CLEVELAND — Toronto-based Brookfield Asset Management Inc. (NYSE: BAM) has agreed to acquire Cleveland-based Forest City Realty Trust Inc. (NYSE: FCEA) in an all-cash transaction valued at $11.4 billion.
The price includes Forest City’s consolidated and unconsolidated debt, which totals approximately $4.6 billion. The transaction is expected to close during the fourth quarter of 2018.
Under the terms of the agreement, Brookfield will acquire Forest City for $25.35 per share. This figure represents a 26 percent premium over Forest City’s closing stock price of $20.03 per share on June 15, the day reports of the merger surfaced, as well as a 9 percent increase over the closing price of $22.99 per share on July 30.
Forest City’s portfolio is mostly comprised of assets in gateway markets. The company’s holdings by property type span 6.3 million square feet of office space, 2.2 million square feet of retail space and 18,500 multifamily units. Flagship properties include the 52-story New York Times building in Manhattan and Pacific Park, a massive mixed-use development surrounding Barclays Center in Brooklyn.
Additional components of the portfolio include 2.3 million square feet of life science properties, mostly located in Cambridge, Mass. Forest City also has five large-scale projects under development in New York, San Francisco and Washington, D.C.
“We are pleased that Brookfield recognizes the success of our ongoing efforts to strengthen the business, as well as the attractiveness of our office, apartment and mixed-use portfolio,” said David LaRue, president and CEO of Forest City. “We believe that this transaction will deliver an immediate cash premium to stockholders for their investment.”
According to The Wall Street Journal (WSJ), Brookfield, which has about $155 billion in real estate assets under management, has been eyeing a buyout of Forest City since earlier this year. Talks between the two firms stalled after Forest City rejected Brookfield’s bid of $25 per share, WSJ reported.
Brookfield’s stock price closed at $42.16 per share on Tuesday, July 31, up from $38.73 in early August 2017. Forest City’s stock price closed at $24.97 per share on Tuesday, July 31, up from $24.55 per share a year ago.
Forest City does not expect to pay quarterly dividends prior to the closing of the deal.
— Taylor Williams