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SEC Filings

FOREST CITY REALTY TRUST, INC. filed this Form PREM14A on 09/21/2018
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amount $1,805 million) of Capital Automotive LLC, a portfolio company of Brookfield, in March 2017; as a joint lead arranger and joint bookrunner with respect to a revolving credit facility (aggregate principal amount $1,000 million) of Vistra Energy Corp., a portfolio company of Brookfield, in August 2017; as a joint lead arranger and joint bookrunner with respect to a revolving credit facility (aggregate principal amount $3,500 million) of Vistra Energy Corp. in December 2017; as a joint lead arranger with respect to a term loan facility (aggregate principal amount $2,000 million) of Dynegy Inc., a portfolio company of Brookfield, in December 2017; and as financial advisor to the Special Committee of GGP Inc., an affiliate of Brookfield, in connection with the sale of GGP Inc. announced in March 2018. During the two-year period ended July 30, 2018, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to Parent and/or its affiliates, including Brookfield and/or its affiliates and portfolio companies, of approximately $18.1 million. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to the Company, Parent and their respective affiliates, including Brookfield and its affiliates and portfolio companies, for which our Investment Banking Division may receive compensation. Affiliates of Goldman Sachs also may have co-invested with Brookfield and its affiliates from time to time and may have invested in limited partnership units of affiliates of Brookfield from time to time and may do so in the future.

Our Board selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger. Pursuant to a letter agreement dated January 7, 2018, as subsequently amended, the Company engaged Goldman Sachs to act as its financial advisor in connection with the contemplated merger. The engagement letter between the Company and Goldman Sachs provides for a transaction fee of $18 million, $4.7 million of which became payable earlier this year in connection with financial advisory services provided by Goldman Sachs, and the remainder of which is contingent upon consummation of the transaction. In addition, the Company has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

NAV Estimates

To assist our Board in evaluating our business and performance, including in connection with our Board’s review of operating, strategic, financial and structural alternatives, our management prepared several estimates of the NAV of the Company’s assets during April and May of 2018 so that our Board would have an alternative valuation framework in evaluating and ultimately deciding on whether or not to authorize and recommend the merger. In addition, as described above, on February 2, 2018, the initial transaction committee engaged a nationally recognized commercial real estate services firm to provide market-based input regarding a selected portfolio of the Company’s most significant income-producing properties (which collectively represented approximately 70% of the Company’s projected 2018 NOI as of the end of 2017). Such market-based input was then combined with management’s NAV estimates for the balance of our assets and adjusted to reflect “encumbrances” such as ground leases and for “marketability” for those properties where we owned less than 51%. These values were further modified based on specific valuation observations received from bidders during the strategic process and then all these valuations and adjustments were compiled to prepare an NAV estimate that included our entire real estate portfolio (the “NAV Compilation Estimates”). Lazard and Goldman Sachs did not use or rely upon these NAV estimates (including the NAV Compilation Estimates) in connection with their respective financial analyses and opinions to our Board described above under the sections entitled “—Opinion of Lazard” and “—Opinion of Goldman Sachs” beginning on page [●] and page [●], respectively. Information about NAV and these NAV estimates and analyses is presented below.

An NAV valuation consists principally of estimating the value of the assets of a company on a market basis and is sometimes utilized by REIT investors and analysts as one reference point for a valuation of a publicly traded REIT. An NAV valuation proceeds from the premise that real estate differs from other industries in that the market value of the assets owned by a REIT can often be estimated with reasonable accuracy, based upon the robust secondary market for commercial real estate sales, which usually provides reliable “real time” pricing. An