Forest City, Equity Commonwealth Consider Merger To Form New $10B REIT

Office real estate owner Equity Commonwealth and Forest City Realty Trust are in talks about a potential merger. 

Chicago-based Equity, chaired by real estate mogul Sam Zell, approached Forest City about the deal. The merging of the two REITs would form a new entity focused solely on office and apartments, Reuters reports. If the deal moves forward, the REIT would be worth more than $10B, making it one of the largest mergers of 2017.

Both REITs have faced scrutiny from activist investors as of late; Forest City investors Scopia Capital Management and Land & Buildings have pushed for immediate strategic changes. 

To accommodate the requests, Forest City is exploring strategic options to enhance shareholder value and is considering an all-stock merger with Equity Commonwealth, as well as the possibility of a sale. In the spring, the REIT offloaded $4B worth of retail assets in a trade-off deal with QIC Global Real Estate to get rid of some of its non-core assets

Under similar pressure from investors, Equity Commonwealth has also made moves to assuage investor concerns, such as changing its name from Commonwealth REIT, hiring new management, bringing billionaire Sam Zell aboard as chairman and selling off properties. Equity Commonwealth currently has a market capitalization of $3.8B.

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