NEW YORK CITY-Forest City Enterprises has provided additional information on its pending joint venture with Shanghai-based Greenland Group for the development of Atlantic Yards. The two companies announced earlier this week the closing of a definitive agreement for the joint venture, which is expected to close in mid-2014.

Under the terms of the definitive agreement, Greenland will make a capital contribution at closing of approximately $200 million in exchange for a 70% 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 one and phase two.

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 the 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,” says David LaRue, Forest City president and CEO. “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.”

Adds MaryAnne Gilmartin, president and CEO of Forest City Ratner Cos., the New York-based subsidiary of Forest City Enterprises, “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.”