This article is from the Australian Property Journal archive
QIC Global Real Estate is expanding into the United States by buying a $435.6 million interest in eight regional retail malls from the $US10.6 billion NYSE-listed Forest City Enterprises.
Under the agreement, Forest City will contribute the properties to the joint venture and QIC will acquire 49% of those interests. The transaction values the eight properties at a total of $2.05 billion, representing a cap rate of approximately 5.75%.
Forest City will continue to manage the assets. Sales at the eight malls currently average approximately $500 per sq ft.
Forest City president and CEO David LaRue said the group expects to raise cash liquidity of approximately $330 million, after transaction costs.
“We are pleased to partner with QIC, an experienced global investor, to invest in and enhance these strong retail centers. 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,” he added.
QIC Global Real Estate managing director Steven Leigh QIC’s expansion into the US retail sector is a natural progression for the business following extensive investigation of the real estate market.
“The joint venture with Forest City Enterprises for investment in a portfolio of eight, high-quality retail assets represents a significant opportunity for QIC to further expand into the US with a successful retail operator and is part of our long-term investment strategy.
“We have established a blue-chip portfolio of investments comprising large-scale shopping centres and CBD office buildings. We now look forward to working with Forest City to implement our successful investment and management strategies in the United States,” he added.
Immediate 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.
LaRue said Forest City initially plans to use a majority of the liquidity to reduce debt but also expects to use it to fund the expansion of the existing centres.
Property Review
