Skip to main content

Forest City Enterprises reports big drop in quarterly profits, mainly because last year they could sell Nets share; "forecasted contractually obligated revenues for the arena" have risen only from 51% to 56% in one year

Forest City Enterprises's FY 2011 second-quarter and year-to-date results, as noted a press release yesterday, show earnings down, mainly because the company--parent to Forest City Ratner--didn't have shares in a losing Nets team to sell this year.

Also, as noted below, the public statement contained an indication that sponsorship sales for the Barclays Center arena could be more robust.

Earnings down

For this quarter, net earnings declined from $.62/share to $.02/share over last year, a phenomenon that was emphasized by the AP and Cleveland Plain Dealer in their stories.

By another measure, according to the release, the drop was not as bad:
Second-quarter EBDT (earnings before depreciation, amortization and deferred taxes) was $70.7 million, compared with 2010 second-quarter EBDT of $105.6 million. The primary driver of the quarter-over-quarter variance was the second quarter 2010 pre-tax gain of $31.4 million related to the disposition of a partial interest in the Nets basketball team, with no comparable event in 2011.

On a fully diluted, per share basis, second-quarter 2011 EBDT was $0.35, compared with 2010 second-quarter EBDT per share of $0.54. Total EBDT for the six-months ended July 31, 2011, was $198.1 million, or $0.98 per fully diluted share, compared with last year's $176.0 million, or $0.91 per share.
Revenues down, though less than 15%

Second quarter revenues dropped less than 15%, while first half revenues were down only slightly. From the release:
Second-quarter 2011 consolidated revenues were $253.2 million compared with $294.2 million last year. First half 2011 revenues were $561.6 million, compared with $563.0 million for the six months ended July 31, 2010.
Losing the Nets helped

From the release:
EBDT results from the Nets Segment decreased $27.7 million, compared with the same period in 2010, primarily due to the nonrecurring 2010 gain on disposition of partial interest of $31.4 million, partially offset by the decrease in Forest City's allocated share of team losses of $3.7 million.
Arena forecast revenues up only slightly

From the release:
Work continues at Barclays Center at Atlantic Yards, and an official opening date of September 28, 2012 has been set for the arena. Approximately 56 percent of forecasted contractually obligated revenues for the arena are currently under contract.
They haven't made much progress in the past year. Three months ago, the figure was 55%. Six months ago, the figure was 55%. In September 2010, one year ago, the figure was 51%.

At the past year's pace, they won't be that much past 60% in September 2012 when the arena opens. I wouldn't doubt they're working on some deals and that they want a much higher number.

A footnote explains:
Represents the percentage of forecasted contractually obligated arena income that is under contract. Contractually obligated income, which include revenue from naming rights, sponsorships, suite licenses, Nets minimum rent and food concession agreements, accounts for 72% of total forecasted revenues for the arena.
If you're reading tea leaves, last September's press release included that second sentence in the body:
To date, approximately 51 percent of forecast contractually obligated income for the arena is under contract. Contractually obligated income, which includes revenue from naming rights, sponsorships, suite licenses, Nets minimum rent, and food concession agreements, accounts for 72 percent of total pro-forma revenues for the arena.
Success with Gehry building and 80 DeKalb

The release emphasized success with two New York projects:
"Our portfolio continued to show strength in the second quarter, despite the overhang of economic uncertainty, high unemployment and market volatility," said David J. LaRue, Forest City president and chief executive officer. "Our residential portfolio had increased comp NOI, occupancy and net rental income, compared with the same period in 2010, as we continue to see solid fundamentals in multifamily, particularly in our core markets. Our retail portfolio continues to improve, with gains in comp NOI, comparable occupancy and year-to-date comparable mall sales. In office, quarter-over-quarter occupancy was down modestly on the timing of lease expirations, but comp NOI was up due to improved operating performance in our life science office properties.

"During the quarter, we also made important progress in our ongoing effort to improve our balance sheet and overall debt metrics. In particular, the recapitalization and modified financing for 8 Spruce Street and DKLB BKLN, which we announced in early July, reduced our pro-rata share of the debt on these projects by more than $285 million, while also extending loan maturities for both properties. In addition, our successful offering of $350 million of Convertible Senior Notes, which closed July 19, took advantage of a window of opportunity in the debt markets to secure capital at an attractive rate and term. We have used, and continue to use, the proceeds from that offering to address higher-rate, nearer-term maturities, including selectively retiring debt at a discount.
AY tower progress?

LaRue added:
"We're pleased with the overall progress of our under-construction pipeline, particularly the remarkable pace of lease-up at our 8 Spruce Street project in Manhattan. We also continue to take advantage of entitled opportunities at our large, mixed-use projects. These include the 220-unit Novella apartments at Stapleton in Denver, for which we secured construction financing and began preliminary site work in early August, and the first residential building at Atlantic Yards in Brooklyn, for which we filed for building permits in late August."
Elsewhere in the press release, the firm stated:
In Brooklyn, design and engineering work continue for the first residential building at Atlantic Yards, and the company recently applied for building permits.
Note that Forest City did not announce the filing of building permits for that first tower but commented only after Brownstoner broke the news. So it's not clear how ready they are.

The Gehry tower

From the release:
The pace of lease up at the Frank Gehry-designed 8 Spruce Street has been noteworthy and a testament to the quality of the property and strength of the lower Manhattan rental submarket. The leasing office opened February 18 and the first tenant move-ins occurred the week of March 14. As of August 30, more than 450 leases have been executed, or approximately half of the total units in the building at completion, at rents at or above pro-forma for the units leased to date. More than 350 units are already occupied, and build-out continues for units on the upper floors.
Cautious outlook

From the release:
"We are mindful of the slow pace of economic recovery and the resulting market volatility," said LaRue. "Accordingly, our outlook is cautious. Despite the uncertain economic conditions, we continue to see solid real estate fundamentals in our core markets and are pleased with the strength of our portfolio. We are focused on bringing our under-construction projects online as contributors to additional growth."
In the pipeline: AY without office tower?

The first project is described:
Atlantic Yards is adjacent to the state-of-the art arena, the Barclays Center, which is designed by the award-winning firms Ellerbe Becket and SHoP Architects and is currently under construction. In addition, Atlantic Yards will feature more than 6,400 units of housing, including over 2,200 affordable units, approximately 250,000 square feet of retail space, and more than 8 acres of landscaped open space.
Note what's missing, as in the statement three months ago: a plan for an office tower. It's also a bit odd to say Atlantic Yards is "adjacent" to the arena, given that it would surround the arena, and the arena has always been described as part of Atlantic Yards.


Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

No, security guards can't ban photos. Questions remain about visibility of ID/sticker system.

The bi-monthly Atlantic Yards/Pacific Park Community Update meeting June 14, held at 55 Hanson Place, addressed multiple issues, including delays in the project, a new detente with project neighbors,concerns about traffic congestion, upcoming sewer work and demolitions, and an explanation of how high winds caused debris to fly off the under-construction 38 Sixth Avenue building. I'll have more coverage.
Security issues came up several times at the meeting.
Wayne Bailey, a resident who regularly takes photos and videos (that I often use) of construction/operations issues that impact residents, asked representatives of Tishman Construction if the security guard at the sites they're building works for them.
After Tishman Senior VP Eric Reid said yes, Bailey asked why a guard told him not to shoot video of the site, even though he was on a public street.

"I will address it with principals for that security firm," Reid said.
Forest City Ratner executive Ashley Cotton, the …

Atlantic Yards/Pacific Park graphic: what's built/what might be coming + FAQ (post-dated pinned post)

This graphic, posted in January 2018, is post-dated to stay at the top of the blog. It will be updated as announced configurations change and buildings launch. Note the unbuilt B1 and the proposed shift in bulk to the unbuilt Site 5.

The August 2014 tentative configurations proposed by developer Greenland Forest City Partners will change. The project is already well behind that tentative timetable.

How many people are expected?

Atlantic Yards/Pacific Park has a projected 6,430 apartments housing 2.1 persons per unit (as per Chapter 4 of the 2006 Final Environmental Impact Statement), which would mean 13,503 new residents, with 1,890 among them in low-income affordable rentals, and 2,835 in moderate- and middle-income affordable rentals.

That leaves 8,778 people in market-rate rentals and condos, though let's call it 8,358 after subtracting 420 who may live in 200 promised below-market condos. So that's 5,145 in below-market units, though many of them won't be so cheap.

As …

The passing of David Sheets, Dean Street renter, former Freddy's bartender, eminent domain plaintiff, and singular personality

David Sheets, longtime Dean Street renter, Freddy's bartender, eminent domain plaintiff, and singular personality, died 1/17/18 in HCA Greenview Hospital in Bowling Green, KY. He was 56.

There are obituary notices in the Bowling Green Daily News and the Wichita Eagle, which state:
He was born in Wichita, KS where he attended public Schools and Wichita State University. He lived for many years in Brooklyn, NY, and was employed as a legal assistant. David's hobby was cartography and had an avid interest in Mass Transit Systems of the world. David was predeceased by his father, Kenneth E. Sheets. He is survived by his mother, Wilma Smith, step-brother, Billy Ray Smith and his wife, Jane all of Bowling Green; step-sister, Ellen Smith Alexander and her husband, Jerry of Bella Vista, AR; several cousins and step-nieces and step-nephews also survive. Memorial Services will be on Monday, January 22, 2018 at 1:00 pm with visitation from 10:00 am to 1:00 pm Monday at Johnson-Vaughn-Phe…

Some skepticism on Belmont hockey deal: lease value seems far below Aqueduct racino; unclear (but large?) cost for LIRR service

As I wrote for The Bridge 12/20/1, The Islanders Say Bye to Brooklyn, But Where Next?, the press conference announcing a new arena at Belmont Park for the New York Islanders was "long on pomp... but short on specifics."

Notably, a lease valued at $40 million "upfront to lease up to 43 acres over 49 years... seems like a good deal on rent for the state-controlled property." Also, the Long Island Rail Road will expand service to Belmont.

That indicates public support for an arena widely described as "privately financed," but how much? We don't know yet, but some more details--or at least questions--have emerged.

An Aqueduct comparable?

Well, we don't know what the other bid was, and there aren't exactly parcels that large offering direct comparables.

But consider: Genting New York LLC in September 2010 was granted a franchise to operate a video lottery terminal under a 30 year lease on 67 acres at Aqueduct Park (as noted by Gov. Andrew Cuomo).


Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…