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SAN FRANCISCO-A subsidiary of Catellus Development Corp. has redeemed its 30% interest in Talega, a residential-community development project located in the Southern California community of San Clemente, CA.

The interest was redeemed to its joint venture partners for $47.4 million –$11.8 million cash and a $35.6 million one-year note — resulting in a pre-tax gain of about $42 million, according to Catellus. Catellus says the disposition was part of an effort to sell off investments that are ancillary to its focus on industrial properties.

“With this sale, we are taking advantage of the continued strength in the housing market and accelerating our efforts to monetize our non-core businesses,” says company chairman/CEO Nelson Rising. “By structuring a portion of the redemption price in the form of a one-year note, we have provided additional time to reinvest this sizable gain back into our core industrial business.”

Catellus and its partners acquired and entitled the Talega land for a total of 4,000 home sites in 1997, and since that time have sold 3,108 lots to third party home developers. All told, Catellus has invested a total of $15.2 million into the Talega partnership and realized $83.6 million in pre-tax gain, includes the $42 million realized from the redemption transaction.

As previously reported, on New Year’s Day Catellus will officially convert from operating as a C corporation to operating as a publicly traded real estate investment trust, or REIT, focused predominantly on developing and owning industrial property.

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