Print Page      Close Window     

SEC Filings

DEFM14A
FOREST CITY REALTY TRUST, INC. filed this Form DEFM14A on 10/12/2018
Entire Document
 


Table of Contents
 

of the potential value creation of our development pipeline (rather than applying book value) and applied various discount rates to the as-of-December 31, 2020 NAV estimates. These analyses and their results are summarized below.

 

   

The as-of-March 31, 2018 NAV estimates were based on the following metrics, estimates and assumptions: (i) a weighted average cap rate of 5.21% for the portfolio, which management obtained from data from a commercial real estate research information service and believed to be reasonable; (ii) our projected annualized stabilized NOI for 2018 of $531 million (which was annualized using actual NOI for the first quarter of 2018 and utilized to estimate gross asset value as of March 31, 2018); (iii) the estimated value of unstabilized assets was derived using the present value of estimated stabilized NOI divided by stabilized cap rate and discounted to present value using a 10% discount rate; (iv) for recently opened properties currently in initial lease-up periods included in our Development segment, an estimate of NOI was reflected at 5% of the Company ownership cost; (v) total liabilities of $5.6 billion as of March 31, 2018; and (vi) diluted number of shares outstanding as of March 31, 2018 of 273.1 million. In addition, these estimates assumed that a portion of the proceeds from the pending disposition of $1.5 billion of retail assets to QIC and Madison International Realty will be exchanged into operating assets and partially reinvested in the various development initiatives in a leverage-neutral way.

 

   

The as-of-December 31, 2020 NAV estimates were based on the following estimates and assumptions: (i) a weighted average cap rate of 5.35% for the portfolio, which management obtained from data from a commercial real estate research information service and believed to be reasonable; (ii) our projected stabilized NOI for the 12-month period ending December 31, 2021 of $700 million (which was utilized to estimate gross asset value as of December 31, 2020); (iii) the estimated value of unstabilized assets was derived using the present value of estimated stabilized NOI divided by stabilized cap rate and discounted to present value using a 10% discount rate; (iv) for recently opened properties currently in initial lease-up periods included in our Development segment, an estimate of NOI was reflected at 5% of the Company ownership cost; (v) estimated total liabilities of $4.8 billion as of December 31, 2020; and (vi) diluted number of shares outstanding as of December 31, 2020 of 276.9 million. The projected NOI growth was primarily attributed to rent increases upon lease renewals in the Life Science portfolio, along with the anticipated completion and stabilization of unstabilized assets in the Company’s current pipeline and management’s expectations regarding inflation.

Summary and Results of NAV Valuations

 

   

Base Case—Gross Asset Value: Using the metrics, estimates, assumptions and methodology described above, our management estimated (i) the gross asset value of our total real estate portfolio as of March 31, 2018 of $12.1 billion, including $1.5 billion associated with disposition of certain assets, and the gross asset value of our other assets as of March 31, 2018 of $1.6 billion, and (ii) the projected gross asset value of our total real estate portfolio as of December 31, 2020 of $14.3 billion and the gross asset value of our other assets as of December 31, 2020 of 1.1 billion. 

 

   

Base Case—Net Asset Value: Using the estimates of gross asset value and the other relevant metrics, estimates, assumptions and methodology described above, (i) the result of the as-of-March 31, 2018 NAV estimates was NAV of $8.1 billion, or $29.68 on a diluted per share basis and (ii) the result of the as-of-December 31, 2020 NAV estimates was NAV of $10.6 billion, or $38.44 on a diluted per share basis (in each case without applying any discount rates).

 

   

Cap Rate Sensitivity: Our management also performed an asset-by-asset cap rate analysis based on the performance history of the Company’s real estate portfolio and management’s view of the Company’s assets in the applicable markets, and through this analysis management derived a weighted-average portfolio cap rate of 4.88% that was then applied to the modified as-of-March 31, 2018 NAV estimates (compared to 5.21% in the base case as-of-March 31, 2018 NAV estimates), and a weighted-average portfolio cap rate of 4.80% that was then applied to the modified as-of-December 31, 2020 NAV

 

-77-