Forest City in Merger Talks

The REIT, which has been exploring options to enhance stockholder value for the last two months, has reportedly received an invitation from Equity Commonwealth to talk about a merger.
David J. LaRue, Executive Vice President and Chief Operating Officer, Forest City Enterprises, Inc.
David LaRue, executive vice president & COO, Forest City Enterprises Inc.

Forest City Realty Trust Inc. just received a big offer. According to Reuters, Equity Commonwealth has contacted the REIT to discuss a merger.

The talks come two months after Forest City disclosed that its board of directors had begun taking steps to explore alternatives to boost shareholder value, and would evaluate a variety of options. Up for consideration: an accelerated and enhanced operating plan; structural alternatives for the company’s assets; acquisition or sale transactions; and merger.

As Forest City reported its third quarter and year-to-date results on November 2, management was positive about the REIT’s future. “Focused execution of our strategies continues to deliver solid performance, growth and stockholder value,” David LaRue, president & CEO of Forest City Realty Trust, said in a prepared statement. “We are focused on creating stockholder value and confident in our ability to continue to execute on our strategies and achieve the goals we have set for the business. We believe that delivering on those goals will result in full and fair valuation of our stock and our company, and increased total stockholder returns.”

Taking action

Since the Forest City board’s September 11 announcement regarding its plan to explore options, the REIT has made quite a few notable moves. Later in September, the company announced a deal to sell its 51 percent stake in a 2.1 million-square-foot, 12-property retail portfolio to Madison International Realty, the portfolio co-owner, for approximately $1 billion. Additionally, October brought news of a definitive agreement to sell a group of 10 regional malls to QIC in a transaction valuing the assets at roughly $3.2 billion.

If Forest City takes Equity up on its offer, the company, which owns a portfolio of mostly office and multifamily properties, will add approximately $8.2 billion in consolidated assets to Equity’s carefully curated, 11 million-square-foot office portfolio. Forest City and Equity have market capitalization of $6.6 billion and $3.8 billion, respectively, according to Yahoo! Finance.

Image courtesy of Forest City