Madison International in talks to buy Forest City’s stake in NYC retail portfolio

Fund manager already owns 49%

From left: Forest City's David LaRue, 234 West 42nd Street and Ronald Dickerman
From left: Forest City's David LaRue, 234 West 42nd Street and Ronald Dickerman

Forest City Realty Trust is in advanced talks to sell its majority stake in a New York retail portfolio to fund manager Madison International Realty, according to a source familiar with the matter.

Ronald Dickerman’s Madison, along with its investment partners, already controls a 49 percent stake in the portfolio, which it bought for $172.3 million in 2011, and is now looking to buy out Forest City’s remaining 51 percent stake.

Madison [TRDataCustom] and Forest City both declined to comment.

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According to Madison’s website, the portfolio encompassed 15 properties and 2.65 million square feet. On Friday, the two firms announced the sale of one of the properties, the 116,000-square-foot Bronx shopping center Shops at Bruckner Boulevard, to Urban Edge Properties for $32 million. Other properties in the portfolio are the Atlantic Center and Atlantic Terminal Mall in Brooklyn and 311,000 square feet of retail space at 234 West 42nd Street.

Cleveland-based Forest City first announced last August that it is conducting a “strategic review” of its retail holdings that could lead to asset sales. In November, the REIT announced it would delay construction of further properties at its Pacific Park megadevelopment in Brooklyn amid a weakening residential market. It also disclosed a $307.6 million impairment over the project. And in December, Bruce and Charles Ratner resigned from the company’s board amid a broader reshuffle at the company that weakened the Ratner family’s control.

Madison, founded in 2002, closed its sixth real estate fund in July 2016 with $1.39 billion in investor commitments. Retail aside, the firm holds stakes in several New York office properties, Including 655 Madison Avenue, 520 Madison Avenue and 375 Park Avenue.