Exhibit 99.1
Forest City Reports Fiscal 2007 Full-Year and Fourth-Quarter Results
CLEVELAND--(BUSINESS WIRE)--Forest City Enterprises, Inc. (NYSE: FCEA) and (NYSE: FCEB) today announced EBDT, net earnings and revenues for the fourth quarter and full year ended January 31, 2008.
EBDT (Earnings Before Depreciation, Amortization and Deferred Taxes) for the full year ended January 31, 2008 was $265.7 million, or $2.47 per share, a decrease of 9.5 percent on a per-share basis compared with last year’s $285.0 million, or $2.73 per share. EBDT for the fourth quarter was $91.2 million, or $0.85 per share, a 15.0 percent decrease on a per-share basis compared with last year’s fourth-quarter EBDT of $107.6 million, or $1.00 per share. For an explanation of the variances, see “Discussion of Results.”
Net earnings for the full year were $52.4 million, or $0.51 per share, compared with $177.3 million, or $1.70 per share, in 2006. Net earnings for the fourth quarter were $12.6 million, or $0.12 per share, compared with net earnings of $70.6 million, or $0.66 per share, in the prior year. The decrease in net earnings for the year and quarter was primarily attributable to larger gains on the disposition of properties in 2006 compared with 2007.
Twelve-month revenues were $1.3 billion, a 15.3 percent increase compared with last year’s $1.1 billion for the 12 months ended January 31, 2007. Fourth-quarter consolidated revenues were $406.0 million compared with $348.3 million last year.
EBDT and EBDT per share are non-GAAP (Generally Accepted Accounting Principles) 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. All per-share amounts are on a fully diluted basis.
Discussion of Results
Charles A. Ratner, president and chief executive officer of Forest City Enterprises, said, “In many ways, 2007 was a very successful year, yet it’s difficult not to be disappointed when EBDT decreased for the first time in 27 years. Looking behind the numbers, the year-over-year EBDT variance becomes more understandable when recognizing the sudden and steep downturn in the land business. Our commercial and residential portfolios, including new project openings and Military Housing, had a good year, generating an increase in EBDT of $46.3 million. In addition, comparable property net operating income increased and occupancies remained very strong.
“The increase in EBDT (mentioned above), plus $9.8 million recognized from the sale of a supported-living development project, was offset by several items, the most significant of which was the $34 million decrease in EBDT in the Land Development Group. After several years of growth in land sales, which is more cyclical than the rental property business, we saw a major slowdown early in 2007, driven by the severe decrease in single-family home sales and the tightening of credit markets. Our results were further negatively impacted by EBDT decreases of $14 million in commercial outlot sales and $15 million from Tax Credit income compared to 2006.
“One of the most important measures of success in real estate, and certainly at Forest City, is the creation of long-term value. In 2007, we completed 11 project openings and acquisitions, representing a record high of approximately $1.0 billion of cost at our share. The opening of the 1.5-million-square-foot New York Times Building added another signature building to Forest City’s office portfolio, and represents our largest single asset. This marks the second consecutive year we have completed a milestone project in a core market – San Francisco Centre, one of the nation’s premier retail centers, opened in late 2006. It’s clear that these two assets alone represent significant value creation over their cost, demonstrating the validity of our long-term value-added strategy.
“Another important measure of success is maintaining a high level of liquidity, particularly in challenging times. During the fourth quarter of 2007, we increased our corporate credit facility by $150 million to $750 million, enhancing our liquidity and financial flexibility. We ended the year with more than $700 million in cash and credit available – the highest in our history. In addition, we closed on approximately $1.4 billion in financing transactions since January 31, 2008, all at favorable rates, further evidencing our ability to access capital despite the stressed conditions currently prevailing in the credit market,” Ratner said.
NOI, Occupancies and Rent
Overall, comparable property net operating income (NOI) increased 4.6 percent compared with the prior year. Comparable property NOI increased in the retail, office and residential portfolios by 6.9 percent, 2.1 percent and 4.2 percent, respectively. Comparable property NOI, defined as NOI from properties operated for the full year in both 2007 and 2006, 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.
Occupancies remained strong across the portfolio with comparable retail occupancies at 94.1 percent at the end of 2007, while comparable office occupancies were 92.7 percent. In the residential portfolio, comparable average occupancies were 95.7 percent. Leasing spreads for the regional mall and office portfolios represented 25.4 percent and 13.9 percent increases over the respective expiring rents, and residential comparable net rental income increased to 93.4 percent. Regional mall sales averaged $468 per square foot, while comparable regional mall sales decreased 1.8 percent, an early indication of slowing consumer confidence.
2007 Milestones
Openings
During 2007, Forest City completed 11 openings and acquisitions – six development projects and five acquisitions, adding a record high of $1.1 billion of cost at the Company’s pro-rata share and $1.0 billion on a full consolidation basis. The properties’ first-year stabilized unleveraged cash-on-cost return averaged 8.4 percent, which resulted in a 220-basis-point spread over the in-place permanent financing of these project openings and acquisitions.
The highlight of the 2007 openings was the New York Times Building. Signed lease agreements represent approximately 94 percent of the 737,000 square feet of space owned by Forest City. During the third quarter, the Company closed on a $640 million loan with HSH Nordbank AG to refinance Forest City’s portion of the Times building. The financing is the largest permanent loan in the Company’s history.
Growth continued in our Military Housing business in 2007, with full-year EBDT of $16.5 million, an increase of 70 percent compared with last year.
Acquisitions and Dispositions
Acquisitions in 2007 totaled $196.9 million at the Company’s pro-rata share. The largest of these were two acquisitions that expanded Forest City’s presence in the Richmond, Virginia, area – the 570,000-square-foot Richmond Office Park and the 259-unit Cameron Kinney residential community at Tobacco Row.
During 2007, Forest City chose to exit the supported-living business and reached an agreement with Atria Senior Living Group to sell eight and lease four properties. Seven of the properties were sold in 2007, including one project under construction, representing a combined 786 units valued at $310 million. These transactions generated $155 million in cash proceeds in 2007. The eighth property will be sold during 2008.
Other Milestones
Among other development and financial milestones were:
- Receiving favorable decisions from the New York State Supreme Court and a federal appeals court – critical milestones in the Company’s ability to move forward with its Atlantic Yards project in Brooklyn. To date, the courts have found in favor of the Company in 18 consecutive decisions, with two current appeals remaining active
- Closing on a $680 million financing for the mixed-use/residential Beekman project in lower Manhattan, the largest construction financing in the Company’s history
- Securing a $630 million construction loan for the Ridge Hill regional lifestyle center project in Yonkers, New York
- Announcing that Sony Pictures Imageworks, Fidelity Investments and SCHOTT Solar, Inc. will build facilities totaling more than 450,000 square feet of commercial space at the Company’s Mesa del Sol mixed-use project in Albuquerque, New Mexico – bringing the total committed or opened space to 1.2 million square feet
- Breaking ground on three new retail centers, including Ridge Hill mentioned above, The Shops at White Oak Village near Richmond, and Village at Gulfstream in Florida -- representing a combined 2.4 million square feet of retail property
- Signing lease agreements with the District of Columbia for more than 500,000 square feet of space at Waterfront and receiving approval of the revised master plan for The Yards, both mixed-use projects in Washington, D.C.
- Acquiring more than 2,500 single-family home lots in San Antonio, Texas, which remains an attractive market for residential development despite the downturn in the overall national housing market
- Continuing the momentum at Stapleton in Denver with more than 400 new home starts
Financing Activity
The capital markets for real estate worsened as the year progressed. Lenders and investors pulled back from the market, demanding increased premiums to underwrite risk. Loan originations for Commercial Mortgage-Backed Securities (CMBS) fell dramatically in the second half of the year and pricing power shifted to the lenders. Capital for real estate remains available; however, lender spreads have increased and underwriting criteria have tightened.
Despite these unfavorable conditions, in the fourth quarter of 2007, Forest City was able to increase its corporate revolving credit facility by $150 million to $750 million.
“Maintaining a higher level of liquidity is important in these more volatile capital markets. We believe the support shown by our existing bank group and the new participants in our expanded bank line speaks to the strength of Forest City’s experience and depth of relationships,” Ratner noted. “This increased liquidity enhances our capacity to fund our development pipeline and to strategically take advantage of selective opportunities arising from the current dislocation in the real estate markets.”
During 2007, Forest City closed on transactions totaling $2.8 billion in nonrecourse mortgage financings, including $1.1 billion in refinancings, $1.0 billion in development projects and acquisitions, and $700 million in loan extensions and additional fundings. During the fourth quarter, the Company closed on 10 loan transactions totaling $315 million. Since January 31, 2008, the Company has closed on financings totaling approximately $1.4 billion in nonrecourse mortgage financings, including $480 million in refinancings, $680 million in development projects and acquisitions, and $210 million in loan extensions and additional fundings. Ratner commented, “The capital markets for real estate remain difficult, and we do not expect to see improvement during 2008. Our recent financing activity demonstrates that capital remains available for well-structured transactions with strong sponsorship.”
As of January 31, 2008, the Company’s weighted average cost of mortgage debt decreased to 5.87 percent from 6.05 percent at January 31, 2007, primarily due to a decrease in fixed-rate mortgage debt. Fixed-rate mortgage debt, which represented 62 percent of the Company’s total nonrecourse mortgage debt and is inclusive of interest rate swaps, declined from 6.17 percent at January 31, 2007, to 6.08 percent at January 31, 2008. The variable-rate mortgage debt decreased from 5.78 percent at January 31, 2007, to 5.53 percent at January 31, 2008.
Development Pipeline Highlights
“As evidenced by exceptional assets such as The New York Times Building and San Francisco Centre, our development pipeline is one of our greatest strengths and the best opportunity we have to grow the Company and create long-term shareholder value,” Ratner said. “We ended 2007 with $2.2 billion of projects under construction at cost (at the Company’s pro-rata share), of which we expect to open more than $770 million of cost at our share in 2008. We also expect to begin work on an additional $1.5 billion in projects in 2008 with $3.0 billion under construction at year end.”
On a full consolidation basis, projects under construction at the end of 2007 represented $1.5 billion of cost, and 2008 anticipated openings represent approximately $678 million of cost. During 2008, work is anticipated to begin on an additional $1.4 billion of projects at full consolidation, resulting in an estimated $2.2 billion in projects under construction at year-end on a full consolidation basis.
Ratner said, “Because of the current economic conditions, we took a much more critical look at the projects in our pipeline, and as a result we delayed projects whose total cost, when completed, would have exceeded $1 billion. Given the challenging development environment we face, we will continue to be more selective on which projects we advance and which we delay.”
Projects Under Construction and Under Development
At the end of the fiscal year, 22 projects, totaling $2.2 billion of cost at the Company’s pro-rata share ($1.5 billion at full consolidation), were under construction or to be acquired. Nine of these projects are scheduled to open during 2008, representing approximately $773.5 million of cost at the Company’s share ($678.2 million on a full consolidation basis).
A schedule of the Company’s pipeline of projects under construction is included in this news release. The schedule includes comparable project costs on both a pro-rata share and full consolidation basis.
At the end of 2007, Forest City had more than 15 projects under development, representing approximately $2 billion of cost at the Company’s pro-rata share and at full consolidation. Previously announced projects include:
- Beekman, an urban residential community featuring more than 800 residential units and a ground-floor elementary school in Manhattan
- 80 DeKalb, a 365-unit apartment community in Brooklyn
- Presidio, a redevelopment of the historic Presidio of San Francisco to become a 161-unit apartment community at the foot of the Golden Gate Bridge
For two decades, the Company’s distinctive development competencies have been symbolized by large, multi-use urban projects such as MetroTech Center in Brooklyn and University Park at MIT in Boston, both of which are now mature. Stapleton in Denver and Central Station in Chicago continue their long-term growth and development. Beyond the development pipeline are four early-stage, mixed-use projects – Mesa del Sol, Atlantic Yards, Waterfront and The Yards – that reached significant development milestones during 2007.
At Mesa del Sol, the 9,000-acre mixed-use project in Albuquerque, the Company secured commitments from three major corporations: Sony Pictures Imageworks, Fidelity Investments, and SCHOTT Solar, Inc., a global leader in solar technology manufacturing. The three companies together have committed to more than 450,000 square feet of commercial space, bringing to a total of 1.2 million square feet of space built and occupied, under construction, or under contract throughout the Mesa del Sol development.
In addition to continuing to prevail in court decisions related to Atlantic Yards in Brooklyn, as previously mentioned, the Company is also moving ahead with site work, including demolition, infrastructure upgrades and construction of the temporary rail yard. Forest City now controls more than 85 percent of the land necessary for the project, which includes up to 6.5 million square feet of developable land on a 22-acre site.
In Washington, D.C., Forest City has begun site work on Waterfront’s first two government office buildings, totaling 500,000-plus square feet. Occupancy by District of Columbia agencies is scheduled for 2010. Located in Southwest Washington, this project will eventually feature 1.2 million square feet of office space, an estimated 1,000 residential units and 110,000 square feet of stores and restaurants. Also in Washington, at The Yards, demolition and construction of infrastructure began last fall. The 42-acre project is expected to include up to 2,800 residential units, 1.8 million square feet of office space, and 400,000 square feet of retail and dining space – all within walking distance of the newly opened Washington Nationals baseball park.
Year-End Summary and Outlook
Ratner said, “Reflecting on 2007, while our EBDT was lower, we were still able to create significant long-term shareholder value, as evidenced by approximately $1 billion of project openings and acquisitions. Our operating portfolio performed well, and our access to capital and significant increase in liquidity in the face of a challenging market speak to our ability to add value under these economic conditions. We expect 2008 will be an even more challenging year, but our results in 2007 and our long-term perspective give us the confidence that we will continue to grow our business and drive shareholder value.”
Corporate Description
Forest City Enterprises, Inc. is a $10 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.
Supplemental Package
Please refer to the Investor Relations section of the Company’s website at www.forestcity.net for a Supplemental Package, which the Company will also furnish to the Securities and Exchange Commission on Form 8-K. This Supplemental Package includes operating and financial information for the year ended January 31, 2008, with reconciliations of non-GAAP financial measures, such as EBDT, comparable NOI and pro-rata financial statements, to their most directly comparable GAAP financial measures.
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, or 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 minority interest expense on the Company's Consolidated Statement of Earnings; v) provision for decline in real estate (net of tax); vi) extraordinary items (net of tax); and vii) cumulative effect of change in accounting principle (net of tax). Unlike the real estate segments, EBDT for the Net segment equals net earnings.
EBDT is reconciled to net earnings, 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 provision for decline in 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, general real estate development and investment risks including lack of satisfactory financing, construction and lease-up delays and cost overruns, dependence on rental income from real property, reliance on major tenants, the effect of economic and market conditions on a nationwide basis as well as in our primary markets, vacancies in our properties, downturns in the housing market, competition, illiquidity of real estate investments, bankruptcy or defaults of tenants, department store consolidations, international activities, the impact of terrorist acts, risks associated with an investment in and operation of a professional sports team, conflicts of interests, our substantial debt leverage and the ability to obtain and service debt, the impact of restrictions imposed by our credit facility, the level and volatility of interest rates, the continued availability of tax-exempt government financing, effects of uninsured or underinsured losses, environmental liabilities, risks associated with developing and managing properties in partnership with others, the ability to maintain effective internal controls, compliance with governmental regulations, changes in market conditions, litigation risks, and other risk factors as disclosed 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 |
| Year Ended January 31, 2008 and 2007 |
| (dollars in thousands, except per share data) |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Three Months Ended,
January 31, | | Increase
(Decrease) | | Year Ended
January 31, | | Increase
(Decrease) |
| | | 2008 | | | 2007 | | | Amount | | Percent | | | 2008 | | | 2007 | | | Amount | | Percent |
| Operating Results: | | | | | | | | | | | | | | |
| Earnings (loss) from continuing operations | | $ | 11,697 | | $ | 31,862 | | | $ | (20,165 | ) | | | | $ | (13,197 | ) | $ | 30,742 | | | $ | (43,939 | ) | | |
| Discontinued operations, net of tax and minority interest (1) | | | 908 | | | 38,764 | | | | (37,856 | ) | | | | | 65,622 | | | 146,509 | | | | (80,887 | ) | | |
| Net earnings | | $ | 12,605 | | $ | 70,626 | | | $ | (58,021 | ) | | | | $ | 52,425 | | $ | 177,251 | | | $ | (124,826 | ) | | |
| | | | | | | | | | | | | | |
| Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) (2) | | $ | 91,188 | | $ | 107,550 | | | $ | (16,362 | ) | | (15.2 | %) | | $ | 265,718 | | $ | 284,954 | | | $ | (19,236 | ) | | (6.8 | %) |
| | | | | | | | | | | | | | |
| Reconciliation of Net Earnings to Earnings Before Depreciation, | | | | | | | | | | | | | | |
| Amortization and Deferred Taxes (EBDT) (2): | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Net Earnings | | $ | 12,605 | | $ | 70,626 | | | $ | (58,021 | ) | | | | $ | 52,425 | | $ | 177,251 | | | $ | (124,826 | ) | | |
| | | | | | | | | | | | | | |
| Depreciation and amortization - Real Estate Groups (7) | | | 65,393 | | | 57,938 | | | | 7,455 | | | | | | 250,951 | | | 206,745 | | | | 44,206 | | | |
| | | | | | | | | | | | | | |
| Amortization of mortgage procurement costs - Real Estate Groups (7) | | | 3,143 | | | 2,900 | | | | 243 | | | | | | 13,126 | | | 10,998 | | | | 2,128 | | | |
| | | | | | | | | | | | | | |
| Deferred income tax expense - Real Estate Groups (8) | | | 11,283 | | | 47,102 | | | | (35,819 | ) | | | | | 32,864 | | | 120,230 | | | | (87,366 | ) | | |
| | | | | | | | | | | | | | |
| Deferred income tax expense - Non-Real Estate Groups: (8) | | | | | | | | | | | | | | |
| Gain on disposition of other investments | | | 404 | | | 294 | | | | 110 | | | | | | 347 | | | 294 | | | | 53 | | | |
| | | | | | | | | | | | | | |
| Current income tax expense on non-operating earnings: (8) | | | | | | | | | | | | | | |
| Gain on disposition of other investments | | | - | | | - | | | | - | | | | | | 290 | | | - | | | | 290 | | | |
| Gain on disposition included in discontinued operations | | | - | | | (3,369 | ) | | | 3,369 | | | | | | 26,834 | | | 13,829 | | | | 13,005 | | | |
| Gain on disposition of equity method rental properties | | | 6,458 | | | - | | | | 6,458 | | | | | | 6,458 | | | 2,657 | | | | 3,801 | | | |
| | | | | | | | | | | | | | |
| Straight-line rent adjustment (3) | | | (7,263 | ) | | (4,198 | ) | | | (3,065 | ) | | | | | (16,551 | ) | | (8,757 | ) | | | (7,794 | ) | | |
| | | | | | | | | | | | | | | - | | | |
| Preference payment (6) | | | 936 | | | 898 | | | | 38 | | | | | | 3,707 | | | 898 | | | | 2,809 | | | |
| | | | | | | | | | | | | | |
| Preferred return on disposition | | | - | | | - | | | | - | | | | | | 5,034 | | | - | | | | 5,034 | | | |
| | | | | | | | | | | | | | |
| Provision for decline in real estate, net of minority interest | | | 3,292 | | | - | | | | 3,292 | | | | | | 3,292 | | | 1,923 | | | | 1,369 | | | |
| | | | | | | | | | | | | | |
| Provision for decline in real estate of equity method rental properties | | | 8,269 | | | - | | | | 8,269 | | | | | | 8,269 | | | 400 | | | | 7,869 | | | |
| | | | | | | | | | | | | | |
| Gain on disposition of equity method rental properties | | | (12,286 | ) | | - | | | | (12,286 | ) | | | | | (14,392 | ) | | (7,662 | ) | | | (6,730 | ) | | |
| | | | | | | | | | | | | | |
| Gain on disposition of other investments | | | - | | | - | | | | - | | | | | | (603 | ) | | - | | | | (603 | ) | | |
| | | | | | | | | | | | | | |
| Discontinued operations: (1) | | | | | | | | | | | | | | |
| Gain on disposition of rental properties | | | (1,046 | ) | | (64,641 | ) | | | 63,595 | | | | | | (106,333 | ) | | (351,861 | ) | | | 245,528 | | | |
| Minority interest - Gain on disposition | | | - | | | - | | | | - | | | | | | - | | | 118,009 | | | | (118,009 | ) | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) (2) | | $ | 91,188 | | $ | 107,550 | | | $ | (16,362 | ) | | (15.2 | %) | | $ | 265,718 | | $ | 284,954 | | | $ | (19,236 | ) | | (6.8 | %) |
| | | | | | | | | | | | | | |
| Diluted Earnings per Common Share: | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Earnings (loss) from continuing operations | | $ | 0.11 | | $ | 0.30 | | | $ | (0.19 | ) | | | | $ | (0.13 | ) | $ | 0.30 | | | $ | (0.43 | ) | | |
| Discontinued operations, net of tax and minority interest (1) | | | 0.01 | | | 0.36 | | | | (0.35 | ) | | | | | 0.64 | | | 1.40 | | | | (0.76 | ) | | |
| Net earnings (5) | | $ | 0.12 | | $ | 0.66 | | | $ | (0.54 | ) | | | | $ | 0.51 | | $ | 1.70 | | | $ | (1.19 | ) | | |
| | | | | | | | | | | | | | |
| Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) (2) (4) | | $ | 0.85 | | $ | 1.00 | | | $ | (0.15 | ) | | (15.0 | %) | | $ | 2.47 | | $ | 2.73 | | | $ | (0.26 | ) | | (9.5 | %) |
| | | | | | | | | | | | | | |
| Operating earnings, net of tax (a non-GAAP financial measure) | | $ | 0.19 | | $ | 0.33 | | | $ | (0.14 | ) | | | | $ | 0.02 | | $ | 0.44 | | | $ | (0.42 | ) | | |
| | | | | | | | | | | | | | |
| Provision for decline in real estate, net of tax | | | (0.07 | ) | | - | | | | (0.07 | ) | | | | | (0.07 | ) | | (0.01 | ) | | | (0.06 | ) | | |
| | | | | | | | | | | | | | |
| Gain on disposition of rental properties and other investments, net of tax | | | 0.08 | | | 0.37 | | | | (0.29 | ) | | | | | 0.75 | | | 2.54 | | | | (1.79 | ) | | |
| | | | | | | | | | | | | | |
| Minority interest | | | (0.08 | ) | | (0.04 | ) | | | (0.04 | ) | | | | | (0.19 | ) | | (1.27 | ) | | | 1.08 | | | |
| | | | | | | | | | | | | | |
| Net earnings (5) | | $ | 0.12 | | $ | 0.66 | | | $ | (0.54 | ) | | | | $ | 0.51 | | $ | 1.70 | | | $ | (1.19 | ) | | |
| | | | | | | | | | | | | | |
| Diluted weighted average shares outstanding (4) | | | 107,258,725 | | | 107,074,472 | | | | 184,253 | | | | | | 102,261,740 | | | 104,454,898 | | | | (2,193,158 | ) | | |
| Forest City Enterprises, Inc. and Subsidiaries |
| Financial Highlights |
| Year Ended January 31, 2008 and 2007 |
| (dollars in thousands) |
| | | | | | | | | | | | |
| | Three Months Ended,
January 31, | | Increase
(Decrease) | | Year Ended
January 31, | | Increase
(Decrease) |
| | | 2008 | | | 2007 | | | Amount | Percent | | | 2008 | | | 2007 | | | Amount | Percent |
| Operating Earnings (a non-GAAP financial measure) and Reconciliation to Net Earnings: | | | | | | | | | | |
| Revenues from real estate operations | | | | | | | | | | | | |
| Commercial Group | | $ | 275,644 | | $ | 242,641 | | | $ | 33,003 | | | | $ | 928,436 | | $ | 811,315 | | | $ | 117,121 | | |
| Residential Group | | | 76,898 | | | 54,227 | | | | 22,671 | | | | | 274,927 | | | 194,806 | | | | 80,121 | | |
| Land Development Group | | | 53,501 | | | 51,386 | | | | 2,115 | | | | | 92,257 | | | 117,230 | | | | (24,973 | ) | |
| Corporate Activities | | | - | | | - | | | | - | | | | | - | | | - | | | | - | | |
| Total Revenues | | | 406,043 | | | 348,254 | | | | 57,789 | | 16.6 | % | | | 1,295,620 | | | 1,123,351 | | | | 172,269 | | 15.3 | % |
| | | | | | | | | | | | |
| Operating expenses | | | (240,602 | ) | | (216,889 | ) | | | (23,713 | ) | | | | (787,654 | ) | | (677,403 | ) | | | (110,251 | ) | |
| Interest expense, including early extinguishment of debt | | | (91,191 | ) | | (79,349 | ) | | | (11,842 | ) | | | | (337,842 | ) | | (285,507 | ) | | | (52,335 | ) | |
| Amortization of mortgage procurement costs (7) | | | (2,653 | ) | | (2,659 | ) | | | 6 | | | | | (11,624 | ) | | (10,710 | ) | | | (914 | ) | |
| Depreciation and amortization (7) | | | (62,642 | ) | | (51,783 | ) | | | (10,859 | ) | | | | (232,584 | ) | | (176,815 | ) | | | (55,769 | ) | |
| Interest and other income | | | 21,002 | | | 31,671 | | | | (10,669 | ) | | | | 73,368 | | | 61,411 | | | | 11,957 | | |
| Equity in earnings of unconsolidated entities | | | 9,665 | | | 32,731 | | | | (23,066 | ) | | | | 12,273 | | | 48,542 | | | | (36,269 | ) | |
| Provision for decline in real estate of equity method rental properties | | | 8,269 | | | - | | | | 8,269 | | | | | 8,269 | | | 400 | | | | 7,869 | | |
| Gain on disposition of equity method rental properties | | | (12,286 | ) | | - | | | | (12,286 | ) | | | | (14,392 | ) | | (7,662 | ) | | | (6,730 | ) | |
| Revenues and interest income from discontinued operations (1) | | | 894 | | | 15,000 | | | | (14,106 | ) | | | | 27,246 | | | 112,633 | | | | (85,387 | ) | |
| Expenses from discontinued operations (1) | | | (461 | ) | | (16,731 | ) | | | 16,270 | | | | | (26,634 | ) | | (107,649 | ) | | | 81,015 | | |
| | | | | | | | | | | | |
| Operating earnings (a non-GAAP financial measure) | | | 36,038 | | | 60,245 | | | | (24,207 | ) | | | | 6,046 | | | 80,591 | | | | (74,545 | ) | |
| | | | | | | | | | | | |
| Income tax expense (8) | | | (16,007 | ) | | (25,033 | ) | | | 9,026 | | | | | (3,064 | ) | | (34,728 | ) | | | 31,664 | | |
| Income tax expense from discontinued operations (1) (8) | | | (571 | ) | | (24,416 | ) | | | 23,845 | | | | | (41,323 | ) | | (92,265 | ) | | | 50,942 | | |
| Income tax expense on non-operating earnings items (see below) | | | 279 | | | 24,978 | | | | (24,699 | ) | | | | 40,064 | | | 92,424 | | | | (52,360 | ) | |
| | | | | | | | | | | | |
| Operating earnings, net of tax (a non-GAAP financial measure) | | | 19,739 | | | 35,774 | | | | (16,035 | ) | | | | 1,723 | | | 46,022 | | | | (44,299 | ) | |
| | | | | | | | | | | | |
| Provision for decline in real estate | | | (3,302 | ) | | - | | | | (3,302 | ) | | | | (3,302 | ) | | (1,923 | ) | | | (1,379 | ) | |
| | | | | | | | | | | | |
| Provision for decline in real estate of equity method rental properties | | | (8,269 | ) | | - | | | | (8,269 | ) | | | | (8,269 | ) | | (400 | ) | | | (7,869 | ) | |
| | | | | | | | | | | | |
| Gain on disposition of equity method rental properties | | | 12,286 | | | - | | | | 12,286 | | | | | 14,392 | | | 7,662 | | | | 6,730 | | |
| | | | | | | | | | | | |
| Gain on disposition of other investments | | | - | | | - | | | | - | | | | | 603 | | | - | | | | 603 | | |
| | | | | | | | | | | | |
| Gain on disposition of rental properties included in discontinued operations (1) | | | 1,046 | | | 64,641 | | | | (63,595 | ) | | | | 106,333 | | | 351,861 | | | | (245,528 | ) | |
| | | | | | | | | | | | |
| Income tax benefit (expense) on non-operating earnings: (8) | | | | | | | | | | | | |
| Provision for decline in real estate | | | 1,272 | | | - | | | | 1,272 | | | | | 1,272 | | | 743 | | | | 529 | | |
| Provision for decline in real estate of equity method rental properties | | | 3,195 | | | - | | | | 3,195 | | | | | 3,195 | | | 155 | | | | 3,040 | | |
| Gain on disposition of other investments | | | - | | | (294 | ) | | | 294 | | | | | (233 | ) | | (294 | ) | | | 61 | | |
| Gain on disposition of equity method rental properties | | | (4,746 | ) | | - | | | | (4,746 | ) | | | | (3,615 | ) | | (2,962 | ) | | | (653 | ) | |
| Gain on disposition of rental properties included in discontinued operations | | | - | | | (24,684 | ) | | | 24,684 | | | | | (40,683 | ) | | (90,066 | ) | | | 49,383 | | |
| Income tax expense on non-operating earnings (see above) | | | (279 | ) | | (24,978 | ) | | | 24,699 | | | | | (40,064 | ) | | (92,424 | ) | | | 52,360 | | |
| | | | | | | | | | | | |
| Minority interest in continuing operations | | | (8,616 | ) | | (5,081 | ) | | | (3,535 | ) | | | | (18,991 | ) | | (15,476 | ) | | | (3,515 | ) | |
| | | | | | | | | | | | |
| Minority interest in discontinued operations: (1) | | | | | | | | | | | | |
| Operating earnings (loss) | | | - | | | 270 | | | | (270 | ) | | | | - | | | (62 | ) | | | 62 | | |
| Gain on disposition of rental properties | | | - | | | - | | | | - | | | | | - | | | (118,009 | ) | | | 118,009 | | |
| | | - | | | 270 | | | | (270 | ) | | | | - | | | (118,071 | ) | | | 118,071 | | |
| | | | | | | | | | | | |
| Minority interest | | | (8,616 | ) | | (4,811 | ) | | | (3,805 | ) | | | | (18,991 | ) | | (133,547 | ) | | | 114,556 | | |
| | | | | | | | | | | | |
| Net earnings | | $ | 12,605 | | $ | 70,626 | | | $ | (58,021 | ) | | | $ | 52,425 | | $ | 177,251 | | | $ | (124,826 | ) | |
| Forest City Enterprises, Inc. and Subsidiaries |
| Financial Highlights |
| Year Ended January 31, 2008 and 2007 |
| (in thousands) |
| | | | | | | | | |
| | | | | | | | |
1) Pursuant to the definition of a component of an entity of SFAS No. 144, assuming no significant continuing involvement, all earnings of properties which have been sold or are held for sale are reported as discontinued operations. |
| | | | | | | | |
| 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 minority interest expense on the Company's Consolidated Statement of Earnings; v) provision for decline in real estate (net of tax); vi) extraordinary items (net of tax); and vii) cumulative effect of change in accounting principle (net of tax). See our discussion of EBDT in the news release. |
| | | | | | | | |
3) The Company recognizes minimum rents on a straight-line basis over the term of the related lease pursuant to the provision of SFAS No. 13, "Accounting for Leases." The straight-line rent adjustment is recorded as an increase or decrease to revenue or operating expense 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. |
| | | | | | | | |
| 4) For the year ended January 31, 2008, the effect of 5,313,567 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 year ended January 31, 2008, diluted weighted average shares outstanding of 107,575,307 were used to arrive at $2.47/share. |
| | | | | | | | |
| 5) For the year ended January 31, 2008, $754,000 of net earnings is allocated to participating securities under EITF 03-6 "Participating Securities and the Two-Class Method under FASB 128". As a result, the net earnings for purposes of calculating basic and diluted EPS is $51,671,000. |
| | | | | | | | |
| 6) The Forest City Ratner Companies portfolio became a wholly-owned subsidiary of the Company November 8, 2006 upon the issuance of the Class A Common Units in exchange for Bruce C. Ratner's minority interests. For the first five years only, the Units that have not been exchanged are entitled to their proportionate share of an annual preferred payment of $2,500,000 plus an amount equal to the dividends paid on the same number of shares of the Company's common stock. After five years, the Units that have not been exchanged are entitled to a payment equal to the dividends paid on an equivalent number of shares of the Company's common stock. At January 31, 2007, the Company has recorded approximately $3,707,000 related to the annual preferred payment which is classified as minority interest expense on the Company's consolidated statement of earnings. |
| | | | | | | | |
| 7) The following table provides detail of depreciation and amortization and amortization of mortgage procurement costs. The Company’s Real Estate Groups are engaged in the ownership, development, acquisition and management of real estate projects, including apartment complexes, regional malls and retail centers, hotels, office buildings and mixed-use facilities, as well as large land development projects. |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | Depreciation and Amortization | | Depreciation and Amortization |
| | Three Months Ended January 31, | | Year Ended January 31, |
| | 2008 | | 2007 | | 2008 | | 2007 |
| | | | | | | | |
| Full Consolidation | $ | 62,642 | | | $ | 51,783 | | | $ | 232,584 | | | $ | 176,815 | |
| Non-Real Estate | | (3,233 | ) | | | (639 | ) | | | (10,663 | ) | | | (1,571 | ) |
| Real Estate Groups Full Consolidation | | 59,409 | | | | 51,144 | | | | 221,921 | | | | 175,244 | |
| Real Estate Groups related to minority interest | | (1,118 | ) | | | (3,074 | ) | | | (7,286 | ) | | | (13,588 | ) |
| Real Estate Groups Equity Method | | 7,096 | | | | 8,867 | | | | 34,369 | | | | 34,779 | |
| Real Estate Groups Discontinued Operations | | 6 | | | | 1,001 | | | | 1,947 | | | | 10,310 | |
| Real Estate Groups Pro-Rata Consolidation | $ | 65,393 | | | $ | 57,938 | | | $ | 250,951 | | | $ | 206,745 | |
| | | | | | | | |
| | Amortization of Mortgage Procurement Costs | Amortization of Mortgage Procurement Costs |
| | Three Months Ended January 31, | | Year Ended January 31, |
| | 2008 | | 2007 | | 2008 | | 2007 |
| | | | | | | | |
| Full Consolidation | $ | 2,653 | | | $ | 2,659 | | | $ | 11,624 | | | $ | 10,710 | |
| Non-Real Estate | | - | | | | (97 | ) | | | - | | | | (333 | ) |
| Real Estate Groups Full Consolidation | | 2,653 | | | | 2,562 | | | | 11,624 | | | | 10,377 | |
| Real Estate Groups related to minority interest | | (114 | ) | | | (161 | ) | | | (730 | ) | | | (1,061 | ) |
| Real Estate Groups Equity Method | | 594 | | | | 452 | | | | 2,142 | | | | 1,312 | |
| Real Estate Groups Discontinued Operations | | 10 | | | | 47 | | | | 90 | | | | 370 | |
| Real Estate Groups Pro-Rata Consolidation | $ | 3,143 | | | $ | 2,900 | | | $ | 13,126 | | | $ | 10,998 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | Three Months Ended January 31, | | Year Ended January 31, |
| | 2008 | | 2007 | | 2008 | | 2007 |
| 8) The following table provides detail of Income Tax Expense (Benefit): | (in thousands) | | (in thousands) |
| (A) Operating earnings | | | | | | | |
| Current | $ | (853 | ) | | $ | 3,715 | | | $ | (17,417 | ) | | $ | (13,643 | ) |
| Deferred | | 16,581 | | | | 21,318 | | | | 21,100 | | | | 46,307 | |
| | | 15,728 | | | | 25,033 | | | | 3,683 | | | | 32,664 | |
| | | | | | | | |
| (B) Provision for decline in real estate | | | | | | | |
| Deferred | | (1,272 | ) | | | - | | | | (1,272 | ) | | | (743 | ) |
| Deferred - Equity method investment | | (3,195 | ) | | | - | | | | (3,195 | ) | | | (155 | ) |
| | | (4,467 | ) | | | - | | | | (4,467 | ) | | | (898 | ) |
| (C) Gain on disposition of other investments | | | | | | | |
| Current - Non-Real Estate Groups | | - | | | | - | | | | 290 | | | | - | |
| Deferred - Non-Real Estate Groups | | - | | | | - | | | | (57 | ) | | | - | |
| | | - | | | | - | | | | 233 | | | | - | |
| (D) Gain on disposition of equity method rental properties | | | | | | | | | | | | | | | |
| Current | | 6,458 | | | | - | | | | 6,458 | | | | 2,657 | |
| Deferred | | (1,712 | ) | | | - | | | | (2,843 | ) | | | 305 | |
| | | 4,746 | | | | - | | | | 3,615 | | | | 2,962 | |
| | | | | | | | |
| Subtotal (A) (B) (C) (D) | | | | | | | |
| Current | | 5,605 | | | | 3,715 | | | | (10,669 | ) | | | (10,986 | ) |
| Deferred | | 10,402 | | | | 21,318 | | | | 13,733 | | | | 45,714 | |
| Income tax expense | | 16,007 | | | | 25,033 | | | | 3,064 | | | | 34,728 | |
| | | | | | | | |
| (E) Discontinued operations - Rental Properties | | | | | | | |
| Operating earnings | | | | | | | |
| Current | | 43 | | | | (2,547 | ) | | | (1,524 | ) | | | (900 | ) |
| Deferred | | 124 | | | | 1,985 | | | | 1,760 | | | | 2,805 | |
| | | 167 | | | | (562 | ) | | | 236 | | | | 1,905 | |
| | | | | | | | |
| Gain on disposition of rental properties | | | | | | | |
| Current | | - | | | | (3,369 | ) | | | 26,834 | | | | 13,829 | |
| Deferred | | - | | | | 28,053 | | | | 13,849 | | | | 76,237 | |
| | | - | | | | 24,684 | | | | 40,683 | | | | 90,066 | |
| | | | | | | | |
| Deferred gain on disposition of Lumber Group | | | | | | | | | | | | | | | |
| Current | | - | | | | - | | | | - | | | | - | |
| Deferred | | 404 | | | | 294 | | | | 404 | | | | 294 | |
| | | 404 | | | | 294 | | | | 404 | | | | 294 | |
| | | 571 | | | | 24,416 | | | | 41,323 | | | | 92,265 | |
| Grand Total (A) (B) (C) (D) (E) | | | | | | | |
| Current | | 5,648 | | | | (2,201 | ) | | | 14,641 | | | | 1,943 | |
| Deferred | | 10,930 | | | | 51,650 | | | | 29,746 | | | | 125,050 | |
| | $ | 16,578 | | | $ | 49,449 | | | $ | 44,387 | | | $ | 126,993 | |
| | | | | | | | |
| Recap of Grand Total: | | | | | | | |
| Real Estate Groups | | | | | | | |
| Current | | 13,598 | | | | 98 | | | | 37,885 | | | | 15,802 | |
| Deferred | | 11,283 | | | | 47,102 | | | | 32,864 | | | | 120,230 | |
| | | 24,881 | | | | 47,200 | | | | 70,749 | | | | 136,032 | |
| Non-Real Estate Groups | | | | | | | |
| Current | | (7,950 | ) | | | (2,299 | ) | | | (23,244 | ) | | | (13,859 | ) |
| Deferred | | (353 | ) | | | 4,548 | | | | (3,118 | ) | | | 4,820 | |
| | | (8,303 | ) | | | 2,249 | | | | (26,362 | ) | | | (9,039 | ) |
| Grand Total | $ | 16,578 | | | $ | 49,449 | | | $ | 44,387 | | | $ | 126,993 | |
| Reconciliation of Net Operating Income (non-GAAP) to Net Earnings (GAAP) (in thousands): |
| | | | | | | | | | |
| Three Months Ended January 31, 2008 | Three Months Ended January 31, 2007 |
| Full Consol- idation (GAAP) | Less Minority Interest | Plus Unconsol- idated Invest- ments at Pro-Rata | Plus Discontinued Operations | Pro-Rata Consol- idation (Non-GAAP) | Full Consol- idation (GAAP) | Less Minority Interest | Plus Unconsol- idated Invest- ments at Pro-Rata | Plus Discontinued Operations | Pro-Rata Consol- idation (Non-GAAP) |
| | | | | | | | | | |
| Revenues from real estate operations | $ | 406,043 | | $ | 19,717 | | $ | 87,410 | | $ | 703 | | $ | 474,439 | | $ | 348,254 | | $ | 20,200 | | $ | 145,274 | | $ | 14,055 | | $ | 487,383 | |
| Exclude straight-line rent adjustment (1) | | (9,018 | ) | | - | | | - | | | - | | | (9,018 | ) | | (6,995 | ) | | - | | | - | | | - | | | (6,995 | ) |
| Adjusted revenues | | 397,025 | | | 19,717 | | | 87,410 | | | 703 | | | 465,421 | | | 341,259 | | | 20,200 | | | 145,274 | | | 14,055 | | | 480,388 | |
| | | | | | | | | | |
| Operating expenses | | 240,602 | | | 10,374 | | | 52,582 | | | 170 | | | 282,980 | | | 216,889 | | | 7,379 | | | 94,094 | | | 9,840 | | | 313,444 | |
| Add back non-Real Estate depreciation and amortization (b) | | 3,233 | | | - | | | 4,160 | | | - | | | 7,393 | | | 639 | | | - | | | (99 | ) | | - | | | 540 | |
| Add back amortization of mortgage procurement costs for non-Real Estate Groups (d) | | - | | | - | | | 20 | | | - | | | 20 | | | 97 | | | - | | | 228 | | | - | | | 325 | |
| Exclude straight-line rent adjustment (2) | | (1,755 | ) | | - | | | - | | | - | | | (1,755 | ) | | (2,797 | ) | | - | | | - | | | - | | | (2,797 | ) |
| Exclude preference payment | | (936 | ) | | - | | | - | | | - | | | (936 | ) | | (898 | ) | | - | | | - | | | - | | | (898 | ) |
| Adjusted operating expenses | | 241,144 | | | 10,374 | | | 56,762 | | | 170 | | | 287,702 | | | 213,930 | | | 7,379 | | | 94,223 | | | 9,840 | | | 310,614 | |
| | | | | | | | | | |
| Add interest income and other income | | 21,002 | | | 800 | | | 2,375 | | | 191 | | | 22,768 | | | 31,671 | | | 90 | | | 2,501 | | | 970 | | | 35,052 | |
| Add equity in earnings of unconsolidated entities | | 9,665 | | | 188 | | | (10,037 | ) | | - | | | (560 | ) | | 32,731 | | | - | | | (29,123 | ) | | - | | | 3,608 | |
| Remove gain on disposition recorded on equity method | | (12,286 | ) | | - | | | 12,286 | | | - | | | - | | | - | | | - | | | - | | | - | | | - | |
| Add back provision for decline recorded on equity method | | 8,269 | | | - | | | (8,269 | ) | | - | | | - | | | - | | | - | | | - | | | - | | | - | |
| Add back equity method depreciation and amortization expense (see below) | | 7,690 | | | - | | | (7,690 | ) | | - | | | - | | | 9,319 | | | - | | | (9,319 | ) | | - | | | - | |
| | | | | | | | | | |
| Net Operating Income | | 190,221 | | | 10,331 | | | 19,313 | | | 724 | | | 199,927 | | | 201,050 | | | 12,911 | | | 15,110 | | | 5,185 | | | 208,434 | |
| | | | | | | | | | |
| Interest expense, including early extinguishment of debt | | (91,191 | ) | | (473 | ) | | (19,313 | ) | | (275 | ) | | (110,306 | ) | | (79,349 | ) | | (4,595 | ) | | (15,110 | ) | | (5,598 | ) | | (95,462 | ) |
| | | | | | | | | | |
| Equity in earnings of unconsolidated entities | | (7,707 | ) | | (188 | ) | | 10,037 | | | - | | | 2,518 | | | (32,731 | ) | | - | | | 29,123 | | | - | | | (3,608 | ) |
| | | | | | | | | | |
| Gain on disposition of equity method rental properties (e) | | 12,286 | | | - | | | - | | | - | | | 12,286 | | | - | | | - | | | - | | | - | | | - | |
| | | | | | | | | | |
| Provision for decline in real estate of equity method rental properties | | (8,269 | ) | | - | | | - | | | - | | | (8,269 | ) | | - | | | - | | | - | | | - | | | - | |
| | | | | | | | | | |
| Equity method depreciation and amortization expense (see above) | | (7,690 | ) | | - | | | 7,690 | | | - | | | - | | | (9,319 | ) | | - | | | 9,319 | | | - | | | - | |
| | | | | | | | | | |
| Gain on disposition of rental properties and other investments | | - | | | - | | | - | | | 1,046 | | | 1,046 | | | - | | | - | | | - | | | 64,641 | | | 64,641 | |
| | | | | | | | | | |
| Provision for decline in real estate | | (3,302 | ) | | (10 | ) | | - | | | - | | | (3,292 | ) | | - | | | - | | | - | | | - | | | - | |
| | | | | | | | | | |
| Depreciation and amortization - Real Estate Groups (a) | | (59,409 | ) | | (1,118 | ) | | (7,096 | ) | | (6 | ) | | (65,393 | ) | | (51,144 | ) | | (3,074 | ) | | (8,867 | ) | | (1,001 | ) | | (57,938 | ) |
| | | | | | | | | | |
| Amortization of mortgage procurement costs - Real Estate Groups (c) | | (2,653 | ) | | (114 | ) | | (594 | ) | | (10 | ) | | (3,143 | ) | | (2,562 | ) | | (161 | ) | | (452 | ) | | (47 | ) | | (2,900 | ) |
| | | | | | | | | | |
| Straight-line rent adjustment (1) + (2) | | 7,263 | | | - | | | - | | | - | | | 7,263 | | | 4,198 | | | - | | | - | | | - | | | 4,198 | |
| | | | | | | | | | |
| Preference payment | | (936 | ) | | - | | | - | | | - | | | (936 | ) | | (898 | ) | | - | | | - | | | - | | | (898 | ) |
| | | | | | | | | | |
| Earnings before income taxes | | 28,613 | | | 8,428 | | | 10,037 | | | 1,479 | | | 31,701 | | | 29,245 | | | 5,081 | | | 29,123 | | | 63,180 | | | 116,467 | |
| | | | | | | | | | |
| Income tax provision | | (16,007 | ) | | - | | | - | | | (571 | ) | | (16,578 | ) | | (25,033 | ) | | - | | | - | | | (24,416 | ) | | (49,449 | ) |
| | | | | | | | | | |
| Earnings before minority interest and discontinued operations | | 12,606 | | | 8,428 | | | 10,037 | | | 908 | | | 15,123 | | | 4,212 | | | 5,081 | | | 29,123 | | | 38,764 | | | 67,018 | |
| | | | | | | | | | |
| Minority Interest | | (8,616 | ) | | (8,616 | ) | | - | | | - | | | - | | | (5,081 | ) | | (5,081 | ) | | - | | | - | | | - | |
| | | | | | | | | | |
| Equity in earnings (loss) of unconsolidated entities | | 7,707 | | | 188 | | | (10,037 | ) | | - | | | (2,518 | ) | | 32,731 | | | - | | | (29,123 | ) | | - | | | 3,608 | |
| Earnings from continuing operations | | 11,697 | | | - | | | - | | | 908 | | | 12,605 | | | 31,862 | | | - | | | - | | | 38,764 | | | 70,626 | |
| | | | | | | | | | |
Discontinued operations, net of tax and minority interest: | | | | | | | | | | |
| Operating earnings from rental properties | | 266 | | | - | | | - | | | (266 | ) | | - | | | (899 | ) | | - | | | - | | | 899 | | | - | |
| Gain (loss) on disposition of rental properties | | 642 | | | - | | | - | | | (642 | ) | | - | | | 39,663 | | | - | | | - | | | (39,663 | ) | | - | |
| | 908 | | | - | | | - | | | (908 | ) | | - | | | 38,764 | | | - | | | - | | | (38,764 | ) | | - | |
| | | | | | | | | | |
| Net earnings | $ | 12,605 | | $ | - | | $ | - | | $ | - | | $ | 12,605 | | $ | 70,626 | | $ | - | | $ | - | | $ | - | | $ | 70,626 | |
| | | | | | | | | | |
| (a) Depreciation and amortization - Real Estate Groups | $ | 59,409 | | $ | 1,118 | | $ | 7,096 | | $ | 6 | | $ | 65,393 | | $ | 51,144 | | $ | 3,074 | | $ | 8,867 | | $ | 1,001 | | $ | 57,938 | |
| (b) Depreciation and amortization - Non-Real Estate | | 3,233 | | | - | | | 4,160 | | | - | | | 7,393 | | | 639 | | | - | | | (99 | ) | | - | | | 540 | |
| Total depreciation and amortization | $ | 62,642 | | $ | 1,118 | | $ | 11,256 | | $ | 6 | | $ | 72,786 | | $ | 51,783 | | $ | 3,074 | | $ | 8,768 | | $ | 1,001 | | $ | 58,478 | |
| | | | | | | | | | |
| (c) Amortization of mortgage procurement costs - Real Estate Groups | $ | 2,653 | | $ | 114 | | $ | 594 | | $ | 10 | | $ | 3,143 | | $ | 2,562 | | $ | 161 | | $ | 452 | | $ | 47 | | $ | 2,900 | |
| (d) Amortization of mortgage procurement costs - Non-Real Estate | | - | | | - | | | 20 | | | - | | | 20 | | | 97 | | | - | | | 228 | | | - | | | 325 | |
| Total amortization of mortgage procurement costs | $ | 2,653 | | $ | 114 | | $ | 614 | | $ | 10 | | $ | 3,163 | | $ | 2,659 | | $ | 161 | | $ | 680 | | $ | 47 | | $ | 3,225 | |
| | | | | | | | | | |
(e) Properties accounted for on the equity method do not meet the definition of a component of an entity under SFAS No. 144 and therefore are reported in continuing operations when sold. For the three months ended January 31, 2008, one equity method property was sold, University Park MIT Hotel, resulting in a pre-tax gain on disposition of $12,286. |
| Reconciliation of Net Operating Income (non-GAAP) to Net Earnings (GAAP) (in thousands): |
| | | | | | | | | | |
| Year Ended January 31, 2008 | Year Ended January 31, 2007 |
| Full Consol- idation (GAAP) | Less Minority Interest | Plus Unconsol- idated Invest- ments at Pro-Rata | Plus Discontinued Operations | Pro-Rata Consol- idation (Non-GAAP) | Full Consol- idation (GAAP) | Less Minority Interest | Plus Unconsol- idated Invest- ments at Pro-Rata | Plus Discontinued Operations | Pro-Rata Consol- idation (Non-GAAP) |
| | | | | | | | | | |
| Revenues from real estate operations | $ 1,295,620 | $ 71,040 | $ 344,638 | $ 26,304 | $ 1,595,522 | $ 1,123,351 | $ 97,031 | $ 355,457 | $ 102,712 | $ 1,484,489 |
| Exclude straight-line rent adjustment (1) | (25,166) | - | - | - | (25,166) | (15,950) | - | - | (44) | (15,994) |
| Adjusted revenues | 1,270,454 | 71,040 | 344,638 | 26,304 | 1,570,356 | 1,107,401 | 97,031 | 355,457 | 102,668 | 1,468,495 |
| | | | | | | | | | |
| Operating expenses | 787,654 | 34,461 | 224,833 | 20,055 | 998,081 | 677,403 | 45,406 | 234,796 | 68,711 | 935,504 |
| Add back non-Real Estate depreciation and amortization (b) | 10,663 | - | 10,431 | - | 21,094 | 1,571 | - | 7,174 | - | 8,745 |
| Add back amortization of mortgage procurement costs for non-Real Estate Groups (d) | - | - | 125 | - | 125 | 333 | 1 | 819 | - | 1,151 |
| Exclude straight-line rent adjustment (2) | (8,615) | - | - | - | (8,615) | (6,299) | - | - | (938) | (7,237) |
| Exclude preference payment | (3,707) | - | - | - | (3,707) | (898) | - | - | - | (898) |
| Adjusted operating expenses | 785,995 | 34,461 | 235,389 | 20,055 | 1,006,978 | 672,110 | 45,407 | 242,789 | 67,773 | 937,265 |
| | | | | | | | | | |
| Add interest income and other income | 73,368 | 2,662 | 11,533 | 942 | 83,181 | 61,411 | 2,763 | 3,301 | 1,830 | 63,779 |
| Add equity in earnings of unconsolidated entities | 12,273 | 884 | (13,149) | - | (1,760) | 48,542 | - | (31,278) | - | 17,264 |
| Remove gain on disposition recorded on equity method | (14,392) | - | 14,392 | - | - | (7,662) | - | 7,662 | - | - |
| Add back provision for decline recorded on equity method | 8,269 | - | (8,269) | - | - | 400 | - | (400) | - | - |
| Add back equity method depreciation and amortization expense (see below) | 36,511 | - | (36,511) | - | - | 36,091 | - | (36,091) | - | - |
| | | | | | | | | | |
| Net Operating Income | 600,488 | 40,125 | 77,245 | 7,191 | 644,799 | 574,073 | 54,387 | 55,862 | 36,725 | 612,273 |
| | | | | | | | | | |
| Interest expense, including early extinguishment of debt | (337,842) | (13,108) | (72,211) | (4,542) | (401,487) | (285,507) | (24,262) | (55,862) | (20,229) | (337,336) |
| | | | | | | | | | |
| Equity in earnings of unconsolidated entities | (10,315) | (884) | 13,149 | - | 3,718 | (48,542) | - | 31,278 | - | (17,264) |
| | | | | | | | | | |
| Gain on disposition of equity method rental properties (e) | 14,392 | - | - | - | 14,392 | 7,662 | - | - | - | 7,662 |
| | | | | | | | | | |
| Provision for decline in real estate of equity method rental properties | (8,269) | - | - | - | (8,269) | (400) | - | - | - | (400) |
| | | | | | | | | | |
| Equity method depreciation and amortization expense (see above) | (36,511) | - | 36,511 | - | - | (36,091) | - | 36,091 | - | - |
| | | | | | | | | | |
| Gain on disposition of rental properties and other investments | 603 | - | - | 106,333 | 106,936 | - | - | - | 233,852 | 233,852 |
| | | | | | | | | | |
| Preferred return on disposition | - | - | (5,034) | - | (5,034) | - | - | - | - | - |
| | | | | | | | | | |
| Provision for decline in real estate | (3,302) | (10) | - | - | (3,292) | (1,923) | - | - | - | (1,923) |
| | | | | | | | | | |
| Depreciation and amortization - Real Estate Groups (a) | (221,921) | (7,286) | (34,369) | (1,947) | (250,951) | (175,244) | (13,588) | (34,779) | (10,310) | (206,745) |
| | | | | | | | | | |
| Amortization of mortgage procurement costs - Real Estate Groups (c) | (11,624) | (730) | (2,142) | (90) | (13,126) | (10,377) | (1,061) | (1,312) | (370) | (10,998) |
| | | | | | | | | | |
| Straight-line rent adjustment (1) + (2) | 16,551 | - | - | - | 16,551 | 9,651 | - | - | (894) | 8,757 |
| | | | | | | | | | |
| Preference payment | (3,707) | - | - | - | (3,707) | (898) | - | - | - | (898) |
| | | | | | | | | | |
| Earnings before income taxes | (1,457) | 18,107 | 13,149 | 106,945 | 100,530 | 32,404 | 15,476 | 31,278 | 238,774 | 286,980 |
| | | | | | | | | | |
| Income tax provision | (3,064) | - | - | (41,323) | (44,387) | (34,728) | - | - | (92,265) | (126,993) |
| | | | | | | | | | |
| Earnings before minority interest and discontinued operations | (4,521) | 18,107 | 13,149 | 65,622 | 56,143 | (2,324) | 15,476 | 31,278 | 146,509 | 159,987 |
| | | | | | | | | | |
| Minority Interest | (18,991) | (18,991) | - | - | - | (15,476) | (15,476) | - | - | - |
| | | | | | | | | | |
| Equity in earnings (loss) of unconsolidated entities | 10,315 | 884 | (13,149) | - | (3,718) | 48,542 | - | (31,278) | - | 17,264 |
| Earnings (loss) from continuing operations | (13,197) | - | - | 65,622 | 52,425 | 30,742 | - | - | 146,509 | 177,251 |
| | | | | | | | | | |
Discontinued operations, net of tax and minority interest: | | | | | | | | | | |
| Operating earnings from rental properties | 376 | - | - | (376) | - | 3,017 | - | - | (3,017) | - |
| Gain on disposition of rental properties | 65,246 | - | - | (65,246) | - | 143,492 | - | - | (143,492) | - |
| 65,622 | - | - | (65,622) | - | 146,509 | - | - | (146,509) | - |
| | | | | | | | | | |
| Net earnings | $ 52,425 | $ - | $ - | $ - | $ 52,425 | $ 177,251 | $ - | $ - | $ - | $ 177,251 |
| | | | | | | | | | |
| (a) Depreciation and amortization - Real Estate Groups | $ 221,921 | $ 7,286 | $ 34,369 | $ 1,947 | $ 250,951 | $ 175,244 | $ 13,588 | $ 34,779 | $ 10,310 | $ 206,745 |
| (b) Depreciation and amortization - Non-Real Estate | 10,663 | - | 10,431 | - | 21,094 | 1,571 | - | 7,174 | - | 8,745 |
| Total depreciation and amortization | $ 232,584 | $ 7,286 | $ 44,800 | $ 1,947 | $ 272,045 | $ 176,815 | $ 13,588 | $ 41,953 | $ 10,310 | $ 215,490 |
| | | | | | | | | | |
| (c) Amortization of mortgage procurement costs - Real Estate Groups | $ 11,624 | $ 730 | $ 2,142 | $ 90 | $ 13,126 | $ 10,377 | $ 1,061 | $ 1,312 | $ 370 | $ 10,998 |
| (d) Amortization of mortgage procurement costs - Non-Real Estate | - | - | 125 | - | 125 | 333 | 1 | 819 | - | 1,151 |
Total amortization of mortgage procurement costs | $ 11,624 | $ 730 | $ 2,267 | $ 90 | $ 13,251 | $ 10,710 | $ 1,062 | $ 2,131 | $ 370 | $ 12,149 |
| | | | | | | | | | |
(e) Properties accounted for on the equity method do not meet the definition of a component of an entity under SFAS No. 144 and therefore are reported in continuing operations when sold. For the year ended January 31, 2008, two equity method properties were sold; White Acres, resulting in a pre-tax gain on disposition of $2,106, and University Park MIT Hotel, resulting in a pre-tax gain on disposition of $12,286. For the year ended January 31, 2007, one equity method property was sold, Midtown Plaza, resulting in a pre-tax gain on disposition of $7,662. |
| Forest City Enterprises, Inc. and Subsidiaries |
| Supplemental Operating Information |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | Net Operating Income (dollars in thousands) |
| | | Three Months Ended January 31, 2008 | | Three Months Ended January 31, 2007 | | % Change |
| | | Full
Consol-
idation
(GAAP) | Less
Minority
Interest | Plus
Unconsol-
idated
Investments
at Pro-Rata | Plus
Discon-
tinued
Operations | Pro-Rata
Consol-
idation
(Non-GAAP) | | Full
Consol-
idation
(GAAP) | Less
Minority
Interest | Plus
Unconsol-
idated
Investments
at Pro-Rata | Plus
Discon-
tinued
Operations | Pro-Rata
Consol-
idation
(Non-GAAP) | | Full Consolidation (GAAP) | | Pro-Rata Consolidation (Non-GAAP) |
| | | | | | | | | | | | | | | | | |
| Commercial Group | | | | | | | | | | | | | | | | |
| Retail | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Comparable | | $ 56,769 | $ 2,632 | $ 2,638 | $ - | $ 56,775 | | $ 53,963 | $ 2,232 | $ 1,430 | $ - | $ 53,161 | | 5.2% | | 6.8% |
| Total | | 68,553 | 3,214 | 6,520 | - | 71,859 | | 62,219 | 2,902 | 4,296 | 186 | 63,799 | | | | |
| Office Buildings | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Comparable | | 45,879 | 3,041 | 944 | - | 43,782 | | 44,227 | 2,556 | 1,261 | - | 42,932 | | 3.7% | | 2.0% |
| Total | | 55,062 | 1,271 | 1,861 | - | 55,652 | | 43,321 | 2,400 | 1,294 | - | 42,215 | | | | |
| Hotels | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Comparable | | 2,158 | - | 270 | - | 2,428 | | 3,266 | - | 281 | - | 3,547 | | -33.9% | | -31.5% |
| Total | | 1,526 | (23) | 1,156 | - | 2,705 | | 3,388 | - | 491 | (405) | 3,474 | | | | |
| | | | | | | | | | | | | | | | | |
| Earnings from Commercial | | | | | | | | | | | | | | | | |
| Land Sales | | 15,096 | 879 | - | - | 14,217 | | 18,989 | 1,556 | 395 | - | 17,828 | | | | |
| | | | | | | | | | | | | | | | | |
| Other | | (5,848) | (407) | (33) | - | (5,474) | | (7,766) | 2,622 | (14) | - | (10,402) | | | | |
| | | | | | | | | | | | | | | | | |
| Total Commercial Group | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Comparable | | 104,806 | 5,673 | 3,852 | - | 102,985 | | 101,456 | 4,788 | 2,972 | - | 99,640 | | 3.3% | | 3.4% |
| Total | | 134,389 | 4,934 | 9,504 | - | 138,959 | | 120,151 | 9,480 | 6,462 | (219) | 116,914 | | | | |
| | | | | | | | | | | | | | | | | |
| Residential Group | | | | | | | | | | | | | | | | |
| Apartments | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Comparable | | 23,467 | 763 | 7,270 | - | 29,974 | | 23,216 | 652 | 6,999 | - | 29,563 | | 1.1% | | 1.4% |
| Total | | 26,352 | 1,000 | 8,068 | 724 | 34,144 | | 39,601 | 1,162 | 8,372 | 5,404 | 52,215 | | | | |
| | | | | | | | | | | | | | | | | |
| Military Housing | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Comparable | | - | - | - | - | - | | - | - | - | - | - | | | | |
| Total | | 11,260 | - | 730 | - | 11,990 | | 5,576 | - | 145 | - | 5,721 | | | | |
| | | | | | | | | | | | | | | | | |
| Sale of Residential | | | | | | | | | | | | | | | | |
| Development Project | | (28) | - | - | - | (28) | | - | - | - | - | - | | | | |
| | | | | | | | | | | | | | | | | |
| Total Residential Group | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Comparable | | 23,467 | 763 | 7,270 | - | 29,974 | | 23,216 | 652 | 6,999 | - | 29,563 | | 1.1% | | 1.4% |
| Total | | 37,584 | 1,000 | 8,798 | 724 | 46,106 | | 45,177 | 1,162 | 8,517 | 5,404 | 57,936 | | | | |
| | | | | | | | | | | | | | | | | |
| Total Rental Properties | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Comparable | | 128,273 | 6,436 | 11,122 | - | 132,959 | | 124,672 | 5,440 | 9,971 | - | 129,203 | | 2.9% | | 2.9% |
| Total | | 171,973 | 5,934 | 18,302 | 724 | 185,065 | | 165,328 | 10,642 | 14,979 | 5,185 | 174,850 | | | | |
| | | | | | | | | | | | | | | | | |
| Land Development Group | | 31,018 | 4,397 | 273 | - | 26,894 | | 46,777 | 2,269 | 130 | - | 44,638 | | | | |
| | | | | | | | | | | | | | | | | |
| The Nets | | (5,825) | - | 738 | - | (5,087) | | (619) | - | 1 | - | (618) | | | | |
| | | | | | | | | | | | | | | | | |
| Corporate Activities | | (6,945) | - | - | - | (6,945) | | (10,436) | - | - | - | (10,436) | | | | |
| | | | | | | | | | | | | | | | | | |
| Grand Total | | $ 190,221 | $ 10,331 | $ 19,313 | $ 724 | $ 199,927 | | $ 201,050 | $ 12,911 | $ 15,110 | $ 5,185 | $ 208,434 | | | | |
| Forest City Enterprises, Inc. and Subsidiaries |
| Supplemental Operating Information |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | Net Operating Income (dollars in thousands) | | | Net Operating Income (dollars in thousands) | | Net Operating Income (dollars in thousands) |
| | | Year Ended January 31, 2008 | | | Year Ended January 31, 2007 | | % Change |
| | | Full
Consol-
idation
(GAAP) | Less
Minority
Interest | Plus
Unconsol-
idated
Investments
at Pro-Rata | Plus Discon-
tinued
Operations | Pro-Rata
Consol-
idation
(Non-GAAP) | | | Full
Consol-
idation
(GAAP) | Less
Minority
Interest | Plus
Unconsol-
idated
Investments
at Pro-Rata | Plus
Discon-
tinued
Operations | Pro-Rata
Consol-
idation
(Non-GAAP) | | Full
Consolidation
(GAAP) | Pro-Rata
Consolidation
(Non-GAAP) |
| | | | | | | | | | | | | | | | | |
| Commercial Group | | | | | | | | | | | | | | | | |
| Retail | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Comparable | | $ 213,752 | $ 20,018 | $ 11,240 | $ - | $ 204,974 | | | $ 200,100 | $ 17,447 | $ 9,173 | $ - | $ 191,826 | | 6.8% | 6.9% |
| Total | | 248,889 | 13,126 | 24,098 | - | 259,861 | | | 210,793 | 17,228 | 13,207 | 1,994 | 208,766 | | | |
| Office Buildings | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Comparable | | 182,336 | 18,938 | 4,226 | - | 167,624 | | | 178,688 | 18,854 | 4,366 | - | 164,200 | | 2.0% | 2.1% |
| Total | | 198,961 | 9,676 | 7,443 | - | 196,728 | | | 174,399 | 18,767 | 4,399 | - | 160,031 | | | |
| Hotels | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Comparable | | 14,093 | - | 1,106 | - | 15,199 | | | 13,398 | - | 1,096 | - | 14,494 | | 5.2% | 4.9% |
| Total | | 14,738 | 118 | 2,611 | - | 17,231 | | | 14,130 | - | 1,947 | 10,715 | 26,792 | | | |
| | | | | | | | | | | | | | | | | |
Earnings from Commercial Land Sales | | 23,555 | 1,670 | - | - | 21,885 | | | 37,143 | 2,684 | 641 | - | 35,100 | | | |
| | | | | | | | | | | | | | | | | |
| Other | | (16,983) | 5,908 | (908) | - | (23,799) | | | (24,919) | 6,815 | (5) | - | (31,739) | | | |
| | | | | | | | | | | | | | | | | |
| Total Commercial Group | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Comparable | | 410,181 | 38,956 | 16,572 | - | 387,797 | | | 392,186 | 36,301 | 14,635 | - | 370,520 | | 4.6% | 4.7% |
| Total | | 469,160 | 30,498 | 33,244 | - | 471,906 | | | 411,546 | 45,494 | 20,189 | 12,709 | 398,950 | | | |
| | | | | | | | | | | | | | | | | |
| Residential Group | | | | | | | | | | | | | | | | |
| Apartments | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Comparable | | 92,745 | 2,840 | 28,806 | - | 118,711 | | | 89,540 | 2,627 | 27,004 | - | 113,917 | | 3.6% | 4.2% |
| Total | | 108,293 | 4,433 | 38,075 | 7,191 | 149,126 | | | 107,318 | 3,838 | 31,766 | 24,016 | 159,262 | | | |
| | | | | | | | | | | | | | | | | |
| Military Housing | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Comparable | | - | - | - | - | - | | | - | - | - | - | - | | | |
| Total | | 24,826 | - | 1,823 | - | 26,649 | | | 12,052 | - | 305 | - | 12,357 | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Sale of Residential Development Project | | 17,607 | - | - | - | 17,607 | | | - | - | - | - | - | | | |
| | | | | | | | | | | | | | | | | |
| Total Residential Group | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Comparable | | 92,745 | 2,840 | 28,806 | - | 118,711 | | | 89,540 | 2,627 | 27,004 | - | 113,917 | | 3.6% | 4.2% |
| Total | | 150,726 | 4,433 | 39,898 | 7,191 | 193,382 | | | 119,370 | 3,838 | 32,071 | 24,016 | 171,619 | | | |
| | | | | | | | | | | | | | | | | |
| Total Rental Properties | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Comparable | | 502,926 | 41,796 | 45,378 | - | 506,508 | | | 481,726 | 38,928 | 41,639 | - | 484,437 | | 4.4% | 4.6% |
| Total | | 619,886 | 34,931 | 73,142 | 7,191 | 665,288 | | | 530,916 | 49,332 | 52,260 | 36,725 | 570,569 | | | |
| | | | | | | | | | | | | | | | | |
| Land Development Group | | 43,396 | 5,194 | 676 | - | 38,878 | | | 99,056 | 5,055 | 790 | - | 94,791 | | | |
| | | | | | | | | | | | | | | | | |
| The Nets | | (20,878) | - | 3,427 | - | (17,451) | | | (14,703) | - | 2,812 | - | (11,891) | | | |
| | | | | | | | | | | | | | | | | |
| Corporate Activities | | (41,916) | - | - | - | (41,916) | | | (41,196) | - | - | - | (41,196) | | | |
| | | | | | | | | | | | | | | | | | |
| Grand Total | | $ 600,488 | $ 40,125 | $ 77,245 | $ 7,191 | $ 644,799 | | | $ 574,073 | $ 54,387 | $ 55,862 | $ 36,725 | $ 612,273 | | | |
Development Pipeline |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| January 31, 2008 |
| 2007 Openings and Acquisitions (11) |
| | | | | | | | | | | | | |
Property / Location | Dev
(D)
Acq
(A) | Date
Opened/
Acquired | | FCE Legal
Ownership % (h) | | Pro-
Rata
FCE %
(h)(1) | Cost at Full
Consol-
idation
(GAAP) (a) | Total
Cost
at 100%
(2) | Cost at FCE
Pro-Rata Share
(Non-GAAP)(b)
(1)X(2) | Sq. ft./
No. of
Units | | Gross
Leasable
Area | |
| | | | | | | (in millions) | | | | |
| | | | | | | | | | | | | |
| Retail Centers: | | | | | | | | | | | | | |
Promenade Bolingbrook/ Bolingbrook, IL | D | Q1-07 | | 100.0% | | 100.0% | $ 152.0 | $ 152.0 | $ 152.0 | 750,000 | | 430,000 | (f) |
Victoria Gardens - Bass Pro/ Rancho Cucamonga, CA | D | Q2-07 | | 80.0% | | 80.0% | 41.2 | 41.2 | 33.0 | 180,000 | | 180,000 | |
| | | | | | | $ 193.2 | $ 193.2 | $ 185.0 | 930,000 | | 610,000 | |
| | | | | | | | | | | | | |
| Office: | | | | | | | | | | | | | |
Colorado Studios/ Denver, CO | A | Q1-07 | | 90.0% | | 90.0% | $ 2.2 | $ 2.2 | $ 2.0 | 75,000 | | | |
Commerce Court/ Pittsburgh, PA | A | Q1-07 | | 70.0% | | 100.0% | 26.5 | 26.5 | 26.5 | 377,000 | | | |
Illinois Science and Technology Park - Building Q/ Skokie, IL | A/D | Q1-07 | | 100.0% | | 100.0% | 47.8 | 47.8 | 47.8 | 158,000 | | | |
Richmond Office Park/ Richmond, VA | A | Q2-07 | | 100.0% | | 100.0% | 116.0 | 116.0 | 116.0 | 570,000 | (i) | | |
New York Times/ Manhattan, NY | D | Q3-07 | | 70.0% | | 100.0% | 542.9 | 542.9 | 542.9 | 737,000 | (j) | | |
| | | | | | | $ 735.4 | $ 735.4 | $ 735.2 | 1,917,000 | | | |
| | | | | | | | | | | | | |
| Residential: | | | | | | | | | | | | | |
Stapleton Town Center - Botanica Phase II/ Denver, CO | D | Q2-07 | | 90.0% | | 90.0% | $ 26.3 | $ 26.3 | $ 23.7 | 154 | | | |
Tobacco Row - Cameron Kinney/ Richmond, VA | A | Q2-07 | | 100.0% | | 100.0% | 31.0 | 31.0 | 31.0 | 259 | | | |
Wilson Building/ Dallas, TX | A | Q4-07 | | 100.0% | | 100.0% | 21.4 | 21.4 | 21.4 | 143 | | | |
| | | | | | | $ 78.7 | $ 78.7 | $ 76.1 | 556 | | | |
| | | | | | | | | | | | Units Sold | |
| Condominiums: | | | | | | | | | | | | at 1/31/2008 | |
Mercury (c)/ Los Angeles, CA | D | Q2-07 | | 50.0% | | 50.0% | $ 0.0 | $ 157.6 | $ 78.8 | 240 | | 76 | |
| | | | | | | | | | | | | |
| Total Openings (d) | $1,007.3 | $1,164.9 | $1,075.1 | | | | |
| LESS: Above properties to be sold as Condominiums | $ 0.0 | $ 157.6 | $ 78.8 | | | | |
| Openings and Acquisitions less Condominiums | $1,007.3 | $1,007.3 | $996.3 | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Residential Phased-In Units (c) (e): | | | | | | | | | | Opened in '07 / Total | | | |
Arbor Glenn/ Twinsburg, OH | D | 2004-07 | | 50.0% | | 50.0% | $ 0.0 | $ 18.4 | $ 9.2 | 48/288 | | | |
Pine Ridge Expansion/ Willoughby Hills, OH | D | 2005-07 | | 50.0% | | 50.0% | 0.0 | 16.4 | 8.2 | 40/162 | | | |
Stratford Crossing/ Wadsworth, OH | D | 2007-09 | | 50.0% | | 50.0% | 0.0 | 25.3 | 12.7 | 108/348 | | | |
Sutton Landing/ Brimfield, OH | D | 2007-08 | | 50.0% | | 50.0% | 0.0 | 15.9 | 8.0 | 24/216 | | | |
Cobblestone Court/ Painesville, OH | D | 2006-08 | | 50.0% | | 50.0% | 0.0 | 24.6 | 12.3 | 96/304 | | | |
| Total (g) | | | | | | | $ 0.0 | $ 100.6 | $ 50.4 | 316/1,318 | | | |
| | | | | | | | | | | | | | |
| See Attached Footnotes |
| Development Pipeline |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
January 31, 2008 |
Under Construction and To Be Acquired (22) |
| | | | | | | | | | | | | | | | |
Property/ Location | Dev
(D)
Acq
(A) | Antici-
pated
Opening | FCE Legal
Owner- ship % (h) | | Pro-Rata
FCE
%
(h)(1) | | Cost at Full
Consol-
idation
(GAAP) (a) | | Total Cost
at 100%
(2) | | Cost at FCE
Pro-Rata Share
(Non-GAAP) (b)
(1) X (2) | Sq. ft./
No. of
Units | | Gross
Leasable
Area | | Lease Commitment % |
| | | | | | | (in millions) | | | | | |
| Retail Centers: | | | | | | | | | | | | | | | | |
Orchard Town Center/ Westminster, CO | D | Q1-08 | 100.0% | | 100.0% | | $ 164.1 | | $ 164.1 | | $ 164.1 | 983,000 | | 569,000 | (n) | 59% |
Shops at Wiregrass/ Tampa, FL | D | Q3-08 | 50.0% | | 100.0% | (m) | 149.3 | | 149.3 | | 149.3 | 646,000 | | 356,000 | | 73% |
White Oak Village/ Richmond, VA | D | Q3-08 | 50.0% | | 100.0% | | 73.5 | | 73.5 | | 73.5 | 792,000 | | 286,000 | | 86% |
Village at Gulfstream (c)/ Hallandale, FL | D | Q1-09 | 50.0% | | 50.0% | | 0.0 | | 164.4 | | 82.2 | 455,000 | | 455,000 | (o) | 25% |
Promenade at Temecula Expansion/ Temecula, CA | D | Q1-09 | 75.0% | | 75.0% | | 102.5 | | 102.5 | | 76.9 | 127,000 | | 127,000 | | 49% |
East River Plaza (c)/ Manhattan, NY | D | Q3-09 | 35.0% | | 50.0% | | 0.0 | | 407.4 | | 203.7 | 517,000 | | 517,000 | | 64% |
Ridge Hill Retail/ Yonkers, NY | D | Q4-09/Q2-10 | 70.0% | | 100.0% | | 670.7 | | 670.7 | | 670.7 | 1,200,000 | | 1,200,000 | (p) | 13% |
| | | | | | | $ 1,160.1 | | $ 1,731.9 | | $ 1,420.4 | 4,720,000 | | 3,510,000 | | |
| | | | | | | | | | | | | | | | |
| Office: | | | | | | | | | | | | | | | | |
Johns Hopkins - 855 North Wolfe Street/ East Baltimore, MD | D | Q1-08 | 76.6% | | 76.6% | | $ 111.2 | | $ 111.2 | | $ 85.2 | 278,000 | (q) | | | 45% |
818 Mission Street (c)/ San Francisco, CA | A | Q1-08 | 50.0% | | 50.0% | | 0.0 | | 20.6 | | 10.3 | 34,000 | | | | 18% |
Mesa Del Sol Town Center (c)/ Albuquerque, NM | D | Q3-08 | 47.5% | | 47.5% | | 0.0 | | 18.7 | | 8.9 | 74,000 | | | | 31% |
| | | | | | | $ 111.2 | | $ 150.5 | | $ 104.4 | 386,000 | | | | |
| | | | | | | | | | | | | | | | |
| Residential: | | | | | | | | | | | | | | | | |
Lucky Strike/ Richmond, VA | D | Q1-08 | 100.0% | | 100.0% | | $ 37.4 | | $ 37.4 | | $ 37.4 | 131 | | | | |
Uptown Apartments (c)/ Oakland, CA | D | Q1-08/Q4-08 | 50.0% | | 50.0% | | 0.0 | | 204.2 | | 102.1 | 665 | | | | |
Dallas Mercantile/ Dallas, TX | D | Q1-08/Q3-08 | 100.0% | | 100.0% | | 142.7 | | 142.7 | | 142.7 | 366 | (r) | | | |
Haverhill/ Haverhill, MA | D | Q1-09 | 100.0% | | 100.0% | | 72.8 | | 72.8 | | 72.8 | 305 | | | | |
| | | | | | | $ 252.9 | | $ 457.1 | | $ 355.0 | 1,467 | | | | |
| | | | | | | | | | | | | | | | |
| Military Housing: | | | | | | | | | | | | | | | | |
Ohana Military Communities, Hawaii Increment I (c)(e)/ Honolulu, HI | D | 2005-2008 | 10.0% | | 10.0% | | $ 0.0 | | $ 316.5 | | $ 31.7 | 1,952 | | | | |
Midwest Millington (c)(e)/ Memphis, TN | D | 2008-2009 | 25.0% | | 25.0% | | 0.0 | | 38.1 | | 9.5 | 318 | | | | |
Military Housing - Navy Midwest (c)(e)/ Chicago, IL | D | 2006-2009 | 25.0% | | 25.0% | | 0.0 | | 264.7 | | 66.2 | 1,658 | | | | |
Air Force Academy (c)(e)/ Colorado Springs, CO | D | 2007-2009 | 50.0% | | 50.0% | | 0.0 | | 82.5 | | 41.3 | 427 | | | | |
Military Housing - Marines, Hawaii Increment II (c)(e)/ Honolulu, HI | D | 2007-2010 | 10.0% | | 10.0% | | 0.0 | | 338.8 | | 33.9 | 1,175 | | | | |
Military Housing - Navy, Hawaii Increment III (c)(e)/ Honolulu, HI | D | 2007-2010 | 10.0% | | 10.0% | | 0.0 | | 614.6 | | 61.5 | 2,519 | | | | |
Pacific Northwest Communities (c)(e)/ Seattle, WA | A/D | 2007-2010 | 20.0% | | 20.0% | | 0.0 | | 264.5 | | 52.9 | 2,986 | | | | |
Hawaii Phase IV (c)(e)/ Kaneohe, HI | D | 2007-2014 | 10.0% | | 10.0% | | 0.0 | | 257.9 | | 25.8 | 917 | | | | |
| | | | | | | $ 0.0 | | $ 2,177.6 | | $ 322.8 | 11,952 | | | | |
Total Under Construction (k) | | | | | | | $1,524.2 | | $4,517.1 | | $2,202.6 | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Residential Phased-In Units (c) (e): | | | | | | | | | | | | Under Const. / Total | | | | |
Cobblestone Court/ Painesville, OH | D | 2006-08 | 50.0% | | 50.0% | | $ 0.0 | | $ 24.6 | | $ 12.3 | 96/304 | | | | |
Sutton Landing/ Brimfield, OH | D | 2007-08 | 50.0% | | 50.0% | | 0.0 | | 15.9 | | 8.0 | 192/216 | | | | |
Stratford Crossing/ Wadsworth, OH | D | 2007-09 | 50.0% | | 50.0% | | 0.0 | | 25.3 | | 12.7 | 240/348 | | | | |
| Total (l) | | | | | | | $ 0.0 | | $ 65.8 | | $ 33.0 | 528/868 | | | | |
| | | | | | | | | | | | | | | | | |
| See Attached Footnotes | |
| Development Pipeline | |
| | | |
| 2007 FOOTNOTES | |
| | | |
(a) | | 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"). |
(b) | | 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. |
(c) | | 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. |
(d) | | The difference between the full consolidation cost amount (GAAP) of $1,007.3 million to the Company's pro-rata share (a non-GAAP measure) of $1,075.1 million consists of a reduction to full consolidation for minority interest of $11.0 million of cost and the addition of its share of cost for unconsolidated investments of $78.8 million. | |
(e) | | Phased-in openings. Costs are representative of the total project. | |
(f) | | Includes 39,000 square feet of office space. | |
(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 $50.4 million consists of the Company's share of cost for unconsolidated investments of $50.4 million. |
(h) | | 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. |
(i) | | Includes 11 office buildings. | |
(j) | | Includes 23,000 square feet of retail space. | |
(k) | | The difference between the full consolidation cost amount (GAAP) of $1,524.2 million to the Company's pro-rata share (a non-GAAP measure) of $2,202.6 million consists of a reduction to full consolidation for minority interest of $51.6 million of cost and the addition of its share of cost for unconsolidated investments of $730.0 million. |
(l) | | 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 $33.0 million consists of Forest City's share of cost for unconsolidated investments of $33.0 million. |
| (m) | | As of 1/31/08 Shops at Wiregrass was funded 50% by Forest City. Since this date Forest City has entered into an agreement to pay back the original partner's contribution and will fund 100% going forward. |
(n) | | Includes 177,000 square feet for Target and 97,000 square feet for JC Penney that opened in Q3-06, as well as 16,000 square feet of office space. |
(o) | | Includes 67,000 square feet of office space. | |
(p) | | Includes 156,000 square feet of office space. | |
(q) | | Includes 22,000 square feet of retail space. | |
(r) | | Includes 18,000 square feet of retail space. | |
CONTACT:
Forest City Enterprises, Inc.
Robert O’Brien, 216-621-6060
Vice President - Finance and Investment
or
Tom Kmiecik, 216-621-6060
Assistant Treasurer
or
Jeff Linton, 216-621-6060
Vice President, Corporate Communications
www.forestcity.net
