CLEVELAND, Dec. 20, 2013 /PRNewswire/ -- Forest City Enterprises, Inc., (NYSE: FCEA and FCEB) today provided additional information on its pending joint venture with Shanghai-based Greenland Group for the development of Atlantic Yards, a 22-acre residential and commercial real estate project in Brooklyn. The two companies announced the signing of a definitive agreement earlier this week for the joint venture, which is expected to close in mid-2014.
Under the terms of the definitive agreement, Greenland Group will make a capital contribution at closing of approximately $200 million to acquire a 70 percent equity interest in the project, excluding Barclays Center and B2, the first residential building. Going forward, both companies will invest and share development risk in proportion to their respective ownership stakes on the entire remaining project, including infrastructure costs and vertical construction for both Phase 1 and Phase 2.
Total estimated site acquisition costs, net of the potential impairment disclosed in Forest City's third-quarter earnings release and filings, are expected to be approximately $1.3 billion. In addition to costs incurred to date, these include projected costs to complete the MTA permanent rail yard, construction costs for the platform above the yard, acquisition of additional land and air rights, as well as other anticipated costs, excluding vertical development.
Based on the 6.4 million square feet of remaining entitlements in both phases, the total anticipated costs yield an expected average cost per square foot of approximately $180-$220 per square foot, prior to vertical development. That cost will be allocated across the project based on the relative sales value of the mix of rental apartments, condos, retail or office components for each future building.
"Greenland's commitment to Atlantic Yards, including their initial capital contribution, the assumption of a 70 percent share of all future costs, as well as additional capital resources, will serve to accelerate vertical development going forward," said David J. LaRue, Forest City Enterprises president and chief executive officer. "Our joint venture with Greenland will bring another strong real estate partner to this unique and transformational project for Brooklyn. We believe this joint venture enhances Forest City's ability to both fulfill our commitments to the community and create value over time by achieving an appropriate, risk-adjusted return on our invested capital."
MaryAnne Gilmartin, president and chief executive officer of Forest City Ratner Companies, the New York-based subsidiary of Forest City Enterprises, said, "The development program for Atlantic Yards includes 2,250 units of affordable housing and eight acres of open space, as well as more than 4,100 units of market-rate rentals and/or luxury condos, all in one of the strongest markets in the country. We are confident that Brooklyn's continued strong demand for rental housing and condos, along with steady growth in rents and sales prices, will drive strong future returns for the project."
About Forest City
Forest City Enterprises, Inc. is an NYSE-listed national real estate company with $9.3 billion in total assets. The company is principally engaged in the ownership, development, management and acquisition of commercial and residential real estate and land throughout the United States. For more information, visit www.forestcity.net.
Safe Harbor Language
Statements made in this news release that state the company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. The company's actual results could differ materially from those expressed or implied in such forward-looking statements due to various risks, uncertainties and other factors. Risks and factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the impact of current lending and capital market conditions on its liquidity, ability to finance or refinance projects and repay its debt, the impact of the current economic environment on its ownership, development and management of its commercial real estate portfolio, general real estate investment and development risks, using and investing in modular construction as a new construction methodology, vacancies in its properties, further downturns in the housing market, competition, illiquidity of real estate investments, bankruptcy or defaults of tenants, anchor store consolidations or closings, international activities, the impact of terrorist acts, risks of owning and operating an arena, risks associated with an investment in a professional sports team, its substantial debt leverage and the ability to obtain and service debt, the impact of restrictions imposed by its credit facility and senior debt, exposure to hedging agreements, the level and volatility of interest rates, the continued availability of tax-exempt government financing, the impact of credit rating downgrades, effects of uninsured or underinsured losses, effects of a downgrade or failure of its insurance carriers, environmental liabilities, conflicts of interest, risks associated with the sale of tax credits, risks associated with developing and managing properties in partnership with others, the ability to maintain effective internal controls, compliance with governmental regulations, increased legislative and regulatory scrutiny of the financial services industry, changes in federal, state or local tax laws, volatility in the market price of its publicly traded securities, inflation risks, litigation risks, cybersecurity risks and cyber incidents, as well as other risks listed from time to time in the company's SEC filings, including but not limited to, the company's annual and quarterly reports.
SOURCE Forest City Enterprises, Inc.