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NREI: caution on Brookfield bid for Forest City

From National Real Estate Investor today, Would Forest City Agree to a Brookfield Deal?, suggests caution on the the reported interest of Brookfield Asset Management in buying Forest City Realty Trust: the reported offer price is just too low, say investment analysts.

In other words, this may be a negotiation to get the bid--reportedly at a discount over 16%--closer to the net asset value.

Also, analyst Sheila McGrath said that tax considerations hamper sales after conversion to a real estate investment trust (REIT) within five years. The company converted to a REIT two years ago. “I think that these additional frictional costs would impede the value of what other buyers might pay at this juncture," she said. "The board may be in a better position to maximize shareholder value when these restrictions burn off in three years."

Does that mean status quo for three years?