Australia’s QIC enters US retail property market
Australian institutional investment manager QIC has made its first direct investment into the US property market after taking a position in eight regional retail malls worth $2.05 billion. QIC’s global real estate division will put in $435.6 million ($425 million) for a 49% equity stake, enabling Forest City Enterprises to recapitalize its portfolio.
Forest City, a New York-listed real estate company with $10.6 billion in assets, will retain responsibility for leasing, financing and managing assets controlled by the new joint venture. The $2.05 billion valuation represents a cap rate of about 5.75% on the portfolio's forecast net operating income for 2013. Forest City expects to generate $330 million in cash through the transaction.
"Expansion into the US retail sector is a natural progression and comes after extensive investigation of the real estate market," Steven Leigh, managing director of QIC Global Real Estate, said in a statement. "Our recognized property investment capability and global relationships enable us to continue offering local and offshore client access to quality opportunities of the scale and return profile that suit their global investing needs, such as this joint venture."
The Forest City portfolio includes malls in Henderson, Nevada, Palmdale, California, Richmond, Virginia and Redondo Beach, California. All of these require renovation or expansion. The other properties are in Rancho Cucamonga, California, Charleston, West Virginia, Pittsburgh, Pennsylvania, and Temecula, California.
QIC, which was established by the Queensland government in 1991 to manage its long-term investments, has A$71.3 billion in funds under management. It has been investing in real estate in Australian and overseas for more than 20 years and the portfolio is worth around A$10 billion.
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