Brisbane, Australia and Cleveland — QIC, an Australian institutional investment management firm, has agreed to purchase Forest City Realty Trust Inc.’s (NYSE: FCE.A) interest in a 10-property regional mall portfolio.
The overall transaction values the portfolio at approximately $3.18 billion, or $1.55 billion for Forest City’s share.
The assets include: The Shops at Northfield Stapleton in Denver; Westchester’s Ridge Hill in Yonkers, New York; The Shops at Wiregrass in Tampa, Florida; Mall at Robinson in Pittsburgh; Antelope Valley Mall in Palmdale, California; South Bay Galleria in Redondo Beach, California; Victoria Gardens in Rancho Cucamonga, California; Galleria at Sunset in Henderson, Nevada; Promenade Temecula in Temecula, California; and Short Pump Town Centre in Richmond, Virginia.
One additional mall, Charleston Town Center in Charleston, West Virginia, was originally part of the negotiations, but QIC subsequently made the decision not to acquire Forest City’s ownership interest.
“This transaction is a win-win for all parties, as we continue to focus our business on urban residential, office and mixed-use assets, and QIC acquires full ownership of a U.S. retail presence with high-quality regional malls in strong markets,” says David LaRue, president and CEO of Forest City.
Forest City provided $150 million of seller financing to QIC for a period of up to 18 months from closing. The sales of six of the 10 malls are expected to close by year-end, and the remaining four mall transactions are expected to close as Forest City secures replacement assets or other opportunities into which it will redeploy its ownership stake in those malls.
As part of the sale, Forest City is also transferring its retail operating platform, including most personnel, to QIC. To date, functions including leasing, marketing, tenant coordination, legal and human resources have transitioned to QIC. Accounting, property management and remaining functions will transfer to QIC as additional sales close.
With the anticipated dispositions of the regional malls to QIC and the company’s specialty retail centers in New York to Madison International, Forest City will have exited from substantially all of the shopping center-based retail in its portfolio.
The stock price of Forest City Realty Trust, which has $8.2 billion in consolidated assets, closed on Tuesday, Oct. 3 at $25.40 per share, up from $22.27 per share a year ago.
QIC currently has $62.9 billion in funds under management and has over 700 employees who serve more than 110 clients. In addition to its Brisbane headquarters, QIC also has offices in New York, San Francisco, Los Angeles, London, Sydney and Melbourne.
— John Nelson