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Farewell, Forest City. Brookfield wraps up purchase of Cleveland real estate company

December 7, 2018

Farewell, Forest City. Brookfield wraps up purchase of Cleveland real estate company

CLEVELAND, Ohio -- Farewell, Forest City. Hello, Brookfield Properties.

The curtain fell Friday afternoon on the almost century-long run of Forest City Realty Trust, Inc., the Cleveland-based company that started as an immigrant-owned building-materials business and became a major developer and owner of real estate projects across the nation.

A Brookfield Asset Management investment fund finalized its nearly $7 billion purchase of Forest City, paying $25.35 per share for the publicly traded company. The sale, announced in late July and approved by Forest City shareholders in mid-November, led to a flurry of layoffs in Cleveland this week. Brookfield pruned top Forest City executives and trimmed other departments at the company’s downtown headquarters, while notifying several dozen additional workers that their jobs will be eliminated sometime next year.

Forest City’s common stock will be delisted from the New York Stock Exchange at the end of the day. The company will become part of Brookfield Properties, a commercial real estate empire controlled by a decentralized global alternative asset manager based in Toronto. Brookfield placed Forest City into a real estate investment fund whose stakeholders include a Brookfield real estate spin-off called Brookfield Property Partners.

The sale followed a strategic review of Forest City’s options, after dramatic changes - to the real estate portfolio, corporate structure and governance - failed to elevate the company’s lackluster share price. Ultimately, a remade and deeply divided board of directors decided that Brookfield’s offer was worthwhile. A majority of shareholders concurred, despite late-in-the-process attempts by Albert Ratner, a former chief executive officer and member of the company’s founding family, to convince them otherwise.

Brookfield, which acquired Richmond Heights-based apartment company Associated Estates Realty Corp. a few years ago, has been on a tear, chasing and closing tens of billions of dollars in real estate transactions this year. In August, Brookfield Property Partners bought mall giant GGP, Inc., the owner of Beachwood Place.

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