Exhibit 99.1
Forest City Reports Second-Quarter and Year-to-Date Financial Results
CLEVELAND--(BUSINESS WIRE)--Sept. 10, 2007--Forest City
Enterprises, Inc. (NYSE:FCEA)(NYSE:FCEB) today announced revenues, net
earnings and EBDT for the second quarter and six months ended July 31,
2007.
EBDT (Earnings Before Depreciation, Amortization and Deferred
Taxes) for the second quarter was $71.2 million, or $0.66 per share, a
20.0 percent increase on a per share basis compared with last year's
second-quarter EBDT of $56.7 million, or $0.55 per share. EBDT for the
six months ended July 31, 2007 was $105.7 million, or $0.98 per share,
compared with last year's $120.0 million, or $1.16 per share.
Fiscal second-quarter net earnings were $67.8 million, or $0.63
per share, compared with $7.5 million, or $0.07 per share, in the
prior year. The primary reason for the increase in net earnings for
the second quarter of 2007 was the gain on disposition of properties,
with no similar transactions occurring in 2006. Net earnings for the
six months were $50.6 million, or $0.48 per share, compared with $60.8
million, or $0.59 per share, in 2006.
Second-quarter 2007 consolidated revenues were $287.6 million
compared with $250.8 million last year. First-half revenues were
$556.0 million compared with $512.6 million for the six months ended
July 31, 2006.
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, "The fundamentals in the rental properties
business remain strong, as our portfolio of mature properties
continues to perform well. Strong occupancies and favorable comparable
NOI performance are evidence of this strength. In addition to our
operating portfolio, new property openings continue to perform at or
above expectations. These results are in sharp contrast to our land
business, where we anticipated an industry-wide slowdown; however, the
impact has been broader and deeper than expected. The downturn in the
for-sale housing business and the related impacts on the sub-prime
mortgage business lead us to believe that we will see no signs of
improvement in the near term and, in fact, we expect to see continued
softening."
Ratner continued, "Our EBDT for the quarter grew by 20 percent on
a per share basis - driven by approximately $11.0 million of
additional EBDT from our investment real estate operations; a $9.3
million increase in the market value of certain 10-year forward-swaps
used to hedge future financings; and a $5.0 million gain on the sale
of Sterling Glen of Roslyn, a supported-living project that was under
construction at the time of disposition. These increases were
partially offset by decreased EBDT of $7.1 million reported in the
Land Development Group and $4.4 million in increased pre-tax corporate
interest expense primarily related to the Puttable Equity-Linked
Senior Notes issued in October 2006.
"For the first six months, while our EBDT decreased by 11.9
percent from the prior year, our rental properties business performed
well, as EBDT from our investment Real Estate Groups was up
approximately $12.3 million. First-half results were also favorably
impacted by the change in fair market value of $7.8 million of 10-year
forward swaps and the $5.0 million net gain on the sale of Sterling
Glen of Roslyn. More than offsetting these increases were the results
from our Land Development Group, which was down $16.7 million in the
first half of 2007 compared with the same period last year.
Additionally, sales of commercial outlots in our Commercial Group were
down $5.1 million, and Historic Preservation Tax Credits income
decreased by $7.1 million. Corporate interest expense was up
approximately $8.0 million over last year, due primarily to the Senior
Notes issued in October 2006."
Comparable property net operating income (NOI) increased 4.5
percent during the second quarter compared with the same period a year
ago. The retail and office portfolios were up 3.1 percent and 2.7
percent, respectively. In the residential portfolio, comparable
property NOI increased 6.4 percent. Comparable property NOI, defined
as NOI from properties operated in both 2007 and 2006, is a non-GAAP
financial measure, and is based on the pro-rata consolidation method,
also a non-GAAP financial measure. Included in this release is a
schedule of comparable property NOI on the full consolidation method.
Fiscal 2007 mid-year comparable occupancies were up or stable
overall compared with the same period a year ago. Comparable retail
occupancies were 94.7 percent through the first six months of 2007
compared with 94.4 percent in the same period a year ago. Comparable
office occupancies were 92.9 percent compared with 93.1 percent last
year. Comparable occupancies in the residential business increased to
95.6 percent compared with 95.3 percent last year.
Recent and Upcoming Milestones
Several milestones and new growth opportunities marked the
Company's progress in the first half of fiscal 2007, as evidenced by
the upcoming opening of the New York Times Building, the
groundbreakings on three large retail projects, and the ramp-up in the
Military Housing business.
The 1.5-million-square-foot New York Times Building is already
occupied by the The New York Times Company and will open to Forest
City's tenants in the third quarter of 2007. Signed lease agreements
represent 86 percent of the 737,000 square feet of space owned by
Forest City. The Times building will be one of the largest single
assets in the Company's portfolio - representing $411.4 million of
cost at its share ($517.5 million on a full consolidation basis).
During the first half, Forest City broke ground on three retail
centers -- Ridge Hill, a lifestyle center in Yonkers, New York; The
Shops at White Oak Village near Richmond, Virginia; and the Village at
Gulfstream in Hallandale, Florida.
Forest City announced three new Military Housing opportunities
during the second quarter. The Military Housing group will be
responsible for the demolition, renovation and new construction of
homes and will provide ongoing asset and property management. The
addition of these three projects will bring the Company's military
family housing program to 8,966 units under management.
Forest City and a 50/50 partner closed on a transaction to develop
and manage 427 military family housing units at the Air Force Academy
in Colorado Springs, Colorado. In addition, Forest City expects to
close within 30 days on two other military family housing projects -
917 Marine Corps family homes on Oahu, bringing its total to 6,563
military family units in Hawaii; and 318 units at Naval Activities
Station (NAS) Mid-South in Millington, Tennessee, bringing its total
to 1,976 military family units in the Midwest.
In addition, Forest City entered into an agreement to acquire
American Eagle Communities' interest in 2,985 Navy housing units and
ancillary facilities in the Puget Sound area of Washington state. The
transaction is subject to approval by the Navy and the consent of
bondholders, with the latter taking longer than anticipated.
The Company continued to be an aggressive seller of real estate
during the first half of the year. The short-term decline in earnings
resulting from these dispositions should be more than offset by the
long-term value of reinvesting the proceeds in future development
projects at higher returns.
During the first half, Forest City took advantage of premium
property valuations, and in the second quarter, chose to exit the
supported-living business by reaching an agreement with Atria Senior
Living Group to sell eight and lease four properties. The transaction
included 1,628 units valued at more than $600 million and is expected
to generate net cash proceeds of approximately $270 million. Sales
through the second quarter resulted in a pre-tax gain of $91.3
million, including the disposition of Sterling Glen of Roslyn. Eleven
of the properties are in the Greater New York City market area; the
other is in Florida.
Forest City also disposed of the Landings of Brentwood, a 724-unit
apartment community in Nashville, Tennessee, for a pre-tax gain of
$25.1 million.
Other second-quarter milestones included:
-- Opened Botanica Phase II, a 154-unit addition to one of its
first apartment communities at the Company's Stapleton project
in Denver.
-- Completed and opened California's first Bass Pro Shops Outdoor
World, located at Forest City's Victoria Gardens,
strengthening the attractiveness of this lifestyle center in
Rancho Cucamonga, California.
-- Completed two acquisitions to expand the Company's presence in
the Richmond, Virginia area - adding the 259-unit Cameron
Kinney apartments to its existing residential community at
Tobacco Row, and acquiring approximately 600,000 square feet
of office space in the Richmond Office Park.
-- Closed on the Company's largest ever construction loan in
August, a $630 million financing for the Ridge Hill regional
lifestyle center in Yonkers, New York.
-- Acquired a 60 percent interest in a 12.7-acre development site
in downtown Las Vegas.
-- Entered into a partnership with General Growth Properties to
develop a mixed-use project on 400 acres in Frisco, Texas, a
Dallas suburb.
-- Signed an agreement with the Presidio Trust to redevelop the
former public health service hospital in the Presidio of San
Francisco into an apartment community.
Development Pipeline Highlights
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 full
consolidation and pro-rata share basis. Described below are several of
the Company's projects under construction or under development.
Projects Under Construction/Planned Openings
At the end of the second quarter, Forest City's pipeline included
17 projects under construction, representing a total cost of $2.4
billion of cost at the Company's pro-rata share ($1.8 billion on a
full consolidation basis). Including the projects opened during the
first half of the year, a total of 10 projects are scheduled to open
in fiscal 2007. Total planned openings for the year represent $917.7
million at the Company's pro-rata share ($956.6 million of cost on a
full consolidation basis).
The Company broke ground on the Ridge Hill mixed-use project, with
1.2 million square feet of retail located in Yonkers, New York.
Financing for this 81-acre project is being provided by Bank of
America, ING Real Estate Finance and Key Bank Real Estate Capital.
Ridge Hill is expected to open in 2009. Tenant commitments include:
National Amusements (12-screen theater), Whole Foods Market, and
L.L.Bean, as well as interest from other high-quality tenants.
Also in the retail development pipeline, Forest City broke ground
for The Shops at White Oak Village, a 796,000-square-foot retail
center near Richmond, Virginia, representing a cost of $70.1 million
on both a full consolidation and pro-rata share basis. The center is
expected to include a power center and a lifestyle center component.
Recently announced retailers include Sam's Club, Target, JCPenney,
Lowe's, Ukrop's Super Markets and Circuit City.
Under construction and scheduled to open within the next 24 months
are four other retail centers: Orchard Town Center (968,000 square
feet) in Westminster, Colorado; Shops at Wiregrass (646,000 square
feet) in Tampa, Florida; East River Plaza (514,000 square feet) in
Manhattan, New York; and Village at Gulfstream (392,000 square feet)
in Hallandale, Florida. These four properties are being developed at a
total cost of $582.9 million at the Company's pro-rata share ($158.5
million at full consolidation).
The 278,000-square-foot 855 North Wolfe Street will be the first
office building at the Company's Science + Technology Park at Johns
Hopkins in East Baltimore, Maryland. This building represents $104.7
million of cost on a full consolidation basis and $80.2 million at the
Company's pro-rata share. Johns Hopkins University will be the lead
tenant in this building, which is currently under construction and
scheduled to open in 2008.
Projects Under Development
At the end of the second quarter, Forest City had more than 15
projects under development, representing approximately $2.0 billion of
cost on a full consolidation basis and at the Company's share. Among
the projects under development and scheduled to begin construction
during the next year are eight projects totaling more than $600
million of cost on a full consolidation basis and at the Company's
pro-rata share.
Forest City recently added two significant development
opportunities to its pipeline. In downtown Las Vegas, the Company
acquired a 60 percent interest in 12.7 acres, representing $136
million in total cost, to develop a major regional transportation
terminal, city office buildings and other commercial buildings on a
five-city-block site.
In Frisco, Texas, a suburb north of Dallas, Forest City has
entered into a partnership with General Growth Properties, Inc., to
develop a master plan for a "town square" development that includes
shopping, dining, residential, hotel and office components on
approximately 400 acres.
During the quarter, the Company signed an agreement with the
Presidio Trust to redevelop the former public health service hospital
in the Presidio of San Francisco into an apartment community of up to
161 residential units at the foot of the Golden Gate Bridge. The
historic buildings on the site will be rehabilitated and the
non-historic wings of the main hospital building will be removed to
make way for new construction. Two other residential projects
currently under development and expected to begin construction in 2007
are the 893-unit Beekman Towers in Manhattan and the 305-unit
Haverhill project in Haverhill, Massachusetts.
Currently not included in the development pipeline totals above
are other long-term projects on which the Company continues to make
progress, such as Atlantic Yards in Brooklyn, Mesa del Sol in
Albuquerque, and The Yards in Washington, D.C.
Financing Activity
During the first six months of 2007, Forest City closed on
transactions totaling $920.5 million in nonrecourse mortgage
financings, including $210.7 million in refinancings, $223.1 million
in development projects and acquisitions, and $486.7 million in loan
extensions and additional fundings.
As previously announced in June, the Company negotiated a new
three-year credit agreement with its 13-member bank group. The new
agreement features improved pricing and allows for a $150 million
accordion feature during the term, which would increase the Company's
revolving credit facility to $750 million.
As of July 31, 2007, the Company's weighted average cost of
mortgage debt decreased to 6.04 percent from 6.06 percent at July 31,
2006, primarily due to a decrease in fixed-rate mortgage debt.
Fixed-rate mortgage debt, which represented 69.5 percent of the
Company's total nonrecourse mortgage debt, decreased from 6.33 percent
at July 31, 2006 to 6.08 percent at July 31, 2007. The variable-rate
mortgage debt increased from 5.65 percent at July 31, 2006 to 5.96
percent at July 31, 2007.
Ratner said, "It is widely acknowledged that the capital markets
have changed significantly since the end of the second quarter.
Difficulties in the sub-prime mortgage markets have negatively
impacted lending and capital markets. There has been a 'flight to
safety' by virtually all capital suppliers and they are demanding
higher premiums to take on additional risk. Underwriters are
proceeding more cautiously and are having difficulty determining
appropriate pricing given the uncertainty in the marketplace. It will
likely take some time for the market to find the appropriate level of
price equilibrium -- and the markets will remain volatile until that
equilibrium is reached."
Despite this volatility, the Company has been able to secure
financing for its projects. The closing of the Ridge Hill financing
discussed above was a significant milestone. Forest City has since
closed construction financings for three additional development
projects (White Oak Village, The Shops at Wiregrass and Village at
Gulfstream). Additionally, the Company recently closed the permanent
refinancing of its Charleston (West Virginia) Mall property.
Forest City is finding lenders to be more selective, utilizing
more conservative underwriting and increasing their spreads. Although
Forest City perhaps has not yet seen the full impact of the changes in
the marketplace, to date the Company has been able to successfully
identify suppliers of capital at a reasonable cost for its capital
needs.
Outlook
Ratner said, "The strength of our diversified portfolio is crucial
in times like these, and when combined with our development pipeline,
should ensure our continued future growth. Consistent with our core
market strategy, we remain focused on investing in the largest and
highest growth markets in the country. Our unique position in retail,
particularly open-air lifestyle centers, large mixed-use developments,
rental apartments, military housing, and land development will
continue to drive value for our shareholders over the long term.
"We are confident about our business -- our operating portfolio is
performing well and continues to generate earnings and deliver value.
San Francisco Centre, which opened last year, and the New York Times
Building, which will open in the third quarter, are excellent examples
of value creation. In fact, these projects represent the two largest
single-asset value propositions delivered to the marketplace in the
history of the Company. We continue to make progress on projects on
our development pipeline and identify new opportunities for the
future.
"Land sales, as expected, have slowed substantially throughout the
country as the housing market continues to struggle. Our land business
is reflective of these national trends and we expect it to remain soft
into the foreseeable future. That said, we have significantly expanded
our land business in recent years to increase our holdings in growth
markets such as the Carolinas, Florida, Arizona and Texas, and
therefore believe we are well-positioned for the long term.
"Uncertainty in the capital markets, weakness in the housing
market, and volatility in the timing of transactions make it difficult
to have clarity on how our EBDT will perform in the short term, but we
remain confident that we will continue to build shareholder value this
year and into the future."
Corporate Description
Forest City Enterprises, Inc. is a $9.5 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 quarter ended July 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 for real estate depreciation, amortization,
amortization of mortgage procurement costs and deferred income taxes;
iv) preferred payment classified as minority interest expense on the
Company's Consolidated Statement of Earnings; v) provision for decline
in real estate (net of tax); vi) extraordinary items (net of tax); and
vii) cumulative effect of change in accounting principle (net of tax).
Unlike the real estate segments, EBDT for the 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 economic share of ownership. Under GAAP, the full
consolidation method is used to report partnership assets and
liabilities consolidated at 100 percent if deemed to be under its
control or if the Company is deemed to be the primary beneficiary of
the variable interest entities, even if its ownership is not 100
percent. The Company provides reconciliations from the full
consolidation method to the pro-rata consolidation method in the
exhibits below and throughout its Supplemental Package, which the
Company will also furnish to the SEC on Form 8-K.
Safe Harbor Language
Statements made in this news release that state the Company's or
management's intentions, hopes, beliefs, expectations or predictions
of the future are forward-looking statements. The Company's actual
results could differ materially from those expressed or implied in
such forward-looking statements due to various risks, uncertainties
and other factors. Risks and factors that could cause actual results
to differ materially from those in the forward-looking statements
include, but are not limited to, real estate development and
investment risks, economic conditions in the Company's primary
markets, dependence on rental income from real property, downturns in
the housing market, competition, illiquidity of real estate
investments, bankruptcy or insolvency of tenants, reliance on major
tenants, the impact of terrorist acts, risks associated with an
investment in and the operation of a professional sports franchise,
conflicts of interest, the Company's substantial debt leverage and the
ability to service debt, the impact of restrictions imposed by the
Company's credit facility, changes in interest rates, the continued
availability of tax-exempt government financing, effects of uninsured
losses, environmental liabilities, risks associated with developing
and managing properties in partnership with others, the ability to
maintain effective internal controls, compliance with governmental
regulations, litigation risks, and other risk factors as disclosed
from time to time in the Company's SEC filings, including but not
limited to, the Company's annual and quarterly reports.
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Six Months Ended July 31, 2007 and 2006
(dollars in thousands, except per share data)
Three Months Ended,
July 31, Increase (Decrease)
-------------------------- -------------------
2007 2006 Amount Percent
-------------------------- ----------- -------
Operating Results:
Earnings (loss) from
continuing
operations $ 4,189 $ (1,081) $ 5,270
Discontinued
operations, net of
tax and minority
interest(1) 63,586 8,573 55,013
-------------------------- -----------
Net earnings $ 67,775 $ 7,492 $ 60,283
========================== ===========
Earnings Before
Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2) $ 71,206 $ 56,665 $ 14,541 25.7%
========================== ===========
Reconciliation of
Net Earnings to
Earnings Before
Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2):
Net Earnings $ 67,775 $ 7,492 $ 60,283
Depreciation and
amortization -
Real Estate
Groups(7) 62,490 54,385 8,105
Amortization of
mortgage
procurement costs
- Real Estate
Groups(7) 3,538 2,446 1,092
Deferred income
tax expense -
Real Estate
Groups(8) 33,397 6,959 26,438
Deferred income
tax expense -
Non-Real Estate
Groups:(8)
Gain on
disposition of
other
investments (57) - (57)
Current income tax
expense on non-
operating
earnings:(8)
Gain on
disposition of
other
investments 224 - 224
Gain on
disposition
included in
discontinued
operations 8,088 - 8,088
Gain on
disposition of
equity method
rental
properties - 2,657 (2,657)
Straight-line rent
adjustment(3) (3,470) (1,900) (1,570)
-
Preference
payment(6) 936 - 936
Preferred return on
disposition 5,034 - 5,034
Provision for
decline in real
estate, net of
minority interest - 1,923 (1,923)
Provision for
decline in real
estate of equity
method rental
properties - 400 (400)
Gain on disposition
of equity method
rental properties - (7,662) 7,662
Gain on disposition
of other
investments (431) - (431)
Discontinued
operations:(1)
Gain on
disposition of
rental
properties (106,318) (7,342) (98,976)
Minority
interest -
Gain on
disposition - (2,693) 2,693
-------------------------- -----------
Earnings Before
Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2) $ 71,206 $ 56,665 $ 14,541 25.7%
========================== ===========
Diluted Earnings per
Common Share:
Earnings (loss) from
continuing
operations $ 0.04 $ (0.01) $ 0.05
Discontinued
operations, net of
tax and minority
interest(1) 0.59 0.08 0.51
-------------------------- -----------
Net earnings(5) $ 0.63 $ 0.07 $ 0.56
========================== ===========
Earnings Before
Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2)(4) $ 0.66 $ 0.55 $ 0.11 20.0%
========================== ===========
Operating earnings
(loss), net of tax
(a non-GAAP
financial measure) $ 0.05 $ 0.01 $ 0.04
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 0.63 0.08 0.55
Minority interest (0.05) (0.01) (0.04)
-------------------------- -----------
Net earnings(5) $ 0.63 $ 0.07 $ 0.56
========================== ===========
Diluted weighted
average shares
outstanding(4) 107,780,304 101,705,878 6,074,426
========================== ===========
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Six Months Ended July 31, 2007 and 2006
(dollars in thousands, except per sharedata)
Six Months Ended
July 31, Increase (Decrease)
--------------------------- ----------------------
2007 2006 Amount Percent
--------------------------- ------------ ---------
Operating Results:
Earnings (loss) from
continuing
operations $ (13,480)$ 6,827 $ (20,307)
Discontinued
operations, net of
tax and minority
interest(1) 64,074 53,923 10,151
--------------------------- ------------
Net earnings $ 50,594 $ 60,750 $ (10,156)
=========================== ============
Earnings Before
Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2) $ 105,735 $ 120,004 $ (14,269) (11.9%)
=========================== ============
Reconciliation of
Net Earnings to
Earnings Before
Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2):
Net Earnings $ 50,594 $ 60,750 $ (10,156)
Depreciation and
amortization -
Real Estate
Groups(7) 126,999 101,585 25,414
Amortization of
mortgage
procurement costs
- Real Estate
Groups(7) 6,457 5,355 1,102
Deferred income
tax expense -
Real Estate
Groups(8) 23,037 43,389 (20,352)
Deferred income
tax expense -
Non-Real Estate
Groups:(8)
Gain on
disposition of
other
investments (57) - (57)
Current income tax
expense on non-
operating
earnings:(8)
Gain on
disposition of
other
investments 224 - 224
Gain on
disposition
included in
discontinued
operations 8,088 (29) 8,117
Gain on
disposition of
equity method
rental
properties - 2,657 (2,657)
Straight-line rent
adjustment(3) (7,620) (3,031) (4,589)
-
Preference
payment(6) 1,834 - 1,834
Preferred return on
disposition 5,034 - 5,034
Provision for
decline in real
estate, net of
minority interest - 1,923 (1,923)
Provision for
decline in real
estate of equity
method rental
properties - 400 (400)
Gain on disposition
of equity method
rental properties (2,106) (7,662) 5,556
Gain on disposition
of other
investments (431) - (431)
Discontinued
operations:(1)
Gain on
disposition of
rental
properties (106,318) (143,726) 37,408
Minority
interest -
Gain on
disposition - 58,393 (58,393)
--------------------------- ------------
Earnings Before
Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2) $ 105,735 $ 120,004 $ (14,269) (11.9%)
=========================== ============
Diluted Earnings per
Common Share:
Earnings (loss) from
continuing
operations $ (0.13)$ 0.07 $ (0.20)
Discontinued
operations, net of
tax and minority
interest(1) 0.61 0.52 0.09
--------------------------- ------------
Net earnings(5) $ 0.48 $ 0.59 $ (0.11)
=========================== ============
Earnings Before
Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2)(4) $ 0.98 $ 1.16 $ (0.18) (15.5%)
=========================== ============
Operating earnings
(loss), net of tax
(a non-GAAP
financial measure) $ (0.10)$ 0.12 $ (0.22)
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 0.65 1.12 (0.47)
Minority interest (0.07) (0.64) 0.57
--------------------------- ------------
Net earnings(5) $ 0.48 $ 0.59 $ (0.11)
=========================== ============
Diluted weighted
average shares
outstanding(4) 102,117,423 103,148,106 (1,030,683)
=========================== ============
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Six Months Ended July 31, 2007 and 2006
(dollars in thousands)
Three Months Ended,
July 31, Increase (Decrease)
-------------------- -------------------
2007 2006 Amount Percent
-------------------- -------------------
Operating Earnings (a non-
GAAP financial measure)
and Reconciliation to Net
Earnings:
Revenues from real estate
operations
Commercial Group $ 210,726 $ 181,142 $ 29,584
Residential Group 62,254 47,593 14,661
Land Development Group 14,606 22,094 (7,488)
Corporate Activities - - -
-------------------- ------------
Total Revenues 287,586 250,829 36,757 (14.7%)
Operating expenses (177,186) (149,566) (27,620)
Interest expense, including
early extinguishment of
debt (74,348) (71,692) (2,656)
Amortization of mortgage
procurement costs(7) (2,839) (2,440) (399)
Depreciation and
amortization(7) (55,741) (41,571) (14,170)
Interest and other income 23,423 7,870 15,553
Equity in earnings of
unconsolidated entities 7,773 6,310 1,463
Provision for decline in
real estate of equity
method rental properties - 400 (400)
Gain on disposition of
equity method rental
properties - (7,662) 7,662
Revenues and interest
income from discontinued
operations(1) 12,509 33,447 (20,938)
Expenses from discontinued
operations(1) (15,201) (28,925) 13,724
-------------------- ------------
Operating earnings (loss)
(a non-GAAP financial
measure) 5,976 (3,000) 8,976
-------------------- ------------
Income tax expense(8) 609 3,679 (3,070)
Income tax expense from
discontinued
operations(1)(8) (40,040) (5,398) (34,642)
Income tax expense on non-
operating earnings items
(see below) 39,303 5,941 33,362
-------------------- ------------
Operating earnings (loss),
net of tax (a non-GAAP
financial measure) 5,848 1,222 4,626
-------------------- ------------
Provision for decline in
real estate - (1,923) 1,923
Provision for decline in
real estate of equity
method rental properties - (400) 400
Gain on disposition of
equity method rental
properties - 7,662 (7,662)
Gain on disposition of
other investments 431 - 431
Gain on disposition of
rental properties included
in discontinued
operations(1) 106,318 7,342 98,976
Income tax benefit
(expense) on non-operating
earnings:(8)
Provision for decline in
real estate - 743 (743)
Provision for decline in
real estate of equity
method rental
properties - 155 (155)
Gain on disposition of
other investments (167) - (167)
Gain on disposition of
equity method rental
properties - (2,962) 2,962
Gain on disposition of
rental properties
included in
discontinued operations (39,136) (3,877) (35,259)
-------------------- ------------
Income tax expense on non-
operating earnings (see
above) (39,303) (5,941) (33,362)
-------------------- ------------
Minority interest in
continuing operations (5,519) (2,577) (2,942)
Minority interest in
discontinued
operations:(1)
Operating earnings - (586) 586
Gain on disposition of
rental properties - 2,693 (2,693)
-------------------- ------------
- 2,107 (2,107)
-------------------- ------------
Minority interest (5,519) (470) (5,049)
-------------------- ------------
Net earnings $ 67,775 $ 7,492 $ 60,283
==================== ============
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Six Months Ended July 31, 2007 and 2006
(dollars in thousands)
Six Months Ended
July 31, Increase (Decrease)
--------------------- -------------------
2007 2006 Amount Percent
--------------------- -------------------
Operating Earnings (a non-
GAAP financial measure) and
Reconciliation to Net
Earnings:
Revenues from real estate
operations
Commercial Group $ 413,753 $ 377,481 $ 36,272
Residential Group 116,859 92,173 24,686
Land Development Group 25,339 42,910 (17,571)
Corporate Activities - - -
--------------------- ------------
Total Revenues 555,951 512,564 43,387 (8.5%)
Operating expenses (345,778) (297,713) (48,065)
Interest expense, including
early extinguishment of debt (153,691) (138,091) (15,600)
Amortization of mortgage
procurement costs(7) (5,403) (5,332) (71)
Depreciation and
amortization(7) (115,528) (81,859) (33,669)
Interest and other income 34,822 22,717 12,105
Equity in earnings of
unconsolidated entities 9,134 6,689 2,445
Provision for decline in real
estate of equity method
rental properties - 400 (400)
Gain on disposition of equity
method rental properties (2,106) (7,662) 5,556
Revenues and interest income
from discontinued
operations(1) 24,808 67,449 (42,641)
Expenses from discontinued
operations(1) (26,704) (64,447) 37,743
--------------------- ------------
Operating earnings (loss) (a
non-GAAP financial measure) (24,495) 14,715 (39,210)
--------------------- ------------
Income tax expense(8) 14,649 (3,468) 18,117
Income tax expense from
discontinued
operations(1)(8) (40,348) (33,955) (6,393)
Income tax expense on non-
operating earnings items
(see below) 40,117 35,036 5,081
--------------------- ------------
Operating earnings (loss),
net of tax (a non-GAAP
financial measure) (10,077) 12,328 (22,405)
--------------------- ------------
Provision for decline in real
estate - (1,923) 1,923
Provision for decline in real
estate of equity method
rental properties - (400) 400
Gain on disposition of equity
method rental properties 2,106 7,662 (5,556)
Gain on disposition of other
investments 431 - 431
Gain on disposition of rental
properties included in
discontinued operations(1) 106,318 143,726 (37,408)
Income tax benefit (expense)
on non-operating
earnings:(8)
Provision for decline in
real estate - 743 (743)
Provision for decline in
real estate of equity
method rental properties - 155 (155)
Gain on disposition of
other investments (167) - (167)
Gain on disposition of
equity method rental
properties (814) (2,962) 2,148
Gain on disposition of
rental properties
included in discontinued
operations (39,136) (32,972) (6,164)
--------------------- ------------
Income tax expense on non-
operating earnings (see
above) (40,117) (35,036) (5,081)
--------------------- ------------
Minority interest in
continuing operations (8,067) (6,757) (1,310)
Minority interest in
discontinued operations:(1)
Operating earnings - (457) 457
Gain on disposition of
rental properties - (58,393) 58,393
--------------------- ------------
- (58,850) 58,850
--------------------- ------------
Minority interest (8,067) (65,607) 57,540
--------------------- ------------
Net earnings $ 50,594 $ 60,750 $(10,156)
===================== ============
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Six Months Ended July 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 which have been sold or are held for sale are reported as
discontinued operations.
2) The Company uses an additional measure, along with net earnings, to
report its operating results. This measure, referred to as Earnings
Before Depreciation, Amortization and Deferred Taxes ("EBDT"), is not
a measure of operating results as defined by generally accepted
accounting principles and may not be directly comparable to
similarly-titled measures reported by other companies. The Company
believes that EBDT provides additional information about its
operations, and along with net earnings, is necessary to understand
its operating results. EBDT is defined as net earnings excluding the
following items: i) gain (loss) on disposition of operating
properties, divisions and other investments (net of tax); ii) the
adjustment to recognize rental revenues and rental expense using the
straight-line method; iii) non-cash charges for real estate
depreciation, amortization (including amortization of mortgage
procurement costs) and deferred income taxes; iv) preferred payment
classified as minority interest expense on the Company's Consolidated
Statement of Earnings; v) provision for decline in real estate (net
of tax); vi) extraordinary items (net of tax); and vii) cumulative
effect of change in accounting principle (net of tax). See our
discussion of EBDT in the news release.
3) The Company recognizes minimum rents on a straight-line basis over
the term of the related lease pursuant to the provision of SFAS No.
13, "Accounting for Leases." The straight-line rent adjustment is
recorded as an increase or decrease to revenue from Forest City
Rental Properties Corporation, a wholly-owned subsidiary of Forest
City Enterprises, Inc., with the applicable offset to either accounts
receivable or accounts payable, as appropriate.
4) For the six months ended July 31, 2007, the effect of 5,607,815
shares of dilutive securities were not included in the computation of
diluted earnings per share because their effect is anti-dilutive to
the loss from continuing operations. (Since 5,670,805 of these shares
are dilutive for the computation of EBDT per share for the six months
ended July 31, 2007, diluted weighted average shares outstanding of
107,725,238 were used to arrive at $0.98/share.)
5) For the six months ended July 31, 2007, $1,292,000 of net earnings
is allocated to participating securities under EITF 03-6
"Participating Securities and the Two-Class Method under FASB 128".
As a result, the net earnings for purposes of calculating basic and
diluted EPS is $49,302,000.
6) The Forest City Ratner Companies portfolio became a wholly-owned
subsidiary of the Company November 8, 2006 upon the issuance of the
Class A Common Units in exchange for Bruce C. Ratner's minority
interests. For the first five years only, the Units that have not
been exchanged are entitled to their proportionate share of an annual
preferred payment of $2,500,000 plus an amount equal to the dividends
paid on the same number of shares of the Company's common stock.
After five years, the Units that have not been exchanged are entitled
to a payment equal to the dividends paid on an equivalent number of
shares of the Company's common stock. At July 31, 2007, the Company
has recorded approximately $1,834,000 related to two quarter's share
of the annual preferred payment which is classified as minority
interest expense on the Company's consolidated statement of earnings.
7) The following table provides detail of depreciation and
amortization and amortization of mortgage procurement costs. The
Company's Real Estate Groups are engaged in the ownership,
development, acquisition and management of real estate projects,
including apartment complexes, regional malls and retail centers,
hotels, office buildings and mixed-use facilities, as well as large
land development projects.
Depreciation and Depreciation and
Amortization Amortization
-------------------- ---------------------
Three Months Ended Six Months Ended July
July 31, 31,
-------------------- ---------------------
2007 2006 2007 2006
-------------------- ---------------------
Full Consolidation $55,741 $41,571 $115,528 $ 81,859
Non-Real Estate (2,022) (347) (4,019) (696)
-------------------- ---------------------
Real Estate Groups Full
Consolidation 53,719 41,224 111,509 81,163
Real Estate Groups related
to minority interest (1,138) (3,665) (3,825) (6,864)
Real Estate Groups Equity
Method 8,988 13,384 17,381 20,202
Real Estate Groups
Discontinued Operations 921 3,442 1,934 7,084
-------------------- ---------------------
Real Estate Groups Pro-Rata
Consolidation $62,490 $54,385 $126,999 $101,585
==================== =====================
Amortization of Amortization of
Mortgage Procurement Mortgage Procurement
Costs Costs
------------------------------------------
Three Months Ended Six Months Ended July
July 31, 31,
-------------------- ---------------------
2007 2006 2007 2006
-------------------- ---------------------
Full Consolidation $ 2,839 $ 2,440 $ 5,403 $ 5,332
Non-Real Estate - (98) - (190)
-------------------- ---------------------
Real Estate Groups Full
Consolidation 2,839 2,342 5,403 5,142
Real Estate Groups related
to minority interest (261) (286) (421) (589)
Real Estate Groups Equity
Method 926 278 1,406 567
Real Estate Groups
Discontinued Operations 34 112 69 235
-------------------- ---------------------
Real Estate Groups Pro-Rata
Consolidation $ 3,538 $ 2,446 $ 6,457 $ 5,355
==================== =====================
Three Months Ended Six Months Ended July
July 31, 31,
-------------------- ---------------------
2007 2006 2007 2006
-------------------- ---------------------
8) The following table (in thousands) (in thousands)
provides detail of Income
Tax Expense (Benefit):
(A) Operating earnings
Current $ 1,547 $(8,517) $ (145) $ (8,874)
Deferred (2,323) 2,774 (15,485) 10,278
-------------------- ---------------------
(776) (5,743) (15,630) 1,404
-------------------- ---------------------
(B) Provision for decline
in real estate
Deferred - (743) - (743)
Deferred - Equity
method investment - (155) - (155)
-------------------- ---------------------
- (898) - (898)
-------------------- ---------------------
(C) Gain on disposition of
other investments
Current - Non-Real
Estate Groups 224 - 224 -
Deferred - Non-Real
Estate Groups (57) - (57) -
-------------------- ---------------------
167 - 167 -
-------------------- ---------------------
(D) Gain on disposition of equity
method rental properties
Current - 2,657 - 2,657
Deferred - 305 814 305
-------------------- ---------------------
- 2,962 814 2,962
-------------------- ---------------------
Subtotal(A)(B)(C)(D)
Current 1,771 (5,860) 79 (6,217)
Deferred (2,380) 2,181 (14,728) 9,685
-------------------- ---------------------
Income tax expense (609) (3,679) (14,649) 3,468
-------------------- ---------------------
(E) Discontinued operations
- Rental Properties
Operating earnings
Current (2,406) 1,405 (2,348) 732
Deferred 3,310 116 3,560 251
-------------------- ---------------------
904 1,521 1,212 983
Gain on disposition
of rental properties
Current 8,088 - 8,088 (29)
Deferred 31,048 3,877 31,048 33,001
-------------------- ---------------------
39,136 3,877 39,136 32,972
-------------------- ---------------------
40,040 5,398 40,348 33,955
-------------------- ---------------------
Grand
Total(A)(B)(C)(D)(E)
Current 7,453 (4,455) 5,819 (5,514)
Deferred 31,978 6,174 19,880 42,937
-------------------- ---------------------
$39,431 $ 1,719 $ 25,699 $ 37,423
-------------------- ---------------------
Recap of Grand Total:
Real Estate Groups
Current 10,728 1,134 12,974 2,445
Deferred 33,397 6,959 23,037 43,389
-------------------- ---------------------
44,125 8,093 36,011 45,834
Non-Real Estate Groups
Current (3,275) (5,589) (7,155) (7,959)
Deferred (1,419) (785) (3,157) (452)
-------------------- ---------------------
(4,694) (6,374) (10,312) (8,411)
-------------------- ---------------------
Grand Total $39,431 $ 1,719 $ 25,699 $ 37,423
==================== =====================
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings
(GAAP) (in thousands):
Three Months Ended July 31, 2007
-----------------------------------------------------
Plus
Unconsol-
Full idated Pro-Rata
Consol- Less Invest- Plus Consol-
idation Minority ments at Discontinued idation
(GAAP) Interest Pro-Rata Operations (Non-GAAP)
-----------------------------------------------------
Revenues from
real estate
operations $287,586 $15,329 $ 96,040 $ 12,397 $380,694
Exclude straight-
line rent
adjustment(1) (7,158) - - - (7,158)
-----------------------------------------------------
Adjusted revenues 280,428 15,329 96,040 12,397 373,536
Operating
expenses 177,186 4,853 62,399 11,883 246,615
Add back non-Real
Estate
depreciation and
amortization(b) 2,022 - 638 - 2,660
Add back
amortization of
mortgage
procurement
costs for non-
Real Estate
Groups(d) - - 10 - 10
Exclude straight-
line rent
adjustment(2) (3,688) - - - (3,688)
Exclude
preference
payment (936) - - - (936)
-----------------------------------------------------
Adjusted
operating
expenses 174,584 4,853 63,047 11,883 244,661
Add interest
income and other
income 23,423 601 6,228 112 29,162
Add equity in
earnings of
unconsolidated
entities 7,773 232 (7,791) - (250)
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) 9,914 - (9,914) - -
-----------------------------------------------------
Net Operating
Income 146,954 11,309 21,516 626 157,787
Interest expense,
including early
extinguishment
of debt (74,348) (4,391) (16,482) (2,363) (88,802)
Gain on
disposition of
equity method
rental
properties(e) - - - - -
Gain on
disposition of
rental
properties and
other
investments 431 - - 106,318 106,749
Preferred return
on disposition - - (5,034) - (5,034)
Provision for
decline in real
estate - - - - -
Provision for
decline in real
estate of equity
method rental
properties - - - - -
Depreciation and
amortization -
Real Estate
Groups(a) (53,719) (1,138) (8,988) (921) (62,490)
Amortization of
mortgage
procurement
costs - Real
Estate Groups(c) (2,839) (261) (926) (34) (3,538)
Straight-line
rent adjustment
(1)+(2) 3,470 - - - 3,470
Preference
payment (936) - - - (936)
Equity method
depreciation and
amortization
expense (see
above) (9,914) - 9,914 - -
-----------------------------------------------------
Earnings (loss)
before income
taxes 9,099 5,519 - 103,626 107,206
Income tax
provision 609 - - (40,040) (39,431)
-----------------------------------------------------
Earnings before
minority
interest and
discontinued
operations 9,708 5,519 - 63,586 67,775
Minority Interest (5,519) (5,519) - - -
-----------------------------------------------------
Earnings (loss)
from continuing
operations 4,189 - - 63,586 67,775
Discontinued
operations, net
of tax and
minority
interest:
Operating
loss from
rental
properties (3,596) - - 3,596 -
Gain on
disposition
of rental
properties 67,182 - - (67,182) -
-----------------------------------------------------
63,586 - - (63,586) -
-----------------------------------------------------
Net earnings $ 67,775 $ - $ - $ - $ 67,775
=====================================================
(a) Depreciation
and amortization
- Real Estate
Groups $ 53,719 $ 1,138 $ 8,988 $ 921 $ 62,490
(b) Depreciation
and amortization
- Non-Real
Estate 2,022 - 638 - 2,660
-----------------------------------------------------
Total
depreciation
and
amortization $ 55,741 $ 1,138 $ 9,626 $ 921 $ 65,150
=====================================================
(c) Amortization
of mortgage
procurement
costs - Real
Estate Groups $ 2,839 $ 261 $ 926 $ 34 $ 3,538
(d) Amortization
of mortgage
procurement
costs - Non-Real
Estate - - 10 - 10
-----------------------------------------------------
Total
amortization
of mortgage
procurement
costs $ 2,839 $ 261 $ 936 $ 34 $ 3,548
=====================================================
(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 July 31, 2006, one equity method property was
sold, Midtown Plaza, resulting in a pre-tax gain on disposition of
$7,662.
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings
(GAAP) (in thousands):
Three Months Ended July 31, 2006
----------------------------------------------------
Plus
Unconsol- Pro-Rata
Full idated Consol-
Consol- Less Invest- Plus idation
idation Minority ments at Discontinued (Non-
(GAAP) Interest Pro-Rata Operations GAAP)
----------------------------------------------------
Revenues from real
estate operations $250,829 $25,055 $ 75,331 $ 30,128 $331,233
Exclude straight-
line rent
adjustment(1) (3,377) - - (15) (3,392)
----------------------------------------------------
Adjusted revenues 247,452 25,055 75,331 30,113 327,841
Operating expenses 149,566 12,923 49,221 18,194 204,058
Add back non-Real
Estate
depreciation and
amortization(b) 347 - 1,334 - 1,681
Add back
amortization of
mortgage
procurement costs
for non-Real
Estate Groups(d) 98 - 151 - 249
Exclude straight-
line rent
adjustment(2) (1,186) - - (306) (1,492)
Exclude preference
payment - - - - -
----------------------------------------------------
Adjusted operating
expenses 148,825 12,923 50,706 17,888 204,496
Add interest
income and other
income 7,870 1,226 265 196 7,105
Add equity in
earnings of
unconsolidated
entities 6,310 - (4,389) - 1,921
Remove gain on
disposition
recorded on
equity method (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) 13,662 - (13,662) - -
----------------------------------------------------
Net Operating
Income 119,207 13,358 14,101 12,421 132,371
Interest expense,
including early
extinguishment of
debt (71,692) (6,830) (14,101) (4,640) (83,603)
Gain on
disposition of
equity method
rental
properties(e) 7,662 - - - 7,662
Gain on
disposition of
rental properties
and other
investments - - - 10,035 10,035
Preferred return
on disposition - - - - -
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) (41,224) (3,665) (13,384) (3,442) (54,385)
Amortization of
mortgage
procurement costs
- Real Estate
Groups(c) (2,342) (286) (278) (112) (2,446)
Straight-line rent
adjustment
(1)+(2) 2,191 - - (291) 1,900
Preference payment - - - - -
Equity method
depreciation and
amortization
expense (see
above) (13,662) - 13,662 - -
----------------------------------------------------
Earnings (loss)
before income
taxes (2,183) 2,577 - 13,971 9,211
Income tax
provision 3,679 - - (5,398) (1,719)
----------------------------------------------------
Earnings before
minority interest
and discontinued
operations 1,496 2,577 - 8,573 7,492
Minority Interest (2,577) (2,577) - - -
----------------------------------------------------
Earnings (loss)
from continuing
operations (1,081) - - 8,573 7,492
Discontinued
operations, net
of tax and
minority
interest:
Operating
loss from
rental
properties 2,415 - - (2,415) -
Gain on
disposition
of rental
properties 6,158 - - (6,158) -
----------------------------------------------------
8,573 - - (8,573) -
----------------------------------------------------
Net earnings $ 7,492 $ - $ - $ - $ 7,492
====================================================
(a) Depreciation
and amortization
- Real Estate
Groups $ 41,224 $ 3,665 $ 13,384 $ 3,442 $ 54,385
(b) Depreciation
and amortization
- Non-Real Estate 347 - 1,334 - 1,681
----------------------------------------------------
Total
depreciation
and
amortization $ 41,571 $ 3,665 $ 14,718 $ 3,442 $ 56,066
====================================================
(c) Amortization
of mortgage
procurement costs
- Real Estate
Groups $ 2,342 $ 286 $ 278 $ 112 $ 2,446
(d) Amortization
of mortgage
procurement costs
- Non-Real Estate 98 - 151 - 249
----------------------------------------------------
Total
amortization
of mortgage
procurement
costs $ 2,440 $ 286 $ 429 $ 112 $ 2,695
====================================================
(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 July 31, 2006, one equity method property was
sold, Midtown Plaza, resulting in a pre-tax gain on disposition of
$7,662.
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings
(GAAP) (in thousands):
Six Months Ended July 31, 2007
-----------------------------------------------------
Plus
Unconsol-
Full idated Pro-Rata
Consol- Less Invest- Plus Consol-
idation Minority ments at Discontinued idation
(GAAP) Interest Pro-Rata Operations (Non-GAAP)
-----------------------------------------------------
Revenues from
real estate
operations $ 555,951 $30,645 $173,222 $ 24,599 $ 723,127
Exclude straight-
line rent
adjustment(1) (13,000) - - - (13,000)
-----------------------------------------------------
Adjusted revenues 542,951 30,645 173,222 24,599 710,127
Operating
expenses 345,778 10,648 112,953 20,730 468,813
Add back non-Real
Estate
depreciation and
amortization(b) 4,019 - 2,517 - 6,536
Add back
amortization of
mortgage
procurement
costs for non-
Real Estate
Groups(d) - - 33 - 33
Exclude straight-
line rent
adjustment(2) (5,380) - - - (5,380)
Exclude
preference
payment (1,834) - - - (1,834)
-----------------------------------------------------
Adjusted
operating
expenses 342,583 10,648 115,503 20,730 468,168
Add interest
income and other
income 34,822 1,424 6,851 209 40,458
Add equity in
earnings of
unconsolidated
entities 9,134 584 (9,099) - (549)
Remove gain on
disposition
recorded on
equity method (2,106) - 2,106 - -
Add back
provision for
decline
recorded on
equity method - - - - -
Add back equity
method
depreciation and
amortization
expense (see
below) 18,787 - (18,787) - -
-----------------------------------------------------
Net Operating
Income 261,005 22,005 38,790 4,078 281,868
Interest expense,
including early
extinguishment
of debt (153,691) (9,692) (33,756) (3,971) (181,726)
Gain on
disposition of
equity method
rental
properties(e) 2,106 - - - 2,106
Gain on
disposition of
rental
properties and
other
investments 431 - - 106,318 106,749
Preferred return
on disposition - - (5,034) - (5,034)
Provision for
decline in real
estate - - - - -
Provision for
decline in real
estate of equity
method rental
properties - - - - -
Depreciation and
amortization -
Real Estate
Groups(a) (111,509) (3,825) (17,381) (1,934) (126,999)
Amortization of
mortgage
procurement
costs - Real
Estate Groups(c) (5,403) (421) (1,406) (69) (6,457)
Straight-line
rent adjustment
(1)+(2) 7,620 - - - 7,620
Preference
payment (1,834) - - - (1,834)
Equity method
depreciation and
amortization
expense (see
above) (18,787) - 18,787 - -
-----------------------------------------------------
Earnings (loss)
before income
taxes (20,062) 8,067 - 104,422 76,293
Income tax
provision 14,649 - - (40,348) (25,699)
-----------------------------------------------------
Earnings (loss)
before minority
interest and
discontinued
operations (5,413) 8,067 - 64,074 50,594
Minority Interest (8,067) (8,067) - - -
-----------------------------------------------------
Earnings (loss)
from continuing
operations (13,480) - - 64,074 50,594
Discontinued
operations, net
of tax and
minority
interest:
Operating
income
(loss) from
rental
properties
(3,108) - - 3,108 -
Gain on
disposition
of rental
properties 67,182 - - (67,182) -
-----------------------------------------------------
64,074 - - (64,074) -
-----------------------------------------------------
Net earnings
(loss) $ 50,594 $ - $ - $ - $ 50,594
=====================================================
(a) Depreciation
and amortization
- Real Estate
Groups $ 111,509 $ 3,825 $ 17,381 $ 1,934 $ 126,999
(b) Depreciation
and amortization
- Non-Real
Estate 4,019 - 2,517 - 6,536
-----------------------------------------------------
Total
depreciation
and
amortization $ 115,528 $ 3,825 $ 19,898 $ 1,934 $ 133,535
=====================================================
(c) Amortization
of mortgage
procurement
costs - Real
Estate Groups $ 5,403 $ 421 $ 1,406 $ 69 $ 6,457
(d) Amortization
of mortgage
procurement
costs - Non-Real
Estate - - 33 - 33
-----------------------------------------------------
Total
amortization
of mortgage
procurement
costs $ 5,403 $ 421 $ 1,439 $ 69 $ 6,490
=====================================================
(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
six months ended July 31, 2007, one equity method property was sold,
White Acres, resulting in a pre-tax gain on disposition of $2,106.
For the six months ended July 31, 2006, one equity method property
was sold, Midtown Plaza, resulting in a pre-tax gain on disposition
of $7,662.
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings
(GAAP) (in thousands):
Six Months Ended July 31, 2006
------------------------------------------------------
Plus
Unconsol-
Full idated Pro-Rata
Consol- Less Invest- Plus Consol-
idation Minority ments at Discontinued idation
(GAAP) Interest Pro-Rata Operations (Non-GAAP)
------------------------------------------------------
Revenues from
real estate
operations $ 512,564 $ 51,072 $145,108 $ 60,972 $ 667,572
Exclude
straight-line
rent
adjustment(1) (6,071) - - (31) (6,102)
------------------------------------------------------
Adjusted
revenues 506,493 51,072 145,108 60,941 661,470
Operating
expenses 297,713 25,229 97,636 41,913 412,033
Add back non-
Real Estate
depreciation
and
amortization(b) 696 - 7,524 - 8,220
Add back
amortization of
mortgage
procurement
costs for non-
Real Estate
Groups(d) 190 - 298 - 488
Exclude
straight-line
rent
adjustment(2) (2,353) - - (718) (3,071)
Exclude
preference
payment - - - - -
------------------------------------------------------
Adjusted
operating
expenses 296,246 25,229 105,458 41,195 417,670
Add interest
income and
other income 22,717 1,871 358 704 21,908
Add equity in
earnings of
unconsolidated
entities 6,689 - 1,291 - 7,980
Remove gain on
disposition
recorded on
equity method (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) 20,769 - (20,769) - -
------------------------------------------------------
Net Operating
Income 253,160 27,714 27,792 20,450 273,688
Interest
expense,
including early
extinguishment
of debt (138,091) (13,504) (27,792) (9,899) (162,278)
Gain on
disposition of
equity method
rental
properties(e) 7,662 - - - 7,662
Gain on
disposition of
rental
properties and
other
investments - - - 85,333 85,333
Preferred return
on disposition - - - - -
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) (81,163) (6,864) (20,202) (7,084) (101,585)
Amortization of
mortgage
procurement
costs - Real
Estate
Groups(c) (5,142) (589) (567) (235) (5,355)
Straight-line
rent adjustment
(1)+(2) 3,718 - - (687) 3,031
Preference
payment - - - - -
Equity method
depreciation
and
amortization
expense (see
above) (20,769) - 20,769 - -
------------------------------------------------------
Earnings (loss)
before income
taxes 17,052 6,757 - 87,878 98,173
Income tax
provision (3,468) - - (33,955) (37,423)
------------------------------------------------------
Earnings (loss)
before minority
interest and
discontinued
operations 13,584 6,757 - 53,923 60,750
Minority
Interest (6,757) (6,757) - - -
------------------------------------------------------
Earnings (loss)
from continuing
operations 6,827 - - 53,923 60,750
Discontinued
operations, net
of tax and
minority
interest:
Operating
income
(loss) from
rental
properties
1,562 - - (1,562) -
Gain on
disposition
of rental
properties 52,361 - - (52,361) -
------------------------------------------------------
53,923 - - (53,923) -
------------------------------------------------------
Net earnings
(loss) $ 60,750 $ - $ - $ - $ 60,750
======================================================
(a) Depreciation
and
amortization -
Real Estate
Groups $ 81,163 $ 6,864 $ 20,202 $ 7,084 $ 101,585
(b) Depreciation
and
amortization -
Non-Real Estate 696 - 7,524 - 8,220
------------------------------------------------------
Total
depreciation
and
amortization $ 81,859 $ 6,864 $ 27,726 $ 7,084 $ 109,805
======================================================
(c) Amortization
of mortgage
procurement
costs - Real
Estate Groups $ 5,142 $ 589 $ 567 $ 235 $ 5,355
(d) Amortization
of mortgage
procurement
costs - Non-
Real Estate 190 - 298 - 488
------------------------------------------------------
Total
amortization
of mortgage
procurement
costs $ 5,332 $ 589 $ 865 $ 235 $ 5,843
======================================================
(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
six months ended July 31, 2007, one equity method property was sold,
White Acres, resulting in a pre-tax gain on disposition of $2,106.
For the six months ended July 31, 2006, one equity method property
was sold, Midtown Plaza, resulting in a pre-tax gain on disposition
of $7,662.
Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Net Operating Income (dollars in thousands)
----------------------------------------------------
Three Months Ended July 31, 2007
----------------------------------------------------
Plus Pro-Rata
Full Unconsol- Plus Consol-
Consol- Less idated Discon- idation
idation Minority Investments tinued (Non-
(GAAP) Interest at Pro-Rata Operations GAAP)
----------------------------------------------------
Commercial Group
Retail
Comparable $ 52,246 $ 6,186 $ 2,481 $ - $ 48,541
- ----------------------------------------------------------------------
Total 62,429 5,010 5,102 - 62,521
Office
Buildings
Comparable 47,559 6,424 962 - 42,097
- ----------------------------------------------------------------------
Total 48,527 3,391 1,738 - 46,874
Hotels
Comparable 5,997 - 613 - 6,610
- ----------------------------------------------------------------------
Total 5,913 - 613 - 6,526
Earnings from
Commercial
Land Sales (316) - - - (316)
Other (2,882) 1,346 (197) - (4,425)
- ----------------------------------------------------------------------
Total Commercial
Group
Comparable 105,802 12,610 4,056 - 97,248
- ----------------------------------------------------------------------
Total 113,671 9,747 7,256 - 111,180
Residential Group
Apartments
Comparable 23,276 745 7,327 - 29,858
- ----------------------------------------------------------------------
Total 26,568 1,348 13,373 626 39,219
Military
Housing
Comparable - - - - -
- ----------------------------------------------------------------------
Total 1,493 (89) 375 - 1,957
Sale of
Residential
Development
Project 10,090 - - - 10,090
- ----------------------------------------------------------------------
Total Residential
Group
Comparable 23,276 745 7,327 - 29,858
- ----------------------------------------------------------------------
Total 38,151 1,259 13,748 626 51,266
Total Rental
Properties
Comparable 129,078 13,355 11,383 - 127,106
- ----------------------------------------------------------------------
Total 151,822 11,006 21,004 626 162,446
Land Development
Group 6,873 303 83 - 6,653
The Nets (2,226) - 429 - (1,797)
Corporate
Activities (9,515) - - - (9,515)
- ----------------------------------------------------------------------
Grand Total $146,954 $11,309 $21,516 $626 $157,787
- ----------------------------------------------------------------------
Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Net Operating Income (dollars in thousands)
--------------------------------------------------------
Three Months Ended July 31, 2006
--------------------------------------------------------
Plus Pro-Rata
Full Unconsol- Plus Consol-
Consol- Less idated Discon- idation
idation Minority Investments tinued (Non-
(GAAP) Interest at Pro-Rata Operations GAAP)
--------------------------------------------------------
Commercial
Group
Retail
Comparable $ 49,258 $ 5,063 $ 2,898 $ - $ 47,093
- ---------------------------------------------------------------------
Total 51,167 5,590 3,210 763 49,550
Office
Buildings
Comparable 45,195 5,312 1,091 - 40,974
- ---------------------------------------------------------------------
Total 44,652 5,444 1,091 93 40,392
Hotels
Comparable 4,971 - 484 - 5,455
- ---------------------------------------------------------------------
Total 4,938 - 484 5,438 10,860
Earnings
from
Commercial
Land Sales 918 162 - - 756
Other (8,053) 11 19 - (8,045)
- ---------------------------------------------------------------------
Total
Commercial
Group
Comparable 99,424 10,375 4,473 - 93,522
- ---------------------------------------------------------------------
Total 93,622 11,207 4,804 6,294 93,513
Residential
Group
Apartments
Comparable 22,025 663 6,713 - 28,075
- ---------------------------------------------------------------------
Total 18,388 717 7,846 6,127 31,644
Military
Housing
Comparable - - - - -
- ---------------------------------------------------------------------
Total 2,141 - 50 - 2,191
Sale of
Residential
Development
Project - - - - -
- ---------------------------------------------------------------------
Total
Residential
Group
Comparable 22,025 663 6,713 - 28,075
- ---------------------------------------------------------------------
Total 20,529 717 7,896 6,127 33,835
Total Rental
Properties
Comparable 121,449 11,038 11,186 - 121,597
- ---------------------------------------------------------------------
Total 114,151 11,924 12,700 12,421 127,348
Land
Development
Group 19,792 1,434 105 - 18,463
The Nets (4,041) - 1,296 - (2,745)
Corporate
Activities (10,695) - - - (10,695)
- ---------------------------------------------------------------------
Grand Total $119,207 $ 13,358 $14,101 $12,421 $132,371
- ---------------------------------------------------------------------
Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Net Operating
Income (dollars
in thousands)
-----------------
% Change
-----------------
Pro-
Rata
Full Consol-
Consol- idation
idation (Non-
(GAAP) GAAP)
-----------------
Commercial Group
Retail
Comparable 6.1% 3.1%
- -----------------------------------------------------
Total
Office Buildings
Comparable 5.2% 2.7%
- -----------------------------------------------------
Total
Hotels
Comparable 20.6% 21.2%
- -----------------------------------------------------
Total
Earnings from Commercial Land Sales
Other
- -----------------------------------------------------
Total Commercial Group
Comparable 6.4% 4.0%
- -----------------------------------------------------
Total
Residential Group
Apartments
Comparable 5.7% 6.4%
- -----------------------------------------------------
Total
Military Housing
Comparable
- -----------------------------------------------------
Total
Sale of Residential Development Project
- ------------------------------------------------------
Total Residential Group
Comparable 5.7% 6.4%
- -----------------------------------------------------
Total
Total Rental Properties
Comparable 6.3% 4.5%
- -----------------------------------------------------
Total
Land Development Group
The Nets
Corporate Activities
- -----------------------------------------------------
Grand Total
- -----------------------------------------------------
Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Net Operating Income (dollars in thousands)
----------------------------------------------------
Six Months Ended July 31, 2007
---------------------------------------------------
Plus Pro-Rata
Full Unconsol- Plus Consol-
Consol- Less idated Discon- idation
idation Minority Investments tinued (Non-
(GAAP) Interest at Pro-Rata Operations GAAP)
---------------------------------------------------
Commercial Group
Retail
Comparable $104,130 $ 11,638 $ 4,846 $ - $ 97,338
- ---------------------------------------------------------------------
Total 117,969 8,805 11,565 - 120,729
Office Buildings
Comparable 91,382 10,866 2,178 - 82,694
- ---------------------------------------------------------------------
Total 94,954 6,251 3,046 - 91,749
Hotels
Comparable 8,024 - 1,062 - 9,086
- ---------------------------------------------------------------------
Total 8,084 - 1,062 - 9,146
Earnings from
Commercial Land
Sales 2,064 434 - - 1,630
Other (9,073) 3,210 (296) - (12,579)
- ---------------------------------------------------------------------
Total Commercial
Group
Comparable 203,536 22,504 8,086 - 189,118
- ---------------------------------------------------------------------
Total 213,998 18,700 15,377 - 210,675
Residential Group
Apartments
Comparable 43,808 1,405 14,842 - 57,245
- ---------------------------------------------------------------------
Total 50,781 2,660 21,892 4,078 74,091
Military Housing
Comparable - - - - -
- ---------------------------------------------------------------------
Total 4,859 (89) 560 - 5,508
Sale of
Residential
Development
Project 10,090 - - - 10,090
- ---------------------------------------------------------------------
Total Residential
Group
Comparable 43,808 1,405 14,842 - 57,245
- ---------------------------------------------------------------------
Total 65,730 2,571 22,452 4,078 89,689
Total Rental
Properties
Comparable 247,344 23,909 22,928 - 246,363
- ---------------------------------------------------------------------
Total 279,728 21,271 37,829 4,078 300,364
Land Development
Group 10,096 734 199 - 9,561
The Nets (5,477) - 762 - (4,715)
Corporate
Activities (23,342) - - - (23,342)
- ---------------------------------------------------------------------
Grand Total $261,005 $ 22,005 $38,790 $4,078 $281,868
- ---------------------------------------------------------------------
Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Net Operating Income (dollars in thousands)
-----------------------------------------------------
Six Months Ended July 31, 2006
----------------------------------------------------
Plus Pro-Rata
Full Unconsol- Plus Consol-
Consol- Less idated Discon- idation
idation Minority Investments tinued (Non-
(GAAP) Interest at Pro-Rata Operations GAAP)
---------------------------------------------------
Commercial Group
Retail
Comparable $ 96,284 $ 9,940 $ 5,795 $ - $ 92,139
- ---------------------------------------------------------------------
Total 99,379 8,682 6,206 1,330 98,233
Office
Buildings
Comparable 89,872 10,780 2,095 - 81,187
- ---------------------------------------------------------------------
Total 88,188 11,286 2,095 18 79,015
Hotels
Comparable 6,224 - 962 - 7,186
- ---------------------------------------------------------------------
Total 6,175 - 962 7,229 14,366
Earnings from
Commercial
Land Sales 10,549 158 - - 10,391
Other (9,370) 4,033 50 - (13,353)
- ---------------------------------------------------------------------
Total Commercial
Group
Comparable 192,380 20,720 8,852 - 180,512
- ---------------------------------------------------------------------
Total 194,921 24,159 9,313 8,577 188,652
Residential Group
Apartments
Comparable 42,601 1,327 13,367 - 54,641
- ---------------------------------------------------------------------
Total 47,681 1,576 15,559 11,873 73,537
Military
Housing
Comparable - - - - -
- ---------------------------------------------------------------------
Total 3,619 - 99 - 3,718
Sale of
Residential
Development
Project - - - - -
- ---------------------------------------------------------------------
Total Residential
Group
Comparable 42,601 1,327 13,367 - 54,641
- ---------------------------------------------------------------------
Total 51,300 1,576 15,658 11,873 77,255
Total Rental
Properties
Comparable 234,981 22,047 22,219 - 235,153
- ---------------------------------------------------------------------
Total 246,221 25,735 24,971 20,450 265,907
Land Development
Group 37,977 1,979 489 - 36,487
The Nets (12,742) - 2,332 - (10,410)
Corporate
Activities (18,296) - - - (18,296)
- ---------------------------------------------------------------------
Grand Total $253,160 $ 27,714 $27,792 $20,450 $273,688
- ---------------------------------------------------------------------
Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Net Operating
Income (dollars
in thousands)
----------------
% Change
----------------
Pro-
Rata
Full Consol-
Consol- idation
idation (Non-
(GAAP) GAAP)
---------------
Commercial Group
Retail
Comparable 8.1% 5.6%
- ------------------------------------------------------
Total
Office Buildings
Comparable 1.7% 1.9%
- ------------------------------------------------------
Total
Hotels
Comparable 28.9% 26.4%
- ------------------------------------------------------
Total
Earnings from Commercial Land Sales
Other
- ------------------------------------------------------
Total Commercial Group
Comparable 5.8% 4.8%
- ------------------------------------------------------
Total
Residential Group
Apartments
Comparable 2.8% 4.8%
- ------------------------------------------------------
Total
Military Housing
Comparable
- ------------------------------------------------------
Total
Sale of Residential Development Project
- ------------------------------------------------------
Total Residential Group
Comparable 2.8% 4.8%
- ------------------------------------------------------
Total
Total Rental Properties
Comparable 5.3% 4.8%
- ------------------------------------------------------
Total
Land Development Group
The Nets
Corporate Activities
- ------------------------------------------------------
Grand Total
- ------------------------------------------------------
Development Pipeline
- ----------------------------------------------------------------------
July 31, 2007
2007 Openings and Acquisitions (9)
Dev FCE
(D) Date Legal
Acq Opened/ Ownership % Pro-Rata
Property/ Location (A) Acquired (h) FCE % (h)(1)
Retail Centers:
Promenade Bolingbrook/
Bolingbrook, IL D Q1-07 100.0% 100.0%
Victoria Gardens - Bass Pro/Rancho
Cucamonga, CA D Q2-07 80.0% 80.0%
Office:
Colorado Studios/ Denver, CO A Q1-07 90.0% 90.0%
Commerce Court/ Pittsburgh, PA A Q1-07 70.0% 100.0%
Illinois Science and Technology
Park - Building Q/Skokie, IL A/D Q1-07 100.0% 100.0%
Richmond Office Park/ Richmond, VA A Q2-07 100.0% 100.0%
Residential:
Stapleton Town Center - Botanica
Phase II/Denver, CO D Q2-07 90.0% 90.0%
Tobacco Row - Cameron Kinney/
Richmond, VA A Q2-07 100.0% 100.0%
Condominiums:
Mercury (c)/Los Angeles, CA D Q2-07 50.0% 50.0%
Total Openings (d)
LESS: Above properties to be sold
as Condominiums
Openings and Acquisitions 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%
Total (g)
- ----------------------------------------------------------------------
See Attached Footnotes
Development Pipeline
- ----------------------------------------------------------------------
July 31, 2007
2007 Openings and Acquisitions (9)
Cost at
FCE
Pro-Rata
Cost at Full Total Share
Consol- Cost (Non-GAAP) Sq. ft./ Gross
Property/ idation at 100% (b) No. of Leasable
Location (GAAP) (a) (2) (1) X (2) Units Area
(in millions)
---------------------------------
Retail
Centers:
Promenade
Bolingbrook/
Bolingbrook,
IL $ 148.0 $ 148.0 $ 148.0 755,000 429,000(f)
Victoria
Gardens -
Bass
Pro/Rancho
Cucamonga,
CA 41.2 41.2 33.0 180,000 180,000
------------------------------------------------------
$ 189.2 $ 189.2 $ 181.0 935,000 609,000
---------------------------------=====================
Office:
Colorado
Studios/
Denver, CO $ 2.0 $ 2.0 $ 1.8 75,000
Commerce
Court/
Pittsburgh,
PA 26.5 26.5 26.5 378,000
Illinois
Science and
Technology
Park -
Building
Q/Skokie, IL 49.1 49.1 49.1 160,000
Richmond
Office Park/
Richmond, VA 115.0 115.0 115.0 571,000(i)
-------------------------------------------
$ 192.6 $ 192.6 $ 192.4 1,184,000
---------------------------------==========
Residential:
Stapleton
Town Center
- Botanica
Phase
II/Denver,
CO $ 26.3 $ 26.3 $ 23.7 154
Tobacco Row -
Cameron
Kinney/
Richmond, VA 31.0 31.0 31.0 259
-------------------------------------------
$ 57.3 $ 57.3 $ 54.7 413
--------------------------------==========
Units
Sold at
Condominiums: 7/31/07
--------
Mercury
(c)/Los
Angeles, CA $ 0.0 $ 156.3 $ 78.2 238 59
--------------------------------==========
--------------------------------
Total
Openings (d) $ 439.1 $ 595.4 $ 506.3
=================================
LESS: Above
properties
to be sold
as
Condominiums $ 0.0 $ 156.3 $ 78.2
--------------------------------
Openings and
Acquisitions
less
Condominiums $ 439.1 $ 439.1 $ 428.1
================================
- --------------------------------------------------------
Residential
Phased-In
Units (c)
(e): Opened in '07 / 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 24/304
-------------------------------------------
Total (g) $ 0.0 $ 59.4 $ 29.7 112/754
---------------------------------==========
- --------------------------------------------------------
See Attached
Footnotes
Development Pipeline
- ----------------------------------------------------------------------
July 31, 2007
Under Construction (17)
Dev
(D) Pro-Rata
Acq Anticipated FCE Legal FCE %
Property Location (A) Opening Ownership % (h) (h)(1)
Retail Centers:
Orchard Town Center/
Westminster, CO D Q1-08 100.0% 100.0%
Shops at Wiregrass (c)/
Tampa, FL D Q3-08 50.0% 66.7%
East River Plaza (c)/
Manhattan, NY D Q1-09 35.0% 50.0%
White Oak Village/ Richmond,
VA D Q3-08 50.0% 100.0%
Village at Gulfstream (c)/
Hallandale, FL D Q3-08 50.0% 100.0%
Promenade at Temecula
Expansion/ Temecula, CA D Q1-09 75.0% 75.0%
Ridge Hill Retail/ Yonkers,
NY D Q4-09 70.0% 100.0%
Office:
New York Times/ Manhattan, NY D Q3-07 70.0% 79.5%
Johns Hopkins - 855 North
Wolfe Street/ East
Baltimore, MD D Q2-08 76.6% 76.6%
Residential:
Lucky Strike/ Richmond, VA D Q1-08 100.0% 100.0%
Uptown Apartments (c)/
Oakland, CA D Q4-07/Q4-08 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%
Military Housing - Navy
Midwest (c) (e)/ Chicago, IL D 2006-2009 25.0% 25.0%
Air Force Academy (c) (e)/
Colorado Springs, CO D 2007-2009 50.0% 50.0%
Military Housing - Marines,
Hawaii Increment II (c) (e)/
Honolulu, HI D 2007-2010 10.0% 10.0%
Military Housing - Navy,
Hawaii Increment III (c)
(e)/ Honolulu, HI D 2007-2010 10.0% 10.0%
Total Under Construction (j)
- ----------------------------------------------------------------------
Residential Phased-In Units
(c) (e):
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
Note: Sterling Glen of Roslyn, which was reported as Under
Construction at April 30, 2007, was sold on July 2, 2007 prior to its
opening.
Development Pipeline
- ----------------------------------------------------------------------
July 31, 2007
Under Construction (17)
Cost at
FCE
Cost at Pro-Rata
Full Share
Consoli- Total (Non-
dation Cost GAAP) Sq. ft./ Gross Pre-
Property (GAAP) at 100% (b) No. of Leasable Leased
Location (a) (2) (1)X(2) Units Area %
(in millions)
---------------------------
Retail
Centers:
Orchard Town
Center/
Westminster,
CO $158.5 $158.5 $158.5 968,000(l) 554,000 60%
Shops at
Wiregrass
(c)/ Tampa,
FL 0.0 142.9 95.3 646,000 356,000 66%
East River
Plaza (c)/
Manhattan, NY 0.0 380.0 190.0 514,000 514,000 64%
White Oak
Village/
Richmond, VA 70.1 70.1 70.1 796,000 290,000 56%
Village at
Gulfstream
(c)/
Hallandale,
FL 0.0 155.6 155.6 392,000 392,000(m) 17%
Promenade at
Temecula
Expansion/
Temecula, CA 106.2 106.2 79.7 144,000 144,000 31%
Ridge Hill
Retail/
Yonkers, NY 669.0 669.0 669.0 1,244,000 1,244,000(n) 13%
-----------------------------------------------
$1,003.8 $1,682.3 $1,418.2 4,704,000 3,494,000
---------------------------====================
Office:
New York
Times/
Manhattan, NY $517.5 $517.5 $411.4 737,000(o) 86%
Johns Hopkins
- 855 North
Wolfe Street/
East
Baltimore, MD 104.7 104.7 80.2 278,000(p) 36%
-------------------------------------
$622.2 $622.2 $491.6 1,015,000
---------------------------==========
Residential:
Lucky Strike/
Richmond, VA 39.5 39.5 39.5 131
Uptown
Apartments
(c)/ Oakland,
CA 0.0 202.3 101.2 665
Ohana Military
Communities,
Hawaii
Increment I
(c) (e)/
Honolulu, HI 0.0 316.5 31.7 1,952
Dallas
Mercantile/
Dallas, TX 136.1 136.1 136.1 366(q)
Military
Housing -
Navy Midwest
(c) (e)/
Chicago, IL 0.0 264.7 66.2 1,658
Air Force
Academy (c)
(e)/ Colorado
Springs, CO 0.0 82.5 41.3 427
Military
Housing -
Marines,
Hawaii
Increment II
(c) (e)/
Honolulu, HI 0.0 338.8 33.9 1,175
Military
Housing -
Navy, Hawaii
Increment III
(c) (e)/
Honolulu, HI 0.0 614.6 61.5 2,519
-------------------------------------
$175.6 $1,995.0 $511.4 8,893
---------------------------==========
---------------------------
Total Under
Construction
(j) $1,801.6 $4,299.5 $2,421.2
===========================
- ---------------------------------------------------
Residential
Phased-In
Units (c)
(e): Under Const. / Total
----------------------------
Cobblestone
Court/
Painesville,
OH $0.0 $24.6 $12.3 168/304
Sutton
Landing/
Brimfield, OH 0.0 15.9 8.0 216/216
Stratford
Crossing/
Wadsworth, OH 0.0 25.3 12.7 108/348
-------------------------------------
Total (k) $0.0 $65.8 $33.0 492/868
=====================================
- ---------------------------------------------------
See Attached
Footnotes
Note: Sterling Glen of Roslyn, which was reported as Under
Construction at April 30, 2007, was sold on July 2, 2007 prior to its
opening.
Development Pipeline
- ----------------------------------------------------------------------
2007 FOOTNOTES
- ---------------------------------------------------------------------
( a ) Amounts are presented on the full consolidation method of
accounting, a GAAP measure. Under full consolidation, costs
are reported as consolidated at 100 percent if we are deemed
to have control or to be the primary beneficiary of our
investments in the variable interest entity ("VIE").
( b ) Cost at pro-rata share represents Forest City's share of cost,
based on the Company's pro-rata ownership of each property (a
non-GAAP measure). Under the pro-rata consolidation method of
accounting the Company determines its pro-rata share by
multiplying its pro-rata ownership by the total cost of the
applicable property.
( c ) Reported under the equity method of accounting. This method
represents a GAAP measure for investments in which the
Company is not deemed to have control or to be the primary
beneficiary of our investments in a VIE.
( d ) The difference between the full consolidation cost amount
(GAAP) of $439.1 million to the Company's pro-rata share (a
non-GAAP measure) of $506.3 million consists of a reduction
to full consolidation for minority interest of $11.0 million
of cost and the addition of its share of cost for
unconsolidated investments of $78.2 million.
( e ) Phased-in openings. Costs are representative of the total
project.
( f ) Includes 39,000 square feet of office space.
( g ) The difference between the full consolidation cost amount
(GAAP) of $0.0 million to the Company's pro-rata share (a
non-GAAP measure) of $29.7 million consists of the Company's
share of cost for unconsolidated investments of $29.7
million.
( h ) As is customary within the real estate industry, the Company
invests in certain real estate projects through joint
ventures. For some of these projects, the Company provides
funding at percentages that differ from the Company's legal
ownership.
( i ) Includes 11 office buildings.
( j ) The difference between the full consolidation cost amount
(GAAP) of $1,801.6 million to the Company's pro-rata share (a
non-GAAP measure) of $2,421.2 million consists of a reduction
to full consolidation for minority interest of $157.1 million
of cost and the addition of its share of cost for
unconsolidated investments of $776.7 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 $33.0 million consists of Forest City's
share of cost for unconsolidated investments of $33.0
million.
( l ) Includes 177,000 square feet for Target and 97,000 square feet
for JC Penney that opened in Q3-06, as well as 16,000 square
feet of office space.
( m ) Includes 67,000 square feet of office space.
( n ) Includes 156,000 square feet of office space.
( o ) Includes 23,000 square feet of retail space. At July 31,
2007, this property is included in Completed Rental
Properties on the Company's balance sheet since construction
is substantially complete and certain tenants control their
space while completing their custom improvements.
( p ) Includes 19,000 square feet of retail space.
( q ) Includes 18,000 square feet of retail space.
CONTACT: Forest City Enterprises, Inc.
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