Forest City Reports Fiscal 2013 Second-Quarter and Year-to-Date Results

   Forest City Reports Fiscal 2013 Second-Quarter and Year-to-Date Results

- Results reflect impact of smaller under-construction pipeline, reduced
capitalized interest

- Continued progress on sustainable capital, non-core dispositions, focused
growth

- Operating portfolio shows solid fundamentals

PR Newswire

CLEVELAND, Sept. 5, 2013

CLEVELAND, Sept. 5, 2013 /PRNewswire/ --Forest City Enterprises, Inc. (NYSE:
FCEA and FCEB) today announced FFO, Operating FFO, net earnings/loss and
revenues for the year to date and the second quarter ended July 31, 2013.

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

FFO

Second-quarter FFO (funds from operations) was $78.7 million, compared with
$21.1 million in the second quarter of 2012. On a fully diluted, per-share
basis, second-quarter 2013 FFO was $0.37, compared with $0.11 in 2012.
Year-to-date FFO was $131.8 million, or $0.62 per share, compared with $110.2
million, or $0.53 per share, for the first six months of 2012.

For the quarter, positive factors impacting the year-over-year FFO variance
included lower losses on land held for divestiture of $45.4 million, increased
gains on extinguishment of debt of $26.0 million, and decreased write-offs of
abandoned development projects of $10.2 million. These were partially offset
by $13.9 million of reduced capitalized interest on projects under
construction and development, and the change in fair market value of
nondesignated derivatives which were marked to market through interest expense
of $11.6 million.

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

Second-quarter Operating FFO was $48.3 million, compared with $62.0 million in
the second quarter of 2012. Year-to-date Operating FFO was $80.6 million,
compared with $120.0 million for the first six months of 2012.

For the quarter, the primary factors impacting the Operating FFO variance from
the prior year included $13.9 million of reduced capitalized interest from
projects under construction and development, lower Operating FFO from
properties sold of $3.5 million, and reduced net operating income of $3.4
million due to vacancy at One Pierrepont Plaza, an office building in
Brooklyn. These negative factors were partially offset by increased NOI from
the mature portfolio (excluding One Pierrepont Plaza) of $5.0 million, ramp up
of new properties of $3.8 million, and lower interest expense on the mature
portfolio of $2.0 million.

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.

Net Loss

The second-quarter net loss attributable to Forest City Enterprises, Inc. was
$16.3 million, compared with a net loss of $43.7 million in the second quarter
of 2012. The net loss for the six months ended July 31, 2013, was $35.6
million, compared with a net loss of $21.0 million for the same period in
2012.

The second-quarter net loss attributable to Forest City Enterprises, Inc.
common shareholders was $16.3 million, or $0.08 per share, compared with a net
loss of $47.6 million, or $0.28 per share, in the same period in 2012. For the
first six months of 2013, the net loss attributable to common shareholders was
$35.8 million, or $0.19 per share, compared with a net loss of $28.7 million,
or $0.17 per share for the first six months of 2012. Per-share amounts are on
a fully diluted basis.

Additional explanations of factors impacting FFO, Operating FFO and net loss
for the second quarter and first six months of 2013 is included in the
company's Second Quarter 2013 Supplemental Package furnished to the SEC and
available on the company's website, www.forestcity.net.

Revenues

Second-quarter 2013 consolidated revenues from real estate operations were
$291.8 million, compared with $241.8 million for the comparable period in
2012. For the first six months of 2013, consolidated revenues from real estate
operations were $587.9 million, compared with $519.0 million for the first six
months of 2012.

Commentary

"While our mature portfolio continues to demonstrate solid fundamentals,
results for the quarter and six months reflect several factors that are
negatively impacting performance in the near term," said David J. LaRue,
Forest City president and chief executive officer. "The first is the ongoing
ramp up of two major assets, the Barclays Center arena and Westchester's Ridge
Hill, which has been slower than originally anticipated. While the arena has
received excellent market acceptance and performed well from a revenue
standpoint, we do not expect it to achieve stabilization until 2016, as we
have stated previously. We anticipate that Ridge Hill will achieve
stabilization within that same timeframe, but the current pace of lease-up at
the property has not met our expectations. Nonetheless, we remain confident in
the outlook for both properties, and we have teams focused on driving results
to achieve our targeted returns for both Barclays Center and Ridge Hill. 

"A second impact on our near-term operating margins is a function of our
strategic decision to reduce our development pipeline as part of building a
sustainable capital structure, reducing risk and improving our development
ratio. The timing of this transition to a lower level of development activity
impacts our results as overhead previously capitalized to active development
projects is now expensed. As we align our overhead to this new level of
activity, activate new entitled opportunities going forward, and gradually
increase development – within the guidelines we have established – we expect
improved operating margins.

"Our FFO results also reflect the impact of increased interest expense due to
reduced capitalized interest. This is primarily a result of the completion in
2012 and ongoing ramp up of several large development projects, including 8
Spruce Street, Barclays Center and Westchester's Ridge Hill. While those
projects were under construction, the related interest expense was capitalized
to the projects. With the projects now open and ramping up, less interest is
capitalized and, as a result, interest expense is increased. Through the first
six months of 2013, the increase in interest expense as a result of reduced
corporate capitalized interest was $29.6 million. For the balance of 2013, we
expect corporate capitalized interest to be comparable with the second half of
2012.

"Even with these near-term challenges, we continue to see solid fundamentals
in our operating portfolio, as reflected by growth in comparable property net
operating income in apartments and retail, as well as positive leasing spreads
and upticks in comparable occupancy across all of our core products. Net
operating income was down in office due to vacancy at One Pierrepont Plaza in
Brooklyn. Excluding that property, Comp NOI from our office portfolio was up
modestly. Notably, we are in the process of finalizing new leases for
approximately half of the space that was vacated over the past year at
Pierrepont, and we are actively marketing the remaining space to prospects.

"During the quarter, we continued to make strides on improving our debt
metrics and effectively managing maturities. In July, we terminated the put
rights associated with our outstanding Puttable Equity-Linked Notes due 2014,
which led to substantially all of the notes being put to us in exchange for
common stock. Also in July, we issued $300 million of 3.625 percent
Convertible Senior Notes due 2020, a portion of the proceeds were utilized to
redeem all of our outstanding 6.50 percent Senior Notes due 2017 (on August
23, 2013). During the quarter, we expanded our bank revolving credit facility
to $500 million, adding a new line bank and receiving increased commitments
from two existing line banks.

"We also continue to focus the company through the disposition of non-core
assets and assets in non-core markets. While dispositions are dilutive to our
overall results in the near term, we are able to use proceeds to continue to
de-lever and to invest in our mature portfolio and higher-value opportunities
in core markets. During the second quarter, we closed the sale of the Sheraton
Station Square, a hotel in Pittsburgh and the Higbee Building, an office
building in Cleveland. At the beginning of the third quarter, we completed
disposition of the Liberty Center complex in Pittsburgh. Notably, the Liberty
Center transaction included the sale of the Westin Convention Center Hotel,
the last hotel in our portfolio. Since the beginning of fiscal 2013, we've
completed eight dispositions, generating net cash proceeds of approximately
$120 million."

NOI, Occupancies and Rent

Overall comparable property NOI increased 1.1 percent during the second
quarter, compared with the same period in 2012, with increases of 7.1 percent
in apartments and 3.5 percent in retail, and a decrease of 4.7 percent in
office.

Comparable property NOI, defined as NOI from stabilized properties operated in
the three months ended July 31, 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).

Comparable office occupancies increased to 92.8 percent at July 31, 2013,
compared with 92.3 percent last year. On a rolling 12-month basis, rent per
square foot in new office leases increased 8.2 percent over expiring leases.

At July 31, 2013, comparable retail occupancies were 92.1 percent, up from
91.9 percent in 2012. Sales in the company's regional malls averaged $480 per
square foot on a rolling 12-month basis, up from $461 per square foot for the
same period in 2012, and up from $476 per square foot in the first quarter of
2013. Year-to-date comparable sales in the company's regional malls increased
1.9 percent, compared with results for the comparable period in 2012. In the
second quarter, new, same-space leases in the company's regional malls
increased 15.8 percent over prior rents on a rolling 12-month basis.

In the residential portfolio, comparable average occupancies year to date were
94.7 percent, up from 94.4 percent for the comparable period last year. For
the first six months of 2013, average monthly residential rents for the
company's comparable apartments rose to $1,290, a 3.9 percent increase
compared with $1,241 for the comparable period in 2012. Comparable average
rents in the company's core markets were $1,681, a 4.7 percent increase from
$1,605 for the same period in 2012.

Debt Maturities, Financing Activity and Liquidity

Since January 31, 2013, the company has addressed, through closed loans and
committed financings, $679.3 million at full consolidation ($820.3 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 $467.2 million ($452.7 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 July 31, 2013, the company's
overall weighted-average cost of debt decreased to 4.95 percent, compared to
5.05 percent at July 31, 2012. Fixed-rate debt represented 82 percent of total
debt at July 31, 2013. The company's weighted-average life of its debt
increased to 6.9 years at July 31, 2013, from 6.2 years at July 31, 2012.

At the end of the second quarter, the company had $340.4 million at the
company's pro-rata share ($306.9 million at full consolidation) in cash on its
balance sheet and $310.9 million of available capacity on its bank revolving
credit facility (net of a $132.1 million reserve, released in August, for
redemption of the company's outstanding Convertible Senior Notes due 2017).

Projects Under Construction

At the end of the second quarter, Forest City had nine projects under
construction at a total cost of $409.5 million at the company's pro-rata share
($494.7 million at full consolidation). This compares with $627.1 million at
the company's pro-rata share ($1.3 billion at full consolidation), at the end
of the second quarter of 2012. Of the nine projects under construction, eight
are apartment communities.

Two apartment projects currently under construction are part of Forest City's
strategic capital partnership with the Arizona State Retirement System. 2175
Market Street in San Francisco, which began construction in the first quarter
of this year, is an 88-unit apartment community expected to be completed in
the third quarter of 2014. B2 BKLYN, the first residential tower at Atlantic
Yards, 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. The project is expected
to open in thefourth quarter of 2014.

At The Yards in Washington, D.C., two projects are under construction, Lumber
Shed, a 32,000-square-foot, adaptive-reuse office building with street-level
retail, and Twelve12, an apartment/retail project with 218 units above
street-level retail. Lumber Shed, which is currently 80 percent leased, is
expected to be completed in the third quarter of 2013. Twelve12, where 90
percent of the retail component is leased or committed, is expected to open in
thethird quarter of 2014.

Also under construction are the following projects:

  oAster Conservatory Green, a 352-unit apartment community at Stapleton in
    Denver, expected to open in phases beginning in the third quarter of this
    year.
  o3700M, a 381-unit apartment community in Dallas. AIG Global Real Estate is
    the company's strategic capital partner for this project, expected to open
    in the second quarter of 2014.
  o120 Kingston, a 240-unit apartment community in Boston, with completion
    anticipated in the second quarter of 2014.
  o1111 Stratford, a 128-unit apartment community in Stratford, Connecticut.
    Phased opening is expected to begin in the third quarter of 2013.
  oWinchester Lofts, a 158-unit adaptive reuse of a historic industrial
    building in New Haven, Connecticut. The project is expected to be
    completed in the third quarter of 2014.

Outlook

"The fundamentals in our operating portfolio are strong. With the portfolio as
a solid foundation, we will continue to make progress on our key drivers of
operational excellence, improving the balance sheet and focusing on core
markets and products," said LaRue. "As we continue to execute against our plan
by investing in our mature portfolio and activating our inventory of
development opportunities, we are confident in our strategic direction and in
our ability to sustain and grow long-term value for our shareholders and other
constituents." 

Corporate Description

Forest City Enterprises, Inc. is an NYSE-listed national real estate company
with $10.7 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 and six months ended July 31, 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, at the
company's proportionate share: 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 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 market 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) participation payments to
ground lessors on refinancing of properties; x) other transactional items; xi)
the Nets pre-tax FFO; and xii) 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, gain
(loss) on land held for divestiture activity, 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 July 31,  Six Months Ended July 31,
                      2013          2012           2013          2012
                      (in thousands)
Net earnings (loss)
attributable to       $        $         $        $     
Forest City           (16,281)      (43,717)       (35,649)      (20,965)
Enterprises, Inc.
Depreciation and
Amortization—Real     104,963       72,493         186,403       142,910
Estate Groups
Impairment of
depreciable rental    8,055         3,559          8,055         4,940
properties
Gain on disposition   (26,153)      (16,107)       (40,690)      (24,021)
of rental properties
Income tax expense
(benefit) adjustments
— current and
deferred ^(1)
Gain on disposition   11,223        6,229          16,831        9,281
of rental properties
Impairment of
depreciable rental    (3,124)       (1,380)        (3,124)       (1,916)
properties
FFO                   $       $        $        $     
                      78,683        21,077         131,826       110,229
FFO Per Share -
Diluted
Numerator (in
thousands):
FFO                   $       $        $        $     
                      78,683        21,077         131,826       110,229
If-Converted Method
(adjustments for
interest, net of
tax):
3.625% Puttable       243           1,110          1,275         2,219
Senior Notes due 2014
5.000% Convertible    382           382            765           765
Senior Notes due 2016
4.250% Convertible    2,277         2,277          4,554         4,554
Senior Notes due 2018
3.625% Convertible    220           —              220           —
Senior Notes due 2020
FFO for per share     $       $        $        $     
data                  81,805        24,846         138,640       117,767
Denominator
Weighted average
shares                194,745,051   169,454,672    189,865,650   169,331,996
outstanding—Basic
Effect of stock
options, restricted   1,236,260     739,767        1,222,432     838,520
stock and performance
shares
Effect of convertible —             14,550,257     162,501       14,550,257
preferred stock
Effect of convertible 24,399,311    33,499,503     28,399,143    33,499,503
debt
Effect of convertible 3,646,755     3,646,755      3,646,755     3,646,755
ClassA Common Units
Weighted average
shares outstanding -  224,027,377   221,890,954    223,296,481   221,867,031
Diluted
FFO Per Share         $       $        $       $      
                        0.37        0.11         0.62        0.53
(1) The following table provides detail of Income Tax Expense (Benefit):
                      Three Months Ended July 31,  Six Months Ended July 31,
                      2013          2012           2013          2012
                      (in thousands)
Current taxes
Operating earnings    $        $        $        $     
                      (25,164)      (6,295)        (34,034)      (10,023)
Gain on disposition   4,915         (21,081)       12,601        (16,830)
of rental properties
 Subtotal        (20,249)      (27,376)       (21,433)      (26,853)
Discontinued
operations
Operating earnings    964           6,556          1,782         6,379
Gain on disposition   15,557        —              16,983        1,294
of rental properties
 Subtotal        16,521        6,556          18,765        7,673
Total Current taxes   (3,728)       (20,820)       (2,668)       (19,180)
Deferred taxes
Operating earnings    12,075        (8,669)        5,824         4,752
Gain on disposition   (4,953)       27,310         (13,351)      22,541
of rental properties
Impairment of
depreciable rental    (3,124)       (330)          (3,124)       (330)
properties
 Subtotal        3,998         18,311         (10,651)      26,963
Discontinued
operations
Operating earnings    (145)         (5,831)        (356)         (4,760)
Gain on disposition   (4,296)       —              598           2,276
of rental properties
Impairment of real    —             (1,050)        —             (1,586)
estate
 Subtotal        (4,441)       (6,881)        242           (4,070)
Total Deferred taxes  (443)         11,430         (10,409)      22,893
Grand Total           $       $        $        $      
                      (4,171)       (9,390)        (13,077)       3,713



Reconciliation of Operating FFO to FFO - Pro-Rata
Consolidation
                  Three Months Ended July          Six Months Ended July
                  31,                              31,
                  2013        2012        %        2013        2012        %
                                          Change                           Change
                  (in thousands)                   (in thousands)
Portfolio Pre-tax
FFO:
Commercial Group  $      $               $      $     
                    69,579   59,377           121,411   157,932
Residential Group 23,484      31,566               47,328      63,505
Arena             (1,554)     863                  (3,568)     2,612
Land Group        2,695       (48,606)             5,551       (47,542)
Adjustments to
Portfolio Pre-Tax
FFO:
Net loss on land
held for          6,459       51,852               6,154       51,852
divestiture
activity
Abandoned
development       2,696       12,906               2,776       13,353
project
write-offs
Tax credit income (5,978)     (7,956)              (11,369)    (11,881)
(Gain) loss on
extinguishment of (24,662)    1,313                (24,414)    1,844
portfolio debt
Change in fair
market value of   8,228       (3,340)              9,821       (7,861)
nondesignated
hedges
Net gain on
change in control (2,762)     (4,064)              (2,762)     (4,064)
of interests
Straight-line     (3,692)     (3,775)              (5,991)     (8,610)
rent adjustments
Participation     1,908       —                    2,498       —
payments
Non-outlot land   —           —                    (8,927)     (36,484)
sales
Adjustments to
Portfolio Pre-Tax (17,803)    46,936               (32,214)    (1,851)
FFO subtotal
Portfolio Pre-tax 76,401      90,136      (15.2)%  138,508     174,656     (20.7)%
Operating FFO
Corporate Group   (28,059)    (28,090)             (62,967)    (54,700)
Pre-tax FFO
Loss on
extinguishment of —           —                    5,026       —
debt - Corporate
Group
Operating FFO     48,342      62,046      (22.1)%  80,567      119,956     (32.8)%
Nets Pre-tax FFO  268         (8,272)              (2,713)     (15,230)
Add back
adjustments to    17,803      (46,936)             32,214      1,851
Portfolio Pre-Tax
FFO above
Add back loss on
extinguishment of —           —                    (5,026)     —
debt - Corporate
Group
Income tax
benefit (expense) 12,270      14,239               26,784      3,652
on FFO
FFO               $      $      273.3 %  $      $      19.6 %
                    78,683   21,077           131,826   110,229
Operating FFO Per
Share - Diluted
Numerator (in
thousands):
Operating FFO     $      $               $      $     
                    48,342   62,046            80,567  119,956
If-Converted
Method
(adjustments for
interest,
pre-tax):
3.625% Puttable
Senior Notes due  398         1,812                2,083       3,625
2014
5.00% Convertible
Senior Notes due  625         625                  1,250       1,250
2016
4.25% Convertible
Senior Notes due  3,719       3,719                7,438       7,438
2018
3.625%
Convertible       360         —                    360         —
Senior Notes due
2020
Operating FFO for $      $               $      $     
per share data      53,444   68,202            91,698  132,269
Denominator
Weighted average
shares            194,745,051 169,454,672          189,865,650 169,331,996
outstanding—Basic
Effect of stock
options,
restricted stock  1,236,260   739,767              1,222,432   838,520
and performance
shares
Effect of
convertible       —           14,550,257           162,501     14,550,257
preferred stock
Effect of         24,399,311  33,499,503           28,399,143  33,499,503
convertible debt
Effect of
convertible       3,646,755   3,646,755            3,646,755   3,646,755
ClassA Common
Units
Weighted average
shares            224,027,377 221,890,954          223,296,481 221,867,031
outstanding -
Diluted
Operating FFO Per $      $               $      $     
Share                                                 
                  0.24       0.31                0.41       0.60



Reconciliation of Net Operating Income (non-GAAP) to Net Earnings (Loss) (GAAP) (in
thousands)
                  Three Months Ended July 31, 2013                                        Three Months Ended July 31, 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     $ 158,507    $   7,382    $      —  $   4,284  $ 155,409     $ 133,746    $   3,516   $      —  $  10,557  $ 140,787
income
Interest expense  (91,723)      (7,081)        (24,219)       (1,515)      (110,376)      (59,354)      (2,674)        (23,966)       (3,624)      (84,270)
Interest expense
of unconsolidated (24,219)      —              24,219         —            —              (23,966)      —              23,966         —            —
entities
Gain (loss) on
extinguishment of 24,669        —              (7)            —            24,662         —             —              (1,313)        —            (1,313)
debt
Gain (loss) on
extinguishment of
debt of           (7)           —              7              —            —              (1,313)       —              1,313          —            —
unconsolidated
entities
Equity in
(earnings) loss
of unconsolidated (8,319)       844            9,903          —            740            25,612        (169)          (20,034)       —            5,747
entities,
including
impairment
Net gain (loss)
on land held for  (8,007)       (720)          828            —            (6,459)        (6,458)       3,507          (41,887)       —            (51,852)
divestiture
activity
Net gain (loss)
on land held for
divestiture       828           —              (828)          —            —              (41,887)      —              41,887         —            —
activity of
unconsolidated
entities
Net gain (loss)
on disposition of 4,932         —              —              21,221       26,153         —             —              16,107         —            16,107
rental properties
Gain (loss) on
disposition of    —             —              —              —            —              16,107        —              (16,107)       —            —
unconsolidated
entities
Impairment of
consolidated and  (8,055)       —              —              —            (8,055)        (460)         —              (390)          (2,709)      (3,559)
unconsolidated
real estate
Impairment of
unconsolidated    —             —              —              —            —              (390)         —              390            —            —
real estate
Depreciation and
amortization—Real (90,712)      (4,612)        (18,114)       (749)        (104,963)      (50,321)      (1,586)        (19,686)       (4,072)      (72,493)
Estate Groups (a)
Amortization of
mortgage          (2,669)       (182)          (771)          (19)         (3,277)        (3,361)       (146)          (813)          (325)        (4,353)
procurement costs
Depreciation and
amortization of   (18,885)      —              18,885         —            —              (20,499)      —              20,499         —            —
unconsolidated
entities
Straight-line     3,585         —              —              107          3,692          3,723         —              —              52           3,775
rent adjustment
Earnings (loss)
before income     (60,075)      (4,369)        9,903          23,329       (22,474)       (28,821)      2,448          (20,034)       (121)        (51,424)
taxes
Income tax        16,251        —              —              (12,080)     4,171          9,065         —              —              325          9,390
benefit (expense)
Net gain on
change in control 2,762         —              —              —            2,762          6,766         2,702          —              —            4,064
of interests
Equity in
earnings (loss)
of unconsolidated
entities,
including         7,491         (844)          (9,075)        —            (740)          16,275        169            (21,853)       —            (5,747)
impairment of
depreciable real
estate, gross of
tax
Net gain (loss)
on land held for
divestiture
activity of       828           —              (828)          —            —              (41,887)      —              41,887         —            —
unconsolidated
entities, gross
of tax
                  8,319         (844)          (9,903)        —            (740)          (25,612)      169            20,034         —            (5,747)
Earnings (loss)
from continuing   (32,743)      (5,213)        —              11,249       (16,281)       (38,602)      5,319          —              204          (43,717)
operations
Discontinued
operations, net   11,249        —              —              (11,249)     —              718           514            —              (204)        —
of tax
Net earnings      (21,494)      (5,213)        —              —            (16,281)       (37,884)      5,833          —              —            (43,717)
(loss)
Noncontrolling
interests
(Earnings) loss
from continuing
operations
attributable to   5,213         5,213          —              —            —              (5,319)       (5,319)        —              —            —
noncontrolling
interests, gross
of tax
(Earnings) loss
from discontinued
operations        —             —              —              —            —              (514)         (514)          —              —            —
attributable to
noncontrolling
interests
                  5,213         5,213          —              —            —              (5,833)       (5,833)        —              —            —
Net earnings
(loss)                                                        $                                                                  $     
attributable to   $  (16,281)  $      —  $      —  —            $  (16,281)   $ (43,717)   $      —  $      —  —            $ (43,717)
Forest City
Enterprises, Inc.
Preferred         —             —              —              —            —              (3,850)       —              —              —            (3,850)
dividends
Net earnings
(loss)
attributable to                                               $                                                                  $     
Forest City       $  (16,281)  $      —  $      —  —            $  (16,281)   $ (47,567)    $      —  $      —  —            $ (47,567)
Enterprises, Inc.
common
shareholders
(a) Depreciation
and amortization  $   90,712  $   4,612   $  18,114    $        $  104,963    $  50,321    $   1,586    $  19,686    $   4,072 $  72,493
- Real Estate                                                 749
Groups
 Depreciation
and amortization  1,145         —              —              —            1,145          576           —              —              —            576
- Non-Real Estate
Total                                                         $    
depreciation and  $   91,857  $   4,612   $  18,114    749          $  106,108   $  50,897    $   1,586    $  19,686    $   4,072 $  73,069
amortization



Reconciliation of Net Operating Income (non-GAAP) to Net Earnings (Loss) (GAAP) (in
thousands)
                      Six Months Ended July 31, 2013                                          Six Months Ended July 31, 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  $          $          $        $       $           $         $         $        $        $    
                      310,997      14,086          —          8,329      305,240       310,060       7,483           —         19,489      322,066
Interest expense      (177,974)     (14,411)       (49,273)       (2,761)      (215,597)      (114,244)     (5,396)        (50,298)       (7,345)      (166,491)
Interest expense of
unconsolidated        (49,273)      —              49,273         —            —              (50,298)      —              50,298         —            —
entities
Gain (loss) on
extinguishment of     19,431        —              (7)            (36)         19,388         (719)         (188)          (1,313)        —            (1,844)
debt
Gain (loss) on
extinguishment of
debt of               (7)           —              7              —            —              (1,313)       —              1,313          —            —
unconsolidated
entities
Equity in (earnings)
loss of               (14,022)      806            19,236         —            4,408          21,839        (199)          (9,774)        —            12,264
unconsolidated
entities
Net gain (loss) on
land held for         (7,555)       (720)          681            —            (6,154)        (6,458)       3,507          (41,887)       —            (51,852)
divestiture activity
Net gain (loss) on
land held for
divestiture activity  681           —              (681)          —            —              (41,887)      —              41,887         —            —
of unconsolidated
entities
Net gain (loss) on
disposition of rental 4,932         —              (1,510)        37,268       40,690         —             —              16,107         7,914        24,021
properties
Gain (loss) on
disposition of        (1,510)       —              1,510          —            —              16,107        —              (16,107)       —            —
unconsolidated
entities
Impairment of
consolidated and      (8,055)       —              —              —            (8,055)        (460)         —              (390)          (4,090)      (4,940)
unconsolidated real
estate
Impairment of
unconsolidated real   —             —              —              —            —              (390)         —              390            —            —
estate
Depreciation and
amortization—Real     (157,857)     (9,360)        (35,930)       (1,976)      (186,403)      (99,065)      (2,580)        (38,847)       (7,578)      (142,910)
Estate Groups (a)
Amortization of
mortgage procurement  (5,326)       (352)          (1,564)        (50)         (6,588)        (6,063)       (229)          (1,650)        (492)        (7,976)
costs
Depreciation and
amortization of       (37,494)      —              37,494         —            —              (40,497)      —              40,497         —            —
unconsolidated
entities
Straight-line rent    5,819         —              —              172          5,991          7,793         —              —              817          8,610
adjustment
Earnings (loss)       (117,213)     (9,951)        19,236         40,946       (47,080)       (5,595)       2,398          (9,774)        8,715        (9,052)
before income taxes
Income tax benefit    32,084        —              —              (19,007)     13,077         (110)         —              —              (3,603)      (3,713)
(expense)
Net gain on change in 2,762         —              —              —            2,762          6,766         2,702          —              —            4,064
control of interests
Equity in earnings
(loss) of
unconsolidated
entities, including   13,341        (806)          (18,555)       —            (4,408)        20,048        199            (32,113)       —            (12,264)
impairment of
depreciable real
estate, gross of tax
Net gain (loss) on
land held for
divestiture activity  681           —              (681)          —            —              (41,887)      —              41,887         —            —
of unconsolidated
entities, gross of
tax
                      14,022        (806)          (19,236)       —            (4,408)        (21,839)      199            9,774          —            (12,264)
Earnings (loss) from  (68,345)      (10,757)       —              21,939       (35,649)       (20,778)      5,299          —              5,112        (20,965)
continuing operations
Discontinued
operations, net of    27,777        5,838          —              (21,939)     —              6,667         1,555          —              (5,112)      —
tax
Net earnings (loss)   (40,568)      (4,919)        —              —            (35,649)       (14,111)      6,854          —              —            (20,965)
Noncontrolling
interests
(Earnings) loss from
continuing operations
attributable to       10,757        10,757         —              —            —              (5,299)       (5,299)        —              —            —
noncontrolling
interests, gross of
tax
(Earnings) loss from
discontinued
operations            (5,838)       (5,838)        —              —            —              (1,555)       (1,555)        —              —            —
attributable to
noncontrolling
interests
                      4,919         4,919          —              —            —              (6,854)       (6,854)        —              —            —
Net earnings (loss)
attributable to       $          $        $        $       $           $         $        $        $       $    
Forest City           (35,649)       —            —            —     (35,649)      (20,965)        —            —            —      (20,965)
Enterprises, Inc.
Preferred dividends   (185)         —              —              —            (185)          (7,700)       —              —              —            (7,700)
Net earnings (loss)
attributable to       $          $        $        $       $           $         $        $        $       $    
Forest City           (35,834)       —            —            —     (35,834)      (28,665)        —            —            —      (28,665)
Enterprises, Inc.
common shareholders
(a) Depreciation and  $          $         $          $       $           $        $         $          $       $    
amortization—Real     157,857      9,360         35,930         1,976      186,403       99,065        2,580         38,847        7,578       142,910
Estate Groups
 Depreciation and
amortization—Non-Real 2,375         —              —              —            2,375          1,196         —              —              —            1,196
Estate
Total depreciation    $          $         $          $       $           $         $         $          $       $    
and amortization      160,232      9,360         35,930         1,976      188,778       100,261       2,580         38,847        7,578       144,106



            Net Operating Income (in thousands)
            Three Months Ended July 31, 2013                         Three Months Ended July 31, 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  $   55,490 $    1,706 $       $   53,784  $   53,639 $    1,668 $       $   51,971 3.5 %         3.5 %
                                          —                                                       —
Total       59,159        1,257          —            57,902         59,428        2,079          1,472        58,821
Office
Buildings
Comparable  56,467        2,183          —            54,284         59,044        2,054          —            56,990        (4.4)%        (4.7)%
Total       63,430        3,182          2,554        62,802         61,691        2,091          3,976        63,576
Hotels      1,239         —              1,502        2,741          1,234         —              2,478        3,712
Land Sales  607           —              —            607            14            —              —            14
Other ^(1)  (12,175)      (75)           110          (11,990)       (11,783)      39             639          (11,183)
Total
Commercial
Group
Comparable  111,957       3,889          —            108,068        112,683       3,722          —            108,961       (0.6)%        (0.8)%
Total       112,260       4,364          4,166        112,062        110,584       4,209          8,565        114,940
Arena       6,054         2,878          —            3,176          (6,298)       (2,515)        —            (3,783)
Residential
Group
Apartments
Comparable  37,475        606            —            36,869         35,113        681            —            34,432        6.7 %         7.1 %
Total       41,409        764            —            40,645         34,346        751            1,880        35,475
Subsidized
Senior      3,769         161            —            3,608          4,712         165            —            4,547
Housing
Military    4,515         (10)           —            4,525          7,121         49             —            7,072
Housing
Other ^(1)  (6,739)       (2,000)        118          (4,621)        (993)         142            112          (1,023)
Total
Residential
Group
Comparable  37,475        606            —            36,869         35,113        681            —            34,432        6.7 %         7.1 %
Total       42,954        (1,085)        118          44,157         45,186        1,107          1,992        46,071
Total
Rental
Properties
Comparable  149,432       4,495          —            144,937        147,796       4,403          —            143,393       1.1 %         1.1 %
Total       161,268       6,157          4,284        159,395        149,472       2,801          10,557       157,228
Land
Development 10,311        1,225          —            9,086          6,394         715            —            5,679
Group
The Nets    268           —              —            268            (8,272)       —              —            (8,272)
Corporate   (13,340)      —              —            (13,340)       (13,848)      —              —            (13,848)
Activities
Grand Total $  158,507  $    7,382 $         $  155,409   $  133,746  $    3,516 $          $  140,787
                                         4,284                                                   10,557
(1) Includes write-offs of abandoned development projects, non-capitalizable development costs and unallocated management and service company overhead,
net of tax credit income.



            Net Operating Income (in thousands)
            Six Months Ended July 31, 2013                           Six Months Ended July 31, 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  $  111,292  $    3,348 $       $  107,944   $  108,801  $    3,442 $       $  105,359  2.3 %         2.5 %
                                          —                                                       —
Total       121,323       2,415          —            118,908        118,923       4,155          3,044        117,812
Office
Buildings
Comparable  111,203       4,385          —            106,818        117,751       4,294          —            113,457       (5.6)%        (5.9)%
Total       119,639       5,544          5,067        119,162        122,803       4,498          8,044        126,349
Hotels      1,391         —              2,628        4,019          1,582         —              3,227        4,809
Land Sales  10,844        —              —            10,844         36,498        —              —            36,498
^(1)
Other ^(2)  (22,422)      (499)          212          (21,711)       (17,632)      (177)          1,330        (16,125)
Total
Commercial
Group
Comparable  222,495       7,733          —            214,762        226,552       7,736          —            218,816       (1.8)%        (1.9)%
Total       230,775       7,460          7,907        231,222        262,174       8,476          15,645       269,343
Arena       10,800        5,149          —            5,651          (10,509)      (4,309)        —            (6,200)
Residential
Group
Apartments
Comparable  72,550        1,218          —            71,332         69,316        1,284          —            68,032        4.7 %         4.9 %
Total       78,768        1,502          220          77,486         71,529        1,525          3,639        73,643
Subsidized
Senior      7,664         205            —            7,459          9,111         204            —            8,907
Housing
Military    10,377        85             —            10,292         14,663        244            —            14,419
Housing
Other ^(2)  (10,417)      (1,894)        202          (8,321)        (4,284)       285            205          (4,364)
Total
Residential
Group
Comparable  72,550        1,218          —            71,332         69,316        1,284          —            68,032        4.7 %         4.9 %
Total       86,392        (102)          422          86,916         91,019        2,258          3,844        92,605
Total
Rental
Properties
Comparable  295,045       8,951          —            286,094        295,868       9,020          —            286,848       (0.3)%        (0.3)%
Total       327,967       12,507         8,329        323,789        342,684       6,425          19,489       355,748
Land
Development 13,206        1,579          —            11,627         9,469         1,058          —            8,411
Group
The Nets    (2,713)       —              —            (2,713)        (15,230)      —              —            (15,230)
Corporate   (27,463)      —              —            (27,463)       (26,863)      —              —            (26,863)
Activities
Grand Total $  310,997  $   14,086  $         $  305,240   $  310,060  $    7,483 $          $  322,066
                                         8,329                                                   19,489
(1) Includes $8,927 and $36,484 of NOI generated from certain non-outlot land sales at full and pro-rata consolidation for the six months ended July
31, 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