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.

Forest City Realty Trust Letter to Shareholders, May 30, 2017 by Norman Oder on Scribd

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