Related Maneuvering To Take Over Pacific Park From Chinese Developer In Default
The long-running saga over Brooklyn’s Pacific Park project could be entering a new chapter.
The Related Cos. has entered talks to take over the embattled 22-acre development from Greenland USA after the affiliate of Chinese state-backed Greenland Group defaulted on its loans last year, The Real Deal reported.
Pacific Park, the development that was hatched as part of the deal to build the Barclays Center arena, is supposed to include 15 commercial and residential buildings over railyards between the neighborhoods of Prospect Heights, Boerum Hill, Park Slope, Fort Greene and Clinton Hill.
Just nine of the towers have been delivered to date. Last year, Greenland defaulted on $350M of loans from EB-5 lenders the U.S. Immigration Fund and Fortress Investment Group covering the six remaining development sites.
The lenders moved to force a foreclosure auction last year, but it was postponed, and negotiations over the publicly owned, privately controlled land are happening behind closed doors. Related's charge is being led by CEO Jeff Blau, as its billionaire chairman, Stephen Ross, focuses more on the company's growth in South Florida, TRD reported.
An ownership change could prove difficult. Atlantic Yards Community Development Corp., a subsidiary of the state’s economic development agency, Empire State Development, would have to approve the takeover.
The agency is expecting a proposal from the potential new developer and from USIF and Fortress lender, The Real Deal reported.
“ESD is fully committed to moving this project forward and will be carefully reviewing the lender’s proposal,” an ESD spokesperson told Bisnow in a statement.
Related, USIF and Fortress didn't respond to Bisnow’s request for comment.
Pacific Park, which kicked off two decades ago when it was called Atlantic Yards, has been behind schedule and in financial difficulty for some time.
When Barclays Center developer Forest City Ratner first embarked on the project, it faced opposition from residents and delays from the recession before getting hit by further construction delays.
In 2014, Greenland USA took a 70% stake in the development. Two years later, Greenland took a 95% stake but never managed to cobble together funding to build the towers itself.
TF Cornerstone and the Brodsky Organization bought into the project with a purchase of leases for three development sites in 2018. During 2020, Fortress Investment Group acquired a stake in the debt. Two years later, Avanath Capital Management also bought part of the project, acquiring two apartment buildings spanning 601 units for $315M.
With the timing of any transfer to Related up in the air, it remains unclear what will happen next year when the original deadline passes to deliver Phase 2 of Pacific Park, with more than 3,000 units, nearly 900 of which would be affordable. If those units aren't open by 2025, the developer could have to cough up $2K a month in fines for every unit not delivered.
