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SEC Filings

PREM14A
FOREST CITY REALTY TRUST, INC. filed this Form PREM14A on 09/21/2018
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and recommends that stockholders vote in favor of the approval of the merger and the other transactions contemplated by the merger agreement. In the course of evaluating the merger, our Board consulted with our senior management and legal counsel and financial advisors. The factors referenced below were discussed during meetings of our Board, with each individual director placing more or less emphasis or weight on particular factors.

The seven directors who voted to approve the merger generally believed that, based on their individual assessment, evaluation and weighting of the factors discussed above and below, the merger would provide greater potential value to our stockholders than if the Company were to remain an independent public company and/or pursue other potential alternatives. In connection with their evaluation of the merger, the seven directors who voted for the merger placed emphasis on: (i) management’s projected cash flows of the Company, including the potential risks to such cash flows from our development exposure and contractual encumbrances on our assets (such as ground leases), (ii) the expected macroeconomic and business execution risk of executing our business plan as an independent public company, particularly in light of the number of the Company’s joint ventures, contractual encumbrances (such as ground leases), diversified asset base and constraints applicable during the built-in gains period, (iii) the impact of our leverage profile and existing contractual arrangements on our ability to pursue financing alternatives and (iv) the risks that the range of available estimates of the NAV of our assets might not be fully realizable now or upon a future liquidation or sale of the Company or its assets (including due to their views of the risks, timing, carry costs and frictional costs associated with potential realization of the NAV of our assets after December 31, 2020), each of which informed such directors’ view of the potential trading multiples based on the earnings and the funds from operations of the Company that could be expected to be achieved in the future and the value that might be obtained in a future liquidation or sale of the Company or its assets.

The five directors who voted against the merger generally believed that, based on their individual assessment, evaluation and weighting of the factors discussed above and below, the merger would not provide greater potential value to our stockholders than if we were to remain an independent public company and/or pursue other potential alternatives. In connection with their evaluation of the merger, the five directors who voted against the merger placed emphasis on (i) our senior management’s and third parties’ estimates of the current and projected NAV of our assets (including market-based input regarding the selected assets presented by a nationally recognized commercial real estate services firm engaged by the initial transaction committee), and their belief as to the greater relevance of such valuation metrics in assessing whether the terms proposed by Brookfield should be accepted, while still recognizing the relevance of the financial analyses presentations and opinions of Lazard and Goldman Sachs relied on by the majority of our Board, including as to the potential uncertainties and costs in estimating and realizing NAV, (ii) the possibility that closer to the end of the built-in gains period, we could pursue a sale process that could be attractive to a wider range of potential buyers or the possibility that, at the end of the built-in gains period, we could conduct a liquidation on an asset-by-asset basis after the satisfaction of liabilities or sale of substantially all or some lesser portion of our assets that, in either case, together with any future dividends that may be paid by us during the interim period, could potentially provide more value to stockholders than the merger on a time-value and risk-adjusted basis and (iii) the fact that Brookfield did not improve the financial terms of June 15 proposal following the discussion on June 19, 2018 at which our representatives reviewed certain positive developments in our business since March 2018 with representatives of Brookfield. For additional details regarding the NAV estimates developed by management, see the summary included in the section entitled “—NAV Estimates” beginning on page [●].

The following material factors were among the number of factors considered by our Board that supported its decision (by a vote of seven to five) to approve the merger, declare the merger advisable and in the best interests of the Company and our stockholders and recommend that stockholders vote in favor of the Merger Proposal:

 

   

our Board’s knowledge of our business, operations, financial condition, earnings and prospects, as well as our Board’s knowledge of our operating environment, including current and prospective economic and market conditions at that time (including expectations regarding the impact of tariffs or other trade protection measures that could be implemented by the current administration);

 

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