Forest City reaches agreement with Onexim for sale of Barclays Center, Brooklyn Nets

- Onexim to become 100 percent equity owner of arena, team

Dec 22, 2015, 17:36 ET from Forest City Enterprises, Inc.

CLEVELAND and BROOKLYN, N.Y., Dec. 22, 2015 /PRNewswire/ -- Forest City Enterprises, Inc. (NYSE: FCEA and FCEB) announced today that its subsidiary, Nets Sports and Entertainment (NS&E), has executed a purchase and sale agreement with Onexim Sports and Entertainment under which Onexim will become the 100 percent equity owner of the Barclays Center arena and the Brooklyn Nets basketball team. The NBA's Board of Governors unanimously approved the transaction earlier this month. 

The transaction values the team at approximately $875 million and the arena at $825 million, inclusive of debt for each asset.  NS&E currently owns a non-controlling 20 percent equity interest in the team and a 55 percent equity interest in the arena.  Forest City owns approximately 62 percent of NS&E.  NS&E expects to receive proceeds from the transaction in a combination of cash and notes receivable of approximately $285 million at closing. The notes receivable are expected to approximate 75 percent of the total proceeds, bear annual interest at 4.5 percent, and be payable in three to five-and-one-half years from the date of closing.

"As we continue to focus our portfolio on core retail, office and apartment assets in strong urban markets, and transition to REIT status, this transaction is a significant milestone," said David J. LaRue, Forest City president and chief executive officer. "I want to thank the NBA for their support and I salute our New York team, led by Bruce Ratner, MaryAnne Gilmartin and David Berliner, as well as our partner and our associates and advisors involved in making this deal a reality."

Bruce Ratner, executive chairman of the company's New York subsidiary, Forest City Ratner Companies, added, "The development of Barclays Center enabled the return of major league professional sports and world-class entertainment to Brooklyn, and in just over three years of operations, it has become one of the top-grossing arenas in the country.  As an anchor for the continued development of Pacific Park Brooklyn, Barclays Center stands as an iconic landmark for the borough."

The parties expect to complete the transaction late this year or early in 2016. Evercore ISI advised Forest City and NS&E on the transaction and provided a fairness opinion.

About Forest City

Forest City Enterprises, Inc. is an NYSE-listed national real estate company with $10.0 billion in consolidated assets. The company is principally engaged in the ownership, development, management and acquisition of commercial and residential real estate throughout the United States. For more information, visit www.forestcity.net.

Safe Harbor Language

Statements made in this news release that state the company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. The company's actual results could differ materially from those expressed or implied in such forward-looking statements due to various risks, uncertainties and other factors. Risks and factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the inability of the company to complete the conversion to REIT status in a timely manner, its failure to satisfy any conditions to completion of the conversion to REIT status, including receipt of required third­ party consents, its failure to complete the conversion to REIT status for any other reason, its ability to qualify or to remain qualified as a REIT, the possibility that the anticipated benefits of qualifying as a REIT will not be realized, or will not be realized within the expected time period, its inability to meet expectations regarding the accounting and tax treatments of qualifying as a REIT, the possibility that the conversion to REIT status may be more expensive to complete than anticipated, including as a result of unexpected factors or events, diversion of management's attention from ongoing business operations and opportunities, the impact of issuing equity, debt or both to satisfy its E&P Distribution and any other future distributions it would be required to make as a REIT, the impact of the amount and timing of any future distributions, the impact of covenants that would prevent it from satisfying REIT distribution requirements, its lack of experience operating as a REIT if it successfully converts, legislative, administrative, regulatory or other actions affecting real estate investment trusts, including positions taken by the Internal Revenue Service, the effect on the market price of its common stock following its conversion to REIT status and the E&P Distribution, the impact to its deferred tax liability balance upon conversion to REIT status, the impact of current lending and capital market conditions on its liquidity, its ability to finance or refinance projects or repay its debt, the impact of the slow economic recovery on its ownership, development and management of its commercial real estate portfolio, general real estate investment and development risks, using modular construction as a new construction methodology and owning a factory to produce modular units, vacancies in its properties, risks associated with developing and managing properties in partnership with others, downturns in the housing market, competition, illiquidity of real estate investments, bankruptcy or defaults of tenants, anchor store consolidations or closings, international activities, the impact of terrorist acts and other armed conflicts, risks of owning and operating an arena, risks associated with an investment in a professional sports team, the ability to sell all or a portion of its ownership interests in a professional sports team and arena, its substantial debt leverage and the ability to obtain and service debt, the impact of restrictions imposed by its credit facility and senior debt, exposure to hedging agreements, the level and volatility of interest rates, the continued availability of tax-exempt government financing, the impact of credit rating downgrades, effects of uninsured or underinsured losses, effects of a downgrade or failure of its insurance carriers, environmental liabilities, conflicts of interest, risks associated with the sale of tax credits, the ability to maintain effective internal controls, compliance with governmental regulations, increased legislative and regulatory scrutiny of the financial services industry, changes in federal, state or local tax laws, volatility in the market price of its publicly traded securities, inflation risks, litigation risks, cybersecurity risks, cyber incidents, its ability to achieve its strategic goals are based on significant assumptions, and its ability to complete non-core asset sales, as well as other risks listed from time to time in the company's SEC filings, including but not limited to, the company's annual and quarterly reports.

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SOURCE Forest City Enterprises, Inc.



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