Thursday, September 11, 2008

The picture clouds for FCR; what might the spreadsheet say?

An anonymous blogger with a keen sense of the financial markets (and no love for Atlantic Yards) opines that the picture is getting rather cloudy:
No, the Atlantic Yards project won't ever get the decisive stake to the heart. There will be a dozen cuts instead, not least among them higher financing costs, discounted naming rights, restrictions on tax-exemption, Brooklyn pols refusing to chuck any more subsidies at it, and mounting losses at the Nets. At some point, FCR's stock analysts are going to start suggesting that it goes back to nickel-and-diming government agencies on a smaller scale than through gargantuan sports-related boondoggles.


A spreadsheet runs through it

You have to believe that the spreadsheet folks inside Forest City Enterprises and Forest City Ratner have done the numbers, and that the developer can incur Nets losses and the carrying costs of the land as long as the upside--including tax-exempt bonds and naming rights--is available.

If that upside changes--and there's no proof that it will, just the possibility--then the numbers change and the deal changes. Then things might get even more interesting.

1 comment:

  1. Let's call it death by a thousand small cuts to the internal rate of return. Somewhat less catchy, though

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