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March 30, 2010
Forest City reports increased earnings, lower net loss; cites major milestones for Atlantic Yards but acknowledges risks, including need for equity
Atlantic Yards Report
Forest City Enterprises, parent of Forest City Ratner, announced today some relatively good financial news, citing a 37.5 percent increase in annual earnings for the year ending 1/31/09 and a lower net loss--$30.7 million, or $0.22 per share, compared with a net loss of $113.2 million, or $1.10 per share, in 2008.
After cutting costs and seeing the economy recover, FCE even gained positive fourth quarter net earnings of $0.04 per share, compared with a net loss of $0.44 in the fourth quarter of 2008.
The Nets and Atlantic Yards
Still, the Nets lost a bit more in 2009 than they did in the previous year: FCE's share was $35.4 million, compared to $34.9 million.
Hence the importance to FCE that Atlantic Yards, as detailed below, was seen as reaching significant milestones.
Still, vacant possession of the project site--likely to be concluded by summer via eminent domain--is necessary for FCE to finish the transaction with Russian billionaire Mikhail Prokhorov to sell 80% of the New Jersey Nets and 45% of the arena.
Also, among the development risks--required boilerplate, maybe more--is the need to "meet required equity contributions," which suggests that, however Forest City Ratner and Prokhorov have pledged to fill an equity gap, it hasn't been consummated.
Note that the press release refers to "a refinancing from Gramercy Capital on a key $161.9 million land loan for the project," but doesn't explain, as Bruce Ratner suggested at the groundbreaking, that Gramercy progressed from "our land lender" to "our partner." There's no mention of any cash flow difficulties at FCR.
Click here for Forest City's press release.
Posted by eric at March 30, 2010 11:29 PM