January 31, 2011
Gramercy Recognition Agreement emerges, with hint that immigrant investor funds would mainly be used to pay off FCR's land loan
Atlantic Yards Report
There are two Atlantic Yards Recognition Agreements after all, both of which allow those loaning money to developer Forest City Ratner to gain development rights for part of the Atlantic Yards site, and also allow the minimum square footage of Phase 1 to be delayed.
And the earlier Recognition Agreement, which is the second to be released, offers hints that the money sought from immigrant investors, subject of the later Recognition Agreement, would be used mainly to pay off Forest City Ratner's land loan, not to build a new railyard, as the developer has said.
As I wrote 12/16/10, the Recognition Agreement that the Empire State Development Corporation (ESDC) signed last October allowed potential immigrant investors development rights to part of the future Atlantic Yards site. And a previous Recognition Agreement did something very similar.
That latter agreement, embedded below and dated December 2009, allows at least 2.25 years of additional time, to February 2012, to reset the clock should FCR default on its obligation to Gramercy Warehouse Funding, which "holds a leasehold mortgage on certain Project parcels."
That would mean at least a 14-year deadline for Phase 1, rather than 12 years. The second Recognition Agreement offers a seven-year extension, meaning a 19-year deadline.
The loan at issue
The Gramercy mortgage, the balance of which was $153.9 million when the Recognition Agreement was signed in December 2009, expires in February 2012.
FCR seeks $249 million from immigrant investors via the New York City Regional Center under the EB-5 program--green cards for purportedly job-creating investments.
FCR executive MaryAnne Gilmartin told the Wall Street Journal that the money would be used for a railyard, but could be used, in part to pay off that land loan.
Given that some 60 percent of the $249 million could be used for the loan, my bet is that's the priority. After all, the railyard doesn't have to be completed until 2016.
That suggests that the developer how has a 13-month window of opportunity to get a no-interest (or low-interest) loan from the immigrant investors to repay Gramercy.
Posted by eric at January 31, 2011 9:55 AM