Forest City Buys Out Equity Partner in Modular Brooklyn High-Rise

Forest City buys out its equity partner in a modular Brooklyn high-rise amid a construction dispute; Ivanhoé Cambridge partners with Black Creek on a Mexico City development; and NorthMarq Capital completes a $15.75 million Freddie Mac refinance with forward lock.

B2New York—Forest City Enterprises has acquired the interest of its equity partner, the Arizona State Retirement System, in B2 BKLYN, a 363-unit high-rise modular apartment being developed at Pacific Park (formerly Atlantic Yards) in Brooklyn. Work recently ceased on the project after the contractor, Skanska USA, shut down construction at the site and closed the factory being used to build the modular units. The development is now subject to litigation between Forest City and Skanska.

The buyout of ASRS’s equity interest to date, for which Forest City paid $40.5 million, removes B2 BKLYN from the $400 million residential development fund between ASRS and Forest City. The company also assumed ASRS’s share of the debt on B2.

“We felt it was prudent to make this incremental investment now, rather than cloud the future of the fund as a result of litigation related to a single property,” says David LaRue, Forest City president and CEO. “In addition, because this investment makes Forest City the 100 percent equity owner of B2, we will have greater flexibility as we drive to restart work at the building site and the modular factory, and to get the hundreds of affected men and women back to work.”

Forest City and ASRS recently closed on two new projects in the fund. The first is Arris (formerly Parcel N) at The Yards in Washington, D.C. Arris is expected to have 327 apartment units with 19,000 square feet of street-level retail, at a total cost (at 100 percent) of $142.7 million.  The second is Blossom Plaza, which is expected to have 237 apartment units above 18,500 square feet of street-level retail in Los Angeles’ Chinatown neighborhood, at a total cost of $106.7 million. Arris is expected to open in the first quarter of 2016, with Blossom Plaza expected to open in the second quarter of 2016.

2175 Market Street in San Francisco, an 88-unit apartment community in that city’s vibrant Upper Market neighborhood, will be the first completed property in the fund when it opens this fall.

Ivanhoé Cambridge partners with Black Creek on Mexico City development

Mexico City—Ivanhoé Cambridge has created a new partnership with private equity firm Black Creek Group to invest in the development of mixed-use urban communities in major Mexican cities including, but not limited to, Mexico City, Monterrey and Guadalajara. The partnership is investing by way of MIRA, a fully-integrated real estate development platform. Ivanhoé Cambridge plans to invest up to $500 million in assets.

The first investment will be more than $100 million for a residential development in the Mexico City borough of Cuajimalpa, adjacent to the Santa Fe business district. Plans calls for two condominium buildings that total 479 units. The deal represents the first investment Ivanhoé Cambridge has made in Mexico.

“With this investment, Ivanhoé Cambridge is setting a major foothold in Mexico, which will provide excellent access to opportunities, including long-term investments in a portfolio of high-quality assets,” explains Rita-Rose Gagné, executive vice president, growth markets, for Ivanhoé Cambridge. “The investment is part of Ivanhoé Cambridge’s strategy of developing a long-term, active presence in growth markets. The economic growth and demographic trends in Mexico are producing a large and sustained local demand for commercial and residential real estate.”

Jaguar Growth Partners acted as advisor to Ivanhoé Cambridge on this transaction and FTI Consulting worked on the financial aspects of the investment.

NorthMarq completes $15.75M Freddie Mac refinance with forward lock

Minneapolis–Dan Trebil, senior vice president/managing director of NorthMarq Capital’s Minneapolis based office, arranged the $15.75 million refinance of The Overlook Apartments, a 318-unit multifamily property located at 1310 SW Summit Woods Drive in Topeka, Kansas. NorthMarq arranged financing for the borrower through its seller/servicer relationship with Freddie Mac.

“The borrower took advantage of the Freddie Mac ‘Index Lock’ program, which allowed the borrower to lock the Treasury within 48 hours of receiving the financing quote,” says Trebil. “The sponsor has improved operations significantly since purchasing the property through attentive management and capital reinvestment. The new loan allows the borrower to lock in a long-term rate on an excellent asset.”