January 1, 2010
Official Statement: Forest City Ratner to get 5% development fee, or $7 million minimum
Atlantic Yards Report
We've known since a July 2007 New York Times report that Forest City Ratner would get a 5% development fee while also owning a significant part of the Atlantic Yards project.
When Atlantic Yards was projected to cost $4 billion, that 5% fee would have represented $200 million. Now that AY is projected to cost $4.9 billion, that 5% fee would total $245 million.
But it could be a little more.
The Barclays Center Official Statement, prepared by underwriter Goldman Sachs, indicates that the annual reimbursement should not exceed the greater of $7 million or 5% of cumulative total Arena Project costs.
$7 million is 5% of $140 million. So if for some reason annual Arena Project costs are less than $140 million, Forest City Ratner could get a $7 million fee, which would represent somewhat greater than 5%.
Given that the arena is supposed to cost $1 billion and be built in less than three years, that seems not too likely, but you never know with Atlantic Yards.
So when Forest City Ratner says it plans to fully build Atlantic Yards because that's the only way to get a return on its investment, the development fee has to be part of the equation.
Posted by eric at January 1, 2010 1:06 PM