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Atlantic Yards/Pacific Park graphic: what's built/what's coming + FAQ (pinned post)

Forest City executive: though selling 461 Dean, they see "compelling values" in Brooklyn, despite "supply issues"

Despite plans to sell 461 Dean, the only building in Atlantic Yards/Pacific Park that they own outright, Forest City Realty Trust executives yesterday told investment analysts they remain bullish in Brooklyn residential real estate, despite near-term challenges.

(461 Dean is also the only building built via modular construction, a process Forest City once had great hope in, but abandoned after delays in construction, a dispute with former partner Skanska, and reports of leaks.)

Asked if the motivation to sell was more about the tax advantages, or concerns about the fundamentals for real estate in Brooklyn, Chief Financial Officer Bob O'Brien said during a conference call that it was the former:  a recognition of the ability to use tax losses to counter corporate gains from selling retail assets.

The increased $44.3 million impairment (on top of a $146 million impairment regarding the building and the modular factory), he said, "really reflected the challenges of really understanding the overall cost to complete, we were taking over a job in the middle."

That was a reference to the split with former partner Skanska over the modular factory; lawsuits between Forest City and Skanska persist. That  $190.3 million total represents a significant loss, but also will help them offset gains.

"Compelling values" in Brooklyn, but "supply issues"

"But what really what drove it was compelling values in that market place that seem to remain," O'Brien said, leaving the impression they're expecting a decent sum for the building. (I wonder: this building has some historical question marks, at least. The modular factory was sold for an unreleased sum.)

"We believe we've got tremendous value in that marketplace, which reflects the long term demand for multi-family property in greater New York and in this case specifically Brooklyn," O'Brien said, citing the 80 DeKalb residential building and "we're in the process of opening the two affordable buildings at Pacific Park." (Note the difficulty in leasing middle-income affordable units, as both I and Rachel Holliday Smith have written.)

"We're not backing down from our commitment to our belief in the long term in the Brooklyn market," he said, though he acknowledged "supply issues in Brooklyn and Manhattan" that have led to what some call a glut.

"We think that will have a near term impact on rental growth, but overall it still remains one of the strongest markets in the country, and we believe in it long term," he said. Note, though, that they have not announced plans to start any new buildings within Atlantic Yards/Pacific Park.

Nor did anyone on the call ask about or mention the 550 Vanderbilt condo building, which is part of the Greenland Forest City Partners joint venture.