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Forest City Takes Key Step to Sell NYC Retail Portfolio

Atlantic Terminal Mall Atlantic Terminal Mall in Brooklyn

NEW YORK CITY—Forest City Realty Trust has closed on converting common ownership interest to preferred interest with 10 of the 13 specialty retail centers that are part of a joint venture with Madison International Realty.

The restructuring of the ownership interests is a step in the process of Forest City’s agreement to sell its 51% stake in 13 specialty retail properties in New York City to Madison International as previously reported in GlobeSt.com. The structure was taken for tax efficiencies according to Forest City senior vice president of corporate communications, Jeff Linton.

Closings on similar conversions of ownership interests for two other centers, Shops at Northern Boulevard and Queens Place, are anticipated to occur by the end of the first quarter of 2018 with the resolution of lender matters.

The final closings on 12 of the retail centers are expected to occur as Forest City acquires replacement assets in the residential, office and mixed-use sectors. This is part of the real estate investment trust’s strategic plan to exit from stand-alone retail centers, as it completes its sale of properties to Madison International, according to Forest City president and CEO, David LaRue.

The 13th shopping center which is also part of the joint venture, located at the 42nd Street retail and entertainment area, is expected to close at a later date due to an ongoing ground lease dispute with the City of New York.

The sale of the retail centers also aligns with Madison International’s strategic plans as set forth in Madison founder and president, Ronald Dickerman’s previous GlobeSt.com interview.

The most recently updated assessment of the overall transaction values the 12 centers (excluding the 42nd Street complex) at approximately $450 million for Forest City’s 51% share. The 100% interest is now valued at approximately $882 million, according to Forest City.

The 10 retail centers which are part of the completed ownership interest conversions include Shops at Gun Hill Road (Waring), Shops at Gun Hill Road (Ely), Castle Center in the Bronx, Harlem Center in Manhattan, The Heights, Atlantic Terminal Mall and Atlantic Center in Brooklyn, Forest Avenue and Shops at Richmond Avenue in Staten Island, and Columbia Park Center in North Bergen, New Jersey.

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