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SEC Filings

PREM14A
FOREST CITY REALTY TRUST, INC. filed this Form PREM14A on 09/21/2018
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The five directors who voted against the merger believed, based primarily on their individual assessment, evaluation and weighting of the factors discussed below, that the $25.35 per share in cash that a holder of common stock is entitled to receive in the merger—which such directors regarded as effectively reduced by $0.36 per share (resulting in an effective $24.99 per share) taking into account the Company’s expectation that stockholders would not be paid any quarterly dividend, which such directors estimated to be $0.18 per share per quarter based on the final business case projections, for the two remaining quarters of 2018 that such directors expected would fully (or near fully) elapse prior to the closing and during which stockholders will continue to own shares in the Company because the merger agreement provides that the $25.35 per share in cash that a holder of common stock is entitled to receive in the merger will be reduced by the per share amount of such quarterly dividends—significantly undervalued the Company and was not in the best interest of our stockholders. Their view was based primarily on the following:

 

  1.

Their belief that our stockholders would likely realize, on a time-value and risk-adjusted basis, significantly greater value than the per share merger consideration, which such directors regarded as effectively $24.99 for the reason noted above, if we were to have an opportunity to:

 

   

conduct an asset sale process focused on selling our different assets to different buyers (both public and private market buyers) who would attach the greatest value to each asset and timed so that sale proceeds would be received and distributed to our stockholders shortly after the expiration of the built-in gains period (which expires on December 31, 2020), and

 

   

pay dividends to our stockholders during the two remaining quarters of 2018 and during 2019 and 2020 in the amounts reflected in the final business case projections.

Their view was informed by, among other things, analyses performed by our management to estimate the NAV of our assets as of December 31, 2020 as described in the section entitled “—NAV Estimates—Summary and Results of NAV Valuations” beginning on page [●].

In addition, for a summary of the dividend projections included in the final business case projections see the section entitled “—Unaudited Prospective Financial Information—Final Business Case Projections” beginning on page [●].

 

  2.

Their view that the per share merger consideration, which such directors regarded as effectively $24.99 for the reason noted above, represented a material discount to other estimates of the NAV of our assets described in the section entitled “—NAV Estimates” beginning on page [●], including:

 

2018 NAV ESTIMATE

   Estimated
NAV/Share
   Premium of Estimated
NAV/Share to $24.99
(i.e., the $25.35
per share in cash that
a holder of common
stock is entitled to
receive in the merger
minus $0.36 per share)

Management estimate—applying cap rates obtained from a commercial real estate research information service to projected net operating income of the Company for the first quarter of 2018 (annualized)

   $29.68    18.8%

Management estimate—applying cap rates reflecting an asset-by-asset cap rate analysis to projected net operating income of the Company for the first quarter of 2018 (annualized)

   $33.01    32.1%

NAV Compilation Estimates (as defined in the section entitled “—NAV Estimates” beginning on page [●])

   $27.02-$30.81    8.1%-23.3%

Equity research analyst median estimate as of May 29, 2018

   $29.25    17.0%

See the section entitled “—Important Information About the Financial Projections and the NAV Estimates” beginning on page [●].

 

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