CAMBRIDGE, MASS. — Forest City Enterprises Inc. (NYSE: FCE-A) has entered into a share purchase and redemption agreement to acquire Health Care REIT Inc.’s (NYSE: HCN) 49 percent equity interest in seven life-science office properties and two parking facilities at University Park at the Massachusetts Institute of Technology (MIT) in Cambridge for $573.5 million.
University Park is a 27-acre, mixed-use campus developed by Forest City adjacent to MIT. The project includes 10 life-science office buildings (including one under construction) totaling more than 1.7 million square feet, as well as 530 apartment units in four multifamily properties.
The two companies entered into a 51/49 equity joint venture for the properties in February 2010.
University Park amenities include a landscaped commons, a 210-room hotel, a grocery store, restaurants and neighborhood retail. MIT is the ground lessor for the entire University Park project.
The redemption price for the properties is $573.5 million, less Health Care REIT’s 49 percent of the outstanding debt on the properties, or approximately $174 million. The purchase price represents a projected 5 percent cap rate based on forward 12 months net operating income.
At closing, which is expected to occur by October, the net redemption price net of debt and other closing adjustments, is expected to be approximately $400 million.
“University Park is one of our most valuable and productive urban, mixed-use projects, and our five-year partnership with Health Care REIT has been productive and mutually beneficial,” says David LaRue, president and CEO of Cleveland-based Forest City. “Acquiring full equity ownership of these assets not only gives us greater control and flexibility, but also enhances our ability to create shareholder value.”
Tom DeRosa, CEO of HCN, says, the move to sell the life-science portfolio makes sense strategically. “The proceeds from this sale will be reinvested accretively in our core business: owning, developing and managing the highest quality seniors housing, post-acute and outpatient medical real estate in the United States, United Kingdom and Canada.”
The seven buildings included in the transaction are 26 Landsdowne Street, 64 Sidney Street, 35 Landsdowne Street, 40 Landsdowne Street, 45/75 Sidney Street, 65/80 Landsdowne Street and 88 Sidney Street.
Tenants of the buildings include ARIAD Pharmaceuticals Inc., a global oncology company working on new medicines to advance the treatment of leukemia, lung cancer and other forms of cancer, as well as Millennium Pharmaceuticals Inc., a genomics company applying technology to the discovery and development of new therapies in a spectrum of diseases.
Forest City is a national real estate company engaged in the ownership, development, management and acquisition of commercial and residential real estate and land throughout the United States with $8.8 billion in total assets.
FCE-A’s stock price closed at $24.31 per share on Monday, May 4, up from $19.22 per share a year ago.
Toledo, Ohio-based HCN is a real estate investment trust that invests in seniors housing and health care real estate. As of Dec. 31, 2014, the company’s portfolio consisted of 1,328 properties in 46 states, the United Kingdom and Canada.
HCN’s stock price closed at $72.13 per share on Monday, May 4, up from $63.10 per share a year ago.
— Scott Reid