DEAL OF THE DAY: Forest City and Bernstein Management Joint Venture on 3 Properties at 6.5% Cap Rate

Washington, D.C. –Forest City Enterprises Inc. created a joint venture with Bernstein Management Corp. for ownership of three residential multifamily properties, totaling 1,340 rental units, in the Washington, D.C. metropolitan area. 

Forest City says it expects to realize proceeds of approximately $34 million from the creation of the joint venture.  The transaction yields a cap rate of 6.5 percent based on 2009 net operating income for the properties.

The three properties – the 549-unit Grand in North Bethesda, Md. the 385-unit Lenox Club in Arlington, Va., and the 406-unit Lenox Park in Silver Springs, Md. – are part of Forest City’s portfolio of residential multifamily properties.

Each company’s joint venture entity will own 50 percent of Forest City’s prior stake in the properties.  Existing minority partners in the three properties are unaffected by the joint venture transaction.  Forest City, through its Residential Management business unit, will continue to lease and manage the three properties on behalf of the joint venture.

“The creation of this joint venture is an important step in our strategy of capturing value and generating liquidity from within our portfolio,” said Charles A. Ratner, Forest City president and CEO.  “The continuing strength of the multifamily rental market in the Washington, D.C. area, and the quality of these assets, together with early signs of an economic recovery, made this the right time to bring this venture to fruition. We’re proud to partner with Bernstein on these fine properties.”