CLEVELAND—Forest City Realty Trust Inc. said Monday it's reviewing its strategic options, including a merger or sale of the company. The Cleveland-based office, residential and retail owner/developer, which began trading as a REIT in January 2016, said there was no guarantee that the review would lead to a transaction of any kind.
“The board believes thoroughly evaluating all alternatives, while simultaneously continuing to execute on our current strategies and supporting our associates in doing so, are the appropriate steps to assess how best to unlock stockholder value,” says James A. Ratner, non-executive chairman of FCRT's board. Over the past several years, he adds, “we have made substantial progress transforming Forest City by focusing on core urban markets and products, reducing complexity, paying down debt, driving operational excellence and enhancing our corporate governance structure.”
This past April, activist investor Jonathan Litt called for just such a review. “We are highly confident that a formal strategic review process would produce indications of interest from credible private equity and public real estate investment trust buyers that could provide full value to shareholders,” wrote Litt, founder and CIO of Land and Buildings Investment Management.
That full value, Litt indicated in a Feb. 28 letter to the REIT's shareholders, is in the neighborhood of $31 per share, compared to then-current estimates of $28 per share, as well as the $26.14 share price for FCRT stock as of early Monday afternoon. The pressure from Land and Buildings began about six months after another investor, Scopia Capital Management, called for change at the nearly 100-year-old company.
Ratner says that along with the progress FCRT has made to date, “we are dedicated to pursuing the right course of action for our company and all stockholders, and are open to potential additional changes that could further maximize stockholder value. During this time, the entire Forest City team remains focused on the company's operations and committed to closing the gap between our share trading price and net asset value.”
Lazard will serve as financial advisor to the company in the evaluation process, and Goldman Sachs is also serving as financial advisor. Sullivan & Cromwell LLP has been retained as legal counsel.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
