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December 9, 2010
Are Atlantic Yards development rights offered to Chinese overvalued as collateral, or should the MTA have gotten double from FCR for railyard?
Part 5 of a series
Atlantic Yards Report
Did the Metropolitan Transportation Authority (MTA) get snookered last year when it agreed to renegotiate the deal with Forest City Ratner (FCR) for Vanderbilt Yard development rights, giving the developer more generous terms than in 2005 because of the weakened real estate market?
Or are prospective Chinese investors seeking green cards in exchange for parking $500,000 each in an Atlantic Yards-related investment pool being misled about the value of the development rights on the site used as collateral?
One or the other seems likely, because a new appraisal of development rights on the site is more than double the 2005 appraisal. That appraisal was never re-done and last year was seen by the MTA as overvaluing the site.
And both may be true--that public transit is losing out on tens of millions of dollars, and the potential investors are being offered a shakier deal than billed--if the real value is somewhere in the middle.
The two parcels do not fully overlap--the Vanderbilt Yard (8.5 acres) occupies the northern portion of the 22-acre site, while the collateral offered to the immigrant investors involves two development parcels on that northern portion and five on the southern segment.
However, the value per square foot of development rights should be fairly constant across the site. (Development costs, such as the cost of a platform for the railyard, would serve as downward adjustments, as described below.)
Value per square foot: $75 vs. $179
The MTA in 2005 appraised railyard development rights at $75 a square foot--and said in 2009 that it would be dangerous to get a new appraisal because land values had undoubtedly declined.
However, the NYCRC and its Chinese agents, promoting Atlantic Yards to immigrant investors under the EB-5 program, tout a new appraisal that calculates the value of the seven parcels at more than $179 a square foot.
NoLandGrab: To be fair, the MTA's appraisal was just "some guy's idea of what it's worth."
Posted by eric at December 9, 2010 5:12 PM