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Brookfield Makes it Official, Confirms Agreement to Buy Forest City Realty Trust in $11.4 Billion Deal

Cleveland-Based Forest City's Portfolio Includes Apartments and Office, Retail and Flex Space
July 31, 2018
(Pictured) Forest City Realty's The Yards, 5.5 million square feet of retail, office and residential property across 25 buildings on 48 acres of Washington, D.C. waterfront.

A real estate fund of Toronto-based Brookfield Asset Management Inc. agreed to acquire developer Forest City Realty Trust in an $11.4 billion deal to gain a portfolio of multifamily, office and retail properties across the United States.

Brookfield, an asset manager, said the fund will pay $25.35 in cash per share and assume debt in a deal valuing Cleveland-based Forest City 26.6 percent over Forest City's closing share price on June 15, when they were reported to be in merger talks. The Forest City board has recommended the transaction, which is expected to close in the fourth quarter.

Forest City shares were trading 8.6 percent higher at $25 per share in early trading Tuesday on the New York Stock Exchange.

Forest City’s portfolio of U.S. properties includes 6.3 million square feet of office space, 2.3 million square feet of life science buildings mostly in biotech stronghold Cambridge, MA, 2.2 million square feet of retail space and 18,500 multifamily units. Its holdings also include five large development projects in the New York area, San Francisco and Washington, D.C.

Affiliates of Starboard Value LP and Scopia Capital Management LP, which own about 14 percent of Forest City’s outstanding shares, agreed to vote their shares in favor of the merger transaction. The deal requires approval of Forest City’s stockholders. Forest City postponed a scheduled Aug. 3 conference call for its second-quarter 2018 business results to be released Thursday.

It’s the latest transaction in a year that has seen the largest flurry of commercial real estate mergers and acquisitions activity since 2007, the height of the previous real estate boom. In March, Brookfield’s real estate arm agreed to take U.S. mall owner GGP Inc. private in a deal valued at about $15 billion after initial talks fell through with Forest City.

Education Realty Trust, one of the nation's largest developers, owners and managers of collegiate housing communities, acquired an affiliate of Greystar Real Estate Partners, in an all-cash transaction valued at $4.6 billion, including debt.

LaSalle Hotel Properties last month rejected a fourth revised offer from Pebblebrook Hotel Trust and said it will move forward with a merger with affiliates of Blackstone Group.

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