Lease-up at 100% affordable buildings proceeds modestly: Forest City reports 535 Carlton 76% leased, 38 Sixth 47% leased
As of 4/26/18, 535 Carlton was 76% leased, while 38 Sixth, which opened later, was 47% leased. Both are owned by the joint venture Greenland Forest City Partners.
By contrast, as noted this past February, 535 Carlton was 66% leased, and 38 Sixth was 23% leased. 535 Carlton had its official grand opening last June, but couldn't find enough takers for upper middle-income units in the lottery, and has had to offer a free month of rent as a sweetener.
Residents began moving into 38 Sixth last November. As I've written, in 2009, when KPMG estimated lease-up time for the project, it predicted middle-income affordable rentals would take 7 months to lease up, and market-rate ones 11 months. Now it seems that the middle-income subset will take far longer than 7 months.
Note that Forest City is no longer reporting lease percentages at 461 Dean because, well, it sold that modular building in March. That was the only building in Atlantic Yards/Pacific Park that Forest City owned outright.
|The previous quarterly report|
In a press release yesterday, Forest City Reports 2018 First-Quarter Results, Forest City Realty Trust announced net earnings of $199.7 million, or $0.73 per share, compared with net earnings of $40.9 million, or $0.16 per share, for the three months ended March 31, 2017.
That mainly derived from an accounting change. Overall revenues and funds from operations for the quarter were were down, with the latter dropping to $81.3 million from $92.3 million, primarily due to "increased organizational transformation and termination benefits of $11.4 million, primarily advisory fees related to the Board of Director's review of strategic alternatives process, which concluded in late March."
There was no mention of Pacific Park, though Forest City president and CEO David LaRue did say the company faced an approximately 200,000-square-foot vacancy at One Pierrepont Plaza in Brooklyn, which was "vacated in February and we are negotiating letters of intent with prospective tenants for approximately three-quarters of the space."
The company's ratio of debt to earnings continues to diminish, now at 7.0x, compared to 7.4x at yearend 2017, with a goal of 6.5x by 2019.