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CLEVELAND-Master developer Forest City Enterprises Inc., a $7.4 billion company engaged in the ownership, development, acquisition and management of several property types, posted a vigorous first quarter ended April 30, 2005.

The company reports that first-quarter consolidated revenues increased 29% to $309.3 million compared with $239.9 million a year earlier. Fiscal first-quarter net earnings were $22.2 million, or $0.43 per share, compared with $7.2 million, or $0.14 per share, in 2004.

Earnings before depreciation, amortization and deferred taxes (EBDT) was $67.7 million, or $1.32 per share, a 22% increase on a per share basis over last year’s fiscal first-quarter EBDT of $55.1 million, or $1.08 per share. The increase was driven by an 8% increase in the company’s operating portfolio as well as large increases in land sales. Executives note that Forest City uses EBDT as a long-term measure in considering capital requirements and allocation of resources by segment.

The company says that a portion of the increases were offset by the sale of its lumber trading group in the fourth quarter of 2004 and the first quarter 2005 loss for the NBA basketball team, the Nets. In addition to these items, net earnings increased in the first quarter of 2005 due to a first-quarter 2004 charge resulting from a change in an accounting principle, which did not recur.

Charles A. Ratner, president and chief executive officer, says the company competed two projects during the first quarter, acquired one in the early second quarter and expects to open eight additional projects during the remainder of the year. In total, the 2005 openings will $486.7 million of cost on a full consolidation basis and $559.7 million of cost at the company’s pro-rata share.

Comparable property net operating income increased 3.1% in 2005 compared with the prior year’s first quarter. NOI for the retail and office portfolios was up 3.3 % and 0.7%, respectively. In the residential portfolio, comparable property NOI increased 3.5%, following a 1.3% increase in the fourth quarter of 2004.

The company reports that comparable occupancies in the first quarter with the same period last year were up portfolio-wide. Retail and office occupancies each increased 2% to 94%; and residential increased 1% to 92%.

Forest City’s land development group, which oversees Denver Stapleton and Chicago Central Station, generated $13.9 million in net earnings and $14.7 million of EBDT in the first quarter. Sales of land in the investment real estate portfolio contributed an additional $10.6 million in net earnings and EBDT during the first quarter.

In the fist quarter, the company sold the Showcase specialty retail center in Las Vegas and the ground lease and expansion rights to the property, which generated cash proceeds of $26 million. Also during the quarter, Forest City disposed of Colony Place, a 300-unit residential community in Fort Myers, FL for $6.6 million in cash proceeds.

Forest City also opened two projects in Q1, representing a total cost of $49.2 million. Among the first-quarter openings was 23 Sidney at the Company’s University Park in Cambridge, MA, as well as the $31 million, 359,000-sf first phase of Saddle Rock Village retail center in Aurora, CO.

Early in the second quarter, Forest City acquired the 176,000-sf Ballston Common Office Center in Arlington, VA for $62.9 million. The office building sits above the company’s existing Ballston Common Mall, a four-level, 578,000-sf urban retail center.

Forest City reports that at the end of Q1, 15 projects were under construction or in the pipeline for acquisition, representing a cost of $805.4 million on a full consolidation basis and $1.2 billion of cost at the company’s pro-rata share. Including the two projects that opened in the first quarter, a total of 11 projects are scheduled to open this year. The openings include three retail properties, one office building, six apartment communities and one condominium building.

Q1 also brought new collaborations with governmental units as the US Navy selected the company’s military communities group to participate in exclusive negotiations for a housing contract covering the Navy’s Great Lakes Region. In early second quarter, the company signed an agreement with the federal government for the 42-acre redevelopment of Southeast Federal Center to create a mixed-use community on the site of a former military supply depot in Washington, DC.

“We are cognizant of the risks inherent in our business and remain confident in our ability to execute our plans even as the nation’s economy continues to send mixed signals,” Ratner said in closing.

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