Forest City Reports Fiscal 2013 First-Quarter Results

            Forest City Reports Fiscal 2013 First-Quarter Results

-- Company creates strategic capital partnership with QIC, expects retail
joint venture to generate liquidity of $330 million

-- Company terminates put rights for remaining $61.1 million of 2014 Senior
Notes as part of deleveraging strategy

-- Management confident in full-year 2013 outlook

PR Newswire

CLEVELAND, June 4, 2013

CLEVELAND, June 4, 2013 /PRNewswire/ -- Forest City Enterprises, Inc. (NYSE:
FCEA and FCEB) today announced FFO (funds from operations), Operating FFO, net
earnings/loss and revenues for the fiscal first quarter ended April 30, 2013.

(Logo: http://photos.prnewswire.com/prnh/20080515/FRSTCTYLOGO )

FFO
First-quarter 2013 FFO was $53.1 million, compared with $89.2 million in the
first quarter of 2012. On a fully diluted, per-share basis, first-quarter 2013
FFO was $0.26, compared with $0.42 for the comparable period in 2012.

The quarter-over-quarter variance reflects non-recurring factors including
lower commercial land sales of $27.6 million (primarily related to the 2012
Cleveland casino land sale of $36.5 million), decreased FFO from the change in
fair market value of nondesignated derivatives which were marked to market
through interest expense of $6.1 million, and a 2013 loss on extinguishment of
debt of $5.0 million, primarily related to the exchange of a portion of the
company's 2014 Senior Notes. These reductions were offset by a larger income
tax benefit of $25.1 million, compared with the first quarter of 2012. The
balance of the FFO variance is comprised of factors impacting Operating FFO,
as described below.

A full description of factors impacting FFO and FFO per share for the first
quarter is included in the company's First Quarter 2013 Supplemental Package
furnished to the SEC and available on the company's website,
www.forestcity.net.

FFO and FFO per share are non-GAAP measures commonly used by publicly traded
real estate companies. Included with this press release is a table reconciling
net earnings (loss), the most comparable GAAP measure, to FFO.

Operating FFO
First-quarter Operating FFO was $31.6 million, compared with first-quarter
2012 Operating FFO of $57.9 million. Factors affecting the year-over-year
variance include decreased capitalized interest on projects under construction
and development of $15.7 million, $3.4 million of lower NOI from an
anticipated vacancy at One Pierrepont Plaza in Brooklyn, reduced Operating FFO
from properties sold of $3.1 million and an expected increase in overhead
costs previously capitalized to development projects that are now being
expensed as the company has reduced the size of its under-construction
pipeline. In addition, Corporate Operating FFO decreased $3.3 million, driven
primarily by increased interest expense previously allocated to the Land
Development Group. These decreases were partially offset by the ramp up of new
properties of $3.1 million.

Additional explanation of factors impacting Operating FFO is included in the
company's First Quarter 2013 Supplemental Package furnished to the SEC and
available on the company's website, www.forestcity.net.

Operating FFO is a non-GAAP measure derived from FFO. The company believes
Operating FFO provides investors with additional information about its core
operations. Included with this press release is a table reconciling Operating
FFO to FFO. Forest City initiated reporting Operating FFO in the second
quarter of 2012.

Net Earnings/Loss
The first-quarter net loss attributable to Forest City Enterprises, Inc. was
$19.4 million, compared with net earnings of $22.8 million in the first
quarter of 2012. 

The company's reported net earnings/loss are impacted by a variety of factors,
including transactions which can create substantial variances in net
earnings/loss between reporting periods. For the first quarter, the
year-over-year variance was driven primarily by lower non-recurring commercial
land sales ($27.6 million), decreased capitalized interest ($15.7 million) and
increased depreciation and amortization expense ($11.6 million), primarily as
a result of substantial property openings in 2011 and 2012. These reductions
were partially offset by decreased income tax expense ($22.0 million), gains
on disposition of rental properties ($6.6 million) and lower allocated losses
for the company's share of the Nets ($4.0 million).

A full description of factors impacting net earnings/loss is included in the
company's First-Quarter 2013 Supplemental Package furnished to the SEC and
available on the company's website.

After preferred stock dividends, the first-quarter net loss attributable to
Forest City Enterprises, Inc. common shareholders was $19.6 million, or $0.11
per share, compared with net earnings of $18.9 million, or $0.11 pershare,
for the first quarter of 2012.

Revenues
First-quarter 2013 consolidated revenues from real estate operations were
$305.6 million, compared with $287.3 million in the first quarter of fiscal
2012.

Commentary
"As anticipated and previously discussed with investors, our first-quarter FFO
results reflect the impact of decreased capitalized interest as we have
reduced the size of our under-construction pipeline," said David J. LaRue,
Forest City president and chief executive officer. "Overall comparable net
operating income for the quarter was impacted by the timing of vacancies in
our New York specialty retail portfolio and underperformance by our apartments
in non-core markets. Seasonal factors, including increased utility and
operating expenses due to the harsher winter in several markets, contributed
to that underperformance.

"As expected, our office segment saw decreased comparable net operating
income, primarily due to a vacancy at One Pierrepont Plaza in Brooklyn. We
continue to be encouraged by the level of activity and interest in the
Brooklyn office market and the lease-up prospects for this space.

"Despite these impacts in the first quarter, we continue to see solid
underlying fundamentals, as illustrated by strong positive gains in leasing
spreads in both our office and retail portfolios during the quarter, together
with continued rent growth and increased comparable occupancy in our
multifamily portfolio. In retail, comparable property net operating income
was impacted by ongoing renovations and remerchandising initiatives at several
centers. Even with these ongoing improvement projects, we continue to see
positive sales and net operating income trends in our comparable regional
malls.

"During the quarter, we achieved significant milestones in executing the key
drivers of our strategic plan. As part of our focus on improving our balance
sheet and building a strong, sustaining capital structure, we executed
transactions that resulted in: exchange of $138.9 million of our 3.625%
Puttable Equity-Linked Notes due 2014 for Class A common stock and cash;
redemption of the remaining $53.3 million of our 7.625% Senior Notes due 2015;
and conversion or redemption of the remaining 211,038 shares of our 7.0%
Series A preferred stock. Also during the quarter, we closed a new,
three-year, $465 million credit facility with more favorable pricing and
covenants than the prior facility.

"We continue to aggressively pursue these efforts to deleverage and improve
our debt metrics. At the end of last week, we gave notice that we will
terminate the put rights associated with the remaining $61.1 million of our
3.625% Puttable Equity-Linked Senior Notes due 2014, on June 20, 2013. Note
holders have until then to exchange their notes for our Class A common stock,
together with interest due through October 14, 2013. 

"We also continued to forge strategic capital partnerships to activate
existing entitlement on our balance sheet, take advantage of new opportunities
in our core markets, and invest in and grow our mature portfolio. In San
Francisco, we commenced construction of 2175 Market Street in the first
quarter. This 88-unit apartment community is the second multifamily asset –
along with B2 BKLYN in Brooklyn – in our partnership with the Arizona State
Retirement System. After the end of the quarter, we closed a new strategic
capital partnership with AIG Global Real Estate for the development of 3700M
(formerly West Village), a 381-unit apartment community in Dallas.

"Lastly, just yesterday we announced an agreement with affiliates of QIC, one
of the largest institutional investment managers in Australia, to form joint
ventures to recapitalize and invest in a portfolio of eight of our regional
retail malls. Under the agreement, QIC will acquire a 49% interest in our
share of these centers for cash. The transaction values the eight properties
at a total of approximately $2 billion, representing a cap rate of
approximately 5.75 percent on forecasted 2013 net operating income. We expect
the transaction to generate cash liquidity of approximately $330 million after
transaction costs, and anticipate closing before the end of our fiscal third
quarter. We plan to use a majority of the liquidity generated to accelerate
our strategy of deleveraging our balance sheet and improving our debt metrics.

NOI, Occupancies and Rent
Overall comparable property net operating income (Comp NOI) decreased 1.9
percent during the first quarter, compared with the same period in 2012, with
increases of 1.7 percent in apartments, 0.5 percent in retail, and a decrease
of 6.0 percent in office.

At April 30, 2013, comparable retail occupancies were 91.7 percent, compared
with 91.8 percent at the end of the first quarter in 2012. Sales in the
company's regional malls averaged $476 per square foot on a rolling 12-month
basis, a 4.4 percent increase compared with $456 per square foot in the same
period in 2012. On a rolling 12-month basis, new, same-space leases in the
company's regional malls increased 14.7 percent over prior rents.

In the residential portfolio, comparable economic occupancies for the quarter
ended April 30, 2013, were 94.5 percent, up from 94.2 percent last year.
Average monthly residential rents in the company's comparable apartments in
its core markets were $1,673 at the end of the first quarter, a 5.2 percent
increase from 2012. Average monthly rents across all of Forest City's
comparable apartments rose 4.1 percent, compared with the same period in 2012.

Comparable office occupancies were 91.0 percent as of April 30, 2013, compared
with 91.9 percent at the end first quarter in 2012. On a rolling 12-month
basis, rent per square foot in new office leases increased 10.9 percent over
expiring leases, driven primarily by a significant lease renewal at the
company's University Park at MIT life science office park near Boston. 

Comparable property NOI, defined as NOI from properties operated in the three
months ended April 30, 2013 and 2012, is a non-GAAP financial measure and is
based on the pro-rata consolidation method, also a non-GAAP financial measure.
Included in this release are schedules that present comparable property NOI on
the full-consolidation method and a reconciliation of NOI to net earnings
(loss).

Debt Maturities, Financing Activity and Liquidity
Since January 31, 2013, the company has addressed, through closed loans and
committed financings, $118.0 million at full consolidation ($202.0 million at
its pro-rata share) of the $835.6 million ($1.0 billion at pro-rata) of
long-term debt maturities coming due in fiscal year 2013. Additionally, since
January 31, 2013, the company addressed $203.5 million ($251.7 million at
pro-rata) of loans maturing in future years.

In financing its real estate assets, the company uses nonrecourse mortgage
debt at the property level and seeks to fix interest rates on its mortgage
debt through long-term financings in order to take advantage of historically
low interest rates in the current environment.At April 30, 2013, the
company's overall weighted-average cost of debt remained the same at 5.02
percent, compared to April 30, 2012. Fixed-rate debt represented 83 percent of
total debt at April 30, 2013. The company's weighted-average life of its debt
increased to 6.8 years at April 30, 2013, from 6.0 years at April 30, 2012.

At April 30, 2013, the company had $261.0 million ($286.6 million at its
pro-rata share) in cash on its balance sheet and $353.2 million of available
capacity on its revolving bank line of credit.

Openings and Projects Under Construction
As of the end of the first quarter, Forest City had eight projects under
construction (seven of which are multifamily) at a total cost of $435.1
million ($350.9 million at the company's pro-rata share).

During the first quarter, the company opened the Continental, a 203-unit,
adaptive-reuse apartment community in downtown Dallas at the Mercantile Place
on Main development. First residents' move-ins occurred in March and the
property is 28 percent leased. Forest City now has more than 700 completed
rental apartments in downtown Dallas.

Also during the quarter, the company commenced construction of 2175 Market
Street in San Francisco. As previously referenced, this 88-unit apartment
community is the second multifamily asset – along with B2 BKLYN in Brooklyn –
in the company's $400 million strategic capital partnership with the Arizona
State Retirement System. 2175 Market Street is expected to be completed in
the third quarter of 2014.

Other projects currently under construction include the following:

In Brooklyn, work continues on B2 BKLYN, the first residential tower at
Atlantic Yards, adjacent to Barclays Center. The 32-story tower will have 363
units, half of which will be reserved for low, moderate and middle income
households. B2 BKLYN is being built using a modular construction process in
partnership with Skanska USA. Work on the foundation is underway. Production
of modules is expected to begin by mid-summer at a factory in the Brooklyn
Navy Yard, with delivery to the site beginning in the fall. The project is
expected to be completed in the second quarter of 2014.

At The Yards in Washington, D.C., construction continues on two projects,
Lumber Shed, a 32,000-square-foot, adaptive-reuse office building with
street-level retail , and Twelve12, an apartment/retail project with 218
rental apartments above a 50,000-square-foot Harris Teeter grocery store and a
28,000-square-foot Vida Fitness facility. Lumber Shed is expected to be
completed in the third quarter of 2013, and Twelve12 in the third quarter of
2014.

In Denver, work continues on Aster Conservatory Green (formerly Aster
Northfield) a 352-unit multifamily project and the first multifamily project
to be constructed north of I-70 at Stapleton.

In Dallas, construction continues on 3700M (formerly West Village) a 381-unit
multifamily project in the Uptown area of Dallas. Forest City and AIG Global
Real Estate will share ownership and fund the equity requirements for the
project. Initial phased opening of 3700M is expected in the third quarter of
2014.

In Boston, construction continues on 120 Kingston, a 240-unit apartment
building. The project is located on the Rose Kennedy Greenway near the border
of the city's financial district and Chinatown neighborhoods, and is expected
to be completed in the second quarter of 2014.

Construction also continues on 1111 Stratford (formerly Stratford Avenue), a
128-unit multifamily project in Stratford, Connecticut. Completion is
expected in late 2013.

Outlook
"We continue to execute our strategic initiatives of improving our balance
sheet, focusing on core products and markets, and pursuing operational
excellence," said LaRue. "We take pride in the progress we've made since
launching our strategic plan at the beginning of 2012. As we continue our
efforts, we expect to see some volatility in our results, quarter-to-quarter,
as we did in the first quarter this year. 

"We continue to believe strongly in the quality of our real estate portfolio,
our chosen core products and markets, our strategic direction as a company,
and the skill and creativity of our associates. While we remain cautious as
it relates to economic and geo-political factors outside our control, we are
confident in our ability to achieve solid 2013 results."

Corporate Description
Forest City Enterprises, Inc. is an NYSE-listed national real estate company
with $10.6 billion in total assets. The company is principally engaged in the
ownership, development, management and acquisition of commercial and
residential real estate and land throughout the United States. For more
information, visit www.forestcity.net.

Supplemental Package
Please refer to the Investor Relations section of the company's website at
www.forestcity.net for a Supplemental Package, which the company will also
furnish to the SEC on Form 8-K. This Supplemental Package includes operating
and financial information for the three months ended April 30, 2013 and 2012,
with reconciliations of non-GAAP financial measures, such as FFO, Operating
FFO, NOI, comparable NOI and results prepared using the pro-rata consolidation
method, to their most directly comparable GAAP financial measures.

FFO
The company uses FFO, along with net earnings (loss) to report its operating
results. The majority of the company's peers in the publicly traded real
estate industry are Real Estate Investment Trusts ("REITs") and report
operations using FFO as defined by the National Association of Real Estate
Investment Trusts ("NAREIT"). FFO provides supplemental information about the
company's operations. Although FFO is not presented in accordance with GAAP,
the company believes it is necessary to understand its business and operating
results, along with net earnings, the most comparable GAAP measure.

FFO is defined by NAREIT as net earnings excluding the following items: i)
gain (loss) on disposition of rental properties, divisions and other
investments (net of tax); ii) non-cash charges for real estate depreciation
and amortization; iii) impairment of depreciable real estate (net of tax); iv)
extraordinary items (net of tax); and v) cumulative or retrospective effect of
change in accounting principle (net of tax). Net earnings (loss), the most
comparable financial measure calculated in accordance with GAAP, is reconciled
to FFO in the table titled Reconciliation of Net Earnings (Loss) to FFO below
and in the company's Supplemental Package, which the company will also furnish
to the SEC on Form 8-K.

Operating FFO
Operating FFO is defined as FFO, as defined by NAREIT, adjusted to exclude: i)
activity related to our land held for divestiture (including impairment
charges); ii) impairment of Land Group projects; iii) write-offs of abandoned
development projects; iv) income recognized on state and federal historic and
other tax credits; v) gains or losses from extinguishment of debt; vi) change
in fair value of nondesignated hedges; vii) gains or losses on change in
control of interests; viii) the adjustment to recognize rental revenues and
rental expense using the straight-line method; ix) other non-recurring items;
x) the Nets pre-tax FFO; and xi) income taxes on FFO. The company believes its
presentation of FFO and Operating FFO provides important supplemental
information to its investors. Operating FFO may not be directly comparable to
similarly titled measures reported by other companies.

Pro-Rata Consolidation Method
This press release contains certain financial measures prepared in accordance
with GAAP under the full consolidation accounting method and certain financial
measures prepared in accordance with the pro-rata consolidation method
(non-GAAP). The company presents certain financial amounts under the pro-rata
method because it believes this information is useful to investors as this
method reflects the manner in which the company operates its business. In line
with industry practice, the company has made a large number of investments in
which its economic ownership is less than 100 percent as a means of procuring
opportunities and sharing risk. Under the pro-rata consolidation method, the
company presents its investments proportionate to its economic share of
ownership. Under GAAP, the full consolidation method is used to report
partnership assets and liabilities consolidated at 100 percent if deemed to be
under its control or if the company is deemed to be the primary beneficiary of
the variable interest entities ("VIE"), even if its ownership is not 100
percent. The company provides reconciliations from the full consolidation
method to the pro-rata consolidation method in the exhibits below and
throughout its Supplemental Package, which the company will also furnish to
the SEC on Form 8-K.

NOI
NOI, a non-GAAP measure, is defined as revenues (excluding straight-line rent
adjustments) less operating expenses (including depreciation and amortization
for non-real estate groups) plus interest income plus equity in earnings
(loss) of unconsolidated entities (excluding gain (loss) on disposition and
impairment of unconsolidated entities) plus interest expense, gain (loss) on
extinguishment of debt, depreciation and amortization of unconsolidated
entities. The company believes NOI provides management, as well as investors,
with additional information about the company's core business operations and,
along with earnings, is necessary to understand the business and operating
results. NOI may not be directly comparable to similarly titled measures
reported by other companies.

Safe Harbor Language
Statements made in this news release that state the company's or management's
intentions, hopes, beliefs, expectations or predictions of the future are
forward-looking statements. The company's actual results could differ
materially from those expressed or implied in such forward-looking statements
due to various risks, uncertainties and other factors. Risks and factors that
could cause actual results to differ materially from those in the
forward-looking statements include, but are not limited to, the impact of
current lending and capital market conditions on its liquidity, ability to
finance or refinance projects and repay its debt, the impact of the current
economic environment on its ownership, development and management of its
commercial real estate portfolio, general real estate investment and
development risks, using and investing in modular construction as a new
construction methodology, vacancies in its properties, further downturns in
the housing market, competition, illiquidity of real estate investments,
bankruptcy or defaults of tenants, anchor store consolidations or closings,
international activities, the impact of terrorist acts, risks of owning and
operating an arena, risks associated with an investment in a professional
sports team, its substantial debt leverage and the ability to obtain and
service debt, the impact of restrictions imposed by its credit facility and
senior debt, exposure to hedging agreements, the level and volatility of
interest rates, the continued availability of tax-exempt government financing,
the impact of credit rating downgrades, effects of uninsured or underinsured
losses, effects of a downgrade or failure of its insurance carriers,
environmental liabilities, conflicts of interest, risks associated with the
sale of tax credits, risks associated with developing and managing properties
in partnership with others, the ability to maintain effective internal
controls, compliance with governmental regulations, increased legislative and
regulatory scrutiny of the financial services industry, changes in federal,
state or local tax laws, volatility in the market price of its publicly traded
securities, inflation risks, litigation risks, cybersecurity risks and cyber
incidents, as well as other risks listed from time to time in the company's
SEC filings, including but not limited to, the company's annual and quarterly
reports.



Reconciliation of Net Earnings
(Loss) to FFO
The table below reconciles net earnings (loss), the most comparable GAAP
measure, to FFO, a non-GAAP measure.
                                     Three Months Ended April 30,
                                     2013                  2012
                                     (in thousands)
Net earnings (loss) attributable to  $             $         
Forest City Enterprises, Inc.        (19,368)             22,752
Depreciation and Amortization—Real   81,440                70,417
Estate Groups
Impairment of depreciable rental     —                     1,381
properties
Gain on disposition of rental        (14,537)              (7,914)
properties
Income tax expense (benefit)
adjustments — current and deferred
^(1)
Gain on disposition of rental        5,608                 3,052
properties
Impairment of depreciable rental     —                     (536)
properties
FFO                                  $            $         
                                     53,143                89,152
FFO Per Share - Diluted
Numerator (in thousands):
FFO                                  $            $         
                                     53,143                89,152
If-Converted Method (adjustments for
interest, net of tax):
 3.625% Puttable Senior Notes due   1,032                 1,110
2014
 5.00% Convertible Senior Notes due 382                   382
2016
 4.25% Convertible Senior Notes due 2,277                 2,277
2018
FFO for per share data               $            $         
                                     56,834                92,921
Denominator
Weighted average shares              184,821,775           169,206,594
outstanding—Basic
 Effect of stock options,
restricted stock and performance     1,208,603             937,272
shares
 Effect of convertible preferred    325,002               14,550,257
stock
 Effect of convertible debt         32,533,801            33,499,503
 Effect of convertible ClassA      3,646,755             3,646,755
Common Units
 Weighted average shares            222,535,936           221,840,381
outstanding - Diluted
FFO Per Share                        $           $         
                                      0.26                  0.42
(1) The following table provides
detail of Income Tax Expense
(Benefit):
                                     Three Months Ended April 30,
                                     2013                  2012
                                     (in thousands)
Current taxes
 Operating earnings                 $            $         
                                     (8,038)              (3,975)
 Gain on disposition of rental      7,686                 4,251
properties
Subtotal                         (352)                 276
Discontinued operations
 Operating earnings                 (14)                  70
 Gain on disposition of rental      1,426                 1,294
properties
Subtotal                         1,412                 1,364
 Total Current taxes                1,060                 1,640
Deferred taxes
 Operating earnings                 (6,472)               14,341
 Gain on disposition of rental      (8,398)               (4,769)
properties
 Subtotal                         (14,870)              9,572
 Discontinued operations
 Operating earnings                 10                    151
 Gain on disposition of rental      4,894                 2,276
properties
 Impairment of real estate          —                     (536)
Subtotal                             4,904                 1,891
 Total Deferred taxes               (9,966)               11,463
Grand Total                          $            $         
                                     (8,906)              13,103

Reconciliation of Operating FFO to FFO - Pro-Rata Consolidation
                                  Three Months Ended April 30,
                                  2013              2012              % Change
                                  (in thousands)
Portfolio Pre-tax FFO:
 Commercial Group                $         $        
                                  51,832           98,555
 Residential Group               23,844            31,939
 Arena                           (2,014)           1,749
 Land Group                      2,856             1,064
Adjustments to Portfolio Pre-Tax
FFO:
Net gain on land held for         (305)             —
divestiture activity
Abandoned development project     80                447
write-offs
Tax credit income                 (5,391)           (3,925)
Loss on extinguishment of         248               531
portfolio debt
Change in fair market value of    1,593             (4,521)
nondesignated hedges
Straight-line rent adjustments    (2,299)           (4,835)
Non-recurring land sales          (8,927)           (36,484)
Adjustments to Portfolio Pre-Tax  (15,001)          (48,787)
FFO subtotal
Portfolio Pre-tax Operating FFO   61,517            84,520            (27.2)%
 Corporate Group Pre-tax FFO     (34,908)          (26,610)
 Loss on extinguishment of debt  5,026             —
- Corporate Group
Operating FFO                     31,635            57,910            (45.4)%
 Nets Pre-tax FFO                (2,981)           (6,958)
 Add back adjustments to         15,001            48,787
Portfolio Pre-Tax FFOabove
 Add back loss on
extinguishment of debt -          (5,026)           —
Corporate Group
 Income tax benefit (expense)    14,514            (10,587)
on FFO
FFO                               $         $         (40.4)%
                                  53,143           89,152
Operating FFO Per Share -
Diluted
Numerator (in thousands):
Operating FFO                     $         $        
                                  31,635           57,910
If-Converted Method (adjustments
for interest, pre-tax):
 3.625% Puttable Senior Notes    1,685             1,812
due 2014
 5.00% Convertible Senior Notes  625               625
due 2016
 4.25% Convertible Senior Notes  3,719             3,719
due 2018
Operating FFO for per share data  $         $        
                                  37,664           64,066
Denominator
Weighted average shares           184,821,775       169,206,594
outstanding—Basic
 Effect of stock options,
restricted stock and performance  1,208,603         937,272
shares
 Effect of convertible           325,002           14,550,257
preferred stock
 Effect of convertible debt      32,533,801        33,499,503
 Effect of convertible ClassA   3,646,755         3,646,755
Common Units
 Weighted average shares         222,535,936       221,840,381
outstanding - Diluted
Operating FFO Per Share           $         $        
                                    0.17           0.29

Reconciliation of Net Operating Income (non-GAAP) to Net Earnings (Loss) (GAAP) (in
thousands)
                      Three Months Ended April 30, 2013                                       Three Months Ended April 30, 2012
                      Full          Less           Plus           Plus         Pro-Rata       Full          Less           Plus           Plus         Pro-Rata
                      Consolidation Noncontrolling Unconsolidated Discontinued Consolidation  Consolidation Noncontrolling Unconsolidated Discontinued Consolidation
                      (GAAP)        Interest       Investments at Operations   (Non-GAAP)     (GAAP)        Interest       Investments at Operations   (Non-GAAP)
                                                   Pro-Rata                                                                Pro-Rata
Net operating income  $   156,322 $         $        $       $  149,831   $  179,685  $         $        $         $   181,279
                                    6,704            —          213                                       3,967           —           5,561
Interest expense      (87,418)      (7,330)        (25,054)       (79)         (105,221)      (56,068)      (2,722)        (26,332)       (2,543)      (82,221)
Interest expense of
unconsolidated        (25,054)      —              25,054         —            —              (26,332)      —              26,332         —            —
entities
Loss on
extinguishment of     (5,238)       —              —              (36)         (5,274)        (719)         (188)          —              —            (531)
debt
Equity in (earnings)
loss of               (5,703)       (38)           9,333          —            3,668          (3,773)       (30)           10,260         —            6,517
unconsolidated
entities
Net gain (loss) on
land held for         452           —              (147)          —            305            —             —              —              —            —
divestiture activity
Net loss on land held
for divestiture
activity of           (147)         —              147            —            —              —             —              —              —            —
unconsolidated
entities
Net gain (loss) on
disposition of rental —             —              (1,510)        16,047       14,537         —             —              —              7,914        7,914
properties
Loss on disposition
of unconsolidated     (1,510)       —              1,510          —            —              —             —              —              —            —
entities
Impairment of
consolidated and      —             —              —              —            —              —             —              —              (1,381)      (1,381)
unconsolidated real
estate
Depreciation and
amortization—Real     (68,265)      (4,748)        (17,816)       (107)        (81,440)       (49,854)      (994)          (19,161)       (2,396)      (70,417)
Estate Groups (a)
Amortization of
mortgage procurement  (2,688)       (170)          (793)          —            (3,311)        (2,756)       (83)           (837)          (113)        (3,623)
costs
Depreciation and
amortization of       (18,609)      —              18,609         —            —              (19,998)      —              19,998         —            —
unconsolidated
entities
Straight-line rent    2,299         —              —              —            2,299          4,776         —              —              59           4,835
adjustment
Earnings (loss)       (55,559)      (5,582)        9,333          16,038       (24,606)       24,961        (50)           10,260         7,101        42,372
before income taxes
Income tax benefit    15,222        —              —              (6,316)      8,906          (9,848)       —              —              (3,255)      (13,103)
(expense)
Equity in earnings
(loss) of
unconsolidated
entities, including   5,850         38             (9,480)        —            (3,668)        3,773         30             (10,260)       —            (6,517)
impairment of
depreciable real
estate
Net loss on land held
for divestiture
activity of           (147)         —              147            —            —              —             —              —              —            —
unconsolidated
entities
                      5,703         38             (9,333)        —            (3,668)        3,773         30             (10,260)       —            (6,517)
Earnings (loss) from  (34,634)      (5,544)        —              9,722        (19,368)       18,886        (20)           —              3,846        22,752
continuing operations
Discontinued
operations, net of    15,560        5,838          —              (9,722)      —              4,887         1,041          —              (3,846)      —
tax
Net earnings (loss)   (19,074)      294            —              —            (19,368)       23,773        1,021          —              —            22,752
Noncontrolling
interests
Loss from continuing
operations
attributable to       5,544         5,544          —              —            —              20            20             —              —            —

noncontrolling
interests
Earnings from
discontinued
operations
attributable to      (5,838)       (5,838)        —              —            —              (1,041)       (1,041)        —              —            —

noncontrolling
interests
                      (294)         (294)          —              —            —              (1,021)       (1,021)        —              —            —
Net earnings (loss)
attributable to       $           $        $        $       $            $   22,752 $        $        $       $   
Forest City           (19,368)      —             —           —          (19,368)                      —            —            —          22,752
Enterprises, Inc.
Preferred dividends   (185)         —              —              —            (185)          (3,850)       —              —              —            (3,850)
Net earnings (loss)
attributable to       $           $        $        $       $                          $        $        $       $   
Forest City           (19,553)      —             —           —          (19,553)       $   18,902  —            —            —          18,902
Enterprises, Inc.
common shareholders
(a) Depreciation and  $          $         $          $                                    $        $          $         $   
amortization—Real     68,265        4,748          17,816         107          $   81,440  $   49,854 994           19,161         2,396        70,417
Estate Groups
 Depreciation
and                   1,230         —              —              —            1,230          620           —              —              —            620
amortization—Non-Real
Estate
 Total            $          $         $          $                                    $        $          $         $   
depreciation and      69,495        4,748          17,816         107          $   82,670  $   50,474 994           19,161         2,396        71,037
amortization

            Net Operating Income (in thousands)
            Three Months Ended April 30, 2013                        Three Months Ended April 30, 2012                       % Change
            Full          Less           Plus         Pro-Rata       Full          Less           Plus         Pro-Rata      Full          Pro-Rata
            Consolidation Noncontrolling Discontinued Consolidation  Consolidation Noncontrolling Discontinued Consolidation Consolidation Consolidation
            (GAAP)        Interest       Operations   (Non-GAAP)     (GAAP)        Interest       Operations   (Non-GAAP)    (GAAP)        (Non-GAAP)
Commercial
Group
Retail
Comparable  $  55,036    $   1,641   $     — $  53,395     $  54,904    $   1,773   $     — $  53,131    0.2 %         0.5 %
Total       62,044        1,158          —            60,886         59,493        2,076          1,572        58,989
Office
Buildings
Comparable  58,059        2,213          —            55,846         61,671        2,246          —            59,425        (5.9)%        (6.0)%
Total       58,722        2,362          —            56,360         63,504        2,408          1,681        62,777
Hotels      1,278         —              —            1,278          1,096         —              —            1,096
Land Sales  10,237        —              —            10,237         36,484        —              —            36,484
^(1)
Other^(2)   (10,018)      (424)          (7)          (9,601)        (5,709)       (217)          549          (4,943)
Total
Commercial
Group
Comparable  113,095       3,854          —            109,241        116,575       4,019          —            112,556       (3.0)%        (2.9)%
Total       122,263       3,096          (7)          119,160        154,868       4,267          3,802        154,403
Arena       4,746         2,271          —            2,475          (4,211)       (1,794)        —            (2,417)
Residential
Group
Apartments
Comparable  34,873        620            —            34,253         34,294        601            —            33,693        1.7 %         1.7 %
Total       37,380        738            220          36,862         37,171        774            1,759        38,156
Subsidized
Senior      3,895         44             —            3,851          4,400         39             —            4,361
Housing
Military    5,862         95             —            5,767          7,542         195            —            7,347
Housing
Other^(2)   (3,615)       106            —            (3,721)        (3,187)       143            —            (3,330)
Total
Residential
Group
Comparable  34,873        620            —            34,253         34,294        601            —            33,693        1.7 %         1.7 %
Total       43,522        983            220          42,759         45,926        1,151          1,759        46,534
Total
Rental
Properties
Comparable  147,968       4,474          —            143,494        150,869       4,620          —            146,249       (1.9)%        (1.9)%
Total       170,531       6,350          213          164,394        196,583       3,624          5,561        198,520
Land
Development 2,895         354            —            2,541          3,075         343            —            2,732
Group
The Nets    (2,981)       —              —            (2,981)        (6,958)       —              —            (6,958)
Corporate   (14,123)      —              —            (14,123)       (13,015)      —              —            (13,015)
Activities
Grand Total $ 156,322     $   6,704   $    213 $ 149,831      $ 179,685     $   3,967   $   5,561  $ 181,279
(1) Includes $8,927 and $36,484 of NOI generated from non-recurring land sales at full and pro-rata consolidation for the three months ended April 30,
2013 and 2012, respectively.
(2) Includes write-offs of abandoned development projects, non-capitalizable development costs and unallocated management and service company overhead,
net of tax credit income.



SOURCE Forest City Enterprises, Inc.

Website: http://www.forestcity.net
Contact: Robert O'Brien, Executive Vice President - Chief Financial Officer,
216-621-6060, or Jeff Linton, Senior Vice President - Corporate Communication,
216-621-6060