CLEVELAND--(BUSINESS WIRE)--March 12, 2001--Forest City
Enterprises, Inc. (NYSE:FCEA)(NYSE:FCEB)
-
EBDT Increases 10.7 Percent for the Year
-
21st Consecutive Year of EBDT Growth
-
17 New Properties Totaling Over $500 million
Forest City Enterprises, Inc. (NYSE: FCEA and NYSE: FCEB)
announced today record financial results for 2000, on a fiscal-year
basis ending January 31, 2001. The Company achieved record performance
in EBDT (Earnings Before Depreciation, Amortization and Deferred
Taxes) and EBDT per share for both the fourth quarter and full year.
Shareholders' equity reached a new high of $456.6 million,
increasing 18.1 percent from $386.5 million in 1999.
EBDT -- a key measure of cash flow and the Company's ability to
invest in continued growth -- reached an all-time high, marking the
Company's 21st year of consecutive increases. EBDT for the year of
$147.8 million, or $4.87 per share, increased 10.7 percent compared
with last year's EBDT of $132.6 million, or $4.40 per share. Fourth
quarter 2000 EBDT increased to $46.0 million, or $1.51 per share, an
11 percent increase on a per share basis when compared with the prior
year's fourth quarter EBDT of $40.9 million, or $1.36 per share. The
increase in EBDT, for both the quarter and the year, resulted from
improved operations and the addition of 17 new properties during 2000,
at a total cost of $534.7 million. The estimated average stabilized
unleveraged return for these properties was 10.9 percent.
Consolidated revenues increased 13.7 percent to $794.8 million
compared with $698.8 million a year earlier. Real Estate revenues were
up 24 percent in 2000 compared with the prior year.
Charles A. Ratner, President and Chief Executive Officer of Forest
City Enterprises, commented, "The excellent results achieved in 2000
reflect the success of our strategy to grow profitably through
targeted development and opportunistic acquisitions in our key
markets. The operating portfolio performed well in 2000, and our
development pipeline produced 12 project openings at a total cost of
$355.9 million, complemented by five acquisitions at a total cost of
$178.8 million. As a result of this activity, EBDT and property Net
Operating Income increased in both the quarter and the year, thereby
enhancing shareholder value."
Comparable property Net Operating Income (NOI) -- NOI from
properties opened and operated in both periods -- increased by
-
3.2 percent in 2000 versus 1999. At the business unit level, the
Commercial Group's property NOI increased 3.1 percent and the
Residential Group's increased 3.6 percent. Rents continued to grow
during the year and accounted for most of the growth in comparable
property NOI. In the Residential Group, rental rates increased
-
3.9 percent across all properties. In the Commercial Group, the
average increase in rents, on more than 850,000 square feet of space
that "turned over" during the year, was 19.4 percent.
Within the Commercial Group, sales in the retail portfolio
increased 1.8 percent from last year to $355 per square foot. Year-end
occupancies were strong across the board with retail at 92 percent,
office at 97 percent and residential at 95 percent.
Operating earnings, net of tax, increased to $44 million compared
with $38 million in the previous year. Included in operating
earnings for 2000 was income of $9.4 million from the straight-lining
of rents, which is not included in EBDT.
"Consistent with our strategy to harvest the value of properties
we believe have achieved maximum potential for our Company, we
disposed of five projects in 2000," said Mr. Ratner. "Three of the
five transactions were structured as tax-deferred exchanges, enabling
us to reinvest the proceeds into potentially higher yielding
projects."
The gain on disposition of properties and other investments was
$51.8 million, after tax, for 2000. This included $16.7 million from
the dispositions of properties. Gains resulted from the dispositions
of Tucson Place shopping center in Arizona and Studio Colony and
Highlands apartment communities in California, all of which the
Company received optimum value for the properties. These gains were
partially offset by the disposition of Canton Centre Mall in Ohio and
Gallery at Metrotech, an urban retail center in Brooklyn, New York.
Both of these properties were under-performing when compared to the
Company's operational hurdle rates for 2000, and management concluded
that it could no longer add value to them. The total gain on
disposition of properties and other investments for the year also
included gains from the sale of securities held for investment
($11.5 million) along with the favorable impact of the reversal of a
deferred tax liability ($23.6 million).
Net earnings for 2000 were $91.6 million, or $3.02 per share,
compared to $40.8 million, or $1.35 per share, for 1999.
"An ever-present objective at Forest City is to continually
improve shareholder value," said Mr. Ratner. "We believe the
New Financial Reporting Presentation
Effective January 31, 2001, the Company implemented a change in
the presentation of its financial results that has impacted the
comparability of those results. While a number of the line items on
the Company's consolidated financial statements have changed under
this method, the end result is that there is no impact on EBDT, net
earnings or shareholders' equity for all years presented. This
presentation change will have no effect on the way the Company
operates or manages its business.
Prior to January 31, 2001, Forest City used the pro-rata method of
consolidation to report its partnerships. Under this method, the
Company presented its partnership investments proportionate to its
share of ownership for each line item of its consolidated financial
statements.
In accordance with the FASB's Emerging Issues Task Force (EITF)
Issue No. 00-1, "Investor Balance Sheet and Income Statement Display
under the Equity Method for Investments in Certain Partnerships and
Other Ventures," the Company can no longer use the pro-rata
consolidation method for partnerships in its public-record reporting.
Accordingly, partnership investments that were previously reported on
the pro-rata method will now be reported as consolidated at
100 percent if deemed under the Company's "control" or otherwise on
the equity method of accounting.
As modified, the presentation of Forest City's revenues, expenses,
assets and liabilities will comply with EITF's reporting requirements.
For comparative purposes, the Company will be presenting a balance
sheet using the EITF method for 2000 and 1999 and an income statement
for 2000, 1999 and 1998. As an aid in adjusting to the EITF reporting
standards, Forest City is providing a reconciliation from the EITF
presentation to the historical pro-rata presentation in its financial
statements for 2000.
"Because we believe that pro-rata consolidation provides
additional information about our operations and, along with the EITF
method, is necessary to understand our operating results, we will
continue to use the pro-rata presentation for internal reporting
purposes and to keep our investors informed as well," said Mr. Ratner.
Fourth Quarter and Full-Year Highlights
Openings
During the fourth quarter, the Residential Group opened 101 San
Fernando, a 323-unit apartment community in San Jose, California and
acquired Westfield Court, a 167-unit supported-living community in
Stamford, Connecticut. Westfield Court represented the sixth
supported-living opening or acquisition in 2000 for the Residential
Group.
During 2000, Forest City more than doubled the size of its
supported-living portfolio by opening or acquiring 1,103 units,
bringing the total portfolio to 1,971 units. Forest City has made a
long-term commitment to this business in the greater New York City
metropolitan market because it meets the Company's strategic criteria
of being located in high-growth markets for this product, with strong
demographics and high "barriers-to-entry".
In total, the Residential Group added 10 projects in 2000,
including five development projects and five acquisitions. The
Company's share of costs was $332.1 million.
The Commercial Group, in the fourth quarter, opened One
International Place, an 87,000-square-foot office building in Emerald
Corporate Park, in Cleveland, Ohio. During 2000, the Commercial
Group opened seven projects at a total cost to the Company of
$202.6 million.
In addition to One International Place, six other projects opened
-
all were in New York City, an important high-growth market for the
Company. The 444-room Hilton Times Square is part of Forest City's
42nd Street mixed-use project, which includes 300,000 square feet of
retail and entertainment space. The Battery Park project in downtown
Manhattan is anchored by a 460-room Embassy Suites Hotel and includes
a retail/entertainment component. The Company also opened three
retail/entertainment projects in New York City -- Court Street, Forest
Avenue and Eastchester.
Denver Stapleton Update
During the first quarter of 2001, Forest City announced the
beginning of its mixed-use Stapleton Project, one of the most
ambitious urban redevelopments in the nation. The Company has signed
leases with major tenants for a 740,000-square-foot regional retail
center -- Quebec Center at Stapleton -- scheduled to be under
construction this Spring and open in the Summer of 2002. Wal-Mart,
Sam's Club and Home Depot will anchor the center.
Concurrently, construction will begin on the first phase of the
residential development that includes 800 new homes, 400 apartments
and a neighborhood retail center. The 150,000-square-foot neighborhood
center will be anchored by a 60,000-square-foot grocery store and
feature residential above retail.
Financing Summary
During 2000, Forest City closed on transactions totaling
$915.1 million in nonrecourse mortgage financings at its economic
share, including $312.5 million in refinancings, $210.1 million in
extensions, $153.8 million in acquisitions and $238.7 million for new
development projects. Property dispositions during the year reduced
total debt by $173.1 million.
At January 31, 2001, the Company's weighted average cost of
mortgage debt increased to 7.60 percent from 7.21 percent at
January 31, 2000, primarily due to the general rise in variable
interest rates. Variable rate mortgage debt, which represented
27 percent of the Company's total nonrecourse mortgage debt, increased
from 6.82 percent at January 31, 2000 to 8.16 percent at January 31,
2001. Fixed-rate mortgage debt increased from 7.33 percent at
January 31, 2000 to 7.39 percent at January 31, 2001.
Forest City continues to manage its exposure to interest rate risk
through the purchase of LIBOR caps and Treasury Options. By using
these hedging instruments, the Company mitigates its exposure to the
variable-rate debt used to finance its large portfolio of development
projects.
Business Outlook
"The results we've achieved reflect the successful execution of
our strategy as evidenced by increased revenues, net operating income
and EBDT -- supported by strong rental rates and consistent
occupancies," noted Mr. Ratner. "We are fully aware of the softening
of the retail environment and the uncertainty of the U.S. economy, and
begin the new year with a sense of caution and guarded optimism.
"In 2001, we will focus on capturing the opportunities we have
identified in our strategic plan, while always being mindful of the
risks inherent in our business. Overall, we remain confident that our
strategy of developing larger projects, in high 'barrier-to-entry'
markets with strong demographics and in diverse locations, will
continue to create value for our shareholders," he added.
Corporate Description
Forest City Enterprises, Inc. is a NYSE-listed real estate company
headquartered in Cleveland, Ohio, principally engaged in the
ownership, development, acquisition and management of commercial and
residential real estate throughout the United States. The Company's
portfolio includes interests in retail centers, apartment communities,
office buildings and hotels. The Company's primary markets include
Boston, Chicago, Cleveland, Denver, Las Vegas, Los Angeles, New York,
Philadelphia, Pittsburgh, Richmond (Virginia), San Francisco and
Washington D. C.
Safe Harbor Language
Statements made in this news release that state the Company or
management's intentions, hopes, beliefs, expectations or predictions
of the future are forward-looking statements. It is important to note
that the Company's actual results could differ materially from those
projected in such forward-looking statements. Additional information
concerning factors that could cause actual results to differ
materially from those in the forward-looking statements include, but
are not limited to, the Company's substantial leverage and the ability
to service debt, guarantees under the Company's credit facility,
changes in interest rates, continued availability of tax-exempt
government financing, the sustainability of substantial operations at
the subsidiary level, real estate development and investment risks,
significant geographic concentration, illiquidity of real estate
investments, dependence on rental income from real property, reliance
on major tenants, conflicts of interest, competition, potential
liability from syndicated properties, effects of uninsured loss,
environmental liabilities, partnership risks, litigation risks and
other risk factors as disclosed from time to time in the Company's SEC
filings, including, but not limited to, the Company's report on Form
10-K for the year ended January 31, 2000.
JANUARY 31, 2001
2000 Openings/Acquisitions (17)
FCE FCE
Economic Economic Sq. ft./
Ownership Cost No. of
Property/Location Opened (%) (in mil.) Units
----------------------------------------------------------------------
Shopping Centers:
Battery Park City/
Manhattan, NY Q2-00 70% 28.9 166,000
Court Street/
Brooklyn, NY Q2-00 70 19.9 103,000
Forest Avenue/
Staten Island, NY Q2-00 70 8.2 68,000
Eastchester/
Bronx, NY Q2-00 70 9.5 63,000
------------------
66.5 400,000
---------=========
Hotels:
Times Square Hilton/
Manhattan, NY Q2-00 56 65.9 444 rooms
Embassy Suites Hotel/
Manhattan, NY Q2-00 50.4 64.6 463 rooms
------------------
130.5 907 rooms
--------==========
Office:
Emerald Corp. Park/
Cleveland, OH(a) Q4-00 50 5.6 87,400
Residential:
Philip Morris/
Richmond, VA(a) Q1-00 90 20.0 171
Mount Vernon/
Alexandria, VA Q2-00 100 86.2 1,387
Forest Trace/
Lauderhill, FL Q3-00 100 48.0 324
Mayfair Great Neck/
Great Neck, NY(a) Q3-00 40 17.1 144
Mayfair of Glen Cove/
Long Island, NY(a) Q3-00 40 7.9 80
Classic Res. By Hyatt/
Yonkers, NY(a) Q3-00 50 36.8 309
Chestnut Grove/
Plainview, NY Q3-00 80 12.2 79
Grand Lowry Lofts/
Denver, CO Q3-00 90 21.5 261
Westfield Court/
Stamford, CT Q4-00 80 19.6 167
101 San Fernando/
San Jose, CA(a) Q4-00 95 62.8 323
------------------
332.1 3,245
----------========
Total Projects Opened $534.7
======
(a) Reported under the equity method of accounting.
JANUARY 31, 2001
Projects Under Construction (14)
FCE FCE
Economic Economic Sq. ft./
Anticipated Ownership Cost No. of
Property/Location Opening (%) (in mil.) Units
----------------------------------------------------------------------
Shopping Centers:
Queens Place/
Queens, NY Q3-01 70 50.0 455,000
Mall @ Robinson/
Pittsburgh, PA (a) Q4-01 56.7 71.8 856,000
Mall @ Stonecrest/
Atlanta, GA (a) Q4-01 67 79.7 1,200,000
------------------
201.5 2,511,000
--------==========
Office:
University Park @ MIT-Partners/
Cambridge, MA Q3-01 100 58.8 123,000
University Park @ MIT-Millennium/
Cambridge, MA Q3-02 100 59.4 201,000
University Park @ MIT-Alkermes/
Cambridge, MA Q3-02 100 49.4 145,000
------------------
167.6 469,000
--------==========
Residential:
Heritage/
San Diego, CA Q1-01 100 37.0 193
Forest Hills/
Forest Hills, NY Q2-01 56 13.2 84
Bayshore/
Bayshore, NY Q3-01 80 14.6 85
Bell Building/
Philadelphia, PA (a) Q4-01 95 39.9 211
Settler's Landing at Greentree/
Streetsboro, OH (a),(b) 2001 50 15.6 408
Parkwood Village/
Brunswick, OH (a),(b) 2001 50 6.5 204
Arbor Glen/
Twinsburg, OH (a),(b) 2001-2003 50 8.4 288
University Park @ MIT/
Cambridge, MA 2002 100 40.4 135
------------------
175.6 1,608
---------=========
Total Projects Under Construction $544.7
======
(a) Reported under the equity method of accounting.
(b) Phased-in openings.
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
For the Periods Ended January 31, 2001 and 2000
(dollars in thousands, except per share data)
Three Months Ended
January 31, Increase (Decrease)
----------------------- ------------------
2001 2000 Amount Percent
----------------------- ------- ------
Revenues:
Forest City
Enterprises, Inc. $ 37,095 $ 44,726 $(7,631) (17.1)
Forest City Rental
Properties
Corporation 189,034 153,199 35,835 23.4
-----------------------------------
Total Revenues $ 226,129 $ 197,925 $28,204 14.2
-----------------------------------
-----------------------------------
Earnings before
depreciation,
amortization and
deferred taxes(a) $ 45,982 $ 40,927 $ 5,055 12.4
-----------------------------------
-----------------------------------
Operating earnings,
net of tax $ 11,905 $ 16,740 $(4,835)
Minority interest (1,995) (4,416) 2,421
Provision for decline
in real estate and
other, net of tax -- -- --
Gain (loss) on
disposition of
properties and
other investments,
net of tax (5,734) 11,139 (16,873)
-----------------------------------
Net earnings before
extraordinary gain 4,176 23,463 (19,287)
Extraordinary gain,
net of tax -- 58 (58)
-----------------------------------
Net earnings $ 4,176 $ 23,521 $(19,345)
-----------------------------------
-----------------------------------
Per common share
- diluted
Earnings before
depreciation,
amortization and
deferred taxes(a) $ 1.51 $ 1.36 $ 0.15 11.0
-----------------------------------
-----------------------------------
Operating earnings,
net of tax $ 0.39 $ 0.56 $ (0.17)
Minority interest (0.06) (0.15) 0.09
Provision for decline
in real estate and
other, net of tax -- -- --
Gain (loss) on
disposition of
properties and
other investments,
net of tax (0.19) 0.37 (0.56)
-----------------------------------
Net earnings before
extraordinary gain 0.14 0.78 (0.64)
Extraordinary gain,
net of tax -- -- --
-----------------------------------
Net earnings $ 0.14 $ 0.78 $ (0.64)
-----------------------------------
-----------------------------------
Weighted average diluted
shares outstanding 30,423,709 30,163,587 260,122
-----------------------------------
-----------------------------------
Year Ended
January 31, Increase (Decrease)
----------------------- ------------------
2001 2000 Amount Percent
----------------------- ------- ------
Revenues:
Forest City
Enterprises, Inc. $ 130,779 $ 163,196 $(32,417) (19.9)
Forest City Rental
Properties
Corporation 664,006 535,592 128,414 24.0
-----------------------------------
Total Revenues $ 794,785 $ 698,788 $95,997 13.7
-----------------------------------
-----------------------------------
Earnings before
depreciation,
amortization and
deferred taxes(a) $ 147,809 $ 132,639 $15,170 11.4
-----------------------------------
-----------------------------------
Operating earnings,
net of tax $ 43,959 $ 38,008 $ 5,951
Minority interest (3,399) (5,557) 2,158
Provision for decline
in real estate and
other, net of tax (744) (3,060) 2,316
Gain (loss) on
disposition of
properties and
other investments,
net of tax 51,821 11,139 40,682
-----------------------------------
Net earnings before
extraordinary gain 91,637 40,530 51,107
Extraordinary gain,
net of tax -- 272 (272)
-----------------------------------
Net earnings $ 91,637 $ 40,802 $ 50,835
-----------------------------------
-----------------------------------
Per common share
- diluted
Earnings before
depreciation,
amortization and
deferred taxes(a) $ 4.87 $ 4.40 $ 0.47 10.7
-----------------------------------
-----------------------------------
Operating earnings,
net of tax $ 1.45 $ 1.26 $ 0.19
Minority interest (0.11) (0.19) 0.08
Provision for decline
in real estate and
other, net of tax (0.02) (0.10) 0.08
Gain (loss) on
disposition of
properties and
other investments,
net of tax 1.70 0.37 1.33
-----------------------------------
Net earnings before
extraordinary gain 3.02 1.34 1.68
Extraordinary gain,
net of tax -- 0.01 (0.01)
-----------------------------------
Net earnings $ 3.02 $ 1.35 $ 1.67
-----------------------------------
-----------------------------------
Weighted average diluted
shares outstanding 30,333,442 30,153,057 180,385
-----------------------------------
-----------------------------------
----------------------------------------------------------------------
(a) Earnings before depreciation, amortization and deferred taxes
consists of net earnings before extraordinary gain, excluding the
following items: i) provision for decline in real estate and
other; ii) gain (loss) on disposition of properties; iii)
beginning in year ended January 31, 2001, the adjustment to
recognize rental revenues using the straight-line method; and
iv) noncash charges from Forest City Rental Properties Corporation
for depreciation, amortization and deferred income taxes.
| CONTACT: |
Forest City Enterprises, Inc. |
| |
Thomas G. Smith, 216/621-6060 |
| |
Thomas T. Kmiecik, 216/621-6060 |
| |
ON THE WEB: www.fceinc.com |
|
|
