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Deals & Dealmakers

Aussies acquire FCR stake in $3B retail portfolio

Forest City has sold its stake in a portfolio of ten malls valued at $3.175 billion to Australian firm QIC Global Real Estate.

The package includes Westchester’s Ridge Hill in Yonkers, New York, The Shops at Northfield Stapleton in Denver, Colorado, The Shops at Wiregrass in Tampa, Florida, Mall at Robinson in Pittsburgh, Pennsylvania, 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.

The two firms control the properties in the portfolio, with Forest City’s interest valued at $1.55 billion. Closings for the acquisition is expected to happen in stages. QIC is expected to complete its acquisition of the Yonkers, Denver, Tampa, Pittsburgh, Palmdale and Redondo Beach malls by the end of the year. The four other malls are expected to close after Forest City finds replacement assets.

The first six malls are valued at $1.24 billion, with Forest City’s share at about $667.5 million. As part of the deal, Forest City is providing QIC with a $150 million loan for a period of 18 months after closing. The remaining four malls, meanwhile, are valued at $1.93 billion, with Forest City’s stake at $887 million.

“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,” said David LaRue, the president and CEO of Forest City.

With the transaction, Forest City, which recently sold its interest in a New York City retail portfolio to Madison International, has sold most of its shares in shopping centers. The firm first announced that it is exploring an exit from retail in August of last year, even raising the possibility of converting its retail spaces to apartments and offices.

As part of the transaction, Forest City is transferring its retail operating platform and its employees involved in leasing, tenant coordination, legal and human resources to QIC. Its property management unit is also included in the deal.
Forest City and QIC entered a joint venture for the properties in 2013. The two firms agreed to a tentative deal last February. The Charleston Town Center in Charleston, West Virgina was originally part of the negotiations. However, QIC eventually backed out of buying Forest City’s interest in the property.

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