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SEC Filings

FOREST CITY REALTY TRUST, INC. filed this Form DEFM14A on 10/12/2018
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discussion was preliminary, key potential alternatives to our standalone plan that were discussed at this meeting included a sale of the Company, a strategic merger of the Company, a spin-off of our Office segment or Apartments segment, opportunities to continue to improve operating results of the existing business and capital allocation alternatives. Also at this meeting, our Board, senior management and advisors discussed certain tax implications related to the Company’s REIT conversion in 2016 and our Board requested further information on the potential impact on potential alternatives. For example, if we were to recognize gain on the disposition of any asset we owned prior to the Company’s conversion into a REIT during the five-year period beginning January 1, 2016 and ending December 31, 2020 (the “built-in gains period”), such as by selling any such asset, then, subject to the availability of net operating losses and other tax planning opportunities, we would be required to pay tax on the built-in gain of the asset at the highest regular corporate rate. After discussion and deliberation, our Board agreed to discuss further the benefits and considerations associated with the various operating, strategic, financial and structural alternatives at our Board’s next regularly scheduled meeting in August 2017.

On August 22, 2017, our Board convened a meeting, which was attended by members of our senior management and representatives of Lazard, Goldman Sachs and Sullivan & Cromwell. At this meeting our Board reviewed and discussed the feedback received from certain of our stockholders regarding our performance, business strategy, competitive position and corporate governance. We received feedback from stockholders who held, in the aggregate, approximately 55 percent of the outstanding shares of our common stock as of August 22, 2017, including Starboard and Scopia. Messages received from certain of our stockholders included: (1) the view that the persistent discount of the market price of our common stock relative to market perceptions of the NAV of our assets and comparable companies merited a process to determine the potential realizable value of the Company in a sale, (2) the perception that the Company was too complex, particularly in view of the number of our joint ventures, our diversified asset base and our development exposure and (3) a desire for board refreshment, particularly in view of the tenure of certain of our independent directors at the time and the fact that, at the time, five of our 13 directors were not independent directors under NYSE listing standards. Also at this meeting, representatives of Lazard and Goldman Sachs reviewed with our Board strategic, operating, financial and structural alternatives potentially available to us as well as various preliminary financial analyses of such alternatives. Representatives of Sullivan & Cromwell also reviewed with our Board the duties of the directors in the context of considering such alternatives. Advisors and management also discussed with our Board the tax consequences of potential alternatives and the duration of the built-in gains period and various encumbrances to such alternatives relating to the Company’s ground lease and joint venture exposure. Following discussion and deliberation that focused principally on our standalone plan and the key potential alternatives discussed by our Board at its meeting on June 9, 2017, our Board concluded that it would be in the best interests of the Company and our stockholders for our Board to engage in an evaluation of strategic, operating, financial and structural alternatives to enhance stockholder value (the “strategic process”), and for us to issue a press release concurrently with the commencement of the strategic process. On August 23, 2017, our Board continued the meeting convened the previous day, with our general counsel in attendance, and discussed additional logistical matters related to the pending commencement of the strategic process. During this meeting, our Board designated an informal steering group (the “informal steering group”) comprised of Mr. LaRue (our President and Chief Executive Officer and a director of the Company), Mr. James Ratner (our non-executive chairman) and Dr. Scott S. Cowen (our lead independent director at the time) to provide guidance and direction to our management and financial advisors and legal counsel regarding the strategic process between meetings of our Board.

On September 11, 2017, we issued a press release announcing that our Board had commenced the strategic process. Each of Lazard and Goldman Sachs was engaged as financial advisor to assist and advise our Board in connection with the strategic process because of its respective reputation as a highly regarded investment bank, substantial knowledge of the REIT industry, familiarity with us and extensive experience in providing financial advice and assistance in connection with reviews of strategic, operating, financial and structural alternatives and acquisition transactions. Sullivan & Cromwell was engaged as legal counsel based on its reputation as a highly regarded corporate law firm, familiarity with us and extensive experience providing legal counsel in connection with reviews of strategic, operating, financial and structural alternatives and acquisition transactions.