Forest City Enterprises completed its transformation into Forest City Realty Trust, granting the Cleveland-based investment firm and developer status as a real estate investment trust.
Having first announced its intention to convert to a REIT 12 months ago, Forest City received the necessary shareholder approval at a special meeting in October. Forest City Enterprises now survives as a wholly-owned subsidiary of Forest City Realty Trust, the company said, with the transformation effective as of 11:59 p.m. on Dec. 31.
“We are thrilled to complete the conversion process and begin operating as a REIT,” Forest City president and CEO David LaRue said in a statement.
Forest City shareholders automatically became shareholders of the REIT on Jan. 1, with the company’s common stock continuing to trade on the New York Stock Exchange under the symbols “FCEA” and “FCEB.”
While REITs are required to distribute at least 90 percent of their taxable income to shareholders, they also receive major federal tax savings on those earnings. The transition will offer Forest City a “tax-efficient structure to continue to drive shareholder value,” CFO Robert O’Brien said last year.
As part of an increased focus on its core real estate business, Forest City recently agreed to offload its ownership stake in both the NBA’s Brooklyn Nets and the team’s arena, the Barclays Center in Downtown Brooklyn, to Nets majority owner Mikhail Prokhorov – giving the Russian billionaire sole ownership of both the basketball team and its stadium. – Rey Mashayekhi