CLEVELAND (AP) â¿¿ Shopping mall, office building and apartment complex developer Forest City Enterprises Inc. said Wednesday its second-quarter profit fell 96 percent as the soft economy continues to hurt real estate developers. The Cleveland-based company posted net income of $4.3 million after payment of dividends on preferred shares, or 2 cents per share, compared with $118.7 million, or 62 cents per share, a year ago. The company said most of the difference was due to the timing of asset sales and the impact of joint ventures. The company saw a $55 million gain on disposition of partial interests in other investments a year ago, but no gain in the current quarter. It also saw revenue and interest income from properties sold or held for sale drop to $3.3 million from $16 million a year ago. Revenue from real estate operations fell 14 percent to $253.2 million from $294.2 million a year earlier. Expenses fell to $214.5 million from $228.7 million. Retail occupancies remained about the same at 90.3 percent and year to date comparable mall sales increased 6.5 percent from the same period a year ago. The company said office occupancies fell to 90.3 percent from 90.9 percent a year ago. Rental income increased to 91.9 percent from 89 percent in 2010. CEO David J. LaRue said the real estate portfolio performance improved despite economic uncertainty, high unemployment and market volatility. The company also improved its balance sheet and debt by refinancing a project in New York and successfully offering $350 million in convertible senior notes. At the end of the second quarter, the company had four projects under construction at a total project cost of $1.7 billion LaRue said the slow pace of economic recovery and resulting volatile markets are reason for a cautious outlook. "Despite the uncertain economic conditions, we continue to see solid real estate fundamentals in our core markets and are pleased with the strength of our portfolio. We are focused on bringing our under-construction projects online as contributors to additional growth," he said. Shares rose 63 cents, or 5 percent, to close at $12.90.
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