Forest City Down to Final Approvals for Ceding $4 Billion Retail Portfolio to Australian Purchaser

Forest City's The Shops At Tanforan in San Bruno, CA
Forest City’s The Shops At Tanforan in San Bruno, CA Sydney, Australia-based QIC Global Realty and Forest City Realty Trust Inc. (NYSE: FCE.A) are close to finalizing a deal under which QIC will take complete control of 11 regional shopping centers valued at about $4 billion that they both currently control.

Independently, Forest City also stated it reached a contract to sell its stake in its New york city City retail portfolio to its JV partner, Madison International Realty.

Cleveland-based Forest City expects to close the sale of its New york city City retail portfolio this summer season, while the very first portion of the shopping mall portfolio sale to QIC is anticipated to close later this year.

QIC and Forest City struck a tentative contract in February for QIC to buy out Forest City’s share of the portfolio. Forest City’s enclosed local shopping malls include the Antelope Valley Shopping center in Palmdale, CA; South Bay Galleria in Redondo Beach, CA; Westfield San Francisco Centre; 234 West 42nd Street in NYC’s Times Square; Charleston Town Center in Charleston, WV; and Pittsburgh’s The Mall at Robinson, among other properties.

“In the case of our local shopping malls, we have actually agreed with our partner, QIC, that, upon carrying out definitive documentation, we mean to offer our interest outright in seven of the 11 properties this year,” David LaRue, CEO and president of Forest City told financiers this month. “For the remaining 4 malls– Victoria Gardens, Short Pump Town Center, Galleria at Sunset, and Boardwalk Temecula– our goal will be to exchange our interest and redeploy our stakes into brand-new apartment or office possessions in core markets.”

LaRue added that total rates and structure for the anticipated deal had not changed because February.

Forest City stated the pending transactions showed a typical capitalization rate of approximately 5% on 2016 net operating income of $110 million. The company anticipates to reap about $2.2 billion from selling the shopping mall and specialty retail portfolios in the set of deals.

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