Related Chief Executive Blau: talks regarding Pacific Park "have a lot of moving parts," but "could be a great opportunity."

A July 11 Wall Street Journal exclusive, Stephen Ross Is Launching His Second Act at 84: A New Florida Real-Estate Firm, describes how "Related’s founder and chairman is stepping down and taking Palm Beach properties to his new company."

Related, a privately owned New York-based firm founded by Ross 52 years ago, began by building affordable housing, then took on larger projects, like Hudson Yards, built over railroad tracks on Manhattan's Far West Side.

The firm, which has a whopping $60 billion worth of completed and ongoing projects, is seeking to build a casino and much more in the second half of Hudson Yards. It will be led by a triumvirate, including Chief Executive Jeff Blau.

About Pacific Park

The article also adds slightly to news The Real Deal broke a week earlier, about Related's interest in Atlantic Yards/Pacific Park:

Related also has been trying to take advantage of the increasing distress in the commercial-property market. For example, the firm is in early talks to possibly take over the giant Pacific Park development next to Brooklyn's Barclays Center, a deal that would add another 3,500 apartments to its portfolio.

The talks "have a lot of moving parts," Blau said. "But it could be a great opportunity for us."

"Moving parts"

Well, "a lot of moving parts" is an understatement, given that there are multiple interested parties.

Those include the "lender," a fund managed by an affiliate of the U.S. Immigration Fund (USIF, a "regional center" that recruits immigrant investors under the EB-5 investor visa program), with an unspecified role for Fortress Investment Group; Empire State Development, the state authority that oversees/shepherds the project; and the Metropolitan Transportation Authority, which owns the railyard that must be decked over for six future towers.

It looks like master developer Greenland USA may be out of the picture for the railyard project, but, who knows, they may also be talking to Related about taking over--or allying on--the potential development at Site 5 catercorner to the arena, long proposed for a giant two-tower project but requiring new public approvals to shift bulk from the unbuilt B1 tower.

"Great opportunity"

As to a "great opportunity," well, that depends on 1) the costs involved and 2) the obligations imposed, or renegotiated, by public entities, such as a May 2025 deadline to build 876 more affordable housing units, as well as other potential extensions and reconfigurations.

After all, to exercise development rights for the remaining 3,218 approved apartments--not 3,500, but with changes at Site 5 could be many more--any developer has significant costs, including building the platform over the railyard and paying the MTA for remaining development rights. 

Greenland had offered the six tower sites as collateral for $349 million in low-interest EB-5 loans, and owed about $286 million when the USIF began to pursue foreclosure.

One question is whether the EB-5 investors, who each put up $500,000 in an essentially no-interest loan but with an expectation of repayment, would get anything close to the amount owed, or whether they would only get a fraction--and whether they have any sway in the matter, or whether it's all up to the manager USIF, which didn't put up any of the money itself.