CLEVELAND—Forest City Enterprises Inc. said it has formed a venture with Australia-based QIC to recapitalize and invest in a portfolio of eight U.S. malls in return for $330 million of liquidity.
Under the agreement, Forest City will contribute its current ownership interest in each of the properties to the joint venture and QIC will acquire 49 percent of those interests for cash. Upon closing, Forest City expects to raise cash liquidity of approximately $330 million, after transaction costs. Ownership of the individual properties, at closing, will vary based on existing partnerships currently in place at three of the malls. Forest City will be the managing member of the individual joint ventures and will continue to be responsible for leasing, operations, marketing, financing,services and asset management of the properties.
In a statement, Forest City officials said preliminary priorities for the joint venture will be renovation and/or expansion of four malls: Galleria at Sunset in Henderson, Nev.; Antelope Valley Mall in Palmdale, Calif.; Short Pump Town Center in Richmond, Va. and South Bay Galleria in Redondo Beach, Calif. The other properties included in the joint venture are Victoria Gardens in Rancho Cucamonga, Calif.; Charleston Town Center in Charleston, W.V.; Mall at Robinson near Pittsburgh and the Promenade in Temecula, Calif.
Forest City values these properties at more than $2 billion. The company initially plans to use a majority of the liquidity from the transaction to reduce debt, but also expects to use a portion of the liquidity to fund the expansion and reinvestment initiatives referenced above, as well as invest in the balance of its mature real estate portfolio and new development opportunities in its core markets.
"We are pleased to partner with QIC, an experienced global, to invest in and enhance these strong retail centers," said David J. LaRue, Forest City president and CEO, in the statement. "This is another example of our strategy of securing strategic capital partners to invest with us in both existing assets and new opportunities.”