Forest City Announces Strategic Actions and Enhanced Disclosure

Forest City Enterprises, Inc.,

today announced actions that further position the company to launch its new, four-year strategic plan, and further enhance the company's disclosure to investors. A primary driver of the company's strategic plan is greater focus on core rental products – apartments, office and retail – in core markets – New York, Washington, D.C., Boston, Dallas, Los Angeles, San Francisco and Denver. As part of the commitment to greater focus on core markets and products, Forest City will strategically reposition or divest portions of its land business and is actively reviewing alternatives to do so. The land business buys and sells raw land, develops subdivisions and sells lots to homebuilders. The land portfolio consists of approximately 35 active projects primarily located in the Southwestern U.S., Texas, the Carolinas and Ohio. As a result of this decision, Forest City expects to recognize a non-cash impairment charge of approximately $150-$165 million, pre-tax, in the quarter ended January 31, 2012. Anticipated cash proceeds from executing the repositioning will be used to both pay down debt and selectively activate new development. A second strategic driver for Forest City is continuing to improve its balance sheet. In support of this objective, the company intends to use proceeds from land sales and asset dispositions to both pay down debt and selectively activate new development, primarily in core markets and with existing entitlements. The company employed this strategy during 2011, when it sold five properties and entered into a joint venture on 15 others. These transactions generated net proceeds of $281 million while removing $392 million of debt from the company's pro-rata balance sheet. During the same time period, Forest City invested to commence development of new projects, primarily in multifamily, in the company's core markets of Washington, D.C., Denver and Dallas. The company also announced that it is introducing a schedule of net asset value (

) components as part of its quarterly and annual Supplemental Packages. "We know many investors use net asset value as part of their analysis of real estate companies, including ours," said LaRue. "We believe this new disclosure will assist investors in estimating Forest City's overall enterprise value, and will also give them additional insight into how management views the company and its overall value proposition." The schedule of NAV components provides a template for estimating the value of the company's total assets, including annualized and stabilized net operating income by property type, less total liabilities. Investors can then apply their own cap-rate assumptions or other valuation methodologies to estimate the overall value of the company's assets.