With a Chinese company buying 70 percent of the project, zero residential units built, and local politicians starting to make a stink, it's clear that Forest City Ratner's Atlantic Yards megaproject could be going better. But it might be even worse off than anyone realized. Forest City announced this week that it plans to take a write-down of $250 million to $350 million on the development, having already invested $500 million to date. The company blames unforeseen costs, construction delays, and, of course, the neighbors who have fought the developers every step of the way. However, although the write-down applies only to the unbuilt commercial and residential portion of the project, the Barclays Center is also underperforming, which is more difficult to explain away. The $1 billion arena brought in $30 million in operating profit in its first full year, after being projected to make $76 million.
With the sale to Greenland Holdings Group expected to close next year, the project should be able to get construction of the modular towers back on track. What are more likely to suffer are the things that Forest City Ratner had to promise to get the project approved seven years ago—a new rail yard for the MTA (the company says the costs of building the yard will be "more than projected" and have repeatedly pushed back the start date) and affordable housing (the company says that the costs will be "more than expected" to reserve all the units that it promised to reserve).
· Value of Atlantic Yards Cut Sharply [WSJ]
· Atlantic Yards coverage [Curbed]