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Brookfield to Buy Forest City

Forest City

By Les Shaver

Another REIT leaves the public sphere as Brookfield agrees to purchase an almost-100 year old apartment developer and owner.

Another residential REIT is leaving the public sphere.

One month after an affiliate of Greystar Real Estate Partners agreed to buy EdR, Brookfield Asset Management announced that it had entered into an agreement to buy Forest City Realty Trust in all-cash transaction valued at $11.4 billion including debt.

The deal is expected to close in Q4 2018.

The Forest City portfolio includes 18,500 apartments, 6.3 million square feet of office space, 2.3 million square feet of life science assets, primarily in Cambridge, Mass., 2.2 million square feet of retail space and five large-scale development projects in the New York Metro area, San Francisco and Washington, D.C.

Forest City represents another diamond in Brookfield’s already impressive portfolio of commercial real estate. The company, which was founded by the Ratner family in 1920, made its name with landmark developments, such as The Yards project near Nationals Park in Washington D.C., the Stapleton redevelopment of the former international airport in Denver and Pacific Park Brooklyn.

This is not the first time Brookfield has bought an apartment REIT. In fact, its not the first time it has privatized a REIT with Cleveland roots, buying Associated Estates in 2015.

Brian Kingston, Chief Executive Officer of Brookfield Property Group, said in a press release, “Forest City has created a high-quality portfolio of operating and development assets over its 100-year history. We look forward to creating further value in these great assets on behalf of our limited partners.”

Brookfield has been recycling capital before the Forest City acquisition. It jettisoned a 28-percent stake in its Manhattan office and multifamily portfolio and it plans to sell an additional seven-percent stake over the remainder of this year for total proceeds of $1.8 billion, according to GlobeSt’s Erika Morphy.

“In total, the company’s capital recycling initiatives have returned $2.2 billion to Brookfield Property Partners year to date, Kingston said, and the company expects an additional $1.7 billion in additional proceeds by the end of this year,” Morphy wrote.

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