CLEVELAND, Feb. 22 /PRNewswire-FirstCall/ -- Forest City Enterprises, Inc. (NYSE: FCEA and FCEB) and Health Care REIT, Inc. (NYSE: HCN) today announced the creation and first-stage closing of a new $668 million joint venture in Forest City's mixed-use University Park project in Cambridge, Mass.
Under the terms of the joint venture, Health Care REIT will acquire a 49 percent interest in the seven University Park life science properties owned solely by Forest City. For its share of the joint venture, Heath Care REIT will invest $170 million in cash and the joint venture will assume $320 million of secured debt on the seven buildings. Subsidiaries of Forest City will retain 51 percent ownership in the properties and will serve as asset and property manager for the joint venture. The first-stage closing, announced today, includes six of the buildings, valued at $610 million. Closing on the seventh building, valued at $58 million, is expected during the second quarter of 2010, subject to third-party consents. All seven buildings are currently 100 percent leased. The transaction's implied valuation represents a 7.6 percent cap rate on projected 2010 net operating income for the properties.
"We're thrilled to launch this new venture with Health Care REIT," said Charles A. Ratner, Forest City president and chief executive officer. "Today's announcement demonstrates both our ability to create liquidity by monetizing elements of our portfolio, and the intrinsic value in that portfolio. It also positions us with a strong capital partner who can help us grow our life science business. We are very proud of the value we've created over the past 25 years with the development and management of University Park, one of the great mixed-use parks in the country. Its success shows not just the quality of the location and the individual assets, but the synergy possible by creating attractive campus environments with a true 'sense of place.'"
"These are best-in-class assets in a prime location leased to world-class life sciences companies that further diversify our health care real estate holdings," commented George L. Chapman, chief executive officer of Health Care REIT, Inc. "We believe these assets have the ability to generate above average NOI growth due to the demand for space in this high-quality market. We are pleased to establish this relationship with Forest City, which owns, develops, acquires and manages commercial and residential real estate. They have extensive experience in successfully developing and managing life sciences properties throughout the country."
University Park is an award winning 27-acre, mixed-use campus developed by Forest City immediately adjacent to the Massachusetts Institute of Technology in Cambridge. The 2.3 million-square-foot project includes a 210 room hotel, 674 residential units, a grocery store, restaurants and retail, in addition to ten life science buildings. MIT is the ground lessor for the entire University Park project, including the properties that will become part of the joint venture.
UBS Investment Bank and Eastdil Secured LLC acted as financial advisors and Goulston & Storrs acted as legal advisor to Forest City on this transaction.
About Forest City
Forest City Enterprises, Inc., is an $11.9 billion NYSE-listed national real estate company. The Company is principally engaged in the ownership, development, management and acquisition of commercial and residential real estate and land throughout the United States. For more information, visit www.forestcity.net.
Safe Harbor Language
Statements made in this news release that state the Company's or 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 impact of current market conditions on our liquidity, ability to finance or refinance projects and repay our debt, the impact of the current economic environment on our ownership, development and management of our commercial real estate portfolio, general real estate investment and development risks, liquidity risks we could face if we do not close the transaction with Onexim Group to create a strategic partnership for our Brooklyn Atlantic Yards project, vacancies in our properties, further downturns in the housing market, competition, illiquidity of real estate investments, bankruptcy or defaults of tenants, anchor store consolidations or closings, international activities, the impact of terrorist acts, risks associated with an investment in a professional sports team, our substantial debt leverage and the ability to obtain and service debt, the impact of restrictions imposed by our credit facility and senior debt, exposure to hedging agreements, the level and volatility of interest rates, the continued availability of tax-exempt government financing, the impact of credit rating downgrades, effects of uninsured or underinsured losses, environmental liabilities, conflicts of interest, risks associated with developing and managing properties in partnership with others, the ability to maintain effective internal controls, compliance with governmental regulations, increased legislative and regulatory scrutiny of the financial services sector, volatility in the market price of our publicly traded securities, litigation risks, 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.
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