Skip to main content

Forest City: decline in Barclays Center revenue part of "overall review" and recognition of "steady-state concert schedule"

In the wake of an announcement of losses and plans to sell 32.5 million shares of stock, Forest City Enterprises stock went down 3.82% yesterday, a not insignificant if hardly crushing hit, closing at $23.17.

Perhaps the dramatic changes were why Forest City scheduled its quarterly earnings conference call for 8 am (as opposed to the usual late morning), before the market opened.

Decline in arena revenues

Executives answered several questions about the Barclays Center and Atlantic Yards/Pacific Park. Following up the announcement that they had downgraded expected net revenues for the Barclays Center from $65 million to $55 million, CEO David LaRue stated, "Our New York team and the management of the property have done a good job bringing the expense side of the arena into line but based upon our experience to-date we now believe the annual NOI [net operating income] of $55 million at full stabilization is the right level for this property."

Note that a "good job" is not a "great job" and the "right level" is essentially an admission that their previous forecasts were bunk.

"Certainly that downward revision is disappointment," LaRue continued, echoing previous prepared remarks, "but Barclays Center continues to be a great anchor for Pacific Park Brooklyn project and a source of pride and an important economic driver for the entire borough."

Pride and claimed "economic driver," however, don't get the company too far.

Was the decline in income, one analyst asked, due to a reduction in sponsorships?

LaRue said the revision could not be attributed to "any particular area," whether it be sponsorships or food and beverage: "it was an overall review in each of the product lines as we again gain that experience and knowledge of how the arena is going to operate." 

He cited "more of a steady-state concert schedule"--essentially an acknowledgment that big-name concerts were one-offs.

The Nets, LaRue said, "had a great run at the end of the year and ended up being in the playoffs which was a positive for the arena, but in those early parts of the year they did have more of a difficult season and some of that translated down each of those line items."

Again using a phrase (by corporate standards) of faint praise, he said, "Brett Yormark and his team continue to do a very good job in regard to all of those revenue areas."

Selling assets

Asked how they were marketing assets, including their share of the Brooklyn Nets and the Barclays Center operating company, CFO Bob O'Brien said that, despite no visible signs of progress, like a duck, they were "paddling like crazy below the surface."

LaRue said Forest City was "working cooperatively" with Mikhail Prokhorov's Onexim, which owns 80% of the team and 45% of the arena operating company. He noted reports that Onexim was not aiming to sell completely but "looking to monetize a portion of their asset."

Update on modular tower

Asked for an update on the B2 modular tower, LaRue said Forest City has been "actively manufacturing and assembling the mods in the factory," working with Turner Construction, aiming to get a sufficient inventory of completed modules.

Field assembly should begin in the next 30 days, and it should continue through the balance of this year. Once that is done, they will make final connections at the site, aiming to complete the building by the third quarter of 2015.

"Right now we are on track with that schedule, and feel comfortable with respect to where we stand now," LaRue said, acknowledging there are risks in this new business. He made no mention of the stated plan to realign modules.

The litigation over B2 with former partner Skanska is ongoing, he said, but didn't disclose details of any progress.

O'Brien said that a forbearance agreement regarding $45 million in bonds for the building has been extended again by the Bank of New York. "The intent is to work out a permanent solution" to fund construction, he said.

Comments

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).

As…

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 Matzav.com 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…