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SEC Filings

FOREST CITY REALTY TRUST, INC. filed this Form DEFM14A on 10/12/2018
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NAV valuation also attributes value to assets that do not yet produce income or are not fully stabilized, where a multiple of the current cash flow or earnings of the property may not accurately reflect either the current market value or future potential value of the particular property. In the chart below we have summarized the principal elements of an NAV valuation for an operating real estate company, with assets in a variety of different life-cycle stages, that was used in preparing the estimates of the NAV of our assets summarized below.



An NAV valuation is one of a range of possible valuation methodologies for valuing a company and its assets. Like all valuation methodologies, an NAV valuation has certain limitations and is subject to various risks, assumptions and estimates that are difficult to predict and may result in actual results in the future, in a liquidation or otherwise, being materially different than the estimated values. These factors are described in more detail below, including in the section entitled “—Important Information About the Financial Projections and the NAV Estimates” beginning on page 81.

The estimates of the NAV of our assets described below are included in this proxy statement solely to give our stockholders access to certain information that was made available to our Board in connection with its review of our operating, strategic, financial and structural alternatives during the strategic process and consideration of the advisability of the merger, including, as to the five directors who voted against the merger, to better understand the bases on which they determined that the merger was not more favorable than the alternative of remaining a publicly traded REIT, with the possibility of future appreciation in the stock price (and the corresponding risk of loss), and/or a future liquidation or partial liquidation of the Company on a basis reflecting an aggregate asset value greater than reflected in the per share merger consideration.

Background; Summary of Procedures and Assumptions Used in NAV Valuations



As described in the Company’s public filings, Forest City’s real estate portfolio is comprised of stabilized, income-producing assets as well as not-yet-stabilized assets in the lease-up, in-construction, and in-development pipelines. Our management conducted a NAV analyses by marking-to-market the value of stabilized assets, estimating the stabilized value of unstabilized assets, and including all non-income-producing assets at book value, as depicted above.



Our management performed these analyses to obtain estimates of the NAV of our assets as of March 31, 2018 (the “as-of-March 31, 2018 NAV estimates”) and to project estimates of the NAV of our assets as of December 31, 2020 (the “as-of-December 31, 2020 NAV estimates”). In addition, our management prepared several sensitivity scenarios, which adjusted cap rates for both the as-of-March 31, 2018 NAV estimates and the as-of-December 31, 2020 NAV estimates, applied estimates