Forest City Reports Fiscal 2009 Third-Quarter and Year-to-Date Results
CLEVELAND, Dec. 8 /PRNewswire-FirstCall/ -- Forest City Enterprises, Inc. (NYSE: FCEA and FCEB), today announced EBDT, net earnings and revenues for the three and nine months ended October 31, 2009.
EBDT
Third-quarter EBDT (earnings before depreciation, amortization and deferred taxes) was $85.6 million, a 94.0 percent increase compared with 2008 third-quarter EBDT of $44.1 million. Year-to-date EBDT was $222.7 million, a 50.0 percent increase compared with $148.4 million for the first nine months of fiscal 2008.
On a per share basis, third-quarter 2009 EBDT was $0.52, a 23.8 percent increase compared with 2008 third quarter EBDT of $0.42. Year-to-date per share EBDT was $1.59, a 14.4 percent increase compared with $1.39 per share for the first nine months of 2008. Per-share data for both the third quarter and nine months of 2009 reflect the dilutive effect of new Class A common shares issued by the Company during the second quarter of 2009, and the "if-converted" effect of two convertible debt transactions executed during the third quarter.
For an explanation of EBDT variances, see the section titled "Review of Results" in this news release. EBDT and EBDT per share are non-Generally Accepted Accounting Principle (GAAP) measures. A reconciliation of net earnings (the most directly comparable GAAP measure to EBDT) to EBDT is provided in the Financial Highlights table in this news release.
Net Loss
The third-quarter net loss attributable to Forest City Enterprises, Inc. was $4.4 million, or $0.03 per share, compared with a net loss of $19.1 million, or $0.19 per share, in the third quarter of 2008. Net loss for the nine months ended October 31, 2009, was $36.9 million, or $0.27 per share, compared with $67.9 million, or $0.66 per share for the same period in 2008. In addition to the items discussed below that impacted EBDT and net loss, the net loss was also negatively impacted by increased impairment charges of $14.4 million for the third quarter (primarily related to the write-down of certain land holdings and to the impairment, prior to sale, of two assisted-living residential properties) and $25.4 million for the first nine months of 2009.
Revenues
Third-quarter 2009 consolidated revenues were $306.1 million compared with $330.4 million last year. Revenues for the nine months ended October 31, 2009, were $932.9 million compared with $960.0 million for the comparable period in 2008. The year-over-year revenue variance was impacted primarily by lower land sales and by reduced construction and development fee income from military housing, as early development phases were completed.
Liquidity
"For more than a year now, nearly every major action we've taken as a Company has been focused on improving liquidity and strengthening our balance sheet," said Charles A Ratner, Forest City president and chief executive officer. "Today, liquidity remains our highest priority. Since the beginning of the third quarter, we have executed a successful private debt exchange, issued and closed a new convertible debt offering, and reached agreement with our bank group on the principal terms of a new, two-year $500 million credit facility. These achievements, together with the equity offering we executed in the second quarter, have contributed to significantly increasing liquidity and managing near-term debt maturities."
At October 31, 2009, the Company had $333 million ($322 million at full consolidation) in cash on its balance sheet, and $646 million of available capacity on its revolving line of credit. The available capacity will be reduced by approximately $250 million upon the closing of the Company's new credit facility, which is anticipated by year end.
Review of Results
Third-quarter EBDT
For the three months ended October 31, 2009, the Company's core portfolio of rental properties (Commercial and Residential Segments), provided a pre-tax EBDT increase of $36.9 million, compared with the same period in 2008. Among the factors contributing to this increase were a $24.2 million gain on early extinguishment of nonrecourse mortgage debt primarily related to an underperforming retail property; $8.7 million in decreased write-offs of abandoned development projects, $6.6 million in lower interest expense on the mature portfolio; and $3.1 million in increased EBDT from the ramp-up of new properties. EBDT was also favorably impacted by expense reductions implemented over the past 12 months.
These increases in the portfolio were partially offset by third-quarter 2008 lease termination fee income of $4.0 million, which did not recur in 2009 and decreased EBDT from military housing of $3.4 million compared with the third quarter of 2008.
Pre-tax EBDT results for the Land Segment were up $7.8 million compared with the same period in 2008, primarily as a result of the third-quarter 2008 charge of $12.4 million related to the Lehman Brothers, Inc. bankruptcy. Without this favorable variance, pre-tax EBDT from the land business was down $4.6 million compared with the third quarter of 2008, reflecting continued difficult conditions affecting the land business.
Results from the Company's Corporate and Nets segments, as well as the impact of taxes, were all relatively flat compared with results from the third quarter of 2008.
Year-to-date EBDT
(An exhibit illustrating factors impacting year-to-date 2009 EBDT results, compared with results for the first nine months of 2008, is available on the Investor Relations page of the Company's Web site: www.forestcity.net)
For the nine months ended October 31, 2009, the Commercial and Residential Segments combined provided a pre-tax EBDT increase of $64.2 million, compared with the same period in 2008. Significant factors contributing to the increase included $28.8 million for a gain on early extinguishment of debt, primarily related to an underperforming retail property, decreased write-offs of abandoned development projects of $17.8 million, decreased interest expense of $15.1 million on the mature portfolio, increased EBDT of $7.2 million from the ramp up of new properties, compared with the first nine months of 2008, and increased income from the sale of tax credits of $4.2 million. The balance of the increase ($13.7 million) is comprised of expense reductions implemented over the past 12 months, an increase in capitalized interest and miscellaneous other items.
Partially offsetting these positive portfolio factors were $12.2 million in 2008 lease termination fee income which did not recur in 2009, decreased pre-tax EBDT from military housing of $7.1 million, and $3.3 million in reduced EBDT from properties sold.
The Land Segment provided a pre-tax EBDT increase of $13.6 million, compared with the first nine months of 2008. This positive variance was driven by the previously mentioned third-quarter 2008 charge related to the Lehman Brothers, Inc. bankruptcy, and a gain on early extinguishment of nonrecourse mortgage debt of $11.3 million. Without the impact of these items, the Land Segment was down approximately $10.1 million for the first nine months of 2009, compared with the same period in 2008.
Corporate pre-tax EBDT decreased $11.8 million and was impacted by severance expense of $8.7 million and increased corporate interest expense of $12.2 million, which were partially offset by corporate expense reductions of $8.0 million. Nine-month EBDT results also reflect a larger tax benefit of $6.3 million, compared with the first nine months of 2008, as a result of ongoing tax management initiatives.
Commentary
"Third-quarter EBDT results significantly exceeded our expectations as a result of lower interest expense, and transactional factors and non-recurring charges, including early extinguishment of debt and reduced development write-offs," said Ratner. "Absent the impact of these items, the performance of our portfolio of rental properties was essentially flat compared with 2008, both for the quarter and nine months, in line with our expectations. Given the severity of the recession and conditions impacting the entire real estate industry, these results show that our overall portfolio is holding its own under very difficult circumstances.
"We continue to see generally weak fundamentals in the overall marketplace, particularly in retail and residential, and the land business continues to struggle. Our office portfolio has experienced gains primarily from the lease-up of previously vacant space, and the life science portfolio continues to show strength. Military housing, while down in year-over-year comparisons, continues to be a meaningful contributor to our results. Overall comparable property net operating income remains roughly even with our year-to-date results for 2008, reflecting both the quality of the markets in which our properties are located and the diversity of product types within our portfolio. We also benefited from contributions from new properties that have been completed and opened in the past 12 months."
NOI, Occupancies and Rent
Overall comparable property net operating income (NOI) increased 0.8 percent during the third quarter compared with the same period a year ago. The office portfolio was up 5.6 percent, while the retail and residential portfolios were down 1.7 percent and 3.9 percent, respectively. For the year to date, overall comparable property NOI increased 0.1 percent compared with the first nine months of 2008. The office portfolio increased 6.2 percent, while the retail and residential portfolios were down 2.0 percent and 3.3 percent, respectively.
Comparable property NOI, defined as NOI from properties operated in the three and nine months ended October 31, 2009, and 2008, is a non-GAAP financial measure, and is based on the pro-rata consolidation method, also a non-GAAP financial measure. Included in this release is a schedule that presents comparable property NOI on the full-consolidation method.
At October 31, 2009, comparable retail occupancies were 90.1 percent, compared with 91.6 percent at October 31, 2008, and regional mall sales averaged $392 per square foot on a rolling 12-month basis. Comparable office occupancies decreased to 89.4 percent, compared with 90.0 percent last year. Comparable average occupancies for the nine months ended October 31, 2009, in the residential business were 90.4 percent, compared with 92.4 percent last year. Comparable residential net rental income (defined as gross rent less vacancies and concessions) decreased to 87.3 percent, compared with 90.2 percent in the same period in 2008.
Financing Activity
On November 18, 2009, Forest City announced that it reached an agreement on the principal terms of a new, two-year, $500 million revolving credit facility with its 15-member bank group. All 14 members of the Company's prior bank group, along with one new bank, are part of the new facility. The new facility will replace Forest City's prior $750 million credit facility, which is scheduled to mature in March 2010. The new facility is expected to close by the end of the year.
Since January 31, 2009, the Company has addressed, through closed loans and committed financings, $637.0 million at full consolidation ($669.1 million at its pro-rata share) of the $826.6 million ($917.8 million at pro-rata) of net maturities (inclusive of notes payable) coming due in fiscal year 2009. Additionally, the Company addressed $970.5 million ($991.0 million at pro-rata) of loans maturing in future years, including borrowings that were outstanding at January 31, 2009, on the Company's revolving line of credit.
As of October 31, 2009, the Company's weighted average cost of mortgage debt decreased to 5.04 percent from 5.58 percent at October 31, 2008, primarily due to a decrease in variable-rate mortgage debt. Fixed-rate mortgage debt, which represented 70 percent of the Company's total nonrecourse mortgage debt, and is inclusive of interest rate swaps, increased from 6.05 percent at October 31, 2008, to 6.09 percent at October 31, 2009. Variable-rate mortgage debt decreased from 4.15 percent at October 31, 2008, to 2.55 percent at October 31, 2009.
Openings and Projects Under Construction
At the end of the third quarter, the Company had seven projects under construction with a total project cost of $2.1 billion at the Company's pro-rata share ($2.5 billion at full consolidation). Since the end of the quarter, Forest City officially opened the East River Plaza retail center with the first Costco in the borough of Manhattan. Costco's opening has received tremendous community support, both in terms of sales and new member sign-ups. East River Plaza is more than 90 percent leased and will also be home to Manhattan's first Target. Other tenants to open beginning in mid-2010 include Best Buy, Marshalls, PetSmart and Old Navy.
Also since the end of the third quarter, the Company has begun initial lease-up for the 365-unit 80 DeKalb residential rental community in Brooklyn. The leasing office and model units opened approximately three weeks ago and response has been strong, with hundreds of prospective tenants visiting the building. First tenant move-ins are expected by mid-December 2009.
Among projects currently under construction, activity continues in Hallandale Beach, Fla., at the 497,000-square-foot Village at Gulfstream Park retail center, where 85 percent of the retail space is leased. The property's grand opening is scheduled for February, 11, 2010.
In keeping with the stated strategy of curtailing additional new development, the Company has not commenced any new construction during 2009. This is in contrast to starts over the past three years, which have averaged approximately $1 billion at the Company's pro-rata share (approximately $865 million at full consolidation) each year. As previously stated, the Barclays Center arena at Atlantic Yards is the only major project on which the Company expects to commence construction yet this year.
Other Milestones
The Company achieved the following additional milestones either during the third quarter or subsequent to the end of the quarter:
- As previously announced, since the beginning of the third quarter, the Company took several major actions to improve liquidity, strengthen its balance sheet and manage near-term maturities. On October 2, Forest City entered into separate, private agreements to exchange $167.4 million of the Company's Puttable Equity-Linked Senior Notes due 2011, for new notes due 2014. An additional $32.6 million of the new notes were also issued to certain of these investors. On October 26, Forest City issued $200 million of convertible senior notes due 2016. And on November 18, the Company announced an agreement with its bank group on the principal terms of a new, two-year, $500 million revolving credit facility to replace the existing facility, which matures in March 2010.
- In late September, Forest City Ratner Companies, the Company's New York-based subsidiary, and Nets Sports and Entertainment signed a letter of intent with an affiliate of Onexim Group, an international private investment fund, to create a strategic partnership for the development of the Atlantic Yards project in Brooklyn, and the Barclays Center arena, the planned home of the NBA's Nets. As part of the agreement, entities to be formed by Onexim Group will invest $200 million and make certain contingent funding commitments to acquire 45 percent of the arena project and 80 percent of the NBA team, and the right to purchase up to 20 percent of the Atlantic Yards Development Company, which will develop the non-arena real estate.
- On November 24, the New York State Court of Appeals issued a key favorable ruling in a lawsuit related to the Company's Atlantic Yards development project in Brooklyn. The suit challenged the State's use of eminent domain related to the project. The court rejected the challenge in a 6-1 ruling, clearing a significant legal hurdle for the project. Subsequently, during the week of December 1, the major bond rating agencies issued investment-grade ratings for $500 million in tax-exempt bonds to finance a portion of the construction of the Barclays Center arena. Both of these events are major positive milestones for the overall project, and while challenges remain, they enable the project to move forward with an anticipated ground-breaking in the fourth quarter.
- On December 2, Las Vegas City Council voted to move ahead with the financing and construction of a new City Hall, which the Company will develop on a fee basis. The City Hall project is part of the City's overall strategy to stimulate economic development in downtown Las Vegas, and also involves a land swap between the Company and the City for future development rights in the Symphony Park development district downtown.
- In early September, Forest City Military Communities (FCMC) completed the first 68 homes in a new 141-home Navy Northwest Region neighborhood being developed in Lake Stevens, Washington. Having broken ground in February, FCMC completed the first phase of the project two months ahead of schedule.
- In part because of its history of creating public/private partnerships, the Company has benefited in a number of instances from government actions to help stimulate the economy. Recent examples include:
- A new interchange in Denver to serve our Stapleton project and the Northfield at Stapleton retail center. Financing for the interchange includes $12 million in federal stimulus money.
- The previously mentioned Las Vegas fee-development project, where Build America Bonds, which were created by the American Recovery and Reinvestment Act of 2009 (ARRA), will be used by the City to finance the majority of the project.
- Federal stimulus-related efforts to create an efficient market for low-income housing tax credits for 80/20 residential projects, which make it easier for the Company to use the credits on existing or under-construction projects, including the recently opened Hamel Mill Lofts in Haverhill, Mass.
- A $55 million allocation of New Market Tax Credits to the Company's community development entity. Thirty percent of this national program's overall funding for the latest round of allocations came from the ARRA.
- A $1 million grant from the State of Ohio, funded by ARRA's State Energy Program, to install a photovoltaic rooftop system at one of the Company's major Cleveland-area residential properties.
Outlook
"We maintain the same cautious outlook that we have expressed for nearly two years now," Ratner said. "As we have said before, we are focused on liquidity as our highest priority, and we continue to adhere closely to the five strategies we implemented in 2008 to address economic and financial market conditions - enhancing liquidity from the portfolio and capital markets, proactively managing debt maturities, driving costs out of the business, curtailing future development, and taking advantage of opportunities created by market conditions.
"Our approach, as always, is to take a conservative course. We expect the fourth quarter of 2009 and all of 2010 to be challenging for our Company and for the entire industry.
"Despite this caution, we take comfort in the resilience that our people and our Company have demonstrated. We continue to execute on the strategies we put in place to strengthen our balance sheet and improve liquidity. Our operating portfolio is holding its own under difficult circumstances. And we continue to nurture key opportunities in our pipeline that can move forward when economic and financial-market conditions allow."
Corporate Description
Forest City Enterprises, Inc. is an $11.9 billion NYSE-listed national real estate company. The Company is principally engaged in the ownership, development, management and acquisition of commercial and residential real estate and land throughout the United States. For more information, visit www.forestcity.net.
EBDT
The Company uses an additional measure, along with net earnings, to report its operating results. This non-GAAP measure, referred to as Earnings Before Depreciation, Amortization and Deferred Taxes ("EBDT"), is not a measure of operating results or cash flows from operations as defined by GAAP and may not be directly comparable to similarly titled measures reported by other companies.
The Company believes that EBDT provides additional information about its core operations and, along with net earnings, is necessary to understand its operating results. EBDT is used by the chief operating decision maker and management in assessing operating performance and to consider capital requirements and allocation of resources by segment and on a consolidated basis. The Company believes EBDT is important to investors because it provides another method for the investor to measure its long-term operating performance, as net earnings can vary from year to year due to property dispositions, acquisitions and other factors that have a short-term impact.
EBDT is defined as net earnings excluding the following items: i) gain (loss) on disposition of rental properties, divisions and other investments (net of tax); ii) the adjustment to recognize rental revenues and rental expense using the straight-line method; iii) non-cash charges for real estate depreciation, amortization, amortization of mortgage procurement costs and deferred income taxes; iv) preferred payment classified as noncontrolling interest expense on the Company's Consolidated Statements of Operations; v) impairment of real estate (net of tax); vi) extraordinary items (net of tax); and vii) cumulative or retrospective effect of change in accounting principle (net of tax). Unlike the real estate segments, EBDT for the Nets segment equals net earnings.
EBDT is reconciled to net earnings (loss), the most comparable financial measure calculated in accordance with GAAP, in the table titled Financial Highlights below and in the Company's Supplemental Package, which the Company will also furnish to the SEC on Form 8-K. The adjustment to recognize rental revenues and rental expenses on the straight-line method is excluded because it is management's opinion that rental revenues and expenses should be recognized when due from the tenants or due to the landlord. The Company excludes depreciation and amortization expense related to real estate operations from EBDT because it believes the values of its properties, in general, have appreciated over time in excess of their original cost. Deferred taxes from real estate operations, which are the result of timing differences of certain net expense items deducted in a future year for federal income tax purposes, are excluded until the year in which they are reflected in the Company's current tax provision. The impairment of real estate is excluded from EBDT because it varies from year to year based on factors unrelated to the Company's overall financial performance and is related to the ultimate gain on dispositions of operating properties. The Company's EBDT may not be directly comparable to similarly titled measures reported by other companies.
Pro-Rata Consolidation Method
This press release contains certain financial measures prepared in accordance with GAAP under the full consolidation accounting method and certain financial measures prepared in accordance with the pro-rata consolidation method (non-GAAP). The Company presents certain financial amounts under the pro-rata method because it believes this information is useful to investors as this method reflects the manner in which the Company operates its business. In line with industry practice, the Company has made a large number of investments in which its economic ownership is less than 100 percent as a means of procuring opportunities and sharing risk. Under the pro-rata consolidation method, the Company presents its investments proportionate to its economic share of ownership. Under GAAP, the full consolidation method is used to report partnership assets and liabilities consolidated at 100 percent if deemed to be under its control or if the Company is deemed to be the primary beneficiary of the variable interest entities ("VIE"), even if its ownership is not 100 percent. The Company provides reconciliations from the full consolidation method to the pro-rata consolidation method in the exhibits below and throughout its Supplemental Package, which the Company will also furnish to the SEC on Form 8-K.
Safe Harbor Language
Statements made in this news release that state the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. The Company's actual results could differ materially from those expressed or implied in such forward-looking statements due to various risks, uncertainties and other factors. Risks and factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the impact of current market conditions on our liquidity, ability to finance or refinance projects and repay our debt, the impact of the current economic environment on our ownership, development and management of our commercial real estate portfolio, general real estate investment and development risks, liquidity risks we could face if we do not close the transaction with Onexim Group to create a strategic partnership for our Brooklyn Atlantic Yards project, vacancies in our properties, further downturns in the housing market, competition, illiquidity of real estate investments, bankruptcy or defaults of tenants, anchor store consolidations or closings, international activities, the impact of terrorist acts, risks associated with an investment in a professional sports team, our substantial debt leverage and the ability to obtain and service debt, the impact of restrictions imposed by our credit facility and senior debt, exposure to hedging agreements, the level and volatility of interest rates, the continued availability of tax-exempt government financing, the impact of credit rating downgrades, effects of uninsured or underinsured losses, environmental liabilities, conflicts of interest, risks associated with developing and managing properties in partnership with others, the ability to maintain effective internal controls, compliance with governmental regulations, increased legislative and regulatory scrutiny of the financial services sector, volatility in the market price of our publicly traded securities, litigation risks, as well as other risks listed from time to time in the Company's SEC filings, including but not limited to, the Company's annual and quarterly reports.
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Nine Months Ended October 31, 2009 and 2008
(dollars in thousands, except per share data)
Three Months Ended
October 31, Increase (Decrease)
----------- -------------------
2009 2008 Amount Percent
---- ---- ------ -------
Operating Results:
Earnings (loss) from
continuing operations $1,532 $(14,855) $16,387
Discontinued operations,
net of tax (5,403) 202 (5,605)
------ --- ------
Net loss (3,871) (14,653) 10,782
Net earnings attributable
to noncontrolling interest (513) (4,462) 3,949
---- ------ -----
Net loss attributable to
Forest City Enterprises, Inc. $(4,384) $(19,115) $14,731
======= ======== =======
Earnings Before Depreciation,
Amortization and Deferred
Taxes (EBDT) (2) $85,612 $44,138 $41,474 94.0%
======= ======= =======
Reconciliation of Net Loss
to Earnings Before
Depreciation, Amortization
and Deferred Taxes (EBDT) (2):
Net loss attributable
to Forest City
Enterprises, Inc. $(4,384) $(19,115) $14,731
Depreciation and
amortization - Real Estate
Groups (8) 71,284 69,725 1,559
Amortization of mortgage
procurement costs -
Real Estate Groups (8) 3,888 3,218 670
Deferred income tax
expense - Real Estate
Groups (9) 1,205 (5,920) 7,125
Deferred income tax
expense - Non-Real
Estate Groups: (9)
Gain on disposition of
other investments - - -
Current income tax expense
on non-operating earnings: (9)
Gain on disposition
included in discontinued
operations (3,031) - (3,031)
Gain on disposition of
unconsolidated entities 203 (833) 1,036
Straight-line rent
adjustment (4) (3,164) (4,523) 1,359
Preference payment (6) 585 877 (292)
Preferred return on disposition - - -
Impairment of real estate 549 - 549
Impairment of unconsolidated
entities 13,200 - 13,200
Gain on disposition of
unconsolidated entities (4,498) (200) (4,298)
Gain on disposition of other
investments - - -
Discontinued operations: (1)
Gain on disposition of
rental properties - - -
Impairment of real estate 9,775 - 9,775
Retrospective adoption of
accounting guidance for
convertible debt instruments (7) - 909 (909)
----- ---- -----
Earnings Before Depreciation,
Amortization and Deferred
Taxes (EBDT) (2) $85,612 $44,138 $41,474 94.0%
======= ======= =======
Diluted Earnings per Common Share:
Earnings (loss) from
continuing operations $0.01 $(0.15) $0.16
Discontinued operations,
net of tax (0.03) - (0.03)
----- --- -----
Net loss (0.02) (0.15) 0.13
Net earnings attributable
to noncontrolling interest (0.01) (0.04) 0.03
----- ----- ----
Net loss attributable to
Forest City Enterprises, Inc. $(0.03) $(0.19) $0.16
====== ====== =====
Earnings Before Depreciation,
Amortization and Deferred
Taxes (EBDT) (2) (3) (5) $0.52 $0.42 $0.10 23.8%
===== ===== =====
Operating earnings (loss), net
of tax (a non-GAAP financial
measure) $0.05 $(0.15) $0.20
Impairment of real estate, net
of tax (0.09) - (0.09)
Gain on disposition of rental
properties and other
investments, net of tax 0.02 - 0.02
Net earnings attributable to
noncontrolling interest (0.01) (0.04) 0.03
----- ----- ----
Net loss attributable to
Forest City Enterprises, Inc. $(0.03) $(0.19) $0.16
====== ====== =====
Basic weighted average
shares outstanding (5) 155,314,676 102,845,434 52,469,242
=========== =========== ==========
Diluted weighted average
shares outstanding (5) 163,866,572 106,914,319 56,952,253
=========== =========== ==========
Nine Months Ended
October 31, Increase (Decrease)
----------- -------------------
2009 2008 Amount Percent
---- ---- ------ -------
Operating Results:
Earnings (loss) from $(28,350) $(63,900) $35,550
continuing operations
Discontinued operations, net (2,303) 6,321 (8,624)
of tax ------ ----- ------
Net loss (30,653) (57,579) 26,926
Net earnings attributable
to noncontrolling interest (6,199) (10,324) 4,125
------ ------- -----
Net loss attributable to
Forest City Enterprises,
Inc. $(36,852) $(67,903) $31,051
======== ======== =======
Earnings Before
Depreciation,
Amortization and
Deferred Taxes (EBDT) (2) $222,699 $148,435 $74,264 50.0%
======== ======== =======
Reconciliation of Net Loss
to Earnings Before
Depreciation, Amortization
and Deferred Taxes
(EBDT) (2):
Net loss attributable to
Forest City Enterprises,
Inc. $(36,852) $(67,903) $31,051
Depreciation and
amortization - Real
Estate Groups (8) 218,436 214,173 4,263
Amortization of mortgage
procurement
costs - Real Estate
Groups (8) 11,733 10,009 1,724
Deferred income tax
expense - Real Estate
Groups (9) (2,294) (5,266) 2,972
Deferred income tax
expense - Non-Real
Estate Groups: (9)
Gain on disposition of
other investments - 58 (58)
Current income tax
expense on non-operating
earnings: (9)
Gain on disposition
included in discontinued
operations 754 - 754
Gain on disposition of
unconsolidated entities 203 506 (303)
Straight-line rent
adjustment (4) (9,553) (3,422) (6,131)
Preference payment (6) 1,756 2,744 (988)
Preferred return on
disposition - 208 (208)
Impairment of real estate 3,124 - 3,124
Impairment of unconsolidated
entities 34,663 6,026 28,637
Gain on disposition of
unconsolidated entities (4,498) (1,081) (3,417)
Gain on disposition of
other investments - (150) 150
Discontinued operations: (1)
Gain on disposition of
rental properties (4,548) (8,627) 4,079
Impairment of real estate 9,775 - 9,775
Retrospective adoption
of accounting guidance for
convertible debt
instruments (7) - 1,160 (1,160)
----- ----- -----
Earnings Before Depreciation,
Amortization and Deferred
Taxes (EBDT) (2) $222,699 $148,435 $74,264 50.0%
======== ======== =======
Diluted Earnings per
Common Share:
Earnings (loss) from
continuing operations $(0.21) $(0.62) $0.41
Discontinued operations,
net of tax (0.01) 0.06 (0.07)
----- ---- -----
Net loss (0.22) (0.56) 0.34
Net earnings attributable
to noncontrolling interest (0.05) (0.10) 0.05
----- ----- ----
Net loss attributable to
Forest City Enterprises, Inc. $(0.27) $(0.66) $0.39
====== ====== =====
Earnings Before
Depreciation, Amortization
and Deferred Taxes
(EBDT) (2) (3) (5) $1.59 $1.39 $0.20 14.4%
===== ===== =====
Operating earnings
(loss), net of tax
(a non-GAAP financial
measure) $(0.04) $(0.58) $0.54
Impairment of real
estate, net of tax (0.22) (0.04) (0.18)
Gain on disposition of
rental properties and
other investments, net of tax 0.04 0.06 (0.02)
Net earnings attributable to
noncontrolling interest (0.05) (0.10) 0.05
----- ----- ----
Net loss attributable to
Forest City Enterprises, Inc. $(0.27) $(0.66) $0.39
====== ====== =====
Basic weighted average
shares outstanding (5) 134,602,200 102,714,757 31,887,443
=========== =========== ==========
Diluted weighted average
shares outstanding (5) 139,906,624 107,113,883 32,792,741
=========== =========== ==========
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Nine Months Ended October 31, 2009 and 2008
(dollars in thousands)
Three Months Ended
October 31, Increase (Decrease)
----------- -------------------
2009 2008 Amount Percent
---- ---- ------ -------
Operating Earnings (a non-GAAP
financial measure) and
Reconciliation to Net Earnings:
Revenues from real estate
operations
Commercial Group $241,317 $247,643 $(6,326)
Residential Group 58,663 72,475 (13,812)
Land Development Group 6,120 10,263 (4,143)
Corporate Activities - - -
--- --- ---
Total Revenues 306,100 330,381 (24,281) (7.3%)
Operating expenses (171,684) (200,441) 28,757
Interest expense (87,863) (97,081) 9,218
Loss on early extinguishment
of debt 28,902 3,692 25,210
Amortization of mortgage
procurement costs (8) (3,562) (2,838) (724)
Depreciation and
amortization (8) (66,393) (64,038) (2,355)
Interest and other income 5,522 6,752 (1,230)
Equity in earnings (loss),
including impairment, of
unconsolidated entities (11,836) (3,198) (8,638)
Impairment of unconsolidated
entities 13,200 - 13,200
Gain on disposition of
unconsolidated entities (4,498) (200) (4,298)
Preferred return on disposition - - -
Revenues and interest income
from discontinued
operations (1) 1,688 4,186 (2,498)
Expenses from discontinued
operations (1) (739) (3,856) 3,117
---- ------ -----
Operating loss (a non-GAAP
financial measure) 8,837 (26,641) 35,478
----- ------- ------
Income tax expense (9) 2,895 11,916 (9,021)
Income tax expense from
discontinued
operations (1) (9) 3,423 (128) 3,551
Income tax expense on
non-operating earnings items
(see below) (7,379) 78 (7,457)
------ --- ------
Operating earnings (loss), net
of tax (a non-GAAP financial
measure) 7,776 (14,775) 22,551
----- ------- ------
Impairment of real estate (549) - (549)
Impairment of unconsolidated
entities (13,200) - (13,200)
Gain on disposition of
unconsolidated entities 4,498 200 4,298
Preferred return on disposition - - -
Gain on disposition of other
investments - - -
Gain on disposition of rental
properties included in discontinued
operations (1) - - -
Impairment of real estate
included in discontinued
operations (1) (9,775) - (9,775)
Income tax benefit (expense) on
non-operating earnings: (9)
Impairment of real estate 212 - 212
Impairment of unconsolidated
entities 5,121 - 5,121
Gain on disposition of
other investments - - -
Gain on disposition of
unconsolidated entities (1,745) (78) (1,667)
Gain on disposition of
rental properties
included in discontinued
operations - - -
Impairment of real estate
included in discontinued
operations 3,791 - 3,791
----- --- -----
Income tax expense on
non-operating earnings
(see above) 7,379 (78) 7,457
----- --- -----
Net earnings (loss) (3,871) (14,653) 10,782
Net earnings attributable to
noncontrolling interest (513) (4,462) 3,949
---- ------ -----
Net loss attributable to Forest
City Enterprises, Inc. $(4,384) $(19,115) $14,731
======= ======== =======
Nine Months Ended
October 31, Increase (Decrease)
----------- -------------------
2009 2008 Amount Percent
---- ---- ------ -------
Operating Earnings (a
non-GAAP financial measure)
and Reconciliation to
Net Earnings:
Revenues from real estate
operations
Commercial Group $720,755 $715,991 $4,764
Residential Group 198,643 220,172 (21,529)
Land Development Group 13,491 23,844 (10,353)
Corporate Activities - - -
--- --- ---
Total Revenues 932,889 960,007 (27,118) (2.8%)
Operating expenses (532,000) (593,306) 61,306
Interest expense (258,434) (259,450) 1,016
Loss on early extinguishment
of debt 37,965 (1,539) 39,504
Amortization of mortgage
procurement costs (8) (10,645) (8,723) (1,922)
Depreciation and
amortization (8) (199,659) (198,610) (1,049)
Interest and other income 23,924 27,976 (4,052)
Equity in earnings (loss),
including impairment, of
unconsolidated entities (45,140) (18,787) (26,353)
Impairment of unconsolidated
entities 34,663 6,026 28,637
Gain on disposition of
unconsolidated entities (4,498) (1,081) (3,417)
Preferred return on
disposition - 208 (208)
Revenues and interest income
from discontinued
operations (1) 5,476 13,250 (7,774)
Expenses from discontinued
operations (1) (4,011) (11,575) 7,564
------ ------- -----
Operating loss (a non-GAAP
financial measure) (19,470) (85,604) 66,134
------- ------- ------
Income tax expense (9) 25,874 28,382 (2,508)
Income tax expense from
discontinued
operations (1) (9) 1,459 (3,981) 5,440
Income tax expense on
non-operating earnings
items (see below) (14,937) 1,401 (16,338)
------- ----- -------
Operating earnings (loss),
net of tax (a non-GAAP
financial measure) (7,074) (59,802) 52,728
------ ------- ------
Impairment of real estate (3,124) - (3,124)
Impairment of unconsolidated
entities (34,663) (6,026) (28,637)
Gain on disposition of
unconsolidated entities 4,498 1,081 3,417
Preferred return on
disposition - (208) 208
Gain on disposition of other
investments - 150 (150)
Gain on disposition of rental
properties included in
discontinued operations (1) 4,548 8,627 (4,079)
Impairment of real estate
included in discontinued
operations (1) (9,775) - (9,775)
Income tax benefit (expense) on
non-operating earnings: (9)
Impairment of real estate 1,211 141 1,070
Impairment of
unconsolidated entities 13,444 2,187 11,257
Gain on disposition of
other investments - (58) 58
Gain on disposition of
unconsolidated entities (1,745) (338) (1,407)
Gain on disposition of
rental properties
included in discontinued
operations (1,764) (3,333) 1,569
Impairment of real estate
included in discontinued
operations 3,791 - 3,791
----- --- -----
Income tax expense on
non-operating earnings
(see above) 14,937 (1,401) 16,338
------ ------ ------
Net earnings (loss) (30,653) (57,579) 26,926
Net earnings attributable
to noncontrolling interest (6,199) (10,324) 4,125
------ ------- -----
Net loss attributable to
Forest City
Enterprises, Inc. $(36,852) $(67,903) $31,051
======== ======== =======
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Nine Months Ended October 31, 2009 and 2008
(in thousands)
1) All earnings of properties that have been sold or are held for sale are
reported as discontinued operations assuming no significant continuing
involvement.
2) The Company uses an additional measure, along with net earnings, to
report its operating results. This measure, referred to as Earnings Before
Depreciation, Amortization and Deferred Taxes ("EBDT"), is not a measure
of operating results as defined by generally accepted accounting
principles and may not be directly comparable to similarly-titled measures
reported by other companies. The Company believes that EBDT provides
additional information about its operations, and along with net earnings,
is necessary to understand its operating results. EBDT is defined as net
earnings excluding the following items: i) gain (loss) on disposition of
operating properties, divisions and other investments (net of tax); ii)
the adjustment to recognize rental revenues and rental expense using the
straight-line method; iii) non-cash charges for real estate depreciation,
amortization (including amortization of mortgage procurement costs) and
deferred income taxes; iv) preferred payment classified as noncontrolling
interest expense on the Company's Consolidated Statement of Earnings; v)
impairment of real estate (net of tax); vi) extraordinary items (net of
tax); and vii) cumulative or retrospective effect of change in accounting
principle (net of tax). See our discussion of EBDT in the news release.
3) For the three and nine months ended October 31, 2009, the calculation
of EBDT per share requires an adjustment for interest of $410 related to
the 3.625% Puttable Senior Notes and the 5% Convertible Senior Notes.
Therefore EBDT for purposes of calculating per share data is $86,022 and
$223,109 for the three and nine months ended October 31, 2009,
respectively.
4) The Company recognizes minimum rents on a straight-line basis over the
term of the related lease pursuant to accounting for leases. The
straight-line rent adjustment is recorded as an increase or decrease to
revenue from Forest City Rental Properties Corporation, a wholly-owned
subsidiary of Forest City Enterprises, Inc., with the applicable offset to
either accounts receivable or accounts payable, as appropriate.
5) For the nine months ended October 31, 2009, the effect of 5,304,424
shares of dilutive securities were not included in the computation of
diluted earnings per share because their effect is anti-dilutive to the
loss from continuing operations. (Since these shares are dilutive for the
computation of EBDT per share for the nine months ended October 31, 2009,
diluted weighted average shares outstanding of 139,906,624 were used to
arrive at $1.59/share.)
For the three and nine months ended October 31, 2008, the effect of
4,068,885 and 4,399,126 shares of dilutive securities were not included in
the computation of diluted earnings per share because their effect is
anti-dilutive to the loss from continuing operations. (Since these shares
are dilutive for the computation of EBDT per share for the three and nine
months ended October 31, 2008, diluted weighted average shares outstanding
106,914,319 and 107,113,883 were used to arrive at $0.42/share and
$1.39/share, respectively.)
6) The preference payment represents the respective period's share of the
annual preferred payment in connection with the issuance of Class A Common
Units in exchange for Bruce C. Ratner's noncontrolling interest in the
Forest City Ratner Company portfolio.
7) Effective February 1, 2009, we adopted Financial Accounting Standards
Board ("FASB") Staff Position ("FSP") No. APB 14-1, "Accounting for
Convertible Debt Instruments That May be Settled in Cash Upon Conversion
(Including Partial Cash Settlement)"("FSP APB 14-1"). This standard
required us to restate the prior year financial statements to show
retrospective application upon adoption.
8) The following table provides detail of depreciation and amortization
and amortization of mortgage procurement costs.
Depreciation and Depreciation and
Amortization Amortization
---------------- ----------------
Three Months Ended Nine Months Ended
October 31, October 31,
------------------ --------------------
2009 2008 2009 2008
---- ---- ---- ----
Full Consolidation $66,393 $64,038 $199,659 $198,610
Non-Real Estate (3,412) (3,119) (10,372) (9,940)
------ ------ ------- ------
Real Estate Groups
Full Consolidation 62,981 60,919 189,287 188,670
Real Estate Groups
related to
noncontrolling interest (1,687) (1,044) (3,412) (3,575)
Real Estate Groups
Unconsolidated 9,795 8,399 31,214 25,167
Real Estate Groups
Discontinued Operations 195 1,451 1,347 3,911
--- ----- ----- -----
Real Estate Groups
Pro-Rata Consolidation $71,284 $69,725 $218,436 $214,173
======= ======= ======== ========
Amortization of Mortgage Amortization of Mortgage
Procurement Costs Procurement Costs
------------------------ ----------------------
Three Months Ended Nine Months Ended
October 31, October 31,
------------------ ----------------------
2009 2008 2009 2008
---- ---- ---- ----
Full Consolidation $3,562 $2,838 $10,645 $8,723
Non-Real Estate - - - -
--- --- --- ---
Real Estate Groups
Full Consolidation 3,562 2,838 10,645 8,723
Real Estate Groups
related to
noncontrolling interest (126) (114) (449) (383)
Real Estate Groups
Unconsolidated 445 388 1,487 1,330
Real Estate Groups
Discontinued
Operations 7 106 50 339
--- --- --- ---
Real Estate Groups
Pro-Rata Consolidation $3,888 $3,218 $11,733 $10,009
====== ====== ======= =======
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Nine Months Ended October 31, 2009 and 2008
(in thousands)
Three Months Ended Nine Months Ended
October 31, October 31,
------------------ -----------------
2009 2008 2009 2008
---- ---- ---- ----
9) The following table
provides detail of Income
Tax Expense (Benefit): (in thousands) (in thousands)
(A) Operating earnings
Current $3,788 $(3,666) $(9,740) $(15,550)
Deferred (3,095) (8,328) (3,224) (10,900)
------ ------ ------ -------
693 (11,994) (12,964) (26,450)
--- ------- ------- -------
(B) Impairment of real
estate
Deferred (212) - (1,211) (141)
Deferred -
Unconsolidated
entities (5,121) - (13,444) (2,187)
------ --- ------- ------
Subtotal (5,333) - (14,655) (2,328)
------ --- ------- ------
(C) Gain on disposition
of other investments
Current -
Non-Real
Estate Groups - - - -
Deferred -
Non-Real
Estate Groups - - - 58
--- --- --- ---
- - - 58
--- --- --- ---
(D) Gain on disposition of
unconsolidated entities
Current 203 (833) 203 506
Deferred 1,542 911 1,542 (168)
----- --- ----- ----
1,745 78 1,745 338
----- --- ----- ---
Subtotal (A)(B)(C)(D)
Current 3,991 (4,499) (9,537) (15,044)
Deferred (6,886) (7,417) (16,337) (13,338)
------ ------ ------- -------
Income tax
expense (2,895) (11,916) (25,874) (28,382)
------ ------- ------- -------
(E) Discontinued operations
Operating
earnings
Current 12 110 94 (636)
Deferred 356 18 474 1,284
--- --- --- -----
368 128 568 648
Gain on disposition
of rental properties
Current (3,031) - 754 -
Deferred 3,031 - 1,010 3,333
----- --- ----- -----
- - 1,764 3,333
Impairment of
real estate
Current - - - -
Deferred (3,791) - (3,791) -
------ --- ------ ---
(3,791) - (3,791) -
------ --- ------ ---
(3,423) 128 (1,459) 3,981
------ --- ------ -----
Grand Total
(A)(B)(C)(D)(E)
Current 972 (4,389) (8,689) (15,680)
Deferred (7,290) (7,399) (18,644) (8,721)
------ ------ ------- ------
$(6,318) $(11,788) $(27,333) $(24,401)
------- -------- -------- --------
Recap of Grand Total:
Real Estate Groups
Current 3,183 (10,642) (1,026) (570)
Deferred 1,205 (5,920) (2,294) (5,266)
----- ------ ------ ------
4,388 (16,562) (3,320) (5,836)
Non-Real Estate
Groups
Current (2,211) 6,253 (7,663) (15,110)
Deferred (8,495) (1,479) (16,350) (3,455)
------ ------ ------- ------
(10,706) 4,774 (24,013) (18,565)
------- ----- ------- -------
Grand Total $(6,318) $(11,788) $(27,333) $(24,401)
======= ======== ======== ========
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings
(Loss) (GAAP) (in thousands):
Three Months Ended October 31, 2009
-------------------------------------------------------------
Plus Unconsol-
Less idated Invest- Plus Pro-Rata
Full Consol- Noncontrol- ments at Discontinued Consol-
idation ling Interest Pro-Rata Operations idation
(GAAP) (Non-GAAP)
-------------------------------------------------------------
Revenues
from real
estate
operations $306,100 $12,447 $74,528 $1,688 $369,869
Exclude
straight-
line rent
adjustment(1) (4,774) - - - (4,774)
------ --- --- --- -----
Adjusted
revenues 301,326 12,447 74,528 1,688 365,095
Operating
expenses 171,684 6,276 51,910 35 217,353
Add back
non-Real
Estate
depreciation
and
amortization(b) 3,412 - 2,351 - 5,763
Add back
amortization of
mortgage
procurement
costs for
non-Real Estate
Groups (d) - - 161 - 161
Exclude
straight-line
rent
adjustment(2) (1,610) - - - (1,610)
Exclude
preference
payment (585) - - - (585)
---- --- --- --- ----
Adjusted
operating
expenses 172,901 6,276 54,422 35 221,082
Add interest
and other
income 5,522 200 1,661 - 6,983
Add equity in
earnings (loss),
including
impairment of
unconsolidated
entities (11,836) (13) 12,422 - 599
Exclude gain on
disposition of
unconsolidated
entities (4,498) - 4,498 - -
Exclude
impairment of
unconsolidated
entities 13,200 - (13,200) - -
Exclude
depreciation
and amortization
of unconsolidated
entities
(see below) 10,240 - (10,240) - -
------ --- ------- --- ---
Net Operating
Income 141,053 6,358 15,247 1,653 151,595
Interest
expense (87,863) (4,032) (17,121) (502) (101,454)
Gain (loss) on
early
extinguishment of
debt 28,902 - 1,874 - 30,776
Equity in
earnings (loss),
including
impairment of
unconsolidated
entities 11,836 13 (12,422) - (599)
Gain on
disposition of
unconsolidated
entities 4,498 - - - 4,498
Impairment of
unconsolidated
entities (13,200) - - - (13,200)
Depreciation and
amortization of
unconsolidated
entities
(see above) (10,240) - 10,240 - -
Impairment of
real estate (549) - - (9,775) (10,324)
Depreciation and
amortization -
Real Estate
Groups (a) (62,981) (1,687) (9,795) (195) (71,284)
Amortization of
mortgage
procurement
costs -
Real Estate
Groups (c) (3,562) (126) (445) (7) (3,888)
Straight-line
rent adjustment
(1) + (2) 3,164 - - - 3,164
Preference
payment (585) - - - (585)
---- --- --- --- ----
Earnings (loss)
before income
taxes 10,473 526 (12,422) (8,826) (11,301)
Income tax
provision 2,895 - - 3,423 6,318
Equity in
earnings (loss),
including
impairment of
unconsolidated
entities (11,836) (13) 12,422 - 599
------- --- ------ --- ---
Earnings (loss)
from continuing
operations 1,532 513 - (5,403) (4,384)
Discontinued
operations, net
of tax (5,403) - - 5,403 -
------- --- ------ ----- -----
Net earnings
(loss) (3,871) 513 - - (4,384)
Net earnings
attributable to
noncontrolling
interest (513) (513) - - -
------- --- ------ --- ---
Net loss
attributable to
Forest City
Enterprises,
Inc. $(4,384) $- $- $- $(4,384)
======= === === === =======
(a) Depreciation
and
amortization -
Real Estate
Groups $62,981 $1,687 $9,795 $195 $71,284
(b) Depreciation
and
amortization -
Non-Real
Estate 3,412 - 2,351 - 5,763
----- --- ----- --- -----
Total
depreciation
and
amortiz-
ation $66,393 $1,687 $12,146 $195 $77,047
======= ====== ======= ==== =======
(c) Amortization
of mortgage
procurement
costs -
Real Estate
Groups $3,562 $126 $445 $7 $3,888
(d) Amortization
of mortgage
procurement
costs -
Non-Real
Estate - - 161 - 161
--- --- --- --- ---
Total
amortization
of mortgage
procurement
costs $3,562 $126 $606 $7 $4,049
====== ==== ==== === ======
Three Months Ended October 31, 2008
--------------------------------------------------------------
Plus Unconsol-
Less idated Invest- Plus Pro-Rata
Full Consol- Noncontrol- ments at Discontinued Consol-
idation ling Interest Pro-Rata Operations idation
(GAAP) (Non-GAAP)
--------------------------------------------------------------
Revenues
from real
estate
operations $330,381 $16,129 $87,802 $4,149 $406,203
Exclude
straight-
line rent
adjustment(1) (6,062) - - (48) (6,110)
------ --- --- --- -----
Adjusted
revenues 324,319 16,129 87,802 4,101 400,093
Operating
expenses 200,441 7,295 66,096 416 259,658
Add back
non-Real
Estate
depreciation
and
amortization(b) 3,119 - 1,326 - 4,445
Add back
amortization of
mortgage
procurement
costs for
non-Real Estate
Groups (d) - - 64 - 64
Exclude
straight-line
rent
adjustment(2) (1,587) - - - (1,587)
Exclude
preference
payment (877) - - - (877)
---- --- --- --- ----
Adjusted
operating
expenses 201,096 7,295 67,486 416 261,703
Add interest
and other
income 6,752 293 602 37 7,098
Add equity in
earnings (loss),
including
impairment of
unconsolidated
entities (3,198) 110 3,925 - 617
Exclude gain on
disposition of
unconsolidated
entities (200) - 200 - -
Exclude
impairment of
unconsolidated
entities - - - - -
Exclude
depreciation
and amortization
of unconsolidated
entities
(see below) 8,787 - (8,787) - -
------ --- ------- --- ---
Net Operating
Income 135,364 9,237 16,256 3,722 146,105
Interest
expense (97,081) (3,617) (16,227) (1,883) (111,574)
Gain (loss) on
early
extinguishment
of debt 3,692 - (29) - 3,663
Equity in
earnings (loss),
including
impairment of
unconsolidated
entities 3,198 (110) (3,925) - (617)
Gain on
disposition of
unconsolidated
entities 200 - - - 200
Impairment of
unconsolidated
entities - - - - -
Depreciation and
amortization of
unconsolidated
entities
(see above) (8,787) - 8,787 - -
Impairment of
real estate - - - - -
Depreciation and
amortization -
Real Estate
Groups (a) (60,919) (1,044) (8,399) (1,451) (69,725)
Amortization of
mortgage
procurement
costs -
Real Estate
Groups (c) (2,838) (114) (388) (106) (3,218)
Straight-line
rent adjustment
(1) + (2) 4,475 - - 48 4,523
Preference
payment (877) - - - (877)
---- --- --- --- ----
Earnings (loss)
before income
taxes (23,573) 4,352 (3,925) 330 (31,520)
Income tax
provision 11,916 - - (128) 11,788
Equity in
earnings (loss),
including
impairment of
unconsolidated
entities (3,198) 110 3,925 - 617
------- --- ------ --- ---
Earnings (loss)
from continuing
operations (14,855) 4,462 - 202 (19,115)
Discontinued
operations, net
of tax 202 - - (202) -
------- ----- ------ --- ---
Net earnings
(loss) (14,653) 4,462 - - (19,115)
Net earnings
attributable to
noncontrolling
interest (4,462) (4,462) - - -
------- ----- ------ --- ---
Net loss
attributable to
Forest City
Enterprises,
Inc. $(19,115) $- $- $- $(19,115)
======= === === === =======
(a) Depreciation
and
amortization -
Real Estate
Groups $60,919 $1,044 $8,399 $1,451 $69,725
(b) Depreciation
and
amortization -
Non-Real
Estate 3,119 - 1,326 - 4,445
----- --- ----- --- -----
Total
depreciation
and
amortiz-
ation $64,038 $1,044 $9,725 $1,451 $74,170
======= ====== ======= ===== =======
(c) Amortization
of mortgage
procurement
costs -
Real Estate
Groups $2,838 $114 $388 $106 $3,218
(d) Amortization
of mortgage
procurement
costs -
Non-Real
Estate - - 64 - 64
--- --- --- --- ---
Total
amortization
of mortgage
procurement
costs $2,838 $114 $452 $106 $3,282
====== ==== ==== === ======
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings
(Loss) (GAAP) (in thousands):
Nine Months Ended October 31, 2009
---------------------------------------------------
Plus Plus
Full Less Unconsoli- Discon- Pro-Rata
Consoli- Noncontrol- dated tinued Consoli-
dation ling Investments Oper- dation
(GAAP) Interest at Pro-Rata ations (Non-GAAP)
---------------------------------------------------
Revenues from real
estate operations $932,889 $38,008 $262,820 $5,476 $1,163,177
Exclude straight-line
rent adjustment (1) (14,398) - - (12) (14,410)
------- --- --- --- -------
Adjusted revenues 918,491 38,008 262,820 5,464 1,148,767
Operating expenses 532,000 17,578 187,980 430 702,832
Add back non-Real Estate
depreciation and
amortization (b) 10,372 - 12,348 - 22,720
Add back amortization
of mortgage procurement
costs for non-Real Estate
Groups (d) - - 402 - 402
Exclude straight-line rent
adjustment (2) (4,857) - - - (4,857)
Exclude preference
payment (1,756) - - - (1,756)
------ --- --- --- ------
Adjusted operating
expenses 535,759 17,578 200,730 430 719,341
Add interest and other
income 23,924 543 2,866 - 26,247
Add equity in earnings
(loss), including
impairment of
unconsolidated entities (45,140) (81) 46,107 - 1,048
Exclude gain on
disposition of
unconsolidated entities (4,498) - 4,498 - -
Exclude impairment of
unconsolidated entities 34,663 - (34,663) - -
Exclude depreciation and
amortization of
unconsolidated entities
(see below) 32,701 - (32,701) - -
------ --- ------- --- ---
Net Operating Income 424,382 20,892 48,197 5,034 456,721
Interest expense (258,434) (10,832) (49,895) (2,184) (299,681)
Gain (loss) on early
extinguishment of
debt 37,965 - 1,698 - 39,663
Equity in earnings
(loss), including
impairment of
unconsolidated entities 45,140 81 (46,107) - (1,048)
Gain on disposition of
unconsolidated entities 4,498 - - - 4,498
Impairment of
unconsolidated
entities (34,663) - - - (34,663)
Depreciation and
amortization of
unconsolidated entities
(see above) (32,701) - 32,701 - -
Gain on disposition of
rental properties and
other investments - - - 4,548 4,548
Preferred return on
disposition - - - - -
Impairment of real estate (3,124) - - (9,775) (12,899)
Depreciation and
amortization - Real
Estate Groups (a) (189,287) (3,412) (31,214) (1,347) (218,436)
Amortization of
mortgage procurement
costs - Real Estate
Groups (c) (10,645) (449) (1,487) (50) (11,733)
Straight-line rent
adjustment (1) + (2) 9,541 - - 12 9,553
Preference payment (1,756) - - - (1,756)
------ --- --- --- ------
Earnings (loss) before
income taxes (9,084) 6,280 (46,107) (3,762) (65,233)
Income tax provision 25,874 - - 1,459 27,333
Equity in earnings
(loss), including
impairment of
unconsolidated entities (45,140) (81) 46,107 - 1,048
------- --- ------ --- -----
Earnings (loss) from
continuing operations (28,350) 6,199 - (2,303) (36,852)
Discontinued operations,
net of tax (2,303) - - 2,303 -
------- --- ------ ----- -----
Net earnings (loss) (30,653) 6,199 - - (36,852)
Net earnings attributable
to noncontrolling
interest (6,199) (6,199) - - -
------- ----- ------ --- -----
Net loss attributable
to Forest City
Enterprises, Inc. $(36,852) $- $- $- $(36,852)
======== === === === ========
(a) Depreciation and
amortization - Real
Estate Groups $189,287 $3,412 $31,214 $1,347 $218,436
(b) Depreciation and
amortization -
Non-Real Estate 10,372 - 12,348 - 22,720
------ --- ------ --- ------
Total depreciation
and amortization $199,659 $3,412 $43,562 $1,347 $241,156
======== ====== ======= ====== ========
(c) Amortization of
mortgage procurement
costs - Real Estate
Groups $10,645 $449 $1,487 $50 $11,733
(d) Amortization of
mortgage procurement
costs - Non-Real
Estate - - 402 - 402
--- --- --- --- ---
Total amortization of
mortgage procurement
costs $10,645 $449 $1,889 $50 $12,135
======= ==== ====== === =======
Nine Months Ended October 31, 2008
---------------------------------------------------
Plus Plus
Full Less Unconsoli- Discon- Pro-Rata
Consoli- Noncontrol- dated tinued Consoli-
dation ling Investments Oper- dation
(GAAP) Interest at Pro-Rata ations (Non-GAAP)
---------------------------------------------------
Revenues from real
estate operations $960,007 $47,695 $287,144 $13,114 $1,212,570
Exclude straight-line
rent adjustment (1) (8,055) - - (147) (8,202)
------ --- --- ---- ------
Adjusted revenues 951,952 47,695 287,144 12,967 1,204,368
Operating expenses 593,306 24,338 211,607 1,604 782,179
Add back non-Real
Estate depreciation
and amortization (b) 9,940 - 14,765 - 24,705
Add back amortization of
mortgage procurement
costs for non-Real
Estate Groups (d) - - 169 - 169
Exclude straight-line
rent adjustment (2) (4,780) - - - (4,780)
Exclude preference
payment (2,744) - - - (2,744)
------ --- --- --- ------
Adjusted operating
expenses 595,722 24,338 226,541 1,604 799,529
Add interest and other
income 27,976 1,420 3,685 136 30,377
Add equity in earnings
(loss), including
impairment of
unconsolidated entities (18,787) (17) 19,820 - 1,050
Exclude gain on
disposition of
unconsolidated entities (1,081) - 1,081 - -
Exclude impairment of
unconsolidated entities 6,026 - (6,026) - -
Exclude depreciation and
amortization of
unconsolidated entities
(see below) 26,497 - (26,497) - -
------ --- ------- --- ---
Net Operating Income 396,861 24,760 52,666 11,499 436,266
Interest expense (259,450) (10,359) (52,407) (5,721) (307,219)
Gain (loss) on early
extinguishment of
debt (1,539) (119) (51) - (1,471)
Equity in earnings
(loss), including
impairment of
unconsolidated entities 18,787 17 (19,820) - (1,050)
Gain on disposition of
unconsolidated entities 1,081 - - - 1,081
Impairment of
unconsolidated entities (6,026) - - - (6,026)
Depreciation and
amortization of
unconsolidated entities
(see above) (26,497) - 26,497 - -
Gain on disposition of
rental properties and
other investments 150 - - 8,627 8,777
Preferred return on
disposition - - (208) - (208)
Impairment of real estate - - - - -
Depreciation and
amortization - Real
Estate Groups (a) (188,670) (3,575) (25,167) (3,911) (214,173)
Amortization of mortgage
procurement costs -
Real Estate Groups (c) (8,723) (383) (1,330) (339) (10,009)
Straight-line rent
adjustment (1) + (2) 3,275 - - 147 3,422
Preference payment (2,744) - - - (2,744)
------ --- --- --- ------
Earnings (loss) before
income taxes (73,495) 10,341 (19,820) 10,302 (93,354)
Income tax provision 28,382 - - (3,981) 24,401
Equity in earnings
(loss), including
impairment of
unconsolidated entities (18,787) (17) 19,820 - 1,050
------- --- ------ --- -----
Earnings (loss) from
continuing operations (63,900) 10,324 - 6,321 (67,903)
Discontinued operations,
net of tax 6,321 - - (6,321) -
------- --- ------ ----- -----
Net earnings (loss) (57,579) 10,324 - - (67,903)
Net earnings
attributable to
noncontrolling interest (10,324) (10,324) - - -
------- ------- ------ --- -----
Net loss attributable
to Forest City
Enterprises, Inc. $(67,903) $- $- $- $(67,903)
======== === === === ========
(a) Depreciation and
amortization -
Real Estate
Groups $188,670 $3,575 $25,167 $3,911 $214,173
(b) Depreciation and
amortization -
Non-Real Estate 9,940 - 14,765 - 24,705
----- --- ------ --- ------
Total depreciation
and amortization $198,610 $3,575 $39,932 $3,911 $238,878
======== ====== ======= ====== ========
(c) Amortization of
mortgage procurement
costs - Real Estate
Groups $8,723 $383 $1,330 $339 $10,009
(d) Amortization of
mortgage procurement
costs - Non-Real Estate - - 169 - 169
--- --- --- --- ---
Total amortization
of mortgage
procurement costs $8,723 $383 $1,499 $339 $10,178
====== ==== ====== ==== =======
Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Net Operating Income (dollars in thousands)
--------------------------------------------------------
Three Months Ended October 31, 2009
--------------------------------------------------------
Plus
Full Less Unconsoli- Plus Pro-Rata
Consolida- Non- dated Dis- Consolida-
tion controlling Investments continued tion
(GAAP) Interest at Pro-Rata Operations (Non-GAAP)
--------------------------------------------------------
Commercial Group
Retail
Comparable $59,345 $2,965 $5,540 $- $61,920
------- ------ ------ --- -------
Total 62,919 2,896 5,600 - 65,623
Office Buildings
Comparable 66,058 2,622 2,353 - 65,789
------ ----- ----- --- ------
Total 61,493 2,592 2,433 - 61,334
Hotels
Comparable 5,473 - - - 5,473
----- --- --- --- -----
Total 5,473 - - - 5,473
Earnings from
Commercial
Land Sales 1,089 - - - 1,089
Other (1) (1,806) (99) (790) - (2,497)
------ --- ---- --- ------
Total Commercial
Group
Comparable 130,876 5,587 7,893 - 133,182
------- ----- ----- --- -------
Total 129,168 5,389 7,243 - 131,022
Residential Group
Apartments
Comparable 27,988 684 6,037 - 33,341
------ --- ----- --- ------
Total 29,568 714 6,993 1,653 37,500
Military Housing
Comparable(2) - - - - -
--- --- --- --- ---
Total 7,918 110 279 - 8,087
Other (1) (4,378) 18 - - (4,396)
------ --- --- --- ------
Total Residential
Group
Comparable 27,988 684 6,037 - 33,341
------ --- ----- --- ------
Total 33,108 842 7,272 1,653 41,191
Total Rental
Properties
Comparable 158,864 6,271 13,930 - 166,523
------- ----- ------ --- -------
Total 162,276 6,231 14,515 1,653 172,213
Land Development
Group (3) (1,130) 127 (1,767) - (3,024)
The Nets (10,853) - 2,499 - (8,354)
Corporate
Activities (9,240) - - - (9,240)
------- ----- ------ --- -------
Grand Total $141,053 $6,358 $15,247 $1,653 $151,595
------- ----- ------ ------ -------
--------------------------------------------------------
Three Months Ended October 31, 2008
--------------------------------------------------------
Plus
Full Less Unconsoli- Plus Pro-Rata
Consolida- Non- dated Dis- Consolida-
tion controlling Investments continued tion
(GAAP) Interest at Pro-Rata Operations (Non-GAAP)
--------------------------------------------------------
Commercial Group
Retail
Comparable $60,584 $3,194 $5,597 $- $62,987
------- ------ ------ --- -------
Total 61,510 3,007 5,657 656 64,816
Office Buildings
Comparable 62,444 2,613 2,440 - 62,271
------ ----- ----- --- ------
Total 65,079 2,618 2,440 - 64,901
Hotels
Comparable 5,152 - - - 5,152
----- --- --- --- -----
Total 5,152 - - - 5,152
Earnings from
Commercial
Land Sales 2,535 181 - - 2,354
Other (1) (8,059) 430 (467) - (8,956)
------ --- ---- --- ------
Total Commercial
Group
Comparable 128,180 5,807 8,037 - 130,410
------- ----- ----- --- -------
Total 126,217 6,236 7,630 656 128,267
Residential Group
Apartments
Comparable 28,701 778 6,787 - 34,710
------ --- ----- --- ------
Total 31,279 764 7,915 3,066 41,496
Military Housing
Comparable (2) - - - - -
--- --- --- --- ---
Total 15,110 3,532 (1,282) - 10,296
Other (1) (8,447) 54 - - (8,501)
------ --- --- --- ------
Total Residential
Group
Comparable 28,701 778 6,787 - 34,710
------ --- ----- --- ------
Total 37,942 4,350 6,633 3,066 43,291
Total Rental
Properties
Comparable 156,881 6,585 14,824 - 165,120
------- ----- ------ --- -------
Total 164,159 10,586 14,263 3,722 171,558
Land Development
Group (3) (11,245) (1,349) 89 - (9,807)
The Nets (9,859) - 1,904 - (7,955)
Corporate
Activities (7,691) - - - (7,691)
------- ----- ------ --- -------
Grand Total $135,364 $9,237 $16,256 $3,722 $146,105
-------- ------ ------- ------ --------
% Change
------------------------------
Full Pro-Rata
Consolidation Consolidation
(GAAP) (Non-GAAP)
------------------------------
Commercial Group
Retail
Comparable (2.0%) (1.7%)
--- ---
Total
Office Buildings
Comparable 5.8% 5.6%
--- ---
Total
Hotels
Comparable 6.2% 6.2%
--- ----
Total
Earnings from Commercial
Land Sales
Other (1)
Total Commercial Group
Comparable 2.1% 2.1%
--- ---
Total
Residential Group Apartments
Comparable (2.5%) (3.9%)
--- ---
Total
Military Housing
Comparable (2)
Total
Other (1)
Total Residential Group
Comparable (2.5%) (3.9%)
--- ---
Total
Total Rental Properties
Comparable 1.3% 0.8%
--- ---
Total
Land Development Group (3)
The Nets
Corporate Activities
Grand Total
(1) Includes write-offs of abandoned development projects, non-
capitalizable development costs and unallocated management and
service company overhead, net of historic and new market
tax credit income. Write-offs of abandoned development projects
were $3,758 and $12,500 at both full and pro-rata consolidation for
the three months ended October 31, 2009 and 2008, respectively.
(2) Comparable NOI for Military Housing commences once the operating
projects complete initial development phase.
(3) Includes reduction in fair value of the Denver Urban Renewal
Authority ("DURA") purchase obligation and fee in 2008 of
$12,434,000.
Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Net Operating Income (dollars in thousands)
--------------------------------------------------------
Nine Months Ended October 31, 2009
--------------------------------------------------------
Plus
Full Less Unconsoli- Plus Pro-Rata
Consolida- Non- dated Dis- Consolida-
tion controlling Investments continued tion
(GAAP) Interest at Pro-Rata Operations (Non-GAAP)
--------------------------------------------------------
Commercial Group
Retail
Comparable $173,579 $8,733 $16,593 $- $181,439
-------- ------ ------- --- --------
Total 187,910 8,761 18,433 481 198,063
Office Buildings
Comparable 153,690 7,560 7,037 - 153,167
------- ----- ----- --- -------
Total 190,755 7,895 7,221 - 190,081
Hotels
Comparable 10,803 - - - 10,803
------ --- --- --- ------
Total 10,803 - - - 10,803
Earnings from
Commercial
Land Sales 5,560 476 - - 5,084
Other (1) (9,622) 445 (3,172) - (13,239)
------ --- ------ --- -------
Total Commercial Group
Comparable 338,072 16,293 23,630 - 345,409
------- ------ ------ --- -------
Total 385,406 17,577 22,482 481 390,792
Residential Group
Apartments
Comparable 83,034 2,072 18,018 - 98,980
------ ----- ------ --- ------
Total 91,654 2,900 21,136 4,553 114,443
Military Housing
Comparable (2) - - - - -
--- --- --- --- ---
Total 28,902 148 733 - 29,487
Other (1) (21,526) 90 - - (21,616)
------- --- --- --- -------
Total Residential
Group
Comparable 83,034 2,072 18,018 - 98,980
------ ----- ------ --- ------
Total 99,030 3,138 21,869 4,553 122,314
Total Rental
Properties
Comparable 421,106 18,365 41,648 - 444,389
------- ------ ------ --- -------
Total 484,436 20,715 44,351 5,034 513,106
Land Development
Group (3) 1,642 177 (1,602) - (137)
The Nets (29,841) - 5,448 - (24,393)
Corporate
Activities (31,855) - - - (31,855)
------- ------ ------ --- -------
Grand Total $424,382 $20,892 $48,197 $5,034 $456,721
-------- ------ ------ ----- -------
Nine Months Ended October 31, 2008
--------------------------------------------------------
Plus
Full Less Unconsoli- Plus Pro-Rata
Consolida- Non- dated Dis- Consolida-
tion controlling Investments continued tion
(GAAP) Interest at Pro-Rata Operations (Non-GAAP)
--------------------------------------------------------
Commercial Group
Retail
Comparable $178,173 $9,495 $16,521 $- $185,199
-------- ------ ------- --- --------
Total 182,000 9,322 17,727 1,873 192,278
Office Buildings
Comparable 143,083 6,406 7,572 - 144,249
------- ----- ----- --- -------
Total 190,139 7,866 7,679 - 189,952
Hotels
Comparable 12,256 - - - 12,256
------ --- --- --- ------
Total 12,256 - - - 12,256
Earnings from
Commercial Land
Sales 8,412 2,421 - - 5,991
Other (1) (34,307) (165) (2,574) - (36,716)
------- ---- ------ --- -------
Total Commercial
Group
Comparable 333,512 15,901 24,093 - 341,704
------- ------ ------ --- -------
Total 358,500 19,444 22,832 1,873 363,761
Residential Group
Apartments
Comparable 84,220 2,189 20,283 - 102,314
------ ----- ------ --- -------
Total 88,902 2,175 23,482 9,626 119,835
Military Housing
Comparable (2) - - - - -
--- --- --- --- ---
Total 40,749 3,928 778 - 37,599
Other (1) (23,049) 143 - - (23,192)
------- --- --- --- -------
Total Residential
Group
Comparable 84,220 2,189 20,283 - 102,314
------ ----- ------ --- -------
Total 106,602 6,246 24,260 9,626 134,242
Total Rental
Properties
Comparable 417,732 18,090 44,376 - 444,018
------- ------ ------ --- -------
Total 465,102 25,690 47,092 11,499 498,003
Land Development
Group (3) (5,087) (930) 367 - (3,790)
The Nets (31,880) - 5,207 - (26,673)
Corporate
Activities (31,274) - - - (31,274)
-------- ------- ------ ------- --------
Grand Total $396,861 $24,760 $52,666 $11,499 $436,266
-------- ------- ------ ------- --------
% Change
------------------------------
Full Pro-Rata
Consolidation Consolidation
(GAAP) (Non-GAAP)
------------------------------
Commercial Group
Retail
Comparable (2.6%) (2.0%)
Total
Office Buildings
Comparable 7.4% 6.2%
Total
Hotels
Comparable (11.9%) (11.9%)
Total
Earnings from Commercial
Land Sales
Other (1)
Total Commercial Group
Comparable 1.4% 1.1%
Total
Residential Group
Apartments
Comparable (1.4%) (3.3%)
Total
Military Housing
Comparable (2)
Total
Other (1)
Total Residential Group
Comparable (1.4%) (3.3%)
Total
Total Rental Properties
Comparable 0.8% 0.1%
Total
Land Development Group (3)
The Nets
Corporate Activities
Grand Total
(1) Includes write-offs of abandoned development projects, non-
capitalizable development costs and unallocated management and
service company overhead, net of historic and new market
tax credit income. Write-offs of abandoned development projects
were $21,398 and $41,452 at full consolidation ($21,398 and $39,206
at pro-rata consolidation) for the nine months ended
October 31, 2009 and 2008 respectively.
(2) Comparable NOI for Military Housing commences once the operating
projects complete initial development phase.
(3) Includes reduction in fair value of the DURA purchase obligation
and fee in 2008 of $12,434,000.
Development Pipeline
--------------------
October 31, 2009
2009 Openings and Acquisitions (2)
Date FCE Legal Pro-Rata
Dev (D) Opened / Ownership FCE % (a)
Property Location Acq (A) Acquired % (a) (1)
-------------------------------------------------------------------------
Retail Centers:
Promenade at
Temecula
Expansion Temecula, CA D Q1-09 75.0% 100.0%
Residential:
North Church
Towers (d) Parma Heights, OH A Q3-09 100.0% 100.0%
Total Openings
and Acquisitions
Residential
Phased-In
Units (e) (f):
Cobblestone
Court Painesville, OH D 2006-09 50.0% 50.0%
Sutton Landing Brimfield, OH D 2007-09 50.0% 50.0%
Stratford
Crossing Wadsworth, OH D 2007-10 50.0% 50.0%
Total (g)
Cost at FCE
Cost at Full Total Cost Pro-Rata Share Sq. ft./ Gross
Consolidation at 100% (Non-GAAP) (c) No. of Leasable
Property (GAAP) (b) (2) (1) X (2) Units Area
-------------------------------------------------------------------------
(in millions)
----------------------------------------
Retail Centers:
Promenade at
Temecula
Expansion $107.0 $107.0 $107.0 127,000 127,000
------ ------ ------ ======= =======
Residential:
North Church
Towers (d) $5.6 $5.6 $5.6 399
---- ---- ---- ===
------ ------ ------
Total Openings
and Acquisitions $112.6 $112.6 $112.6
====== ====== ======
Residential
Phased-In Opened in '09 /
Units (e)(f): Total
--------------
Cobblestone Court $0.0 $30.3 $15.2 72/400
Sutton Landing 0.0 15.9 8.0 36/216
Stratford Crossing 0.0 25.3 12.7 36/348
--- ---- ---- ------
Total (g) $0.0 $71.5 $35.9 144/964
==== ===== ===== =======
See attached footnotes
Development Pipeline
--------------------
October 31, 2009
Under Construction (7)
FCE Legal Pro-Rata
Dev (D) Anticipated Ownership FCE % (a)
Property Location Acq (A) Opening % (a) (1)
-------------------------------------------------------------------------
Retail Centers:
East River
Plaza
(e) (f) (m) Manhattan, NY D Q4-09/10 35.0% 50.0%
Village at
Gulfstream
Park Hallandale Beach, FL D Q1-10 50.0% 50.0%
Ridge Hill (e) Yonkers, NY D 2011/2012 70.0% 100.0%
Office:
Waterfront
Station - East
4th & West 4th
Buildings Washington, D.C. D Q1-10 45.0% 45.0%
Residential:
80 Dekalb
Avenue (e) Brooklyn, NY D Q4-09/10 70.0% 100.0%
Presidio San Francisco, CA D Q3-10 100.0% 100.0%
Beekman (e) Manhattan, NY D Q1-11/12 49.0% 70.0%
Total Under
Construction (h)
Residential
Phased-In
Units (e) (f):
Cobblestone
Court Painesville, OH D 2006-09 50.0% 50.0%
Stratford
Crossing Wadsworth, OH D 2007-10 50.0% 50.0%
Total (i)
Cost at FCE
Pro-Rata
Cost at Full Total Cost Share Sq. ft./ Gross Lease
Consolidation at 100% (Non-GAAP) No. of Leasable Commit-
Property (GAAP) (b) (2) (c) (1) X (2) Units Area ment %
-------------------------------------------------------------------------
(in millions)
---------------------------------------
Retail
Centers:
East River
Plaza
(e) (f) (m) $0.0 $398.1 $199.1 527,000 527,000 92%
Village at
Gulfstream
Park 203.6 203.6 101.8 497,000 497,000 (j) 70%
Ridge Hill (e) 798.7 798.7 798.7 1,336,000 1,336,000 (k) 33%
----- ----- ----- --------- ---------
$1,002.3 $1,400.4 $1,099.6 2,360,000 2,360,000
-------- -------- -------- ========= =========
Office:
Waterfront
Station -
East 4th &
West 4th
Buildings $326.7 $326.7 $147.0 628,000 (l) 97%
------ ------ ------ =======
Residential:
80 Dekalb
Avenue (e) $163.3 $163.3 $163.3 365
Presidio 110.7 110.7 110.7 161
Beekman (e) 875.7 875.7 613.0 904
----- ----- ----- ---
$1,149.7 $1,149.7 $887.0 1,430
-------- -------- ------ =====
-------- -------- ------
Total Under
Construction
(h) $2,478.7 $2,876.8 $2,133.6
======== ======== ========
Residential
Phased-In
Units (e) (f): Under Const. / Total
--------------------
Cobblestone
Court $0.0 $30.3 $15.2 24/400
Stratford
Crossing 0.0 25.3 12.7 96/348
--- ---- ---- ------
Total (i) $0.0 $55.6 $27.9 120/748
==== ===== ===== =======
See attached footnotes.
Military Housing - see footnote n
Development Pipeline
--------------------
2009 FOOTNOTES
--------------
( a ) As is customary within the real estate industry, the Company
invests in certain real estate projects through joint ventures.
For some of these projects, the Company provides funding at
percentages that differ from the Company's legal ownership.
( b ) Amounts are presented on the full consolidation method of
accounting, a GAAP measure. Under full consolidation, costs are
reported as consolidated at 100 percent if we are deemed to have
control or to be the primary beneficiary of our investments in
the variable interest entity ("VIE").
( c ) Cost at pro-rata share represents Forest City's share of cost,
based on the Company's pro-rata ownership of each property (a
non-GAAP measure). Under the pro-rata consolidation method of
accounting the Company determines its pro-rata share by
multiplying its pro-rata ownership by the total cost of the
applicable property.
( d ) The Company exchanged its 50% ownership interest in Boulevard
Towers, an apartment community located in Amherst, NY, for 100%
ownership in North Church Towers, in a nonmonetary exchange.
( e ) Phased-in openings. Costs are representative of the total project.
( f ) Reported under the equity method of accounting. This method
represents a GAAP measure for investments in which the Company is
not deemed to have control or to be the primary beneficiary of
our investments in a VIE.
( g ) The difference between the full consolidation cost amount (GAAP)
of $0.0 million to the Company's pro-rata share (a non-GAAP
measure) of $35.9 million consists of the Company's share of cost
for unconsolidated investments of $35.9 million.
( h ) The difference between the full consolidation cost amount (GAAP)
of $2,478.7 million to the Company's pro-rata share (a non-GAAP
measure) of $2,133.6 million consists of a reduction to full
consolidation for noncontrolling interest of $544.2 million of
cost and the addition of its share of cost for unconsolidated
investments of $199.1 million.
( i ) The difference between the full consolidation cost amount (GAAP)
of $0.0 million to the Company's pro-rata share (a non-GAAP
measure) of $27.9 million consists of the Company's share of cost
for unconsolidated investments of $27.9 million.
( j ) Includes 89,000 square feet of office space. Excluding this
office space from the calculation of the preleased percentage
would result in the retail space being 85% preleased. In
addition, includes 35,000 square feet site for Crate & Barrel,
opening Q4-09.
( k ) Includes 156,000 square feet of office space.
( l ) Includes 85,000 square feet of retail space.
( m ) Total cost includes construction of the 1,248-space garage and
structural upgrades to accommodate a possible future residential
project above the retail center.
( n ) Below is a summary of our equity method investments for Military
Housing Development projects. The Company provides development,
construction, and management services for these projects and
receives agreed upon fees for these services.
Cost at
FCE Full Total Sq.ft./
Anticipated Pro-Rata Consoli- Cost No. of
Property Location Opening % dation at 100% Units
-------------------------------------------------------------------------
(in millions)
----------------
Military Housing
Under
Construction (7)
Navy Midwest Chicago, IL 2006-2010 * $0.0 $248.8 1,658
Air Force
Academy Colorado
Springs, CO 2007-2009 50.0% 0.0 69.5 427
Pacific Northwest
Communities Seattle, WA 2007-2010 * 0.0 280.5 2,986
Midwest
Millington Memphis, TN 2008-2010 * 0.0 37.0 318
Marines, Hawaii
Increment II Honolulu, HI 2007-2011 * 0.0 293.3 1,175
Navy, Hawaii
Increment III Honolulu, HI 2007-2011 * 0.0 535.1 2,520
Hawaii Phase IV Kaneohe, HI 2007-2014 * 0.0 364.0 917
--- ----- ---
Total Military
Housing Under
Construction $0.0 $1,828.2 10,001
==== ======== ======
* The Company's share of residual cash flow ranges from 0-20% during the
life cycle of the project.
SOURCE Forest City Enterprises, Inc.
RELATED LINKS
http://www.forestcity.net
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