CHARLESTON, W.Va. -- An Australian investment firm will own a one-fourth stake in the Charleston Town Center as part of a $2 billion deal designed to raise cash for mall-owner Forest City Enterprises, Inc.
Cleveland, Ohio-based Forest City announced Monday it has reached an agreement with Australia's third largest institutional investment firm, QIC, to transition ownership of eight Forest City regional malls — including Town Center — to joint ventures owned by both companies.
As part of the deal, Forest City will transition its entire ownership stake in each of the malls into new joint venture partnerships for each location. QIC will hold a 49 percent ownership stake in each of the joint ventures, with Forest City retaining the remaining 51 percent.
The deal values the eight malls at a combined $2.05 billion.
"The transaction clearly demonstrates the tremendous value of these properties," said Forest City president and chief executive officer David J. LaRue.
According to Forest City, the malls currently generate about $500 in sales per square foot, based on rolling 12-month averages.
Steven Leigh, managing director for QIC Global Real Estate, called QIC's expansion into the U.S. retail sector a "natural progression." He said the company has already built a large international portfolio of retail and commercial properties and hopes to build upon that success in the United States.
"The joint venture with Forest City Enterprises for investment in a portfolio of eight, high-quality retail assets represents a significant opportunity for QIC to further expand into the United States with a successful retail operator and is part of our long-term investment strategy," Leigh said.
According to the agreement, Forest City will be the managing member of the joint ventures The company will also continue to be responsible for leasing, operations, marketing, financing, development services and asset management for all of the locations.
The deal is designed to raise cash for Forest City, which the company will use to pay off some debt and fund expansion and improvement projects at some of the locations. The transaction is expected to close by the end of October.
Forest City spokesman Jeff Linton said aspects of the deal concerning Town Center remain to be finalized in the coming months.
While Forest City manages the day-to-day operations at the mall, current ownership of the Town Center is actually split 50-50 between Forest City and the Cafaro Corp. of Youngstown, Ohio.