Exhibit 99.1
Forest City Reports Fiscal 2005 First-Quarter Results
CLEVELAND--(BUSINESS WIRE)--June 8, 2005--Forest City Enterprises,
Inc. (NYSE:FCEA) (NYSE:FCEB) today announced increases in revenues,
net earnings and EBDT for the fiscal first quarter ended April 30,
2005. The second-quarter dividend is expected to be declared at the
quarterly Board meeting on June 21, 2005.
The Company reported first-quarter consolidated revenues increased
29 percent to $309.3 million compared with $239.9 million a year
earlier. Fiscal first-quarter net earnings were $22.2 million, or
$0.43 per share, compared with $7.2 million, or $0.14 per share, in
2004. EBDT (Earnings Before Depreciation, Amortization and Deferred
Taxes) was $67.7 million, or $1.32 per share, a 22 percent increase on
a per share basis over last year's fiscal first-quarter EBDT of $55.1
million, or $1.08 per share.
The 22 percent increase in EBDT was driven by an 8 percent
increase in the Company's operating portfolio, and large increases in
land sales in both the investment real estate business and in the Land
Development Group. A portion of these increases were offset by two
factors: Lumber Trading Group EBDT in the first quarter of last year
with no corresponding EBDT in 2005 due to the sale of this business
unit in the fourth quarter of 2004; and a first-quarter 2005 loss for
The Nets (NBA basketball team) segment, which the Company did not own
in the first quarter of 2004. In addition to these items, net earnings
increased in the first quarter of 2005 due to a first-quarter 2004
charge resulting from a change in an accounting principle, which did
not recur.
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.
Discussion of Results
Charles A. Ratner, president and chief executive officer of Forest
City Enterprises, said, "We completed two projects during the fiscal
first quarter and one acquisition early in the second quarter, and we
expect to open eight additional projects during the balance of the
year. Total project openings for 2005 will represent $486.7 million of
cost on a full consolidation basis and $559.7 million of cost at the
Company's pro-rata share."
Comparable property net operating income (NOI) - defined as NOI
from properties operated during the fiscal first quarters of both 2005
and 2004 -- increased 3.1 percent in 2005 compared with the prior
year's first quarter. Comparable property NOI for the retail and
office portfolios was up 3.3 percent and 0.7 percent, respectively. In
the residential portfolio, comparable property NOI increased 3.5
percent, following a 1.3 percent increase in the fourth quarter of
2004 - the first time in three years that comparable NOI has increased
in two consecutive quarters. Comparable property NOI, a non-GAAP
financial measure, is based on the pro-rata consolidation method, also
a non-GAAP financial measure. Included in this news release is an
exhibit that presents comparable property NOI on the full
consolidation method.
Fiscal 2005 first-quarter comparable occupancies were up
portfolio-wide compared with the same period a year ago. Retail
occupancies were 94 percent compared with 92 percent last year; office
was 94 percent compared to 92 percent in the prior year first quarter;
and residential increased to 92 percent from 91 percent.
The Land Development Group, which includes Denver Stapleton,
Chicago Central Station and other projects throughout the country, has
remained strong, generating $13.9 million in net earnings and $14.7
million of EBDT in the first quarter.
Sales of land in the investment real estate portfolio contributed
an additional $10.6 million in net earnings and EBDT during the first
quarter. These transactions occur when the Company chooses to sell
rather than lease land, as part of major real estate development
projects.
Financing Activity
Forest City continues to take advantage of current low interest
rates and attractive debt markets for its project financings, with
primary emphasis on locking in fixed-rate nonrecourse mortgages.
During the first fiscal quarter, Forest City closed on transactions
totaling $266.4 million in nonrecourse mortgage financings, including
$67.7 million for new development projects and acquisitions, $170.4
million in refinancings, and $28.4 million in loan extensions and
other fundings.
As of April 30, 2005, the Company's weighted average cost of
mortgage debt increased to 5.94 percent from 5.66 percent at April 30,
2004, primarily due to the increase in variable interest rates. The
variable-rate mortgage debt increased from 3.56 percent at April 30,
2004 to 4.85 percent at April 30, 2005. More significantly, fixed-rate
mortgage debt, which represented 69 percent of the Company's total
nonrecourse mortgage debt, decreased from 6.64 percent at April 30,
2004 to 6.43 percent at April 30, 2005.
Dispositions
During the fiscal first quarter, the Company sold the Showcase
specialty retail center in Las Vegas as well as the ground lease and
expansion rights to the property, which generated a pre-tax gain of
approximately $17.7 million and cash proceeds of $26 million. Also
during the quarter, Forest City disposed of Colony Place, a 300-unit
residential community in Fort Myers, Florida, for a $5.4 million
pre-tax gain and $6.6 million in cash proceeds.
Acquisition and Development Highlights
More than 70 percent of the Company's portfolio is concentrated in
the following major markets: New York City/Philadelphia metropolitan
area, Boston, Greater Washington D.C./Baltimore, Denver, and
California. Both of the projects opened and 88 percent of the projects
under construction during the first quarter are located in these major
markets. A schedule of the Company's project openings and the pipeline
of projects under construction are included in this news release.
Highlighted below are several of those properties.
Openings and Acquisition
During the first quarter, Forest City opened two projects,
representing a total cost of $49.2 million. Among the first-quarter
openings was 23 Sidney, one of the final buildings to be completed at
the Company's University Park at MIT life sciences office park in
Cambridge, Massachusetts. 23 Sidney features 51 loft apartments and
serves as the "front door" for the entire 27-acre mixed-use project.
Also in the first quarter, Forest City opened the $31 million,
359,000-square-foot first phase of Saddle Rock Village retail center
in Aurora, Colorado. The retail center will feature Super Target,
Jo-Ann Stores, OfficeMax and PETsMART as anchor tenants.
Early in the second quarter, Forest City acquired Ballston Common
Office Center in Arlington, Virginia for $62.9 million. The
176,000-square-foot office building is 99 percent leased to three
existing tenants - the largest of which is the U.S. Coast Guard. The
office building sits above the Company's existing Ballston Common
Mall, a four-level, 578,000-square-foot urban retail center.
Projects Under Construction and Scheduled to Open in Fiscal 2005
As of the end of the first quarter, Forest City's pipeline
included 15 projects under construction or to be acquired,
representing a cost of $805.4 million on a full consolidation basis
and $1.2 billion of cost at the Company's pro-rata share. Including
the two projects opened in the first quarter, a total of 11 projects -
three retail properties, one office building, six apartment
communities and one condominium building - are scheduled to open in
2005. See attached exhibit, which includes comparable project costs on
both a pro-rata share and full consolidation basis.
Commercial/Mixed-Use Projects
Retail centers currently under construction and scheduled to open
in 2005 include:
-- Simi Valley Town Center - The 600,000-square-foot, $138
million open-air regional lifestyle center in Southern
California will feature anchor stores Macy's and
Robinsons-May, and as many as 120 specialty shops and
restaurants.
-- NorthField at Stapleton - This 1.1-million-square-foot
regional lifestyle center at the Company's Denver Stapleton
development will feature anchors Super Target, Foley's,
Harkins Theatres and Bass Pro Shops. The first phase will open
later in fiscal 2005 with subsequent openings throughout
fiscal 2006. This project represents a cost of $173 million on
a full consolidation basis and $156 million of cost at the
Company's pro-rata share.
Residential Projects
As of the end of the first quarter, Forest City has approximately
3,700 rental residential units at eight properties under construction.
In addition to the already-opened 23 Sidney, five apartment
communities, representing $209.2 million on a full consolidation basis
and $234.9 million of cost at the Company's pro-rata share, are
scheduled to open in 2005. The use of federal and state historic tax
credits, affordable-housing tax credits, and tax-exempt financing for
many residential projects has enabled the Company to maximize its
returns, even under difficult market conditions.
Downtown Los Angeles is a growing market for residential
development, and the Company has two apartment communities there
currently under construction and scheduled to open during fiscal 2005.
The 264-unit Met Lofts is located in Los Angeles' growing South Park
neighborhood. Meanwhile, at Metro 417, Forest City is redeveloping the
former Subway Terminal train station and office building into 277 loft
apartments. Other rental residential projects under construction and
scheduled to open in fiscal 2005 are the 203-unit 100 Landsdowne at
University Park at MIT near Boston; Ashton Mill, which is being
transformed from an Industrial Revolution-era cotton mill into more
than 190 apartment units near Providence, Rhode Island; and Sterling
Glen of Lynbrook, a 100-unit senior-housing community in the New York
City metropolitan area.
Condominiums
Forest City is continuing its involvement in the condominium
market. In downtown Los Angeles, the Company currently has under
construction a 37-story condominium at 1100 Wilshire, originally a
1980s-era office building that was never finished or opened by the
former owner. Forest City expects to begin delivering the first of the
228 for-sale residential units in late fiscal 2005. During the first
quarter of fiscal 2005, Forest City acquired a second building in Los
Angeles, 3800 Wilshire, a former office building that will be
converted into a 22-story, 260-unit condominium.
Projects Under Development
At the end of the first quarter, Forest City had more than 25
projects under development, representing approximately $2 billion.
Forest City anticipates that more than 10 of these projects will begin
construction by late 2005.
During the first fiscal quarter, Forest City announced two new
life sciences development opportunities. In Skokie, Illinois, the
Company acquired from Pfizer, Inc. the redevelopment rights to a
22-acre technology and research park to be called the Illinois
Technology Innovation Campus. The site currently includes a million
square feet of office space in nine buildings, consisting of
high-quality facilities as well as future development opportunities.
In East Baltimore, Maryland, Forest City was chosen as the lead
developer for the first phase of an 80-acre mixed-use community
adjacent to the Johns Hopkins University medical campus, which will
include approximately 1 million square feet of life sciences space.
These two new projects enable the Company to capitalize on its
experience at its University Park at MIT development and a recently
completed life sciences research facility at the University of
Pennsylvania.
Also in the first fiscal quarter, Forest City announced the
achievement of milestones at three open-air regional lifestyle centers
currently under development:
-- The Orchard Town Center, a $114 million, approximately
900,000-square-foot retail and residential project in the
Denver suburb of Westminster, recently announced a Foley's
department store will join JC Penney and AMC Theatres as
anchors.
-- At the $103 million, approximately 1-million-square-foot
Promenade at Bolingbrook retail center near Chicago, Forest
City announced that Marshall Field's will join Bass Pro Shops
as anchors for a second phase of development; IKEA is the
anchor for phase one.
-- In Tampa, Florida, Forest City announced that the
707,000-square-foot Shops at Wiregrass Ranch will be anchored
by Florida's first prototype, stand-alone JC Penney store,
which is currently under construction.
In addition, Forest City has two major retail centers under
development in its New York City core market - the $297 million,
1.2-million-square-foot Ridge Hill retail center in Yonkers; and the
532,000-square-foot East River Plaza in Manhattan. Both projects are
scheduled to begin construction in early 2006 and open in fiscal 2007.
In the residential business in Manhattan, Forest City has the
Beekman project under development. Beekman is an approximately $600
million residential development, where construction is anticipated to
begin in early fiscal 2006, with completion targeted for late fiscal
2008 for approximately 500 rental units, a 100,000-square-foot "K-8"
school, and 200 condominium units.
In fiscal 2005, Forest City signed a memorandum of understanding
to pursue Brooklyn Atlantic Yards. This long-term development
project's main attraction and catalyst will be a new
850,000-square-foot arena for the Nets NBA basketball team, in which
the Company is an investor. As anticipated, The Nets recorded a loss
in the first quarter, and additional losses are expected in this
segment for the balance of the year. Forest City's long-term
objectives are to build a great franchise, move it to Brooklyn, and
develop a large-scale, mixed-use real estate project. The Company is
currently in the process of pursuing the appropriate entitlements and
acquiring land.
During the first fiscal quarter, the U.S. Navy selected Forest
City Military Communities to participate in exclusive negotiations for
a housing contract covering the Navy's Great Lakes Region. The project
will involve owning, operating, managing, maintaining and renovating
nearly 1,900 residential units in Illinois and Indiana. The Midwest
project would be Forest City's second military family housing project
with the U.S. Navy. The first one involves the ownership,
redevelopment and management of approximately 1,950 family housing
units at five existing Navy communities in Hawaii.
Early in the second quarter, Forest City signed an agreement with
the federal government for the 42-acre redevelopment of Southeast
Federal Center to create a mixed-use community on the site of a former
military supply depot in Washington, D.C. The project is expected to
include up to 2,800 housing units; approximately 2 million square feet
of commercial, retail and cultural space; and parks and open space.
Outlook
Ratner said, "The increases in our comparable NOI and the projects
we have opened and acquired in recent years continue to drive our
near-term growth. Our current development pipeline contains more than
three dozen projects under construction and under development that
will be an ongoing source of long-term growth. While we have remained
committed to our core businesses, we have 'pushed the envelope,' as
evidenced by the recent expansion of our life sciences and condominium
businesses, and our new efforts in military family housing. We are
very pleased with the short-term and long-term growth prospects
stemming from our development pipeline.
"Forest City is a relationship company. Our success is dependent
on our ability to become involved in the cities where we do business,
and to demonstrate our expertise in developing large projects with a
variety of uses. Our success also depends on the fact that we deliver
what we promise. As a matter of fact, a Rancho Cucamonga, California
city official recently said at the grand opening of the Victoria
Gardens open-air lifestyle center that 'Forest City under-promises and
over-delivers.' As a result, we are constantly presented with exciting
new real estate development opportunities, which we expect will
continue to drive our long-term growth.
"We are cognizant of the risks inherent in our business and remain
confident in our ability to execute our plans even as the nation's
economy continues to send mixed signals. We look forward to a strong
year and expect that 2005 will be our 26th consecutive year of EBDT
growth."
Corporate Description
Forest City Enterprises, Inc. is a $7.4 billion NYSE-listed
national real estate company. The Company is principally engaged in
the ownership, development, acquisition and management of mixed-use
projects, retail centers, apartment communities, office buildings and
land development projects 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 first quarter ended April 30, 2005, with
reconciliations of non-GAAP financial measures, such as comparable net
operating income 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, 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 from real estate operations of Forest City Rental
Properties Corporation, a wholly owned subsidiary of Forest City
Enterprises, Inc., for depreciation, amortization (including
amortization of mortgage procurement costs) and deferred income taxes;
iv) provision for decline in real estate (net of tax); v)
extraordinary items (net of tax); and vi) cumulative effect of change
in accounting principle (net of tax). Unlike the real estate segments,
EBDT for the Nets segment equals net earnings of the equity method
investment.
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 our 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 our overall financial performance
and is related to the ultimate gain on dispositions of operating
properties. Our 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, a non-GAAP financial measure. 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 share of ownership. Under GAAP, the full
consolidation method is used to report partnership assets and
liabilities as 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 or
management's intentions, hopes, beliefs, expectations or predictions
of the future are forward-looking statements. It is important to note
that the Company's actual results could differ materially from those
projected in such forward-looking statements. Additional information
concerning factors that could cause actual results to differ
materially from those in the forward-looking statements include, but
are not limited to, real estate development and investment risks,
economic conditions in the Company's target markets, reliance on major
tenants, the impact of terrorist acts, the Company's substantial
leverage and the ability to service debt, guarantees under the
Company's credit facility, changes in interest rates, continued
availability of tax-exempt government financing, the sustainability of
substantial operations at the subsidiary level, significant geographic
concentration, illiquidity of real estate investments, dependence on
rental income from real property, conflicts of interest, competition,
potential liability from syndicated properties, effects of uninsured
loss, environmental liabilities, partnership risks, litigation risks,
risks associated with an investment in a professional sports
franchise, 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 Report on Form 10-K for the fiscal year ended January
31, 2005.
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Three Months Ended April 30, 2005 and 2004
(dollars in thousands, except per share data)
Three Months Ended Increase
April 30, (Decrease)
---------------------- ----------------
2005 2004 Amount Percent
---------------------- -------- -------
Operating Results:
Earnings from continuing
operations $22,216 $3,668 $18,548
Discontinued operations, net
of tax and minority
interest(1) - 14,796 (14,796)
Cumulative effect of change in
accounting principle, net of
tax - (11,261) 11,261
---------------------- --------
Net earnings $22,216 $7,203 $15,013
====================== ========
Earnings Before Depreciation,
Amortization and Deferred
Taxes (EBDT)(2) $67,662 $55,121 $12,541 22.8%
====================== ========
Reconciliation of Net Earnings
to Earnings Before
Depreciation, Amortization
and Deferred Taxes (EBDT)(2):
Net Earnings $22,216 $7,203 $15,013
Depreciation and
amortization - Real Estate
Groups(5) 46,272 42,431 3,841
Depreciation and
amortization - equity
method investments(3) - 237 (237)
Amortization of mortgage
procurement costs - Real
Estate Groups 2,731 2,486 245
Deferred income tax expense
- Real Estate Groups(6) 7,984 9,078 (1,094)
Deferred income tax expense
- Non-Real Estate
Groups:(6)
Gain on disposition of
other investments 178 - 178
Current income tax expense
on non-operating
earnings:(6)
Gain on disposition of
other investments 62 - 62
Gain on disposition
recorded on equity
method 8,114 - 8,114
Straight-line rent
adjustment(4) (2,996) 1,924 (4,920)
Provision for decline in real
estate 1,500 - 1,500
Provision for decline in real
estate recorded on equity
method 704 - 704
Gain on disposition recorded
on equity method (18,497) - (18,497)
Gain on disposition of other
investments (606) - (606)
Discontinued operations:(1)
Gain on disposition of
rental properties - (19,499) 19,499
Cumulative effect of change
in accounting principle,
net of tax - 11,261 (11,261)
---------------------- --------
Earnings Before
Depreciation, Amortization
and Deferred Taxes
(EBDT)(2) $67,662 $55,121 $12,541 22.8%
====================== ========
Diluted Earnings per Common
Share:
Earnings from continuing
operations $0.43 $0.07 $0.36
Discontinued operations, net
of tax and minority
interest(1) - 0.29 (0.29)
Cumulative effect of change in
accounting principle, net of
tax - (0.22) 0.22
---------------------- --------
Net earnings $0.43 $0.14 $0.29
====================== ========
Earnings Before Depreciation,
Amortization and Deferred
Taxes (EBDT)(2) $1.32 $1.08 $0.24 22.2%
====================== ========
Operating earnings, net of tax
(a non-GAAP financial
measure) $0.29 $0.28 $0.01
Provision for decline in real
estate, net of tax (0.03) - (0.03)
Gain on disposition of rental
properties and other
investments, net of tax 0.23 0.23 -
Minority interest (0.06) (0.15) 0.09
Cumulative effect of change in
accounting principle, net of
tax - (0.22) 0.22
---------------------- --------
Net earnings $0.43 $0.14 $0.29
====================== ========
Diluted weighted average
shares outstanding 51,148,339 50,870,134 278,205
====================== ========
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Three Months Ended April 30, 2005 and 2004
(dollars in thousands)
Three Months Ended, Increase
April 30, (Decrease)
-------------------- ---------------
2005 2004 Amount Percent
-------------------- ---------------
Operating Earnings (a non-GAAP
financial measure) and
Reconciliation to Net Earnings:
Revenues from real estate
operations
Commercial Group $219,699 $161,414 $58,285
Residential Group 53,950 47,120 6,830
Land Development Group 35,654 31,329 4,325
-------------------- --------
Total Revenues 309,303 239,863 69,440 28.9%
Operating expenses (176,422) (137,363) (39,059)
Interest expense, including early
extinguishment of debt (71,229) (56,899) (14,330)
Amortization of mortgage
procurement costs(5) (3,266) (2,486) (780)
Depreciation and amortization(5) (43,974) (36,976) (6,998)
Interest income 6,969 1,839 5,130
Equity in earnings of
unconsolidated entities 20,036 6,244 13,792
Provision for decline in real
estate recorded on equity method 704 - 704
Gain on disposition recorded on
equity method (18,497) - (18,497)
Revenues from discontinued
operations(1) - 47,313 (47,313)
Expenses from discontinued
operations(1) - (42,100) 42,100
-------------------- --------
Operating earnings (a non-GAAP
financial measure) 23,624 19,435 4,189
-------------------- --------
Income tax expense(6) (15,437) (3,367) (12,070)
Income tax expense from
discontinued operations(1)(6) - (9,775) 9,775
Income tax expense on non-
operating earnings items (see
below) 6,684 7,712 (1,028)
-------------------- --------
Operating earnings, net of tax (a
non-GAAP financial measure) 14,871 14,005 866
-------------------- --------
Provision for decline in real
estate (1,500) - (1,500)
Provision for decline in real
estate recorded on equity method (704) - (704)
Gain on disposition recorded on
equity method 18,497 - 18,497
Gain on disposition of other
investments 606 - 606
Gain on disposition of rental
properties included in
discontinued operations(1) - 19,499 (19,499)
Income tax benefit (expense) on
non-operating earnings:(6)
Provision for decline in real
estate 872 - 872
Gain on disposition of other
investments (240) - (240)
Gain on disposition recorded
on equity method (7,316) - (7,316)
Gain on disposition of rental
properties included in
discontinued operations - (7,712) 7,712
-------------------- --------
Income tax expense on non-
operating earnings (see above) (6,684) (7,712) 1,028
-------------------- --------
Minority interest in continuing
operations (2,870) (7,187) 4,317
Minority interest in discontinued
operations:(1)
Operating earnings - (141) 141
-------------------- --------
- (141) 141
-------------------- --------
Minority interest (2,870) (7,328) 4,458
-------------------- --------
Cumulative effect of change in
accounting principle, net of tax - (11,261) 11,261
-------------------- --------
Net earnings $22,216 $7,203 $15,013
==================== ========
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Three Months Ended April 30, 2005 and 2004
(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 and a divison which have been sold or 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)
noncash charges from Forest City Rental Properties Corporation, a
wholly-owned subsidiary of Forest City Enterprises, Inc., for
depreciation, amortization (including amortization of mortgage
procurement costs) and deferred income taxes; iv) provision for
decline in real estate (net of tax); v) extraordinary items (net
of tax); and vi) cumulative effect of change in accounting
principle (net of tax). See our discussion of EBDT in the news
release.
3) Amount represents depreciation expense for certain syndicated
properties accounted for on the equity method of accounting under
both full consolidation and pro-rata consolidation (a non-GAAP
financial measure). See our discussion of pro-rata consolidation
in the news release.
4) 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 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) The following table provides detail of Depreciation and
Amortization and Amortization of mortgage procurement costs. The
Company's Real Estate Groups are owned by Forest City Rental
Properties Corporation, a wholly-owned subsidiary 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.
Amortization of
Depreciation and mortgage
amortization procurement costs
-------------------- ------------------
Three Months Ended Three Months
April 30, Ended April 30,
-------------------- -----------------
2005 2004 2005 2004
-------------------- -----------------
Full Consolidation $43,974 $36,976 $3,266 $2,486
Non-Real Estate Groups (548) (490) (68) (60)
-------------------- -----------------
Real Estate Groups Full
Consolidation 43,426 36,486 3,198 2,426
Real Estate Groups related to
minority interest (4,329) (1,545) (766) (523)
Real Estate Groups Equity
Method 7,175 6,754 299 279
Real Estate Groups
Discontinued Operations - 736 - 304
-------------------- -----------------
Real Estate Groups Pro-Rata
Consolidation $46,272 $42,431 $2,731 $2,486
==================== =================
Three Months Ended
April 30,
--------------------
2005 2004
--------------------
(6) The following table (in thousands)
provides detail of Income Tax
Expense (Benefit):
(A) Operating earnings
Current $(1,898) $1,028
Deferred 10,651 2,339
--------------------
8,753 3,367
--------------------
(B) Provision for decline in
real estate
Deferred (593) -
--------------------
Deferred - Equity
method investment (279) -
--------------------
(872) -
--------------------
(C) Gain on disposition of
other investments
Current - Non-Real
Estate Groups 62 -
Deferred - Non-Real
Estate Groups 178 -
--------------------
240 -
--------------------
(D) Gain on disposition
recorded on equity method
Current 8,114 -
Deferred (798) -
--------------------
7,316 -
--------------------
Subtotal(A)(B)(C)(D)
Current 6,278 1,028
Deferred 9,159 2,339
--------------------
Income tax expense 15,437 3,367
--------------------
(E) Discontinued operations -
Rental Properties
Operating earnings
Current - (11)
Deferred - 287
--------------------
- 276
Gain on disposition
of rental properties
Current - -
Deferred - 7,712
--------------------
- 7,712
--------------------
- 7,988
--------------------
Subtotal(A)(B)(C)(D)(E)
Current 6,278 1,017
Deferred 9,159 10,338
--------------------
$15,437 $11,355
--------------------
(F) Discontinued operations -
Lumber Group
Operating earnings
Current - 692
Deferred - 1,095
--------------------
- 1,787
--------------------
Subtotal(E)(F) - 9,775
--------------------
Grand
Total(A)(B)(C)(D)(E)(F)
Current 6,278 1,709
Deferred 9,159 11,433
--------------------
15,437 13,142
--------------------
Recap of Grand Total:
Real Estate Groups
Current 11,178 3,008
Deferred 7,984 9,078
--------------------
19,162 12,086
Non-Real Estate Groups
Current (4,900) (1,299)
Deferred 1,175 2,355
--------------------
(3,725) 1,056
--------------------
Grand Total $15,437 $13,142
====================
Development Pipeline
April 30, 2005
2005 Openings (2)
Cost
at FCE
Pro-
Cost at Rata
Pro- Full Share
FCE Rata Con- Total (Non- Square
Dev Date Legal FCE solid- Cost GAAP) Feet/
(D) Opened/ Owner- % ation at (b) Number
Property/ Acq Ac- ship% (i) (GAAP) 100% (2)x of
Location (A) quired (i)(1) (2) (a) (3) (3) Units
- ----------------------------------------------------------------
(in millions)
---------------------
Retail
Centers:
Saddle Rock
Village/
Aurora, CO D Q1-05 80.0% 100.0% $31.5 $31.5 $31.5 359,000
---------------------------
Residential:
23 Sidney
Street/
Cambridge,
MA D Q1-05 100.0% 100.0% $17.7 $17.7 $17.7 51
---------------------------
-------------------
Total 2005 Openings (b) $49.2 $49.2 $49.2
===================
- ----------------------------------------------------------------
Residential Phased-In Units Opened in
(c)(e): '05/Total
----------
Newport
Landing/
Coventry,
OH D 2002-05 50.0% 50.0% $0.0 $16.0 $8.0 36/336
Arbor Glen/
Twinsburg,
OH D 2004-07 50.0% 50.0% 0.0 18.4 9.2 48/288
Woodgate/
Evergreen
Farms/
Olmsted
Township,
OH D 2004-07 33.0% 33.0% 0.0 22.9 7.6 96/348
Pine Ridge
Expansion/
Willoughby,
OH D 2005-06 50.0% 50.0% 0.0 16.4 8.2 100/162
---------------------------
Total(b)(f) $0.0 $73.7 $33.0 280/1,134
===========================
- ----------------------------------------------------------------
See attached 2005 footnotes.
Development Pipeline
April 30, 2005
Under Construction or to be Acquired (15)
Cost at Cost
Pro- Full at FCE
Anti- FCE Rata Con- Pro-Rata
Pro- Dev cipat Legal FCE solid- Share Square Pre-
perty/ (D) ed Owner- % ation Total (Non-GAAP) Feet/ lea-
Loc- Acq Open- ship% (i) (GAAP) Cost at (b)(2)x Number sed
ation (A) ing (i)(1) (2) (a) 100%(3) (3) of Units %
- ----------------------------------------------------------------------
(in millions)
------------------------
Retail
Centers:
Simi
Valley
Town
Center/
Simi
Valley,
CA D Q3-05 85.0% 100.0% $138.4 $138.4 $138.4 600,000 84%
Short
Pump
Expansion/
Richmond,
VA D Q3-05 50.0% 100.0% 27.0 27.0 27.0 88,000 73%
Northfield
at
Stapleton
(p)/ Q4-05/
Denver, Q1-06/
CO D Q3-06 90.0% 90.0% 173.3 173.3 156.0 1,142,000 56%
(n)
San
Francisco
Centre -
Emporium
(c)(j)/
San
Francisco,
CA D Q3-06 50.0% 50.0% 0.0 425.0 212.5 964,000 8%
(o)
----------------------------------
$338.7 $763.7 $533.9 2,794,000
----------------------------------
Office:
Ballston
Common
Office
Center/
Arlington,
VA A Q2-05 50.0% 100.0% $62.9 $62.9 $62.9 176,000 99%
New York
Times(c)/
Manhattan,
NY D Q2-07 28.0% 40.0% 0.0 415.0 166.0 734,000 0%
----------------------------------
$62.9 $477.9 $228.9 910,000
----------------------------------
Residential:
Metro 417
(m)/
Los
Angeles,
CA D Q2-05 100.0% 100.0% $74.5 $74.5 $74.5 277
Met Lofts
(c)/
Los
Angeles,
CA D Q2-05 50.0% 50.0% 0.0 63.0 31.5 264
Ashton
Mill/
Providence,
RI D Q2-05 100.0% 100.0% 41.7 41.7 41.7 193
Sterling
Glen
of
Lynbrook
(g)(k)/
Lynbrook,
NY D Q2-05 80.0% 80.0% 29.1 29.1 23.3 100
100
Landsdowne
Street/
Cambridge,
MA D Q3-05 100.0% 100.0% 63.9 63.9 63.9 203
Central
Station
Apartments/
Chicago,
IL D Q1-06 100.0% 100.0% 120.7 120.7 120.7 502
Sterling
Glen of
Roslyn
(l)(g)/
Roslyn,
NY D Q2-06 80.0% 80.0% 73.9 73.9 59.1 158
Ohana
Military
Communities
(c)(e)/
Honolulu, 2005-
HI D 2008 7.0% 7.0% 0.0 316.5 22.2 1,952
----------------------------------
$403.8 $783.3 $436.9 3,649
------------------------==========
Condominiums:
1100 Wilshire
Condominiums
(c)/
Los
Angeles,
CA D Q2-05 40.0% 40.0% $0.0 $118.2 $47.3 228
----------------------------------
$0.0 $118.2 $47.3 228
------------------------==========
Total Under Construction
(b)(h) $805.4 $2,143.1 $1,247.0
========================
LESS: Above properties to be
sold as condominiums $0.0 $118.2 $47.3
------------------------
Under Construction less
condominiums $805.4 $2,024.9 $1,199.7
========================
---------------------------------------------------------------------
Residential Phased-In Units Under Under
Construction(c)(e): Const./Total
------------
Newport
Landing/
Coventry, 2002-
OH D 05 50.0% 50.0% $0.0 $16.0 $8.0 24/336
Arbor Glen/
Twinsburg, 2004-
OH D 07 50.0% 50.0% 0.0 18.4 9.2 96/288
Woodgate/
Evergreen
Farms/
Olmsted
Township, 2004-
OH D 07 33.0% 33.0% 0.0 22.9 7.6 48/348
Pine Ridge
Expansion/
Willoughby, 2005-
OH D 06 50.0% 50.0% 0.0 16.4 8.2 62/162
-----------------------------------
Total(b)(f) $0.0 $73.7 $33.0 230/1,134
===================================
- ----------------------------------------------------------------------
See attached 2005 footnotes.
2005 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) Not used.
(e) Phased-in openings. Costs are representative of the total project.
(f) The difference between the full consolidation amount (GAAP) of
$0.0 million of cost to the Company's pro-rata share (a non-GAAP
measure) of $33.0 million of cost consists of the Company's share
of cost for unconsolidated investments of $33.0 million.
(g) Supported-living property.
(h) The difference between the full consolidation amount (GAAP) of
$805.4 million of cost to the Company's pro-rata share (a non-GAAP
measure) of $1,247.0 million of cost consists of a reduction to
full consolidation for minority interest of $37.9 million of cost
and the addition of its share of cost for unconsolidated
investments of $479.5 million.
(i) As is customary within the real estate industry, the Company
invests in certain real estate projects through joint ventures.
For these projects, the Company provides funding for certain of
its partners' equity contributions. The Company consolidates its
investments in these projects in accordance with FIN No. 46(R) at
a consolidation percentage that is reflected in the Pro-Rata FCE %
column. These advances entitle the Company to a preferred return
on investment, which is payable from cash flows of each respective
property. At the point the Company is no longer entitled to a
preferred return on a particular joint venture because the
partner's advance has been repaid in full, the Company's net
assets will be adjusted to its intended ownership percentage
(reflected in the FCE Legal Ownership % column) by recording a
minority interest to reflect the amount of the partner's claim on
those net assets.
(j) This project will also include the acquisition of an adjacent
retail center totaling 508,000 square feet.
(k) Formerly Tanglewood Crest.
(l) Formerly Bryant Landing.
(m) Formerly Subway Terminal.
(n) Includes 30,000 square feet of office space.
(o) Includes 235,000 square feet of office space.
(p) Phased opening: Phase I opens Q4-05, Phase II opens Q1-06, Phase
III opens Q3-06
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings
(GAAP) (in thousands):
Three Months Ended April 30, 2005
--------------------------------------------------
Plus
Unconsol-
idated
Full Less Invest- Pro-Rata
Consol- Minority ments at Consol-
idation Interest Pro-Rata idation
----------------------------------------
Revenues from real
estate operations $309,303 $32,686 $75,425 $352,042
Exclude straight-
line rent
adjustment(1) (4,922) - - (4,922)
----------------------------------------
Adjusted revenues 304,381 32,686 75,425 347,120
Operating expenses 176,422 17,362 47,278 206,338
Add back
depreciation and
amortization for
non-Real Estate
Groups(b) 548 - 7,578 8,126
Add back
amortization of
mortgage
procurement costs
for non-Real
Estate Groups(d) 68 - 90 158
Exclude straight-
line rent
adjustment(2) (1,926) - - (1,926)
----------------------------------------
Adjusted operating
expenses 175,112 17,362 54,946 212,696
Add interest income 6,969 578 120 6,511
Add equity in
earnings of
unconsolidated
entities 20,036 - (17,987) 2,049
Remove gain on
disposition
recorded on equity
method (18,497) - 18,497 -
Add back provision
for decline
recorded on equity
method 704 - (704) -
Add back equity
method
depreciation and
amortization
expense (see
below) 7,474 - (7,474) -
----------------------------------------
Net Operating
Income 145,955 15,902 12,931 142,984
Interest expense,
including early
extinguishment of
debt (71,229) (7,937) (12,931) (76,223)
Gain on disposition
of equity method
rental
properties(e) 18,497 - - 18,497
Gain on disposition
of rental
properties and
other investments 606 - - 606
Provision for
decline in real
estate (1,500) - - (1,500)
Provision for
decline in real
estate of equity
method rental
properties (704) - - (704)
Depreciation and
amortization -
Real Estate
Groups(a) (43,426) (4,329) (7,175) (46,272)
Amortization of
mortgage
procurement costs
- Real Estate
Groups(c) (3,198) (766) (299) (2,731)
Straight-line rent
adjustment(1)+(2) 2,996 - - 2,996
Equity method
depreciation and
amortization
expense (see
above) (7,474) - 7,474 -
----------------------------------------
Earnings before
income taxes 40,523 2,870 - 37,653
Income tax
provision (15,437) - - (15,437)
----------------------------------------
Earnings before
minority interest,
discontinued
operations and
cumulative effect
of change in
accounting
principle 25,086 2,870 - 22,216
Minority Interest (2,870) (2,870) - -
----------------------------------------
Earnings from
continuing
operations 22,216 - - 22,216
Discontinued
operations, net of
tax and minority
interest:
Operating
earnings from
Lumber Group - - - -
Operating
earnings from
rental
properties - - - -
Gain on
disposition of
rental
properties - - - -
----------------------------------------
- - - -
----------------------------------------
Cumulative effect
of change in
accounting
principle, net of
tax - - - -
----------------------------------------
Net earnings $22,216 $- $- $22,216
========================================
(a) Depreciation
and amortization -
Real Estate Groups $43,426 $4,329 $7,175 $46,272
(b) Depreciation
and amortization -
Non-Real Estate
Groups 548 - 7,578 8,126
----------------------------------------
Total
depreciation
and
amortization $43,974 $4,329 $14,753 $54,398
========================================
(c) Amortization
of mortgage
procurement costs
- Real Estate
Groups $3,198 $766 $299 $2,731
(d) Amortization
of mortgage
procurement costs
- Non-Real Estate
Groups 68 - 90 158
----------------------------------------
Total
depreciation
and
amortization $3,266 $766 $389 $2,889
========================================
(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 April 30, 2005, two equity method investments
were sold including Showcase and Colony Place, resulting in a gain
on disposition of $18,497.
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings
(GAAP) (in thousands):
Three Months Ended April 30, 2004
------------------------------------------------
Plus
Unconsol-
idated Plus
Full Less Invest- Discont- Pro-Rata
Consol- Minority ments at inued Consol-
idation Interest Pro-Rata Operations idation
------------------------------------------------
Revenues from real
estate operations $239,863 $37,576 $62,634 $6,504 $271,425
Exclude straight-line
rent adjustment(1) (2,042) - - (322) (2,364)
------------------------------------------------
Adjusted revenues 237,821 37,576 62,634 6,182 269,061
Operating expenses 137,363 19,254 37,398 2,648 158,155
Add back depreciation
and amortization for
non-Real Estate
Groups(b) 490 - 33 - 523
Add back amortization
of mortgage
procurement costs
for non-Real Estate
Groups(d) 60 - 54 - 114
Exclude straight-line
rent adjustment(2) (4,281) - - (7) (4,288)
------------------------------------------------
Adjusted operating
expenses 133,632 19,254 37,485 2,641 154,504
Add interest income 1,839 624 339 32 1,586
Add equity in
earnings of
unconsolidated
entities 6,244 (4) (5,894) - 354
Remove gain on
disposition recorded
on equity method - - - - -
Add back provision
for decline recorded
on equity method - - - - -
Add back equity
method depreciation
and amortization
expense (see below) 7,270 - (7,033) - 237
------------------------------------------------
Net Operating Income 119,542 18,942 12,561 3,573 116,734
Interest expense,
including early
extinguishment of
debt (56,899) (9,687) (12,561) (2,147) (61,920)
Gain on disposition
of equity method
rental properties(e) - - - - -
Gain on disposition
of rental properties
and other
investments - - - 19,499 19,499
Provision for decline
in real estate - - - - -
Provision for decline
in real estate of
equity method rental
properties - - - - -
Depreciation and
amortization - Real
Estate Groups(a) (36,486) (1,545) (6,754) (736) (42,431)
Amortization of
mortgage procurement
costs - Real Estate
Groups(c) (2,426) (523) (279) (304) (2,486)
Straight-line rent
adjustment(1)+(2) (2,239) - - 315 (1,924)
Equity method
depreciation and
amortization expense
(see above) (7,270) - 7,033 - (237)
------------------------------------------------
Earnings before
income taxes 14,222 7,187 - 20,200 27,235
Income tax provision (3,367) - - (7,988) (11,355)
------------------------------------------------
Earnings before
minority interest,
discontinued
operations and
cumulative effect of
change in accounting
principle 10,855 7,187 - 12,212 15,880
Minority Interest (7,187) (7,187) - - -
------------------------------------------------
Earnings from
continuing
operations 3,668 - - 12,212 15,880
Discontinued
operations, net of
tax and minority
interest:
Operating earnings
from Lumber Group 2,584 - - - 2,584
Operating earnings
from rental
properties 425 - - (425) -
Gain on disposition
of rental
properties 11,787 - - (11,787) -
------------------------------------------------
14,796 - - (12,212) 2,584
------------------------------------------------
Cumulative effect of
change in accounting
principle, net of
tax (11,261) - - - (11,261)
------------------------------------------------
Net earnings $7,203 $- $- $- $7,203
================================================
(a) Depreciation and
amortization - Real
Estate Groups $36,486 $1,545 $6,754 $736 $42,431
(b) Depreciation and
amortization - Non-
Real Estate Groups 490 - 33 - 523
------------------------------------------------
Total
depreciation
and
amortization $36,976 $1,545 $6,787 $736 $42,954
================================================
(c) Amortization of
mortgage procurement
costs - Real Estate
Groups $2,426 $523 $279 $304 $2,486
(d) Amortization of
mortgage procurement
costs - Non-Real
Estate Groups 60 - 54 - 114
------------------------------------------------
Total
depreciation
and
amortization $2,486 $523 $333 $304 $2,600
================================================
Net Operating Income (in thousands)
-------------------------------------------------
Three Months Ended April 30, 2005
-------------------------------------------------
Plus
Unconsol-
idated
Full Less Invest- Pro-Rata
Consol- Minority ments at Consol-
idation Interest Pro-Rata idation
-------------------------------------------------
Commercial Group
Retail
Comparable $36,945 $4,258 $2,871 $35,558
---------------------------------------------------------------------
Total 44,755 5,113 3,002 42,644
Office Buildings
Comparable 35,476 4,911 1,054 31,619
---------------------------------------------------------------------
Total 43,015 5,286 1,054 38,783
Hotels
Comparable 4,019 1,123 517 3,413
---------------------------------------------------------------------
Total 4,019 1,123 517 3,413
Earnings from
Commercial Land
Sales 19,352 1,752 - 17,600
Development Fees &
Other (381) 89 22 (448)
Total Commercial
Group
Comparable 76,440 10,292 4,442 70,590
---------------------------------------------------------------------
Total 110,760 13,363 4,595 101,992
Residential Group
Apartments
Comparable 24,126 992 5,994 29,128
---------------------------------------------------------------------
Total 26,542 1,095 7,562 33,009
Total Real Estate
Groups
Comparable 100,566 11,284 10,436 99,718
---------------------------------------------------------------------
Total 137,302 14,458 12,157 135,001
Land Development
Group 26,448 1,444 105 25,109
The Nets (8,596) - 669 (7,927)
Corporate Activities (9,199) - - (9,199)
- ----------------------------------------------------------------------
Grand Total $145,955 $15,902 $12,931 $142,984
Net Operating Income (in thousands)
--------------------------------------------------
Three Months Ended April 30, 2004
--------------------------------------------------
Plus
Unconsol-
idated Plus
Full Less Invest- Discont- Pro-Rata
Consol- Minority ments at inued Consol-
idation Interest Pro-Rata Operations idation
------------------------------------------------
Commercial Group
Retail
Comparable $35,668 $4,188 $2,955 $- $34,435
-------------------------------------------------------------------
Total 40,156 6,595 3,644 678 37,883
Office Buildings
Comparable 35,505 5,182 1,071 - 31,394
-------------------------------------------------------------------
Total 40,346 7,180 1,071 906 35,143
Hotels
Comparable 3,044 886 623 - 2,781
-------------------------------------------------------------------
Total 3,044 886 623 - 2,781
Earnings from
Commercial Land
Sales (19) - - - (19)
Development Fees &
Other 1,725 2,077 62 (2) (292)
Total Commercial
Group
Comparable 74,217 10,256 4,649 - 68,610
-------------------------------------------------------------------
Total 85,252 16,738 5,400 1,582 75,496
Residential Group
Apartments
Comparable 23,163 1,141 6,120 - 28,142
-------------------------------------------------------------------
Total 26,372 1,265 6,990 1,991 34,088
Total Real Estate
Groups
Comparable 97,380 11,397 10,769 - 96,752
-------------------------------------------------------------------
Total 111,624 18,003 12,390 3,573 109,584
Land Development
Group 14,990 939 171 - 14,222
The Nets - - - - -
Corporate Activities (7,072) - - - (7,072)
- --------------------------------------------------------------------
Grand Total $119,542 $18,942 $12,561 $3,573 $116,734
Net Operating
Income (in
thousands)
-------------------
% Change
-------------------
Full Pro-Rata
Consol- Consol-
idation idation
-------------------
Commercial Group
Retail
Comparable 3.6% 3.3%
--------------------------------
Total
Office Buildings
Comparable -0.1% 0.7%
--------------------------------
Total
Hotels
Comparable 32.0% 22.7%
--------------------------------
Total
Earnings from Commercial
Land Sales
Development Fees & Other
Total Commercial Group
Comparable 3.0% 2.9%
--------------------------------
Total
Residential Group
Apartments
Comparable 4.2% 3.5%
--------------------------------
Total
Total Real Estate Groups
Comparable 3.3% 3.1%
--------------------------------
Total
Land Development Group
The Nets
Corporate Activities
- ---------------------------------
Grand Total
CONTACT: Forest City Enterprises, Inc.
Thomas G. Smith or Thomas T. Kmiecik, 216-621-6060
On the Web: www.forestcity.net