« Malls getting a little greener | Main | Atlantic Yards Construction update »
July 2, 2007
Forest City Enterprises Inc.
$9B Giant Reaches for Complex, Diverse Deals
Multi-Housing News
By Keat Foong, Executive Editor
We missed this item last month, but it was republished on CNNMoney.com.
It's a pretty good article for familiarizing yourself with some of the history and mythology of Forest City.
JUNE 06, 2007 -- Forest City Enterprises Inc., a $9-billion NYSE-listed real estate company, is a developer at heart that pursues the creation of large, complex projects that often involve public/private partnerships.
"We are a big company, with big overhead. We do large projects well," says Ron Ratner, president and CEO of Forest City Residential Group Inc. Because of its size, Forest City by definition needs to develop larger projects in order to make a difference to its bottom line.
Where does Bruce Ratner's division fit in the $9B corporate behemoth?
Last year, Forest City Enterprises strengthened its position in its largest market, New York City, through the consolidation of ownership of Forest City Ratner Cos. under its commercial group. As a result, the company increased its interest in 30 operating properties in the New York City metropolitan area and has full ownership rights to all future developments by Forest City Ratner Cos. in the market.
Though Forest City has a progressive reputation in the rest of the country, in the New York Metro area, the developer is seen as a self-serving backroom-dealing overdeveloper. What the NY division and the mother company have in common is their ability to secure tax-exempt financing and subsidies:
Ratner notes that Forest City, which won the Best Development Firm of the Year award from the National Association of Home Builders in 2006, tries to surmount high land costs by designing its projects carefully, using more creative financing including tax-exempt bonds, turning to adaptive reuse and historic tax credits and taking advantage of large-scale projects. Since the company holds assets for the long-term, it is able to tolerate lower initial yields.
The point about "lower initial yields" was discussed back in February, when a vague sketch of cash flow for Atlantic Yards was released. This document only showed cash flow until 2015, at which point profits dramatically increased. Figures after 2015 were not made available. [See, DDDB, Press Release: "Atlantic Yards" Financial Projections Fail to Shed Light on Forest City Ratner's Potential Profit"]
Posted by lumi at July 2, 2007 9:49 AM