- Posted at 9:28, October 13, 2013
- By Russ Bleemer
Late last week, China took a big stake in the Atlantic Yards-Barclays Center development project.
The deal between the government-owned Greenland Holdings Group, based in Shanghai, and state-owned developer Bruce Ratner’s Brooklyn-based Forest City Ratner Companies LLC, and its subsidiary, Forest City Enterprises Inc., raises plenty of questions about what everybody is getting out the deal.
The story was broken ahead of a Ratner press release on Friday by the Wall Street Journal, and the biggest U.S. development to get Chinese backing.
Greenland will get a 70% stake in the project at the site, and will focus on developing long-stalled housing.
Ratner told the WSJ that the project will cost $4 billion, and Greenland estimated that the cost will be $5 billion.
Among the many open questions:
How much will the Ratner companies contribute?
The Wall Street Journal story (here) points out that only one of 15 residential towers promised for the project, begun in 2010, has been started. Neither it, not the project’s Phase 1, the year-old Barclays Center arena, are included in the Greenland deal.
The article reports that “the purchase price isn't being disclosed, but Forest City has invested $500 million in the 22-acre project so far—and it has committed to additional spending on land and infrastructure set to total hundreds of millions of dollars.”
Where will the rest of the Ratner investment come from?
It remains to be seen what the source of the commitment is. The WSJ article points out that the Russian investment not only in the Brooklyn Nets, but in the arena itself, saved the project from potential collapse in 2009.
What’s next for Greenland?
A WSJ blog report that followed the deal story on Friday said China loves high profile development projects:
Cash-rich Chinese developers have been looking for geographic diversification as the domestic economy slows. Policy tightening in the residential market has also forced Chinese individuals to look abroad for homes, compelling developers to follow their customers beyond China. And New York is fast becoming a favorite destination.
See the blog post here.
Put another way: Has Related Companies and Oxford Properties Group called Greenland with Hudson Yards tour dates and times?
The WSJ blog piece details Greenland’s “overseas acquisition spree,” including a $1 billion Los Angeles office deal earlier this year, as well as Chinese investments in the World Trade Center site, the GM Building on Fifth Avenue, and a condominium project in Williamsburg.
China real estate investments in the U.S. tend toward office buildings. Do they get one in Brooklyn?
Earlier today, Atlantic Yards watchdog blogger Norman Oder picked up on the WSJ’s report that an office building would be part of the deal, and pointed out the “cagy” (sic) press materials from the Ratner companies which emphasize Greenland’s interest in developing housing—the stalled part of the development in Brooklyn, and a big part of Greenland’s public face (see Greenland's site here).
Oder’s blog, raising issues include a dearth of press coverage and following up on his questioning of so-called EB-5 financing (in which foreign investors provide capital to development projects in exchange for visas, and for which Oder makes a strong case provided few jobs but plenty of below-bank-rate financing for earlier Ratner companies' contributions to the development), can be found here: http://atlanticyardsreport.blogspot.com/
For more on EB-5 visas and investments, see the U.S. Citizenship and Immigration Services web page, here.
And here’s the official word from Ratner on Friday.