Exhibit 99.1
Forest City Reports Fiscal 2006
Full-Year and Fourth-Quarter Results
CLEVELAND--(BUSINESS WIRE)--March 27, 2007--Forest City
Enterprises, Inc. (NYSE:FCEA)(NYSE:FCEB) today announced EBDT, net
earnings and revenues for the fiscal fourth quarter and full year
ended January 31, 2007.
In fiscal 2006, consolidated revenues grew to a record $1.2
billion, a 3.6 percent increase over last year's $1.1 billion. EBDT
(Earnings Before Depreciation, Amortization and Deferred Taxes) was
$285.0 million, or $2.73 per share, a 3.4 percent increase on a per
share basis compared with last year's EBDT of $270.5 million, or $2.64
per share. Net earnings were $177.3 million, or $1.70 per share,
compared with $83.5 million, or $0.81 per share, in the prior year.
Fourth-quarter consolidated revenues were $360.4 million compared
with $313.0 million last year. EBDT for the fourth quarter was $107.6
million, or $1.00 per share, compared with last year's fourth-quarter
EBDT of $73.7 million, or $0.72 per share. Net earnings for the fourth
quarter were $70.6 million, or $0.66 per share, compared with
fourth-quarter 2005 net earnings of $28.2 million, or $0.27 per share.
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, "Fiscal 2006 was an outstanding year for
Forest City - including our 27th consecutive year of EBDT growth, and
record-high revenues of $1.2 billion, net earnings of $177.3 million,
total assets of $9.0 billion, shareholders' equity of $1.0 billion,
and liquidity of $644.1 million. We opened 14 projects representing a
record $803.7 million of total cost at our share. Development has
been, and will continue to be, the primary driver of our growth. Of
particular significance in 2006, however, were our acquisitions and
the New York portfolio transaction, which together added $854.0
million to our completed real estate. We also achieved a record-high
level of property sales, totaling $461.3 million, and made significant
progress on some of the largest projects in our development pipeline.
"The increase in EBDT was primarily due to the strong performance
of our commercial and residential operating portfolios. Comparable
NOI, the primary driver of EBDT, grew because of consistently high
occupancies, as well as increasing rents in all segments. Also, EBDT
increased as a result of property additions, growth in our military
housing business, and the ability of the Land Development Group to
maintain its profitability despite overall weakness in the sector.
Historic Tax Credit income in our Residential Group and recognition of
a lower percentage of the Nets losses had a positive impact on EBDT,
as well.
"These increases were partially offset by decreases in outlot
sales in our commercial business and the loss recognized on interest
rate derivatives. We purchased $1.2 billion of 10-year forward swaps,
at a weighted average rate of 5.76 percent, to hedge our interest rate
exposure in anticipation of future financing transactions. This
resulted in a $9.4 million decrease in 2006 EBDT, but it enabled us to
lock in favorable, long-term fixed rates," Ratner said.
Overall, comparable property net operating income (NOI) increased
4.9 percent during the year. Comparable property NOI increased in the
retail, office and residential portfolios by 4.9 percent, 2.5 percent
and 6.5 percent, respectively. These results represented the highest
increases in the past five years. Comparable property NOI, defined as
NOI from properties operated in both 2006 and 2005, 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.
Comparable retail occupancies were 94.6 percent in 2006 compared
with 94.7 percent in 2005. Comparable office occupancies were 93.4
percent compared with 92.5 percent. Comparable average occupancies in
the residential business increased to 95.1 percent from 93.4 percent
last year. Retail and office experienced rent increases of 8.8 percent
and 11.9 percent, respectively, while residential Net Rental Income
increased to 92.8 percent, up 1.9 percent from a year ago. Regional
mall sales averaged $473 per square foot and comparable mall sales
increased 5.6 percent.
Ratner concluded, "We had a very strong year of project openings
and closed on two major acquisitions and the New York portfolio
transaction. At January 31, 2007, we had $1.7 billion of projects
under construction and more than $2.5 billion of projects under
development (both at the Company's pro-rata share). Our capital
strategy provided the equity for all of these investment
opportunities. Progress on projects in our pipeline will ensure
long-term value creation for shareholders."
2006 Milestones
Openings and New York City Portfolio Transaction
During fiscal 2006, Forest City opened or acquired 14 projects,
representing a total of $803.7 million at the Company's pro-rata share
and $417.8 million of cost on a full consolidation basis. In addition,
the Company increased its ownership or acquired partnership interests
that totaled $854.0 million.
The Forest City Ratner Companies (FCRC) portfolio transaction is
one of the most important achievements in the Company's recent
history. This made FCRC a wholly owned subsidiary of Forest City
Enterprises - strengthening the Company's commitment and position in
its largest single market, New York City. As a result, Forest City has
increased its interest in 30 operating properties in the greater New
York City metropolitan area. The transaction was slightly dilutive to
Forest City's EBDT per share in 2006, but we believe it will be
accretive in the long term.
The largest opening during the year was Westfield San Francisco
Centre, which is one of the nation's premier retail centers. Developed
and owned in partnership with Westfield, the multi-level,
1.5-million-square-foot center in downtown San Francisco is more than
90 percent leased. The center features the second-largest Nordstrom
and Bloomingdale's stores in the country as well as a unique, high-end
tenant lineup that is generating sales of more than $670 per square
foot. Microsoft and San Francisco State University will occupy more
than 75 percent of the 235,000-square-foot office component of the
project.
Ratner said, "Our partnership with Westfield has been so mutually
beneficial that, together, we acquired two other buildings in downtown
San Francisco for redevelopment - the 290,000-square-foot Metreon and
the 87,000-square-foot Bulletin Building."
At its Stapleton mixed-use project in Denver, Forest City opened
the Main Street phase of The Shops at Northfield open-air regional
lifestyle center. The Edgeworth Building, a former tobacco factory
that has been transformed into an office building, opened at Tobacco
Row in Richmond, Virginia. During 2006, Forest City opened its first
rental apartment communities at Chicago's Central Station - the
411-unit Sky55 and 91-unit 1251 South Michigan - totaling $125.5
million of project costs.
Dispositions
Forest City continues to take advantage of favorable market
conditions and high valuations to dispose of properties. In fiscal
2006, Forest City sold seven properties, including two New York City
hotels. The aggregate price was approximately $461.3 million at the
Company's pro-rata share, which generated $264.3 million in net
proceeds - the highest level of dispositions in Company history. The
properties were sold at an average cap rate of 6.6 percent.
Dispositions remain an excellent source of liquidity and a
meaningful part of the Company's long-term capital strategy. Over the
last six years, the Company completed more than $1.2 billion (at the
Company's pro-rata share) in property sales, which generated more than
$560 million in cash proceeds. In the year prior to their sales, these
properties were generating annual EBDT of $36.4 million, and yet EBDT
still grew at an 11.1 percent compound annual growth rate over the
last six years.
Capital Transactions and Financing Activity
During 2006, Forest City completed the sale of $287.5 million of
Puttable Equity-Linked Senior Notes due 2011 at very favorable terms.
This transaction evidences the Company's efforts to further diversify
its layered capital structure and enhance financial flexibility. The
Company also increased its corporate credit facility by $150 million
to $600 million.
During the year, Forest City closed on transactions totaling $1.3
billion in nonrecourse mortgage financings, including $658.0 million
in refinancings, $319.3 million in development and acquisitions, and
$318.6 million in loan extensions and additional fundings. As of
January 31, 2007, the Company's weighted average cost of mortgage debt
increased to 6.05 percent from 5.98 percent at January 31, 2006,
primarily due to the general increase in short-term interest rates.
Fixed-rate mortgage debt, which represented 70 percent of the
Company's total nonrecourse mortgage debt, decreased from 6.26 percent
at January 31, 2006, to 6.17 percent at January 31, 2007. The
variable-rate mortgage debt increased from 5.34 percent at January 31,
2006 to 5.78 percent at January 31, 2007.
Development Pipeline Highlights
Just as important as any of the milestones achieved during the
year, but more difficult to measure, is the progress the Company made
on its development pipeline of high-quality projects. During the year,
the Company successfully pursued the required entitlements on many of
its large, complex projects, which are central to its development
strategy. The pipeline is stronger because projects have moved closer
to construction or opening, and toward the realization of their
ultimate value. A schedule of the Company's project openings and
acquisitions, and the 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.
Projects Under Construction
At the end of fiscal 2006, Forest City's pipeline included 18
projects under construction, representing a total cost of $1.7 billion
at the Company's pro-rata share and $1.3 billion on a full
consolidation basis. Despite opening projects representing $803.7
million of cost (at the Company's pro-rata share) in 2006, the
Company's pipeline of projects under construction grew by nearly 32
percent from $1.3 billion (cost at the Company's pro-rata share) at
last year-end.
In New York City, Forest City's 52-story, 1.5-million-square-foot
New York Times Building in Manhattan is on schedule for opening later
in 2007. During the year, the Company achieved significant leasing and
ownership milestones. When the year started, none of the space owned
by Forest City had been preleased. At year's end, 80 percent of the
736,000 square feet of office space owned by Forest City had been
preleased, at rents greater than the Company's pro-forma estimates. In
addition, by acquiring its financial partner ING Real Estate's
interest in this signature office building in 2006, Forest City
increased its ownership in a building that will have tremendous value.
Retail projects under construction at the end of fiscal 2006
include:
-- Promenade Bolingbrook, a 736,000-square-foot retail center in
suburban Chicago that is approximately 72 percent preleased
and scheduled to open in April
-- Orchard Town Center, a 970,000-square-foot open-air lifestyle
center in the Denver suburb of Westminster that will open in
2008
-- The Shops at Wiregrass, a 530,000-square-foot anchored retail
center in the Tampa area
-- East River Plaza, a 514,000-square-foot anchored retail center
in Manhattan, which is scheduled for a 2008 opening
Forest City has five residential projects under construction,
totaling 1,474 units and representing approximately $374.0 million of
cost at the Company's pro-rata share and $276.4 million at full
consolidation. These apartment communities include the 665-unit Uptown
Apartments in center city Oakland; 366 units at the Company's
Mercantile redevelopment project in Dallas; and 131 units at the Lucky
Strike Building at Tobacco Row - adding to 329 loft apartment units
the Company previously developed at the Tobacco Row project in
Richmond. These three projects are scheduled to open in 2008.
In addition, Forest City is managing and developing military
housing projects, which have become an important part of the
residential portfolio. Building on its U.S. Navy project near Hawaii's
Pearl Harbor, the Company added more than 2,500 Navy units and more
than 1,100 units for the Marines in Hawaii. Forest City also began
management and construction of more than 1,600 Navy family homes in
the Great Lakes region, primarily in the Chicago area. In total,
Forest City has secured the opportunity to own, manage and develop
military family communities representing 7,300 housing units. Given
this level of commitment, the Company is well positioned to grow the
military housing business. In 2006, military housing EBDT increased by
$6.1 million and is anticipated to contribute significantly more EBDT
in the future.
Projects Under Development
At the end of fiscal 2006, Forest City had more than 20 projects
under development, representing approximately $2.5 billion of cost at
the Company's pro-rata share and at full consolidation. Consistent
with the Company's market strategy, 84 percent of the projects under
development are located in Forest City's core markets. Projects under
development and scheduled to begin construction within the next 12 to
18 months include:
-- Beekman, featuring more than 800 residential units and an
elementary school in Manhattan
-- Bolingbrook South, 441,000 square feet of retail adjacent to
the Company's Promenade Bolingbrook near Chicago
-- Ridge Hill Village, a 1.2-million-square-foot retail center
and more than 300 residential units in Yonkers, New York
-- Summit at Lehigh Valley, a mixed-use project in Allentown,
Pennsylvania, which includes a 492,000-square-foot lifestyle
center
-- Village at Gulfstream Park, 446,000 square feet of retail in
Hallandale, Florida, adjacent to a newly expanded and
renovated gaming and race track facility
-- Waterfront, a mixed-use project in Washington, D.C., where two
government agencies have agreed to lease approximately 500,000
square feet in two new office buildings
-- White Oak Village, an 832,000-square-foot retail development
in Richmond, Virginia
Not yet included in the above pipeline are two large mixed-use
projects on which Forest City made significant progress during 2006.
Atlantic Yards in Brooklyn gained unanimous approval from the State of
New York's Public Authorities Control Board, and the Company now owns
or controls approximately 85 percent of the land necessary for the
development. In addition, Barclays PLC, a U.K.-based global financial
services provider, signed a 20-year naming rights agreement for the
proposed 850,000-square-foot, Frank Gehry-designed arena that will be
the centerpiece of the project. The arena, which is expected to become
home to the NBA's Nets, in which Forest City is an investor, is
anticipated to open in time for the 2009-2010 NBA season. In addition
to Barclays Center, Atlantic Yards is expected to include new urban
retail, office buildings, apartments, and parks and open space.
At The Yards in Washington, D.C. (formerly known as the Southeast
Federal Center military supply depot), Forest City made significant
progress on this mixed-use redevelopment, including approval of the
master plan by the General Services Administration. As a result, the
Company expects to begin demolition in mid-2007 with building
construction scheduled for early 2008. The Yards will blend adaptive
reuse of several historically protected, former industrial buildings
that were originally part of the neighboring Washington Navy Yard, as
well as numerous buildings of new construction - all within walking
distance of the new Washington Nationals baseball park.
Land Development Update
The Land Development Group had an excellent year in 2006, despite
a challenging environment for residential land sales. The group's EBDT
was $62.1 million, compared with $59.3 million a year ago. 2006 land
sales were led by a strong performance at Stapleton. After several
years of unprecedented demand, land sales at Stapleton moderated in
2006, with 595 lots being sold compared with 910 in the prior year.
Since Stapleton's inception in 2000, 3,642 lots for residential
development have been sold to homebuilders, with 93 percent of those
lots being subsequently purchased by homeowners. All total, Forest
City has purchased 1,274 acres of land, and Stapleton has a population
of more than 7,000 residents.
In addition to Stapleton, land sales were driven by the continued
strength of the North Carolina and Texas markets. Results were
favorably impacted by two large land transactions - the sale of the
1,307-acre Bal Gra Harbor in coastal North Carolina; and the sale of
the 1,581-acre Sweetwater mixed-use community in Austin, Texas.
During 2006, Forest City reached several milestones at its
9,000-acre Mesa del Sol mixed-use project in Albuquerque. The Company
was instrumental in helping the state approve a tax increment
financing district in Albuquerque, which will be used as a vehicle to
finance the infrastructure of the project. In addition, the first
3,000 acres of land were purchased to begin development; a 50-acre
site was sold to Culver Studios for a Hollywood film production
campus, which recently opened; and the first office building was
completed for a solar technology company, Advent Solar Inc.
At year-end, Forest City had 12,090 acres of land inventory at 37
projects in 11 states. Of the total acres, 3,050 are located at Mesa
del Sol, and 2,100 acres in Prosper, Texas. In addition, Forest City
has options to purchase 11,114 acres, of which 6,580 acres are located
in Albuquerque and 1,661 at Stapleton in Denver.
Year-End Summary and Outlook
Ratner said, "We are very pleased to report an excellent year of
performance, both financially and strategically, and the execution of
the New York City portfolio transaction. We are equally pleased that
our shareholders were able to participate in our success, with a total
return on our stock price of 54 percent. Over the past 10 fiscal
years, our stock price has increased at a compound annual growth rate
of 25 percent. It has been said that 'a rising tide lifts all boats'
and 2006 was a great year for the entire real estate industry. Our
share price not only performed well this past year, but has been
consistently strong over the long term.
"2006 was a year of many milestones. We continued to maintain,
improve and add to our existing portfolio, while making significant
progress on our development pipeline - the vast majority of which is
located in our core markets. This should fuel our future growth for
years to come. We are aware of the risks inherent in our business, and
as in recent years, we believe having a diversified portfolio will
enable us to grow throughout various economic cycles and continue to
capitalize on our unique real estate franchise. We expect to deliver
our 28th consecutive year of EBDT growth in fiscal 2007, and to
continue to build shareholder value."
Corporate Description
Forest City Enterprises, Inc. is a $9.0 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, 2007, 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, 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, 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.
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 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 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 core 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 and quarterly reports.
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Year Ended January 31, 2007 and 2006
(dollars in thousands, except per share data)
Three Months Ended, Increase
January 31, (Decrease)
------------------------ ------------------
2007 2006 Amount Percent
------------------------ ---------- -------
Operating Results:
Earnings from continuing
operations $30,671 $10,700 $19,971
Discontinued operations,
net of tax and minority
interest(1) 39,955 17,535 22,420
------------------------ ----------
Net earnings $70,626 $28,235 $42,391
======================== ==========
Earnings Before
Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2) $107,550 $73,657 $33,893 46.0%
======================== ==========
Reconciliation of Net
Earnings to Earnings
Before Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2):
Net Earnings $70,626 $28,235 $42,391
Depreciation and
amortization - Real
Estate Groups(4) 57,938 54,202 3,736
Amortization of
mortgage procurement
costs - Real Estate
Groups(4) 2,900 2,919 (19)
Deferred income tax
expense - Real Estate
Groups(5) 47,102 26,089 21,013
Deferred income tax
expense - Non-Real
Estate Groups:(5)
Gain on disposition
of other
investments 294 (39) 333
Provision for
decline in real
estate recorded on
equity method - - -
Provision for
decline in real
estate - (587) 587
Current income tax
expense on non-
operating
earnings:(5)
Gain on disposition
of other
investments - - -
Gain on disposition
included in
discontinued
operations (3,369) (811) (2,558)
Gain on disposition
of equity method
rental properties - - -
Straight-line rent
adjustment(3) (4,198) (4,477) 279
Preference payment 898 - 898
Provision for decline
in real estate, net of
minority interest - 1,748 (1,748)
Provision for decline
in real estate of
equity method rental
properties - - -
Gain on disposition of
equity method rental
properties - - -
Loss (gain) on
disposition of other
investments - 100 (100)
Discontinued
operations:(1)
Gain on disposition
of rental properties (64,641) (33,722) (30,919)
Minority interest -
Gain on disposition - - -
------------------------ ----------
Earnings Before
Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2) $107,550 $73,657 $33,893 46.0%
======================== ==========
Diluted Earnings per
Common Share:
Earnings (loss) from
continuing operations $0.29 $0.10 $0.19
Discontinued operations,
net of tax and minority
interest(1) 0.37 0.17 0.20
------------------------ ----------
Net earnings $0.66 $0.27 $0.39
======================== ==========
Earnings Before
Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2) $1.00 $0.72 $0.28 38.9%
======================== ==========
Operating earnings, net
of tax (a non-GAAP
financial measure) $0.33 $0.32 $0.01
Provision for decline in
real estate, net of tax - (0.01) 0.01
Gain on disposition of
rental properties and
other investments, net
of tax 0.37 0.20 0.17
Minority interest (0.04) (0.24) 0.20
------------------------ ----------
Net earnings $0.66 $0.27 $0.39
======================== ==========
Diluted weighted average
shares outstanding 107,074,472 102,924,564 4,149,908
======================== ==========
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Year Ended January 31, 2007 and 2006
(dollars in thousands, except per share data)
Year Ended Increase
January 31, (Decrease)
------------------------- ------------------
2007 2006 Amount Percent
------------------------- ---------- -------
Operating Results:
Earnings from continuing
operations $30,239 $64,512 $(34,273)
Discontinued operations,
net of tax and minority
interest(1) 147,012 19,007 128,005
------------------------- ----------
Net earnings $177,251 $83,519 $93,732
========================= ==========
Earnings Before
Depreciation,
Amortization and Deferred
Taxes (EBDT)(2) $284,954 $270,496 $14,458 5.3%
========================= ==========
Reconciliation of Net
Earnings to Earnings
Before Depreciation,
Amortization and Deferred
Taxes (EBDT)(2):
Net Earnings $177,251 $83,519 $93,732
Depreciation and
amortization - Real
Estate Groups(4) 206,745 192,715 14,030
Amortization of mortgage
procurement costs -
Real Estate Groups(4) 10,998 11,578 (580)
Deferred income tax
expense - Real Estate
Groups(5) 120,230 43,981 76,249
Deferred income tax
expense - Non-Real
Estate Groups:(5)
Gain on disposition of
other investments 294 135 159
Provision for decline
in real estate
recorded on equity
method - - -
Provision for decline
in real estate - (587) 587
Current income tax
expense on non-
operating earnings:(5)
Gain on disposition of
other investments - 60 (60)
Gain on disposition
included in
discontinued
operations 13,829 (811) 14,640
Gain on disposition of
equity method rental
properties 2,657 8,147 (5,490)
Straight-line rent
adjustment(3) (8,757) (10,660) 1,903
Preference payment 898 - 898
Provision for decline in
real estate, net of
minority interest 1,923 6,442 (4,519)
Provision for decline in
real estate of equity
method rental properties 400 704 (304)
Gain on disposition of
equity method rental
properties (7,662) (21,023) 13,361
Loss (gain) on
disposition of other
investments - (506) 506
Discontinued
operations:(1)
Gain on disposition of
rental properties (351,861) (43,198) (308,663)
Minority interest -
Gain on disposition 118,009 - 118,009
------------------------- ----------
Earnings Before
Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2) $284,954 $270,496 $14,458 5.3%
========================= ==========
Diluted Earnings per
Common Share:
Earnings (loss) from
continuing operations $0.29 $0.63 $(0.34)
Discontinued operations,
net of tax and minority
interest(1) 1.41 0.18 1.23
------------------------- ----------
Net earnings $1.70 $0.81 $0.89
========================= ==========
Earnings Before
Depreciation,
Amortization and Deferred
Taxes (EBDT)(2) $2.73 $2.64 $0.09 3.4%
========================= ==========
Operating earnings, net of
tax (a non-GAAP financial
measure) $0.45 $0.81 $(0.36)
Provision for decline in
real estate, net of tax (0.01) (0.06) 0.05
Gain on disposition of
rental properties and
other investments, net of
tax 2.54 0.38 2.16
Minority interest (1.28) (0.32) (0.96)
------------------------- ----------
Net earnings $1.70 $0.81 $0.89
========================= ==========
Diluted weighted average
shares outstanding 104,454,898 102,603,932 1,850,966
========================= ==========
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Year Ended January 31, 2007 and 2006
(dollars in thousands)
Three Months
Ended, Increase
January 31, (Decrease)
------------------ ---------------
2007 2006 Amount Percent
------------------ ---------------
Operating Earnings (a non-GAAP
financial measure) and
Reconciliation to Net Earnings:
Revenues from real estate
operations
Commercial Group $242,641 $229,045 $13,596
Residential Group 66,352 53,297 13,055
Land Development Group 51,386 30,628 20,758
Corporate Activities - - -
------------------ --------
Total Revenues 360,379 312,970 47,409 15.1%
Operating expenses (225,465)(173,246) (52,219)
Interest expense, including early
extinguishment of debt (83,909) (69,954) (13,955)
Amortization of mortgage
procurement costs(4) (2,695) (2,534) (161)
Depreciation and amortization(4) (52,793) (46,124) (6,669)
Interest and other income 31,763 9,292 22,471
Equity in earnings of
unconsolidated entities 32,731 9,172 23,559
Provision for decline in real
estate of equity method rental
properties - - -
Gain on disposition of equity
method rental properties - - -
Revenues and interest income from
discontinued operations(1) 2,783 34,880 (32,097)
Expenses from discontinued
operations(1) (2,549) (38,139) 35,590
------------------ --------
Operating earnings (loss) (a non-
GAAP financial measure) 60,245 36,317 23,928
------------------ --------
Income tax expense(5) (24,284) (4,455) (19,829)
Income tax expense from
discontinued operations(1)(5) (25,165) (11,049) (14,116)
Income tax expense on non-
operating earnings items (see
below) 24,978 12,316 12,662
------------------ --------
Operating earnings, net of tax (a
non-GAAP financial measure) 35,774 33,129 2,645
------------------ --------
Provision for decline in real
estate - (1,774) 1,774
Provision for decline in real
estate of equity method rental
properties - - -
Gain on disposition of equity
method rental properties - - -
Gain on disposition of other
investments - (100) 100
Gain on disposition of rental
properties included in
discontinued operations(1) 64,641 33,722 30,919
Income tax benefit (expense) on
non-operating earnings:(5)
Provision for decline in
real estate - 676 (676)
Provision for decline in
real estate of equity
method rental properties - - -
Gain on disposition of other
investments (294) 39 (333)
Gain on disposition of
equity method rental
properties - - -
Gain on disposition of rental
properties included in
discontinued operations (24,684) (13,031) (11,653)
------------------ --------
Income tax expense on non-
operating earnings (see above) (24,978) (12,316) (12,662)
------------------ --------
Minority interest in continuing
operations (5,056) (22,547) 17,491
Minority interest in discontinued
operations:(1)
Operating earnings 245 (1,879) 2,124
Gain on disposition of
rental properties - - -
------------------ --------
245 (1,879) 2,124
------------------ --------
Minority interest (4,811) (24,426) 19,615
------------------ --------
Net earnings $70,626 $28,235 $42,391
================== ========
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Year Ended January 31, 2007 and 2006
(dollars in thousands)
Year Ended Increase
January 31, (Decrease)
--------------------- ----------------
2007 2006 Amount Percent
--------------------- ----------------
Operating Earnings (a non-GAAP
financial measure) and
Reconciliation to Net Earnings:
Revenues from real estate
operations
Commercial Group $811,315 $824,337 $(13,022)
Residential Group 240,290 196,266 44,024
Land Development Group 117,230 107,869 9,361
Corporate Activities - - -
--------------------- ---------
Total Revenues 1,168,835 1,128,472 40,363 3.6%
Operating expenses (709,343) (644,765) (64,578)
Interest expense, including
early extinguishment of debt (295,978) (264,834) (31,144)
Amortization of mortgage
procurement costs(4) (10,903) (9,979) (924)
Depreciation and amortization(4) (181,129) (164,397) (16,732)
Interest and other income 61,737 27,773 33,964
Equity in earnings of
unconsolidated entities 48,542 55,201 (6,659)
Provision for decline in real
estate of equity method rental
properties 400 704 (304)
Gain on disposition of equity
method rental properties (7,662) (21,023) 13,361
Revenues and interest income
from discontinued operations(1) 66,823 134,575 (67,752)
Expenses from discontinued
operations(1) (60,731) (144,224) 83,493
--------------------- ---------
Operating earnings (loss) (a
non-GAAP financial measure) 80,591 97,503 (16,912)
--------------------- ---------
Income tax expense(5) (34,412) (25,564) (8,848)
Income tax expense from
discontinued operations(1)(5) (92,581) (11,980) (80,601)
Income tax expense on non-
operating earnings items (see
below) 92,424 22,249 70,175
--------------------- ---------
Operating earnings, net of tax
(a non-GAAP financial measure) 46,022 82,208 (36,186)
--------------------- ---------
Provision for decline in real
estate (1,923) (7,874) 5,951
Provision for decline in real
estate of equity method rental
properties (400) (704) 304
Gain on disposition of equity
method rental properties 7,662 21,023 (13,361)
Gain on disposition of other
investments - 506 (506)
Gain on disposition of rental
properties included in
discontinued operations(1) 351,861 43,198 308,663
Income tax benefit (expense) on
non-operating earnings:(5)
Provision for decline in
real estate 743 2,490 (1,747)
Provision for decline in
real estate of equity
method rental properties 155 272 (117)
Gain on disposition of
other investments (294) (195) (99)
Gain on disposition of
equity method rental
properties (2,962) (8,123) 5,161
Gain on disposition of
rental properties included
in discontinued operations (90,066) (16,693) (73,373)
--------------------- ---------
Income tax expense on non-
operating earnings (see above) (92,424) (22,249) (70,175)
--------------------- ---------
Minority interest in continuing
operations (15,187) (30,027) 14,840
Minority interest in
discontinued operations:(1)
Operating earnings (351) (2,562) 2,211
Gain on disposition of
rental properties (118,009) - (118,009)
--------------------- ---------
(118,360) (2,562) (115,798)
--------------------- ---------
Minority interest (133,547) (32,589) (100,958)
--------------------- ---------
Net earnings $177,251 $83,519 $93,732
===================== =========
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Year Ended January 31, 2007 and 2006
(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 division 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) 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.
4) 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.
Depreciation and Depreciation and
Amortization Amortization
--------------------- ---------------------
Three Months Ended Year Ended
January 31, January 31,
--------------------- ---------------------
2007 2006 2007 2006
--------------------- ---------------------
Full Consolidation $52,793 $46,124 $181,129 $164,397
Non-Real Estate Groups (639) (368) (1,571) (1,104)
--------------------- ---------------------
Real Estate Groups Full
Consolidation 52,154 45,756 179,558 163,293
Real Estate Groups related
to minority interest (3,097) (2,233) (13,811) (15,341)
Real Estate Groups Equity
Method 8,867 7,080 34,779 26,905
Real Estate Groups
Discontinued Operations 14 3,599 6,219 17,858
--------------------- ---------------------
Real Estate Groups Pro-
Rata Consolidation $57,938 $54,202 $206,745 $192,715
===================== =====================
Amortization of Amortization of
Mortgage Procurement Mortgage Procurement
Costs Costs
-------------------------------------------
Three Months Ended Year Ended
January 31, January 31,
--------------------- ---------------------
2007 2006 2007 2006
--------------------- ---------------------
Full Consolidation $2,695 $2,534 $10,903 $9,979
Non-Real Estate Groups (97) (83) (333) (369)
--------------------- ---------------------
Real Estate Groups Full
Consolidation 2,598 2,451 10,570 9,610
Real Estate Groups related
to minority interest (161) (84) (1,076) (1,066)
Real Estate Groups Equity
Method 452 338 1,312 1,244
Real Estate Groups
Discontinued Operations 11 214 192 1,790
--------------------- ---------------------
Real Estate Groups Pro-
Rata Consolidation $2,900 $2,919 $10,998 $11,578
===================== =====================
Three Months Ended Year Ended
January 31, January 31,
--------------------- ---------------------
2007 2006 2007 2006
--------------------- ---------------------
(5) The following table (in thousands) (in thousands)
provides detail of Income
Tax Expense (Benefit):
(A) Operating earnings
Current $1,119 $(3,057) $(16,085) $(4,207)
Deferred 23,165 8,227 48,433 24,215
--------------------- ---------------------
24,284 5,170 32,348 20,008
--------------------- ---------------------
(B) Provision for decline
in real estate
Deferred - (676) (743) (2,490)
Deferred - Equity
method investment - - (155) (272)
--------------------- ---------------------
- (676) (898) (2,762)
--------------------- ---------------------
(C) Gain on disposition of
other investments
Current - Non-Real
Estate Groups - - - 60
Deferred - Non-Real
Estate Groups - (39) - 135
--------------------- ---------------------
- (39) - 195
--------------------- ---------------------
(D) Gain on disposition of
equity method rental
properties
Current - - 2,657 8,147
Deferred - - 305 (24)
--------------------- ---------------------
- - 2,962 8,123
--------------------- ---------------------
Subtotal (A) (B) (C)
(D)
Current 1,119 (3,057) (13,428) 4,000
Deferred 23,165 7,512 47,840 21,564
--------------------- ---------------------
Income tax expense 24,284 4,455 34,412 25,564
--------------------- ---------------------
(E) Discontinued
operations - Rental
Properties
Operating earnings
Current 49 (1,663) 1,542 (6,149)
Deferred 138 (319) 679 1,436
--------------------- ---------------------
187 (1,982) 2,221 (4,713)
Gain on disposition
of rental
properties
Current (3,369) (811) 13,829 (811)
Deferred 28,053 13,842 76,237 17,504
--------------------- ---------------------
24,684 13,031 90,066 16,693
--------------------- ---------------------
24,871 11,049 92,287 11,980
--------------------- ---------------------
Deferred gain on
disposition of
Lumber Group
Current - - - -
Deferred 294 - 294 -
--------------------- ---------------------
294 - 294 -
--------------------- ---------------------
Subtotal 25,165 11,049 92,581 11,980
--------------------- ---------------------
Grand
Total(A)(B)(C)(D)(E)
Current (2,201) (5,531) 1,943 (2,960)
Deferred 51,650 21,035 125,050 40,504
--------------------- ---------------------
$49,449 $15,504 $126,993 $37,544
--------------------- ---------------------
Recap of Grand Total:
Real Estate Groups
Current 98 (8,215) 15,802 5,356
Deferred 47,102 26,089 120,230 43,981
--------------------- ---------------------
47,200 17,874 136,032 49,337
Non-Real Estate
Groups
Current (2,299) 2,684 (13,859) (8,316)
Deferred 4,548 (5,054) 4,820 (3,477)
--------------------- ---------------------
2,249 (2,370) (9,039) (11,793)
--------------------- ---------------------
Grand Total $49,449 $15,504 $126,993 $37,544
===================== =====================
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings
(GAAP) (in thousands):
Three Months Ended January 31, 2007
--------------------------------------------------
Plus
Unconsol-
idated Plus
Full Less Invest- Discon- Pro-Rata
Consol- Minority ments at tinued Consol-
idation Interest Pro-Rata Operations idation
--------------------------------------------------
Revenues from real
estate operations $360,379 $20,389 $145,274 $2,119 $487,383
Exclude straight-
line rent
adjustment(1) (6,995) - - - (6,995)
--------------------------------------------------
Adjusted revenues 353,384 20,389 145,274 2,119 480,388
Operating expenses 225,465 7,515 94,094 1,400 313,444
Add back
depreciation and
amortization for
non-Real Estate
Groups(b) 639 - (99) - 540
Add back
amortization of
mortgage
procurement costs
for non-Real Estate
Groups (d) 97 - 228 - 325
Exclude straight-
line rent
adjustment(2) (2,797) - - - (2,797)
Exclude preference
payment (898) - - - (898)
--------------------------------------------------
Adjusted operating
expenses 222,506 7,515 94,223 1,400 310,614
Add interest and
other income 31,763 90 2,501 878 35,052
Add equity in
earnings of
unconsolidated
entities 32,731 - (29,123) - 3,608
Add back equity
method depreciation
and amortization
expense (see below) 9,319 - (9,319) - -
--------------------------------------------------
Net Operating Income 204,691 12,964 15,110 1,597 208,434
Interest expense,
including early
extinguishment of
debt (83,909) (4,650) (15,110) (1,093) (95,462)
Gain on disposition
of rental
properties and
other investments - - - 64,641 64,641
Provision for
decline in real
estate - - - - -
Depreciation and
amortization - Real
Estate Groups (a) (52,154) (3,097) (8,867) (14) (57,938)
Amortization of
mortgage
procurement costs -
Real Estate
Groups(c) (2,598) (161) (452) (11) (2,900)
Straight-line rent
adjustment (1)+(2) 4,198 - - - 4,198
Preference payment (898) - - - (898)
Equity method
depreciation and
amortization
expense (see above) (9,319) - 9,319 - -
--------------------------------------------------
Earnings before
income taxes 60,011 5,056 - 65,120 120,075
Income tax expense (24,284) - - (25,165) (49,449)
--------------------------------------------------
Earnings (loss)
before minority
interest and
discontinued
operations 35,727 5,056 - 39,955 70,626
Minority Interest (5,056) (5,056) - - -
--------------------------------------------------
Earnings (loss) from
continuing
operations 30,671 - - 39,955 70,626
Discontinued
operations, net of
tax and minority
interest:
Operating
earnings (loss)
from rental
properties 292 - - (292) -
Gain on
disposition of
rental
properties 39,663 - - (39,663) -
--------------------------------------------------
39,955 - - (39,955) -
--------------------------------------------------
Net earnings $70,626 $- $- $- $70,626
==================================================
(a) Depreciation and
amortization - Real
Estate Groups $52,154 $3,097 $8,867 $14 $57,938
(b) Depreciation and
amortization - Non-
Real Estate Groups 639 - (99) - 540
--------------------------------------------------
Total
depreciation and
amortization $52,793 $3,097 $8,768 $14 $58,478
==================================================
(c) Amortization of
mortgage
procurement costs -
Real Estate Groups $2,598 $161 $452 $11 $2,900
(d) Amortization of
mortgage
procurement costs -
Non-Real Estate
Groups 97 - 228 - 325
--------------------------------------------------
Total
amortization of
mortgage
procurement
costs $2,695 $161 $680 $11 $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, 2007, and the three months ended
January 31, 2006, no equity method rental properties were sold.
Reconciliation of
Net Operating Income (non-GAAP) to Net Earnings
(GAAP) (in thousands):
Three Months Ended January 31, 2006
--------------------------------------------------
Plus
Unconsol-
idated Plus
Full Less Invest- Discon- Pro-Rata
Consol- Minority ments at tinued Consol-
idation Interest Pro-Rata Operations idation
--------------------------------------------------
Revenues from real
estate operations $312,970 $44,017 $86,592 $25,372 $380,917
Exclude straight-
line rent
adjustment(1) (6,334) - - (69) (6,403)
--------------------------------------------------
Adjusted revenues 306,636 44,017 86,592 25,303 374,514
Operating expenses 173,246 13,598 52,252 17,130 229,030
Add back
depreciation and
amortization for
non-Real Estate
Groups(b) 368 - 3,228 - 3,596
Add back
amortization of
mortgage
procurement costs
for non-Real Estate
Groups (d) 83 - 1,582 - 1,665
Exclude straight-
line rent
adjustment(2) (1,349) - - (577) (1,926)
Exclude preference
payment - - - - -
--------------------------------------------------
Adjusted operating
expenses 172,348 13,598 57,062 16,553 232,365
Add interest and
other income 9,292 959 713 173 9,219
Add equity in
earnings of
unconsolidated
entities 9,172 - (8,957) - 215
Add back equity
method depreciation
and amortization
expense (see below) 7,418 - (7,418) - -
--------------------------------------------------
Net Operating Income 160,170 31,378 13,868 8,923 151,583
Interest expense,
including early
extinguishment of
debt (69,954) (6,488) (13,868) (9,740) (87,074)
Gain on disposition
of rental
properties and
other investments (100) - - 33,722 33,622
Provision for
decline in real
estate (1,774) (26) - - (1,748)
Depreciation and
amortization - Real
Estate Groups (a) (45,756) (2,233) (7,080) (3,599) (54,202)
Amortization of
mortgage
procurement costs -
Real Estate
Groups(c) (2,451) (84) (338) (214) (2,919)
Straight-line rent
adjustment (1)+(2) 4,985 - - (508) 4,477
Preference payment - - - - -
Equity method
depreciation and
amortization
expense (see above) (7,418) - 7,418 - -
--------------------------------------------------
Earnings before
income taxes 37,702 22,547 - 28,584 43,739
Income tax expense (4,455) - - (11,049) (15,504)
--------------------------------------------------
Earnings (loss)
before minority
interest and
discontinued
operations 33,247 22,547 - 17,535 28,235
Minority Interest (22,547) (22,547) - - -
--------------------------------------------------
Earnings (loss) from
continuing
operations 10,700 - - 17,535 28,235
Discontinued
operations, net of
tax and minority
interest:
Operating
earnings (loss)
from rental
properties (3,156) - - 3,156 -
Gain on
disposition of
rental
properties 20,691 - - (20,691) -
--------------------------------------------------
17,535 - - (17,535) -
--------------------------------------------------
Net earnings $28,235 $- $- $- $28,235
==================================================
(a) Depreciation and
amortization - Real
Estate Groups $45,756 $2,233 $7,080 $3,599 $54,202
(b) Depreciation and
amortization - Non-
Real Estate Groups 368 - 3,228 - 3,596
--------------------------------------------------
Total
depreciation and
amortization $46,124 $2,233 $10,308 $3,599 $57,798
==================================================
(c) Amortization of
mortgage
procurement costs -
Real Estate Groups $2,451 $84 $338 $214 $2,919
(d) Amortization of
mortgage
procurement costs -
Non-Real Estate
Groups 83 - 1,582 - 1,665
--------------------------------------------------
Total
amortization of
mortgage
procurement
costs $2,534 $84 $1,920 $214 $4,584
==================================================
(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, 2007, and the three months ended
January 31, 2006, no equity method rental properties were sold.
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings
(GAAP) (in thousands):
Year Ended January 31, 2007
-----------------------------------------------------
Plus
Unconsol-
idated Plus
Full Less Invest- Discon- Pro-Rata
Consol- Minority ments at tinued Consol-
idation Interest Pro-Rata Operations idation
-----------------------------------------------------
Revenues from
real estate
operations $1,168,835 $98,001 $355,457 $58,198 $1,484,489
Exclude straight-
line rent
adjustment(1) (15,950) - - (44) (15,994)
-----------------------------------------------------
Adjusted revenues 1,152,885 98,001 355,457 58,154 1,468,495
Operating
expenses 709,343 46,132 234,796 37,497 935,504
Add back
depreciation and
amortization for
non-Real Estate
Groups(b) 1,571 - 7,174 - 8,745
Add back
amortization of
mortgage
procurement
costs for non-
Real Estate
Groups(d) 333 1 819 - 1,151
Exclude straight-
line rent
adjustment(2) (6,299) - - (938) (7,237)
Exclude
preference
payment (898) - - - (898)
-----------------------------------------------------
Adjusted
operating
expenses 704,050 46,133 242,789 36,559 937,265
Add interest and
other income 61,737 2,763 3,301 1,504 63,779
Add equity in
earnings of
unconsolidated
entities 48,542 - (31,278) - 17,264
Remove gain on
disposition of
equity method
rental
properties (7,662) - 7,662 - -
Add back
provision for
decline recorded
on equity method 400 - (400) - -
Add back equity
method
depreciation and
amortization
expense (see
below) 36,091 - (36,091) - -
-----------------------------------------------------
Net Operating
Income 587,943 54,631 55,862 23,099 612,273
Interest expense,
including early
extinguishment
of debt (295,978) (24,557) (55,862) (10,053) (337,336)
Gain on
disposition of
equity method
rental
properties(e) 7,662 - - - 7,662
Gain on
disposition of
rental
properties and
other
investments - - - 233,852 233,852
Provision for
decline in real
estate (1,923) - - - (1,923)
Provision for
decline in real
estate of equity
method rental
properties (400) - - - (400)
Depreciation and
amortization -
Real Estate
Groups(a) (179,558) (13,811) (34,779) (6,219) (206,745)
Amortization of
mortgage
procurement
costs - Real
Estate Groups(c) (10,570) (1,076) (1,312) (192) (10,998)
Straight-line
rent adjustment
(1)+(2) 9,651 - - (894) 8,757
Preference
payment (898) - - - (898)
Equity method
depreciation and
amortization
expense (see
above) (36,091) - 36,091 - -
-----------------------------------------------------
Earnings before
income taxes 79,838 15,187 - 239,593 304,244
Income tax
expense (34,412) - - (92,581) (126,993)
-----------------------------------------------------
Earnings before
minority
interest and
discontinued
operations 45,426 15,187 - 147,012 177,251
Minority Interest (15,187) (15,187) - - -
-----------------------------------------------------
Earnings from
continuing
operations 30,239 - - 147,012 177,251
Discontinued
operations, net
of tax and
minority
interest:
Operating
earnings
(loss) from
rental
properties 3,520 - - (3,520) -
Gain on
disposition
of rental
properties 143,492 - - (143,492) -
-----------------------------------------------------
147,012 - - (147,012) -
-----------------------------------------------------
Net earnings $177,251 $- $- $- $177,251
=====================================================
(a) Depreciation
and amortization
- Real Estate
Groups $179,558 $13,811 $34,779 $6,219 $206,745
(b) Depreciation
and amortization
- Non-Real
Estate Groups 1,571 - 7,174 - 8,745
-----------------------------------------------------
Total
depreciation
and
amortization $181,129 $13,811 $41,953 $6,219 $215,490
=====================================================
(c) Amortization
of mortgage
procurement
costs - Real
Estate Groups $10,570 $1,076 $1,312 $192 $10,998
(d) Amortization
of mortgage
procurement
costs - Non-Real
Estate Groups 333 1 819 - 1,151
-----------------------------------------------------
Total
amortization of
mortgage
procurement
costs $10,903 $1,077 $2,131 $192 $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, 2007, one equity method property was sold,
Midtown Plaza, resulting in a pre-tax gain on disposition of $7,662.
For the year ended January 31, 2006, three equity method investments
were sold, including Flower Park Plaza, Showcase and Colony Place,
resulting in a pre-tax gain on disposition of $21,023.
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings
(GAAP) (in thousands):
Year Ended January 31, 2006
-----------------------------------------------------
Plus
Unconsol-
idated Plus
Full Less Invest- Discon- Pro-Rata
Consol- Minority ments at tinued Consol-
idation Interest Pro-Rata Operations idation
-----------------------------------------------------
Revenues from
real estate
operations $1,128,472 $129,043 $318,282 $115,392 $1,433,103
Exclude straight-
line rent
adjustment(1) (18,229) - - (163) (18,392)
-----------------------------------------------------
Adjusted revenues 1,110,243 129,043 318,282 115,229 1,414,711
Operating
expenses 644,765 55,114 194,900 78,436 862,987
Add back
depreciation and
amortization for
non-Real Estate
Groups(b) 1,104 - 13,086 - 14,190
Add back
amortization of
mortgage
procurement
costs for non-
Real Estate
Groups(d) 369 - 2,035 - 2,404
Exclude straight-
line rent
adjustment(2) (5,394) - - (2,338) (7,732)
Exclude
preference
payment - - - - -
-----------------------------------------------------
Adjusted
operating
expenses 640,844 55,114 210,021 76,098 871,849
Add interest and
other income 27,773 2,604 1,218 543 26,930
Add equity in
earnings of
unconsolidated
entities 55,201 - (49,060) - 6,141
Remove gain on
disposition of
equity method
rental
properties (21,023) - 21,023 - -
Add back
provision for
decline recorded
on equity method 704 - (704) - -
Add back equity
method
depreciation and
amortization
expense (see
below) 28,149 - (28,149) - -
-----------------------------------------------------
Net Operating
Income 560,203 76,533 52,589 39,674 575,933
Interest expense,
including early
extinguishment
of debt (264,834) (28,667) (52,589) (30,062) (318,818)
Gain on
disposition of
equity method
rental
properties(e) 21,023 - - - 21,023
Gain on
disposition of
rental
properties and
other
investments 506 - - 43,198 43,704
Provision for
decline in real
estate (7,874) (1,432) - - (6,442)
Provision for
decline in real
estate of equity
method rental
properties (704) - - - (704)
Depreciation and
amortization -
Real Estate
Groups(a) (163,293) (15,341) (26,905) (17,858) (192,715)
Amortization of
mortgage
procurement
costs - Real
Estate Groups(c) (9,610) (1,066) (1,244) (1,790) (11,578)
Straight-line
rent adjustment
(1)+(2) 12,835 - - (2,175) 10,660
Preference
payment - - - - -
Equity method
depreciation and
amortization
expense (see
above) (28,149) - 28,149 - -
-----------------------------------------------------
Earnings before
income taxes 120,103 30,027 - 30,987 121,063
Income tax
expense (25,564) - - (11,980) (37,544)
-----------------------------------------------------
Earnings before
minority
interest and
discontinued
operations 94,539 30,027 - 19,007 83,519
Minority Interest (30,027) (30,027) - - -
-----------------------------------------------------
Earnings from
continuing
operations 64,512 - - 19,007 83,519
Discontinued
operations, net
of tax and
minority
interest:
Operating
earnings
(loss) from
rental
properties (7,498) - - 7,498 -
Gain on
disposition
of rental
properties 26,505 - - (26,505) -
-----------------------------------------------------
19,007 - - (19,007) -
-----------------------------------------------------
Net earnings $83,519 $- $- $- $83,519
=====================================================
(a) Depreciation
and amortization
- Real Estate
Groups $163,293 $15,341 $26,905 $17,858 $192,715
(b) Depreciation
and amortization
- Non-Real
Estate Groups 1,104 - 13,086 - 14,190
-----------------------------------------------------
Total
depreciation
and
amortization $164,397 $15,341 $39,991 $17,858 $206,905
=====================================================
(c) Amortization
of mortgage
procurement
costs - Real
Estate Groups $9,610 $1,066 $1,244 $1,790 $11,578
(d) Amortization
of mortgage
procurement
costs - Non-Real
Estate Groups 369 - 2,035 - 2,404
-----------------------------------------------------
Total
amortization of
mortgage
procurement
costs $9,979 $1,066 $3,279 $1,790 $13,982
=====================================================
(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, 2007, one equity method property was sold,
Midtown Plaza, resulting in a pre-tax gain on disposition of $7,662.
For the year ended January 31, 2006, three equity method investments
were sold, including Flower Park Plaza, Showcase and Colony Place,
resulting in a pre-tax gain on disposition of $21,023.
Net Operating Income (dollars in thousands)
--------------------------------------------------
Three Months Ended January 31, 2007
--------------------------------------------------
Plus
Unconsol- Plus
Full Less idated Discont- Pro-Rata
Consol- Minority Investments inued Consol-
idation Interest at Pro-Rata Operations idation
--------------------------------------------------
Commercial Group
Retail
Comparable $52,403 $5,684 $806 $- $47,525
------------------------------------------------------------------
Total 63,517 2,933 4,273 186 65,043
Office Buildings
Comparable 43,612 4,868 1,334 - 40,078
------------------------------------------------------------------
Total 43,651 2,348 1,261 - 42,564
Hotels
Comparable 3,418 - 491 - 3,909
------------------------------------------------------------------
Total 3,418 - 491 (405) 3,504
Earnings from
Commercial
Land Sales 18,989 1,556 395 - 17,828
Development
Fees 160 64 - - 96
Other (9,584) 2,579 42 - (12,121)
------------------------------------------------------------------
Total Commercial
Group
Comparable 99,433 10,552 2,631 - 91,512
------------------------------------------------------------------
Total 120,151 9,480 6,462 (219) 116,914
Residential Group
Apartments
Comparable 23,178 620 6,256 - 28,814
------------------------------------------------------------------
Total 43,241 1,215 8,373 1,816 52,215
Military Housing
Comparable - - - - -
------------------------------------------------------------------
Total 5,577 - 144 - 5,721
Total Real Estate
Groups
Comparable 122,611 11,172 8,887 - 120,326
------------------------------------------------------------------
Total 168,969 10,695 14,979 1,597 174,850
Land Development
Group 46,777 2,269 130 - 44,638
The Nets (619) - 1 - (618)
Corporate
Activities (10,436) - - - (10,436)
- ----------------------------------------------------------------------
Grand Total $204,691 $12,964 $15,110 $1,597 $208,434
- ----------------------------------------------------------------------
---------------------------------------------------
Three Months Ended January 31, 2006
---------------------------------------------------
Plus
Unconsol- Plus
Full Less idated Discont- Pro-Rata
Consol- Minority Investments inued Consol-
idation Interest at Pro-Rata Operations idation
--------------------------------------------------
Commercial Group
Retail
Comparable $48,307 $5,556 $2,943 $- $45,694
-----------------------------------------------------------------
Total 52,036 5,730 3,007 925 50,238
Office Buildings
Comparable 43,319 5,366 1,201 - 39,154
-----------------------------------------------------------------
Total 43,251 5,095 1,061 - 39,217
Hotels
Comparable 2,105 - 467 - 2,572
-----------------------------------------------------------------
Total 2,105 - 467 5,286 7,858
Earnings from
Commercial
Land Sales 30,241 16,285 - - 13,956
Development
Fees 2,897 1,159 - - 1,738
Other (5,559) (459) (321) - (5,421)
-----------------------------------------------------------------
Total Commercial
Group
Comparable 93,731 10,922 4,611 - 87,420
-----------------------------------------------------------------
Total 124,971 27,810 4,214 6,211 107,586
Residential Group
Apartments
Comparable 21,389 584 6,726 - 27,531
-----------------------------------------------------------------
Total 18,454 1,440 8,454 2,712 28,180
Military Housing
Comparable - - - - -
-----------------------------------------------------------------
Total 2,567 - 38 - 2,605
Total Real Estate
Groups
Comparable 115,120 11,506 11,337 - 114,951
-----------------------------------------------------------------
Total 145,992 29,250 12,706 8,923 138,371
Land Development
Group 32,184 2,128 162 - 30,218
The Nets (7,537) - 1,000 - (6,537)
Corporate
Activities (10,469) - - - (10,469)
- ---------------------------------------------------------------------
Grand Total $160,170 $31,378 $13,868 $8,923 $151,583
- ---------------------------------------------------------------------
----------------------------
% Change
----------------------------
Full Pro-Rata
Consolidation Consolidation
----------------------------
Commercial Group
Retail
Comparable 8.5% 4.0%
--------------------------------------
Total
Office Buildings
Comparable 0.7% 2.4%
--------------------------------------
Total
Hotels
Comparable 62.4% 52.0%
--------------------------------------
Total
Earnings from Commercial
Land Sales
Development Fees
Other
--------------------------------------
Total Commercial Group
Comparable 6.1% 4.7%
--------------------------------------
Total
Residential Group
Apartments
Comparable 8.4% 4.7%
--------------------------------------
Total
Military Housing
Comparable
--------------------------------------
Total
Total Real Estate Groups
Comparable 6.5% 4.7%
--------------------------------------
Total
Land Development Group
The Nets
Corporate Activities
- ------------------------------------------
Grand Total
- ------------------------------------------
Net Operating Income (dollars in thousands)
-------------------------------------------------------
Twelve Months Ended January 31, 2007
-------------------------------------------------------
Plus
Unconsol-
idated
Full Less Invest- Plus Discont- Pro-Rata
Consol- Minority ments at inued Consol-
idation Interest Pro-Rata Operations idation
-------------------------------------------------------
Commercial
Group
Retail
Comparable $189,225 $20,745 $8,452 $- $176,932
-------------------------------------------------------------------
Total 213,220 16,926 13,091 1,994 211,379
Office
Buildings
Comparable 176,097 21,073 4,594 - 159,618
-------------------------------------------------------------------
Total 174,880 18,764 4,365 - 160,481
Hotels
Comparable 14,421 - 1,947 - 16,368
-------------------------------------------------------------------
Total 14,421 - 1,947 10,715 27,083
Earnings
from
Commercial
Land Sales 37,143 2,684 641 - 35,100
Development
Fees 879 352 - - 527
Other (28,997) 6,768 145 - (35,620)
-------------------------------------------------------------------
Total
Commercial
Group
Comparable 379,743 41,818 14,993 - 352,918
-------------------------------------------------------------------
Total 411,546 45,494 20,189 12,709 398,950
Residential
Group
Apartments
Comparable 91,990 2,501 25,411 - 114,900
-------------------------------------------------------------------
Total 121,188 4,082 31,766 10,390 159,262
Military
Housing
Comparable - - - - -
-------------------------------------------------------------------
Total 12,052 - 305 - 12,357
Total Real
Estate Groups
Comparable 471,733 44,319 40,404 - 467,818
-------------------------------------------------------------------
Total 544,786 49,576 52,260 23,099 570,569
Land
Development
Group 99,056 5,055 790 - 94,791
The Nets (14,703) - 2,812 - (11,891)
Corporate
Activities (41,196) - - - (41,196)
- ----------------------------------------------------------------------
Grand Total $587,943 $54,631 $55,862 $23,099 $612,273
- ----------------------------------------------------------------------
-------------------------------------------------
Twelve Months Ended January 31, 2006
-------------------------------------------------
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 $177,580 $20,545 $11,590 $- $168,625
------------------------------------------------------------------
Total 186,787 18,437 11,950 2,647 182,947
Office Buildings
Comparable 172,071 20,811 4,413 - 155,673
------------------------------------------------------------------
Total 173,319 21,694 4,025 - 155,650
Hotels
Comparable 11,819 - 1,899 - 13,718
------------------------------------------------------------------
Total 11,819 - 1,899 21,766 35,484
Earnings from
Commercial
Land Sales 67,990 18,390 - - 49,600
Development Fees 10,614 4,247 - - 6,367
Other (17,466) 3,011 (214) - (20,691)
------------------------------------------------------------------
Total Commercial Group
Comparable 361,470 41,356 17,902 - 338,016
------------------------------------------------------------------
Total 433,063 65,779 17,660 24,413 409,357
Residential Group
Apartments
Comparable 84,837 2,286 25,335 - 107,886
------------------------------------------------------------------
Total 81,101 5,050 30,552 15,261 121,864
Military Housing
Comparable - - - - -
------------------------------------------------------------------
Total 4,763 - 1,032 - 5,795
Total Real Estate
Groups
Comparable 446,307 43,642 43,237 - 445,902
------------------------------------------------------------------
Total 518,927 70,829 49,244 39,674 537,016
Land Development Group 102,002 5,704 353 - 96,651
The Nets (24,534) - 2,992 - (21,542)
Corporate Activities (36,192) - - - (36,192)
- ---------------------------------------------------------------------
Grand Total $560,203 $76,533 $52,589 $39,674 $575,933
- ---------------------------------------------------------------------
-------------------------------
% Change
-------------------------------
Full Pro-Rata
Consolidation Consolidation
-------------------------------
Commercial Group
Retail
Comparable 6.6% 4.9%
-------------------------------------
Total
Office Buildings
Comparable 2.3% 2.5%
-------------------------------------
Total
Hotels
Comparable 22.0% 19.3%
-------------------------------------
Total
Earnings from Commercial
Land Sales
Development Fees
Other
-------------------------------------
Total Commercial Group
Comparable 5.1% 4.4%
-------------------------------------
Total
Residential Group
Apartments
Comparable 8.4% 6.5%
-------------------------------------
Total
Military Housing
Comparable
-------------------------------------
Total
Total Real Estate Groups
Comparable 5.7% 4.9%
-------------------------------------
Total
Land Development Group
The Nets
Corporate Activities
- ----------------------------------------
Grand Total
- ----------------------------------------
Development Pipeline
- ----------------------------------------------------------------------
January 31, 2007
2006 Openings and Acquisitions (14)
FCE Pro-
Dev Legal Rata
(D) Date Ownership FCE%
Acq Opened/ % (i) (i)
Property/Location (A) Acquired (1) (2)
Retail Centers:
Northfield at Stapleton/ Denver, CO Q4-05/Q1-
D 06/
Q3-06 95.0% 97.9%
Metreon(c)/ San Francisco, CA A/D Q1-06 50.0% 50.0%
San Francisco Centre(c)/ San Francisco,
CA A/D Q3-06 50.0% 50.0%
Office:
Resurrection Health Care/Skokie, IL A Q1-06 100.0%100.0%
Advent Solar(c)/ Albuquerque, NM D Q3-06 47.5% 47.5%
Bulletin Building(c)/ San Francisco, CA A/D Q3-06 50.0% 50.0%
Stapleton Medical Office Building/
Denver, CO D Q3-06 90.0% 90.0%
Illinois Science and Technology Park -
Building A/ Skokie, IL A/D Q4-06 100.0%100.0%
Illinois Science and Technology Park -
Building P/ Skokie, IL A/D Q4-06 100.0%100.0%
Edgeworth Building/ Richmond, VA D Q4-06 100.0%100.0%
Residential:
Sky55/ Chicago, IL D Q1-06 100.0%100.0%
1251 S. Michigan/ Chicago, IL D Q1-06 100.0%100.0%
Cutters Ridge at Tobacco Row/ Richmond,
VA D Q4-06 100.0%100.0%
Condominiums:
1100 Wilshire(c)/ Los Angeles, CA D Q4-06 40.0% 40.0%
Total Openings (d)
LESS: Above properties to be sold as
condominiums
Total Openings less Condominiums
- ----------------------------------------------------------------------
Residential Phased-In Units (c) (e):
Arbor Glenn/ Twinsburg, OH D 2004-07 50.0% 50.0%
Woodgate/Evergreen Farms/ Olmsted
Township, OH D 2004-06 33.0% 33.0%
Pine Ridge Expansion/ Willoughby Hills,
OH D 2005-07 50.0% 50.0%
Cobblestone Court/ Painesville, OH D 2006-08 50.0% 50.0%
Total (f)
- ----------------------------------------------------------------------
See Attached Footnotes
Development Pipeline
- -------------------------------------------------------------------
January 31, 2007
2006 Openings and Acquisitions (14)
Cost
at
FCE
Pro-
Cost at Rata
Full Share
Consol- Total (Non-
idation Cost GAAP) Sq. ft./ Gross
(GAAP) at 100% (b) No. of Leasable
Property/Location (a) (3) (2)X(3) Units Area
(in millions)
----------------------------
Retail Centers:
Northfield at
Stapleton/
Denver, CO
$182.5 $182.5 $178.5 1,170,000 560,000 (g)
Metreon(c)/ San
Francisco, CA 0.0 40.0 20.0 290,000 290,000
San Francisco
Centre(c)/ San
Francisco, CA 0.0 598.0 299.0 1,462,000 812,000 (h)
-------------------------------------- ----------
$182.5 $820.5 $497.5 2,922,000 1,662,000
----------------------------========== ==========
Office:
Resurrection
Health
Care/Skokie, IL $5.1 $5.1 $5.1 40,000
Advent Solar(c)/
Albuquerque, NM 0.0 10.7 5.1 88,000
Bulletin
Building(c)/ San
Francisco, CA 0.0 28.0 14.0 87,000
Stapleton Medical
Office Building/
Denver, CO 10.3 10.3 9.3 45,000
Illinois Science
and Technology
Park - Building
A/ Skokie, IL 31.1 31.1 31.1 225,000
Illinois Science
and Technology
Park - Building
P/ Skokie, IL 23.3 23.3 23.3 127,000
Edgeworth
Building/
Richmond, VA 35.2 35.2 35.2 142,000
--------------------------------------
$105.0 $143.7 $123.1 754,000
----------------------------==========
Residential:
Sky55/ Chicago, IL $109.5 $109.5 $109.5 411
1251 S. Michigan/
Chicago, IL 16.0 16.0 16.0 91
Cutters Ridge at
Tobacco Row/
Richmond, VA 4.8 4.8 4.8 12
--------------------------------------
$130.3 $130.3 $130.3 514
----------------------------==========
Units Sold
Condominiums: at 1/31/07
----------
1100 Wilshire(c)/
Los Angeles, CA $0.0 $132.0 $52.8 228 139
----------------------------==========
----------------------------
Total Openings (d) $417.8 $1,226.5 $803.7
============================
LESS: Above
properties to be
sold as
condominiums $0.0 $132.0 $52.8
----------------------------
Total Openings
less Condominiums $417.8 $1,094.5 $750.9
============================
- --------------------------------------------------------
Residential
Phased-In Units Opened in
(c) (e): '06/Total
----------
Arbor Glenn/
Twinsburg, OH $0.0 $18.4 $9.2 48/288
Woodgate/Evergreen
Farms/ Olmsted
Township, OH 0.0 22.0 7.3 144/348
Pine Ridge
Expansion/
Willoughby Hills,
OH 0.0 16.4 8.2 53/162
Cobblestone Court/
Painesville, OH 0.0 24.6 12.3 112/304
--------------------------------------
Total (f) $0.0 $81.4 $37.0 357/1,102
======================================
- --------------------------------------------------------
See Attached Footnotes
Development Pipeline
- ----------------------------------------------------------------------
January 31, 2007
Under Construction or to be Acquired (18)
FCE
Dev Legal Pro-
(D) Ownership Rata
Property/ Acq Anticipated % FCE%
Location (A) Opening (i)(1) (i)(2)
Retail Centers:
Promenade Bolingbrook/ Bolingbrook, IL D Q1-07 100.0% 100.0%
Rancho Cucamonga Leggio/ Rancho
Cucamonga, CA D Q2-07 80.0% 80.0%
Orchard Town Center/ Westminster, CO D 2008 100.0% 100.0%
Shops at Wiregrass (c)/ Tampa, FL D Q3-08 50.0% 66.7%
East River Plaza (c)/ Manhattan, NY D Q3-08 35.0% 50.0%
Office:
New York Times/ Manhattan, NY D Q3-07 70.0% 79.5%
Illinois Science and Technology Park -
Building Q/ Skokie, IL A/D Q3-07 100.0% 100.0%
Johns Hopkins - 855 North Wolfe
Street/ East Baltimore, MD D Q1-08 76.6% 76.6%
Residential:
Sterling Glen of Roslyn(o)/ Roslyn, NY D Q2-07 40.0% 100.0%
Stapleton Town Center - Botanica Phase
II/ Denver, CO D Q3-07 90.0% 90.0%
Uptown Apartments (c)/ Oakland, CA D Q2-08 50.0% 50.0%
Ohana Military Communities, Hawaii
Increment I(c)(e)/ Honolulu, HI D 2005-2008 10.0% 10.0%
Dallas Mercantile/ Dallas, TX D Q1-08/Q3-08 100.0% 100.0%
Lucky Strike/ Richmond, VA D Q1-08 100.0% 100.0%
Military Housing - Navy Midwest(c)/
Chicago, IL D Q1-09 25.0% 25.0%
Military Housing - Marines, Hawaii
Increment II(c)/ Honolulu, HI D 2007-2010 10.0% 10.0%
Military Housing - Navy, Hawaii
Increment III (c)/ Honolulu, HI D 2007-2010 10.0% 10.0%
Condominiums:
Mercury (c)/ Los Angeles, CA D Q3-07 50.0% 50.0%
Total Under Construction (j)
LESS: Above properties to be sold as
condominiums
Under Construction less Condominiums
- ----------------------------------------------------------------------
Residential Phased-In Units(c)(e):
Arbor Glenn/ Twinsburg, OH D 2004-07 50.0% 50.0%
Pine Ridge Expansion/ Willoughby
Hills, OH D 2005-07 50.0% 50.0%
Cobblestone Court/ Painesville, OH D 2006-08 50.0% 50.0%
Sutton Landing/ Brimfield, OH D 2007-08 50.0% 50.0%
Stratford Crossing/ Wadsworth, OH D 2007-09 50.0% 50.0%
Total (k)
- ----------------------------------------------------------------------
See Attached Footnotes
Development Pipeline
- ----------------------------------------------------------------------
January 31, 2007
Under Construction or to be Acquired (18)
Cost at
FCE
Cost at Pro-Rata
Full Share
Consol- Total (Non-
idation Cost GAAP) Sq. ft./ Gross Pre-
Property/ (GAAP) at 100% (b) No. of Leasable Leased
Location (a) (3) (2)X(3) Units Area %
(in millions)
----------------------------
Retail
Centers:
Promenade
Bolingbrook/
Bolingbrook,
IL $135.0 $135.0 $135.0 736,000 409,000 (l) 72%
Rancho
Cucamonga
Leggio/
Rancho
Cucamonga,
CA 41.2 41.2 33.0 180,000 180,000 100%
Orchard Town
Center/
Westminster,
CO 143.0 143.0 143.0 971,000 557,000 (m) 28%
Shops at
Wiregrass
(c)/ Tampa,
FL 0.0 123.7 82.5 530,000 380,000 50%
East River
Plaza (c)/
Manhattan,
NY 0.0 347.0 173.5 514,000 514,000 64%
------------------------------------------------
$319.2 $789.9 $567.0 2,931,000 2,040,000
----------------------------====================
Office:
New York
Times/
Manhattan,
NY $517.5 $517.5 $411.4 736,000 (n) 80%
Illinois
Science and
Technology
Park -
Building Q/
Skokie, IL 46.4 46.4 46.4 160,000 16%
Johns Hopkins
- 855 North
Wolfe
Street/ East
Baltimore,
MD 102.2 102.2 78.3 278,000 36%
--------------------------------------
$666.1 $666.1 $536.1 1,174,000
----------------------------==========
Residential:
Sterling Glen
of
Roslyn(o)/
Roslyn, NY $79.7 $79.7 $79.7 158
Stapleton
Town Center
- Botanica
Phase II/
Denver, CO 26.3 26.3 23.7 154
Uptown
Apartments
(c)/
Oakland, CA 0.0 200.3 100.2 665
Ohana
Military
Communities,
Hawaii
Increment
I(c)(e)/
Honolulu, HI 0.0 316.5 31.7 1,952
Dallas
Mercantile/
Dallas, TX 132.6 132.6 132.6 366 (p)
Lucky Strike/
Richmond, VA 37.8 37.8 37.8 131
Military
Housing -
Navy
Midwest(c)/
Chicago, IL 0.0 264.9 66.2 1,658
Military
Housing -
Marines,
Hawaii
Increment
II(c)/
Honolulu, HI 0.0 294.7 29.5 1,175
Military
Housing -
Navy, Hawaii
Increment
III (c)/
Honolulu, HI 0.0 547.8 54.8 2,519
--------------------------------------
--------------------------------------
$276.4 $1,900.6 $556.2 8,778
----------------------------==========
Units Sold
Condominiums: at 1/31/07
----------
Mercury (c)/
Los Angeles,
CA $0.0 $150.6 $75.3 238 62
----------------------------==========
----------------------------
Total Under
Construction
(j) $1,261.7 $3,507.2 $1,734.6
============================
LESS: Above
properties
to be sold
as
condominiums $0.0 $150.6 $75.3
----------------------------
Under
Construction
less
Condominiums $1,261.7 $3,356.6 $1,659.3
============================
- ---------------------------------------------------
Residential Under
Phased-In Const./
Units(c)(e): Total
----------
Arbor Glenn/
Twinsburg,
OH $0.0 $18.4 $9.2 48/288
Pine Ridge
Expansion/
Willoughby
Hills, OH 0.0 16.4 8.2 40/162
Cobblestone
Court/
Painesville,
OH 0.0 24.6 12.3 192/304
Sutton
Landing/
Brimfield,
OH 0.0 15.9 8.0 132/216
Stratford
Crossing/
Wadsworth,
OH 0.0 24.1 12.1 108/348
--------------------------------------
Total (k) $0.0 $99.4 $49.8 520/1,318
----------------------------==========
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See Attached Footnotes
*T
- -0-
*T
2006 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 amount (GAAP) of
$417.8 million of cost to the Company's pro-rata share (a non-
GAAP measure) of $803.7 million of cost consists of a reduction
to full consolidation for minority interest of $5.0 million of
cost and the addition of its share of cost for unconsolidated
investments of $390.9 million.
(e) Phased-in openings. Costs are representative of the total project.
(f) 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 $37.0 million consists of the Company's share of cost
for unconsolidated investments of $37.0 million.
(g) Includes all phases of Northfield at Stapleton including Phase I
which opened in Q4-05. Also, includes 34,000 square feet of
office space.
(h) Includes San Francisco Centre and Emporium which were previously
reported separately. Includes 235,000 square feet of office
space.
(i) 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. 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.
(j) The difference between the full consolidation cost amount (GAAP)
of $1,261.7 million to the Company's pro-rata share (a non-GAAP
measure) of $1,734.6 million of cost consists of a reduction to
full consolidation for minority interest of $140.8 million of
cost and the addition of its share of cost for unconsolidated
investments of $613.7 million.
(k) 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 $49.8 million consists of Forest City's share of cost
for unconsolidated investments of $49.8 million.
(l) Includes 39,000 square feet of office space.
(m) 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.
(n) Includes 23,000 square feet of retail space.
(o) Supported-living property.
(p) Project includes 18,000 square feet of retail space.
CONTACT: Forest City Enterprises, Inc.
At The Company
Thomas G. Smith
Executive Vice President,
Chief Financial Officer
216-621-6060
or
Thomas T. Kmiecik
Assistant Treasurer
216-621-6060
or
On The Web
www.forestcity.net