Skip to main content

Forest City letter to shareholders cites progress, including goal of reducing "joint venture exposure" (what about AY?)

Before today's annual meeting of Forest City Realty Trust, in a 5/30/17 letter (bottom) to shareholders, the company's board of directors offered updates on several previously reported corporate changes, including ending the dual-class share structure (which let the extended Ratner family control the publicly traded company), and adding two new directors (which makes the board majority independent, though not all investors ).

It didn't answer, of course, when Pacific Park towers will re-start--joint venture partner/Greenland USA seems more optimistic about launching this year--but maybe that will be brought up at the meeting.

The company cited progress on its strategic plan (quoted verbatim):
• Completion of our conversion to a REIT;
• Disposition of $1.5 billion of non-core assets since 2015;
• Exit from 3 non-core businesses;
• Reduction of $1.2 billion of secured and unsecured debt;
• Re-initiation of a quarterly dividend in 2016 and a 50% increase in the dividend in 2017;
• Significant cost reduction; and
• Cutting of our development exposure in half.

"Our shares have generated a 21.6% total return compared to 5.4% for the MSCI US REIT Index (RMZ) since our share reclassification announced on December 6, 2016," the letter stated.

The transformation is described in the chart below.

What about joint ventures?

The company stated:
We recognize that we have a lot more to do in order to achieve our objectives. Notably, the disposition of our retail joint ventures with Madison International and QIC, which we expect to go under contract by mid-summer 2017, will go a long way to further transform our business into an urban office and residential focused REIT, while simultaneously reducing our joint venture exposure, leverage and exposure to non-core markets. 
That's interesting, as is the goal, as noted in the chart above, of "additional partner buy-outs" that would further reduce joint-venture exposure. (I'm interpreting that as Forest City buying out its partner, but the transaction could go in the other direction.)

After all, only by getting Greenland USA to invest in Atlantic Yards/Pacific Park and to create a joint venture did Forest City lower its risks, as affirmed by ratings agencies such as Fitch and Moody's.

Similarly, the Real Deal reported 12/14/15:
In terms of limiting risk, Forest City may look to limit its exposure by using joint venture structures on most of its future transactions, similar to its recent tie-up with China-based Greenland Group, experts said.
Forest City surely won't to buy out Greenland. Rather, the partners in April 2016 began the process--yet unfulfilled--to find more partners (or buyers) for three development sites. Perhaps the term "additional partner buy-outs" also could mean that its partner--Greenland--could buy the rest of the project, especially since Greenland now seems more bent on getting a tower started this year than Forest City.

But if Forest City is reducing joint venture exposure to fully control projects it now partly owns, that likely applies only to projects that it considers solid profit centers. Which is not Atlantic Yards/Pacific Park.

\

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 …

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…

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

Click on graphic to enlarge. This is post-dated to stay at the top of the blog. It will be updated as announced configurations change and buildings launch. The August 2014 tentative configurations proposed by developer Greenland Forest City Partners will change, and the project is already well behind that tentative timetable.


Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…