Print Page      Close Window     

SEC Filings

8-K
FOREST CITY REALTY TRUST, INC. filed this Form 8-K on 10/30/2018
Entire Document
 
Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________
Form 8-K
_____________________________________________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): October 30, 2018
_____________________________________________________________
Forest City Realty Trust, Inc.
(Exact name of registrant as specified in its charter)
_____________________________________________________________

Maryland
(State or other jurisdiction of
incorporation or organization)
 
1-37671
(Commission
File Number)
 
47-4113168
(I.R.S. Employer
Identification No.)
 
 
 
 
 
Key Tower, 127 Public Square
Suite 3100, Cleveland, Ohio
 
44114
(Address of principal executive offices)
 
(Zip Code)
 
 
 
Registrant's telephone number, including area code: 216-621-6060
 
 
 
 
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
_____________________________________________________________


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o





Item 2.02. Results of Operations and Financial Condition.
The information in this Current Report on Form 8-K, including exhibits, is being furnished and shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report on Form 8-K, including exhibits, shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except as may be expressly set forth by specific reference in such filing.
On October 30, 2018, Forest City Realty Trust, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter of 2018. This press release refers to its supplemental package which is available on its website. The press release and supplemental package are attached hereto as Exhibit 99.1 and are incorporated by reference herein.

Item 9.01. Financial Statements and Exhibit.

(d)
Exhibit

The following exhibit is furnished herewith.






SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
FOREST CITY REALTY TRUST, INC.
 
 
 
 
 
 
By:
/s/ ROBERT G. O'BRIEN
 
 
Name:
Robert G. O’Brien
 
 
Title:
Executive Vice President and Chief Financial Officer
 
 
 
 
Date:
October 30, 2018
 
 



Exhibit
Exhibit 99.1




http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12519320&doc=11
Earnings Release and Supplemental Package
For the Quarter Ended September 30, 2018




Forest City Realty Trust, Inc. and Subsidiaries - Earnings Release and Supplemental Package
Third Quarter 2018
Index
Earnings Release
Company Operations
Selected Financial Information
 
Consolidated Balance Sheets
Consolidated Statements of Operations
Net Asset Value Components
Supplemental Operating Information
 
Leasing Summary
Occupancy Data
Comparable Net Operating Income (NOI)
NOI Detail
Summary of Corporate General and Administrative and Other NOI
Core Market NOI
Reconciliation of Earnings Before Income Taxes to NOI
Reconciliation of Net Earnings to FFO to Operating FFO
Reconciliation of Net Earnings attributable to Forest City Realty Trust, Inc. to Adjusted EBITDA attributable to Forest City Realty Trust, Inc.
Reconciliation of NOI to Operating FFO
Operating FFO Bridges
Historical Trends
Development Pipeline
Appendix
This supplemental package, together with other statements and information publicly disseminated by us, contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements reflect management’s current views with respect to financial results related to future events and are based on assumptions and expectations that may not be realized and are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial or otherwise, may differ, perhaps materially, from the results discussed in the forward-looking statements. Risk factors discussed in Item 1A of our Form 10-K for the year ended December 31, 2017 and Form 10-Q for the quarter ended September 30, 2018 and other factors that might cause differences, some of which could be material, include, but are not limited to, the conditions to the completion of the proposed merger transaction may not be satisfied, the parties’ to the proposed merger transaction ability to meet expectations regarding the anticipated timing of the transaction, the occurrence of any event, change or other circumstance that could give rise to the termination of the transaction agreement between the parties to the proposed merger transaction, the effect of the pendency of the proposed merger transaction on business relationships, operating results, stock price, and business generally, risks that the proposed merger transaction disrupts current plans and operations and potential difficulties in employee retention as a result of the proposed merger transaction, risks related to diverting management’s attention from ongoing business operations as a result of the proposed merger transaction, the outcome of any legal proceedings that may be instituted related to the proposed merger transaction or the transaction agreement between the parties to the proposed merger transaction, the amount of the costs, fees, expenses and other charges related to the proposed merger transaction, our ability to carry out future transactions and strategic investments, as well as the acquisition related costs, unanticipated difficulties realizing benefits expected when entering into a transaction, our ability to qualify or to remain qualified as a REIT, our ability to satisfy REIT distribution requirements, the impact of issuing equity, debt or both, and selling assets to satisfy our future distributions required as a REIT or to fund capital expenditures, future growth and expansion initiatives, the impact of the amount and timing of any future distributions, the impact from complying with REIT qualification requirements limiting our flexibility or causing us to forego otherwise attractive opportunities beyond rental real estate operations, the impact of complying with the REIT requirements related to hedging, our lack of experience operating as a REIT, legislative, administrative, regulatory or other actions affecting REITs, including positions taken by the Internal Revenue Service, the possibility that our Board of Directors will unilaterally revoke our REIT election, the possibility that the anticipated benefits of qualifying as a REIT will not be realized, or will not be realized within the expected time period, the impact of current lending and capital market conditions on our liquidity, our ability to finance or refinance projects or repay our debt, the impact of the slow economic recovery on the ownership, development and management of our commercial real estate portfolio, general real estate investment and development risks, litigation risks, vacancies in our properties, risks associated with developing and managing properties in partnership with others, competition, our ability to renew leases or re-lease spaces as leases expire, illiquidity of real estate investments, our ability to identify and transact on chosen strategic alternatives for a portion of our retail portfolio, bankruptcy or defaults of tenants, anchor store consolidations or closings, the impact of terrorist acts and other armed conflicts, our substantial debt leverage and the ability to obtain and service debt, the impact of restrictions imposed by our revolving credit facility, term loan and senior debt, exposure to hedging agreements, the level and volatility of interest rates, the continued availability of tax-exempt government financing, our ability to receive payment on the note receivable issued by Onexim in connection with their purchase of our interests in the Barclays Center, the impact of credit rating downgrades, effects of uninsured or underinsured losses, effects of a downgrade or failure of our insurance carriers, environmental liabilities, competing interests of our directors and executive officers, the ability to recruit and retain key personnel, risks associated with the sale of tax credits, downturns in the housing market, the ability to maintain effective internal controls, compliance with governmental regulations, increased legislative and regulatory scrutiny of the financial services industry, changes in federal, state or local tax laws and international trade agreements, volatility in the market price of our publicly traded securities, inflation risks, cybersecurity risks, cyber incidents, shareholder activism efforts, conflicts of interest, risks related to our organizational structure including operating through our Operating Partnership and our UPREIT structure, as well as other risks listed from time to time in our SEC filings, including but not limited to, our annual and quarterly reports. We have no obligation to revise or update any forward-looking statements, other than as imposed by law, as a result of future events or new information. Readers are cautioned not to place undue reliance on such forward-looking statements.

1



Forest City Realty Trust, Inc. and Subsidiaries
Earnings Release


AT THE COMPANY  
ON THE WEB
Mike Lonsway
www.forestcity.net
Executive Vice President – Planning
 
216-416-3325
 
 
 
Jeff Linton
 
Senior Vice President – Communication
 
216-416-3558
 

FOR IMMEDIATE RELEASE

Forest City Reports 2018 Third-Quarter and Year-to-Date Results

Q3 Net earnings: $447.2 million ($1.63 per share) vs. $5.5 million ($0.02 per share) Q3 2017
Q3 FFO: $98.8 million ($0.36 per share) vs. $112.6 million ($0.42 per share) Q3 2017
Q3 Operating FFO: $102.1 million ($0.38 per share) vs. $110.1 million ($0.41 per share) Q3 2017
Q3 Comp NOI up 1.7 percent, with office up 2.1 percent and apartments up 1.1 percent
Adjusted EBITDA margins up 490 basis points vs. yearend 2016 benchmark, on a rolling 12-month basis
Q3 Net Debt to Adjusted EBITDA ratio 6.7 times vs. 7.8 times Q3 2017, on a rolling 12-month basis

CLEVELAND, Ohio - October 30, 2018 - Forest City Realty Trust, Inc. (NYSE: FCEA) today announced financial results for the three and nine months ended September 30, 2018.
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
2017
 
2018
2017
 
(in thousands, except per share data)
Net earnings attributable to Forest City Realty Trust, Inc. (GAAP)
$
447,173

$
5,454

 
$
715,432

$
103,124

Net earnings attributable to common stockholders per share, diluted
$
1.63

$
0.02

 
$
2.62

$
0.39

Revenues
$
218,230

$
233,544

 
$
635,488

$
685,992

FFO attributable to Forest City Realty Trust, Inc. (Non-GAAP)
$
98,796

$
112,558

 
$
279,776

$
308,301

FFO per share, diluted
$
0.36

$
0.42

 
$
1.03

$
1.15

Operating FFO attributable to Forest City Realty Trust, Inc. (Non-GAAP)
$
102,099

$
110,145

 
$
297,116

$
310,200

Operating FFO per share, diluted
$
0.38

$
0.41

 
$
1.10

$
1.16


Factors Impacting Variances in Net Earnings, FFO and Operating FFO
The primary driver of the positive net earnings variance for the third quarter, compared with the comparable period in 2017, was increased gain on change in control of interest and increased gain on sales (net of tax) totaling $394.3 million, as well as a non-recurring 2017 impairment of real estate of $54.9 million, partially offset by lower depreciation and amortization expense of $6.3 million. For the year to date, the same factors were the primary proportionate drivers of the net earnings variance, with the gains accounting for $556.2 million (net of tax) of the increase.

Third-quarter 2018 FFO was impacted by the factors listed below under Operating FFO, as well as by increased organizational transformation and severance costs of $5.7 million.

Primary positive factors impacting third-quarter 2018 Operating FFO, compared with the comparable period in 2017, included improvement in Other Net Operating Income/Corporate G&A of $7.7 million, most of which is reduced overhead expense, increased NOI from the mature portfolio of $1.9 million, and increased NOI from new property openings and acquisitions of $0.5 million. These positive factors were offset by reduced NOI from properties sold of $10.1 million, a 2017 tax credit of $7.2 million related to Westchester’s Ridge Hill that did not recur, and reduced Operating FFO from other sources of $0.8 million. Bridges depicting factors impacting Operating FFO for the three and nine months ended September 30, 2018, are included in the company’s Supplemental Package.



2



Forest City Realty Trust, Inc. and Subsidiaries
Earnings Release


Comparable NOI, Occupancies and Rent
Operating results for the company’s real estate portfolio for the three and nine months ended September 30, 2018, are summarized below.
 
Percent Change to Prior Year
 
Three Months Ended September 30, 2018
Nine Months Ended September 30, 2018
Comparable NOI (Non-GAAP)
 
 
Office
2.1
%
1.4
%
Apartments
1.1
%
2.3
%
Total
1.7
%
1.8
%
 
As of September 30,
 
2018
2017
Comparable occupancy, Office
94.5
%
97.0
%
 
Nine Months Ended September 30, 2018
Nine Months Ended September 30, 2017
Comparable economic occupancy, Apartments
94.7
%
94.1
%
Comparable average rental rates, Apartments
$
1,553

$
1,533

Comparable average Core Market rental rates, Apartments
$
2,031

$
2,011


Projects Under Construction
At September 30, 2018, Forest City had seven projects under construction at a total cost of $880.3 million, or $279.8 million at the company’s share, for a development ratio of 4.4 percent. Additional information on openings and projects under construction can be found in the Development Pipeline exhibit in the company’s Supplemental Package for the quarter ended September 30, 2018.

Commentary
“Results for the quarter and year to date met our expectations and demonstrate the strength of our operating properties and core markets, as well as the skill and dedication of our teams across the enterprise. They also reflect the ongoing execution of our strategies to further strengthen and focus our company,” said David J. LaRue, Forest City president and chief executive officer.
   
“Results in apartments benefited from increased occupancy, partially offset by increased real estate taxes, utility expenses, wages and concessions. As expected, comp NOI growth for the apartment portfolio moderated, up 1.1 percent in the third quarter and 2.3 percent for the first nine months of 2018.

“In office, comp NOI grew by 2.1 percent in the third quarter, driven primarily by strong results from University Park at MIT in Cambridge, partially offset by a large lease expiration at One Pierrepont Plaza in Brooklyn. We expect to have roughly half the Pierrepont space under lease by yearend, with letters of intent for additional space beyond that.

“At the end of the third quarter, our Adjusted EBITDA margins (excluding the Development Segment) were up 490 basis points over our 2016 yearend benchmark, near the top of our target range of 400-to-500 basis points of improvement by mid-2018. We ended the third quarter with a ratio of Net Debt to Adjusted EBITDA of 6.7 times, on a rolling 12-month basis, down from 7.8 times at September 30, 2017, and down from 7.4 times at the end of 2017.

“Projects under construction continue on track in our core markets, including greater Greater Washington D.C., New York City, and Denver, and development work is progressing on our future entitled opportunities, including both the Pier 70 and 5M projects in San Francisco.”

Merger Agreement
On July 30, 2018, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Antlia Holdings LLC (“Parent”) and Antlia Merger Sub Inc. (“Merger Sub”), pursuant to which, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into Forest City (the “Merger”), with Forest City surviving

3



Forest City Realty Trust, Inc. and Subsidiaries
Earnings Release


the Merger as a wholly owned subsidiary of Parent.  Parent and Merger Sub were formed by a Brookfield Asset Management Inc. (“Brookfield”) real estate investment fund.  Consummation of the Merger is subject to the satisfaction or waiver of specified closing conditions, including the approval of the Merger by the affirmative vote of the holders of a majority of the outstanding shares of Forest City’s Class A common stock entitled to vote on such matter at a meeting of the Forest City stockholders and other customary closing conditions for a transaction of this type.  We anticipate the Merger will close in the fourth quarter of 2018.

NOTE: As a result of the July 31, 2018, announcement of a definitive agreement for Forest City to be acquired by a fund of Brookfield Asset Management, the company will not conduct a third-quarter conference call with investors.

Additional Information about the Proposed Merger and Where to Find It
This communication may be deemed to be solicitation material in respect of the proposed acquisition of Forest City by Brookfield. In connection with the proposed transaction, Forest City filed a definitive proxy statement on Schedule 14A (the “Proxy Statement”) with the SEC on October 12, 2018 for a special meeting of the stockholders in connection with the proposed transaction to be held on November 15, 2018. The Proxy Statement was mailed to stockholders on or about October 12, 2018. This communication is not a substitute for the Proxy Statement or for any other document that Forest City has filed or may file with the SEC or send to Forest City’s stockholders in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain the documents free of charge at the SEC’s web site, http://www.sec.gov. In addition, investors will be able to obtain free copies of the documents filed with the SEC by Brookfield, when available, by contacting Brookfield Investor Relations at bpy.enquiries@brookfield.com or (855) 212-8243 or at Brookfield’s website at www.brookfield.com, and will be able to obtain free copies of the Proxy Statement and the other documents filed with the SEC by Forest City, when available, by contacting Forest City Investor Relations at (216)-416-3325 or at Forest City’s website at http://ir.forestcity.net/.

Participants in Solicitation
Forest City and its respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the holders of Forest City’s common stock in respect of the proposed transaction. Information about the directors and executive officers of Forest City is set forth in the proxy statement for Forest City’s 2018 Annual Meeting of Stockholders, which was filed with the SEC on May 16, 2018, and in subsequent documents filed with the SEC. Additional information regarding persons who may be deemed participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, are included in the Proxy Statement and other relevant materials that have been filed with the SEC.


4



Forest City Realty Trust, Inc. and Subsidiaries
Supplemental Financial and Operating Information

Supplemental Financial and Operating Information
We recommend reading this supplemental package in conjunction with our Form 10-Q for the three and nine months ended September 30, 2018. This supplemental package contains consolidated financial statements prepared in accordance with generally accepted accounting principles (“GAAP”). We also present certain financial information at total company ownership because we believe this information is useful to financial statement users as this method reflects the manner in which we operate our business. We believe financial information and other operating metrics at total company ownership including net asset value (“NAV”) components, net operating income (“NOI”), comparable NOI, comparable NOI margins, Funds From Operations (“FFO”), Operating FFO, Earnings Before Interest, Taxes, Depreciation and Amortization for real estate (“EBITDAre”), Adjusted EBITDA and Net Debt to Adjusted EBITDA are necessary to understand our business and operating results, along with net earnings and other GAAP measures. Our financial statement users can use these non-GAAP measures as supplementary information to evaluate our business. Our non-GAAP measures or information shown at total company ownership are not intended to be performance measures that should be regarded as alternatives to, or more meaningful than, our GAAP measures. Further information and definitions for these non-GAAP measures are included in the Appendix section of the supplemental package.

The operating information contained in this document includes: occupancy data, leasing summaries, comparable NOI, comparable NOI margins, core market NOI, reconciliation of earnings before income taxes to NOI, reconciliation of net earnings to FFO, reconciliation of FFO to Operating FFO, reconciliation of net earnings attributable to Forest City Realty Trust, Inc. to Adjusted EBITDA attributable to Forest City Realty Trust, Inc., reconciliation of NOI to Operating FFO, Operating FFO bridges, historical trends and our development pipeline. We believe this information gives interested parties a better understanding and more information about our operating performance. The term “comparable,” which is used throughout this document, is generally defined as including stabilized properties open and operated in the three and nine months ended September 30, 2018 and 2017.

This supplemental package also contains financial information of entities consolidated under GAAP (“Fully Consolidated Entities”), financial information on our partners’ share of entities consolidated under GAAP (“Noncontrolling Interest”) and financial information on our share of entities accounted for using the equity method of accounting (“Company Share of Unconsolidated Entities”). We believe disclosing financial information on Fully Consolidated Entities, Noncontrolling Interest and Company Share of Unconsolidated Entities is essential to allow our financial statement users the ability to arrive at our total company ownership of all of our real estate investments, whether or not we “control” the investment under GAAP.

Financial information related to Fully Consolidated Entities, Noncontrolling Interest and Company Share of Unconsolidated Entities is included in the Appendix section of this supplemental package.

Corporate Headquarters    Transfer Agent and Registrar
Forest City Realty Trust, Inc.    EQ Shareowner Services
Key Tower    P.O. Box 64854
127 Public Square, Suite 3100    St. Paul, MN 55164-9440
Cleveland, Ohio 44114    (800) 468-9716 www.shareowneronline.com
Annual Report on Form 10-K
A copy of the Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) for the year ended December 31, 2017, can be found on our website under SEC Filings or may be obtained without charge upon written request to:
Jeffrey B. Linton
Senior Vice President - Communication
JeffLinton@forestcity.net
Website
www.forestcity.net
The information contained on this website is not incorporated herein by reference and does not constitute a part of this supplemental package.
Investor Relations
Michael E. Lonsway
Executive Vice President - Planning
MikeLonsway@forestcity.net

NYSE Listing
FCEA - Class A Common Stock ($.01 par value)


5



Forest City Realty Trust, Inc. and Subsidiaries
Selected Financial Information

Consolidated Balance Sheets – (Unaudited)
 
September 30, 2018
December 31, 2017
 
(in thousands)
Assets
 
 
Real Estate
 
 
Completed rental properties
7,413,450

7,154,607

Projects under construction and development
435,892

568,552

Land inventory
72,885

57,296

Total Real Estate
7,922,227

7,780,455

Less accumulated depreciation
(1,554,126
)
(1,484,163
)
Real Estate, net
6,368,101

6,296,292

Cash and equivalents
485,941

204,260

Restricted cash
211,572

146,131

Accounts receivable, net
224,788

225,022

Notes receivable
423,737

398,785

Investments in and advances to unconsolidated entities
533,482

550,362

Lease procurement costs, net
66,386

59,810

Prepaid expenses and other deferred costs, net
59,274

75,839

Intangible assets, net
174,051

106,786

Assets held for sale
29,014


Total Assets
$
8,576,346

$
8,063,287

Liabilities and Equity
 
 
Liabilities
 
 
Nonrecourse mortgage debt and notes payable, net
3,163,987

2,998,361

Revolving credit facility


Term loan, net
333,967

333,668

Convertible senior debt, net
31,802

112,637

Construction payables
71,286

76,045

Operating accounts payable and accrued expenses
494,730

561,132

Accrued derivative liability
12,020

12,845

Total Accounts payable, accrued expenses and other liabilities
578,036

650,022

Cash distributions and losses in excess of investments in unconsolidated entities
84,810

123,882

Liabilities on assets held for sale
10,022


Total Liabilities
4,202,624

4,218,570

Equity
 
 
Stockholders’ Equity
 
 
Stockholders’ equity before accumulated other comprehensive loss
4,145,154

3,436,997

Accumulated other comprehensive loss
(3,750
)
(8,563
)
Total Stockholders’ Equity
4,141,404

3,428,434

Noncontrolling interest
232,318

416,283

Total Equity
4,373,722

3,844,717

Total Liabilities and Equity
$
8,576,346

$
8,063,287







6



Forest City Realty Trust, Inc. and Subsidiaries
Selected Financial Information

Consolidated Statements of Operations – (Unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
2017
 
2018
2017
 
(in thousands)
Revenues
 
 
 
 
 
Rental
$
167,551

$
167,682

 
$
490,462

$
496,095

Tenant recoveries
30,026

26,671

 
85,245

80,735

Service and management fees
1,911

8,152

 
9,765

29,642

Parking and other
10,822

9,253

 
26,657

34,212

Land sales
7,920

21,786

 
23,359

45,308

Total revenues
218,230

233,544

 
635,488

685,992

Expenses
 
 
 
 
 
Property operating and management
66,337

71,961

 
200,112

228,912

Real estate taxes
25,105

21,748

 
66,147

64,305

Ground rent
4,235

3,837

 
12,013

11,491

Cost of land sales
2,723

13,301

 
7,943

22,996

Corporate general and administrative
9,736

16,480

 
35,331

46,081

Organizational transformation and termination benefits
8,289

2,633

 
29,188

14,021

 
116,425

129,960

 
350,734

387,806

Depreciation and amortization
60,925

60,194

 
170,652

189,496

Write-offs of abandoned development projects and demolition costs


 

1,596

Impairment of real estate

44,288

 

44,288

Total expenses
177,350

234,442

 
521,386

623,186

Operating income (loss)
40,880

(898
)
 
114,102

62,806

Interest and other income
13,296

20,361

 
34,773

40,529

Gain on change in control of interests
219,666


 
337,377


Interest expense
(30,882
)
(31,597
)
 
(86,849
)
(88,473
)
Amortization of mortgage procurement costs
(1,366
)
(1,338
)
 
(3,966
)
(4,067
)
Loss on extinguishment of debt
(19
)

 
(3,995
)
(2,843
)
Earnings (loss) before income taxes and earnings from unconsolidated entities
241,575

(13,472
)
 
391,442

7,952

Equity in earnings
7,369

8,295

 
12,038

23,834

Net gain on disposition of interest in unconsolidated entities
181,504

28,828

 
265,510

81,782

Impairment

(10,600
)
 

(10,600
)

188,873

26,523

 
277,548

95,016

Earnings before income taxes
430,448

13,051

 
668,990

102,968

 
 
 
 
 
 
Current income tax expense of taxable REIT subsidiaries
2,981

304

 
3,940

4,817

Earnings before gain on disposal of real estate, net of tax
427,467

12,747

 
665,050

98,151

Net gain (loss) on disposition of interest in development project


 
6,227

(113
)
Net gain (loss) on disposition of rental properties
60,931

(256
)
 
84,038

13,573

Net earnings
488,398

12,491

 
755,315

111,611

Noncontrolling interests, gross of tax
 
 
 
 
 
Earnings from continuing operations attributable to noncontrolling interests
(41,225
)
(7,037
)
 
(39,883
)
(8,487
)
Net earnings attributable to Forest City Realty Trust, Inc.
$
447,173

$
5,454

 
$
715,432

$
103,124


7



Forest City Realty Trust, Inc. and Subsidiaries
Selected Financial Information


Net Asset Value Components – September 30, 2018
Completed Rental Properties - Operations
 
Q3 2018
 
Net Stabilized
 
Stabilized
 
Annualized
 
Nonrecourse
(Dollars in millions)
NOI (1)
 
Adjustments (2)
 
NOI
 
Stabilized NOI
 
Debt, net (3)
Operations
A
 
B
 
=A+B
 

 
 
Office Real Estate
 
 


 
 
 


 
 
Life Science
 
 


 
 
 
 
 
 
Cambridge
$
22.3

 
$
2.1

 
$
24.4

 
$
97.6

 
$
(655.9
)
Other Life Science
4.4

 

 
4.4

 
17.6

 
(128.0
)
New York
 
 


 
 
 
 
 
 
Manhattan
14.4

 

 
14.4

 
57.6

 

Brooklyn
22.9

 
0.4

 
23.3

 
93.2

 
(349.0
)
Other Office
7.3



 
7.3

 
29.2

 
(111.6
)
Subtotal Office
$
71.3

 
$
2.5

 
$
73.8

 
$
295.2

 
$
(1,244.5
)
Apartment Real Estate
 
 


 
 
 
 
 
 
Apartments, Core Markets
$
35.8


$
1.2

 
$
37.0

 
$
148.0

 
$
(1,469.9
)
Apartments, Non-Core Markets
12.7

 

 
12.7

 
50.8

 
(305.9
)
Subtotal Apartment Product Type
$
48.5

 
$
1.2

 
$
49.7

 
$
198.8

 
$
(1,775.8
)
Retail Real Estate
 
 

 
 
 
 
 
 
Other Retail
$
11.9


$
(1.7
)
 
$
10.2

 
$
40.8

 
$
(434.0
)
Subtotal
$
131.7

 
$
2.0

 
$
133.7

 
$
534.8

 
$
(3,454.3
)
Straight-line rent adjustments
4.0

 

 
4.0

 
16.0

 

Other Operations
(1.3
)
 

 
(1.3
)
 
(5.2
)
 

Total Operations
$
134.4

 
$
2.0

 
$
136.4

 
$
545.6

 
$
(3,454.3
)
 
Development
 
 
 
 
 
 
 
 
 
Recently-Opened Properties/Redevelopment
$
2.6

 
$
5.5

 
$
8.1

 
$
32.4

 
$
(350.9
)
Straight-line rent adjustments
0.6

 

 
0.6

 
2.4

 

Other Development
(2.4
)

(1.6
)
 
(4.0
)
 
(16.0
)
 

Total Development
$
0.8

 
$
3.9

 
$
4.7

 
$
18.8

 
$
(350.9
)
Retail Dispositions
 
 
 
 
 
 
Gross Asset Value (4)
 
 
QIC
 
 
 
 
 
 
$
869.0

 
$
(328.2
)
Madison
 
 
 
 
 
 
77.9

 
(49.7
)
Total Retail Dispositions
 
 
 
 
 
 
$
946.9

 
$
(377.9
)
 

 
 
 
 
 
Book Value (3)
 
 
Projects under construction (5)
 
$
122.5

 
$
(61.0
)
Projects under development
 
$
245.8

 
$
(8.6
)
Land inventory:
 
 
 
 
Stapleton
 
$
64.2

 
$

Commercial Outlots
 
$
2.4

 
$

Other Tangible Assets
Cash and equivalents
 
$
521.4

 
 
Restricted cash
 
$
145.3

 
 
Accounts receivable, net (6) 
 
$
265.5

 
 
Notes receivable
 
$
526.5

 
 
Net investments and advances to unconsolidated entities
 
$
10.8

 
 
Prepaid expenses and other deferred costs, net
 
$
64.4

 
 
Recourse Debt and Other Liabilities
Revolving credit facility
 
$

 
 
Term loan, net
 
$
(334.0
)
 
 
Convertible senior debt, net
 
$
(31.8
)
 
 
Less: convertible debt
 
$
31.8

 
 
Construction payables
 
$
(78.5
)
 
 
Operating accounts payable and accrued expenses (7) 
 
$
(552.4
)
 
 
Share Data (in millions)
Diluted weighted average number of shares for the three months ended September 30, 2018
 
274.0

 
 

8



Forest City Realty Trust, Inc. and Subsidiaries
Selected Financial Information

Net Asset Value Components – September 30, 2018 (continued)
(1)
Q3 2018 Earnings Before Income Taxes is reconciled to NOI for the three months ended September 30, 2018 in the Supplemental Operating Information section of this supplemental package. Total NOI is reconciled below:
        
 
Q3 2018
(Dollars in millions)
NOI
Total Operations
$
134.4

Total Development
0.8

QIC
9.8

Madison
1.1

Grand Total
$
146.1

(2)
The net stabilized adjustments column represents adjustments assumed to arrive at an estimated annualized stabilized NOI. We include stabilization adjustments to the Q3 2018 NOI as follows:
a)
Due to the redevelopment of 26 Landsdowne Street (Life Science Office - Cambridge), we have included a stabilization adjustment to the Q3 2018 NOI to arrive at our estimate of annualized stabilized NOI prior to the commencement of our current redevelopment.
b)
Additional NOI for the recently acquired ownership interests in three life science properties at University Park at MIT (Life Science Office - Cambridge) and DKLB BKLN (Apartments, Core Markets) has been included.
c)
Partial period NOI for recently sold properties has been removed.
d)
Due to the planned transfer of Charleston Town Center and Shops at Northern Boulevard (Other Retail) to the lenders in deed-in-lieu transactions, we have removed NOI and nonrecourse debt, net, related to these properties.
e)
For recently-opened properties currently in initial lease-up periods included in the Development Segment, NOI is reflected at 5% of the company ownership cost. This assumption does not reflect our anticipated NOI, but rather is used in order to establish a hypothetical basis for an estimated valuation of leased-up properties. The following properties are currently in their initial lease-up periods:
        
 
Cost at 100%
Cost at Company Share
Lease Commitment % as of
Property
October 25, 2018
 
(in millions)
 
Office:
 
 
 
The Bridge at Cornell Tech (New York Office)
$
159.6

$
159.6

57%
Apartments, Core Markets:
 
 
 
Ardan
$
121.8

$
38.0

16%
Mint Town Center
$
94.8

$
83.4

36%
Axis
$
141.7

$
43.1

56%
VYV
$
211.6

$
105.8

97%
38 Sixth Avenue
$
197.3

$
48.6

80%
535 Carlton
$
168.2

$
41.8

94%
Eliot on 4th
$
136.6

$
42.8

96%
NorthxNorthwest
$
115.0

$
33.7

94%
Total Apartments
$
1,187.0

$
437.2

 
Grand Total
$
1,346.6

$
596.8

 
f)
Due to the redevelopment of Ballston Quarter (Development Segment; Recently-Opened Properties/Redevelopment), we have included a stabilization adjustment to the Q3 2018 NOI to arrive at $2.6 million, our estimate of annualized stabilized NOI prior to the commencement of our current redevelopment..
g)
Development Other includes a stabilization adjustment to arrive at our estimate of annualized net expensed development overhead.
The net stabilized adjustments are not comparable to any GAAP measure and therefore do not have a reconciliation to the nearest comparable GAAP measure.
(3)
Amounts represent the company’s share of each respective balance sheet line item as of September 30, 2018 and may be calculated using the financial information contained in the Appendix of this supplemental package. Adjustments to these amounts include:
a.
Due to the planned transfer of Charleston Town Center and Shops at Northern Boulevard to their lenders in deed in lieu transactions, we have removed nonrecourse debt, net, of $48.7 million and $17.0 million, respectively, related to these properties.
(4)
Gross asset valued related to the retail portfolio dispositions:
a.
Represents the gross asset value of the four remaining regional malls, based on the agreed upon pricing under the signed definitive agreement with QIC.
b.
Represents the gross asset value of the remaining asset, based on agreed upon pricing under the signed definitive agreement with Madison.



9



Forest City Realty Trust, Inc. and Subsidiaries
Selected Financial Information

(5)
Stabilized NOI for the following properties is included under Recently-Opened Properties/Redevelopment. As such, we have removed the following from the book value of projects under construction:
a.
$59.2 million, which represents the costs on the balance sheet associated with the ongoing redevelopment of Ballston Quarter.
b.
$12.6 million, which represents costs on the balance sheet associated with the phased opening of Ardan.
(6)
Includes $133.1 million of straight-line rent receivable (net of $6.6 million of allowance for doubtful accounts).
(7)
Includes $48.4 million of straight-line rent payable.

Net Asset Value Components - Stabilized NOI - Q2 2018 vs. Q3 2018
The following represents the quarterly change in stabilized NOI used to estimate NAV, as a result of recent property openings and sales, as well as other portfolio changes. GAAP reconciliations for the beginning period can be found in prior supplemental packages furnished with the SEC and are available on our website at www.forestcity.net.
 
 
 
 
 
 
 
 
 
 
Net Asset Value Components - Stabilized NOI
 
 
 
Stabilized Adjustments
 
 
 
 
 
Property
 
 
 
 
 
 
 
Q2 2018
 
Openings/
 
Property
 
Portfolio
 
Q3 2018
(Dollars in millions)
Stabilized NOI
 
Acquisitions
 
Sales
 
NOI Changes
 
Stabilized NOI
Operations
 
 
 
 
 
 
 
 
 
Office Real Estate
 
 
 
 
 
 
 
 
 
Life Science
 
 
 
 
 
 
 
 
 
Cambridge
$
24.4

 
$

 
$

 
$

 
$
24.4

Other Life Science
4.2

 

 

 
0.2

 
4.4

New York
 
 
 
 
 
 
 
 
 
Manhattan
14.5

 

 

 
(0.1
)
 
14.4

Brooklyn
23.4

 

 

 
(0.1
)
 
23.3

Other Office
7.5

 

 

 
(0.2
)
 
7.3

Subtotal Office
$
74.0

 
$

 
$

 
$
(0.2
)
 
$
73.8

Apartment Real Estate
 
 
 
 
 
 
 
 
 
Apartments, Core Markets
$
38.0

 
$
1.2

 
$

 
$
(2.2
)
 
$
37.0

Apartments, Non-Core Markets
12.9

 

 

 
(0.2
)
 
12.7

Subtotal Apartment Product Type
$
50.9

 
$
1.2

 
$

 
$
(2.4
)
 
$
49.7

Federally Assisted Housing

 

 

 

 

Subtotal Apartments
$
50.9

 
$
1.2

 
$

 
$
(2.4
)
 
$
49.7

Retail Real Estate
 
 
 
 
 
 
 
 
 
Other Retail
9.9

 

 

 
0.3

 
10.2

Subtotal
$
134.8

 
$
1.2

 
$

 
$
(2.3
)
 
$
133.7

Straight-line rent adjustments
3.6

 

 

 
0.4

 
4.0

Other Operations
(3.0
)
 

 

 
1.7

 
(1.3
)
Total Operations
$
135.4

 
$
1.2

 
$

 
$
(0.2
)
 
$
136.4

 
 
 
 
 
 
 
 
 
 
Development Pipeline
  
 
  
 
  
 
  
 
  
Development
 
 
 
 
 
 
 
 
 
Recently-Opened Properties/Redevelopment
$
8.1

 
$

 
$

 
$

 
$
8.1

Straight-line rent adjustments
0.8

 

 

 
(0.2
)
 
0.6

Other Development
(4.0
)
 

 

 

 
(4.0
)
Total Development
$
4.9

 
$

 
$

 
$
(0.2
)
 
$
4.7

Grand Total
$
140.3

 
$
1.2

 
$

 
$
(0.4
)
 
$
141.1









10



Forest City Realty Trust, Inc. and Subsidiaries
Supplemental Operating Information


Leasing Summary
Office Buildings
The following table represents those new leases and GLA signed on the same space in which there was a former tenant and existing tenant renewals along with all other new leases signed within the rolling 12-month period.

 
Same-Space Leases
 
Other New Leases
 
 
Quarter
Number
of Leases
Signed
GLA
Signed
Contractual
Rent Per
SF (1)
Expired 
Rent Per
SF (1)
Cash Basis 
% Change
over Prior
Rent
 
Number
of Leases
Signed
GLA
Signed
Contractual
Rent Per
SF (1)
 
Total GLA
Signed
Q4 2017
14

340,532

$
46.92

$
39.39

19.1
%
 
3

1,186

$
57.26

 
341,718

Q1 2018
13

183,331

$
73.09

$
63.36

15.4
%
 
3

7,172

$
31.61

 
190,503

Q2 2018
12

208,502

$
61.53

$
49.23

25.0
%
 
3

39,530

$
25.61

 
248,032

Q3 2018
8

103,667

$
50.26

$
46.23

8.7
%
 
4

10,103

$
90.71

 
113,770

Total
47

836,032

$
56.72

$
47.95

18.3
%
 
13

57,991

$
38.34

 
894,023

 
 
 
 
 
 
 
 
 
 
 
 
(1)
Office contractual rent per square foot includes base rent and fixed additional charges for common area maintenance and real estate taxes as of rental commencement. For all expiring leases, contractual rent per square foot includes any applicable escalations.
Apartment Communities
The following tables present leasing information of our apartment communities. Apartment segment occupancy data represents economic occupancy, which is calculated by dividing the period-to-date gross potential rent less vacancy by gross potential rent. Prior period amounts may differ from data as reported in previous quarters since the properties that qualify as comparable change from period to period.
Quarterly Comparison
 
 
 
 
 
 
 
 
 
 
 
 
 
Monthly Average Apartment Rental Rates (2)
 
Economic Apartment Occupancy
Comparable Apartment
Leasable Units
 
Three Months Ended September 30,
 
 
Three Months Ended September 30,
 
Communities (1)
at Company % (3)
 
2018
2017
% Change
 
2018
2017
% Change
Core Markets
8,857

 
$
2,043

$
2,027

0.8
%
 
95.8
%
94.3
%
1.5
%
Non-Core Markets
7,953

 
$
1,029

$
1,013

1.6
%
 
94.5
%
93.5
%
1.0
%
Total Comparable Apartments
16,810

 
$
1,563

$
1,547

1.0
%
 
95.4
%
94.0
%
1.4
%
 
 
 
 
 
 
 
 
 
 
Year-to-Date Comparison
 
 
 
Monthly Average Apartment Rental Rates (2)
 
Economic Apartment Occupancy
Comparable Apartment
Leasable Units
 
Nine Months Ended September 30,
 
 
Nine Months Ended September 30,
 
Communities (1)
at Company % (3)
 
2018
2017
% Change
 
2018
2017
% Change
Core Markets
8,857

 
$
2,031

$
2,011

1.0
%
 
95.1
%
94.6
%
0.5
%
Non-Core Markets
7,953

 
$
1,020

$
1,002

1.8
%
 
93.8
%
92.9
%
0.9
%
Total Comparable Apartments
16,810

 
$
1,553

$
1,533

1.3
%
 
94.7
%
94.1
%
0.6
%
 
 
 
 
 
 
 
 
 
 
Sequential Comparison
 
 
 
Monthly Average Apartment Rental Rates (2)
 
Economic Apartment Occupancy
 
 
 
Three Months Ended
 
 
Three Months Ended
 
Comparable Apartment
Leasable Units
 
September 30,
June 30,
 
 
September 30,
June 30,
 
Communities (1)
at Company % (3)
 
2018
2018
% Change
 
2018
2018
% Change
Core Markets
8,857

 
$
2,043

$
2,031

0.6
%
 
95.8
%
95.0
%
0.8
%
Non-Core Markets
7,953

 
$
1,029

$
1,016

1.3
%
 
94.5
%
94.1
%
0.4
%
Total Comparable Apartments
16,810

 
$
1,563

$
1,551

0.8
%
 
95.4
%
94.7
%
0.7
%
 
 
 
 
 
 
 
 
 
 
(1)
Includes stabilized apartment communities completely opened and operated in the periods presented. These apartment communities include units leased at affordable apartment rates which provide a discount from average market rental rates. For the three months ended September 30, 2018, 14.4% of leasable units in core markets and 4.9% of leasable units in non-core markets were affordable housing units.
(2)
Represents gross potential rent less concessions.
(3)
Leasable units represent our share of comparable leasable units at the apartment community.

11



Forest City Realty Trust, Inc. and Subsidiaries
Supplemental Operating Information


Occupancy Data
Office segment occupancy data represents leased occupancy at the end of the quarter. Leased occupancy percentage is calculated by dividing the sum of the total tenant occupied space under the lease and vacant space under the lease by gross leasable area (“GLA”).
 
Leased Occupancy
 
As of September 30,
Office
2018
2017
Comparable
94.5
%
97.0
%
Total
94.3
%
95.8
%

The graph below provides comparable leased and economic (quarter-to-date) occupancy data as reported in previous quarters. Prior period amounts may differ from above since the properties qualifying as comparable change from period to period.
Comparable Occupancy Percentage Trend
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12519320&doc=6

12



Forest City Realty Trust, Inc. and Subsidiaries
Supplemental Operating Information



Comparable NOI
The tables below provide the percentage change of Comparable NOI. Prior periods are as reported in previous quarters. GAAP reconciliations for previous periods can be found in prior supplemental packages furnished to the SEC and are available on our website at www.forestcity.net.
Quarterly Historical Trends
 
 
 
 
Three Months Ended
 
 
September 30, 2018
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
Office
2.1
%
 
0.8
%
 
1.2
 %
 
6.4
%
 
4.3
%
 
Apartments
1.1
%
 
5.2
%
 
(0.4
)%
 
5.6
%
 
5.0
%
 
Total
1.7
%
 
2.6
%
 
0.6
 %
 
6.1
%
 
4.6
%
 
Year-to-Date and Annual Historical Trends
 
 
Nine Months Ended
 
Years Ended December 31,
 
 
September 30, 2018
 
2017
 
2016
 
2015
 
2014
 
Office
1.4
%
 
2.9
%
 
3.6
%
 
4.9
%
 
6.6
%
 
Apartments
2.3
%
 
3.3
%
 
3.3
%
 
4.7
%
 
4.3
%
 
Total
1.8
%
 
3.1
%
 
3.5
%
 
4.9
%
 
5.7
%
 
The table below provides comparable NOI margins for our Operations segments. Properties included in prior periods may differ from the current year since properties qualifying as comparable change from period to period.
Year-to-Date and Annual Historical Trends - Margins on Comparable NOI
 
 
Nine Months Ended
 
Years Ended December 31,
 
 
September 30, 2018
 
2017
 
2016
 
2015
 
2014
 
Office Segment
 
 
 
 
 
 
 
 
 
 
Life Science
68.6
%
 
68.6
%
 
60.1
%
 
58.7
%
 
58.5
%
 
New York
 
 
 
 
 
 
 
 
 
 
Manhattan
73.9
%
 
73.9
%
 
73.5
%
 
72.1
%
 
73.2
%
 
Brooklyn
52.1
%
 
52.8
%
 
53.0
%
 
51.4
%
 
50.5
%
 
Other Office
66.7
%
 
63.7
%
 
55.6
%
 
53.8
%
 
53.4
%
 
Total Office Segment
62.6
%
 
62.2
%
 
59.0
%
 
57.3
%
 
57.1
%
 
Apartment Segment
 
 
 
 
 
 
 
 
 
 
Core Markets
60.8
%
 
62.3
%
 
61.6
%
 
60.8
%
 
60.7
%
 
Non-Core Markets
49.9
%
 
49.7
%
 
48.9
%
 
46.3
%
 
47.0
%
 
Total Apartment Segment
57.6
%
 
58.6
%
 
57.8
%
 
56.7
%
 
56.7
%
 
Total
60.4
%
 
60.6
%
 
58.5
%
 
57.1
%
 
56.9
%
 

13



Forest City Realty Trust, Inc. and Subsidiaries
Supplemental Operating Information


NOI (Non-GAAP) Detail (in thousands)
 
Three Months Ended September 30,
 
 
Nine Months Ended September 30,
 
 
2018
2017
% Change
 
2018
2017
% Change
Office Segment
 
 
 
 
 
 
 
Comparable NOI
67,918

66,515

2.1
%
 
203,390

200,620

1.4
%
Non-Comparable NOI
3,427

367

 
 
4,668

8,787

 
Office Product Type NOI
71,345

66,882

 
 
208,058

209,407

 
Other NOI (1)
5,415

2,781

 
 
9,852

9,010

 
Total Office Segment
76,760

69,663

 
 
217,910

218,417

 
Apartment Segment
 
 
 
 
 
 
 
Comparable NOI
47,764

47,250

1.1
%
 
143,424

140,205

2.3
%
Non-Comparable NOI
741

(26
)
 
 
2,198

(79
)
 
Apartment Product Type NOI
48,505

47,224

 
 
145,622

140,126

 
Federally Assisted Housing

1,532

 
 
124

9,813

 
Other NOI (1)
(1,596
)
(869
)
 
 
(4,626
)
(2,692
)
 
Total Apartment Segment
46,909

47,887

 
 
141,120

147,247

 
Retail Segment
 
 
 
 
 
 
 
Retail NOI
21,719

39,698

 
 
71,430

118,659

 
Madison Preferred Return
1,075


 
 
6,006


 
Retail Product Type NOI
22,794

39,698

 
 
77,436

118,659

 
Other NOI (1)
(1,189
)
56

 
 
(523
)
(682
)
 
Total Retail Segment
21,605

39,754

 
 
76,913

117,977

 
Operations
 
 
 
 
 
 
 
Comparable NOI
115,682

113,765

1.7
%
 
346,814

340,825

1.8
%
Retail NOI
22,794

39,698

 
 
77,436

118,659

 
Non-Comparable NOI (2)
4,168

341

 
 
6,866

8,708

 
Product Type NOI
142,644

153,804

 
 
431,116

468,192

 
Federally Assisted Housing

1,532

 
 
124

9,813

 
Other NOI (1):
 
 
 
 
 
 
 
Straight-line rent adjustments
3,985

2,133

 
 
10,919

8,776

 
Participation payments
(26
)

 
 
(1,160
)

 
Other Operations
(1,329
)
(165
)
 
 
(5,056
)
(3,140
)
 

2,630

1,968

 
 
4,703

5,636

 
Total Operations
145,274

157,304

 
 
435,943

483,641

 
Development Segment
 
 
 
 
 
 
 
Recently-Opened Properties/Redevelopment
2,646

2,542

 
 
7,392

1,188

 
Other Development (3)
(1,803
)
(3,283
)
 
 
(9,378
)
(16,296
)
 
Total Development Segment
843

(741
)
 
 
(1,986
)
(15,108
)
 
Grand Total
$
146,117

$
156,563

 
 
$
433,957

$
468,533

 

(1)
Includes straight-line rent adjustments, participation payments as a result of refinancing transactions on our properties and management and service company overhead, net of service fee revenues.
(2)
Non-comparable NOI includes lease termination income of $495 and $936 for the three and nine months ended September 30, 2018, respectively, compared with $618 and $6,219 for the three and nine months ended September 30, 2017.
(3)
Includes straight-line adjustments, non-capitalizable development overhead and other costs on our development projects.

Percentage of NOI by Product Type (dollars in thousands)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
2017
 
2018
2017
 
NOI
% of Total
NOI
% of Total
 
NOI
% of Total
NOI
% of Total
Office Segment
$
71,345

50.0
%
$
66,882

43.5
%
 
$
208,058

48.2
%
$
209,407

44.7
%
Apartment Segment
48,505

34.0
%
47,224

30.7
%
 
145,622

33.8
%
140,126

29.9
%
Retail Segment
22,794

16.0
%
39,698

25.8
%
 
77,436

18.0
%
118,659

25.4
%
Total Product Type NOI
$
142,644

 
$
153,804

 
 
$
431,116

 
$
468,192

 



14



Forest City Realty Trust, Inc. and Subsidiaries
Supplemental Operating Information


Summary of Corporate General and Administrative and Other NOI (in thousands)
 
Three Months Ended September 30,
 
 
Nine Months Ended September 30,
 
 
2018
2017
Change
 
2018
2017
Change
Corporate General and Administrative
$
(9,736
)
$
(17,140
)
$
7,404

 
$
(39,949
)
$
(48,061
)
$
8,112

Other Operations NOI
(1,329
)
(165
)
(1,164
)
 
(5,056
)
(3,140
)
(1,916
)
Other Development NOI
(1,803
)
(3,283
)
1,480

 
(9,378
)
(16,296
)
6,918

 
$
(12,868
)
$
(20,588
)
$
7,720

 
$
(54,383
)
$
(67,497
)
$
13,114

Deferred gain (1)

660

(660
)
 
4,618

1,980

2,638

Total
$
(12,868
)
$
(19,928
)
$
7,060

 
$
(49,765
)
$
(65,517
)
$
15,752


Year-to-Date and Annual Historical Trends
GAAP reconciliations for previous periods can be found in prior supplemental packages furnished to the SEC and are available on our website at www.forestcity.net.
 
Nine Months Ended
 
Years Ended
 
September 30, 2018
 
December 31, 2017
December 31, 2016
 
(in thousands)
Corporate General and Administrative
$
(39,949
)
 
$
(64,788
)
$
(63,343
)
Other Operations NOI
(5,056
)
 
(3,203
)
(1,593
)
Other Development NOI
(9,378
)
 
(18,611
)
(33,391
)
 
$
(54,383
)
 
$
(86,602
)
$
(98,327
)
Deferred gain (1)
4,618

 
2,639

660

Ballston Quarter development fee

 

5,500

Total
$
(49,765
)
 
$
(83,963
)
$
(92,167
)

(1)
Deferred gain relates to a 2016 leaseback transaction at Terminal Tower, the Company’s former headquarters in Cleveland, Ohio. Upon vacating these premises in March 2018, the remaining deferred gain was recorded as a reduction to rent expense in accordance with GAAP.



15



Forest City Realty Trust, Inc. and Subsidiaries
Supplemental Operating Information


Core Market NOI
(dollars in thousands)
Nine Months Ended September 30, 2018
 
Nine Months Ended September 30, 2017
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12519320&doc=10
Product Type NOI
$
431,116

 
Product Type NOI
$
468,192

Federally Assisted Housing
124

 
Federally Assisted Housing
9,813

Other NOI (3):
 
 
Other NOI (3):
 
Straight-line rent adjustments
10,919

 
Straight-line rent adjustments
8,776

Participation payments
(1,160
)
 
Participation payments

Other Operations
(5,056
)
 
Other Operations
(3,140
)
 
4,703

 
 
5,636

Recently-Opened Properties/Redevelopment
7,392

 
Recently-Opened Properties/Redevelopment
1,188

Development Segment (4)
(9,378
)
 
Development Segment (4)
(16,296
)
Grand Total NOI
$
433,957

 
Grand Total NOI
$
468,533

(1)
Includes Richmond, Virginia.
(2)
Represents Regional Malls located in Non-Core Markets. Regional Malls located in Core Markets are included in their applicable Core Markets.
(3)
Includes straight-line rent adjustments, participation payments as a result of refinancing transactions on our properties and management and service company overhead, net of service fee revenues.
(4)
Includes straight-line adjustments, non-capitalizable development overhead and other costs on our development projects.

16



Forest City Realty Trust, Inc. and Subsidiaries
Supplemental Operating Information


Reconciliation of Earnings Before Income Taxes (GAAP) to Net Operating Income (non-GAAP) (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
2017
 
2018
2017
Earnings before income taxes (GAAP)
$
430,448

$
13,051

 
$
668,990

$
102,968

Earnings from unconsolidated entities
(188,873
)
(26,523
)
 
(277,548
)
(95,016
)
Earnings before income taxes and earnings from unconsolidated entities
241,575

(13,472
)
 
391,442

7,952

Land sales
(7,920
)
(21,786
)
 
(23,359
)
(45,308
)
Cost of land sales
2,723

13,301

 
7,943

22,996

Other land development revenues
(3,574
)
(1,781
)
 
(9,612
)
(4,748
)
Other land development expenses
2,338

2,977

 
7,132

7,575

Corporate general and administrative expenses
9,736

16,480

 
35,331

46,081

Organizational transformation and termination benefits
8,289

2,633

 
29,188

14,021

Depreciation and amortization
60,925

60,194

 
170,652

189,496

Write-offs of abandoned development projects and demolition costs


 

1,596

Impairment of real estate

44,288

 

44,288

Interest and other income
(13,296
)
(20,361
)
 
(34,773
)
(40,529
)
Gains on change in control of interests
(219,666
)

 
(337,377
)

Interest expense
30,882

31,597

 
86,849

88,473

Amortization of mortgage procurement costs
1,366

1,338

 
3,966

4,067

Loss on extinguishment of debt
19


 
3,995

2,843

NOI related to noncontrolling interest (1)
(8,658
)
(10,583