CLEVELAND, Ohio — Farewell, Forest City. Hello, Brookfield Properties.
The curtain fell Friday afternoon on the nearly century-old operation of Forest City Realty Trust, Inc., the Cleveland-based company that began as an immigrant-owned building materials company and has grown into a major developer and owner of real estate projects across the nation.
A Brookfield Asset Management investment fund has completed 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 wave of layoffs in Cleveland this week. Brookfield has pruned top Forest City executives and cut other departments at the company’s downtown headquarters, while telling several dozen more workers their jobs will be cut over the 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 be part of Brookfield Properties, a commercial real estate empire controlled by a Toronto-based decentralized global alternative asset manager. Brookfield has placed Forest City in a property investment fund whose stakeholders include a Brookfield property spin-off called Brookfield Property Partners.
The sale follows a strategic review of Forest City’s options, after dramatic changes – to the property portfolio, corporate structure and governance – failed to drive up the price of the property. lackluster action of the company. In the end, a revamped and deeply divided board of directors decided that Brookfield’s offer was worth it. A majority of shareholders agreed, despite belated attempts by Albert Ratner, a former chief executive and member of the company’s founding family, to convince them otherwise.
Brookfield, which a few years ago acquired apartment company Associated Estates Realty Corp. based in Richmond Heights, has been on a tear, chasing and closing tens of billions of dollars in real estate deals this year. In August, Brookfield Property Partners bought shopping mall giant GGP, Inc., which owns Beachwood Place.