Forest City and QIC execute definitive agreements for regional mall portfolio

CLEVELAND, Oct. 2, 2017 /PRNewswire/ -- Forest City Realty Trust, Inc. (NYSE: FCEA) and QIC today announced the execution of definitive agreements on 10 regional malls in which QIC will acquire Forest City's ownership interest. The sales of six of the 10 malls are expected to close by yearend as third-party consents are obtained.  The remaining four malls will be transferred to QIC under a fixed-price option and are expected to close as Forest City secures replacement assets or other opportunities into which it will redeploy its ownership stake in those malls. 

The overall transaction values the 10 regional malls at approximately $3.175 billion, or $1.55 billion at Forest City's share.  The first six malls represent $1.24 billion of value, approximately $667.5 million at Forest City's share.  Forest City provided 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 remaining four malls represent $1.93 billion of value, approximately $887 million at Forest City's share.  Forest City's overall share is substantially in line with the company's previous disclosures about the transaction.    

"We are very pleased to achieve this key milestone with our partner," said David J. LaRue, Forest City president and chief executive officer. "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.

"As with our recently announced definitive agreement with Madison International for the disposition of our New York specialty retail portfolio, this transaction is large and complex, and has required perseverance, creativity and flexibility from both organizations to bring to fruition. I thank the teams on both sides for moving the transaction forward to this important stage," LaRue added.

"QIC and Forest City have been working closely together to achieve this outcome," said Steve Leigh, Managing Director of Global Real Estate for QIC. "QIC 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."

The six malls expected to transact by the end of the year are: The Shops at Northfield Stapleton in Denver, CO, Westchester's Ridge Hill in Yonkers, NY, The Shops at Wiregrass in Tampa, FL, Mall at Robinson in Pittsburgh, PA, Antelope Valley Mall in Palmdale, CA, and South Bay Galleria in Redondo Beach, CA. The remaining four malls, which are expected to transact as Forest City secures replacement assets, are: Victoria Gardens in Rancho Cucamonga, CA, Galleria at Sunset in Henderson, NV, Promenade Temecula in Temecula, CA, and Short Pump Town Centre in Richmond, VA. One additional mall, Charleston Town Center in Charleston, WV, was originally part of the negotiations, but QIC subsequently made the decision not to acquire Forest City's ownership interest.

As part of the 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.

Forest City and QIC began a joint venture relationship for a portfolio of Forest City's regional malls in 2013. With the anticipated dispositions of the regional malls to QIC and the company's New York specialty retail centers to Madison International, Forest City will have exited from substantially all of the shopping center-based retail in its portfolio.

About Forest City
Forest City Realty Trust, Inc. is a NYSE-listed national real estate company with $8.2 billion in consolidated assets. The Company is principally engaged in the ownership, development, management and acquisition of commercial and residential real estate throughout the United States.  For more information, visit www.forestcity.net.

About QIC  
QIC is a global diversified alternative investment firm offering infrastructure, real estate, private equity, liquid strategies and multi-asset investments. It is one of the largest institutional investment managers in Australia, with A$82.0 billion (US$62.9/£48.4 billion), ^[1] in funds under management, offering infrastructure, real estate, private equity, liquid strategies and multi-asset investment services. QIC has over 700 employees and serves more than 110 clients including governments, pension plans, sovereign wealth funds and insurers, spanning Australia, Europe, Asia, Middle East and the US. Headquartered in Brisbane, Australia, QIC also has offices in New York, San Francisco, Los Angeles, London, Sydney, and Melbourne. For more information, please visit: www.qic.com.

Safe Harbor Language
Statements made in this news release that state Forest City's or its management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. The company's actual results could differ materially from those expressed or implied in such forward-looking statements due to various risks, uncertainties and other factors. Risks and factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the uncertain outcome, impact, effects and results of the Board's review of operating, strategic, financial and structural alternatives, the company's ability to carry out future transactions and strategic investments, as well as the acquisition related costs, unanticipated difficulties realizing expected benefits expected when entering into a transaction, the company's ability to qualify or to remain qualified as a REIT, its ability to satisfy REIT distribution requirements, the impact of issuing equity, debt or both, and selling assets to satisfy its future distributions required as a REIT or to fund capital expenditures, future growth and expansion initiatives, the impact of the amount and timing of any future distributions, the impact from complying with REIT qualification requirements limiting its flexibility or causing it to forego otherwise attractive opportunities beyond rental real estate operations, the impact of complying with the REIT requirements related to hedging, its lack of experience operating as a REIT, legislative, administrative, regulatory or other actions affecting REITs, including positions taken by the Internal Revenue Service, the possibility that the company's Board of Directors will unilaterally revoke its REIT election, the possibility that the anticipated benefits of qualifying as a REIT will not be realized, or will not be realized within the expected time period, the impact of current lending and capital market conditions on its liquidity, its ability to finance or refinance projects or repay its debt, the impact of the slow economic recovery on the ownership, development and management of its commercial real estate portfolio, general real estate investment and development risks, litigation risks, vacancies in its properties, risks associated with developing and managing properties in partnership with others, competition, its ability to renew leases or re-lease spaces as leases expire, illiquidity of real estate investments, its ability to identify and transact on chosen strategic alternatives for a portion of its retail portfolio, bankruptcy or defaults of tenants, anchor store consolidations or closings, the impact of terrorist acts and other armed conflicts, its substantial debt leverage and the ability to obtain and service debt, the impact of restrictions imposed by the company's revolving credit facility, term loan and senior debt, exposure to hedging agreements, the level and volatility of interest rates, the continued availability of tax-exempt government financing, its ability to receive payment on the notes receivable issued by Onexim in connection with their purchase of our interests in the Barclays Center and the Nets, the impact of credit rating downgrades, effects of uninsured or underinsured losses, effects of a downgrade or failure of its insurance carriers, environmental liabilities, competing interests of its directors and executive officers, the ability to recruit and retain key personnel, risks associated with the sale of tax credits, downturns in the housing market, the ability to maintain effective internal controls, compliance with governmental regulations, increased legislative and regulatory scrutiny of the financial services industry, changes in federal, state or local tax laws and international trade agreements, volatility in the market price of its publicly traded securities, inflation risks, cybersecurity risks, cyber incidents, shareholder activism efforts, conflicts of interest, risks related to its organizational structure including operating through its Operating Partnership and its UPREIT structure, as well as other risks listed from time to time in the company's SEC filings, including but not limited to, the company's annual and quarterly reports.

[1] As at 30 June 2017

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SOURCE Forest City Realty Trust, Inc.

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