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June 29, 2009
Analysts: New Atlantic Yards Deal A 'Significant Positive’ for Forest City Ratner
NY Observer
by Eliot Brown
Well, duh!
We know Eliot Brown, who's covered this story for a few years now, isn't surprised, either. In fact, we can't imagine anyone would be surprised by this. It would only be news if the Atlantic Yards deal turned out to be even a wee bit positive for city, state and federal taxpayers.
After a renegotiation of the terms of the $4.9 billion Atlantic Yards project, financial analysts have warmed to the project.
A look at a recent rating of Forest City Enterprises by investment firm Keefe, Bruyette & Woods shows that the development company, which is the parent of Atlantic Yards developer Forest City Ratner, seems to be making at least a little bit of a comeback. After months of tanking stock prices—the stock fell from $69 a share in early 2007 to a low of $3.26 before stabilizing around $6.50—there now is some reason for optimism with regard to Atlantic Yards.
The analysis by KBW comes after the developer renegotiated its deal with the M.T.A. last week. Now Forest City Ratner is giving the agency $20 million instead of $100 million in an upfront payment, pushing the other $80 million years down the road.
This pleased the analysts, who gave Forest City a rating of "outperform," which is better than "neutral" though less strong than "buy."
The headline really should have said "analyst," since we're only talking one firm, though two "analysts" authored the report.
The analysts, Sheila McGrath and Bill Carrier, also found it ironic that opponents of the project were in an uproar after Frank Gehry was dropped from the project, because, they write, a more functional, cheaper, and far less dazzling arena is better than more delay:
"The irony at this juncture is that the opposition is citing the delays in the project and a change of architect that should be considered as a negative to vote against Forest City and the project. If this project had not been tied up in litigation for years by the opposition, the MTA would have closed on the land for an upfront payment of $100 million several years ago, and affordable housing would already have been under construction. The litigation has increased the cost of the project and dragged timing of closing into one of the deepest recessions in decades and certainly a most difficult financing environment."
Well, duh, again. Opponents were in an uproar because Gehry's design was central to the project's selling and approval — a classic bait and switch. And analyze this: the legal strategy — if the court cases couldn't be won outright — aimed to tie up the project until it could collapse under its own weight.
Posted by eric at June 29, 2009 6:21 PM