315858--3/31/2009--BFC_FINANCIAL

related topics

{loan, real, estate}

{stock, price, share}

{tax, income, asset}

{acquisition, growth, future}

{debt, indebtedness, cash}

{stock, price, operating}

{condition, economic, financial}

{cost, regulation, environmental}

{capital, credit, financial}

{cost, contract, operation}

{regulation, change, law}

{loss, insurance, financial}

{operation, natural, condition}

{investment, property, distribution}

{financial, litigation, operation}

{personnel, key, retain}

{provision, law, control}

Restrictions, operating performance and the terms of indebtedness limit the ability for Woodbridge to pay dividends, which may impact our cash flow. Our activities and our subsidiaries activities are subject to a wide range of regulatory requirements that could have a material adverse effect on our business. Certain members of our Board of Directors and certain of our executive officers are also directors and executive officers of our affiliates. Risks Associated with Our Investment in Benihana and the Restaurant Industry Issuance of Additional Securities In The Future. Our portfolio of equity securities and our investments in BankAtlantic Bancorp and Woodbridge subjects us to equity pricing risks. Our control position may adversely affect the market price of BankAtlantic Bancorp s and Woodbridge s Class A Common Stock. Alan B. Levan And John E. Abdo s Control Position May Adversely Affect The Market Price Of Our Common Stock. The terms of our articles of incorporation, which establish fixed relative voting percentages between our Class A Common Stock and Class B Common Stock, may not be well accepted by the market. Adverse market conditions have affected and may continue to affect the financial services industry as well as our business and results of operations. There can be no assurance that recent steps taken by Congress, the FDIC and the Federal Reserve will stabilize the U.S. financial system. The impact on us of recently enacted legislation, in particular the EESA and its implementing regulations, and actions by the FDIC, cannot be predicted at this time. The decline in the Florida real estate market has adversely affected, and may continue to adversely affect, our earnings and financial condition. Our loan portfolio is concentrated in real estate lending which makes us more susceptible to credit losses given the current depressed real estate market. BankAtlantic s consumer loan portfolio is concentrated in home equity loans collateralized by Florida properties primarily located in the markets where BankAtlantic operates its store network. BankAtlantic s interest-only residential loans expose it to greater credit risks. An increase in BankAtlantic s allowance for loan losses will result in reduced earnings. Our loan portfolio subjects us to high levels of credit and counterparty risk. Adverse events in Florida, where our business is currently concentrated, could adversely impact our results and future growth. Changes in interest rates could adversely affect our net interest income and profitability. BankAtlantic is subject to liquidity risk as its loans exceed its deposits. BankAtlantic s Florida s Most Convenient Bank initiative and related infrastructure expansion to support a larger organization has resulted in higher operating expenses, which has had an adverse impact on our earnings. BankAtlantic obtains a significant portion of its non-interest income through service charges on core deposit accounts. Deposit premium insurance assessments may increase substantially, which will adversely affect expenses. We may need to raise additional capital in the future and such capital may not be available when needed or at all. Continued capital and credit market volatility may adversely affect our ability to access capital and may have a material adverse effect on our business, financial condition and results of operations. A sustained decline in the Company s Class A common stock price may result in the delisting of its Class A common stock from the New York Stock Exchange. BankAtlantic Bancorp services its debt and pays dividends primarily from dividends from BankAtlantic, which are subject to regulatory limits. The Company is controlled by BFC Financial Corporation and its controlling shareholders and this control position may adversely affect the market price of the Company s Class A common stock. The Company s activities and the activities of the Company s subsidiaries, including BankAtlantic, are subject to regulatory requirements that could have a material adverse effect on the Company s business. Real Estate Development Risk Factors RISKS RELATING TO OUR REAL ESTATE OPERATIONS Through Core Communities and Carolina Oak, we engage in real estate activities which are speculative and involve a high degree of risk. The real estate market has experienced a significant downturn, and the duration and ultimate severity of the downturn is uncertain. A continued deterioration of economic conditions will adversely affect our operating results and financial condition. Because real estate investments are illiquid, the downturn in the real estate market and in the economy in general has had, and may continue to have, an adverse impact on our business and cash flow. The commercial real estate market has been adversely affected by the current economic and credit environment. Commercial leasing projects may not yield anticipated returns, which could harm our operating results, reduce cash flow, or the ability to sell commercial assets. We utilize community development district and special assessment district bonds to fund development costs, and we will be responsible for assessments until the underlying property is sold Core s results are subject to significant volatility. We are dependent upon certain key tenants in our commercial developments, and decisions made by these tenants or adverse developments in the business of these tenants could have a negative impact on our financial condition. It may be difficult and costly to rent vacant space and space which may become vacant in future periods. Additional adverse changes in economic conditions where we conduct our operations could further reduce the demand for real estate and, as a result, could further adversely impact our results of operations and financial condition. If prospective purchasers of our inventory and tenants are not able to obtain suitable financing, our results of operations may further decline. Natural disasters could have an adverse effect on our real estate operations. A portion of our revenues from land sales in Core s master-planned communities are recognized for accounting purposes under the percentage of completion method. Therefore, if our actual results differ from our assumptions, our profitability may be reduced. Product liability litigation and claims that arise in the ordinary course of business may be costly. We are subject to governmental regulations that may limit our operations, increase our expenses or subject us to liability. Building moratoriums and changes in governmental regulations may subject us to delays or increased costs of construction or prohibit development of our properties. We are subject to environmental laws and the cost of compliance could adversely affect our business. Increased insurance risk could negatively affect our business. Levitt and Sons had surety bonds on most of their projects, some of which were subject to indemnity by Woodbridge. RISKS RELATING TO OUR OTHER ACTIVITIES AND TO OUR COMPANY, GENERALLY Our outstanding debt instruments impose restrictions on our operations and activities and could adversely affect our financial condition. Our current business strategy may require us to obtain additional capital, which may not be available on favorable terms, if at all. We are subject to the risks of the businesses that we currently hold investments in, and our future acquisitions may reduce our earnings, require us to obtain additional financing, and expose us to additional risks. If current economic and credit market conditions do not improve and the book value of our investments continue to exceed the trading value of the shares we own, we may incur additional impairment charges in the future relating to those investments, which would adversely impact our financial condition and operating results. We are subject to certain additional risks relating to our investment in Bluegreen. The loss of the services of our key management and personnel could adversely affect our business. Our controlling shareholders have the voting power to control the outcome of any shareholder vote, except in limited circumstances. Our net operating loss carryforwards could be substantially limited if we experience an ownership change as defined in the Internal Revenue Code. In the event that the Company chooses to de-register its securities from registration with the Securities and Exchange Commission, it would no longer file reports with the Securities and Exchange Commission and this could result in lower prices and more limited trading of the Company s securities as well as adversely impact the Company s ability to raise capital.

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315858--3/31/2009--BFC_FINANCIAL_CORP