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| 8-K - 8-K - Forest City Realty Trust, Inc. | a8kinvestorpresentationaug.htm |
August 2017
Investor
Presentation
Exhibit 99.1
Disclosure Information
INFORMATION RELATED TO FORWARD-LOOKING STATEMENTS
Statements made in this presentation that state the Company’s 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 future events and
actual results, financial or otherwise, could differ materially from those projected in such forward-looking statements.
Additional information concerning factors that could cause future events or actual results to differ materially from those in
the forward-looking statements are included in the “Risk Factors” section of the Company's SEC filings, including, but not
limited to, the Company's Annual Report and quarterly reports. You are cautioned not to place undue reliance on such
forward-looking statements.
USE OF NON-GAAP MEASURES
We frequently use the non‐GAAP measures at total company ownership of funds from operations (“FFO”), Operating FFO,
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), Adjusted EBITDA, Net Debt to Adjusted
EBITDA, net operating income (“NOI”), net asset value (“NAV”) and comparable NOI to explain operating performance and
assist investors in evaluating our business. For a more thorough discussion of FFO, Operating FFO, EBITDA, Adjusted
EBITDA, Net Debt to Adjusted EBITDA, NOI, Comparable NOI, and NAV, including how we reconcile these measures to
their GAAP counterparts, please refer to the supplemental package for the quarter-ended June 30, 2017, furnished to the
SEC on Form 8‐K on August 3, 2017 and the supplemental package for the year-ended December 31, 2016, furnished to
the SEC on Form 8‐K on February 27, 2017. Copies of our quarterly and annual supplemental packages can be found on
our website at www.forestcity.net, or on the SEC’s website at www.sec.gov.
Please note: We periodically post updated investor presentations on the Investors page of our website at
www.forestcity.net. It is possible the periodic updates may include information deemed to be material. Therefore, we
encourage investors, the media, and other interested parties to review the Investors page of our website at
www.forestcity.net for the most recent investor presentation.
Pictures shown on cover from left to right are Twelve12, the New York Times building and 88 Sidney Street.
Section Page #
Our Company 1
Our Portfolio 6
Near-Term Priorities and Long-Term Strategy 8
Capital Structure Overview 13
Property Margins and Overhead 15
Corporate Responsibility and ESG 19
Appendix: Additional Financial Information 21
Table of Contents
1
2
3
4
5
A
6
Premier assets in core, high-barrier-to-entry urban markets
Scale and focus within core markets; top 10 assets comprise ~61% of NOI(1)
Outsized growth opportunities from existing JV buyouts, in-process developments
and entitled pipeline in attractive core markets
Identified margin enhancements resulting in ~400-500bps of adjusted EBITDA
margin expansion
Effective, seasoned management team averaging ~20 years of experience at Forest
City; successfully executed key strategic goals in the Company‟s evolution(2)
Substantial upside in dividend; anticipated to more than double by 2019
- 1 -
Value Proposition 1
High-quality assets concentrated in core, urban markets with strong growth
profiles and operated by an experienced, proven management team
(1) Reflects portfolio pro forma for pending retail and FAH dispositions. Percentage based on Q2 2017 estimated annualized stabilized NOI.
(2) Average represents top senior executives excluding Ketan Patel who joined Forest City as General Counsel in 2017.
NAV per Share
Trading Gap
FFO per Share NAV per Share Stockholder Returns
Commitment to Outperformance
Guiding Principles
- 2 -
1
(1) Core markets include Boston, Dallas, Denver and Los Angeles as well as the Greater New York City, San Francisco and Washington, D.C.
metropolitan areas. Reflective of portfolio pro forma for pending retail and FAH dispositions.
Focused Placemaking
Premier national portfolio of
high-quality office and
multifamily assets
Concentrated exposure in
seven leading core markets(1)
Pursue development at
attractive risk-adjusted
returns
Sustainable Growth
Operate within well-defined
capital allocation parameters
Tailored capital structure for
future growth opportunities
Disciplined approach to
activating development
pipeline
Exceptional Performance
Streamlined operations for
“best-in-class” performance
Reduced exposure to non-
core assets and markets
Accountability through
transparency in governance
Focus on core markets
Refine portfolio
Deliver in-process
developments
Portfolio Optimization Earnings Enhancements
Reduce cost of capital
Improve margins
Stabilize accretive
developments
Growth Opportunities
Existing development
entitlements
Opportunistic JV buyouts
Targeted acquisitions
Key Factors As of 2011 Today Target
S
tra
te
g
ic
G
o
a
ls
Core Asset
Focus
Non-Core
Markets
82.2% NOI from 9 Markets(1) 88.4% NOI from 9 Markets(1) >90.0% NOI from 7 Core Markets(2)
Development 16.7%
2011 Development Ratio
7.6%
Q2 2017 Development Ratio
Target development ratio less than ~7.5%
and deliver NAV and FFO growth from
existing projects
Fina
n
cia
l
Margin
Improvement
44.4%
Adjusted EBITDA Margin
49.9% Q2 2017 Adj. EBITDA Margin
(rolling 12-months)
~400-500bps
of upside from identified cost savings
JV Exposure Majority of NOI from JVs
University Park at MIT, QIC
and Madison JV transactions
Opportunity for partner buy-outs
from captive deal pipeline reduces JV exposure
Leverage 13.1x
Net Debt / Adj. EBITDA
8.2x Net Debt / Adj. EBITDA (rolling 12-months
as of 06/30/2017) with a target of 7-8x by
YE2017
6.5x
Long Term Net Debt / Adj. EBITDA
Dividend
Policy
None
$0.09
Quarterly Dividend More than Double by 2019
C
orp
o
ra
te
G
o
v
ern
a
n
c
e
Other
Corporate
Governance
Items
6/15 Independent Board Members
2/6 Independent Board Members with
less than 10 years tenure
21.5 yrs Avg. Board Tenure
Executive Chairman
8/13 Independent Board Members
6/8 Independent Board Members with less
than 10 years tenure
12.2 yrs Avg. Board Tenure
Non-Executive Chairman
Predominantly Independent
Board
Majority Voting standard in uncontested
elections
Ongoing Board Refreshment
(1) Nine markets include Boston, Chicago, Dallas, Denver, Los Angeles and Philadelphia, as well as the Greater New York City, San Francisco and Washington,
D.C. metropolitan areas.
(2) Core markets include Boston, Dallas, Denver and Los Angeles as well as the Greater New York City, San Francisco and Washington, D.C. metropolitan areas.
Retail FAH
Office Apartment
- 3 -
Focus on Continued Execution
Office Apartment
Mixed-Use
1
Retail FAH
Office Apartment
Hotels
Military
Housing
Land Team / Arena
- 4 -
Recent Steps & Accomplishments… 1
Management and the Board have a proven track record of achieving their stated goals and
are focused on continuing successful execution of the Company‟s strategy
Increased Focus
Narrowing focus to two property types, apartment and office, from eight in 2011
Pending disposition of the majority of our retail portfolio through the sale of 11 regional malls
and 12 New York shopping center assets to our existing partners, QIC and Madison International,
for a combined ~5% cap rate (represents $2.2Bn valuation and $1.2Bn NAV)(1)
Currently generate 88.4% of NOI from nine markets compared to 82.2% in 2011(2)
2017 Guidance 2017 Operating FFO Guidance : $1.50 - $1.55 per share
Expanded Margins Adjusted EBITDA margin has expanded from 44.4% in 2011 to 49.9% as of Q2 2017 (rolling 12-months)
Improved Corporate
Governance
Eliminated dual-class structure, implemented majority voting, established a predominately
independent Board and committed to ongoing Board refreshment
Initiated Dividend Re-initiated dividend in 2016 and increased dividend by 50% in 2017
Reduced Leverage Steadily decreased leverage from 13.1x Net Debt / Adj. EBITDA in 2011 to 8.4x at year-end 2016
Enhanced Disclosure Changed fiscal year-end to Dec. 31, disclosed new segment level data, added detailed margin and
overhead information and currently provide annualized NOI and NAV components
Outperformed Peers(3)
Outperformed our proxy peers on a 1, 3 and 5 year basis by ~12%, ~7% and ~30%, respectively
Outperformed MSCI US REIT Index on a 1, 3 and 5 year basis by ~9%, ~2% and ~22%,
respectively
Source: FactSet, SNL Financial.
(1) See pages 28–29 for additional disclosure.
(2) Nine markets include Boston, Chicago, Dallas, Denver, Los Angeles and Philadelphia, as well as the Greater New York City, San Francisco and Washington,
D.C. metropolitan areas.
(3) On an equity market cap-weighted, total returns basis as of 07/31/2017; proxy peers include ARE, AIV, AVB, BXP, CBL, DDR, DRE, EQR, FRT, KIM, MAC,
SLG, UDR and VNO.
(7.5%)
(4.6%)
4.4%
(30%)
(25%)
(20%)
(15%)
(10%)
(5%)
--
5%
10%
07/29/16 10/10/16 12/22/16 03/06/17 05/18/17 07/31/17
23.1%
28.1%
30.2%
(20%)
(10%)
--
10%
20%
30%
40%
07/3 /14 03/ 7/15 10/12/15 05/18/ 6 12/23/16 07/31/17
47.8%
55.5%
77.0%
(20%)
--
20%
40%
60%
80%
100%
07/31/12 07/31/13 07/31/14 07/31/15 0 /30/16 07/31/17
31%
(1%)
6%
14%
(7%)
6%
2
(11%)
(1%)
111%
34%
47%
- 5 -
…Have Yielded Strong Results 1
1 Year Total Return 3 Year Total Return 5 Year Total Return
Source: FactSet, SNL Financial.
(1) Peers are proxy peers.
(2) On an equity market cap-weighted, total returns basis as of 07/31/2017; proxy peers include ARE, AIV, AVB, BXP, CBL, DDR, DRE, EQR, FRT, KIM, MAC,
SLG, UDR and VNO.
Forest City Proxy Peers(2) MSCI US REIT Index (RMZ)
Total Returns Since Key Strategic Milestones
Start of Strategic Plan Converted to a REIT
Reclassification
Announcement
Announcement of REIT
Conversion / Strategic Plan
01/01/2012 01/13/2015 01/04/2016 12/06/2016
Total returns have outperformed peers both over a 1, 3 and 5 year basis,
and since key strategic milestones(1)
Near-Term Strategic Priorities
- 6 -
Objective Near-Term Impact
Execute Sale of Retail Portfolio
Reduces retail exposure, with ~94% of pro forma NOI from
office and multifamily assets
Margin Improvement
~400-500bps of identified adjusted EBITDA margin
improvement
Increase Dividend
More than double current quarterly dividend of $0.09/share
by 2019
Reduce Leverage
~6.5x Net Debt / Adj. EBITDA by year-end 2018 from 8.2x
as of 6/30/2017 (rolling 12-months)(1)
Deliver Near-Term
Developments
Near-term incremental FFO contribution of $0.06 – $0.08
per share from 2017 and 2018 openings upon stabilization
Navigate “BIG” Period
Minimize built-in gains (“BIG”) recognition, resulting from
REIT conversion, while retail and other non-core asset
sales are executed
“BIG” period lasts until 12/31/2020(2)
(1) See page 16 for current capital structure.
(2) See page 25 for additional detail.
2
Forest City has identified six key near-term strategic priorities intended to
simplify & focus the portfolio, increase cash flow and drive stockholder returns
4
3
2
1
5
6
Long-Term Strategy
- 7 -
2
Portfolio Optimization
Focus investing in top tier core markets (inventory of
opportunity: NYC, D.C., San Francisco and Denver)
Deliver ongoing “power of place” developments into
stabilized core portfolio
Continue to evaluate the merit of the long-term
ownership of non-core and remaining retail
Growth Opportunities
Disciplined development targeting 6% – 7% yield on
cost or 150-200bps spread to stabilized cap rates
Opportunistic acquisitions from captive pipeline of
JV partner interests
Targeting development ratio less than ~7.5%
Value creation potential from development pipeline
Earnings Enhancements
Reduce cost of capital
Strengthen balance sheet
Efficient organizational structure of continuous
improvement mindset
Significant FFO from delivery of current developments
Maximize
Stockholder
Value
Portfolio Composition
- 8 -
Total Operating Portfolio Office (% of Total NOI)(2)
Apartment (% of Total NOI)(3)
~$278MM
NOI
~$190MM
NOI
3
(1)
Note: NOI data as presented is at Company share.
(1) Reflects portfolio pro forma for pending retail and FAH dispositions. Percentages based on Q2 2017 estimated annualized stabilized NOI.
(2) CBD includes assets located in the central business districts of Pittsburgh, PA, Richmond, VA, Cleveland, OH and San Francisco, CA. Other includes
assets located in suburban areas of Alexandria, VA, Beachwood, OH, Richmond, VA and Albuquerque, NM. Other Life Science includes an asset in
Philadelphia, PA and an asset in Baltimore, MD.
(3) Core markets include Boston, Chicago, Dallas, Denver, Los Angeles and Philadelphia as well as the Greater New York City, San Francisco and
Washington, D.C. metropolitan areas. Non-Core markets include Cleveland, OH, Cumberland, RI, Haverhill, MA, New Haven, CT, San Diego, CA,
Orange, CA and Stratford, CT.
AMERICAN CIGAR LOFTS | RICHMOND, VA
40 LANDSDOWNE ST | CAMBRIDGE, MA
FOUNDRY LOFTS | WASHINGTON, D.C.
~$501MM
NOI
Atlantic Terminal
Office
Top Ten Assets
- 9 -
3
Pro forma for pending retail portfolio dispositions, Forest City‟s portfolio is concentrated in a
select number of high-quality assets with the top ten assets comprising ~61% of total NOI
Note: Reflects portfolio pro forma for pending retail and FAH asset dispositions. NOI reflects Q2 2017 estimated annualized stabilized NOI. GLA as of 6/30/2017.
Note: NOI and GLA data as presented is at Company share.
(1) Includes Arris, an apartment building that was not stabilized as of Q2 2017. Arris is excluded in other NOI calculations or percentages.
(2) Includes One Pierrepont Plaza.
Cambridge Life
Science Portfolio
Boston, MA
1.5MM SF GLA
$80.8MM NOI
2
NYC San Francisco
San Francisco, CA
388K SF GLA
$19.0MM NOI
Westfield SF
Centre
4
Bayside Village
San Francisco, CA
431 Units
$11.5MM NOI
Brooklyn, NY
400K SF GLA
$11.4MM NOI
New York, NY
735K SF GLA
$50.7MM NOI
New York Times
3
East River Plaza
New York, NY
262K SF GLA
$12.1MM NOI
6
8 Spruce Street
New York, NY
234 Units
$9.9MM NOI
9
Brooklyn, NY
3.2MM SF GLA
$87.3MM NOI
Metrotech
Portfolio(2)
1
Boston
Retail
Office
Apartment
Mixed-Use
Top 10 Asset NOI Contribution
Property Type Key
# Denotes ranking by NOI
Greater Washington, D.C.
276K SF GLA
$9.6MM NOI
Johns Hopkins
8
Washington, D.C.
71K SF GLA / 485 Units
$13.8MM NOI
The Yards(1)
10
Top 10
61%
Remaining
39%
~$501MM
NOI
Washington, D.C.
7
5
New
York
55%
Boston
29%
Washing
ton, D.C.
4%
San
Francisc
o
2%
Philadel
phia
2%
Other
8%
Key Office Stats
New
York
Life
Science
Other
Rent PSF: $52.57 $64.91 $24.54
Occupancy: 98.4% 99.8% 82.8%
Total GLA: 4,823 2,126 2,558
Company GLA: 4,463 1,855 2,250
% Total NOI(1): 31% 19% 6%
Allocated Debt: $408MM $607MM $217MM
Office Segment Overview
- 10 -
Top Office Assets (% of NOI)
Property Location
GLA
(000s)
Rent
PSF Occ‟y
% Office
NOI(1)
Metrotech(2)(3) Brooklyn, NY 3,181 $45.07 98.4% 31%
Cambridge Life
Science(2)
Cambridge, MA 1,457 $70.23 100.0% 29%
New York Times(2) Manhattan, NY 735 $92.39 100.0% 18%
Remaining Core 1,944 $42.61 92.5% 17%
Non-Core(4) 1,251 $20.23 78.6% 5%
Total / Wtd. Avg. 8,568 $48.41 94.5% 100%
33 properties encompassing 8.6MM SF primarily located in core-urban markets
21 traditional office properties (6.7MM SF) and 12 life science properties (1.9MM SF)
3
Geographic Overview (% of Office NOI)(1)
Note: All figures shown at Company share as of 06/30/2017.
(1) Based on Q2 2017 estimated annualized stabilized NOI.
(2) Subject to a ground lease. Additional disclosure on page 22.
(3) Includes One Pierrepont Plaza.
(4) Includes assets located in Beachwood, OH, Albuquerque, NM, Cleveland, OH and Pittsburgh, PA.
(5) Includes Greater Washington, D.C. and Richmond, VA.
300 MASSACHUSETTS AVE | CAMBRIDGE, MA TWELVE METROTECH CENTER | BROOKLYN, NY
(5)
~$278MM
NOI
(4)
Top Apartment Assets (% of NOI)(1)
Property Location Units
Rent /
Unit(2)
Economic
Occ‟y
% Apt.
NOI
Bayside Village San Francisco, CA 431 $3,010 92.5% 6%
8 Spruce Street Manhattan, NY 234 $4,862 95.3% 5%
Pavilion Chicago, IL 1,058 $1,187 94.2% 5%
Remaining Core 7,211 $1,984 94.9% 59%
Non-Core(3) 7,853 $997 92.6% 25%
Total / Wtd. Avg. 16,787 $1,531 94.1% 100%
Apartment Segment Overview
- 11 -
69 total properties; 23,212 total leasable units (16,787 at Company share)(1)
75% of apartment NOI comes from core assets
Note: All figures shown at Company share as of 6/30/2017 and NOI reflects Q2 2017 estimated annualized stabilized NOI.
(1) Pro forma for FAH disposition.
(2) Reflects monthly rent based on comparable unit data as of 6/30/2017.
(3) Core markets include Boston, Chicago, Dallas, Denver, Los Angeles and Philadelphia as well as the Greater New York City, San Francisco and
Washington, D.C. metropolitan areas. Non-Core markets include Cleveland, OH, Cumberland, RI, Haverhill, MA, New Haven, CT, San Diego, CA,
Orange, CA and Stratford, CT.
(4) Includes Richmond, VA.
3
Sky55 | CHICAGO BAYSIDE VILLAGE | SAN FRANCISCO, CA 8 SPRUCE STREET | NEW YORK, NY
(3)
Key Apartment Stats(1)
Core Non-Core
Rent per Unit: $2,015 $997
Occupancy: 94.7% 92.6%
Total Units: 12,322 10,890
Company Units: 8,934 7,853
Avg. Units / Property: 293 407
% of Total NOI: 29% 9%
Allocated Debt: $1.38Bn $328MM
Geographic Overview (% of Apt. NOI)(1)
(4)
~$190MM
NOI
Year
Opening
# of
Projects
Net Cost
($MM)
NOI Range
($MM)
Yield Range
2017 5 298.0$ $15.8 - $17.3 5.7% - 6.2%
2018 3 73.6 4.8 - 5.2 6.5% - 7.0%
2019 2 97.9 6.7 - 7.3 6.9% - 7.4%
10 469.5$ $27.3 - $29.8 5.7% - 6.2%
Property
Type
# of
Projects
Net Cost
($MM)
NOI Range
($MM)
Yield Range
Apartment 8 421.5$ $24.0 - $26.2 5.6% - 6.1%
Retail 2 48.0 3.3 - 3.6 6.7% - 7.2%
10 469.5$ $27.3 - $29.8 5.7% - 6.2%
By Year
By Property Type
Name Location $MM Office Apt. Retail Other Total
Stapleton Denver, CO $0.0 3.1 2.0 0.2 0.2 5.6
The Yards Washington, D.C. 70.4 1.8 2.0 0.3 0.5 4.6
Pier 70 San Francisco, CA 36.2 1.2 0.9 0.4 0.8 3.2
Hudson Exchange Jersey City, NJ 12.5 - 3.0 0.2 - 3.2
Pacific Park Brooklyn, NY 40.9 0.3 1.2 - 0.3 1.8
Waterfront Station Washington, D.C. 10.4 - 0.3 0.0 - 0.3
5M San Francisco, CA 30.8 0.1 0.0 0.0 0.1 0.3
Operating Properties 23.1 - - - - -
Other 5.7 0.1 0.5 0.2 - 0.8
Non-Core Markets 53.4 1.6 0.4 0.1 - 2.1
Total $283.5 8.3 10.2 1.3 1.9 21.7
Square Feet
- 12 -
3
Near-Term Growth(1) Long-Term Growth(2)
Summary of Potential Growth
(1) Reflects projects under construction. See page 24 for additional detail. Dollar amounts represent cost at Company share.
(2) Reflects development pipeline. Dollar amounts and square feet are at Company share. May not sum to totals as presented due to rounding.
(3) $469.5MM reflects cost net of subsidies. Gross cost is $489.4MM.
(4) Dollar amounts reflect projects under development at Company Share.
(5) Completed Projects include: Foundry Lofts, Boilermaker Shops, Lumbershed, Arris, Twelve12; Projects Underway include The Guild and District Winery.
(6) Value of NOI less cost. Assumes 4.5% blended cap rate for residential and office (Source: CoStar as of Q1 2017).
Robust growth pipeline of ~$489MM of projects currently under construction and
a development pipeline of ~20MM entitled SF in core markets
(3)
The Yards Development
(3)
Phase 1 Value Created(6) = $205MM - $230MM
Cash on Cost Return = 6.6% - 7.1%
Cash on Cost spread to Cap Rate = 210-260 bps
Completed
Projects(5)
Projects
Underway Total Phase I
Total
Investment
$198MM ~$212MM - $232MM ~$410MM - $430MM
Total NOI $15MM ~$13MM - $15MM ~$28MM - $30MM
THE BRIDGE AT CORNELL TECH | NEW YORK, NY
Total/Wtd. Avg.
Total/Wtd. Avg.
(4)
Company Share Net Debt / TEV 44%
Fixed Charge Coverage Ratio 2.1x
Net Debt / Adj. EBITDA 8.2x
Total Liquidity: 780.1$
Cash and Cash Equivalents 223.1$
Revolver Capacity 557.0
Secured Debt $ Amt Rate $ Amt Rate
Fixed-rate Mortgage Debt 1,907.3$ 4.38% 3,642.2$ 4.37%
Variable-rate Mortgage Debt 668.5 3.32% 753.4 4.06%
Tax-Exempt Notes Payable 618.1 1.87% 679.9 1.97%
Total Secured Debt 3,193.9$ 5,075.6$
Net unamortized mortgage procurement costs (35.6) (49.9)
Total Secured Debt, Net 3,158.3$ 3.68% 5,025.7$ 4.00%
Unsecured Debt
Revolving Credit Facility L+ 125bps L+ 125bps
May 2021 Term Loan, Net 333.5$ L+ 145bps 333.5$ L+ 145bps
Convertible Senior Debt
4.250 Notes due 2018 73.2 4.25% 73.2 4.25%
3.625% Notes due 2020 40.0 3.63% 40.0 3.63%
Net unamortized mortgage procurement costs (0.8) (0.8)
Total Unsecured Debt 445.9$ 445.9$ 2.54%
Total Debt 3,604.2$ 5,471.6$ 3.92%
Less: Cash and Cash Equivalents (172.3) (223.1)
Net Debt 3,431.8$ 5,248.4$
Common Equity ($24.38 per share as of 7/31/2017) (3) 6,667.9$ 6,667.9$
Noncontrolling interest 480.4 -
Total Enterprise Value 11,916.3$
Consolidated Company's Share
Common Equity
Secured Debt
Term Loan
Convertible Senior Debt
Capital Structure Overview
- 13 -
Capitalization(1) Capitalization (%)(1)(2)
Leverage Metrics & Liquidity(1)
4
(1) All figures shown at Company share unless noted. Balance sheet as of 06/30/2017 and share price as of 07/31/2017.
(2) Does not include $223.1MM of cash and cash equivalents or $0.8MM of net unamortized mortgage procurement costs.
(3) Based on 273.5MM shares outstanding.
(4) Rolling 12-months ended 06/30/2017.
Key
Dollars in millions
Dollars in millions
(4)
Illustrative Deleveraging Plan
- 14 -
Leverage target of ~6.5x by year-end 2018 as the Company continues its focus on
enhancing the balance sheet profile and builds equity in stabilized assets
4
Note: The 2017 and 2018 information is illustrative. It is based on a number of significant assumptions any or all which may turn out to be untrue. You
should not place undue reliance on this forward-looking information. There can be no assurance that these plans will be implemented, or if
implemented, that will be effective in achieving our strategic goals.
13.1x
10.7x
9.5x
8.4x
~7.5x
~6.5x
YE 2011 YE 2014 YE 2015 YE 2016 YE 2017
Target
YE 2018
Run Rate
Key Drivers of Further Deleveraging:
Debt Reduction:
Disposition of FAH portfolio
Disposition of retail assets
Use proceeds from dispositions to pay down
debt
Key Drivers of Further Deleveraging:
EBITDA Growth:
Strong continued free cash flow generation
from operating assets
Additional ~400–500bps in adj. EBITDA
margin improvement from identified cost
savings
NOI contributions from New Property
Openings
Key Drivers of Further Deleveraging from 2017 to 2018:
49.7%
~125bps
~150bps
~225bps
~275bps
~50bps 53.7%
~75bps
54.7%
Year-End 2016 Property NOI Corporate G&A and
Other Operations NOI
Development Overhead Year-End 2018
Adjusted EBITDA Margin Expansion
- 15 -
5
Identified cost savings are expected to provide ~400-500bps of additional
margin improvements by year-end 2018
Illustrative Adjusted EBITDA Margin Enhancement Bridge
Note: Diagonal lines on bridge are reflective of the range of potential enhancements.
Office NOI Margins
- 16 -
Total Office
5
Our New York and Life Science assets have adjusted property margins in line
with top-quartile performing peers
New York (55% of Office NOI) Life Science (34% of Office NOI)
Other (11% of Office NOI)
Note: Margin figures from the six months ended June 30, 2016. NOI and GLA figures shown at Company share. NOI dollar amounts based on Q2 2017
estimated annualized stabilized NOI. GLA as of 06/30/2017.
$95MM NOI
1.9MM GLA
$279MM NOI
8.6MM GLA
$29MM NOI
2.2MM GLA
$154MM NOI
4.5MM GLA
Apartment NOI Margins
- 17 -
Total Apartment
5
Our apartment portfolio has adjusted property margins which are generally in
line with peers operating in the respective markets
Core Markets (75% of Apartment NOI)(1) Non-Core (25% of Apartment NOI)(2)
Note: Margin figures from the year-ended Dec. 31, 2016. NOI and GLA figures shown at Company share. NOI is Q2 2017 estimated annualized
stabilized NOI. Units as of 06/30/2017. Apartment peers normally exclude management fees.
(1) Core markets include Boston, Chicago, Dallas, Denver, Los Angeles and Philadelphia as well as the Greater New York City, San Francisco and
Washington, D.C. metropolitan areas.
(2) Non-Core markets include Cleveland, OH, Cumberland, RI, Haverhill, MA, New Haven, CT, San Diego, CA, Orange, CA and Stratford, CT.
$191MM NOI
16,787 Units
$47MM NOI
7,853 Units
$143MM NOI
8,934 Units
Corporate Overhead
- 18 -
5
Forest City is focused on improving efficiency to align its corporate overhead
with best-in-class peers
G&A as a % of Revenue(1)
Note: Revenue and G&A data as of fiscal year-end 2016 for Forest City.
(1) Forest City revenue is pro rata for JVs, minority interests and discontinued operations.
(2) Adjustments include Apartment segment service and management fees and corporate allocations, which were removed from the Apartment
segment comparable NOI margin bridges shown previously in the supplemental package. Additionally the remaining Apartment segment
service and management company overhead (reflected in Apartment segment “other NOI” in the NOI Detail section of this supplemental
package) is included in these adjustments.
Annual G&A
Expense: $63MM ~$98MM ~$73MM–$83MM
Expected range of 5.75% - 6.50%
pro forma for achieving identified
cost savings of ~$15MM-$25MM
~Q3 2018
(2)
Green Building Performance
2016 LEED Multi-Family Developer of the Year
Recognized by Dept. of Energy as part of the Better Building Alliance Interior Lighting Campaign
Achieved an 11.1% energy reduction since 2010 and 7.3% water use reduction since 2013
Developing a long-term GHG Emissions Reduction target to be implemented in 2017
ESG Ratings & Rankings
“A” rating from MSCI
Green Star Recognition from Global Real Estate Sustainability Benchmark for 2nd straight year
Participation in Global Reporting Initiative framework annually
Submitting performance to CDP Climate Change in 2017
Diversity
Only U.S. REIT on Equileap’s 2017 Top 200 Gender Equality Global Report and Ranking
2020 Women on Boards Winning „W‟ Company for 2016
10.25% spend with minority, women and/or veteran business enterprises in 2016, exceeding
Enterprise-Wide Diverse Supplier Spend goal
Corporate Responsibility and ESG 6
Forest City creates thriving, mixed-use developments that address both the
environmental and social needs of our core markets
- 19 -
Addressing Key Risks Proactively 6
- 20 -
Reducing energy and water use and GHG emissions by improving efficiency through
robust data tracking and reporting
Investing in innovation: developing and incorporating smart building technology and
pursuing the development of green-building certifications and standards
Remediation and responsible land use in operations, development and demolition
Embracing affordable housing and strategically locating properties in dense
environments, aided by careful planning and a focus on transit-oriented design
Sustainable design criteria adheres to standards that exceed local air quality regulations
Implementing strict standards on contractors during all construction/renovation projects
Proactive approach to cybersecurity that accounts for security at connected entities
Cybersecurity committee establishes cyber risk priority areas and implements
enhancements to the security of company and customer data
Energy and Emissions
Cybersecurity
Land Management
and Urban Access
Tenant Health/Safety
Lobbying targeted toward driving economic vitality in the markets served
4 areas of philanthropic focus are economic development, workforce
preparedness, educational attainment and diversity and inclusion efforts
Government and
Community Engagement
Appendix
THE NEW YORK TIMES BUILDING | NEW YORK, NY
Development Detail
- 21 -
Project Name
Property
Type Ownership(3) Units / SF(4)
Cost
Incurred(MM)(4)
Expected
Cost(MM)(4)
Anticipated
Stabilization
2017 Phased Openings
550 Vanderbilt Condominiums 30% 83 106.7 116.4 n/a
Pacific Park Parking Parking 30% n/a 1.2 4.1 Q3 2017
Projects Under Construction
Axis Apartment 30% 116 45.1 41.8 Q1 2019
Ardan Apartment 30% 115 20.8 36.2 Q3 2019
38 Sixth Ave Apartment 30% 91 40.1 50.1 Q3 2018
Mint Town Center Apartment 95% 379 65.4 88.4 Q1 2019
VYV Apartment 50% 211 93.1 107.1 Q1 2019
Ballston Quarter Residential Apartment 51% 207 23.8 92.9 Q3 2020
The Yards – The Guild Apartment 0% 0 0.0 0.0 Q3 2019
Capper 769 Apartment 25% 45 3.7 18.1 Q1 2020
The Yards – The District Winery Retail 100% 16,150 9.1 10.6 Q4 2017
Ballston Quarter Redevelopment Retail 51% 156,570 23.0 44.2 Q3 2018
Total Projects Under Construction $324.1 $489.4
Total (Includes 2017 Openings) $432.0 $609.9
(1) Represent phased openings.
(2) Pacific Park Parking costs include garages that are open/under construction as well as garages not yet under construction.
(3) The Company invests in certain real estate projects through joint ventures and, at times, may provide funding at percentages that differ from the
Company’s legal ownership.
(4) Figures shown at Company share.
(5) Opening date.
A
(5)
(1)
(1)(2)
(1)
(1)
(1)
(1)
(1)
(1)
Summary of Stapleton
- 22 -
Plans for Stapleton include more than 12,000 homes and apartments, 3MM SF of
retail and 10MM SF feet of office, research, development and industrial space
# of Lots Sold to Homebuilders
Completed Project Summary as of 6/30/2017
Completed Retail GLA: 2.5MM SF
Completed Office GLA: 393k SF
Completed Other Commercial GLA: 2.5MM SF
Completed Apartment Units: 1,608
Apartment Units Under Construction: 399
Owned Land: 468 Acres
Land Controlled via Option: 408 Acres
Located in Denver, CO, Stapleton is one of the largest
urban in-fill redevelopment projects in U.S. history
Future entitlements in-place for apartment, retail, office
and single family uses
Upon completion, Stapleton is expected to be home to
30,000 residents and 35,000 workers
Stapleton exemplifies Forest City’s excellence in urban
placemaking
Over the past few years Stapleton land sales have
contributed ~$40MM annually to FFO, which is expected
to continue in the near-term
ASTER TOWN CENTER | DENVER, CO
A
(1) As of 06/30/2017.
501
650
522 [VALUE]
251
12/31/2013* 12/31/2014 12/31/2015 12/31/2016 6/30/2017†
*Represents 11 months ended 12/31/2013
†Represents YTD sales as of 6/30/2017
The Yards Development Case Study
- 23 -
At full build-out, The Yards is expected to include up to 3,000 residential units,
1.8MM SF of office space and approximately 400k SF of retail and dining space
ARRIS | WASHINGTON, D.C.
A
FOUNDRY LOFTS | WASHINGTON, D.C.
Phase 1 Value Created(2) = $205MM - $230MM
Cash on Cost Return = 6.6% - 7.1%
Cash on Cost spread to Cap Rate = 210-260 bps
Completed
Projects(1)
Projects
Underway Total Phase I
Total
Investment
$198MM ~$212MM - $232MM ~$410MM - $430MM
Total NOI $15MM ~$13MM - $15MM ~$28MM - $30MM
Source: CoStar as of Q2 2017.
(1) Completed Projects include: Foundry Lofts, Boilermaker Shops, Lumbershed, Arris, Twelve12; Projects Underway include The Guild and
District Winery.
(2) Value of NOI less cost. Assumes 4.5% blended cap rate for residential and office.
The Yards Project Summary The Yards Geographic Overview
H:\! GRAPHICS\! MAPINFO\Porter Carbajal\2017-06-29\Yards Development.wor
Downtown
Capitol Riverfront
The White House
Washington Monument The Capitol
Nationals Park
E
N
W
S
Washington D.C.
695
295
395
295
395
1 mile
The Yards
Arlington, VA
Summary of Retail Transaction
- 24 -
A
QIC Madison Forest City
Westfield San Francisco Centre
Ballston Quarter (redevelopment)
East River Plaza
Station Square
The Yards:
- Boilermaker Shops
- Lumber Shed
- Twelve12
Likely Dispositions:
- Boulevard Mall
- Atlantic Center Site V
- Brooklyn Commons
Atlantic Center
Atlantic Terminal
Castle Center
Columbia Park Center
Forest Avenue
Harlem Center
Queens Place
Shops at Gun Hill Road
Shops at Northern Boulevard
Shops at Richmond Avenue
The Heights
42nd Street(1)
Outright Sales:
Antelope Valley Mall
Charleston Town Center
Mall at Robinson
Shops at Northfield Stapleton
Shops at Wiregrass
South Bay Galleria
Westchester’s Ridge Hill
Galleria at Sunset
Short Pump Town Center
Promenade Temecula
Victoria Gardens
Cap Rate 5.0%
Valuation $2.2 Bn
QIC Madison
~$1.6B ~$600M
Debt - $1.0 Bn ~700M ~300M
NAV - $1.2 Bn ~900M ~300M
$110.0MM
2016 NOI
(1) 42nd Street will close after resolution of the ground lease rate reset dispute with the city.
NAV Components (as of June 30, 2017)
- 25 -
A
Q2 2017 Net Stabilized Stabilized Annualized Nonrecourse
(Dollars in millions at company's share) NOI ( 1) Adjustments ( 2) NOI Stabilized NOI ( 3) Debt, net ( 4)
Operations A B =A+B
Office Real Estate
Life Science
Cambridge $ 21.9 $ (1.7) $ 20.2 80.8$ (505.1)$
Other Life Science 3.7 (0.1) 3.6 14.4 (101.4)
New York
Manhattan 14.6 (0.7) 13.9 55.6 -
Brooklyn 24.7 - 24.7 98.8 (408.0)
Other Office 7.2 - 7.2 28.8 (217.1)
Subtotal Office $ 72.1 $ (2.5) $ 69.6 278.4$ (1,231.6)$
Apartment Real Estate
Apartments, Core-Markets 35.7 - 35.7 142.8 (1,376.1)
Apartments, Non-Core Markets 11.9 - 11.9 47.6 (327.9)
Subtotal Apartment Product Type $ 47.6 $ - $ 47.6 190.4$ (1,704.0)$
Federally Assisted Housing (5) 4.0 (2.3) 1.7 6.8 (67.3)
Subtotal Apartments 51.6 (2.3) 49.3 197.2 (1,771.3)
Retail Real Estate
Regional Malls 26.3 (2.1) 24.2 96.8 (930.5)
Specialty Retail Centers 12.7 0.1 12.8 51.2 (472.2)
Subtotal Retail $ 39.0 $ (2.0) $ 37.0 148.0$ (1,402.7)$
Subtotal $ 162.7 $ (6.8) $ 155.9 $ 623.6 $ (4,405.6)
Straight-line rent adjustments 3.8 - 3.8 15.2 -
Other operations (1.5) - (1.5) (6.0) -
Total Operations $ 165.0 $ (6.8) $ 158.2 $ 632.8 $ (4,405.6)
Development
Recently-Opened Properties/Redevelopment $ 0.7 $ 5.7 $ 6.4 25.6$ (129.8)$
Straight-line rent adjustments 0.1 - 0.1 0.4 -
Other Development (7.1) - (7.1) (28.4) -
Total Development $ (6.3) $ 5.7 $ (0.6) $ (2.4) $ (129.8)
NAV Components (as of June 30, 2017)
- 26 -
A
(Dollars in millions at company's share) Nonrecourse
Development Book Value ( 4) Debt, net ( 4)
Projects under construction (6) 519.8$ (211.7)$
Projects under development 283.5$ (187.4)$
Land inventory
Stapleton 49.6$ —$
Commercial Outlots 19.7$ —$
Other Tangible Assets
Cash and equivalents 223.1$
Restricted cash 227.0$
Accounts receivable, net (7) 257.1$
Notes Receivable 446.2$
Net investments and advances to unconsolidated entities 41.7$
Prepaid expenses and other deferred costs, net 87.9$
Recourse Debt and Other Liabilities
Revolving credit facility —$
Term loan, net (333.5)$
Convertible senior debt, net (112.4)$
Less: convertible debt 112.4$
Construction payables (110.1)$
Operating accounts payable and accrued expenses (8) (657.9)$
Share Data (in millions)
Diluted weighted average number of shares for the three months ended June 30, 2017 268.8
1) Q2 2017 Earnings Before Income Taxes reconciled to NOI for the three months ended June 30, 2017 in the Supplemental Operating Information section
of the supplemental package, furnished to the SEC on form 8-K on August 3, 2017.
2) The net stabilized adjustments column represents adjustments assumed to arrive at an estimated annualized stabilized NOI. We include stabilization
adjustments to the Q2 2017 NOI as follows:
a) We have removed Q2 2017 lease termination income from our Cambridge Life Science and Manhattan office portfolios.
b) Due to quarterly fluctuations of NOI as a result of distribution restrictions from our limited-distribution federally assisted housing
properties, we have included a stabilization adjustment to the Q2 2017 NOI to arrive at our estimate of stabilized NOI. Our estimate of
stabilized NOI is based on the 2016 annual NOI of $6.8 million, which excludes NOI related to 22 properties in this portfolio that were sold
during the six months ended June 30, 2017.
c) Partial period NOI for recently sold properties has been removed in the Operations Segments.
d) Due to the planned transfer of Boulevard Mall (Regional Malls) to the lender in a deed-in-lieu transaction during 2017, we have removed
NOI and nonrecourse debt, net, related to this property.
e) For recently-opened properties currently in initial lease-up periods included in the Development Segment, NOI is reflected at 5% of the
company ownership cost. This assumption does not reflect our anticipated NOI, but rather is used in order to establish a hypothetical
basis for an estimated valuation of leased-up properties. The following properties are currently in their initial lease-up periods:
NOI attributable to Kapolei Lofts, an apartment community on land in which we lease, is not included in NOI from lease-up properties.
We consolidate the land lessor, who is entitled to a preferred return that currently exceeds anticipated operating cash flow of the project, and
therefore, this project is reflected at 0% for company-share purposes. In accordance with the waterfall provisions of the distribution agreement,
we expect to share in the net proceeds upon a sale of the project, which is not currently reflected on the NAV component schedule.
- 27 -
NAV Components-Footnotes (as of June 30, 2017) A
Property Cost at 100%
Cost at Company
Share
Lease Commitment % as of
July 23, 2017
Office:
1812 A hland Ave (Life Science) 61.2$ 61.2$ 75%
Apartments:
535 Carlton (Core Market) 168.1$ 41.7$ 36%
Eli t on 4th (C r Market) 143.7$ 44.2$ 39%
NorthxNorthwest (Core Market) 115.0$ 33.5$ 24%
461 Dean Street (Core Market) 195.6$ 195.6$ 77%
The Bixby (Core Market) 59.2$ 11.8$ 99%
Blossom Plaza (Core Market) 100.6$ 29.9$ 95%
The Yards - Arris (Core Market) 143.2$ 42.9$ 94%
986.6$ 460.8$
(in millions)
NAV Components-Footnotes (as of June 30, 2017)
- 28 -
f) Due to the redevelopment of Ballston Quarter (Development Segment; Recently-Opened Properties/Redevelopment), we have
included a stabilization adjustment to the Q2 2017 NOI to arrive at $2.6 million, our estimate of annualized stabilized NOI prior to
the commencement of our current redevelopment.
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) Company ownership annualized stabilized NOI is calculated by taking the Q2 2017 stabilized NOI times a multiple of four.
4) Amounts represent the company’s share of each respective balance sheet line item as of June 30, 2017 and may be calculated using the financial
information contained in the Appendix of the supplemental package furnished to the SEC on form 8-K on August 3, 2017. Due to the planned
transfer of Boulevard Mall to the lender, we have removed nonrecourse debt, net, of $91.1 million related to this property.
5) Represents the remaining 25 federally assisted housing apartment communities. We recently signed a master purchase and sale agreement to
dispose of this portfolio and expect to receive net proceeds of approximately $65 million. As of June 30, 2017, 22 properties have closed,
representing $53.5 million in net proceeds.
6) We have removed $23.0 million of assets from projects under construction, which represents the costs on the balance sheet associated with the
ongoing redevelopment of Ballston Quarter. NOI for each of this is stabilized under Recently-Opened Properties/Redevelopment.
7) Includes $149.9 million of straight-line rent receivable (net of $9.1 million of allowance for doubtful accounts).
8) Includes $62.2 million of straight-line rent payable.
A
Definitions of non-GAAP measures
EBITDA
EBITDA, a non-GAAP measure, is defined as net earnings excluding the following items at our company share: i) non-cash charges for depreciation and
amortization; ii) interest expense; iii) amortization of mortgage procurement costs; and iv) income taxes. EBITDA may not be directly comparable to
similarly-titled measures reported by other companies. We use EBITDA as the starting point in order to calculate Adjusted EBITDA as described below.
Adjusted EBITDA
We define Adjusted EBITDA, a non-GAAP measure, as EBITDA adjusted to exclude: i) impairment of real estate; ii) gains or losses from extinguishment
of debt; iii) gain (loss) on full or partial disposition of rental properties, development projects and other investments; iv) gains or losses on change in
control of interests; v) other transactional items, including organizational transformation and termination benefits; and vi) the Nets pre-tax EBITDA. We
believe EBITDA, Adjusted EBITDA and net debt to Adjusted EBITDA provide additional information in evaluating our credit and ability to service our debt
obligations. Adjusted EBITDA is used by the chief operating decision maker and management to assess operating performance and resource allocations
by segment and on a consolidated basis. Management believes Adjusted EBITDA gives the investment community a further understanding of the
Company’s operating results, including the impact of general and administrative expenses and acquisition-related expenses, before the impact of
investing and financing transactions and facilitates comparisons with competitors. However, Adjusted EBITDA should not be viewed as an alternative
measure of the Company’s operating performance since it excludes financing costs as well as depreciation and amortization costs which are significant
economic costs that could materially impact the Company’s results of operations and liquidity. Other REITs may use different methodologies for
calculating Adjusted EBITDA and, accordingly, the Company’s Adjusted EBITDA may not be comparable to other REITs.
Net Debt to Adjusted EBITDA
Net Debt to Adjusted EBITDA, a non-GAAP measure, is defined as total debt, net at our company share (total debt includes outstanding borrowings on
our revolving credit facility, our term loan facility, convertible senior debt, net, nonrecourse mortgages and notes payable, net) less cash and
equivalents, at our company share, divided by Adjusted EBITDA. Net Debt to Adjusted EBITDA is a supplemental measure derived from non-GAAP
financial measures that the Company uses to evaluate its capital structure and the magnitude of its debt against its operating performance. The
Company believes that investors use versions of this ratio in a similar manner. The Company’s method of calculating the ratio may be different from
methods used by other REITs and, accordingly, may not be comparable to other REITs.
Net Asset Value Components
We disclose components of our business relevant to calculate NAV, a non-GAAP measure. There is no directly comparable GAAP financial measure to
NAV. We consider NAV to be a useful supplemental measure which assists both management and investors to estimate the fair value of our Company.
The calculation of NAV involves significant estimates and can be calculated using various methods. Each individual investor must determine the specific
methodology, assumptions and estimates to use to arrive at an estimated NAV of the Company. NAV components are shown at our total company
ownership. We believe disclosing the components at total company ownership is essential to estimate NAV, as they represent our estimated
proportionate amount of assets and liabilities the Company is entitled to.
The components of NAV do not consider the potential changes in rental and fee income streams or development platform. The components include
non-GAAP financial measures, such as NOI, and information related to our rental properties business at the Company’s share. Although these measures
are not presented in accordance with GAAP, investors can use these non-GAAP measures as supplementary information to evaluate our business.
- 29 -
A
Definitions of non-GAAP measures(cont’d)
NOI
NOI, a non-GAAP measure, reflects our share of the core operations of our rental real estate portfolio, prior to any financing activity. NOI is
defined as revenues less operating expenses at our ownership within our Office, Apartments, Retail, and Development segments, except for
revenues and cost of sales associated with sales of land held in these segments. The activities of our Corporate and Other segments do not involve
the operations of our rental property portfolio and therefore are not included in NOI.
We believe NOI provides important information about our core operations and, along with earnings before income taxes, is necessary to
understand our business and operating results. Because NOI excludes general and administrative expenses, interest expense, depreciation and
amortization, revenues and cost of sales associated with sales of land, other non-property income and losses, and gains and losses from property
dispositions, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with
owning and operating office, apartment and retail real estate and the impact to operations from trends in occupancy rates, rental rates, and
operating costs, providing a perspective on operations not immediately apparent from net income. We use NOI to evaluate our operating
performance on a portfolio basis since NOI allows us to evaluate the impact that factors such as occupancy levels, lease structure, rental rates, and
tenant mix have on our financial results. Investors can use NOI as supplementary information to evaluate our business. In addition, management
believes NOI provides useful information to the investment community about our financial and operating performance when compared to other
REITs since NOI is generally recognized as a standard measure of performance in the real estate industry. NOI is not intended to be a performance
measure that should be regarded as an alternative to, or more meaningful than, our GAAP measures, and may not be directly comparable to
similarly-titled measures reported by other companies.
- 30 -
A
Reconciliation of non-GAAP measures
(1)-(3) See page 29 in the supplemental package furnished to the SEC for the three and six months ended June 30, 2017 for footnotes. Additionally, see page 25 in the
supplemental package furnished to the SEC for the year-ended December 31, 2016 for footnotes.
- 31 -
A
2017 2016
Earnings ( loss) before income taxes (GAAP) 58,245$ (454,173)$
Earnings from unconsolidated entities (41,514) 263,533
Earnings (loss) before income taxes and earnings from unconsolidated entities 16,731 (190,640)
Land sales (17,762) (48,078)
Cost of land sales 7,694 13,661
Other land development revenues (1,862) (10,183)
Other land development expenses 2,034 8,923
Corporate general and administrative expenses 14,018 62,683
Organizational transformation and termination benefits 6,863 31,708
Depreciation and amortization 65,747 250,848
Write-offs of abandoned development projects and demolition costs 1,596 10,348
Impairment of real estate — 156,825
Interest and other income (9,896) (46,229)
Interest expense 28,901 131,441
Interest rate swap breakage fee — 24,635
Am rtization of mortgage procurement costs 1,507 5,719
Loss on extinguishment of debt — 32,960
NOI related to unconsolidated entities(1) 53,629 223,592
NOI related to noncontrolling interest(2) (10,483) (37,221)
NOI related to discontinued operations(3) — 1,198
Net Operating Income (Non-GAAP) 158,717$ 622,190$
Three Months
Ended June 30,
Year Ended
December 31,
Reconciliation of Earnings (Loss) Before Income Taxes (GAAP) to Net Operating Income (non-GAAP)
(in thousands)
Reconciliation of non-GAAP measures(cont’d)
(1) See page 35 in the supplemental package furnished to the SEC for the quarter ended June 30, 2017 for footnotes. Additionally, see page 32 in the supplemental
package furnished to the SEC for the year-ended December 31, 2016 for footnotes.
- 32 -
A
Reconciliation of Net Earnings (GAAP) to EBITDA (non-GAAP)
Three Months
Ended June 30,
2017 2016
Net earnings attributable to Forest C ity Realty Trust, Inc. (GAAP) 56,753$ (158,402)$
Depreciation and amortization 82,089 321,749
Interest Expense(1) 48,857 221,812
Interest rate swap breakage fee — 24,635
Amortization of mortgage procurement costs 1,909 8,680
Income tax expense 4,654 85,105
EBITDA attributable to Forest C ity Realty Trust, Inc. (Non-GAAP) 194,262$ 503,579$
Impairment of real estate — 463,225
Net loss on extinguishment of debt 2 33,863
Net gain on disposition of interest in development project — (136,687)
Net gain on disposition of partial interest in other investment - Nets — (136,247)
Net gain on disposition of full or partial interests in rental properties (39,314) (129,367)
Nets pre-tax EBITDA — 1,400
Organizational transformation and termination benefits 6,863 31,708
Adjusted EBITDA attributable to Forest C ity Realty Trust, Inc. (Non-GAAP) 161,813$ 631,474$
2017 2016
Nonrecourse mortgage debt and notes payable, net, at company share 5,025,661$ 5,063,175$
Revolving credit facility — —
Term loan, net 333,468 333,268
Convertible ior debt, net 112,410 112,181
Total debt 5,471,539$ 5,508,624
Less cash and equivalents (223,141) (221,478)
Net Debt 5,248,398$ 5,287,146$
Net Debt to Adjusted EBITDA (Annualized) 8.1x 8 .4x
As of June 30, As of Dec 31,
(in thousands)
Year Ended
December 31,
(in thousands)
2017 Guidance
- 33 -
A
Forest City Realty Trust Inc.’s year ended December 31, 2017 guidance for net earnings attributable to common stockholders - diluted and
Operating funds from operations (“Operating FFO”) per share - diluted is disclosed and reconciled below. These estimates reflect management’s
view of current and future market conditions, including assumptions with respect to, but not limited to, rental rates, occupancy levels and
comparable net operating income. These estimates exclude any possible future gains or losses from the disposal of rental properties or change in
control of interest transactions, including any applicable operating results. In addition, these estimates do not assume any potential property
acquisitions or related operating results, future impairment charges or write-offs of abandoned development projects and demolition costs.
Estimated fully diluted weighted average shares for the year ended December 31, 2017 were used to calculate the per share estimates. These
estimates are subject to fluctuations and there can be no assurance the Company’s actual results will not differ materially from these estimates.
This guidance is a forward-looking statement and is subject to the risks and other factors described elsewhere in this release and in the Company's
annual and quarterly period reports filed with the Securities and Exchange Commission.
Low High
Net earnings attributable to common stockholders - diluted 0.53$ 0.58$
Depreciation and amortization—real estate 1.17 1.17
Gain on disposition of full or partial interests in rental properties, net of tax (0.23) (0.23)
Adjustments for convertible senior note interest - if converted method 0.02 0.02
Tax credit income (0.04) (0.04)
Orga zatio al tr nsformation and termination benefits 0.06 0.06
Oth r adjustments
(1)
(0.01) (0.01)
Operating FFO per share - Diluted 1.50$ 1.55$
(1)
Range for the Year Ended
December 31, 2017
Includes write-offs of abandoned development projects and demolition costs, loss on extinguishment of debt,
change in fair market value of nondesignated hedges, straight-line rent adjustments and income tax expense
(benefit) on FFO.