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Former Forest City CEO Opposes The REIT's Sale To Brookfield

8 Spruce St. in Lower Manhattan, also known as New York by Gehry, was developed by Forest City and is now owned by Brookfield.

The former CEO of Forest City Realty Trust is working to halt the sale of the company to Brookfield Asset Management.

Albert Ratner, the son of one of the company's founders, controls 1% of the stock and is the co-chairman emeritus. He was Forest City's CEO from 1975 through 1995, when it was still a private, family-owned development company.

Ratner sent a public letter against the deal, claiming the Cleveland-based REIT is worth more than the current offer and will be more valuable in the future. He is encouraging other shareholders to the same position.

Forest City’s board, recently restructured to reduce the influence of the Ratner family, backed the sale to Brookfield in a 7-to-5 vote, the Wall Street Journal reports, paving the way for the Canadian equity giant to buy the company for around $6.8B, excluding debt. Of the seven votes to approve the sale, six came from new board members, Ratner wrote in his letter.

A full shareholder vote on the sale is set for Nov. 15.

Ratner wrote in his letter that the deal was made “at the wrong price, at the wrong time, through a flawed process.”

He thinks shareholders should wait another 26 months, so that tax restrictions imposed by the 2016 conversion to a REIT no longer apply. He said the shareholders may receive 48% more on an undiscounted basis if they wait.

The Forest City portfolio includes 18,500 multifamily units and 10.8M SF of office, life science and retail space in major markets in the United States.

Some of its best-known assets include University Park at MIT — a 2.3M SF development next to the Massachusetts Institute of Technology campus — the Frank Gehry-designed rental tower at 8 Spruce St. in Lower Manhattan and the New York Times Building on Eighth Avenue. 

It is also developing The Yards in Washington, D.C., a 48-acre megaproject next to Nationals Park. It was the original developer on Brooklyn’s Pacific Park development, but has sold stakes to Greenland USA, and now controls only 5%.

Brookfield’s deal in July ended months of speculation over the future of the company.

In September 2017, Forest City announced it was weighing a merger or acquisition, but in March it said all plans for a sale were off. In June, the Brookfield deal was reportedly back on the table.