Forest City Makes $214M in Dispositions
- Aug 05, 2013
As part of its ongoing effort to focus on core properties in core markets, Forest City Enterprises Inc., of Cleveland, has completed the sale of two properties for $214 million, Forest City announced late last week.
The sales, of the Higbee Building, an historic office building in downtown Cleveland, and the Liberty Center office/hotel complex in Pittsburgh, reportedly brought the company about $69 million in net cash proceeds.
“We continue to execute on our strategy of focusing on our primary core markets: New York; Washington, D.C.; Boston; Denver; Dallas; Los Angeles; and San Francisco,” David LaRue, Forest City president & CEO, said in a release. “We will use liquidity from dispositions … to continue to reduce debt and improve our balance sheet, invest in our mature portfolio and activate entitled development opportunities in core markets.”
Those development projects include Stapleton in Denver, The Yards and Waterfront Station in the District of Columbia, and Atlantic Yards in Brooklyn.
In addition, LaRue added, the Westin Convention Center in Pittsburgh was the last remaining hotel in Forest City’s portfolio, so that sale also marks the company’s exit from that business. “Our focus going forward continues to be apartment, retail, office and multi-use projects in our core markets.”
Since the beginning of fiscal 2013, a Forest City spokesperson told Commercial Property Executive, the company has completed seven dispositions, generating net cash proceeds of approximately $124 million. In fiscal 2012, Forest City completed 12 dispositions with total net cash proceeds of about $129 million.
The 815,000-square-foot Higbee Building was sold to an affiliate of Rock Ohio Caesars Cleveland, which operates the Horseshoe Cleveland casino in the building. The sale price was about $79 million, and generated net cash proceeds to Forest City of approximately $39 million.
The casino, which opened in May 2012, was Ohio’s first. It has 2,000 slot machines and 89 table games in 96,000 square feet of gaming space. The building’s other major tenant is Key Bank.
The structure, which is part of the mixed-use Tower City Center, was built in 1931 to house the Higbee’s department store. The Higbee’s chain was sold to a partnership of Dillard’s department stores and Edward DeBartolo in 1987, and the stores were re-branded as Dillard’s in 1992. Forest City, meanwhile, had acquired the building in 1990. The store closed in 2002.
The sale of the Liberty Center complex was for a gross price of $135 million and generated about $30 million in net cash proceeds to Forest City. The property, which includes the 27-story Federated Investors office tower and the 616-room Westin Convention Center hotel, had been owned in a 50/50 partnership by Forest City and Jos. L. Muscarelle Inc. of Maywood, N.J.
The buyer was a subsidiary of Starwood Capital Group. The hotel will continue to operate as a Westin under a long-term management agreement with Starwood Hotels, which is not affiliated with Starwood Capital.
In addition to the office building and hotel, Liberty Center includes a 25,000-square-foot retail arcade and underground parking for 479 cars. An enclosed pedestrian bridge connects the hotel with the David L. Lawrence Convention Center.