Forest City Writes Down Value of San Francisco Assets
Submitted August 3, 2010, 11:22 PM
Cleveland-based Forest City Enterprises lowered the book value of downtown San Francisco’s Metreon mixed-use project by $4.6 million prior to the sale of the property, according to public filings by the company with the Securities and Exchange Commission. The impairment charge was one of several Forest City took against Bay Area properties in its last fiscal quarter.
The company, which reported $11.5 billion in assets at the end of April, disclosed the sale of the 279,000 square-foot Metreon at the end of July. Forest City sold its 50 percent interest to the U.S. unit of Australia-based Westfield Group. Westfield already owned the other 50 percent of Metreon.
Forest City has written down the value of at least three other Bay Area properties in recent quarters. The company dropped the value of its partial interest in 818 Mission St. in San Francisco by just more than $4 million in its most recent quarter. It also lowered the book value of its partial interest in San Francisco’s Bulletin Building by $3.5 million.
Forest City acquired its 50 percent interest in 818 Mission in 2008. It is considered an “operating property identified for redevelopment,” according to its public filings. The property totals 28,000 square feet, and the major tenant is Denny’s.
The Bulletin Building, at 814 Mission Street, has been in the Forest City portfolio since 2006. It totals 78,000 square feet. The major tenants are the Corinthian School and Great West Life and Annuity. The building has 8,000 square feet of available office space, which the company is asking $15 a square foot a year to lease, according to LoopNet.
The three San Francisco write-downs, which totaled nearly $12.2 million, contributed to the company’s $21.4 million loss from continuing operations in its first quarter, which ended April 30. The company released its first quarter results June 8.
Forest City recently sold the 323-unit 101 San Fernando apartment complex in downtown San Jose for $59.6 million to Palo Alto-based Essex Property Trust after taking an impairment on the property of $4.4 million.
Jeff Linton, vice president of Corporate Communications for Forest City, said the company has no plans to sell either the Bulletin Building or 818 Mission.
Forest City made the decision to sell its interest in the Metreon to concentrate its efforts on other San Francisco Bay Area assets. “We felt it would be better to focus on other assets that we own in the region,” Linton said.
One of these is the 1.5 million square-foot San Francisco Centre. The property is anchored by Nordstrom, Bloomingdale’s, Century Theaters, San Francisco State University and Microsoft. Forest City holds a 50 percent stake in this property along with Westfield. It made a $299 million investment in the project in 2006. The total redevelopment costs on this project were $598 million.
In June, the company also said it expected to see the first tenants move into its 161-unit Presidio Landmark apartment project at the foot of the Golden Gate Bridge in the Presidio National Park, also in San Francisco. The project involves the redevelopment of a former hospital building into luxury units.
The company also owns a 50 percent interest in Oakland’s 665-unit Uptown Apartments.
Forest City is a New York Stock Exchange-listed national real estate company. It is actively involved in the ownership, development and redevelopment of both commercial and residential assets across the country.
