Forest City executives: "we expect to break ground" this year on first tower; arena revenues should stabilize in two years
That represents a rise from 64 percent three months earlier, which itself represented a not insignificant rise from the 56 percent reported in December 2011. The developer has admitted that the 100% mark will not be met by the arena opening.
Yesterday, CEO David LaRue suggested progress has "re-accelerated" after a slowdown thanks to the NBA labor dispute. Still, his colleagues agreed that income from the arena is not expected to stabilize for some two years after the September 2012 opening.
In his prepared remarks, LaRue stated:
Construction is nearing completion at the Barclays Center arena at Atlantic Yards in Brooklyn. And preparations for the grand opening in September are underway. As you saw... approximately 70 percent of the forecasted contractually obligated revenues for the arena are under contract. Recently, individual tickets have gone on sale for a number of early events that have been booked into the arena, and the response has been enthusiastic The caliber of the acts being booked, including Barbra Streisand, Justin Bieber, and Andrea Bocell, also demonstrates that Barclays Center is also being recognized as a premier venue for the entire New York metropolitan area.(Here's a transcript; my transcript is based on listening to the call.)
First tower this year, maybe modular
LaRue then raised an issue not discussed in the press release a day earlier:
While we are on the subject of Atlantic Yards I want to confirm that we expect to break ground on our the first residential apartment building at the site by year end. As we have previously announced, we're very looking at a modular construction technique for the residential component, both from a cost and speed of execution standpoint, and we're continuing to make that evaluation.That date, of course, has been pushed back regularly, and Bruce Ratner has, in recent remarks, said indicated by year end or early next year.
Maybe they really have not yet decided, or maybe LaRue didn't want to invite questions about it, but it looks like the evaluation is over; executives for subsidiary Forest City Ratner have indicated a factory should be set up in four to six weeks.
Viewing progress, and impact on malls
One analyst asked the executives how they view arena revenue progress versus original expectations, and if there's any derivative impact on adjacent retail outlets owned by the firm, like the Atlantic Center mall.
"The progress, as we noted.... is very positive," LaRue said. "I think on our prior call we mentioned that we've fallen behind a bit in our pro forma [revenue] progress because of the dispute in the NBA regarding their labor contract, but as you can see from the numbers, progress has re-accelerated."
To the second question, his tone was less authoritative. "The interest around the project in the neighborhood as a result of Barclays Center opening in September has definitely increased," he said. " We have adjacent retail assets which have been well-leased and continue to be well-leased. But the opportunity to have quality assets, and that additional traffic in the area, has sparked additional interest, so there's a spillover benefit that we look forward to."
That presumably depends on the length of the leases; if there were major leases for, say, food and beverage outlets coming up, wouldn't LaRue have been talking them up?
A note on nomenclature and a Brooklyn investor event
Discussing the company's Stapleton project in Denver, LaRue said that it, like The Yards in Washington, DC and Atlantic Yards, has "substantial future entitlement."
That's developer-speak for We can build when we feel like the market's right. Presumably that comes from negotiating deals with some flexibility, or even renegotiating them, as Forest City Ratner has been known for doing.
After the arena opening, "when we've worked out some of the kinks," LaRue said there would be investor event at the Barclays Center in the fall. It's not clear whether that would be geared only to investment analysts or to all shareholders.