Cirrus Buys Most of Greenland USA’s U.S. Debt

Cirrus Real Estate Partners didn’t just swoop in to take over Greenland USA’s troubled Brooklyn project: It also bought up most of the firm’s debt in the U.S.

Cirrus’ Joseph McDonnell on Thursday said that his company purchased a majority of the outstanding debt held by the struggling Greenland, which is a subsidiary of Shanghai-based conglomerate Greenland Group.

He said that debt was valued at $200 million, excluding the more than $300 million tied to Pacific Park.

During a public meeting on Thursday, McDonnell provided some more details on how Cirrus restructured Pacific Park, a long-delayed development in Prospect Heights that was supposed to deliver 6,400 apartments, of which 2,250 would be affordable. Under a 2014 agreement, developer Greenland was supposed to finish the affordable units — of which 876 have gone unbuilt — by May 31, 2025.

This week, the state approved a joint venture led by Cirrus and LCOR to take over the sites. Through a foreclosure auction, six rail yard sites were transferred to the team. Through a separate deal, the joint venture also took over a site near the Barclays Center, referred to as site 5, and development rights tied to a public plaza in front of the arena. Greenland previously planned to transfer those rights to build a larger project at site 5.

This handoff is a long time coming. In 2022, Greenland defaulted on $350 million tied to the rail yard sites from Nick Mastroianni’s USIF, which raised the capital through the cash-for-visas EB-5 program. Fortress Investment Group also owned a stake in the debt. Greenland, USIF and Fortress are part of the new joint venture, but will not have a role in the day-to-day management of the project.

Cirrus paid outstanding bills to architects, engineers and others who have worked on the project and took care of other liabilities, according to McDonnell. Some of those bills were paid in the form of new debt issued by Cirrus. As part of the new arrangement, USIF and Fortress took a deferred interest in repayment of new debt on the project, discounted for their stake in the new joint venture and subordinated to Cirrus and LCOR.

Greenland has already invested $950 million in the project.

Changing hands to forge ahead

McDonnell said Cirrus’ takeover of all of Greenland’s U.S. debt provided leverage to come to an agreement on how to move forward at Pacific Park.

“This project, as everybody knows, has been stuck for a period of time. It was carrying a debt load which was unsustainable even when rates were lower,” he said. “Through the leverage we had over those three counterparties, Greenland, USIF and Fortress, we came in to clean up the structure so that it can hopefully move forward at a quicker pace.”

Greenland bought a 70 percent stake in Pacific Park, previously Atlantic Yards, in 2013, eventually taking another 25 percent as the previous developer, Forest City Realty Trust, backed away from development and eventually sold its assets to Brookfield Asset Management.

The firm was then hit by economic challenges, including China’s slowing economy and the government’s scramble to pull back on its U.S. investments and save developers who took on excessive debt. Then the pandemic hit, and interest rates soared. Greenland began trying to sell off its California assets, including its trophy apartment tower in Los Angeles known as Metropolis, which it sold at a $200 million loss in late 2022.

Additional details on Greenland’s other debt taken over by Cirrus were not immediately available.

McDonnell and Anthony Tortora, co-chief investment officer and principal at LCOR, gave a brief overview of their companies at Thursday’s meeting, held by the Atlantic Yards Community Development Corporation, a subsidiary of Empire State Development that reviews and makes recommendations on the project.

McDonnell repeatedly said the development team is not “condo-focused,” and that Cirrus is dedicated to “making a dent in the housing crisis” by building housing accessible to a range of incomes. He noted that “it is a lot easier” to make the development work with condos, so the team expects public investment alongside private money. The developers didn’t provide any information on how they will seek to change plans for the sites.

Members of the Atlantic Yards Community Development Corporation raised concerns about the project’s timeline, given that the platforms over the rail yards between Pacific Street and Atlantic Avenue could alone take years to construct. That, along with the time it will take for an environmental review and for a new plan to be approved, could mean construction of buildings won’t begin until after 2030.

Some also asked how the platforms over the rail yards will be financed, and raised the possibility of implementing a similar arrangement to Hudson Yards. There, Related Companies is using $2 billion worth of payments in lieu of taxes to pay for a platform over train tracks on Manhattan’s West Side.

The developers didn’t specify how much public subsidies it is hoping will help finance the housing and platforms, but indicated that it is looking at a number of city and state programs.

“The current plan for the rail yards predates the iPhone,” Tortora said. “We think there’s an opportunity to optimize the plan, bring it current, which will facilitate the delivery of more housing, more affordability.”

Changes to the project will require amendments to the state’s general project plan, a method outside the city’s land use process that lays out the parameters of the development. The state expects to begin a public engagement process in November.

As part of its agreement with the state, the developers will pay $12 million, in installments, to a fund that will finance affordable housing in the neighboring communities. The payment comes after ESD halted fines that were intended to kick in when Greenland missed the May 2025 deadline. Missing that deadline was supposed to result in fines of $2,000 per month per unfinished affordable housing unit — a sum that would ultimately be far greater than the $12 million.

If the developers do not sign a memorandum of understanding outlining the new project by July 31, 2026, the state could impose the 2014 fines.

Michelle de la Uz, executive director of the Fifth Avenue Committee, which is a member of BrooklynSpeaks, a coalition that was party to the 2014 agreement, said $12 million is not sufficient to make up for the level of displacement seen in the surrounding neighborhoods as residents waited for this housing to be delivered. She said she doesn’t believe ESD has not always acted in the best interest of the public.

“This is a long time coming. We’re at a critical moment, and there’s obviously decades of distrust and skepticism that need to be overcome,” she said, noting that she was referring both to the developers and ESD.

In an interview this week, Assembly member Jo Anne Simon expressed the need to establish that the project is feasible after multiple developers have been unable to deliver.

“My concerns are, we’ve gone a long time without this housing,” she said. “How can we have any faith in what is being done here?”