http://www.morningstar.com/earnings/52978318-forest-city-enterprises-inc-class-a-fcea-q1-2013.aspx

Forest City Enterprises Inc Class A FCE.A
Q1 2013 Earnings Call Transcript

Transcript Call Date 06/04/2013

Operator: Welcome to Forest City Enterprises First Quarter 2013 Earnings Conference Call.

The Company would like to remind you that today's remarks include forward-looking comments that are covered under Federal Safe Harbor provisions. Actual results could differ materially from those expressed or implied in such forward-looking statements due to various risks, uncertainties and other factors. Please refer to the risk factors outlined in Forest City's annual and quarterly reports filed with the SEC for a discussion of factors that could cause results to differ.

This call is being recorded and a replay will be available beginning at 7.30 p.m. Eastern Time today. Both the telephone replay and the webcast will be available until July 4, 2013, 11.59 p.m. Eastern Time.

The Company would like to remind listeners that it will be using non-GAAP terminology, such as operating FFO, FFO comparable property net operating income and pro rata share in its discussions today. Please refer to the Forest City's supplemental package, which is posted on the Company's website at www.forestcity.net for an explanation of these terms, and why the Company uses them, as well as reconciliations to their comparable financial measures, in accordance with Generally Accepted Accounting Principles.

At this time, all participants are in a listen-only mode. Participants on the call will have the opportunity to ask questions following the Company's prepared comments.

I would now like to turn the call over to Forest City's President and CEO, David LaRue. Please go ahead, Mr. LaRue.

David J. LaRue - President and CEO: Thank you, operator. Good evening, everyone. With me today is Bob O'Brien, our Chief Financial Officer. Our results for the first quarter went out after the close of the market today. As most of you are aware, our usual practice would have been to hold this call tomorrow at 11.00 a. m. Easter Time. In order to allow us to participate in NARIET REITWeek Conference, which begins tomorrow morning in Chicago, we've accelerated our filing of our quarterly results and this call.

Let me begin today with a recap and comments on two announcements we made within the past several days. At the end of last week, we issued notice that we will terminate put rights on remaining $61.1 million of our outstanding 3.625% Puttable Equity-Linked Senior Notes due 2014, effective June 20, 2013.

As you may know, under the terms of the indenture for these notes, if our stock maintained a volume weighted average price at or above $18.90 for 20 days and a 30-day period, we had the option to terminate the holders put rights. We reached that 20-day mark last Thursday and issued notice of the termination. Owners now have until June 20 to put their notes to the Company and receive approximately 69 shares of the Company's Class A common stock per 1,000 principal amount of notes together with cash for interest payable through October 14, 2013.

Yesterday, after the market close, we issued another important announcement that advances our strategic goals and objectives. We announced an agreement to create a strategic capital partnership with QIC, one of the largest institutional investment managers in Australia, to form joint ventures to recapitalize and invest in a portfolio of eight of our regional malls. The transaction values eight properties at a total of approximately $2 billion representing a cap rate of approximately 5.75% on projected 2013 net operating income. At closing, we expect to raise cash of approximately $330 million after transaction costs, and we expect the joint ventures to close in the third quarter.

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