Breaking News

Scotland Votes Against Independence in Referendum, BBC Projects
Tweet TWEET

Forest City Reports Fiscal 2012 Third-Quarter and Year-to-Date Results

    Forest City Reports Fiscal 2012 Third-Quarter and Year-to-Date Results

FFO up for the quarter; Operating FFO up for quarter and nine months

Continued strong performance in multifamily

Barclays Center arena is major opening in the quarter

New independent director named; board now majority independent

Company reports additional progress on land dispositions

PR Newswire

CLEVELAND, Dec. 6, 2012

CLEVELAND, Dec. 6, 2012 /PRNewswire/ --Forest City Enterprises, Inc. (NYSE:
FCEA and FCEB) today announced FFO, Operating FFO, net earnings/loss and
revenues for the year to date and the third quarter ended October 31, 2012.

FFO

Third-quarter FFO (funds from operations) was $79.6 million, compared with
$61.2 million in the third quarter of 2011. On a fully diluted, per-share
basis, third-quarter 2012 FFO was $0.37, compared with $0.29 in 2011.

Year-to-date FFO was $189.9 million, or $0.91 per share, compared with $218.9
million, or $1.07 per share, for the first nine months of 2011. A full
description of factors impacting FFO and FFO per share for the third quarter
and first nine months of 2012 is included in the company's third-quarter 2012
Supplemental Package furnished to the SEC and available on the company's
website.

FFO and FFO per share are non-GAAP measures commonly used by publicly traded
real estate companies. Included with this press release is a table reconciling
FFO to net earnings (loss), the most comparable GAAP measure.

Operating FFO

In an effort to provide investors with additional information about its core
operations, the company initiated reporting Operating FFO in the second
quarter of 2012. Operating FFO is a non-GAAP measure derived from FFO.
Included with this press release are tables reconciling Operating FFO to FFO,
and then to net earnings (loss).

Third-quarter Operating FFO was $65.0 million, a 19.8 percent increase over
third-quarter 2011 Operating FFO of $54.3 million. Year-to-date Operating FFO
was $192.9 million, a 10.2 percent increase compared with $175.1 million for
the first nine months of 2011. For additional explanation of factors impacting
Operating FFO variances, see the section titled "Review of Results" in this
news release.

Net Earnings/Loss

The third-quarter net loss attributable to Forest City Enterprises, Inc. was
$1.1 million, compared with a net loss of $36.8 million in the third quarter
of 2011. The net loss for the nine months ended October 31, 2012, was $22.0
million, compared with net earnings of $18.9 million for the same period in
2011. The company's reported net earnings/loss are impacted by a variety of
factors, including transactions, which can create substantial variances in net
earnings/loss between reporting periods. A full description of these factors
is included in the company's third quarter 2012 Supplemental Package furnished
to the SEC and available on the company's website, www.forestcity.net.

After preferred stock dividends and inducements related to a preferred stock
conversion during the quarter, the third-quarter net loss attributable to
Forest City Enterprises, Inc. common shareholders was $18.8 million, or $0.11
per share, compared with a net loss of $40.7 million, or $0.24 pershare, for
the third quarter of 2011. For the first nine months of 2012, the net loss
attributable to common shareholders was $47.5 million, or $0.28 per share,
compared with net earnings of $7.4 million, or $0.04 per share, in 2011.
Per-share amounts are on a fully diluted basis.

In addition to factors that also impacted Operating FFO, as mentioned under
"Review of Results" later in this press release, net earnings/loss was
negatively impacted by a third-quarter impairment of $30.2 million on an
office building in Cleveland. The company made the decision to reposition the
asset after evaluating a number of potential long-term strategies for the
property. That decision changed the probable holding period for the asset and
required the company to adjust the carrying value of the asset to its
estimated fair market value.

Revenues

Third-quarter 2012 consolidated revenues from real estate operations increased
to $291.4 million, from $252.6 million in the third quarter of 2011. For the
first nine months of 2012, consolidated revenues from real estate operations
were $843.1 million, compared with $794.2 million for the first nine months of
2011.

Commentary

"Our results for the third quarter and year to date continued to reflect solid
overall performance from our portfolio, particularly multifamily," said David
J. LaRue, Forest City president and chief executive officer. "Third-quarter
FFO was up over last year, and Operating FFO showed double-digit increases
over the prior year for both the quarter and year to date. These results also
reflect continued execution on the key drivers of our strategic plan.

"In residential multifamily, growth in comparable property net operating
income was in line with peers, following four consecutive quarters of
double-digit gains. Comp NOI in both retail and office was up modestly, and
leasing spreads were up 10.7 percent in our regional malls and 2.6 percent in
office, on a rolling 12-month basis. Our regional mall sales averaged $465
per square foot on a rolling 12-month basis, the eighth consecutive quarter of
increases, and our year-to-date comparable mall sales increased 5.2 percent,
compared with the same period in 2011, demonstrating solid fundamentals in our
retail portfolio.

"We continued to focus on strengthening our capital structure during the
quarter, executing privately negotiated exchanges for $133.7 million of our 7
percent convertible preferred stock for common stock and a cash inducement.
The transaction substantially reduced the outstanding preferred, was
non-dilutive and eliminated approximately $9.4 million in future annual fixed
charges.

"The widely celebrated opening of the Barclays Center arena in Brooklyn was a
highlight of the quarter. The state-of-the-art arena has performed very well
and day-of-event revenues have been in line with our expectations to date. The
opening also marks the delivery of the last of our "Big 3" New York projects –
8 Spruce Street, Westchester's Ridge Hill and now Barclays Center. Our
under-construction pipeline now consists of seven projects with total costs of
$257 million, at full consolidation, down from $1.9 billion at this same time
last year, and down from $2.7 billion at its peak in 2010. It has been a
remarkable journey through very difficult conditions, and one that some
doubted we would be able to complete. Today we are a much stronger company
with a dramatically reduced risk profile, a focused strategy, and substantial
future opportunity.

"We continue to demonstrate our value-creation model as we take advantage of
existing entitlement in our core markets to drive future growth. The latest
example is B2, the first apartment building at Atlantic Yards in Brooklyn,
where we expect to break ground December 18. The project will be built using
state-of-the-art modular technology that is expected to reduce costs over
time, while also speeding delivery and improving quality and sustainability.

"We continue to make progress in executing our strategy of focusing on core
rental properties by exiting our land development business. To date, we have
closed the sale of approximately three quarters of the land projects targeted
for disposition, and we continue to market the balance.

"As we first announced at our October 22 Investor Day at Barclays Center, we
are in the process of finalizing a partnership with a large institutional
investor to create a $400 million multifamily development fund to invest in
five of our core markets. The fund will target activation of our existing
entitlement as well as select new opportunities. We expect to complete the
partnership agreement before the end of the year and to provide investors with
more detail at that time.

"We are also in the final stages of closing the previously announced effort to
bring a partner into to the ownership of 8 Spruce Street, our apartment high
rise in lower Manhattan, and to monetize some of the substantial value created
by the development of this iconic property. The transaction values the
property at approximately $1 billion, and we expect to close by the end of the
year.

"Finally, earlier this week, we announced the addition of a new independent
director to our board, achieving our goal of moving to a majority independent
board. Kenneth J. Bacon is a seasoned executive who has held senior positions
with Fannie Mae, Resolution Trust and Morgan Stanley, among others, and who
also has outstanding board experience, having served as a director for Comcast
Corporation since 2002. We are thrilled that he has joined our board."

Review of Results

Third-quarter Operating FFO was $65.0 million, a 19.8 percent increase over
third-quarter 2011 Operating FFO of $54.3 million. Year-to-date Operating FFO
was $192.9 million, a 10.2 percent increase compared with $175.1 million for
the first nine months of 2011.

The increase in Operating FFO for the first nine months of 2012, compared with
the same period in 2011, is attributable to a variety of factors. Overall
Operating FFO from the company's Commercial, Residential and Land portfolio
increased $24.2 million. The largest components of this increase were higher
NOI from mature properties of $16.4 million, decreased interest expense of
$12.9 million, increased income from the change in fair market value of
derivatives of $10.9 million, and increased residential lot sales, primarily
at Stapleton in Denver, of $6.7 million. These increases were offset by a
number of factors, the most significant of which were reduced capitalized
interest on projects under construction and development, including land
development, of $18.5 million, reduced Operating FFO from properties sold of
$6.6 million, and non-recurring 2011 lease cancellation fee income of $6.5
million.

Corporate Operating FFO decreased $6.4 million, primarily due to increased
severance, outplacement and general corporate expenses of $3.9 million, and
increased interest expense of $2.5 million, primarily related to certain
senior notes, offset by lower average borrowings on the company's bank
revolving credit facility.

A full description of factors impacting Operating FFO for the third quarter
and first nine months of 2012 is included in the company's third quarter 2012
Supplemental Package furnished to the SEC and available on the company's
website.

NOI, Occupancies and Rent

Overall comparable property NOI increased 1.8 percent during the third
quarter, compared with the same period in 2011, with increases of 6.0 percent
in apartments, 0.6 percent in office, and 0.5 percent in retail.

Comparable property NOI, defined as NOI from properties operated in the three
months ended October 31, 2012 and 2011, is a non-GAAP financial measure and is
based on the pro-rata consolidation method, also a non-GAAP financial measure.
Included in this release are schedules that present comparable property NOI on
the full-consolidation method and a reconciliation of NOI to net earnings
(loss).

Comparable office occupancies were 90.4 percent as of October 31, 2012,
compared with 90.6 percent at the same point last year. On a rolling 12-month
basis, rent per square foot in new office leases increased 2.6 percent over
expiring leases.

At October 31, 2012, comparable retail occupancies were 91.6 percent, compared
with 91.9 percent at the end of the third quarter of 2011. Sales in the
company's regional malls averaged $465 per square foot on a rolling 12-month
basis, up from $434 per square foot for the same period in 2011, and up from
$461 per square foot at the end of the second quarter of 2012. Year-to-date
comparable sales in the company's regional malls increased 5.2 percent,
compared with results for the first nine months of 2011. On a rolling 12-month
basis, new, same-space leases in the company's regional malls increased 10.7
percent over prior rents.

In the residential portfolio, comparable average occupancies for the nine
months ended October 31, 2012, were 94.7 percent, up from 94.6 percent last
year. Average monthly residential rents for the company's comparable
apartments rose to $1,194 year-to-date, a 4.6 percent increase compared with
$1,141 at October 31, 2011. Average rents in the company's comparable
apartments in its core markets were $1,585 year-to-date, a 5.4 percent
increase from $1,504 for the first nine months of 2011.

Debt Maturities, Financing Activity and Liquidity

Since January 31, 2012, the company has addressed, through closed loans and
committed financings, $1.1 billion at full consolidation ($1.3 billion at its
pro-rata share) of the $1.2 billion ($1.4 billion at pro-rata) of long-term
debt maturities coming due in fiscal year 2012. Additionally, inclusive of
Senior and Subordinated Debt, the company addressed $260.3 million ($279.3
million at pro-rata) of loans maturing in future years.

In financing its real estate assets, the company uses nonrecourse mortgage
debt at the property level and seeks to fix its mortgage debt through
long-term financings. This allows the company to benefit from historically
low interest rates in the current environment.For the first nine months of
2012, the company's overall weighted-average cost of debt decreased to 5.10
percent, compared with 5.21 percentat October 31, 2011. Fixed-rate debt
represented 84 percent of total debt at October 31, 2012. The company's
weighted-average life of its debt increased to 6.90 years at October 31, 2012,
from 5.40 years for the same period in 2011.

At October 31, 2012, the company had $268.8 million ($238.6 million at full
consolidation) in cash on its balance sheet and $213.8 million of available
capacity on its revolving bank line of credit.

Recent Openings and Projects Under Construction

At the end of the third quarter, Forest City had seven projects under
construction at a total cost of $323.9 million, at the company's pro-rata
share ($257.2 million at full consolidation). This compares with $1.3 billion
at pro-rata ($1.9 billion at full consolidation) at the end of the third
quarter of 2011.

As previously mentioned, the September 28 opening of the Barclays Center arena
in Brooklyn was a highlight of the third quarter and an event that drew
international attention to the property and to Brooklyn. In just its first
two months of operations, the facility has already hosted dozens of major
events. Initial event-day revenues have met the company's expectations, and
the quality of the customer experience and venue operations have exceeded
expectations.

At the beginning of the third quarter, the company opened the first phase of
Botanica Eastbridge at Stapleton in Denver, and the 118-unit apartment
community is 27 percent leased. Also at Stapleton, lease-up continues for
Aster Town Center, which opened its 85-unit first phase in the first quarter
of this year. Aster is already 97 percent leased.

In Washington, D.C., three separate projects are underway at The Yards, our
mixed-use development in the rapidly growing Capitol Riverfront District. At
Boilermaker Shops, a 40,000-square-foot, adaptive reuse project with ground
level retail and mezzanine office space, initial tenants move-ins are underway
with openings expected to begin during the fourth quarter. Construction
continues at Lumber Shed, a 32,000-square-foot, adaptive-reuse office building
with street-level retail, and at Twelve12, a mixed-use project with 218 rental
apartments above a 50,000-square-foot Harris Teeter grocery store and a
28,000-square-foot Vida Fitness facility. Lumber Shed is expected to open in
the third quarter of 2013, with Twelve12 following in the third quarter of
2014.

Construction continues on the Continental Building,  a 203-unit,
adaptive-reuse apartment community in downtown Dallas at the company's
Mercantile Place on Main development. Completion is expected in the first
quarter of 2013.

In Boston, construction continues on 120 Kingston, a 240-unit apartment
building. The project is located on the Rose Kennedy Greenway near the border
of the city's financial district and Chinatown neighborhoods, and is expected
to be completed in the second quarter of 2014.

Finally, during the third quarter the company activated an existing
entitlement and commenced construction of Stratford Avenue Apartments, a
128-unit multifamily project in Fairfield, Connecticut.

Outlook

"Overall, our third quarter and nine month results met our expectations, as
evidenced by strong Operating FFO results in both periods," said LaRue. "As we
have since the beginning of the year, we continue to execute on our key
strategies: focusing on core markets and products, building a strong capital
structure and improving our balance sheet, and pursuing operational excellence
to drive growth from the mature portfolio, newly opened projects, and new
development.

"While we remain alert to changing conditions and cautious regarding
macroeconomic factors, we are confident in our strategy and in our ability to
deliver enhanced value for our shareholders and other stakeholders."

Corporate Description

Forest City Enterprises, Inc. is an NYSE-listed national real estate company
with $10.7 billion in total assets. The company is principally engaged in the
ownership, development, management and acquisition of commercial and
residential real estate and land throughout the United States. For more
information, visit www.forestcity.net.

Supplemental Package

Please refer to the Investor Relations section of the company's website at
www.forestcity.net for a Supplemental Package, which the company will also
furnish to the SEC on Form 8-K. This Supplemental Package includes operating
and financial information for the three months and nine months ended October
31, 2012, with reconciliations of non-GAAP financial measures, such as FFO,
Operating FFO, EBDT, comparable NOI and results prepared using the pro-rata
consolidation method, to their most directly comparable GAAP financial
measures.

FFO

The company uses FFO, along with EBDT and net earnings (loss) to report its
operating results. The majority of the company's peers in the publically
traded real estate industry are Real Estate Investment Trusts ("REITs") and
report operations using FFO as defined by the National Association of Real
Estate Investment Trusts ("NAREIT"). FFO provides supplemental information
about the company's operations. Although FFO is not presented in accordance
with GAAP, the company believes it is necessary to understand its business and
operating results, along with net earnings, the most comparable GAAP measure.
The company believes its presentation of FFO provides important supplemental
information to its investors.

FFO is defined by NAREIT as net earnings excluding the following items: i)
gain (loss) on disposition of rental properties, divisions and other
investments (net of tax); ii) non-cash charges for real estate depreciation
and amortization; iii) impairment of depreciable real estate (net of tax); iv)
extraordinary items (net of tax); and v) cumulative or retrospective effect of
change in accounting principle (net of tax). FFO is reconciled to net earnings
(loss), the most comparable financial measure calculated in accordance with
GAAP, in the table titled Reconciliation of FFO and EBDT to Net Earnings/Loss
below and in the company's Supplemental Package, which the company will also
furnish to the SEC on Form 8-K.

Operating FFO

Operating FFO is defined as FFO, as defined by NAREIT, adjusted to exclude: i)
activity related to our land held for divestiture (including impairment
charges); ii) impairment of Land Group projects; iii) write-offs of abandoned
development projects; iv) income recognized on state and federal historic and
other tax credits; v) gains or losses from extinguishment of debt; vi) gains
or losses on change in control of interests; vii) the adjustment to recognize
rental revenues and rental expense using the straight-line method; viii) other
non-recurring items such as income generated from the casino land sale; ix)
the Nets pre-tax FFO; and x) income taxes on FFO.

Pro-Rata Consolidation Method

This press release contains certain financial measures prepared in accordance
with GAAP under the full consolidation accounting method and certain financial
measures prepared in accordance with the pro-rata consolidation method
(non-GAAP). The company presents certain financial amounts under the pro-rata
method because it believes this information is useful to investors as this
method reflects the manner in which the company operates its business. In line
with industry practice, the company has made a large number of investments in
which its economic ownership is less than 100 percent as a means of procuring
opportunities and sharing risk. Under the pro-rata consolidation method, the
company presents its investments proportionate to its economic share of
ownership. Under GAAP, the full consolidation method is used to report
partnership assets and liabilities consolidated at 100 percent if deemed to be
under its control or if the company is deemed to be the primary beneficiary of
the variable interest entities ("VIE"), even if its ownership is not 100
percent. The company provides reconciliations from the full consolidation
method to the pro-rata consolidation method in the exhibits below and
throughout its Supplemental Package, which the company will also furnish to
the SEC on Form 8-K.

NOI

NOI, a non-GAAP measure, is defined as revenues (excluding straight-line rent
adjustments) less operating expenses (including depreciation and amortization
and amortization of mortgage procurement costs for non-real estate groups)
plus interest income plus equity in earnings (loss) of unconsolidated entities
(excluding gain on disposition and impairment of unconsolidated entities) plus
interest expense, gain (loss) on extinguishment of debt, depreciation and
amortization of unconsolidated entities. We believe NOI provides us, as well
as our investors, additional information about our core business operations
and, along with earnings, is necessary to understand our business and
operating results.

Safe Harbor Language

Statements made in this news release that state the company's or management's
intentions, hopes, beliefs, expectations or predictions of the future are
forward-looking statements. The company's actual results could differ
materially from those expressed or implied in such forward-looking statements
due to various risks, uncertainties and other factors. Risks and factors that
could cause actual results to differ materially from those in the
forward-looking statements include, but are not limited to, the impact of
current lending and capital market conditions on its liquidity, ability to
finance or refinance projects and repay its debt, the impact of the current
economic environment on its ownership, development and management of its real
estate portfolio, general real estate investment and development risks,
vacancies in its properties, the strategic decision to reposition or divest
portions of the company's land business, further downturns in the housing
market, competition, illiquidity of real estate investments, bankruptcy or
defaults of tenants, anchor store consolidations or closings, international
activities, the impact of terrorist acts, risks associated with an investment
in a professional sports team, its substantial debt leverage and the ability
to obtain and service debt, the impact of restrictions imposed by its credit
facility and senior debt, exposure to hedging agreements, the level and
volatility of interest rates, the continued availability of tax-exempt
government financing, the impact of credit rating downgrades, effects of
uninsured or underinsured losses, effects of a downgrade or failure of its
insurance carriers, environmental liabilities, conflicts of interest, risks
associated with the sale of tax credits, risks associated with developing and
managing properties in partnership with others, the ability to maintain
effective internal controls, compliance with governmental regulations,
increased legislative and regulatory scrutiny of the financial services
industry, volatility in the market price of its publicly traded securities,
inflation risks, litigation risks, cybersecurity risks and cyber incidents, as
well as other risks listed from time to time in the company's SEC filings,
including but not limited to, the company's annual and quarterly reports.



Reconciliation of
FFO and EBDT to   Three Months       Three Months       Nine Months Ended  Nine Months Ended
Net Earnings      Ended              Ended
(Loss)
                  October 31, 2012   October 31, 2011   October 31, 2012   October 31, 2011
                  FFO      EBDT      FFO      EBDT      FFO      EBDT      FFO      EBDT
                  (in thousands)
Net earnings
(loss)            $     $      $      $       $      $       $     $   
attributable to   (1,078)  (1,078)   (36,801) (36,801)  (22,043) (22,043)  18,900   18,900
Forest City
Enterprises, Inc.
Depreciation and
Amortization—Real 73,526   73,526    71,304   71,304    216,436  216,436   209,062  209,062
Estate Groups
Impairment of
depreciable       30,364   30,364    49,446   49,446    35,304   35,304    53,116   53,116
rental properties
Gain on
disposition of
rental properties (19,299) (19,299)  (5,849)  (5,849)   (43,320) (43,320)  (67,914) (67,914)
and partial
interests in
rental properties
Income tax
expense (benefit)
adjustments —
current and
deferred ^(1)
 Gain on
disposition of
rental properties 7,893    7,893     2,275    2,275     17,174   17,174    26,339   26,339
and partial
interests in
rental properties
 Impairment of
depreciable       (11,776) (11,776)  (19,177) (19,177)  (13,692) (13,692)  (20,600) (20,600)
rental properties
Straight-line     -        (3,107)   -        (3,268)   -        (11,717)  -        (2,995)
rent adjustments
Net gain on
change in control -        -         -        -         -        (4,064)   -        -
of interests
Net (gain) loss
on land held for  -        (277)     -        -         -        51,575    -        -
divestiture
activity
Impairment of
Land Group        -        -         -        2,550     -        -         -        3,950
projects
Amortization of
mortgage
procurement       -        3,364     -        4,052     -        11,340    -        11,099
costs—Real Estate
Groups
Preference        -        -         -        585       -        -         -        1,756
payment
Allowance for
projects under    -        -         -        (2,000)   -        -         -        (2,000)
development
revision
Income tax
expense (benefit)
adjustments —
current and
deferred ^(1)
 Deferred income
tax expense
(benefit) on      -        (2,547)   -        15,349    -        17,655    -        46,378
operating
earnings
 Impairment of
Land Group        -        -         -        (989)     -        -         -        (1,532)
projects
 Net gain (loss)
on land held for  -        115       -        -         -        (20,003)  -        -
divestiture
activity
 Net gain on
change in control -        -         -        -         -        1,576     -        -
of interests
FFO/EBDT          $     $      $     $      $      $       $      $  
                  79,630   77,178    61,198   77,477    189,859  236,221   218,903  275,559
(1) The following table provides detail of Income Tax Expense (Benefit) in thousands:
                  Three Months                          Nine Months Ended
                  Ended October 31,                     October 31,
                  2012     2011                         2012     2011
Current taxes
Operating         $     $                          $     $  
earnings          (3,575)  (13,357)                     (8,941)  (37,501)
Gain on
disposition of
rental properties (565)    10                           (21,732) 39,179
and partial
interests in
rental properties
Net gain (loss)
on land held for  (17,967) -                            (16,299) -
divestiture
activity
Subtotal          (22,107) (13,347)                     (46,972) 1,678
Discontinued
operations
Operating         7        (543)                        61       (285)
earnings
Gain on
disposition of
rental properties 15,961   -                            21,592   2,792
and partial
interests in
rental properties
Subtotal          15,968   (543)                        21,653   2,507
Total Current     (6,139)  (13,890)                     (25,319) 4,185
taxes
Deferred taxes
Operating         (2,545)  15,210                       17,478   45,721
earnings
Gain on
disposition of
rental properties (252)    2,265                        26,966   (29,729)
and partial
interests in
rental properties
Impairment of
depreciable       (11,712) (15,199)                     (12,042) (15,290)
rental properties
Impairment of
Land Group        -        (989)                        -        (1,532)
projects
Net gain (loss)
on land held for  18,082   -                            (3,704)  -
divestiture
activity
Net gain on
change in control -        -                            1,576    -
of interests
Subtotal          3,573    1,287                        30,274   (830)
Discontinued
operations
Operating         (2)      139                          177      657
earnings
Gain on
disposition of
rental properties (7,251)  -                            (9,652)  14,097
and partial
interests in
rental properties
Impairment of     (64)     (3,978)                      (1,650)  (5,310)
real estate
Subtotal          (7,317)  (3,839)                      (11,125) 9,444
Total Deferred    (3,744)  (2,552)                      19,149   8,614
taxes
Grand Total       $     $                          $     $   
                  (9,883)  (16,442)                     (6,170)  12,799



Reconciliation of
Operating FFO to FFO
Pro-Rata              Three Months Ended          Nine Months Ended
Consolidation         October 31,                 October 31,
                      2012      2011      %       2012      2011      % Change
                                          Change
                      (in thousands)              (in thousands)
Portfolio Pre-tax
FFO:
Commercial Group      $     $             $     $    
                       79,614  74,531         240,158  260,563
Residential Group     33,042    25,791            96,547    70,947
Land Group            615       523               (46,927)  (131)
Adjustments to
Portfolio Pre-Tax
FFO:
Net loss (gain) on
land held for         (277)     -                 51,575    -
divestiture activity
Impairment of Land    -         2,550             -         3,950
Group project
Abandoned
development project   401       2,686             13,754    7,931
write-offs
Tax credit income     (4,851)   (5,144)           (16,732)  (24,784)
(Gain) loss on
extinguishment of     (9,019)   (15,465)          (7,175)   (18,147)
portfolio debt
Net gain on change
in control of         -         -                 (4,064)   -
interests
Straight-line rent    (3,107)   (3,268)           (11,717)  (2,995)
adjustments
Casino land sale      -         -                 (36,484)  (42,622)
Adjustments to
Portfolio Pre-Tax     (16,853)  (18,641)          (10,843)  (76,667)
FFO subtotal
Portfolio Pre-tax     96,418    82,204    17.3 %  278,935   254,712   9.5 %
Operating FFO
Corporate Group       (32,164)  (27,904)          (86,864)  (90,447)
Pre-tax FFO
Loss on
extinguishment of     789       -                 789       10,800
debt - Corporate
Group
Operating FFO         65,043    54,300    19.8 %  192,860   175,065   10.2 %
Nets Pre-tax FFO      (7,477)   (11,283)          (22,707)  (14,969)
Add back adjustments
to Portfolio Pre-Tax  16,853    18,641            10,843    76,667
FFO above
Add back loss on
extinguishment of     (789)     -                 (789)     (10,800)
debt - Corporate
Group
Income tax benefit    6,000     (460)             9,652     (7,060)
(expense) on FFO
FFO                   $     $     30.1 %  $     $     (13.3)%
                       79,630  61,198         189,859  218,903



Reconciliation of Net Operating Income (non-GAAP) to Net Earnings (Loss) (GAAP) (in
thousands)
                      Three Months Ended October 31, 2012                                     Three Months Ended October 31, 2011
                      Full          Less           Plus           Plus         Pro-Rata       Full          Less           Plus           Plus         Pro-Rata
                      Consolidation Noncontrolling Unconsolidated Discontinued Consolidation  Consolidation Noncontrolling Unconsolidated Discontinued Consolidation
                      (GAAP)        Interest       Investments at Operations   (Non-GAAP)     (GAAP)        Interest       Investments at Operations   (Non-GAAP)
                                                   Pro-Rata                                                                Pro-Rata
Net operating income  $  162,922   $   6,507    $        $        $  156,764    $   143,387 $          $        $         $   141,812
                                                   -              349                                      4,218          -             2,643
Interest expense      (69,300)      (4,007)        (25,932)       (159)        (91,384)       (65,334)      (1,710)        (26,211)       (1,865)      (91,700)
Interest expense of
unconsolidated        (25,932)      -              25,932         -            -              (26,211)      -              26,211         -            -
entities
Gain (loss) on
extinguishment of     8,007         (415)          -              (192)        8,230          15,101        1,511          1,875          -            15,465
debt
Gain on
extinguishment of
debt of               -             -              -              -            -              1,875         -              (1,875)        -            -
unconsolidated
entities
Equity in (earnings)
loss of
unconsolidated        (3,906)       (61)           11,187         -            7,342          40,016        (38)           (28,967)       -            11,087
entities, including
impairment
Net gain (loss) on
land held for         807           247            (283)          -            277            -             -              -              -            -
divestiture activity
Net loss on land held
for divestiture
activity of           (283)         -              283            -            -              -             -              -              -            -
unconsolidated
entities
Net gain on
disposition of rental
properties and        -             -              -              19,299       19,299         5,849         -              -              -            5,849
partial interests in
rental properties
Impairment of
consolidated real     (30,200)      -              -              (164)        (30,364)       (450)         -              (41,289)       (10,257)     (51,996)
estate
Impairment of
unconsolidated real   -             -              -              -            -              (41,289)      -              41,289         -            -
estate
Depreciation and
amortization—Real     (57,044)      (2,699)        (19,145)       (36)         (73,526)       (52,568)      (1,174)        (18,024)       (1,886)      (71,304)
Estate Groups (a)
Amortization of
mortgage procurement  (2,665)       (74)           (773)          -            (3,364)        (3,371)       (166)          (805)          (42)         (4,052)
costs—Real Estate
Groups (b)
Depreciation and
amortization of       (19,918)      -              19,918         -            -              (18,829)      -              18,829         -            -
unconsolidated
entities
Straight-line rent    3,055         -              -              52           3,107          3,167         -              -              101          3,268
adjustment
Preference payment    -             -              -              -            -              (585)         -              -              -            (585)
Earnings (loss)       (34,457)      (502)          11,187         19,149       (3,619)        758           2,641          (28,967)       (11,306)     (42,156)
before income taxes
Income tax benefit    18,534        -              -              (8,651)      9,883          12,060        -              -              4,382        16,442
(expense)
Equity in earnings
(loss) of
unconsolidated        4,189         61             (11,470)       -            (7,342)        (40,016)      38             28,967         -            (11,087)
entities, including
impairment
Net loss on land held
for divestiture
activity of           (283)         -              283            -            -              -             -              -              -            -
unconsolidated
entities
                      3,906         61             (11,187)       -            (7,342)        (40,016)      38             28,967         -            (11,087)
Earnings (loss) from  (12,017)      (441)          -              10,498       (1,078)        (27,198)      2,679          -              (6,924)      (36,801)
continuing operations
Discontinued
operations, net of    10,370        (128)          -              (10,498)     -              (6,860)       64             -              6,924        -
tax
Net earnings (loss)   (1,647)       (569)          -              -            (1,078)        (34,058)      2,743          -              -            (36,801)
Noncontrolling
interests
(Earnings) loss from
continuing operations
attributable to       441           441            -              -            -              (2,679)       (2,679)        -              -            -
noncontrolling
interests
(Earnings) loss from
discontinued
operations            128           128            -              -            -              (64)          (64)           -              -            -
attributable to
noncontrolling
interests
                      569           569            -              -            -              (2,743)       (2,743)        -              -            -
Net loss attributable $           $        $        $       $           $           $        $        $       $  
to Forest City        (1,078)      -              -              -          (1,078)        (36,801)      -             -              -         (36,801)
Enterprises, Inc.
Preferred dividends
and inducements of    (17,731)      -              -              -            (17,731)       (3,850)       -              -              -            (3,850)
preferred stock
conversion
Net loss attributable
to Forest City        $  (18,809) $        $        $       $            $           $        $        $       $  
Enterprises, Inc.                   -              -              -          (18,809)       (40,651)      -             -              -         (40,651)
common shareholders
(a) Depreciation and                                              $       $           $                                                     $   
amortization - Real   $   57,044 $   2,699    $  19,145    36           73,526         52,568        $    1,174  $   18,024   $   1,886 71,304
Estate Groups
 Depreciation
and                   1,037         -              -              -            1,037          1,012         -              -              -            1,012
amortization—Non-Real
Estate
 Total                                                       $       $           $                                                     $   
depreciation and      $   58,081 $   2,699    $  19,145    36           74,563         53,580        $    1,174  $   18,024   $   1,886 72,316
amortization
(b) Amortization of
mortgage procurement  $          $     74  $     773  $       $          $         $     166 $     805 $       $    
costs - Real Estate   2,665                                       -         3,364          3,371                                       42           4,052
Groups



Reconciliation of Net Operating Income (non-GAAP) to Net Earnings (Loss) (GAAP) (in thousands)
                      Nine Months Ended October 31, 2012                                      Nine Months Ended October 31, 2011
                      Full          Less           Plus           Plus         Pro-Rata       Full          Less           Plus           Plus         Pro-Rata
                      Consolidation Noncontrolling Unconsolidated Discontinued Consolidation  Consolidation Noncontrolling Unconsolidated Discontinued Consolidation
                      (GAAP)        Interest       Investments at Operations   (Non-GAAP)     (GAAP)        Interest       Investments at Operations   (Non-GAAP)
                                                   Pro-Rata                                                                Pro-Rata
Net operating income  $   487,481 $  13,380    $        $   4,729  $  478,830   $  496,804  $  14,224    $        $          $   496,687
                                                   -                                                                       -             14,107
Interest expense      (188,640)     (9,408)        (76,230)       (2,413)      (257,875)      (192,545)     (9,065)        (74,501)       (6,280)      (264,261)
Interest expense of
unconsolidated        (76,230)      -              76,230         -            -              (74,501)      -              74,501         -            -
entities
Gain (loss) on
extinguishment of     7,288         (603)          (1,313)        (192)        6,386          9,334         1,507          (480)          -            7,347
debt
Loss on
extinguishment of
debt of               (1,313)       -              1,313          -            -              (480)         -              480            -            -
unconsolidated
entities
Equity in (earnings)
loss of
unconsolidated        17,933        (260)          1,413          -            19,606         17,637        (228)          (3,076)        -            14,789
entities, including
impairment
Net gain (loss) on
land held for         (5,651)       3,754          (42,170)       -            (51,575)       -             -              -              -            -
divestiture activity
Net loss on land held
for divestiture
activity of           (42,170)      -              42,170         -            -              -             -              -              -            -
unconsolidated
entities
Net gain on
disposition of rental
properties and        -             -              16,107         27,213       43,320         15,410        -              12,567         39,937       67,914
partial interests in
rental properties
Gain on disposition
of unconsolidated     16,107        -              (16,107)       -            -              12,567        -              (12,567)       -            -
entities
Impairment of
consolidated real     (30,660)      -              (390)          (4,254)      (35,304)       (2,085)       -              (41,289)       (13,692)     (57,066)
estate
Impairment of
unconsolidated real   (390)         -              390            -            -              (41,289)      -              41,289         -            -
estate
Depreciation and
amortization—Real     (161,414)     (4,695)        (57,992)       (1,725)      (216,436)      (158,488)     (4,370)        (47,724)       (7,220)      (209,062)
Estate Groups (a)
Amortization of
mortgage procurement  (9,054)       (303)          (2,423)        (166)        (11,340)       (8,791)       (425)          (2,157)        (576)        (11,099)
costs—Real Estate
Groups (b)
Depreciation and
amortization of       (60,415)      -              60,415         -            -              (49,881)      -              49,881         -            -
unconsolidated
entities
Straight-line rent    11,338        -              -              379          11,717         2,070         -              -              925          2,995
adjustment
Preference payment    -             -              -              -            -              (1,756)       -              -              -            (1,756)
Earnings (loss)       (35,790)      1,865          1,413          23,571       (12,671)       24,006        1,643          (3,076)        27,201       46,488
before income taxes
Income tax benefit    16,698        -              -              (10,528)     6,170          (848)         -              -              (11,951)     (12,799)
(expense)
Net gain on change in 6,766         2,702          -              -            4,064          -             -              -              -            -
control of interests
Equity in earnings
(loss) of
unconsolidated        24,237        260            (43,583)       -            (19,606)       (17,637)      228            3,076          -            (14,789)
entities, including
impairment
Net loss on land held
for divestiture
activity of           (42,170)      -              42,170         -            -              -             -              -              -            -
unconsolidated
entities
                      (17,933)      260            (1,413)        -            (19,606)       (17,637)      228            3,076          -            (14,789)
Earnings (loss) from  (30,259)      4,827          -              13,043       (22,043)       5,521         1,871          -              15,250       18,900
continuing operations
Discontinued
operations, net of    14,501        1,458          -              (13,043)     -              99,475        84,225         -              (15,250)     -
tax
Net earnings (loss)   (15,758)      6,285          -              -            (22,043)       104,996       86,096         -              -            18,900
Noncontrolling
interests
Earnings from
continuing operations
attributable to       (4,827)       (4,827)        -              -            -              (1,871)       (1,871)        -              -            -
noncontrolling
interests
Earnings from
discontinued
operations            (1,458)       (1,458)        -              -            -              (84,225)      (84,225)       -              -            -
attributable to
noncontrolling
interests
                      (6,285)       (6,285)        -              -            -              (86,096)      (86,096)       -              -            -
Net earnings (loss)
attributable to       $           $        $        $       $  (22,043)  $   18,900  $        $        $       $   18,900
Forest City           (22,043)       -           -             -                                         -             -              -
Enterprises, Inc.
Preferred dividends
and inducements of    (25,431)      -              -              -            (25,431)       (11,550)      -              -              -            (11,550)
preferred stock
conversion
Net earnings (loss)
attributable to       $           $        $        $                                    $        $        $       $   
Forest City           (47,474)       -            -             -            $  (47,474)  $    7,350 -             -              -         7,350
Enterprises, Inc.
common shareholders
(a) Depreciation and
amortization—Real     $   161,414 $    4,695 $   57,992   $  1,725    $  216,436   $  158,488   $   4,370   $   47,724   $   7,220 $  209,062
Estate Groups
 Depreciation
and                   2,233         -              -              -            2,233          2,400         -              -              -            2,400
amortization—Non-Real
Estate
 Total
depreciation and      $   163,647 $    4,695 $   57,992   $  1,725    $  218,669   $  160,888   $   4,370   $   47,724   $   7,220 $  211,462
amortization
(b) Amortization of
mortgage procurement  $         $         $    2,423  $   166   $   11,340  $    8,791 $     425  $    2,157  $        $   11,099
costs—Real Estate     9,054         303                                                                                                   576
Groups



            Net Operating Income (in thousands)
            Three Months Ended October 31, 2012                      Three Months Ended October 31, 2011                     % Change
            Full          Less           Plus         Pro-Rata       Full          Less           Plus         Pro-Rata      Full          Pro-Rata
            Consolidation Noncontrolling Discontinued Consolidation  Consolidation Noncontrolling Discontinued Consolidation Consolidation Consolidation
            (GAAP)        Interest       Operations   (Non-GAAP)     (GAAP)        Interest       Operations   (Non-GAAP)    (GAAP)        (Non-GAAP)
Commercial
Group
Retail
Comparable  $          $         $       $           $          $         $       $          0.2 %         0.5 %
            58,212       1,569            -        56,643        58,067       1,700            -        56,367
Total       62,012        2,106          590          60,496         58,046        2,031          1,823        57,838
Office
Buildings
Comparable  61,843        1,822          -            60,021         61,388        1,718          -            59,670        0.7 %         0.6 %
Total       62,383        1,798          -            60,585         61,932        1,230          (49)         60,653
Arena       1,278         802            -            476            (2,210)       (974)          -            (1,236)
Hotels      4,200         -              -            4,200          3,217         -              (88)         3,129
Land Sales  3,703         -              -            3,703          128           -              -            128
Other ^(1)  (259)         (7)            (183)        (435)          (2,151)       665            522          (2,294)
Total
Commercial
Group
Comparable  120,055       3,391          -            116,664        119,455       3,418          -            116,037       0.5 %         0.5 %
Total       133,317       4,699          407          129,025        118,962       2,952          2,208        118,218
Residential
Group
Apartments
Comparable  36,463        635            -            35,828         34,475        672            -            33,803        5.8 %         6.0 %
Total       39,051        852            (58)         38,141         35,428        600            435          35,263
Subsidized
Senior      6,471         55             -            6,416          4,437         101            -            4,336
Housing
Military    6,770         285            -            6,485          8,626         97             -            8,529
Housing
Land Sales  -             -              -            -              46            -              -            46
Other ^(1)  (1,569)       131            -            (1,700)        (2,745)       148            -            (2,893)
Total
Residential
Group
Comparable  36,463        635            -            35,828         34,475        672            -            33,803        5.8 %         6.0 %
Total       50,723        1,323          (58)         49,342         45,792        946            435          45,281
Total
Rental
Properties
Comparable  156,518       4,026          -            152,492        153,930       4,090          -            149,840       1.7 %         1.8 %
Total       184,040       6,022          349          178,367        164,754       3,898          2,643        163,499
Land
Development 886           485            -            401            2,333         320            -            2,013
Group
The Nets    (7,477)       -              -            (7,477)        (11,283)      -              -            (11,283)
Corporate   (14,527)      -              -            (14,527)       (12,417)      -              -            (12,417)
Activities
Grand Total $           $         $       $            $           $         $        $  
            162,922      6,507           349        156,764       143,387      4,218          2,643       141,812
(1) Includes write-offs of abandoned development projects, non-capitalizable development costs and unallocated management and service company overhead,
net of tax credit income.



            Net Operating Income (in thousands)
            Nine Months Ended October 31, 2012                       Nine Months Ended October 31, 2011                      % Change
            Full          Less           Plus         Pro-Rata       Full          Less           Plus         Pro-Rata      Full          Pro-Rata
            Consolidation Noncontrolling Discontinued Consolidation  Consolidation Noncontrolling Discontinued Consolidation Consolidation Consolidation
            (GAAP)        Interest       Operations   (Non-GAAP)     (GAAP)        Interest       Operations   (Non-GAAP)    (GAAP)        (Non-GAAP)
Commercial
Group
Retail
Comparable  $   172,557 $         $       $   167,546  $   169,492 $         $       $   164,428 1.8 %         1.9 %
                          5,011            -                                     5,064            -
Total       180,932       5,645          3,021        178,308        181,487       7,320          5,699        179,866
Office
Buildings
Comparable  190,958       6,132          -            184,826        184,404       4,982          -            179,422       3.6 %         3.0 %
Total       193,054       6,229          -            186,825        190,757       4,900          2,823        188,680
Arena       (9,231)       (3,507)        -            (5,724)        (6,561)       (2,852)        -            (3,709)
Hotels      9,009         -              -            9,009          7,844         -              2,054        9,898
Land Sales  40,201        -              -            40,201         42,801        (782)          684          44,267
^(1)
Other ^(2)  (17,457)      (184)          822          (16,451)       (215)         1,959          1,545        (629)
Total
Commercial
Group
Comparable  363,515       11,143         -            352,372        353,896       10,046         -            343,850       2.7 %         2.5 %
Total       396,508       8,183          3,843        392,168        416,113       10,545         12,805       418,373
Residential
Group
Apartments
Comparable  107,137       1,992          -            105,145        99,129        1,832          -            97,297        8.1 %         8.1 %
Total       113,348       2,450          886          111,784        98,250        1,798          1,302        97,754
Subsidized
Senior      15,582        259            -            15,323         12,418        351            -            12,067
Housing
Military    21,433        529            -            20,904         19,793        335            -            19,458
Housing
Land Sales  -             -              -            -              204           16             -            188
Other ^(2)  (5,648)       416            -            (6,064)        (2,780)       425            -            (3,205)
Total
Residential
Group
Comparable  107,137       1,992          -            105,145        99,129        1,832          -            97,297        8.1 %         8.1 %
Total       144,715       3,654          886          141,947        127,885       2,925          1,302        126,262
Total
Rental
Properties
Comparable  470,652       13,135         -            457,517        453,025       11,878         -            441,147       3.9 %         3.7 %
Total       541,223       11,837         4,729        534,115        543,998       13,470         14,107       544,635
Land
Development 10,355        1,543          -            8,812          5,227         754            -            4,473
Group
The Nets    (22,707)      -              -            (22,707)       (14,969)      -              -            (14,969)
Corporate   (41,390)      -              -            (41,390)       (37,452)      -              -            (37,452)
Activities
Grand Total $   487,481 $          $        $   478,830  $   496,804 $          $         $   496,687
                          13,380         4,729                                     14,224         14,107
(1) Includes $36,484 and $42,622 of NOI generated from the casino land sale at full and pro-rata consolidation for the nine months ended October 31,
2012 and 2011, respectively.
(2) Includes write-offs of abandoned development projects, non-capitalizable development costs and unallocated management and service company overhead,
net of tax credit income.



SOURCE Forest City Enterprises, Inc.

Website: http://www.forestcity.net
Contact: Robert O'Brien, Executive Vice President - Chief Financial Officer,
+1-216-621-6060, or Jeff Linton, Senior Vice President - Corporate
Communication, +1-216-621-6060
 
Press spacebar to pause and continue. Press esc to stop.