Forest City Downgraded; Analysts 'Particularly Concerned' About Atlantic Yards

Standard & Poor's yesterday downgraded the credit rating of mega-developer Forest City Enterprises, the parent company of Forest City Ratner, the developer of the planned Atlantic Yards project in Brooklyn. The downgrade came as the credit markets have made the financing of new development near impossible, and Forest City, based in Cleveland and with projects in numerous regions, is no exception.

Among the agency's worries was Forest City Ratner's more-than $4 billion signature project, a Frank Gehry-designed complex that includes a new basketball arena for the Nets, more than 6,000 units of housing and a commercial tower. Forest City has spent about two years fending off a string of lawsuits, while watching the financial markets stagnate. Moreover, the developer has yet to close on the deal with the state. Nor has it received financing for the arena or other portions of the site.

"We remain particularly concerned about the effect the weak and uncertain capital and real estate markets may have on the company's ability to close, finance, lease, and ultimately profitably complete the high-profile Atlantic Yards mixed-use project," the analyst report said, as the stock was downgraded from "BB+" to "BB." Forest City has invested $250 million so far in the project, the report said.

The rating agency's outlook on Forest City: "negative."