TODAY’S DEALS: Forest City Completes Three Investments with Arizona State Retirement System

Forest City closes investment allocations in D.C., Philadelphia; and Oakland, Calif.; a joint venture led by The Preiss Co. completes a Florida student housing acquisition; and CareTrust REIT closes a $7.5 million preferred equity investment.

Washington, D.C. & Philadelphia—Forest City Enterprises has closed three additional investment allocations as part of its $400 million residential development fund with the Arizona State Retirement System. The deals involve assets in Washington, D.C.; Philadelphia; and Oakland, Calif., which together total 1,316 units.

When we last covered the partnership the news wasn’t necessarily positive. In October, Forest City announced it was buying out ASRS’s interest in a modular high-rise in Brooklyn after contractor Skanska USA shut down construction at the site and closed the factory building the modular units.

But that hiccup didn’t upset the venture. When paired with conventional project financing, the $400 million fund is expected to generate approximately $1 billion in new multifamily residential development, with 75 percent of the equity provided by ASRS and 25 percent by Forest City.

“These closings reflect our continued strong partnership with ASRS, and the execution of our strategy of working closely with select capital partners to activate entitled development opportunities in strong markets,” says David LaRue, Forest City president and chief executive officer. “These also reflect the variety of investment opportunities available to the fund, with one investment in a conventional entitled development project, one investment in an operating property as a springboard to additional new development, and one allocation to invest in a mature, productive operating property.”

  • In Washington, D.C., the fund closed an investment in 1001 4th Street, SW, the first Forest City-developed residential component of Waterfront Station, the mixed-use redevelopment of the former Waterside Mall site in Southwest D.C.  1001 4th Street, SW, which is expected to break ground in early January, will feature 365 market-rate apartments, underground parking, a rooftop pool, clubhouse and landscaped courtyard. Completion is expected in mid-2016.
  • In Philadelphia, the fund closed an investment in Museum Towers, an existing 286-unit apartment community in Center City, in which Forest City had been the 100 percent equity owner.  The fund’s investment in Museum Towers facilitates development of Museum Towers II, an adjacent 286-unit apartment project and 400-space parking garage, in which the fund is also planning to invest. The additional investment by the fund in Museum Towers II is expected to close in the first quarter of 2015 with commencement of construction soon thereafter.
  • In Oakland, the fund invested in The Uptown, Forest City’s existing 665-unit apartment community in the city’s arts and entertainment district. A LEED Silver-certified apartment community, The Uptown includes a public park and was constructed on an underutilized, four-city block brownfield location in partnership with the City of Oakland. Prior to the fund’s investment, Forest City had been the 100 percent equity owner of The Uptown.

Preiss Co. JV enrolls in Florida student housing ownership

Orion on Orpington SMALLOrlando, Fla.—The Preiss Co. has acquired a 642-bed student housing asset near the University of Central Florida through a joint venture with a private investment group. The asset, Orion on Orpington, was sold by Orlando Student Venture.

“This is our third joint venture with the same private investment group, bringing to nearly $130 million of student housing assets that we have acquired together in the past 18 months, and we look forward to the opportunity to further build on this relationship,” says Donna Preiss, founder and president of The Preiss Co. “We were attracted to this property because of its well-deserved reputation at UCF and consistently high leasing history. Our goal is to further enhance the student experience and to improve operating margins.”

The acquisition represents Preiss’ second property in Florida. Orion on Orpington sits on 21 landscaped acres, and features an amenity package one would expect from the modern off-campus student housing space: free turbo stand-up tanning bed, a game room, resort-style pool, lighted sand volleyball court, and fitness center.

CareTrust REIT completes $7.5 million preferred equity investment

San Clemente, Calif.—CareTrust REIT Inc. today announced that it completed a $7.5 million preferred equity investment with Signature Senior Living and Milestone Retirement Communities. The investment will be used to develop Signature Senior Living at Arvada, a planned 134-unit upscale assisted living and memory care community in Arvada, Colo., a first-ring suburb of Denver. The community will be constructed on a five-acre site, and is slated for completion in early 2016.

“We are pleased to be partnering with the CareTrust team on this project,” says Paul Habeeb, founder and Chairman of Signature Senior Living. “They understood the challenges of financing new seniors housing development, and provided a vital piece of the capital structure we needed to get it done.”

CareTrust Chief Financial Officer Bill Wagner noted that CareTrust was attracted to the Arvada opportunity based on the excellent market characteristics, well-located site and especially the experienced development and operations teams.

“The Signature and Milestone teams together bring years of quality industry experience in seniors housing development, investment and management,” he says. “We believe that combining their skills and our funds with the demand for quality senior living in the Denver marketplace make this project work, and work well.”

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