Robert G. O’Brien, Executive Vice President and Chief Financial Officer, Forest City Enterprises, Inc.
Thanks Dave. Good morning everybody. I am really happy and pleased to have you up, and to speak to everybody today about yesterday’s announcement. It is really a critical one for Forest City. But maybe you know, we’ve been out frequently, spending more time tonight than we ever in the past about the possibility of becoming a REIT. Part of it has always been that because of the net operating loss carryforward in our balance sheet, were already tax efficient and did not need to become a REIT to achieve that. As we’ve executed our specific plans and focus on core urban markets, we sold nine core assets and used those proceeds primarily to reduce debt. Gains from those sales should reduce our NOLs. We expect proceeds from non-core assets sales this year to be well above our historic averages and as a result, we expect gains from those sales to use the majority of our remaining NOLs by year end 2015.
These conversion will allow us to maintain a tax efficient structure to continue to drive shareholder value and ultimately distributing regular quarterly dividends to shareholders and thus will providing for diversified in the tract of totally turn the shareholders going forward. It is also another step in bringing our business more in line with our peers. As some of you know, in order to convert to a REIT, we will be required to distribute to shareholders all of the companies accumulated earnings and profits. This is what often is referred to as the E&P purge. The 2015 assets sales will not affect our NOLs but they will have a material impact on our accumulated E&P. We expect the E&P distribution to take the form of a combination of cash and common stock.
We have a lot of work ahead to complete the REIT conversion by January 1, 2016. This includes partner discussions, lender consents, regulatory compliance, evaluation of income sources, and establishing the TRS and other REIT compliance issues. While completing all of these work will be a challenge, we are confident that with our talented and dedicated team will meet the timing and necessary requirements. As we indicated in our press release, by mid-year we expect to provide you additional information on the questions I’m sure you all have about targeted levels, rapid sales, leverage, operating margins and development volumes. In addition, we expect to share more details on dividends and distribution of earnings and profits by that time. I will turn it back to Dave for the closing part.
David LaRue, President and Chief Executive Officer, Forest City Enterprises, Inc.
Thanks Bob. We’ve already had a number of discussions with investors and analysts since our announcement yesterday. The response has been positive as had we hoped. As we move forward over these next months, we’d finalize the answers to the many questions you have. We are committed to an open and transparent communication process. Again, thank you all for your support. Thank you for joining us on this brief call today and as we’ve said, we are very excited about yesterday’s announcement and we’ll continue to work hard taking care of strategies which we believe drive increased long-term shareholder value. I want to thank you again and have a great day.
Ladies and gentlemen, that concludes today’s conference. Thank you for your participation. You may now disconnect and have a great day.
