Lead partner in Gulch project to sell 70 percent of its Brooklyn deal to state-owned Chinese developer
By David Pendered
A subsidiary of the lead developer of the Gulch in downtown Atlanta has a tentative deal to sell 70 percent of its stake in a Brooklyn project to a Chinese firm in order to raise cash to continue the work on the $5 billion Atlantic Yards.
If the deal goes through, it will be the largest commercial real estate deal in the U.S. ever to involve direct backing from a state-owned Chinese development company, according to a story posted Friday on wsj.com.
Forest City Ratner Cos., a subsidiary of Gulch-developer Forest City Enterprises, has been unable to arrange financing for housing promised for low- and middle-income families at its Atlantic Yards project in Brooklyn, according to wsj.com. Although Forest City opened Barclays Center in 2012, home of the Brooklyn Nets, the developer has been criticized for failing to meet obligations related to its winning approval for the center, the report said.
The Brooklyn development is to have 15 towers and a total estimated cost nearing $5 billion, according to a story Sunday in jewishbusinessnews.com. The wsj.com story put the cost closer to $4 billion.
In Atlanta, news has been scant about the planned $1 billion redevelopment of the Gulch, a blighted railroad corridor between MARTA’s Five Points Station and CNN Center.
The latest update posted on the website of the Georgia Department of Transportation is a newsletter dated Spring 2013. It says construction could begin as early as 2015. The newletter from October 2012 predicts construction could begin in fall 2014. A story in ajc.com in July 2012 reported construction could begin in “late 2013.” There’s no activity on the site of the Gulch to indicate construction is imminent.
For the Chinese firm, the Brooklyn deal could be the first of many such transactions, according to a statement post on prnewswire.com. The statement quoted Zhang Yuliang, chairman and president of Greenland Group:
- “Atlantic Yards is about more than Brooklyn and New York, as important as this development is for the City. It is about how we build sustainable, well-designed housing to meet the needs of diverse groups of people. If we can do that in New York, we can do that elsewhere. That is at the very foundation of what Greenland Group is about.”
For Forest City Ratner Cos., a subsidiary of Forest City Enterprises, the joint venture with Greenland offers a chance to move ahead with a project that became stalled during the recession. The statement quotes FCRC Executive Chairman Bruce Ratner:
- “We are delighted to have an opportunity to create a strong development and investment partnership with Greenland Group. We look forward to working together to bring the housing and other amenities of Atlantic Yards to fruition. Most importantly, this partnership would allow us to deliver the 6,400 units of housing, including 2,250 units of affordable housing, to market more expeditiously, which is important for Brooklyn and the entire city.”
At the Gulch project in Atlanta, the GDOT schedule for public involvement calls for a flurry of activity to be occurring now.
The GDOT schedule calls for website updates, public hearing open houses, implementation workshops and social media to be unfolding through May 2013.
The schedule calls for at least one public presentation in the period between June and December.
The most recent public discussion emerged early this past summer. Norfolk Southern railway sent a letter to GDOT in May saying that it won’t be able to accommodate passenger rail service to the Gulch because of anticipated freight traffic on its rail lines. Maria Saporta wrote about the issue in a story in June.
The Gulch is a local nickname for a swath of industrial land extending south, east and west from MARTA’s Five Points Station. The formal title used by GDOT is Multi Modal Passenger Terminal, or MMPT. The plan is to build a hub for passenger trains and buses in the Gulch, and surround it with mixed use developments that would revitalize Atlanta’s central business district.
In October 2011, GDOT announced the selection of a joint venture team to develop the project and provided a two-year, $12.2 million contract with Forest City Enterprises, of Cleveland, Ohio and two Atlanta-based firms, Cousins Properties, Inc. and The Integral Group, LLC.
The two joint ventures not selected were Houston-based Hines, and two Atlanta-based firms, The Dawson Co., and H.J. Russell & Co.; and Terminus Development Partners, LLC., comprised of the John Buck Co., of Chicago, and Atlanta-based The Jacoby Group, which developed Atlantic Station and is developing Aerotropolis, where Porsche will have its headquarters.
Tangible progress on the Gulch project is difficult to find. There’s no indication the status of the project’s review as it relates to the National Environmental Policy Act, though GDOT’s schedule called for the final documentation to be done by May and a record of decision filed by December.
That said, the closure of the federal government has resulted in the lack of updates to the website of the Environmental Protection Administration, according to a note on the EPA website late Sunday.