The Real Deal New York

Forest City sells 49 percent stake in 15 New York City properties

March 30, 2011 10:54AM
By David Jones

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From left: Charles Ratner, 42nd Street Retail and Entertainment Complex, Atlantic Center and Harlem Center

Madison International Realty today said it entered a joint venture to buy a 49 percent stake in Forest
City Enterprises’ 15 retail and entertainment properties in New York City for $172.3 million in cash.

Cleveland-based Forest City, the parent company of Forest City Ratner, said it will retain a 51 percent
stake in the properties and will continue to manage and control leasing at the properties.

“Today’s announcement represents both the significant value represented in our mature portfolio and
our continuing ability to create liquidity by monetizing select elements of that portfolio,” Forest City
President and CEO Charles Ratner said in a statement.

The properties include all of Forest City’s mall properties in New York City, including a retail and
entertainment complex at 234 West 42nd Street and the retail components of Harlem Center at 125
West 125th Street, and Atlantic Center at 625 Atlantic Avenue in Brooklyn.

Forest City said the deal values the properties at $851.5 million, including $499.9 million in debt, based
on a 6.9 capitalization rate.

Analysts said the new equity would help Forest City deal with a considerable amount of debt related to
the properties.

“At certain points in the cycle bringing in more equity is more attractive than debt for a lot of reasons,”
said Dan Fasulo, managing director of research at Real Capital Analytics. “They make a lot of money just
off business activities not related to owning.”

In December, Forest City announced it was close to finding a joint venture partner for the retail
properties
.

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