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October 24, 2008

Forest City's debt rating cut


The Associated Press, via Forbes.com, Forest City: Company solid despite ratings cut

Forest City Enterprises Inc. sought to reassure investors Thursday that it can manage its debt maturities and liquidity position even after Standard & Poor's Rating Services cut the real estate developer's credit ratings.

S&P lowered Forest City's corporate credit rating and its rating on senior unsecured notes further into junk, or non-investment grade, status.

"We interpret this action in light of the macroeconomic factors impacting nearly every sector of the economy, including real estate," said Forest City President and Chief Executive Charles Ratner. "We believe Forest City and its management team are fully capable of navigating the current environment."

Ratner also said the company has access to nonrecourse financing to fund its development projects.

Shares closed earlier down $1.63, or 12 percent, at $11.91.

Full press release after the jump.

NoLandGrab: Investment analysts wouldn't characterize the NJ Nets, which is burning a mega-million-dollar hole in Forest City's balance sheet, as one of the "macroeconomic factors impacting nearly every sector of the economy."

Forest City Comments on Standard & Poor's Rating Action


CLEVELAND, Oct. 23 /PRNewswire-FirstCall/ -- Forest City Enterprises, Inc. (NYSE: FCEA and FCEB) commented today on action taken by Standard & Poor's Rating Services (S&P). S&P lowered its corporate credit rating for Forest City to BB from BB+, and lowered its rating on the Company's senior unsecured notes to B+ from BB-. In response, Forest City President and Chief Executive Officer Charles A. Ratner issued the following statement:

"We interpret this action in light of the macroeconomic factors impacting nearly every sector of the economy, including real estate. These are clearly difficult times, given the condition of capital and credit markets. Nevertheless, we believe Forest City and its management team are fully capable of navigating the current environment. We have already taken a number of steps to enhance liquidity and we continue to effectively manage debt maturities for the balance of 2008 and 2009. We have also demonstrated repeatedly in recent months that we continue to have access to non-recourse financing to fund our development pipeline projects.

"Forest City has weathered many downturns and real estate cycles over 80-plus years in business and more than four decades as a public company. Our skilled, long-tenured management team has a track record of performance and demonstrated ability to consistently create value, even in challenging times. We have responded to current market and industry conditions with prudent, assertive actions that put us in a strong position for the future.

"Further, we still believe that current conditions create opportunity for Forest City, given market dislocations, and we intend to selectively and strategically take advantage of such opportunities. We are confident that over time, we will return to the growth path that has characterized Forest City for decades."

About Forest City

Forest City Enterprises, Inc. is a $10.9 billion NYSE-listed national real estate company. The Company is principally engaged in the ownership, development, management and acquisition of commercial and residential real estate and land throughout the United States.

Safe Harbor Language

Statements made in this news release that state the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. The Company's actual results could differ materially from those expressed or implied in such forward-looking statements due to various risks, uncertainties and other factors. Risks and factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, general real estate development and investment risks including lack of satisfactory financing, construction and lease-up delays and cost overruns, dependence on rental income from real property, reliance on major tenants, the effect of economic and market conditions on a nationwide basis as well as in our primary markets, vacancies in our properties, downturns in the housing market, competition, illiquidity of real estate investments, bankruptcy or defaults of tenants, department store consolidations, international activities, the impact of terrorist acts, risks associated with an investment in and operation of a professional sports team, conflicts of interests, our substantial debt leverage and the ability to obtain and service debt, the impact of restrictions imposed by our credit facility, the level and volatility of interest rates, the continued availability of tax-exempt government financing, effects of uninsured or underinsured losses, environmental liabilities, risks associated with developing and managing properties in partnership with others, the ability to maintain effective internal controls, compliance with governmental regulations, changes in market conditions, litigation risks, and other risk factors as disclosed from time to time in the Company's SEC filings, including but not limited to, the Company's annual and quarterly reports.

SOURCE Forest City Enterprises, Inc.

Related links:
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AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
Robert O'Brien, Executive Vice President,
Chief Financial Officer; Thomas Kmiecik, Assistant Treasurer; or
Jeff Linton, Vice President, Corporate Communication, all of
Forest City Enterprises, Inc., +1-216-621-6060

Posted by lumi at October 24, 2008 6:47 AM