Why did Forest City Ratner sell a 49 percent stake in its malls? To help pay for Atlantic Yards, and to combat investor "fatigue"

In a "Square Feet" interview in the upcoming Sunday New York Times Real Estate section, Ronald Dickerman, founder and president of the private equity firm Madison International Realty, explains his business and talks about the deal announced at the end of March to acquire a 49 percent interest in 15 retail and entertainment properties owned by Forest City Ratner.

So what do companies like Forest City do with the cash?

"To redeploy into other investment opportunities, to fund other liabilities within their portfolio," responded Dickerman.

In other words, to help pay for Atlantic Yards. Dickerman said:

They came to us, I think, in September 2010 to fund their go-forward investments. You may know that the Atlantic Yards development is something like $4 billion.

These properties are as core as core can be. They’re 99 percent occupied; the average lease term is over eight years.

(Actually, Atlantic Yards is supposed to be a $4.9 billion project.)

"Fatigue" of the investor

Madison investors see a rate of return "between 17 and 18 percent gross," so that suggests Forest City Ratner gave up something significant.

Asked if his firm adds value to its holdings, Dickerman said no:

We invest in core Class A assets where the building itself is relatively stable and the deal is not distressed. What’s distressed about the transaction is the fatigue of the underlying investor.