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May 14, 2009

DDDB Press Release: Atlantic Yards Developer Announces: No New Vertical Development This Year

Forest City Enterprises Dilutes Existing Shares By Selling 45.5 Million New Shares To Pay Off Debts

BROOKLYN, NY— Just last week NBA Commissioner David Stern said Forest City Ratner would break ground this summer on the besieged Barclays Center arena in Brooklyn. Or, at least, that is what he has been told by the developer, who last year said they’d break ground in December 2008, and in 2003 said they’d open their arena in 2006.

Today, announcing the sale of 45.5 million new shares to raise cash to pay off a heavy debt burden, parent company Forest City Enterprises stated in a press release that:

“…Forest City does not anticipate commencing any new vertical development in the near term…”

Presumably if they were going to start construction on the arena this summer, or even this year, they would have said so as an exception to their overall construction freeze.

Forest City Ratner (FCR) continues to maintain that the Barclays Center Arena would open in 2011. But if construction does not start in 2009, that would be impossible, as would a 2012 opening date given stated build out schedules.

“Currently Forest City Ratner doesn’t own the land it needs to build the arena or the rest of Atlantic Yards, and does not have the financing to build the arena. It appears that the numbers no longer compute to build the arena or affordable housing they once envisioned. The project is also being litigated in two major lawsuits,” said Develop Don’t Destroy Brooklyn spokesman Daniel Goldstein. “The new stock issued by Forest City Enterprises shows a desperate company in a precarious position with no creditor friends.”

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Apparently banks are reluctant to extend more credit to Cleveland-based Forest City Enterprises, so the developer issued 45.5 million new shares priced at $6.60. As of noon the market has responded that $6.60 is overpriced, the stock is trading at $6.36 a share and was as low as $6.06. The stock is down about 80% since September.

Answers from the developer and the Empire State Development Corporation (the State agency overseeing the project) about these and many other questions will hopefully be forthcoming in the first State Senate public hearing on the Atlantic Yards project scheduled for May 29th in Brooklyn.

Posted by eric at May 14, 2009 1:40 PM