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As Predicted, Atlantic Yards Could Just Be Stadium, Parking


By

Garth Johnston

Published Apr 4, 2011

Modified Apr 4, 2011


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The state of the stadium on March 12 xbettyx's flickr).

 


By

Garth Johnston

Published Apr 4, 2011

Modified Apr 4, 2011


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After all of that fighting, the never ending Atlantic Yards project could now end up just being a nondescript stadium and acres of parking. The project's developer, Forest City Ratner, filed documents with the SEC last week that warn of "further delays" to the non-stadium portions of the project that could lead to the scrapping of most or all of the rest of the 22-acre, $4.9 billion project. But hey, at least the city got rid of all that urban blight!

Basically the same cash flow issues (rising construction costs, rising financing rates, inability to meet government deadlines, trouble with sponsorships) that have caused Ratner to start looking into prefab construction may in the end entirely kill the project. Here is how the company's filing describes the situation if any any of those problems get worse:

If any of the foregoing risks were to occur we may: (i) not be able to develop Brooklyn Atlantic Yards to the extent intended or at all resulting in a potential write-off of our investment, (ii) be required to pay the City and/or State of New York liquidated damages for failure to meet certain agreed upon project deadlines, and (iii) be in default of our non-recourse mortgages on the project. The exposure to loss on this investment is approximately $525 million, excluding any potential write-offs for the arena or any liquidated damages described in (ii) of this paragraph, and could have a significant, material adverse effect on our business, cash flows and results of operations. Even if we were able to continue with the development, or a portion thereof, we would likely not be able to do so as quickly as originally planned, would be likely to incur additional costs and may need to write-off a portion of the development.

And the Yards project isn't the only troublesome spot for the developer. It's also having a lot of trouble filling out its new Ridge Hill Mall in Yonkers. And though renters are picking up spots in the developer's downtown Gehry tower, they could still be going faster. And then there is the New York Times Building. According to the developer's filings the nonrecourse mortgages on the Times Building, the Gehry tower, and the mall "have outstanding balances of $640,000,000, $635,000,000 and $379,363,000, respectively."

The company did have one bright spot last year, however. Thanks to the finally finalized sale of a majority interest in the Nets to Russian billionaire Mikhail Prokhorov, Forest City had "record" earnings.

Tagged

Atlantic Yards

barclay center

brooklyn

Bruce Ratner

Forest City Ratner

the nets


Garth Johnston

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