Forest City to sell Ridge Hill mall to Australia’s QIC

Forest City Realty Trust Inc. has definitively agreed to sell its ownership interest in Westchester”™s Ridge Hill in Yonkers and nine other regional malls nationwide to QIC Ltd., a government-owned alternative investment firm headquartered in Brisbane, Australia.

The 10 malls are valued at approximately $3.175 billion and Forest City”™s ownership share at $1.55 billion.

The sale of Ridge Hill, the approximately 1.3-million-square-foot retail, entertainment and medical office center that Brooklyn-based Forest City Ratner Cos. opened in Yonkers in 2011, and five other mall properties are expected to close this year as third-party consents are obtained, the companies announced on Monday. The six malls represent $1.24 billion of value, and Forest City”™s share is valued at approximately $667.5 million.

Forest City, headquartered in Cleveland, agreed to provide the buyer $150 million of seller financing for a period of up to 18 months from closing. Net proceeds for the first six malls, after transaction costs and seller financing, will be approximately $180 million.

The companies said the remaining four malls will be transferred to QIC under a fixed-price option. They represent $1.93 billion of value, of which Forest City”™s share is approximately $887 million.  Those sales are expected to close as Forest City secures replacement assets or other opportunities into which it will redeploy its ownership stake in those malls.

David J. LaRue, Forest City president and CEO, called the deal “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.”

The agreement with QIC follows Forest City”™s September announcement that it would sell its majority interest in its 2.1 million-square-foot New York City and New Jersey retail portfolio to Madison International Realty. The deal, valued at $1 billion and expected to close in the fourth quarter, will give Madison full ownership of the portfolio, which includes the Atlantic Center and Atlantic Terminal shopping malls in Brooklyn.

Forest City and QIC in 2013 formed a joint venture for a portfolio of Forest City’s regional malls. With the pending sales to QIC and Madison International, Forest City will have exited from largely all of the shopping center-based retail in its portfolio.

As part of the QIC transaction, 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 closings are achieved.

Steve Leigh, managing director of global real estate for QIC, said the company “is extremely pleased to expand our operations in the U.S. and will continue to invest in these quality assets. We welcome the Forest City operational staff onto our team and are highly confident that we will be able to replicate our strong Australian operating model here in the U.S.”