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Forest City Finds a Buyer for its Land Portfolio

November 7, 2012
After announcing earlier this year that it wanted to divest its land holdings, Forest City Enterprises has sold a significant portion of the portfolio to Mountain Real Estate Capital LLC.

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The sale includes master-planned communities across the country totaling 1,200 residential lots. The projects include a mix of finished lots, partially finished lots and undeveloped land for residential and commercial development.

The terms of the transaction were not disclosed. A year ago at this time, Forest City listed the portfolio value at $340 million.

"This portfolio continues our interest in investing in land and communities for residential development in major regions nationally," said Rodney Montag, senior director in Mountain's New York office. "It was a challenging portfolio with many moving parts and we spent significant time and money in order to figure it out. Ultimately, it provides a perfect mix of finished lots, which provide liquidity, and undeveloped lots for upside appreciation."

The larger projects include Woodbury Crossing in Olympia, WA; Tangerine Crossing in Tucson, AZ; Legacy Lakes in Pinehurst, NC; and Summers Walk both in Charlotte, NC.

Mountain will partner with Raleigh-based LStar Management Group to develop out the North Carolina projects, which will bring to seven the number of projects co-developed by this Mountain/LStar partnership.

"There was strong interest in this prime portfolio," explains Michael Daly, Forest City's executive vice president. "Mountain's proposal was very responsive. Their national footprint and strong capital position allowed them to move quickly in a variety of markets. It was also very important for us to work with a group that has the operational experience to understand the complexity of owning, developing and managing long term land assets."

Mountain anticipates a seven-year investment horizon in which it will sell lots to some of the nation's leading homebuilders including Richmond American, Lennar, Ryan, DR Horton, Maracay and other regional and custom builders. Total finished lot values are estimated to be in excess of $65 million.

"While we have focused on portfolios similar to the Forest City opportunity, we have also recapitalized best-in-class developers and builders to restructure their projects and businesses," states Peter Fioretti, Mountain's CEO. "We recently helped a regional homebuilder purchase back a portfolio of projects from its bank and are currently pursuing similar restructures in Denver and Houston."

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