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June 30, 2009
Read the fine print: Investment analysts in bed with Forest City look positively on post-dealmaking Forest City
Atlantic Yards Report
A New York Observer piece yesterday, headlined Analysts: New Atlantic Yards Deal A 'Significant Positive' for Forest City Ratner, brought highly unsurprising news.
From the report by investment firm Keefe, Bruyette & Woods (KBW):
While many of the details have not been completely outlined publicly, we believe staging a takedown of the land and paying for the air rights portion starting in 2012 is a significant positive for Forest City. While the stretched-out takedown and payments will require a higher total outlay (implied 6.5% annual interest rate) over the 19-year period starting in 2012, this reduces current cash outlays in 2009 and near term. In addition, this means that Forest City's takedown of the additional parcels (or air rights) will be more closely matched with vertical development of stages of the project."
...Who does KBW work for?
Consider analyst McGrath's concern for the public interest, when she chortled with approval when learning that FCR's Beekman Tower would, in the words of Forest City Enterprises executive Bob O'Brien, take advantage of "the beauty of the Liberty Bonds, tax-exempt rates and all market-rate units."
The report also states:
KBW either expects to receive or intends to seek compensation for investment banking services from Forest City Enterprises Inc. during the next three months. During the past 12 months, KBW acted as a manager or co-manager in an offering of equity securities of Forest City Enterprises Inc.That's not an unusual entanglement for an investment firm, but it also gives reason to think KBW isn't inclined to be tough on Forest City.
Posted by eric at June 30, 2009 9:33 AM