February 13, 2009
Atlantic Yards Project Said to Get a Reprieve
City Room [NY Times Blog]
by Charles V. Bagli
No, not an infusion of stimulus spending, but an extension on the $177 million that Forest City was supposed to repay to Gramercy Capital this month.
The developer of the beleaguered Atlantic Yards project in Brooklyn is reported to have accepted a deal in which its lender granted an extension of its loan rather than demand full payment this month.
The developer Bruce Ratner, chief executive of Forest City Ratner, has been scrambling to keep alive his proposed $4 billion project, which includes a basketball arena and up to 6,000 apartments, in the face of a severe recession, chaotic financial markets and lawsuits filed by local opponents.
Forest City’s loan of $177 million from Gramercy Capital Corporation for the 22-acre property was due this month, which caused much speculation in political and real estate circles about the fate of the project.
According to executives familiar with the negotiations, Forest City committed to signing an agreement as soon as Friday in which the company will make a $15 million payment immediately, as well as additional large payments in the future, in return for a two-year extension.
Still, the Atlantic Yards project faces a critical test in the coming weeks at the state Appellate Court, which will hear oral arguments Feb. 23 in a lawsuit challenging the state’s use of eminent domain to seize privately owned property on behalf of the project. A victory for the opponents could be devastating for the developer.
The coming months will be telling. Barclays Bank, which signed a $20 million a year deal for the naming rights at the basketball arena, extended its deadline for the start of construction until the end of 2009. Under a recent ruling by the Internal Revenue Service, Forest City has only until the end of the year to use special tax-exempt financing for the arena.
NoLandGrab: While this is good news for Ratner, it's not that good. He needs to come up with $15 million ASAP, and then make accelerated payments. With the Izod Center as empty of people as the Atlantic Yards footprint, no amount of salary dumping (Vince Carter, anyone?) will sufficiently shore up the Nets' bottom line.
Does anyone know if a bridge-loan extension qualifies as "infrastructure" in the bill passed by the House today?
Posted by eric at February 13, 2009 4:52 PM