What's the ownership percentage for B4 (18 Sixth Avenue)? How much did Brodsky pay the joint venture?
Yesterday, in my blog follow-up to my Brooklyn Eagle article on a letter from legislators asking questions about the Pacific Park timetable, I noted an important question:
And, as far as we know, the deals for the first three of those sites were full transfers, thus presumably diminishing the GFCP ownership percentages accordingly.
What about the B4 partnership?
But one of those leases, involving B4 (aka 18 Sixth Avenue), may be more complicated. This is the huge tower with some 860 apartments at the northeast flank of the Barclays Center.
Let's start with the 4/23/19 press release, headlined Greenland Forest City Partners and The Brodsky Organization Announce Partnership to Develop 18 Sixth Avenue at Pacific Park, which said the "joint venture" would immediately commence construction.
“We are thrilled to expand and strengthen our relationship with The Brodsky Organization," said Scott Solish of Greenland Forest City Partners. “We are excited to announce our next project in Brooklyn with Greenland Forest City Partners," said Dean Amro of Brodsky.
That sounded like a partnership. At the 5/7/19 Quality of Life meeting, I asked for more details. "Greenland's the majority partner," Solish said, though he didn't offer a percentage.
8) What are the current percentages of ownership held by FCRC, GFCP, and Greenland USA in the Atlantic Yards project, and what will be the ownership percentages be following the closing of the rights transfers that have been announced?Some of that answer should be easy. We've been told that, before the deals for four development leases involving TF Cornerstone (B12, B13) and The Brodsky Organization (B15, B4), Forest City--now owned by Brookfield--owned only 5% of the project going forward.
And, as far as we know, the deals for the first three of those sites were full transfers, thus presumably diminishing the GFCP ownership percentages accordingly.
What about the B4 partnership?
But one of those leases, involving B4 (aka 18 Sixth Avenue), may be more complicated. This is the huge tower with some 860 apartments at the northeast flank of the Barclays Center.
Let's start with the 4/23/19 press release, headlined Greenland Forest City Partners and The Brodsky Organization Announce Partnership to Develop 18 Sixth Avenue at Pacific Park, which said the "joint venture" would immediately commence construction.
“We are thrilled to expand and strengthen our relationship with The Brodsky Organization," said Scott Solish of Greenland Forest City Partners. “We are excited to announce our next project in Brooklyn with Greenland Forest City Partners," said Dean Amro of Brodsky.
That sounded like a partnership. At the 5/7/19 Quality of Life meeting, I asked for more details. "Greenland's the majority partner," Solish said, though he didn't offer a percentage.
Shifting ownership entities
But new evidence complicates that statement, suggesting that, at minimum, the entity developing the building is operated--if not controlled--by Brodsky.
An "Assignment and Assumption of Development Lease" (bottom) between an Assignor entity housed at Greenland Forest City (Pacific Park 18 Sixth Avenue, LLC) and an Assignee entity housed at Brodsky (18 Sixth Avenue Owner, LLC) lays that out:
What's inside the deal?
That leads to various potential conclusions. One is that Greenland Forest City, despite public rhetoric, has sold the entire lease to Brodsky.
I asked a spokesman for the joint venture to clarify the role of Greenland and Brodsky in the new 18 Sixth Avenue Owner and why, if Greenland's the majority partner, the new entity's housed at Brodsky. The spokesman declined comment.
Here's a 5/9/19 press release from law firm DLA Piper:
But new evidence complicates that statement, suggesting that, at minimum, the entity developing the building is operated--if not controlled--by Brodsky.
An "Assignment and Assumption of Development Lease" (bottom) between an Assignor entity housed at Greenland Forest City (Pacific Park 18 Sixth Avenue, LLC) and an Assignee entity housed at Brodsky (18 Sixth Avenue Owner, LLC) lays that out:
Assignor and Assignee have entered into that certain Purchase, Sale and Contribution Agreement, dated as of March 22, 2019, providing for the sale and contribution by Assignor to Assignee of, among other things, Assignor's right, title and interest in and to the Lease.
Assignor desires to assign to Assignee all of its right, title and interest as tenant under the Lease, and Assignee desires to assume all obligations of the tenant under the lease.That's a full shift to a Brodsky-housed, if not fully-owned, entity. (Note that the site is leased from Empire State Development, so it's an assignment of lease, not a sale of land.)
What's inside the deal?
That leads to various potential conclusions. One is that Greenland Forest City, despite public rhetoric, has sold the entire lease to Brodsky.
But remember, it's a vaguely-described "Purchase, Sale and Contribution Agreement."
It's also possible that Greenland has transferred its interest into a new entity housed at Brodsky and operated by Brodsky, but with shared ownership, thanks to a "contribution" made by Brodsky.
I asked a spokesman for the joint venture to clarify the role of Greenland and Brodsky in the new 18 Sixth Avenue Owner and why, if Greenland's the majority partner, the new entity's housed at Brodsky. The spokesman declined comment.
Here's a 5/9/19 press release from law firm DLA Piper:
DLA Piper represented affiliates of Greenland Atlantic Yards, the developer of the 22-acre development known as Pacific Park in Brooklyn, New York, in a joint venture with the Brodsky Organization to develop a US$640 million, 800,000-square-foot, 500-plus foot tall multi-use tower at 18 Sixth Avenue, adjacent to the Barclays Center.
The transaction also included the sale/contribution of a ground lease interest in the development site. Upon completion of the project, Pacific Park plans to have 2,250 affordable residential units and more than 6,000 total residential units, along with office space, retail, community facilities and eight acres of public open space
(Emphasis added)
How much is the deal valued?
As noted in the screenshot below, the city's online database cites a transaction valued at $194,745,462.
How much is the deal valued?
As noted in the screenshot below, the city's online database cites a transaction valued at $194,745,462.
Is that the value of the payment by Brodsky? Or the valuation of the new entity? Again, no comment.
There's some precedent for values cited in ACRIS to referencing the full value of the site, not the amount paid by a single entity.
Consider: when Greenland USA first bought into Atlantic Yards in 2014, it made a capital contribution of $200 million for 70% of the project going forward, as stated in a news release, but the entire deal was valued in ACRIS at $547 million. (Some news outlets erroneously suggested Greenland had paid $547 million.)
In this case, we have even less clarity. So stay tuned.
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Consider: when Greenland USA first bought into Atlantic Yards in 2014, it made a capital contribution of $200 million for 70% of the project going forward, as stated in a news release, but the entire deal was valued in ACRIS at $547 million. (Some news outlets erroneously suggested Greenland had paid $547 million.)
In this case, we have even less clarity. So stay tuned.
B4 Assignment of Lease by on Scribd
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