Real Estate

Bruce Ratner deal signals decline of New York real estate families

Bruce Ratner stood, shovel in hand, near the corner of Flatbush and Atlantic avenues in Brooklyn in March 2010. Flanked by mayor Michael Bloomberg, Barclays’ chief executive Bob Diamond and hip-hop artist Jay-Z, he was ready to break ground on the new home for the National Basketball Association’s Brooklyn Nets: Barclays Center.

Mr Ratner was by then a familiar figure on the New York scene, scion of a family real estate company, Forest City, which was aiming to make its name as well known as such traditional local property powers as the Dursts, the Speyers and the Rudins.

Last week, Forest City was sold for $11.4bn to Canada’s Brookfield Asset Management, and even the buyer could grasp the poignance of the moment. Many of the renowned families of New York real estate were giving ground to companies such as Brookfield, Blackstone and The Related Companies, backed by pensions, endowments and sovereign wealth funds looking for higher yields than could be found in the bond markets.

Only a few days after buying out the Ratners, Brookfield struck a deal to take control of Manhattan’s 666 Fifth Avenue, the lossmaking tower purchased at the top of the market for $1.8bn by the Kushner family of New Jersey, now represented in the White House by President Donald Trump’s son-in-law, Jared Kushner.

“Thirty years ago, it was an industry largely dominated by families,” said Brian Kingston, chief executive of Brookfield’s property group. Now, the influx of new investors to real estate had “necessitated groups like ours” — which manages about $160bn of property — to oversee the action.

“That has brought more discipline to the sector. You don’t see situations of a massive oversupply then a crash. The boom-bust cycle seems to be shallower.”

Even before the sale to Brookfield, the Ratners had already seen their voting control in Forest City diluted. Once shareholders approve the sale, their ownership will end. Forest City declined to put Mr Ratner and David LaRue, its chief executive, up for interviews, citing US securities regulations ahead of a shareholder vote.

Mr Ratner, who was seen by New Yorkers as the face of a company with roots in Cleveland, had stepped down from Forest City’s subsidiary in New York in 2013 and retired from the board in 2016.

Before then, Mr Ratner was instrumental in altering the New York skyline, developing the New York Times tower in midtown Manhattan as well as retail assets in Times Square. But his efforts were more centred on Brooklyn.

He spent the 1980s and 1990s developing and building the downtown MetroTech office complex where more than 20,000 people work. He would go on to hammer out a plan for an arena — what is now the Barclays Center — and a sprawling group of towers in 2003 known as Atlantic Yards. The project, the largest in the borough’s history, was hampered by the financial crisis as well as strong opposition from the local community. Only a handful of the residential buildings have been completed.

For being one of the most powerful real estate magnates in New York’s cut-throat market, Mr Ratner managed to preserve a reputation for being “one of the good guys”, said Diane Coffey, a managing director at boutique investment bank PJ Solomon, who has known him for four decades.

“He was tough, you have to be tough to survive New York’s real estate world, but he had an ability to bring people together and get things done,” said Ms Coffey, who worked together with Mr Ratner in the late 1970s and 1980s in the administration of New York mayor Ed Koch.

The rise of Mr Ratner in the city’s real estate industry partly stems from the lasting connections he made during his years at City Hall, where he served as Mr Koch’s commissioner of the department of consumer affairs.*

“He was really getting his feet wet in public service at the time and that helped him to get to know everyone,” said Ms Coffey, who worked as Mr Koch’s chief-of-staff. “Working in City Hall taught him how to bridge the world of politics and business as well as getting to bring people together on big projects.”

Mr Ratner remained a close friend of Mr Koch well after leaving the mayor’s office, including working closely with the former mayor in 2011 while he was setting up a statewide redistricting reform supported then by Mr Bloomberg.

A former official in the Bloomberg administration who dealt directly with Mr Ratner on a number of big projects, including the development of Atlantic Yards, said the real estate tycoon had some of the deepest political connections in New York. It was no easy feat for someone who was originally from Cleveland.

“He was the ultimate socialite, he knew everybody,” said the former Bloomberg administration official. “That’s not usual for real estate people but he was particularly good at the people game.” His experience in public office helped him to do deals that faced complex social, political and labour issues, situations that made it difficult executing big development projects, the official said, even if frustrations often boiled over and Mr Ratner was known for getting into shouting matches.

Ms Coffey said the battles wore on Mr Ratner. One particular fight with an opponent of Atlantic Yards ultimately led the real estate developer to reconsider his legacy, several of the people who knew him said. While his cousins from Cleveland were developing projects across the US, his daughters did not show an interest in following in his footsteps.

He has shifted his focus and now serves on the board of Memorial Sloan-Kettering Cancer Center and is chairman of the Museum of Jewish Heritage.

“Bruce . . . really focused on transforming neighbourhoods, including Times Square, Harlem and Brooklyn,” said Jeremy Moss, who worked under Mr Ratner before leaving to head leasing for Silverstein Properties. “Bruce was way ahead of his time in Brooklyn . . . and today it’s a destination that is known throughout the world.”

*This article has been amended to correct Mr Ratner’s role in the Koch administration


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