Raising $504M, Greenland USA sells Metropolis tower in Los Angeles at $200M+ loss. Is there money to shore up struggling parent or help with Brooklyn project?

Greenland Forest City Partners, as reported in May, sold two "100% affordable" Atlantic Yards/Pacific Park towers for $46 million less than the $370.8 million that they cost to build, a sign that cash-strapped majority owner Greenland USA, part of a cash-stapped parent company, was more interested in raising funds than making a profit. 

(The press release said the sale was for $315 million, which was rounded up from the $314.53 million in property records.)

For those two towers, 535 Carlton and 38 Sixth--as well as the condo building 550 Vanderbilt--Greenland USA owned a 70% share, so it reaped a little more than $220 million. It owns a 95% share of the project going forward.

Another sale, more questions

Earlier this month, Greenland USA sold an even bigger project in Los Angeles, at a bigger loss, as noted below.

The question is whether the money only goes to pay off (partly) financing, or if there's some left for the struggling Shanghai-based parent, or whether it might be used in Brooklyn to get the long-delayed platform for Atlantic Yards/Pacific Park going.

The developer's recent pattern of sales is another reminder that it has no particular commitments to specific properties but rather will make the best decision for their bottom line.

That's relevant when it comes to the still-pending plan, floated in 2016, to transfer bulk from the unbuilt Miss Brooklyn, the office tower once planned to loom over the Barclays Center, across Flatbush Avenue to Site 5, longtime home to two-big box stores, electronic retailer P.C. Richard and the now-closed Modell’s, creating a giant two-tower project.

If and when that bulk transfer is approved by Empire State Development, the state authority that oversees/shepherds Atlantic Yards, a sale by Greenland--without conditions--could leave the platform unbuilt and the rail yard undeveloped. That would leave six towers and the bulk of the open space unbuilt, and the project rationale upended.

"They're going to have to somehow understand that the fate of Site 5 is tied to the railyards as well," said advocate Gib Veconi at a meeting last month.

A loss in Los Angeles

Greenland sells Metropolis apartment tower for $500M, the Real Deal reported 11/9/22, noting that the $504 million price was nearly $200 million less than what the developer wanted for the 59-story, 684-unit Thea at Metropolis in Downtown Los Angeles.

Actually, it's worse.

Greenland had earlier asked for $695 million, which would've been a modest loss from the $715 million cost, as a source told TRD in the 11/20/22 follow-up, “Borderline offensive”: Why Greenland lost $200M on its LA tower,

Buyer Northland, a private equity firm based in Boston, told the Real Deal it initially offered $550 million for the tower, an admittedly "borderline offensive” counter to Greenland's $695 million ask.

But Greenland eventually realized it was not negotiating from a position of strength. Meanwhile, the market in Downtown L.A. for high-priced rentals has cooled, in part because of remote work.

According to the Commercial Observer 11/9/22, Northland Buys DTLA Apartment Tower at ‘Steeply Discounted’ $504M:

The purchase price values the multifamily units (which make up 97 percent of total) at $714,000 per unit and $688 per square foot, a 40 to 45 percent discount to today’s replacement costs, Northland said. The firm financed the purchase with 10-year, fixed-rate debt.

What's left

Greenland is also trying to sell its 315-room Hotel Indigo. The other two Metropolis buildings hold condos. 

According to the Real Deal, Greenland has sold about 500 of the 800 condos. In Brooklyn, 550 Vanderbilt, the only Atlantic Yards/Pacific Park condo building, is nearly sold out, with one penthouse left to go--though it went off-market earlier this month.