Goldman withdraws from $1bn NY deal

The real estate arm of Goldman Sachs has pulled out of a planned $1bn development of New York City’s west side rail yards, leaving developer Related to fly solo. Related remains 'committed' to the project.

Goldman Sachs’ real estate group has pulled out of a planned $1 billion joint venture to transform the largest undeveloped plot of land in Manhattan.

The bank’s Real Estate Principal Investment Area (REPIA) agreed in May 2008 to work with New York development firm The Related Companies to acquire and develop the 26-acre Hudson Yards site on the city’s west side.

At the time, the duo had come to the project’s rescue after a previous agreement with real estate investment firm Tishman Speyer failed owing to reported planning issues.

Related is and remains the majority partner of the venture. Goldman Sachs has informed us that they will no longer be moving forward as a minority partner.

However, sources confirmed to PERE today that Goldman had withdrawn from the project, which would see Goldman Sachs and Related pay New York’s Metropolitan Transportation Authority, the owner of the site, $1 billion for a 99-year lease. The two firms had planned to construct 13 buildings on the site – which sits on top of an active rail yard – including offices, apartments, hotels, shops, parking space and public spaces. The building space would total 12 million square feet, one million more than the planned World Trade Center replacement.

A spokeswoman for Goldman Sachs and the MTA declined to comment, Related were unavailable for comment. However an earlier report on the deal by the New York Observer quoted Related spokeswoman Joanna Rose as saying: “Related is and remains the majority partner of the venture. Goldman Sachs has informed us that they will no longer be moving forward as a minority partner.

“Related remains fully committed and has the capabilities to execute on this historic development opportunity to create New York's next great neighbourhood.”

Hudson Yards, New York

The Observer reported Related would also get an extra two-months in which to sign a contact with the MTA to develop the West Side rail yards, pushing back a deadline that was set to expire at the end of this month. The extra time was attributed by the report as time necessarily to finish documentation.

The site has been earmarked for a variety of major development schemes over recent years, with former New York City mayor Rudolph Giuliani proposing a football stadium for the site and New York City Mayor Michael Bloomberg proposing an Olympics stadium.

In May 2008, when the Goldman and Related deal was announced, Bloomberg said that despite the setbacks of the past he was certain Goldman Sachs and Related would “realise this tremendous opportunity to develop what is really the only large parcel of undeveloped space left in Manhattan.”

Stuart Rothenberg, former global head at Goldman Sachs Real Estate Principal Investments, said at the time the firm was committed to seeing the project through adding that it would create “New York's next great neighbourhood.”