Atlantic Yards/Pacific Park Report

There's a quote I remember from former Forest City Ratner CEO MaryAnne Gilmartin, in one observer's paraphrase , don't "get too attached to the brick and mortar.” So the 36-story 80 DeKalb tower, Forest City's first Brooklyn residential tower, claimed to test the market for Atlantic Yards when it opened in 2009, has been sold yet again, in a third transaction, at a modest profit. Let's back up. As reported in June 2018, Forest City Realty Trust--the successor to Forest City Enterprises, parent of Forest City Ratner/Forest City New York--along with Madison International Realty bought out the 49% owned by National Real Estate Advisors. The transaction valued National's share of the property at a total of $93.5 million, including assumption of debt, suggesting the total project value of $190.8 million.  Then, as reported in July 2022, Forest City's successor, Brookfield sold the tower for $190 million to the partnership of KKR and Dalan Management. Not m...

Forest City Ratner's first residential building in Brooklyn, the 36-story 80 DeKalb (aka DKLB BKLN) flanking Fort Greene Park near Downtown Brooklyn, has been sold again, for $190 million. The 365-unit building, with 20% affordable units, was finally completed in 2009, according to this 3/30/11 Forest City credit agreement , which cited $200.2 million in total requisition costs. Separately, this Forest City Enterprises annual report , dated 1/31/10, cites a $163.3 million expenditure, with 80% ownership. That translates to $204.1 million. The news KKR, Dalan buy Downtown Brooklyn rental tower from Brookfield for $190M , the Real Deal reported yesterday. That involves not just the investment firm KKR--which, fun fact, just bought Atlantic Yards in Atlanta--but also Dalan Management. It's not the first transaction. As I reported in June 2018, Forest City Realty Trust--the successor to Forest City Enterprises, parent of Forest City Ratner/Forest City New York--along with Madison...

In a 6/27/18  press release , "Forest City joint venture acquires partner's interest in DKLB BKLN apartment community," Forest City Realty Trust announced it's buying out a partner in 80 DeKalb Avenue, the 365-unit (80/20) building known as DKLB BKLN. A joint venture between Forest City and Madison International Realty have bought out the 49% owned by National Real Estate Advisors , which is wholly owned by a subsidiary of the National Electrical Benefit Fund, a major U.S. pension fund. The building opened in 2009, so it's been almost ten years. "Brooklyn continues to be one of the strongest rental apartment markets in the country, and DKLB BKLN has quickly become both a landmark in the Fort Greene neighborhood and a valuable and productive asset for our company," said David J. LaRue, Forest City president and chief executive officer, in a statement. "All of that makes acquiring our partner's interest a compelling opportunity and a low-risk c...

The Forest City Ratner rental tower 80 DeKalb near Fort Greene Park, also known as DKLB BKLN , is-along with Pacific Park's  461 Dean , among others--seeking out tenants with ads in the Downtown Brooklyn area. I took the photo at right on Adams Street near Fulton Street, near the Shake Shack. Apparently this tower, which leased up fast when it opened in 2009 and was seen by the developer as testing the market for Atlantic Yards, is not immune to the glut of units in the area. (Forest City sold 49% of the building in 2011.) To be sure, StreetEasy indicates that only 10 of the apartments (292 market-rate units, plus 73 low-income ones)   are available, but a closer look suggests some price pressure. Part of that may be the developer's own seeming strategy of raising asking rents in the summer, when more people move, and lowering them in the winter, when fewer seek to sign leases. But surely another part is the current competition. Yesterday, I look at a few units....

On Wednesday came  NY1 Exclusive: Who is Jonathan Rosen? The Most Powerful Man in Politics – Outside City Hall , a long report by Grace Rauh on the founder of BerlinRosen, who represents the mayor and then sometimes adversaries like real estate client Two Trees, a "place often rife with conflict." BerlinRosen's reach is astonishing, working with 15 City Council Members (including Council Speaker Melissa Mark-Viverito, City Comptroller Scott Stringer, Attorney General Eric Schneiderman, and Assembly Speaker Sheldon Silver. “It's a very tight interconnected web of influence because you've helped to elect the candidates to elected office and you are also helping to have the groups that you represent influence the actions of those elected officials. And controlling so much of that process does pose tremendous opportunities for conflict,” Dick Dadey of the Citizens Union told NY1. Susan Lerner of Common Cause said the problem was not unique to BerlinRosen. The re...

There wasn't that much new about Atlantic Yards in Forest City Enterprises' second-quarter conference call ( transcript ) yesterday with investment analysts that wasn't in the press release two days earlier. Yes, work continues on the arena, and a permit has been applied for the first residential tower. FCE President and CEO David LaRue made a comment that echoed the "We control the pace" comment from 2008: In our core markets and key mixed use projects such as Denver and Stapleton, Atlantic Yards in Brooklyn and The Yards in DC, we have existing entitlements that we are able to activate judiciously. In other words, they build when they get financing. More on that first tower: subsidies? One analyst asked about that first tower. Paul Adornato - BMO Capital Markets: First on the multifamily side. I was wondering if you could talk a little bit about the apartment that you're contemplating at Atlantic Yards. What's the concept, what's the pri...

To lower debt payments, Forest City Enterprises is selling nearly half of two New York rental properties developed by subordinate Forest City Ratner, keeping 51% ownership. Similarly, the company sold nearly half of New York area retail properties in March to raise cash. The press release at bottom, which is distilled in The Real Deal, Forest City restructures financing at 8 Spruce, DKLB BKLN , provides the developer's preferred angle: Forest City Enterprises and National Real Estate Advisors [NREA] announced agreements to restructure the financing at 8 Spruce Street, the Frank Gehry-designed 76-story rental tower in Lower Manhattan and at DKLB BKLN the luxury tower in Fort Greene, Brooklyn, saving the companies hundreds of millions of dollars in debt payments. Crain's Cleveland Business also distilled the press release . But there's a trade-off: while Forest City may save hundreds of millions in debt, it sold stakes in both buildings for what seem to be discounts. (...

Forest City Ratner's 80 DeKalb rental tower bordering Fort Greene Park is 97% rented, a rental agent tells Brownstoner , occasioning a round of generally positive comments about the building's location and layouts. Except this one: I am a resident at 80 Dekalb. There have been some pretty egregious issues of misrepresentation by the sales department here. They, of course, are denying all of it. But we have organized a group of concerned residents (our first meeting had over 120 people in attendance), sent letters, had a meeting with management(Rose Associates) and ownership (Forest City Ratner), and are continuing to press them to follow through on the promises they made during the sales cycle. The promises had a lot to do with this being a "green" building. They are claiming to have LEED Certification in their ads. It is not LEED Certified. And it is anything but energy efficient, despite claims they are making to the contrary. Frustrating stuff, to say the...

In a conference call yesterday with investment analysts, Forest City Enterprises executives said relatively little about Atlantic Yards, but emphasized moderately positive results, careful attention to the cost of financing, and the challenge of refinancing. Sale of Nets key They reiterated that the sale of 80 percent of the Nets to Russian billionaire Mikhail Prokhorov was key to improved second quarter results . Not only did Prokhorov mean a $31.4 million gain and increased earnings "as we recovered a portion of our losses," said Executive VP Bob O'Brien, so did earnings for the Nets improve by $7.7 million, "primarily due to reduced amortization of player contracts compared to 2009." I think that means that the departure of some high-priced players meant for a smaller payroll. See the EBDT (Earnings Before Depreciation and Taxes) graphic from this supplementary document . Click on graphic to enlarge. Liquidity "Liquidity remains one of our highest pri...

Executives at Forest City Enterprises (FCE), speaking yesterday in a conference call with investment analysts to discuss first quarter results, said their optimism about the real estate market was continuing to grow--and that progress on the Atlantic Yards project was significant. (The webcast is here . FCE's annual meeting will be held at 2 pm June 16 in Cleveland, and will be webcast .) "We believe the bottom has been reached for most real estate fundamentals," declared FCE CEO Chuck Ratner, who acknowledged that "clearly that recovery is fragile." AY progress "Without question, however, our biggest pipeline-related achievement during the first quarter was obtaining vacant possession in Atlantic Yards in Brooklyn, closing our new partnership with Mikhail Prokhorov for the ownership of the Barclays Center arena and the Nets team and continuing construction work on the arena," Ratner said. "Vacant possession" referred not to the entire Atlant...

Can 4000 empty luxury condos, including some in and around Downtown Brooklyn, really be converted into low-income housing owned by a community land trust or the New York City Housing Authority? Several activist groups say yes, though their proposals--involving tax foreclosure and the use of eminent domain--are thin on the actual number of condos that might qualify, given that only a fraction are in empty buildings rather than simply languishing on the market. Also not estimated is the cost of such housing programs, which would be significant, and the comparison of this tactic with others aimed at achieving subsidized housing. The cost likely would be much greater than the Housing Asset Renewal Program, proposed by Council Speaker Christine Quinn, and Project Reclaim, proposed by Brooklyn Assemblyman Hakeem Jeffries, which have similar goals but do not require permanent affordability nor limit the buildings to low-income residents. Still, a report issued yesterday makes some policy reco...

The Fifth Avenue Committee's new LEED Gold , mixed-income Atlantic Terrace development is nearing completion, far faster than Atlantic Yards (which began earlier), but there's a curious omission on the official web site: no (planned) arena. The neighborhood page of the web site states: Atlantic Terrace is located in Fort Greene, adjacent to Prospect Heights, Downtown Brooklyn, Clinton Hill and Boerum Hill. The location has so much to offer, including two public parks, multiple schools, a major hospital, and a local university—all within walking distance. The building is also adjacent to a major shopping center, the Atlantic Terminal Mall, as well as Brooklyn’s premier transit hub at the Atlantic/Pacific Station through which virtually all city subway lines pass. Yes, and it looks like they're going to build an arena across the street, surrounded by a tower or two or four. There's a similar omission on the web site for Forest City Ratner's 80 DeKalb Avenue projec...

It was just a short walk, less than a third of a mile. But Brooklyn's contrasts and contradictions were manifest during a walk I took on November 24, a few hours after we learned that the state Court of Appeals had green-lighted the state's use of eminent domain , justified in part by removing "blight" in Prospect Heights, to build the Atlantic Yards project. There, at the corner of Fulton Street and South Portland Avenue, a major shopping corridor in the gentrified section of Fort Greene, Brooklyn Borough President Marty Markowitz hosted a press conference outside the new Greenlight Bookstore , a most-local independent bookstore started with the help of a prize in a small business plan contest sponsored by the Brooklyn Public Library. The new novel by Brooklyn author Jonathan Lethem, a member of the Develop Don't Destroy Brooklyn advisory board and noted critic of the Atlantic Yards plan, was in the window. Markowitz and other were boasting "Shop Brooklyn...

In July 2006, Forest City Ratner projected that the most expensive "affordable" studios in the Atlantic Yards project would rent for $1861 a month. That was over market-rate then--and it still is. Forest City Ratner's new 80 DeKalb building in Fort Greene will offer studios at $1795 a month, according to the Brooklyn Eagle. Given that the Area Median Income (AMI) has gone up since 2006, the rent for AY units would be higher now--and likely would be even higher when and if units are built. Market vs. subsidized units In July, I questioned whether 40% (900) of the 2250 subsidized units would be above market, given that the projected rents for the new Brooklyner tower would be below the rents for the two most expensive affordable "bands." Not every new building, including 80 DeKalb, will offer rents that "affordable." But the rents at 80 DeKalb would apparently be more expensive than at least 20% (450) of the subsidized units. The ACORN disconnect If A...

Forest City Ratner has tried very hard to suggest that the mixed-income housing in the Atlantic Yards project would be "for Brooklyn." A May 2004 brochure , the very first "liar flier," promised 4,500 UNITS OF MIXED-INCOME HOUSING FOR BROOKLYN . The only problem: market-rate housing follows the market, natch, so renters and buyers come from anywhere. As shown in the Atlantic Yards market study by KPMG, commissioned by the Empire State Development Corporation (ESDC) and released Wednesday , most new residents of market-rate units (4180 of 6430 units) would come from outside Brooklyn: Although any new and upscale development in Brooklyn that offers transportation benefits similar to the Subject Property will likely attract residents from within New York City as well as the suburbs, a significant number of residents will likely come from Manhattan and to a lesser extent Brooklyn . Those from Brooklyn will likely involve "move-up" residents. (Emphasis added...