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March 30, 2012

Forest City reports additional losses on Nets, 64% of forecasted arena revenues under contract

Atlantic Yards Report

It's a good thing for Bruce Ratner that the New Jersey Nets served as the phony "civic" aspect of his Atlantic Yards project, because, beyond that, his purchase of the team has been a complete financial debacle.

Forest City Enterprises, parent of Forest City Ratner, issued full-year and fourth-quarter earnings today, citing record-setting EBDT (Earnings Before Depreciation, Amortization and Deferred Taxes) of $1.61, compared with $1.59 per share for fiscal 2010.

However, for 2011, the net loss attributable to Forest City Enterprises, Inc., was $86.5 million, or $0.52 per share, compared with net earnings of $58.0 million, or $0.34 per share, in 2010. Why? Forest City made less money on property sales and joint ventures, and lost money by deciding "to strategically reposition the company's land business through sale or other disposition."

Nets losses, arena revenue

Losses on the Nets also hurt, as the company is absorbing additional losses after the amount in the red exceeded the $60 million cap on losses accepted by team owner Mikhail Prokhorov when he bought the team.

The company also reported that some "64 percent of forecasted contractually obligated revenues for the [Barclays Center] arena are currently under contract," a not insignificant rise from the 56 percent reported in December.

Still, with six months to go before the arena opens in, if that rate of growth continues, the 100 percent mark, which Forest City has admitted it won't meet, will be a good margin away.

(Contractually obligated income, which includes revenue from naming rights, sponsorships, suite licenses, Nets minimum rent and food concession agreements, accounts for 72 percent of total forecasted revenues for the arena.)

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Posted by eric at March 30, 2012 10:43 AM