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Forest City Opts Not To Sell Itself

Instead, it is shifting the composition of the board to give shareholders a larger stake.

A Forest City holding. Photo by Forest City Realty Trust.

CLEVELAND–Forest City Realty Trust has put to rest the speculation about its acquisition. After announcing it was considering strategic alternatives last year, the board of directors has decided not to sell the REIT, based on the pricing of the offers that it has received. Instead, it is opting to give certain stakeholders in the company a greater voting share on the Board — a nod to the demands activists shareholders have been making on the REIT for the past several months.

The REIT wrote in a letter to shareholders:

To this end, we engaged in constructive discussions with certain significant stockholders of the company to identify a mutually acceptable group of new independent directors to join the Board as part of a substantial refreshment. This refreshment will help improve the company’s corporate governance structure for the benefit of all stockholders and we are confident the new directors will bring substantial industry expertise and new and diverse perspectives for the benefit of our stockholders.

50 Bidders To Start

According to Forest City, there were over 50 interested buyers during the initial stage of the process, and 18 of which executed confidentiality agreements and received proprietary information about the company. An initial round of bidding at the end of October 2017 resulted in seven indications of interest, with five being all-cash offers to acquire the REIT and two offering structured deals involving a portion of the company’s business. A second round of bidding kicked off with six potentially interested buyers, of which two parties submitted indications of interest to acquire the company, two submitted proposals to acquire the company’s development portfolio and one party reaffirmed its interest in pursuing a structured deal for a portion of the business.

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Erika Morphy

Erika Morphy

Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.

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