Brookfield to investors about acquiring Forest City: "we believe we can drive further value" and "create outsized returns"

There's not a ton of detail/insight in public statements by the buyer of Forest City Realty Trust before the 12/7/18 closing of the purchase, but, for the record, here's a recap, from Brookfield, plus last week's post-closing statements, which were even more optimistic.

The key phrase is "we look forward to creating further value in this business by leveraging our unique mixed-use real estate and placemaking expertise with the portfolio." The unspoken addendum may be: "we have deeper pockets and more patience."

Emphases added.

8/1/18, Brookfield Property Partners Q2 Letter to Unitholders:

New Investments
Earlier this week, a Brookfield real estate investment fund entered into an agreement with Forest City Realty Trust (NYSE: FCEA) – an $11.4 billion diversified U.S. REIT – to acquire all of the shares of Forest City for $25.35/share. BPY is a 25% limited partnership investor in this fund. Forest City has created a high-quality portfolio of operating and development assets over its 100-year history and we believe we can continue to create further value in these great assets by leveraging our much larger office, retail and multifamily platforms.

8/1/18, Q2 2018 Brookfield Property Partners LP Earnings Call:

Brian William Kingston - Brookfield Property Partners L.P. - Senior Managing Partner & CEO of Brookfield Property Partners Limited:
In addition, as announced yesterday, Brookfield's flagship private real estate fund entered into an agreement with Forest City Realty Trust, a diversified U.S. REIT, to acquire all the shares of that company for $25.35 a share in an all-cash transaction. The Forest City portfolio is comprised of a number of iconic assets across major gateway cities in the U.S. with high barriers to entry, containing significant overlap with our existing real estate investment and operating platforms. Over its 100-year history, Forest City has created a high-quality portfolio of operating and development assets, and given our scale and multi-sector approach and expertise, we see a tremendous opportunity here to create further value within these assets for the benefit of BPY and BPR shareholders as well as Brookfield's other institutional investors in that fund.

9/26/18, Brookfield Property Partners – 2018 IR Day Transcript:

Ric Clark, Senior Managing Partner & Chairman:
The addition of Forest City, should we be successful with that transaction, is quantifiable and would add an additional 18,500 units to our multifamily portfolio.

Sheila McGrath, Evercore:
Okay, and one follow up. Ric mentioned Forest City. If you're successful with that transaction, two questions, could you just explain why that is an opportunity fund because they do have a lot of multifamily if you're trying to expand that on balance sheet, why it's not on balance sheet, and second question is, it was revealed in the proxy filed on Friday that it was a very split vote on the Board, I'm just wondering if Ric's hedging about if you're successful, if there's anything to read into that there? 

Brian Kingston, Senior Managing Partner & CEO:
I'll answer them in reverse order. So, I think we would have said the exact same thing about any other public company process that was still subject to shareholder vote, is you won't know until the day of. Obviously, we've got the support of the Board, we think it's a good price. We're optimistic that it'll be successful.
As far as where the investment goes and whether it goes into the opportunity fund or whether it goes on to the balance sheet, as you know, we are a very large investor in the fund and a substantial portion of this investment will also likely be done on a co-investment basis. So, we will, don't worry, you'll all get access to the investment returns that are coming from this. But, the way we look, really, at our investment and yield in the opportunity funds, it's like built-in partners. So, on some of these projects that are directly on our balance sheet, we have partners on a specific project or we will bring them in at some stage to, sort of, lower our capital commitment to it.
The fund is exactly the same way. We effectively have a 75% built-in partner, which is all of these other institutional investors. So, I'd say everything that we do, whether it's in the fund or it's directly on the balance sheet, benefits the balance sheet.

11/1/18, Brookfield Property Partners Q3 2018 Letter to Unitholders:

As announced in late July, a Brookfield private real estate investment fund in which BPY is a 25% investor reached agreement with Forest City Realty Trust Inc. to acquire all of its outstanding shares for $25.35 per share in cash. Forest City has a 100-year track record of owning a high-quality portfolio of operating and development assets, and we look forward to creating further value in this business by leveraging our unique mixed-use real estate and placemaking expertise with the portfolio. Forest City’s shareholders will vote on the transaction on November 15, and, assuming a positive outcome, we anticipate the transaction will close in December.

11/1/18, Q3 2018 Brookfield Property Partners LP Earnings Call:

Kingston:
In late July, we announced that we reached agreement with Forest City Realty Trust to acquire that company for $25.35 per share in cash. This acquisition will be made through a Brookfield-sponsored Real Estate Opportunity Fund in which BPY is a 25% investor. Forest City has a 100-year track record of owning high-quality, diversified portfolio of operating and development assets, and we believe we can drive further value in this business by leveraging our unique mixed-use real estate and place-making expertise.
Forest City shareholders will vote on the transaction on November 15. And assuming a positive outcome, we anticipate the transaction will close in early December.

2/7/19, Brookfield Property Partners Reports Fourth Quarter & Full-Year 2018 Results:

The following new LP investments were made during the fourth quarter:
• Completed the acquisition of Forest City Realty Trust Inc. for approximately $6.9 billion ($486 million at BPY’s share)

2/7/19, Brookfield Property Partners Q4 2018 Letter to Unitholders:

In the fourth quarter, the Fund closed on the acquisition of Forest City Realty Trust, a high-quality portfolio of operating and development assets in high-barrier-to-entry markets in the US. By combining these assets with our existing office, multifamily, retail and development platforms, we will be able to drive outsized returns from what would ordinarily be considered core-plus return assets.

Also note this 2/7/19 press release from a New Orleans law firm saying it is investigating the sale of Forest City to Brookfield and "seeking to determine whether this consideration and the process that led to it were adequate, or whether the consideration undervalued the Company."

That of course was the subject of a pre-vote challenge launched by former Forest City Chairman Al Ratner, who raised several strong points but did not prevail. It's hard not to think that the potential legal challenge is aimed at driving some kind of settlement.