print header

# 1 Commercial Real Estate Information Company

  • Find Properties 
  • Market Properties 
  • Analyze Properties 
Products
Commercial Real Estate News

Greenland USA Takes Majority Interest in NY's Pacific Park Project

With Ownership Restructure, JV Partner Forest City Now Responsible for Just 5% of Future Development
July 5, 2018


Forest City Realty Trust has closed on its restructuring of the Pacific Park development project in Brooklyn, leaving joint-venture partner Greenland USA with the majority interest.

As part of the agreement, the subsidiary of Shanghai-based Greenland Holding Group will see its ownership stake jump to 95 percent from 70 percent, while Forest City’s ownership interests and obligations to fund future construction costs has dropped to 5 percent from 30 percent. Forest City reported in its first-quarter 2018 earnings report that the restructured ownership interest and funding obligations would be effective from January 15, 2018.

Pacific Park is a 22-acre, mixed-use project currently being built adjacent to Brooklyn’s Barclays Center. The development broke ground at the end of 2014 and is planned across two phases that will create a new rail yard and up to 15 new commercial and residential buildings.

Although Pacific Park is targeting 1 million square feet of office space, the majority of the build-out will be a mix of affordable housing, rental apartments and condominium homes – a total of 6,400 apartment units, of which 2,250 will be set aside as affordable housing. A combined 250,000 square feet of retail space will anchor the buildings' bases.

By 2016, Forest City had to revise its Pacific Park project schedule, citing a softening in New York City’s condominium market, similar softness for Brooklyn rental markets and rising vertical construction costs. It also cited "substantial additional costs for rail yard and infrastructure improvements" to complete Phase II of the project.

Forest City wrote in its most recent annual report:

More specifically, our agreement with the Metropolitan Transit Authority ("MTA") requires collateral to be posted and for the construction of the permanent rail yard to be substantially complete by December 2017, subject to force majeure. In 2015, we notified the MTA of a force majeure delay of approximately 16 months, due to unforeseen site conditions. Collateral of $86 million was posted with the MTA, of which our portion was 30 percent, or approximately $26 million, which resulted in an increase to our equity method investment. There is also the potential for increased costs and further delays to the project as a result of (i) increasing construction costs, (ii) scarcity of labor and supplies, (iii) the unavailability of additional needed financing, (iv) our or our partners’ inability or failure to meet required equity contributions, (v) increasing rates for financing, (vi) our inability to meet certain agreed upon deadlines for the development of the project, (vii) other potential litigation seeking to enjoin or prevent the project or litigation for which there may not be insurance coverage and (viii) our or our partners’ inability to fulfill contractual obligations.



Now, the restructured ownership agreement gives Greenland primary responsibility for the remaining development work.

However, three apartment projects already-completed by the joint venture – 38 Sixth Ave., 535 Carlton and 550 Vanderbilt – are not included in the terms. For those buildings, Forest City and Greenland retain their original 30/70 split.

"Pacific Park is an important development and we are committed to continuing to deliver the terrific mixed-use community that we have begun to build in the heart of Brooklyn," noted Greenland USA president Hu Gang. "We're proud of the significant progress we've already made, particularly providing much needed affordable housing and local retail, and with the completion of this restructuring are ready to immediately build on this momentum."

Story continues below...
Forest City's Top 10 Assets as of May 2018.


In a May 2018 presentation, the REIT told investors it had $74 million under development as its share of the Pacific Park project. Its pipeline responsibility at the site totals 1.8 million square feet, including 1.2 million square feet in apartment property and 300,000 square feet of office space.

Most recent figures on its New York City office portfolio, as of December 31, 2017, show nearly 4.47 million square feet, of which the largest properties are the New York Times Building, 3.2 million-square-foot MetroTech portfolio and 400,000-square-foot Atlantic Office Terminal. The REIT announced in mid-June that it had closed 560,000 in office leasing across its New York portfolio over the past 18 months.

Forest City has told investors it will continue to narrow its focus to two major property groups, apartment and office, in four major markets: New York Metro, Denver, San Francisco and Washington D.C.

In Washington, D.C., Forest City is still building The Yards, a 53-acre waterfront project that will bring 1.8 million square feet of office space and 3,000 apartment units. It is also working on the Pier 70 project in San Francisco, which will span 3.2 million square feet across 28 acres. In Jersey City, NJ, it expects to invest between $380 million to $415 million on the 18-acre Hudson Exchange development.



Diana Bell, New York City Market Reporter  CoStar Group   
GET IN TOUCH        Contact CoStar News Team:   News@CoStar.com

 Find us on 

Welcome To CoStar's
Industry-Focused,
Award-Winning News

Winner of three Journalism Awards from the National Association of Real Estate Editors (NAREE)

Award-Winning News