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"We are pleased to report back to investors with an update on our planned REIT conversion and on financial targets we will seek to achieve across a number of key metrics," said
"Creating a strong, sustaining capital structure is a key element of our strategic plan, and we are committed to further reducing leverage and enhancing our financial flexibility," said
"Since we launched our strategic plan at the end of 2011, through
The anticipated components of the company's transition from its
"We continue to be focused on the sale of non-core assets," O'Brien said. "We are targeting net proceeds from the sale of various non-core assets in the range of
"When we announced our intent to convert to REIT status, we also acknowledged that we were analyzing our corporate structure to better align with our strategies and to improve operating margins and operational efficiencies," said LaRue. "Based on that effort, which we are conducting with the help of outside advisors, we expect to be able to achieve annual cost savings of approximately
"Our signature strength in developing vibrant real estate, including dynamic, mixed-use projects in key urban markets, is at the heart of Forest City, and we plan to continue to take advantage of that strength as a REIT," said LaRue. "We anticipate maintaining a target development ratio (the cost of projects under construction and development, and land, as a percent of total undepreciated assets) of 8 percent to 12 percent going forward, while managing associated risks and adjusting for market conditions. Today, our development ratio is approximately 6.3 percent."
"We plan to reinstate a quarterly dividend shortly following REIT conversion," said LaRue. "While we anticipate our dividend yield to initially be below those of our peers, as we continue to execute on our deleveraging and margin-improvement efforts, we would expect the dividend yield to increase to be in line with our peers over time."
Distribution of Earnings and Profits
"In connection with REIT conversion, we expect to distribute our cumulative earnings and profits (E&P) to shareholders," said LaRue. "At the end of 2014, our estimated E&P was between
REIT Conversion Costs
"As disclosed in our Form 10Q for the period ended
"These strategic plans reflect our initial thoughts on moving towards REIT conversion. We will continue to refine and update these views, and we will provide additional updates as appropriate," LaRue said.
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 forwardlooking statements. The company's actual results could differ materially from those expressed or implied in such forwardlooking statements due to various risks, uncertainties and other factors. These risks and other factors are set forth under the heading "Risk Factors" beginning on page 7 in the company's Annual Report on Form 10K for the year ended
In particular, in considering the company's update of its strategic plans, investors should carefully consider the following risks and important factors that may affect the company's ability to convert to a REIT and meet its targeted financial metrics and strategic goals: the ability of the company to obtain necessary thirdparty consents and approvals, including shareholder approval, to convert to a REIT, which may require the company to restructure existing joint ventures in a manner that adversely affects the company's economic interests in those joint ventures; the ability of the company to effect asset sales at targeted prices; the ability to complete the proposed equity offering in a sufficient size and at a price to accomplish its goals; the ability of the company to successfully complete any other capital markets or other transactions, including exchanges of remaining convertible senior notes for Class A common stock, necessary to successfully reduce its leverage; the ability of management to successfully continue to operate its properties while engaged in the completion of REIT conversion, asset sales and negotiating and obtaining third-party consents; the company's ability to create new systems and processes, including new accounting systems, to generate and distribute data, that will be needed in order to operate as a REIT; and the ability of the company to successfully reconfigure its operations to drive costs savings. These risks and important factors are described in more detail commencing on page 45 of the company's Quarterly Report on Form 10Q for the quarterly period ended
Further risks and other factors that could cause actual results to differ materially from those in the forwardlooking statements include, but are not limited to, the company's ability to qualify or to remain qualified as a REIT, realizing the anticipated benefits to shareholders if it successfully elects REIT status, the impact of complying with REIT qualification requirements, the amount and timing of any future distributions including those that it would be required to make as a REIT, the impact of issuing equity, debt or both to satisfy its E&P Distribution and other REIT conversion costs, the impact of covenants that could prevent it from satisfying REIT distribution requirements, its lack of experience operating as a REIT if it successfully converts, the impact of current lending and capital market conditions on its liquidity, its ability to finance or refinance projects or repay its debt, the impact of the slow economic recovery on its ownership, development and management of its commercial real estate portfolio, general real estate investment and development risks, using modular construction as a new construction methodology and owning a factory to produce modular units, vacancies in its properties, risks associated with developing and managing properties in partnership with others, 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 and other armed conflicts, risks of owning and operating an arena, risks associated with an investment in a professional sports team, the ability to sell all or a portion of its ownership interests in a professional sports team and arena, 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 taxexempt 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, 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, volatility in the market price of its publicly traded securities, inflation risks, litigation risks, cybersecurity risks, cyber incidents, its ability to achieve its strategic goals based on significant assumptions, the completion of its acquisition of
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At the Company: Jeff Frericks, Vice President - Capital Markets, 216-621-6060; Jeff Linton, Senior Vice President - Corporate Communication, 216-621-6060