Atlantic Yards/Pacific Park Report

The latest Atlantic Yards/Pacific Park Construction Update (bottom), covering the two weeks beginning yesterday, Feb. 12, was circulated at 11:27 am yesterday (late) by Empire State Development (ESD) after preparation by Greenland Forest City Partners. There's not much new compared to the previous update , but National Grid is anticipated to start project-related infrastructure relocation work near the intersection of Vanderbilt and Atlantic avenues. Also, previously noted SOE (support of excavation) installation   in the northeastern portion of Block 1120 (just west of the Carlton Avenue Bridge) will continue, with the activity of "excavation" added and clarified. Sidewalk on Dean coming Outside the B12 site, west of 550 Vanderbilt along Dean Street, the document states, as it did in the previous update, "The 16 foot fence has been removed. Work related to grading the site will continue. Sidewalk replacement will occur when permits are received." Wee...

From National Real Estate Investor today, Would Forest City Agree to a Brookfield Deal? , suggests caution on the the reported interest of Brookfield Asset Management in buying Forest City Realty Trust: the reported offer price is just too low, say investment analysts. In other words, this may be a negotiation to get the bid--reportedly at a discount over 16%--closer to the net asset value. Also, analyst Sheila McGrath said that tax considerations hamper sales after conversion to a real estate investment trust (REIT) within five years. The company converted to a REIT two years ago. “I think that these additional frictional costs would impede the value of what other buyers might pay at this juncture," she said. "The board may be in a better position to maximize shareholder value when these restrictions burn off in three years." Does that mean status quo for three years?

As I reported 1/24/18, Ashley Cotton of L&L MAG, which represents Forest City (and says she speaks for the joint venture Greenland Forest City Partners), said that open space planned outside 550 Vanderbilt is finished, but not yet open because of safety issues regarding final work on the building.  “I was told February, today,” she said of the new goal. (Previously, the goal was the end of 2017.) Well, as the photo--taken through a window Thursday 2/8/18 in the Dean Street wall outside the space--shows, the open space is done. February has several weeks left, though.

The news from yesterday's Forest City Realty Trust conference call with investment analysts,  according to  the Real Deal, was that discussions about a potential sale or strategic dispositions will remain “robust” but not necessarily “timely,” according to CEO David LaRue. He had been asked by previous guidance that included the word "timely" had been dropped. The company's initial statement about a potential disposition came in September, and reports of two possible deals have been floated already. So perhaps the lack of "timely" was a signal that reported (but not confirmed) talks with Brookfield and/or Equity Residential were hardly resolved. The board, LaRue said, "is running a robust and thorough process that is ongoing." And in New York LaRue was similarly tactful regarding Forest City's operations in New York, given its announcement that it was reducing from 30% to 5% ownership of future Pacific Park development. "Again, w...

According to an investor presentation ( download ) posted yesterday by Forest City Realty Trust, the three rental buildings in Pacific Park are getting somewhat more full. As of 2/1/18, as noted in the screenshot at right, "100% affordable" 38 Sixth was 23% leased, "100% affordable" 535 Carlton was 66% leased, and 50% affordable/50% market 461 Dean was 92% leased. Those numbers compare to 0%, 51%, and 90% as of 10/26/17, as noted in a previous presentation . 535 Carlton had its official grand opening in June, but couldn't find enough takers for upper middle-income units in the lottery, and has had to offer a free month of rent . Half the building is in that "band." So it's still not going that fast. Forest City's annual results Yesterday, Forest City Realty Trust had good news regarding its 2017 Fourth-Quarter and Yearend Results , in a press release stating that 2017 fourth and annual earnings were up significantly compared to 2016 ver...

From the Real Deal's analysis, When a suitor calls: The calculus behind Brookfield’s Forest City play , regarding the reported, but hardly confirmed pursuit of Forest City Realty Trust by Brookfield Asset Management: Brookfield's reported offer, less than $24/share, is below the estimate net asset value, but could change Forest City's complex enough to require a sophisticated investor One analyst thinks the company will be sold in full, rather than in pieces Note that Forest City yesterday, in its quarterly earnings release , continued its no-comment mode. Is Forest City New York moving ahead? Forest City spokesman Jeff Linton told the Real Deal that New York City remained a core market: “We have moderated our overall development level, but remain committed to development opportunities that allow flexibility to activate entitlement when market conditions are right,” Linton said in a statement. “Our current development ratio of approximately 6 percent of total ...

Thanks to worldwide marketing/popularity and new revenue sources like corporate logos on uniforms, Forbes reported yesterday that  NBA Team Values 2018: Every Club Now Worth At Least $1 Billion . And yes, the Brooklyn Nets really are worth $2.3 billion, because they found a buyer: Mikhail Prokhorov is on the verge of selling 49% of the Nets to Taiwanese billionaire Joseph Tsai. The Alibaba co-founder has an option to assume majority control by the end of 2021. The deal values the Nets at $2.3 billion and does not include operating rights to the Barclays Center where the Nets play their home games. That's an enormous leap in value, and a testament to Jay-Z's line that pro teams are like "paintings for billionaires." After all, when Forest City Enterprises/Forest City Ratner sold its 20% of the team to Prokhorov in early 2016, as well as its majority share of the arena, "the transaction values the team at approximately $875 million and the arena at $825 mil...

I have a essay in Gotham Gazette:  The real value of New York Islanders’ Belmont deal? Cuomo administration won’t say . It includes the state stonewalling on the rival bid and the new arena's economic projections, as well as the seeming failure to confront two big issues: the cost of the Long Island Rail Road upgrades, as well as the impact of the new arena on the county-owned Nassau Coliseum.

A briefly prominent Atlantic Yards investor, who was presented early on as representing "inclusion" in ownership, is not happy with Atlantic Yards, not at all. In a Crain's Q&A,  Prince's former manager Londell McMillan explains Jay-Z's beef with him , the Brooklyn-born lawyer, who famously extracted Prince from an onerous recording contract, not only defends himself in a dispute with Jay-Z regarding Prince's estate, he answers a few bonus questions from Aaron Elstein: You’ve had so much success, but what’s your biggest setback? Atlantic Yards and Barclays Center. I am an investor in that project, and what was promised was not delivered. It was presented as a public-private partnership to create not just a sports facility but housing—affordable housing—jobs and economic opportunities to benefit the community. Today the Nets are owned by a Russian industrialist, the property sold to a Chinese conglomerate, and the public officials who advanced the p...

I wrote recently about how changes in the 421-a law have upended plans for condos beyond the already-constructed 550 Vanderbilt, with 278 units. How would Greenland Forest City Partners get to the planned 1,930 condos? (There are also 4,500 rentals planned, half of them below-market.) Well, maybe they won't, even if the 421-a law changes again to encompass condos. In other words, the developer (previously just Forest City Ratner)  may not have ever aimed for that total A look at 2006 and 2009 documents cast doubt that the condo total was ever a goal within the overall total of 6,430 residential units. Moreover, a second look at two documents prepared by the developer in 2014--a map and a chart--suggests plans for the full 1,930 units had yet to gel. 2006 numbers From the December 2006 Modified General Project Plan states: At full build-out, the Project would include approximately 5,325 to 6,430 residential units, depending on the amount of commercial office space provi...

So, the "100% affordable"--but skewed to middle-income households--535 Carlton tower has gotten a little more affordable. But it's no act of generosity, but rather furthers a huge tax break for Greenland Forest City Partners, as previously reported . Recently posted public documents reveal that the moderate-income "band," which originally included only 15 of the building's 297 apartments, now has eleven more units, and the most expensive "band" has eleven fewer units. This approximates a 50% rent cut. 535 Carlton has eight more two-bedroom units renting for $1,591 a month (total now 12) and three more three-bedroom units renting for $1,832 (total: 4). Combined with 90 low-income units, this means the building now has 116 units renting at 100% of Area Median Income (AMI) and below. (In 2016, 100% of AMI for a four-person household was  $90,600 ; it rose to  $95,400 in 2017 .) Here's the original distribution . The number of studios (3) an...

& Thomas Hauser in The Sweet Science says @barclayscenter has a pot problem: "At times--and Saturday night was one of them--the smell of weed is so strong that non-smokers are in danger of getting a contact high" (I've heard reports from concerts, too. Hoops/hockey, not so much) pic.twitter.com/7tsPbvUPyQ — Norman Oder (@AYReport) January 22, 2018

A 1/10/18 Real Deal article A cautionary tale? EB-5 investors sue over Battery Maritime woes describes lawsuits on behalf of 150 Chinese nationals who put some $77 million in EB-5 funds into the Battery Maritime Building in Lower Manhattan, a project that defaulted. The investors got green cards for themselves and their families, but they didn't get their money back. The defendant, the New York City Regional Center (NYCRC)--the most prolific regional center, the middleman for the first $228 million in Atlantic Yards EB-5 funds--allegedly misled the investors about progress. I can't judge that at this point, but here's the key point about EB-5. According to the Real Deal, the suit describes the investors as “unsophisticated Chinese nationals, most of whom neither speak nor read English.” However, the NYCRC, in its defense, states, "“Plaintiffs claim they were ‘unsophisticated’ when in fact they expressly represented and were required by law to be sophisticated in...

Looking east toward Newswalk; B15 site at right John Catsimatidis, a prolific developer, supermarket owner, and sometime political candidate, has bought 670 Pacific Street , the 8-story, 86-unit rental building situated between the Newswalk condos and the unbuilt B15 site, aka 664 Pacific. The Real Deal reports that Catsimatidis’ Red Apple Group paid $69.2 million to Read Property Group, a little more than he wanted, but he had proceeds from another sale he wanted to deploy. “This reinforces our love for Brooklyn and our trust in the borough," he said. OK, but does he know that a 27-story building is coming next door, and there likely will be work developing over the railyard for years?

Ah, maybe I was a little too optimistic. Two weeks ago, I wrote that the Barclays Center will return to a small but important practice of transparency, announcing non-ticketed events on the monthly calendar circulated to community residents. That longstanding practice of alerting residents of events--including graduations and other gatherings--that may be disruptive was abandoned after May 2016, with an arena representative rather dubiously claiming that it was for security reasons. Well, the practice is back, as noted in the Community Notice circulated yesterday (below), but there was no information about the nature of the private events held on Feb. 1 and the one schedule for Feb. 27. On Feb. 28, there is an indication of "Disney Training," which is presumably staff training and not a huge event. but no actual information to help people prepare. By contrast, the May 2016 event calendar (above right) indicated the nature of the event, such as a graduation, as well...

A recent article in the New Yorker on the inside-the-workplace site Glassdoor prompted me to look at reviews of both Forest City New York (aka Forest City Ratner) and its parent Forest City Realty Trust , at least its headquarters in Cleveland. The reviews are hardly definitive, notes the New Yorker's Lizzie Widdicombe: "Any one review on Glassdoor, like any single restaurant review on Yelp or product review on Amazon, may be misleading, useless, or unhinged." Indeed, those who choose to post reviews generally cluster at the very positive or very negative scale. So we should take these anonymous reviews with some significant grains of salt. But they might indicate some trends. I'd say they indicate rumbles of concern in a company, and office, that has been going through reassessment, even upheaval. That upheaval, if we believe a Bloomberg report yesterday , means Forest City Realty Trust may be sold to Brookfield Asset Management, a firm large and sprawling en...

Newsday published an editorial last night, Don’t let Islanders deal become slippery slope for taxpayers , arguing that it was wrong for New York State to pay $6 million to renovate the Nassau Coliseum for the New York Islanders's return. (I made that point earlier.) And Newsday raises some questions that I and other have raised regarding the new Belmont arena: There are still many unknowns. Will there be tax breaks? Who will pay for traffic mitigation, Long Island Rail Road modifications, and other infrastructure? The slope from privately funded to publicly funded is a slippery one, and taxpayers should be assured they’re on firm footing. Thing is, these questions, and such scrutiny, should have forced far more transparency than we've gotten.

Forest City New York continues to divest, as part of a corporate re-focusing and, I suspect, profit-taking. As Crain's New York Business reported 1/29/18,  Two Trees buys huge commercial sites in Gowanus : Two Trees is buying one of the properties, a 70,000-square-foot building formerly anchored by a Pathmark grocery store with an attached 100,000-square-foot parking lot, for around $65 million from Hamilton Plaza Associates. It also purchased from Forest City Ratner a long-term ground lease of a neighboring 9-acre property that houses a Lowe’s Home Improvement store and its expansive parking lot. It wasn’t immediately clear what the company agreed to pay for that site, but several sources with knowledge of both deals put the total transaction above $100 million. Given the location in an Industrial Business Zone, other commercial use, including office or warehouse space, is likely. Forest City has had a 99-year ground lease from the U.S. Postal Service since 2003, a time befor...

Gov. Andrew Cuomo, headlining another triumphant press event, went to the Nassau Coliseum yesterday to announce that the New York Islanders would return there for at least 60 games over the next three seasons--12 next year, and 24 the next two--while the new Belmont arena is being built. That splits the two later seasons with the awkward but suite-rich Barclays Center, which would like the Islanders to leave an arrangement that loses money for the arena, and gives Brooklyn Sports & Entertainment, which also operates the Coliseum, a tenant for that venue. Not that the Islanders had great options beyond the downsized Coliseum, which holds just 13,000 for hockey, well below the league minimum (but above current Barclays attendance, last in the league at 12,059 ). The key, as Cuomo hinted at somewhat confusingly in his address, is this statement from the official press release , "New York State will invest $6 million in enhancements at the Coliseum to meet NHL requirement...

The latest Atlantic Yards/Pacific Park Construction Update (bottom), covering the two weeks beginning today, January 29, was circulated at 10:57 am today (late) by Empire State Development (ESD) after preparation by Greenland Forest City Partners. There's not much new compared to the previous update , but there will be weekend track work in the Vanderbilt Yard over the coming weekend, Feb. 3-4. No scope, hours, or noise levels were indicated. Sidewalk on Dean coming Outside the B12 site, west of 550 Vanderbilt along Dean Street, the document states, "The 16 foot fence has been removed. Work related to grading the site will continue. Sidewalk replacement will occur when permits are received." Street paving outside 38 Sixth Outside 38 Sixth Avenue (B3), street paving work "is expected to commence subject to weather," though it was supposed to commence  six weeks ago . (Did they just not update the document?) Weekend work Weekend electrical utility in...