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Forest City Enterprises, Inc. (NYSE:FCE.A)

June 13, 2013 2:00 pm ET

Executives

Charles A. Ratner - Chairman

Geralyn M. Presti - Executive Vice President, General Counsel and Secretary

Robert G. O'Brien - Chief Financial Officer and Executive Vice President

David J. LaRue - Chief Executive Officer, President and Director

Albert B. Ratner - Director

Joan K. Shafran - Former Director

Samuel H. Miller - Co-Chairman Emeritus

Charles A. Ratner

Ladies and gentlemen, if you will, we'd like to begin. I'm Chuck Ratner, Chairman of the Board of Forest City Enterprises, and I want to welcome all of you, and thank you so much for joining us today at our annual meeting. I want to particularly thank our directors and our associates who are here for a tremendous year of, what is that?

Unknown Attendee

[indiscernible].

Charles A. Ratner

Apparently, there was a substantial message in that, that it was lost on me. So anyway, thank you, all, for being here.

Let me introduce you to our Board. I would ask them please to stand as I read their names and please stay -- keep standing, so we can give everybody a round of applause at the end of the list: Arthur F. Anton; Kenneth J. Bacon; Scott S. Cowen; Michael P. Esposito Jr.; Deborah L. Harmon; David LaRue, our President and Chief Executive Officer; Brian Ratner; Ronald Ratner; Deborah Ratner Salzberg; Stan Ross; and Louis Stokes. Thank you all very much.

I thank you for your commitment to our company, to our Forest City family, and I thank you deeply for a conclusion of another annual meeting, at the beginning of another annual meeting and a great year. I now want to call the meeting officially to order. You will find an agenda and rules of procedure for the meeting at your chair. To ensure timely, fair and orderly meeting, it is our intention to conduct the meeting with the agenda and the rules. You will note that the agenda is divided into 2 parts. The first part is the Annual Meeting of Shareholders and formal business matters required by law. After the formal portion of the meeting is officially adjourned, we'll begin the informal portion of the meeting. And at that time, we'll have remarks on our business from myself; Bob O'Brien, our Chief Financial Officer; and Dave LaRue, who you've already met. This will be followed by a question-and-answer period. I ask you please to hold all of your question until the Q&A. Also, please note that no form of recording of the meeting by shareholders is permitted, and we ask you to please silence all cellphones. I neglected to read at the beginning that we are webcasting today's meeting on the Investor Relations page of our website, www.forestcity.net. A webcast replay will also be available on the website. I ask the Secretary to present to the meeting the certificate as to the giving of Notice of the Meeting and the list of Class A common and Class B common shareholders of the company of record as of April 17, 2013, the record date set for this meeting.

Geralyn M. Presti

[indiscernible]

Charles A. Ratner

You've just heard from Geri Presti, our Chief Legal Counsel. And the affidavit and certificate and the attached copies of notice of this meeting, this annual meeting with proxies, proxy statements and annual reports to the shareholders for 2012 and the list of shareholders of record on that record date set for this meeting will be inserted in the records of the company and are available for inspection by the shareholders.

Geralyn M. Presti

[indiscernible]

Charles A. Ratner

In order to expedite this meeting, will any shareholder who has not previously turned in his proxy deliver it to the Inspectors of Election, unless he or she wishes to vote in person by ballot. The Inspectors of the Election will collect the ballots, if there are any to be collected. May I please have a show of hands by any shareholder who wish to vote in person by ballot at this meeting rather than by proxy on the matters to come before the meeting? Please remember, if you have already voted by proxy, it is not necessary to vote again by ballot. Okay, we will continue.

Geralyn M. Presti

[indiscernible]

Unknown Attendee

We wish to report that there are [indiscernible].

Charles A. Ratner

By reason of the fact that there is a quorum present, I thereby now declare this meeting duly convened and shall proceed with the business of the meeting. The first order of business is the election of 4 Class A directors for the coming year by holders of Class A Common Stock. Ken?

Unknown Attendee

I nominate the following to serve as Class A directors, each to hold office until the next shareholder's meeting and until their successor be elected and qualified: Arthur F. Anton, Scott Cowen, Michael P. Esposito, Stan Ross.

Charles A. Ratner

I ask for a second.

Unknown Attendee

I second the nomination.

Charles A. Ratner

Is there any discussion?

Nominations have been made for Class A directors of the company to be elected by the holders of Class A common stock. I hereby direct the inspectors to determine the number of shares voted in person by ballot and by proxy for and against the election of the nominees as Class A directors.

Geralyn M. Presti

The Class A directors nominated through [indiscernible] represented by 144,098,264 shares [indiscernible] each of the Class A directors nominees [indiscernible] of Class A common stock to be elected for the proposed term.

Charles A. Ratner

It's been reported that the holders of Class A common stock voting, either in person or by proxy, have voted for the resolution electing the persons nominated as Class A directors.

The next order of business, the election of 9 Class B directors by the holders of Class B common stock.

Unknown Attendee

Chairman, I nominate the following to serve as Class B directors, each to hold office until the next shareholder's meeting and until their successor shall be elected and qualified: Kenneth J. Bacon, Deborah L. Harmon, David J. LaRue, Brian J. Ratner, Bruce C. Ratner, Charles A. Ratner, Deborah Ratner Salzberg, Ronald A. Ratner and Louis Stokes.

Unknown Attendee

I second the nomination.

Charles A. Ratner

Is there any discussion? Nominations have been made for Class B directors of the company to be elected by holders of the Class B common stock. I hereby direct inspectors to determine the number of shares voted in person by ballot and by proxy for and against the election of the nominees as Class B directors.

Unknown Attendee

The Class B directors nominees [indiscernible].

Charles A. Ratner

It's been reported that holders of Class B common stock, voting either in person or by proxy, have voted for the resolution electing the persons nominated as Class B directors. The Secretary will please incorporate complete voting results in the election of directors in the minutes of the meeting.

The next order of business is Proposal 2, which is the company shareholders to approve, on an advisory nonbinding basis, the compensation of the company's named executive officers as disclosed in the company's proxy statement for 2013 Annual Meeting of Shareholders. Additional copies of the proxy statement are available at the back of the room.

Unknown Attendee

I hereby move for the approval on an advisory nonbinding basis of the compensation of the company's named executive officers as disclosed in the proxy statement.

Unknown Attendee

Mr. Chairman, I second the motion.

Charles A. Ratner

It's been moved and seconded. Is there any discussion? I hereby direct the inspectors to determine the number of shares voting in person, by ballot and by proxy, cast for and against, including the effect of the abstentions and broker non-votes, the approval of the compensation of the company's named executive officers as disclosed in the proxy statement.

Unknown Attendee

I wish to report that the holders of the majority of the combined voting power of the outstanding Class A common stock and Class B common stock [indiscernible] in person or by proxy have voted for the approval for the compensation of the company's named executive officers.

Charles A. Ratner

It has been reported that the number of votes required to approve the compensation of the company's named executive officers, as disclosed in the proxy statement, have been received. I therefore declare that the compensation of the company's named executive officers has been approved. The Secretary will please incorporate the full text and complete voting for this proposal in the minutes of the meeting. The next order of business is Proposal 3, the approval of the amendment and the restatement of the executive short-term incentive plan as disclosed in the proxy statement.

Unknown Attendee

I hereby move the approval of the amendment and the restatement of the executive short-term incentive plan as disclosed the proxy statement.

Unknown Attendee

I second the motion.

Charles A. Ratner

It has been moved and seconded. Is there any discussion? I hereby direct the inspectors to determine the number of shares voting in person, by ballot and by proxy, cast for and against, including the effect of abstentions and broker non-votes, the approval of the amendment and the restatement of the executive short-term incentive plan, as disclosed in the proxy statement.

Unknown Attendee

I wish to report that the holders of the majority of the combined voting power of the outstanding Class A common stock and Class B common stock [indiscernible] in person or by proxy voted to approve the amendment and the restatement of the executive short-term incentive plan as disclosed in the proxy statement.

Charles A. Ratner

It's been reported that number of votes required to approve the amendment and the restatement of the executive short-term incentive plan, as disclosed by the proxy statement, have been received. I therefore declare that this amendment and the reinstatement of the executive short-term incentive plan has been approved. The Secretary will please incorporate the full text and complete voting for this proposal in the minutes of the meeting.

The next order of business is Proposal 4, the approval of the amendment and restatement of the executive long-term incentive plan as disclosed in the proxy statement.

Unknown Attendee

Mr. Chairman, I hereby move the approval of the amendment and restatement of the executive long-term incentive plan as disclosed in the proxy statement.

Unknown Attendee

I second the motion.

Charles A. Ratner

It's been moved and seconded. Is there any discussion? I hereby direct the inspectors to determine the number of shares voting in person, by ballot and by proxy, cast for and against, including the effect of the abstentions and broker non-votes, the approval of the amendment and restatement of the executive long-term incentive plan as disclosed in the proxy statement.

Unknown Attendee

I wish to report that the holders of a majority

of the combined voting power of the outstanding Class A common stock and Class B common stock [indiscernible] the Proposal 4 [indiscernible] in person or by proxy, have voted to approve the amendment and the restatement of the executive long-term incentive plan as disclosed in the proxy statement.

Charles A. Ratner

It's been reported that the number of votes required to approve the amendment and restatement of the executive long-term incentive plan, as disclosed in the proxy statement, have been received. I therefore declare that the amendment and restatement of the executive long-term incentive plan has been approved. The Secretary will please incorporate the full text and complete voting for this proposal in the minutes of the meeting.

The next order of business is Proposal 5, the approval of the amendment and restatement of the 1994 stock plan as disclosed in the proxy statement.

Unknown Attendee

I hereby move the approval of the amendment and restatement of 1994 stock plan as disclosed in the proxy.

Unknown Attendee

I second the motion.

Charles A. Ratner

It's been moved and seconded. Is there any discussion? I hereby direct the inspectors to determine the number of shares voting in person, by ballot and by proxy, cast for and against, including the effect of abstentions and broker non-votes, the approval of the amendment and restatement of the 1994 stock plan as disclosed in the proxy statement.

Unknown Attendee

I wish to report that the holders of the majority

of the combined voting power of the outstanding Class A common stock and Class B common stock [indiscernible] in person or by proxy, have voted to approve the amendment and restatement of the 1994 stock plan as disclosed in the proxy statement.

Charles A. Ratner

It's been reported that number of votes required to approve the amendment and restatement of the 1994 stock plan, as disclosed in the proxy statement, have been received. I therefore declare that the amendment and restatement of the 1994 stock plan has been approved. The Secretary will please incorporate the full text and complete voting for this proposal in the minutes of the meeting.

The next order of business is Proposal 6, the ratification of PricewaterhouseCoopers LLP as independent registered public accountants for the company for the 11 months ended December 31, 2013.

Unknown Attendee

I hereby move the ratification of PricewaterhouseCoopers LLP as independent registered public accountant for the company for the 11 months ending December 31, 2013.

Unknown Attendee

I second the motion.

Charles A. Ratner

It it's been moved and seconded. Is there any discussion? I hereby direct the inspectors to determine the number of shares voting in person, by ballot and by proxy, for and against the ratification.

Unknown Attendee

I wish to report that the ratification of PricewaterhouseCoopers LLP was approved by the holders of a majority of the combined voting power of the outstanding Class A common stock and Class B common stock [indiscernible] present at this meeting in person or by proxy.

Charles A. Ratner

It's been reported that number of votes required to approve the ratification of PricewaterhouseCoopers LLP for the 11 months ended December 31, 2013, have been received. I therefore declare that the ratification of the PricewaterhouseCoopers LLP as independent registered public accountant firm for the company for the 11 months ending December 31, 2013, has been approved. The Secretary will please incorporate the complete voting for this proposal in the minutes of the meeting.

If there is no further official business to come before the meeting, do I have a motion that we adjourn?

Unknown Attendee

I move we adjourn.

Unknown Attendee

I second the motion.

Charles A. Ratner

It's been moved and seconded. The meeting be officially adjourned. All those in favor will signify by saying aye.

[Voting]

Charles A. Ratner

Anybody oppose by saying no? I vote no. I'm having a good time. Imagine 12 years of school, 3 years of law school, 44 years at Forest City to do this, pretty good. It's been moved and seconded that the meeting be officially adjourned. All those in favor will say -- we did that. The meeting is officially adjourned. We will now proceed to the informal portion. We will now proceed to the informal portion of the meeting, and I'd like to start. I have 's something here I need. My introduction to my dearest and closest friend, Robert O'Brien, our CFO, it says, is possible. This is a quote from Albert Einstein. Not everything that can be counted counts and not everything that counts can be counted. Bob, my dear friend and my brilliant colleague, has the judgment and capacity to tell the difference. He has done a magnificent job for our company for a long time. And he, as much as anybody else, has been responsible for orchestrating and navigating our way from that very difficult time in 2008, '09 to where we are today and in partnership with myself, with David and with all of us, but a great deal of this responsibility rests on his very capable shoulders. Bob, where are you, please?

Robert G. O'Brien

Thanks, Chuck. I think I'll just take you everywhere I go. You can introduce me that way, and people will be dearly impressed. Thanks. Good afternoon. As Chief Financial Officer, it's my responsibility today to report on the company's financial condition.

Before I begin, the company would like to remind everyone that today's remarks may include forward-looking comments that are covered under federal Safe Harbor provisions. Please refer to risk factors disclosed in our SEC filings included in our annual and quarterly reports for a discussion of factors that may cause actual results to differ from such forward-looking statements.

I will also remind everyone that we refer to non-GAAP measures, such as funds from operations, or FFO; operating FFO and comparable property -- net operating income or comp NOI, all of which are defined and reconciled to their most comparable GAAP equivalents in our supplemental packages furnished to the SEC and available on our website.

Our 2012 results were issued back at the end of March. With that much time having passed, I won't go into much detail, but let me hit on some of the highlights for the year. We were pleased with our 2012 results. Funds from operations, operating FFO and comp NOI, key metrics we used to assess the company's performance, were all up over the prior year, as were revenues and net earnings.

Our portfolio continued to show strength, particularly in multi-family, where we had strong growth in comp NOI throughout the year. Year-end FFO was $267.4 million or $1.27 per share compared with $178.2 million or $0.88 per share for 2011. Operating FFO ended 2012 at $234.7 million, up a little over 3% from $227.5 million in 2011. Comp NOI was up 3.2%, with increases of 7.3% in apartments, 2.1% in retail and 2.1% in office compared with the prior year.

2013 net earnings were $36.4 million compared with a net loss of $86.5 million for fiscal 2011. For fiscal 2012, a significant factor and both are positive net earnings variance, as well as the increase in total FFO was a loss we recognized at the end of 2011 when we made the strategic decision to divest our land development business.

As we turn now to the highlights of our first quarter results, I need to acknowledge the work of our operations and accounting teams. As most of you are aware, we are moving our year end to December to align our reporting calendar with industry events and the majority of our peers. This has placed a significant burden on our teams as we prepare for that change. Additionally, we asked our team to accelerate the filing of our first quarter results so we could discuss them at the recent NAREIT conference in Chicago. David and I want to publicly acknowledge and thank our team for their extraordinary efforts.

As we anticipated, our first quarter FFO results reflected the impact of decreased capitalized interest as we have opened major projects and reduced the size of our underconstruction pipeline. We anticipate that the total reduction in capitalized interest for all of 2013 to be approximately $35 million, and a little less than half of that reduction occurred in the first quarter.

Overall comp NOI for the first quarter decreased 1.9% compared with the same period in 2012, with increases in -- about 1.7% in apartments, 0.5% in retail, offset by a decrease of 6% in office. The drop in office was anticipated and was due to a significant vacancy at one of our Brooklyn office properties. In residential, comp NOI grew, but at a slower rate than anticipated primarily due to seasonal factors, including increased utility and operating expenses due to the harsher winter and several of our noncore markets.

Retail performance was impacted by the timing of vacancies in our New York specialty retail portfolio and by renovation and remerchandising initiatives at a number of our regional malls. As we said on our call with investors last week, despite mixed results in the first quarter, we continue to see solid underlying fundamentals in our portfolio, and we are confident in our ability to achieve solid 2013 results.

One of the key drivers of our strategic plan is building a strong sustaining capital structure. Our goal is to improve our balance sheet and debt metrics, which will lead to improved credit ratings over time, which will, in turn, drive a lower cost of capital. All of these things will enable us to have a greater flexibility in how and where we invest and how we grow the company going forward.

In the words of Pablo Picasso, action is the foundational key to all success. Well, we've certainly been taken action. In 2012 and continuing into 2013, we have made considerable progress on our balance sheet goals. Let me highlight some of the things our team has accomplished to date.

In July of last year, we effectively extended $125 million of our 7.625% senior notes that were due in 2015 and extended them to about 2034 at roughly the same cost. And in the first quarter, we paid off the remaining $53.5 million of those bonds. Late last year, we completed exchanges of 4.2 million shares of our convertible preferred stock for Class A common. And in the first quarter of this year, we redeemed the remaining preferred. This converted $225 million of preferred stock to equity and eliminated over $15 million of annual fixed charges.

During the first quarter, we exchanged 138.9 million of our 3.625 puttable puttable equity linked senior notes due 2014 for Class A common stock, and recently announced we are terminating to put option on the remaining 61.1 million of the 2014 notes effective on June 20. We believe that substantially all those holders will put their notes to the company exchange for common stock, and these transactions will further reduce our annual fixed charges by more than $7 million.

Another key element of our effort to build a strong, sustaining capital structure is securing strategic capital partners to invest with us in new opportunities, as well as in our mature portfolio. We've made amazing progress on this front as well.

Last year, we launched the strategic capital partnership with the Arizona State Retirement System to create a $400 million multi-family development fund targeting 5 of our core markets. We also bought -- brought TIAA-CREF into our partnership at 8 Spruce Street in Manhattan in a transaction that valued the building at a record $1.05 billion and resulted in proceeds to Forest City of $129 million.

In the first quarter of this year, we closed a new partnership with AIG to jointly fund one of our Dallas apartment development projects. Earlier this month, we announced an agreement that will create our largest strategic capital partnership today. QIC, one of Australia's largest institutional investors, will acquire a 49% interest in our share of a portfolio of 8 of our regional malls. The transaction value of the 8 properties has a total of approximately $2 billion. At closing, which should be in the third quarter, we expect to receive cash of approximately $330 million and expect to use the majority of that cash to accelerate our deleveraging efforts.

In summary, we have been very active in working to improve our balance sheet and build a solid foundation for the future of your company.

With that, let me thank you all for being here today, and thank you for your support, and I'll turn it back to Chuck.

Charles A. Ratner

Got to admit, there aren't many companies that have a CFO that will quote Picasso. That's a pretty cool thing. Okay, so our next speaker, our next presentation comes from our CEO, President and CEO, David LaRue. I'm not going to make a lot of comments. These guys are doing just a terrific job. I can't tell you how good I feel and how comfortable I feel with David in command of our battleship.

I heard Albert say very often that one's tenure is judged ultimately by one successor, and I couldn't be more proud and more pleased. Recently, we had an opportunity for much of our leadership to convene together in Denver at a leadership retreat. And we spent a lot of time at that retreat talking about leadership and what qualities there are to leadership. And the most profound discussion I was a part of came from one of the facilitators, one of the speakers who said basically that leadership is all about trust. At the end of the day, leadership is all about trust. There are magnificent examples of that in this room. Our board is full of people who've demonstrated that kind of leadership built from trust. And when he said that trust is built from a combination of credibility that is you know what you're talking about; reliability, you've got the track record and you've got the reputation for being there and being reliable and being someone that others can count on, someone who has their back and who is out there in front, leading. And finally, what he called intimacy, but what he really meant, I think, by that was relationship, the ability to build relationships. Based on that criteria, that leadership is based on trust, and trust is based on reliability, credibility and intimacy or relationship, we have a CEO who has the highest possible quotient of trust, and therefore, someone who's leadership we can all rely on. You have to have good sense, you have to have good character and you have to have a sense of goodwill. David brings them all.

Finally, I just want to comment that my own experience is that a CEO has 4 basic constituencies. He's got the owners of the business, the shareholders. He's got the associates of the business, all of us together who work at Forest City, worked together at Forest City. He's got the customers, myriads of customers that you have to pay close attention to. And finally, he's got the responsibility to all of the partners, the financial partners, the professional partners, the real estate partners, et cetera, that we've cultivated over decades. The only thing I would add to that, he's got one more constituency he's got to worry about, and that's his predecessor. This guy is -- that he's got the respect of, the trust of all of those constituencies. So I give you our CEO, Dave LaRue.

David J. LaRue

Bob, I think you and I are going to have to fight for introductions. I'm going to do that as well. Well, thank you all, and good afternoon. I'm glad you are all able to come to our meeting. As I'm sure you've seen the theme of our year -- our past year's annual report is focus. And I think focus describes not only what we did last year, but it's something that we continue to execute upon every day. It's core to our strategic plan and it's core to how we are going to produce and achieve results for the constituencies that Chuck mentioned before. Hello? There you got it. Well, you never know when it rings. A few minutes ago, you heard Bob describe the focus on improving the balance sheet, a fundamental element of our plan, and many actions and accomplishments that have led in this important area.

Another key element of our plan is focusing on the core products and our core markets. Those core market -- one of those core markets is Denver, where our Stapleton project continues to demonstrate Forest City's ability to build great communities through the power of a public/private partnership. And 2012 marked the 10th year anniversary of the first residents moving into Stapleton. And I'd like you to listen to these statistics of what has happened in the last 10 years.

The community is home to approximately 15,000 people. It has grown to more than 4,700 homes, nearly 1,000 apartment buildings, 2 apartment units, 2.1 million square feet of retail, 9 schools, 800 acres of parks and open space, and much more. That's the definition of a community. Stapleton showcases Forest City's unique capabilities to bring together all of our core products: retail, office, apartments, as well as single-family homes, schools, parks, open space to create the unique sense of place.

To give everyone here a better sense of what's been accomplished in Stapleton, I'd like to share a short video that celebrates Stapleton's 10th anniversary. Now we can have the noise and the pictures, that's the queue.

[Presentation]

David J. LaRue

Now if that's not a definition of community, we don't know what is. It's an embodiment of our vision statement, which is to create places for people who want to live, work and shop, and the most important part of all of that is coming together as a community. The most exciting part about that is we are 1,800 acres into the master development, and we have approximately 1,100 acres to go. So we have a bright future, not only for the residents of Denver, the community of Stapleton, but Forest City Enterprises and all of its associates.

In addition to improving our balance sheet and focusing on core products and markets, the 2 other drivers of our business are strategic plan, have been pursuing operational excellence, and developing and aligning talent around our strategic -- around our strategies. Let me give you a brief update on the progress in each of these areas.

We define operational excellence as using the power of our entire enterprise to improve the business process and maximize efficiency, effectiveness and customer satisfaction. Here are some of the highlights of what we have accomplished in 2012 and what we've done thus far in 2013.

We launched the major process improvement and efficiency initiatives targeting specific functions within the company that led effort -- led to creation of a centralized accounting organization, where previously there had been separate independent accounting teams. It also led to streamlining IT, as well as procurement, energy and sustainability, and human resource capabilities. We upgraded our enterprise resource planning technology, integrated our treasury, debt management and procurement functions into -- in the system, giving senior management and functional leaders greater visibility to information, performance in real time.

Additionally, we've adopted best practices regarding sourcing and procurement, and implemented energy management initiatives across the portfolio, where our goal is to achieve savings of $25 million on an annual basis.

Everything we do as a company is only possible because of the skills, the creativity and the dedication of our associates. Therefore, developing and aligning talent with our key strategies is vital to the successful execution of our plan. Some highlights to the actions we've taken in the talent development and management area over the past year include an ongoing communication plan with associates to engage -- that are engaged in the strategic plan, which include town hall meetings, regional roadshows. And in that regional roadshow, we met with over 1,100 of our associates, and it allowed us to have direct interaction and feedback from the people who are executing the plan. We also publish on a quarterly basis all of the progress we made in reaching and achieving these milestones. We've created associate resource groups, or ARGs, to support the professional development of our associates. We lead our ARG for women. It was launched in 2012, and currently has over 300 members. And ARG for African-American associates was launched earlier this year. Within the past 2 days, both of these groups sponsored the meetings, which met with our board, with members of our Board of directors, who spoke to our associates and answered questions relative to each group. Participating in these meetings is inspirational, not only because the associates' engagement and the topics discussed, but because the future leadership of Forest City Enterprises is represented by these associates.

In 2012, we launched FC Voices, an associate engagement survey to gather feedback and help direct us in our business, which we do share back with our associates. More than 60% of the associates participated, overall results were very positive, while still highlighting areas that we have feature opportunities to develop. We just completed our 2013 survey, and do -- we'll plan on doing a survey annually. Those are just a few examples of our talent initiatives. And now let me turn to our -- my closing comments.

Earlier, you heard about strong underlying fundamentals of the business. Those strong fundamentals give us confidence in our ability to achieve solid results, to create value for shareholders and for other constituents. As we look ahead, we continue to anticipate a slow, but steady improvement in the economy. This recovery has not been as strong as anyone would like, however, we are growing and that bodes well for our nation, our industry and our company.

When we prepare materials to send to our board for our quarterly meetings, we often include a quote that captures something about the business or how it's performing or what is happening in the market. Recently, we included a quote from Paul Saffo. Never mistake a clear view for a short distance. To me, that quote says a lot about the journey we are on as a company. We have a clear view of where we are going. We continue to make meaningful progress and we have shared as we have shared with you here today. We recognize there's more to do and the journey is and will continue to be a marathon, not a sprint.

We remain focused on executing our strategies and look ahead with confidence and strength -- at the strength of our portfolio, the skills of our associates, the support of our tenants, our business partners and our shareholders.

Thank you very much, and I'd like to also thank the board for their ongoing support. And again, most importantly, all of the associates at Forest City for doing their job extremely well. Thank you.

Charles A. Ratner

Well done, David, and thank you, and thank you again on behalf of all of us for your very committed and dedicated leadership. Jeffrey, are we ready to do this -- what you need to do. Turn the TV on, okay. We have a very special presentation we'd like to make at this point in time. And I'd like to ask Albert Ratner, our chair emeritus, to come forward and make this presentation on behalf of our company David -- Albert, please.

Albert B. Ratner

Hi, Joanie. Good to see you. Joanie isn't with us today because the airplanes weren't working the way they were supposed to work. But Joanie, I'm happy to make this presentation, too, on behalf of the Board of Trustees, and particularly, on behalf of Sam and myself. If my arithmetic is right, Sam, this marks your 67th year. And actually, this month represents my 62nd. So we've been here for a long time, so we speak with authority when we say this to you.

You belong to a very unique group of people. There are actually only 9 people in this group what is known as the COM, and that is a child of a founder. And there happened to be 9 of us, and we're the children of Leonard and Lillian Ratner, Max and Betty Rattner, and Fannie and Nate Shafran. And just to give you a little bit of the history of the country, these were 2 brothers and a sister. And when the business started out, my Uncle Max was really a student and was dying to go to law school. When the business started, it was my father and his secretary, who became my mother. It was my Aunt Fannye who ran the cash register such as it was coming in, and it was my Uncle Max. And those of us who were the children of the family had a very unique experience, because every night, as long as we can remember, our parents came home and talked about the business. And it was unique because we all felt that we worked in the business our whole lifetime. And it started when we only had 3 employees and continued on for a long period of time. And a great deal of what we all learned has been very helpful to us in our lifetime.

Your dad was a very important part of this company. He actually was a person who put together Forest City Dillon, in which we built almost 90,000 apartment units and represented the company all over the country. Wherever Uncle Nate went, good things always happen. I remember that during the war, when we didn't have a lot of lumber to sell, Uncle Nate got a contract from Goodyear to build boxes, so we could send ammunition overseas to our troops that were fighting there. You've been a director now for 16 years, Joanie. And when I just ask people the different impressions that they had of you because you know my impressions of you, because we've been together for a long time, here's what they've said. You've been incredibly active and engaged board member. You never missed a meeting nor one of senior management. You participate in every one of our strategic planning and corporate initiatives. You've been a tremendous support to our Boston office, where you live and you've established a tremendous relationship with all of the people and in the development of University Park. You've been engaged and deeply involved in all of the work that the board has done, and the link between the board and the executives of the company, you formed a great relationship. And I guess, the last thing that I can say is that you have been and always will be a part of the Forest City family. You've been a tremendous asset to you. I cannot throw this far enough to get to you in Brooklyn, but we will present this, too, and it says the Joan Shafran, with gratitude, Forest City Board of Directors 1997-2012. And my only hope is that you will keep coming around with us and doing the great things that you do. Joanie, we love you. Thank you.

Charles A. Ratner

Joanie, please.

Joan K. Shafran

Okay. Well, Albert, thank you. I am honored and grateful to have served the Forest City board to be with these wonderful people. I miss you all, and I'm -- I know my parents, Nate and Fannye arguably experienced, even if they're not physically here, my brother Joe, I believe, is there and my sister Paula, they've been tremendously supportive. And just thank you very much for the opportunity.

Charles A. Ratner

Joanie, thank you. Joey, where are you? I saw Joey walking. Stand up, Joey. Joey Shafran, another of the children of the founder, as Albert said. I owe so much to the Shafran family. So much it's hard to describe, but my Uncle Nate, my Aunt Fannye, they were as much a part of raising all of us as anybody. And when I first started to work at Forest City as a sophomore in high school, it was my Uncle Nate Shafran that used to -- I worked for him at the lumberyard that he was running on the Lorraine Street. He was always a great champion for all of us and my Aunt Fannye as well. And it's hard to stay in touch with how much you all folks like this. And Joanie was such a tremendous, tremendous and continues to be such a tremendous representative of that whole sense of family and commitment and culture and doing the right thing and making the world a better place. So Joanie, thank you. I'm sorry you can't be with us in person, but we're thrilled we're able to make this happen. And I do want to mention at the same time that Joanie just stepped off board, Jim Ratner, my brother stepped off the board. We're not making equally magnificent presentation because Jim, as you know, continues to actively serve in the leadership and the management of the company.

With that, I would open the floor to questions and answers. We would be happy to address any of your questions. We have representatives of PriceWaterhouse here who can help me in responding, and the floor is open.

Question-and-Answer Session

Charles A. Ratner

I'm a patient man. Okay, okay, if we have no questions. I would open the floor to a motion for adjournment.

Samuel H. Miller

I second the motion.

Charles A. Ratner

Or I guess, we don't even needed an adjournment. We're already adjourned officially. Who made the motion? Sam. Okay, Sam. Hey, you guys, Sam and Albert, Chairs Emeritus. Stand both of you guys. Thank you. Sam, stand up, Sam. Okay, I can't get Sam to stand. Of course, I could never get Sam to do anything I wanted, so that's not unusual. Thank you, all, very much.

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Source: Forest City Enterprises Inc. - Shareholder/Analyst Call
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