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December 11, 2008

Forest City Puts a Halt To New Work

The Wall Street Journal
by Alex Frangos

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Real-estate developer Forest City Enterprises Inc. said it will halt new projects and focus on reducing debt and managing its existing real-estate portfolio.
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"Forest City has heavy debt and heavy development, both of which are a problem these days," says Rich Moore, analyst at RBC Capital Markets. The company has $2 billion of debt maturities over the next two years, according to company filings. Real-estate debt markets have seized during the past year, creating headaches for property owners needing to refinance mortgages and replace construction loans.

Forest City said it will continue some developments it has already started, including the $4 billion Atlantic Yards project in Brooklyn, N.Y. Plans for the 22-acre site include offices, apartments and a basketball arena.

The company has spent five years working on Atlantic Yards. Lawsuits and the weak economy have delayed the start of major construction, and Forest City faces the maturity of an Atlantic Yards development loan from lender Gramercy Capital Corp. in February 2009.

Forest City hasn't disclosed the size of the Gramercy loan. But according to New York City records, Gramercy lent Forest City $153 million for land at the site. "We're actively engaged in the negotiation on extending the terms," Mr. Ratner said during the conference call.

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NoLandGrab: Apparently, Forest City is "continuing" to develop its Atlantic Yards project by halting all work on it.

And based on the company's past M.O., turning to the public purse for yet more help will surely be a key strategy.

Posted by eric at December 11, 2008 10:36 AM