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March 20, 2009
Beekman Street Stumped
The big news yesterday was Forest City Ratner's (FCR) admission that the company was "conducting a study to assess costs, risks and overall timing" for the Beekman St. Tower project. That's developerspeak for "salvaging a project that's already under construction."
If FCR actually caps off the Beekman St. tower at a stumpy 38 stories, the building would become a highly visible iconic stump, noteworthy for what it is not. However, it is equally noteworthy that FCR might consider downsizing a project for which it has already secured financing.
A clearer picture is beginning to emerge of a company that has endured waves of layoffs, has been scrambling to renegotiate looming debt obligations, and has halted or slowed construction wherever possible. All outward appearances indicate that parent company Forest City Enterprises could be experiencing a dire cash-flow problem. [If we're wrong, then the company should stop acting like that's the case.]
This also might explain why FCR has been loudly proclaiming its commitment to the Atlantic Yards arena and high-rise project in Brooklyn, while trying to sell off some of its better performing income-producing assets. The real estate company is already stuck with the money-hemorrhaging NJ Nets, but the rest of Atlantic Yards is stalled and has relatively limited overhead costs (aside from lobbyists), and may represent the company's best opportunity for growth if it can weather the current financial storm.
With 4th-quarter results due out in April, it will be interesting if the conference call with analysts will be more business as usual, or if institutional investors will manage to get some real answers as to where this company thinks it is headed.
Posted by lumi at March 20, 2009 5:44 AM