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SEC Filings

FOREST CITY REALTY TRUST, INC. filed this Form PREM14A on 09/21/2018
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Their view that NAV estimates are the most relevant metrics for valuing the Company due to the significant portion of our assets that are in the form of non-income-producing land and development projects, including land for which entitlements have been obtained and are under active development in San Francisco, Washington D.C. and other major markets, the value of which such directors believed was not adequately reflected in the multiples or earnings-based analyses of the type performed by our financial advisors and summarized below in the sections of this proxy statement entitled “—Opinion of Lazard” and “—Opinion of Goldman Sachs” beginning on pages [●] and [●], respectively. Moreover, our asset base and organization structure has changed materially in recent years and, for that reason, the five directors believed analyses based on historical multiples are less relevant to us. Such directors also believed that, in our case, NAV estimates are particularly relevant because such directors believed that the vast majority of our assets are located in highly liquid property markets where there is robust transaction activity that provides significant transparency as to underlying property market valuations.



The five directors took account of the fact that the 14.6% discount to analyst consensus NAV per share (calculated using $24.99 per share (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) and $29.25 per share equity research analyst median NAV estimate as of May 29, 2018) was the largest discount from among those of the selected REIT transactions reviewed with our Board which the five directors who voted against the merger believed to be relevant or comparable to the merger, consisting of sales of REITs for more than $1 billion in the past five years (but excluding any stock or part-stock transactions, distressed situations, affiliated party transactions and the single family rental real estate sector).

In addition to considering the views of the five directors that voted against the merger described above, the seven directors who voted for the merger also considered a variety of risks and other potentially negative factors regarding the merger, including the material factors described below. The factors described below were also considered by the five directors who voted against the merger.



the merger would preclude our stockholders from having the opportunity to participate in the future performance or appreciation of our assets, future potential earnings growth, future potential appreciation of the value of our common stock or future dividends that could be realized depending on our future performance or any future asset sales;



the significant costs involved in connection with entering into and completing the merger, the substantial time and effort of management required to consummate the merger and related disruptions to the operation of our business;



the restrictions on the conduct of our business prior to the completion of the merger, which could delay or prevent us from undertaking business opportunities that may arise pending completion of the merger;



the possibility that the merger may not be completed, or that completion of the merger may be delayed for reasons that are beyond the control of the Company or Brookfield, including the failure of our stockholders to approve the merger, or the failure of the Company or the Brookfield Parties to satisfy other requirements that are conditions to closing the merger, which could negatively affect the price of our common stock and/or the future business and financial results;



the potential harm to relationships with our employees, tenants and other business associates, and potential diversion of management and employee attention away from the day-to-day operation of our business, as a result of the pendency of the merger or failure to complete the merger;



an all-cash merger would be taxable to our stockholders for U.S. federal income tax purposes;



under Maryland law, our stockholders are not entitled to appraisal rights, dissenters’ rights or similar rights of an objecting stockholder in connection with the merger;



the view of certain directors that Brookfield should have improved the financial terms of its 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, including positive leasing momentum and compelling market rents at certain key properties being achieved