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RATNER ALBERT B filed this Form PX14A6G on 11/08/2018
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There is no disclosed evidence that the newly reconstituted Board spoke with potential buyers other than Brookfield, or looked into strategic alternatives such as refinancing existing properties or pre-marketing properties and contracting for their sale before the end of the “built-in gains” period, so that the sale of the properties could be completed, and the proceeds of sale distributed to shareholders, immediately upon the conclusion of that built-in gains period.
The proxy statement includes a series of NAV estimates made by the company, but fails to provide shareholders with the detailed analyses underlying these estimates.
The NAV analysis that led to those estimates – upon which ISS also frames its stock price evaluation – does not take into account the property-by-property valuation. In fact, the single property-by-property evaluation by Forest City management arrived at an undiscounted Net Asset Value of $43.78 per share as of December 31, 2020 (proxy p. 59), which excludes an additional $2.25 per share in estimated dividends for the ten quarters prior to that date (proxy p. 80), for a total value that is 84%, or about $5.8 billion, higher than the $24.99 per share effectively being offered by Brookfield – yet another example of shareholders being denied significant returns in favor of a hasty deal. Mr. Ratner also notes that Chief Executive Officer David LaRue changed his vote to be in favor of the deal as it stood, despite this unrecognized increase in valuation.
The company’s 10-Q as of September 30, 2018 results revealed net earnings attributable to Forest City Realty Trust, Inc. (GAAP) for the first nine months of the year that exceeded $715 million – an increase of nearly seven-fold from the same period in 2017. It also revealed a significantly reduced risk profile compared to the period when transaction terms were being negotiated.
At the time that the Board agreed to sell the company to Brookfield, was the Board aware that these earnings would exceed $715 million, or $2.26 per share, for the nine months ending on September 30, 2018, with all the benefit going to Brookfield, while depriving shareholders? If so, why did they agree to these terms?
Moreover, given that the transaction is slated to close in December 2018, in order for shareholders to make a judgment on the appropriateness of the proposed price, they would need to have NAV estimates for all of 2019 – which do not appear in the proxy. Does the Board have these estimates, and if so, why have they not released them to shareholders?
The company likewise should let shareholders know whether the Board or management are currently aware of any undisclosed events, including any new leases signed or other transactions, that bear on the value of the company and its properties.
Did the Board take into account that, at minimum, the company completed $1.3 billion in gross asset dispositions between June 30, 2017 and June 30, 2018, yet the sale process for the company took place before proceeds could be redeployed, thereby providing an unrepresentative view of the company’s ability to generate NOI, a key value metric in real estate?