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Forest City Sells Stake in New York Retail Portfolio

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Forest City Enterprises has been extremely busy the last couple of years as it has aggressively cleaned up its balance sheet, increased liquidity and revamped its approach to development and redevelopment (including halting all its projects at one point). And, of course, it even recently completed a succession plan.

In just one example of how its tidied up its balance sheet, two months ago the firm exchanged senior notes for about 10 million shares of its common stock.

In the latest move in that vein, Forest City announced last night that it reached a deal to sell joint venture interests in 15 retail properties in and around New York City.

It's a move the firm teased late last year and now has come to fruition.

According to the firm's release:

Under the terms of the joint ventures, an affiliated entity of Madison International Realty will enter into existing partnerships in 15 mature retail and entertainment properties that are valued by this transaction at $851.5 million, including $499.9 million of debt. Madison will receive a 49 percent equity interest in the partnerships in exchange for an investment of $172.3 million in cash. Subsidiaries of Forest City will retain 51 percent equity interest, will serve as asset and property manager, and will manage leasing for the joint ventures. The transaction's implied valuation represents a 6.9 percent cap rate on 2010 net operating income for the properties.

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The properties included in the transaction are: the 42nd Street Retail and Entertainment Complex and Harlem Center (retail component) in Manhattan; Atlantic Center, Atlantic Terminal (retail component) and The Heights in Brooklyn; Queens Place, Steinway Street Theatres and Shops at Northern Boulevard in Queens; Shops at Bruckner Boulevard, Castle Center and Shops at Gun Hill Road in the Bronx; Shops at Richmond Avenue and Forest Avenue Cinemas on Staten Island; and Columbia Park in North Bergen, New Jersey.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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