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 Citywill 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 Cityexpects 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 Citywill be the managing member of the individual joint ventures and will continue to be responsible for leasing, operations, marketing, financing, development 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 inHenderson, Nev.; Antelope Valley Mall inPalmdale, Calif.; Short Pump Town Center inRichmond, Va. and South Bay Galleria inRedondo Beach, Calif. The other properties included in the joint venture are Victoria Gardens inRancho Cucamonga, Calif.; Charleston Town Center inCharleston, W.V.; Mall at RobinsonnearPittsburgh and the Promenade inTemecula, 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 investor, to invest in and enhance these strong retail centers," saidDavid 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.”