Creating a joint venture portfolio valued at $2.05 billion, Forest City Enterprises, Inc. announced this week that it had signed an agreement to for joint ventures with QIC to recapitalize a retail portfolio of eight U.S. malls in return for $330 million of liquidity. According to a Cleveland Sun Press article, Forest City confirmed last month that it had hired New York investment bankers to explore sale and joint-venture opportunities for the Avenue shopping mall, the Post Office Plaza building and the Skylight Office Tower. Weeks later the company announced that QIC, one of the largest institutional investment managers in Australia, will acquire 49% of Forest City's current ownership interest in the portfolio for cash. Forest City will be the managing member of the individual joint ventures and continue to be responsible for management of the properties. Closing of the joint ventures is expected to occur before the end of the fiscal third quarter.
"We are pleased to partner with QIC, an experienced global investor, to invest in and enhance these strong retail centers," said David J. LaRue, Forest City president and chief executive officer. "This is another example of our strategy of securing strategic capital partners to invest with us in both existing assets and new opportunities. The transaction clearly demonstrates the tremendous value of these properties. Unlocking a portion of that value allows us to advance our deleveraging efforts while also reinvesting in our portfolio and new development. I want to thank our entire transaction team, led by James Ratner, Duane Bishop and Frank Wuest, as well as everyone involved from QIC, for achieving this great outcome."
Preliminary priorities for the joint venture will be renovation and/or expansion of four malls: Galleria at Sunset in Henderson, Nevada, Antelope Valley Mall in Palmdale, California, Short Pump Town Center in Richmond, Virginia, and South Bay Galleria in Redondo Beach, California. The other properties included in the joint venture are Victoria Gardens in Rancho Cucamonga, California, Charleston Town Center in Charleston, West Virginia, Mall at Robinson near Pittsburgh, Pennsylvania, and Promenade in Temecula, California.
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