Chinese Builder Charges Into Brooklyn – By ELIOT BROWN 
Developer Greenland Takes a Majority Stake in a High-Profile Atlantic Yards Apartment Project 

Rendering of three apartment towers to be built near Barclays Center. A Chinese company is buying a majority stake in 15 towers at the site.

State-owned property developer Greenland Holdings Group of China agreed to buy a majority stake in a 15-tower apartment project in Brooklyn, N.Y., that would rank as the largest commercial-real-estate development in the U.S. ever to get major backing directly from a Chinese company.

Located in the Atlantic Yards site that includes the Barclays Center arena, the project is expected to cost nearly $4 billion, including debt. The deal could be announced as soon as Friday.

Terms of the tentative deal call for Greenland to buy a 70% stake from Forest City Ratner Cos., which began the project and would continue to manage the development. The purchase price isn’t being disclosed, but Forest City has invested $500 million in the 22-acre project so far—and it has committed to additional spending on land and infrastructure set to total hundreds of millions of dollars.

In addition to the apartment towers, the project includes one office building and retail space. If the deal is approved, Shanghai-based Greenland would provide 70% of the money needed to finish the project, excluding any debt that is taken on for the construction.

The purchase won’t affect the Barclays Center, which is jointly owned by Forest City and Russian billionaire Mikhail Prokhorov. Mr. Prokhorov also is majority owner of the Brooklyn Nets, a National Basketball Association team that plays its home games at the arena.

“I’m thrilled,” MaryAnne Gilmartin, Forest City’s chief executive, said in an interview Thursday. “We think we can learn from them and they can learn from us.”

Zhang Yuliang, Greenland’s chairman, said in an emailed statement that the company is “very excited” about the potential partnership. “Atlantic Yards is about more than Brooklyn and New York, as important as this development is for the city,” he said. “It is about how we build sustainable, well-designed housing to meet the needs of diverse groups of people.”

The deal, a “memorandum of understanding,” was signed last week, Ms. Gilmartin said. But it isn’t final, she said, because it needs extensive negotiations over details and approvals from Chinese regulators. It also may need to be reviewed by the Committee on Foreign Investment in the United States, which reviews proposed foreign purchases, according to Forest City.

The company, which has come under fire for the slow pace of apartment development at the site, decided earlier this year to hire real-estate-services firm CBRE Group Inc. CBG -0.18% to seek a partner. David LaRue, chief executive of Forest City Enterprises Inc., FCEA +5.45% the company’s Cleveland-based parent, said during a September investor call that the company wasn’t expecting to receive more than the cost of the land in any sale at Atlantic Yards.

The planned investment would be the latest high-profile investment in U.S. real estate by a Chinese company. Chinese investment in U.S. properties has reached $1.7 billion in 2013, including the recent purchase by billionaire Zhang Xin of a stake in the General Motors building in Manhattan. That is up from $1.1 billion in all of 2011 and just $22 million in 2008, according to property-data firm Real Capital Analytics Inc.

Chinese companies also are becoming developers in major construction projects throughout the country. China Vanke Co., 000002.SZ -2.54% the largest Chinese developer, is co-developing two condominium towers in San Francisco with Tishman Speyer Properties. Greenland in July announced its first U.S. investment: a $1 billion hotel and apartment project in downtown Los Angeles.

Beijing has encouraged Chinese companies to go abroad to help diversify the country’s foreign-exchange reserves. Developers also view investing in the U.S. as a way of diversifying their portfolios, particularly at a time when concerns are rising of a slowing Chinese economy.

This year, China’s appetite for property and development deals in the U.S. has been expanding. “It basically came from zero five years ago,” Dan Fasulo, a managing director at Real Capital, said of Chinese property investment.

The increasing Chinese investment stands to help a number of U.S. projects move forward. In California, Signature Development Corp. said in April that it had partnered with the Chinese investment firm Zarsion Holdings Group to provide financing to a stalled $1.5 billion project along an estuary of San Francisco Bay that will include more than 3,000 residential units and a community park.

A Chinese infusion into the Brooklyn project also could help speed the development there. Forest City Ratner has struggled with delays and higher-than-expected costs since the project was conceived a decade ago.

While the Barclays Center opened last year, apartments at the site have been slower to rise, partly because they have been hard to finance. Finding affordable ways to build promised units for low- and middle-income families has been more difficult than the company expected, Forest City executives have said.

Due in part to the high costs and large amounts of cash needed from Forest City, construction has begun on only one tower. That has sparked criticism of Forest City for not fulfilling obligations it made when the Barclays Center was approved and the site was expected to be completed as early as 2013. The 350-unit tower under construction wouldn’t be included in the sale to Greenland.

The deal with the Chinese firm, if completed, would give the project an additional source of capital, likely allowing for faster development. “It’s just for us a great way to roll out the project and build it quickly,” Ms. Gilmartin said.

This isn’t the first time Forest City has found help abroad. In 2009, when the company was struggling to get the arena project financed, Forest City Ratner Chairman Bruce Ratner lured Mr. Prokhorov to buy a majority stake in the Nets and a minority stake in the arena, saving the project from potential collapse.

Greenland, a state-owned company, is building a 2,087-foot skyscraper in the city of Wuhan that would be 400 feet higher than China’s current tallest tower, the Shanghai World Financial Center.

The developer also bought a large site in Sydney in March, where it plans the city’s tallest apartment tower.