Madison International Realty is considering redeveloping the Atlantic Terminal Mall (above) and adjoining Atlantic Center in Brooklyn.

NEW YORK CITY—Forest City Realty Trust has signed an agreement to sell its 51% stake in 12 specialty retail properties in the New York City area to partner Madison International Realty for $1 billion.

Cleveland-based Forest City Realty Trust has been in talks with New York City-based real estate investment firm Madison International Realty on the possible sale of its majority interest in the 2.1-million-square-foot portfolio located in Manhattan, Brooklyn, Queens, the Bronx, Staten Island and Northern New Jersey. Forest City is also reportedly nearing the conclusion of a previously announced deal to sell its interest in 11 US regional malls with Australian partner QIC Global Real Estate in a deal valued at approximately $4 billion.

The retail portfolio transactions are in line with Forest City's stated strategy of focusing its portfolio on apartment, office and mixed-use assets in core urban markets. The company announced in August 2016 that it would explore strategic alternatives for its regional mall and New York specialty retail portfolios. Madison has maintained a 49% ownership stake in the New York City area specialty retail portfolio since 2011.

The deal comes a little more than a month since Forest City announced it would be reviewing its strategic options, including a possible merger or sale of the company.

The New York City specialty retail portfolio is currently 95% leased, according to Madison International. A closing on the deal between Forest City and Madison International is expected in the fourth quarter of this year. Madison states that the acquisition of the 51% interest in the properties will be capitalized with “significant follow-on investment” from the existing New York City portfolio investors.

“Today's announcement is an important step in the ongoing execution of our strategic plan and is another example of delivering on our commitment to create value,” says David J. LaRue, Forest City president and CEO. “Madison International has been a great partner for the past six-plus years in these high-quality assets, and I salute the teams on both sides for bringing this large and complex transaction to fruition.”

The 12 retail centers part of the transaction with Madison International are: Shops at Gun Hill Road (Waring Ave.), Shops at Gun Hill Road (Ely Ave.) and Castle Center in the Bronx; Harlem Center in Manhattan; Shops at Northern Boulevard and Queens Place in Queens; The Heights, Atlantic Terminal Mall and Atlantic Center in Brooklyn; Forest Avenue and Shops at Richmond Avenue in Staten Island and the Columbia Park Center in North Bergen, NJ.

“This transaction is strategic for both Madison and Forest City, and fits well with our investment strategy of executing large scale equity investments to create 'win/win' outcomes for our partners and investors. The retail centers in the New York City portfolio are in densely-populated, well-trafficked areas that offer significant opportunity for continued value creation,” says Ronald Dickerman, president and founder of Madison.

The deal makes Madison International a player in the New York City retail market as the third largest owner of retail space in the New York metro area, Dickerman tells Globest.com.

Madison says it will hire Cushman & Wakefield as the third-party property management and leasing team for the New York City portfolio. Madison reports it is considering the potential redevelopment of the approximately 370,000-square-foot Atlantic Terminal Mall and the 396,000-square-foot Atlantic Center in Brooklyn, two properties located directly across Atlantic Avenue from the Barclays Center arena.

The deal comes a little more than a month since Forest City announced it would be reviewing its strategic options, including a possible merger or sale of the company.

The deal makes Madison International a player in the New York City retail market as the third largest owner of retail space in the New York metro area, Dickerman tells Globest.com.

Instant Insights /

Forest City Signs $1B Deal to Trade Majority Stake of NYC Retail Portfolio

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