NEW YORK CITY—Forest City Enterprises Inc. is selling its interests in the Brooklyn Nets basketball franchise and the arena housing the team, Barclays Center, to Mikhail Prokhorov's Onexim Sports and Entertainment. The deal values team and arena at a combined $1.7 billion including debt.
Forest City subsidiary Nets Sports and Entertainment currently owns a 20% interest in the Nets and a 55% share of the arena, which was developed by Forest City Ratner Cos. as part of its Pacific Park Brooklyn mixed-use project. NS&E expects to receive proceeds from the transaction in a combination of cash and notes receivable of approximately $285 million at closing, which is expected to occur late this year or early in 2016.
The National Basketball Association's board of governors has signed off on the sale. Earlier this year, Barclays Center also became home turf for the New York Islanders hockey franchise, formerly based at the Nassau Coliseum in Uniondale, NY.
"The development of Barclays Center enabled the return of major league professional sports and world-class entertainment to Brooklyn, and in just over three years of operations, it has become one of the top-grossing arenas in the country," says Bruce Ratner, executive chairman of FCRC, Foreast City's New York subsidiary. "As an anchor for the continued development of Pacific Park Brooklyn, Barclays Center stands as an iconic landmark for the borough."
At Forest City headquarters in Cleveland, president and CEO David LaRue calls the sale "a significant milestone" as the company prepares to become a REIT, effective Jan. 1. "I want to thank the NBA for their support and I salute our New York team, led by Bruce Ratner, MaryAnne Gilmartin and David Berliner, as well as our partner and our associates and advisors involved in making this deal a reality." Evercore ISI advised Forest City and NS&E on the transaction and provided a fairness opinion.
FCRC and its partner in Greenland Forest City Partners, the US subsidiary of Shangai-based Greenland Group, are developing Pacific Park Brooklyn's residential component. Greenland USA acquired a 70% stake in the project in October 2013.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
