CLEVELAND, May 4, 2015 /PRNewswire/ -- Forest City Enterprises, Inc. (NYSE: FCEA and FCEB) today announced that it has entered into a share purchase and redemption agreement with Health Care REIT, Inc. (NYSE: HCN) to acquire Health Care REIT's 49 percent equity interest in seven life-science office properties and two parking facilities at University Park at MIT, a mixed-use life-science office campus developed by Forest City, in Cambridge, Massachusetts. The two companies entered into a 51/49 equity joint venture for the properties in early 2010.
The redemption price is $573.5 million, less Health Care REIT's 49 percent of the outstanding debt on the properties. At closing, which is expected to occur no later than September 30, 2015, the net redemption price, net of debt and other closing adjustments, is anticipated to be approximately $400 million. The estimated cash on cost yield of this investment is approximately 5.25 percent, based on forward 12-month net operating income, adjusted for the stabilization of 88 Sidney Street, one of the seven office buildings.
"University Park is one of our most valuable and productive urban, mixed-use projects, and our five-year partnership with Health Care REIT has been productive and mutually beneficial," said David J. LaRue, Forest City president and chief executive officer. "Acquiring full equity ownership of these assets not only gives us greater control and flexibility, but also enhances our ability to create shareholder value. The transaction aligns with our strategy of concentrating our investments in high-quality assets in key urban markets, reduces the number of operating assets we own through joint ventures, and both strengthens and simplifies our portfolio."
University Park is a 27-acre, mixed-use campus developed by Forest City immediately adjacent to the Massachusetts Institute of Technology in Cambridge. The project includes ten life-science office buildings (including one under construction) totaling more than 1.7 million square feet, as well as 530 apartment units in four multifamily properties. Park amenities include a landscaped commons, a 210-room hotel, a grocery store, restaurants and neighborhood retail. MIT is the ground lessor for the entire University Park project.
The acquisition is subject to several closing conditions. The company has paid a significant, non-refundable cash deposit, which would be forfeited in the event the company fails to complete the acquisition, other than due to the failure of certain closing conditions to be met.
The seven buildings included in this transaction are 26 Landsdowne Street, 64 Sidney Street, 35 Landsdowne Street, 40 Landsdowne Street, 45/75 Sidney Street, 65/80 Landsdowne Street, and 88 Sidney Street.
Forest City Enterprises, Inc. is an NYSE-listed national real estate company with $8.8 billion in total assets. The company is principally engaged in the ownership, development, management and acquisition of commercial and residential real estate and land throughout the United States. For more information, visit www.forestcity.net.
Safe Harbor Language
Statements made in this news release that state the company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. The company's actual results could differ materially from those expressed or implied in such forward-looking statements due to various risks, uncertainties and other factors. Risks and factors that could cause actual results to differ materially from those in the forward-looking statements include failure to obtain the necessary financing to complete the acquisition, failure to obtain certain approvals required, failure to meet any of our other closing conditions and failure to achieve anticipated benefits of the transaction, as well as other risks described in the Company's quarterly report on Form 10-Q for the period ended March 31, 2015.
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SOURCE Forest City Enterprises, Inc.
Jeff Frericks, Vice President - Capital Markets, 216-621-6060; Jeff Linton, Senior Vice President - Corporate Communication, 216-621-6060