Forest City Sees Decline in Revenue

The net loss of $1.8 million is significantly lower than the net loss experienced in Q2 2008. Forest City saw a net loss that quarter of $8.4 million, or $0.08 per share. Net loss for the first half totaled $32.5 million, or $0.26 per share, compared with $48.8 million, or $0.47 per share during the first half of 2008.

Q2 earnings before depreciation, amortization and deferred taxes totaled $95.5 million, an 8.1% increase when compared to Q2 2008's EBDT of $88.3 million. Year-to-date EBDT was $137.1 million, a 31.4% increase compared to $104.3 million for the first half of 2008.

President and CEO Charles Ratner told investors on a conference call this morning that despite the decline in numbers the company remained focused on the five main areas it outlined at the beginning of the year. Those focus areas include curtailing development, driving costs out, raising capital, proactively managing debt securities and taking advantage of opportunities created by the current market conditions.

To that end, Forest City has not begun construction on a single new building this year, with plans to remain on that course for the rest of 2009. The company will start construction on two pre-planned properties in 2010, but that will likely be the only new construction it undergoes, according to Ratner. Forest City is, however, moving forward with projects it was working on before the start of 2009, a number of which will open this year or the beginning of 2010.

The company actively tried to divest of a number of assets during Q2 but was unable to complete a single deal. CFO Bob O'Brien says that was due in large part to companies desire to find the best deals by investing in trophy assets at distressed prices. Forest City has refocused to pursing joint ventures on a number of properties hoping to attract investors in that way. Although O'Brien says it is unlikely the company will be able to close on a single joint venture by the end of the third quarter.

Ratner says he and the other executives do not see a recovery on the horizon in the near term and the company is therefore planning for more quarters like the previous two. "We don't expect improvement in the near term. We are not seeing an improvement." He does admit the bottom of the recession might have been reached.

The long-awaited and much-debated Atlantic Yards project will be moving forward by the end of the year, Ratner says. He hopes to reach the necessary agreements and have those finalized and documents by the end of the year.