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Forest City Continues to Clean Up its Balance Sheet

Forest City Enterprises Inc. (NYSE: FCE.A and NYCE: FCE.B) provided a progress update on getting its balance sheet in order. The company has made progress on modifying and renewing a $750 million revolving credit facility and lined up other extensions and refinancing at property-level, non-recourse debt. Forest City has received preliminary, non-binding commitments from a majority of its current 14-member bank group to participate in a renewed revolving credit facility. Preliminary commitments to date account for approximately 60 percent of the total commitment being sought. If approved, additional terms and conditions of the facility will be announced at the time of closing. The current facility is scheduled to mature in March 2010.

In addition, the company announced its intention to offer, subject to market and other conditions, $175 million aggregate principal amount of convertible senior notes due 2016. The interest rate, conversion rate, conversion price and other terms of the Notes will be determined by negotiations between Forest City and the initial purchasers of the notes. Forest City expects to use the net proceeds from the offering to pay the cost of convertible note hedge transactions, to reduce outstanding borrowings on its $750 million revolving credit facility and for general corporate purposes.

Separately, Forest City announced $150.3 million, at 100 percent ($97.2 million related to consolidated properties and $53.1 million related to unconsolidated properties), in refinancings and loan extensions not previously reported.

On September 30, 2009, the company closed a three-year extension of a $90.8 million loan for 2 Hanson Place, a 10-story, 399,000-square-foot office building adjacent to its Atlantic Terminal retail center in Brooklyn, N.Y. The same day, it also closed a 10-year refinancing for Lofts 23, a 51-unit, loft-style apartment property at its University Park project in Cambridge, Mass. In addition, it secured a $17.7 million, two-year extension of financing related to its master planned Sterling Lakes community, a $4.9 million refinancing at Perrytown Place Apartments in Pittsburgh and a $30.5 million, five-year refinancing for the 361,000-square-foot Golden Gate Plaza in Cleveland.

Other Notable Deals

Macerich Co. priced a public offering of 12 million shares of its common stock for $29.00 per share. Macerich intends to grant the underwriters a 30-day option to purchase up to 1,800,000 additional shares to cover over-allotments, if any. Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. are acting as joint book-running managers and underwriters for the offering. Macerich intends to use the net proceeds of the offering to repay a portion of the outstanding balance under its $1.5 billion revolving line of credit…. Prudential Insurance and New York Life provided $135 million in senior mortgage debt to Brooks Shopping Center LLC for the 1-million-square-foot Cross County Shopping Center in Yonkers, N.Y. Funds from the five-year, fixed-rate mortgage will help pay for the $220 million redevelopment of the center currently being undertaken by Macerich Co. Estreich & Co. helped arranged the debt for Brooks, which is owned by Dollar Land Associates and was represented by Goldfarb & Fleece in the transaction..Phillips Edison & Co. announced that it has completed a $27 million secured loan collateralized by the 600,000-square-foot Bridgewater Falls regional shopping center in Fairfield Township, Ohio. The financing, which includes a term of four years, was provided by US Bank, N.A.Upland Real Estate Group Inc. sold a Blockbuster/Potbelly investment property located in Eagan, Minn. for $1,350,000 at an 11.31 percent cap rate. The property sold to a private investor. Upland exclusively represented the buyers….NorthMarq Capital’s New York Metro Regional office arranged $3.3 million in first mortgage construction and permanent financing for a 14,820-square-foot Walgreens in Middletown, Conn. Financing was based on a 12-month construction loan followed by a 6-year term with a 30-year amortization schedule and was arranged for the borrower, Sound Middleton, LLC….Baker Storey McDonald Properties Inc. purchased an 8,800-square-foot retail building in Murfreesboro, Tenn. The original owner had gone out of business, filed bankruptcy and was facing foreclosure. Including the purchase of the bank note and a renovation Baker Storey McDonald Properties will invest about $2.5 million into the property…. Hodgdon Group represented Ashley Furniture Industries Inc. in the acquisition of a 39,200-square-foot retail building in Victorville, Calif. The seller, a Texas-based financial institution, was represented by Grubb & Ellis

(To have your deals included in our weekly roundup, please email releases to David Bodamer or Elaine Misonzhnik.)

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