Forest City Adds Ballston Quarter to QIC JV Series

Ballston Quarter

ARLINGTON, VA—As it announced it would last year, Forest City Realty Trust has created a joint venture with Australian institutional investment manager QIC Global Real Estate to invest in Ballston Quarter. It also has done the same for a retail center close to Tampa, Fla. Together, the 49% stake sale of the two properties total $121.8 million in gross proceeds and estimated net proceeds of $60 million, according to marketing materials presented to investors. Forest City revealed the agreement with QIC to expand its relationship with them at the end of 2015. The agreement also called for Forest City to create a JV for Westchester’s Ridge Hill regional mall in Yonkers, New York, in the fourth quarter. In the first half of 2016, the JVs for Shops at Wiregrass near Tampa, Fla., and Ballston Commons would launch.  “Our relationship with QIC has been a great success to date and we’re seeing positive impact on our retail results as we invest together to further improve the centers in the portfolio,” said CEO David LaRue during an earnings call last year. “Bringing these three additional centers into the QIC joint venture portfolio is expected to generate net proceeds with approximately $150 million,” he also said. Forest City first announced the strategic capital partnership it had formed with QIC, or the Queensland Investment Corporation, in 2013. It was originally formed to invest in eight of Forest City’s regional malls: Victoria Gardens in Rancho Cucamonga, Calif.; Charleston Town Center in Charleston, WV; Mall at Robinson near Pittsburgh, Penn.; Promenade in Temecula, Calif.; Galleria at Sunset in Henderson, Nev.; Antelope Valley Mall in Palmdale, Calif.; Short Pump Town Center in Richmond; and South Bay Galleria in Redondo Beach, Calif. Forest City raised some $340 million in proceeds from these eight retail centers and its QIC partnership. Since then it has started — and in some cases finished — renovation on half of these properties and plans to have the other half under renovation over the next four years. To be clear, each of these properties is held in a separate JV with QIC that are structured in similar fashion but also reflect the specific valuation and cash flows of the particular mall. For example, in the 1.3 million square foot Ridge Hill JV, Forest City retained 49% equity ownership and expects to receive approximately $90 million in total proceeds from the JV. Forest City was forthcoming with Ridge Hill’s financial but it has played its cards close regarding Ballston Quarter, given the extensive renovation it is undergoing. LaRue said in the last earnings call that the $150 million in cash it would be receiving from the next three JVs, of which Ballston is one, would be based on the stand alone assets. Additional funding for the development would be provided via the 49%/51% JV.