UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended January 31, 2010

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 1-4372

FOREST CITY ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

Ohio				34-0863886
(State or other jurisdiction of				(I.R.S. Employer
incorporation or organization)				Identification No.)
Terminal Tower		50 Public Square
Suite 1100		Cleveland, Ohio		44113
(Address of principal executive offices)				(Zip Code)
Registrant’s telephone number, including area code				216-621-6060

Securities registered pursuant to Section 12(b) of the Act:

		Name of each exchange on
Title of each class		which registered
Class A Common Stock ($.33 1/3 par value)		New York Stock Exchange
Class B Common Stock ($.33 1/3 par value)		New York Stock Exchange
$100,000,000 Aggregate Principal Amount of 7.375% Senior Notes Due 2034		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
YES  ý    NO o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
YES  o    NO ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES  ý    NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES  o    NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act: (Check one):

Large accelerated filer   ý		Accelerated filer   o		Non-accelerated filer   o		Smaller Reporting Company   o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES  o    NO ý

The aggregate market value of the outstanding common equity held by non-affiliates as of the last business day of the registrant’s most recently completed second fiscal quarter was $874,712,205.

The number of shares of registrant’s common stock outstanding on March 23, 2010 was 134,805,397 and 21,607,568 for Class A and Class B common stock, respectively.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held on June 16, 2010 are incorporated by reference into Part III to the extent described herein.

Forest City Enterprises, Inc. and Subsidiaries

Annual Report on Form 10-K
For The Year Ended January 31, 2010

Table of Contents

PART I
						Page
		Item 1.		Business			2
		Item 1A.		Risk Factors			7
		Item 1B.		Unresolved Staff Comments			20
		Item 2.		Properties			20
		Item 3.		Legal Proceedings			36
		Item 4.		Reserved			36
				Executive Officers of the Registrant			36
PART II
		Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			37
		Item 6.		Selected Financial Data			39
		Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			40
		Item 7A.		Quantitative and Qualitative Disclosures About Market Risk			88
		Item 8.		Financial Statements and Supplementary Data			92
		Item 9.		Changes in and Disagreements With Accountants on Accounting and Financial Disclosure			159
		Item 9A.		Controls and Procedures			159
		Item 9B.		Other Information			161
PART III
		Item 10.		Directors, Executive Officers and Corporate Governance			161
		Item 11.		Executive Compensation			161
		Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			161
		Item 13.		Certain Relationships and Related Transactions, and Director Independence			161
		Item 14.		Principal Accountant Fees and Services			161
PART IV
		Item 15.		Exhibits and Financial Statements Schedules			162
				Signatures			170
EX-10.7
EX-10.14
EX-10.16
EX-10.23
EX-10.24
EX-21
EX-23
EX-24A
EX-24B
EX-24C
EX-24D
EX-24E
EX-24F
EX-24G
EX-24H
EX-24I
EX-24J
EX-24K
EX-24L
EX-24M
EX-24.N
EX-31.1
EX-31.2
EX-32.1

PART I

Item 1. Business

Founded in 1920 and publicly traded since 1960, Forest City Enterprises, Inc. (with its subsidiaries, the “Company” or “Forest City”) is principally engaged in the ownership, development, management and acquisition of commercial and residential real estate properties in 27 states and the District of Columbia. At January 31, 2010, the Company had approximately $11.9 billion in consolidated assets, of which approximately $11.3 billion was invested in real estate, at cost. The Company’s core markets include Boston, the state of California, Chicago, Denver, the New York City/Philadelphia metropolitan area and the Greater Washington D.C./Baltimore metropolitan area. The Company has offices in Albuquerque, Boston, Chicago, Denver, London (England), Los Angeles, New York City, San Francisco, Washington, D.C. and the Company’s corporate headquarters in Cleveland, Ohio. The Company’s portfolio of real estate assets is diversified both geographically and among property types.

The Company operates through three primary strategic business units:

	•		Commercial Group, the Company’s largest strategic business unit, owns, develops, acquires and operates regional malls, specialty/urban retail centers, office and life science buildings, hotels and mixed-use projects.
	•		Residential Group owns, develops, acquires and operates residential rental properties, including upscale and middle-market apartments and adaptive re-use developments. Additionally, it develops for-sale condominium projects and also owns interests in entities that develop and manage military family housing.
	•		Land Development Group acquires and sells both land and developed lots to residential, commercial and industrial customers. It also owns and develops land into master-planned communities and mixed-use projects.

The Company has centralized the capital management, financial reporting and certain administrative functions of its business units. In most other respects, the strategic business units operate autonomously, with the Commercial Group and Residential Group each having their own development, acquisition, leasing, property and financial management functions. The Company believes this structure enables its employees to focus their expertise and to exercise the independent leadership, creativity and entrepreneurial skills appropriate for their particular business segment.

Segments of Business

The Company currently has five segments:

	•		Commercial Group
	•		Residential Group
	•		Land Development Group
	•		The New Jersey Nets (“The Nets”)
	•		Corporate Activities

Financial information about industry segments required by this item is included in Item 8 - Financial Statements and Supplementary Data and Note M - Segment Information.

Commercial Group

The Company has developed and/or acquired retail projects for more than 50 years and office and mixed-use projects for more than 30 years. The Commercial Group owns a diverse portfolio in both urban and suburban locations in 16 states and the District of Columbia. The Commercial Group targets densely populated markets where it uses its expertise to develop complex projects, often employing public and/or private partnerships. As of January 31, 2010, the Commercial Group owned interests in 98 completed properties, including 46 retail properties (approximately 15 million gross leasable square feet), 47 office properties (approximately 13.5 million gross leasable square feet) and 5 hotels (1,833 rooms).

The Company opened its first community retail center in 1948 and its first enclosed regional mall in 1962. Since then, it has developed regional malls and specialty retail centers. The specialty retail centers include urban retail centers, entertainment-based centers, community centers and power centers (collectively, “specialty retail centers”). As of January 31, 2010, the Commercial Group’s retail portfolio consisted of 17 regional malls with gross leasable area (“GLA”) of 8.1 million square feet and 29 specialty retail centers with a total GLA of 6.5 million square feet. The Commercial Group has two specialty retail centers under construction with GLA of 1.0 million square feet, one of which had a partial opening during the three months ended January 31, 2010 and the other had a grand opening in February 2010. The Commercial Group also had one regional mall under construction with GLA of 1.3 million square feet.

Regional malls are developed in collaboration with anchor stores that typically own their facilities as an integral part of the mall structure and environment but do not generate significant direct payments to the Company. In contrast, anchor stores at specialty retail centers generally are tenants under long-term leases that contribute significant rental payments to the Company.

While the Company continues to develop regional malls in strong markets, it has also pioneered the concept of bringing specialty retailing to urban locations previously ignored by major retailers. With high population densities and disposable income levels at or near those of the suburbs, urban development is proving to be economically advantageous for the Company, for the tenants who realize high sales per square foot and for the cities that benefit from the new jobs and taxes created in the urban locations.

In its office development activities, the Company is primarily a build-to-suit developer that works with tenants to meet their requirements. The Company’s office development has focused primarily on mixed-use projects in urban developments, often built in conjunction with hotels and/or retail centers or as part of a major office or life science campus. As a result of this focus on urban developments, the Company continues to concentrate future office and mixed-use developments largely in the New York City, Boston, Chicago, Washington, D.C., Albuquerque and Denver metropolitan areas.

The following tables provide lease expiration and significant tenant information as of January 31, 2010 relating to the Commercial Group’s retail properties.

Retail Lease Expirations as of January 31, 2010

																						AVERAGE
																						BASE
		NUMBER OF				SQUARE FEET				PERCENTAGE				NET				PERCENTAGE				RENT PER
EXPIRATION		EXPIRING				OF EXPIRING				OF TOTAL				BASE RENT				OF TOTAL				SQUARE FEET
YEAR		LEASES				LEASES (3)				LEASED GLA (1)				EXPIRING (2)				BASE RENT				EXPIRING (3)
2010			262				645,973				5.08	%		$	16,112,035				5.75	%		$	31.34
2011			343				1,205,116				9.48				28,533,272				10.19				28.70
2012			247				927,210				7.29				22,617,851				8.08				28.26
2013			236				1,024,225				8.05				25,244,672				9.01				27.71
2014			233				1,078,570				8.48				22,539,251				8.05				27.14
2015			170				770,188				6.06				18,011,467				6.43				27.33
2016			224				1,197,226				9.42				32,648,867				11.66				37.23
2017			149				1,014,189				7.98				22,302,602				7.96				25.85
2018			166				848,368				6.67				18,481,659				6.60				23.89
2019			111				984,031				7.74				21,270,318				7.59				23.35
Thereafter			100				3,020,665				23.75				52,308,693				18.68				20.55
Total			2,241				12,715,761				100.00	%		$	280,070,687				100.00	%		$	26.41

(1)		GLA = Gross Leasable Area.
(2)		Net base rent expiring is an operating statistic and is not comparable to rental revenue, a Generally Accepted Accounting Principles (“GAAP”) financial measure. The primary differences arise because net base rent is determined using the tenant’s contractual rental agreements at the Company’s ownership share of the base rental income from expiring leases as determined within the rent agreement and it does not include adjustments such as the impact of straight-line rent, amortization of above and below market in-place lease values and contingent rental payments (which are not reasonably estimable).
(3)		Square feet of expiring leases and average base rent per square feet are operating statistics that represent 100% of the square footage and base rental income per square foot from expiring leases.

Schedule of Significant Retail Tenants as of January 31, 2010

(Based on net base rent 1% or greater of the Company’s ownership share)

		NUMBER				LEASED				PERCENTAGE OF
		OF				SQUARE				TOTAL RETAIL
TENANT		LEASES				FEET				SQUARE FEET
AMC Entertainment, Inc.			6				515,097				4.05	%
Bass Pro Shops, Inc.			3				510,855				4.02
Regal Entertainment Group			5				381,461				3.00
TJX Companies			10				313,861				2.47
The Gap			24				305,756				2.40
The Home Depot			2				282,000				2.22
Dick’s Sporting Goods			5				257,486				2.02
Abercrombie & Fitch Stores, Inc.			30				223,567				1.76
The Limited			36				221,684				1.74
Footlocker, Inc.			37				142,848				1.12
Pathmark Stores, Inc.			2				123,500				0.97
American Eagle Outfitters			18				104,067				0.83
Subtotal			178				3,382,182				26.60
All Others			2,063				9,333,579				73.40
Total			2,241				12,715,761				100.00	%

The following tables provide lease expiration and significant tenant information as of January 31, 2010 relating to the Commercial Group’s office properties.

Office Lease Expirations as of January 31, 2010

																						AVERAGE
																						BASE
		NUMBER OF				SQUARE FEET				PERCENTAGE				NET				PERCENTAGE				RENT PER
EXPIRATION		EXPIRING				OF EXPIRING				OF TOTAL				BASE RENT				OF TOTAL				SQUARE FEET
YEAR		LEASES				LEASES (3)				LEASED GLA (1)				EXPIRING (2)				BASE RENT				EXPIRING (3)
2010			99				1,209,822				10.76	%		$	24,285,735				7.59	%		$	23.76
2011			69				734,187				6.53				17,207,639				5.37				26.25
2012			81				1,128,482				10.04				32,087,579				10.02				30.20
2013			75				1,179,469				10.49				27,184,470				8.49				24.52
2014			44				888,349				7.90				22,791,675				7.12				30.13
2015			12				258,801				2.30				4,693,752				1.47				19.17
2016			19				401,476				3.57				9,084,751				2.84				24.85
2017			18				265,156				2.36				7,953,622				2.48				32.43
2018			17				1,060,998				9.44				30,255,361				9.45				32.42
2019			17				689,141				6.13				16,450,908				5.14				25.77
Thereafter			36				3,427,531				30.48				128,174,483				40.03				39.18
Total			487				11,243,412				100.00	%		$	320,169,975				100.00	%		$	30.93

Schedule of Significant Office Tenants as of January 31, 2010

(Based on net base rent 2% or greater of the Company’s ownership share)

		LEASED				PERCENTAGE OF
		SQUARE				TOTAL OFFICE
TENANT		FEET				SQUARE FEET
City of New York			890,185				7.92	%
Millennium Pharmaceuticals, Inc.			628,934				5.59
U.S. Government			620,402				5.52
Morgan Stanley & Co.			444,685				3.96
Securities Industry Automation Corp.			433,971				3.86
Wellchoice, Inc.			392,514				3.49
JP Morgan Chase & Co.			385,254				3.43
Forest City Enterprises, Inc.(1)			366,786				3.26
Bank of New York			323,043				2.87
National Grid			254,034				2.26
Alkermes, Inc.			210,248				1.87
Clearbridge Advisors, LLC, a Legg Mason Company			193,249				1.72
Covington & Burling, LLP			160,565				1.43
Seyfarth Shaw, LLP			96,909				0.86
Subtotal			5,400,779				48.04
All Others			5,842,633				51.96
Total			11,243,412				100.00	%

(1)		All intercompany rental income is eliminated in consolidation.

Residential Group

The Company’s Residential Group owns, develops, acquires, leases and manages residential rental properties in 21 states and the District of Columbia. The Company has been engaged in apartment community development for over 50 years beginning in Northeast Ohio and gradually expanding nationally. Its residential portfolio includes middle-market apartments, upscale urban properties and adaptive re-use developments. The Residential Group develops for-sale condominium projects and also owns, develops and manages military family housing.

At January 31, 2010, the Residential Group’s operating portfolio consisted of 34,707 units in 119 properties in which Forest City has an ownership interest. In addition, the Company owns a residual interest in and manages 5 properties containing 741 units of syndicated senior citizen subsidized housing.

Land Development Group

The Company has been in the land development business since the 1930s. The Land Development Group acquires and sells raw land and sells fully-entitled developed lots to residential, commercial and industrial customers. The Land Development Group also owns and develops raw land into master-planned communities, mixed-use projects and other residential developments. As of January 31, 2010, the Company owned approximately 10,543 acres of undeveloped land (including 7,756 of saleable acres) for these commercial and residential development purposes. The Company has an option to purchase 1,474 acres of developable land at its Stapleton project in Denver, Colorado, and 5,731 acres of developable land at its Mesa del Sol project in Albuquerque, New Mexico. The Company has land development projects in 12 states.

Historically, the Land Development Group’s activities focused on land development projects in Northeast Ohio. Over time, the Land Development Group’s activities expanded to larger, more complex projects. The Land Development Group has extended its activities on a national basis, first in Arizona, and more recently in Illinois, North Carolina, Florida, Colorado, Texas, New Mexico, South Carolina, New York, Missouri and Washington. Land development and sales activities at the Company’s Stapleton project in Denver, Mesa del Sol project in Albuquerque and Central Station project in downtown Chicago are reported in the Land Development Group.

As of the end of fiscal 2009, the Company had purchased 1,461 acres at Stapleton, leaving a balance of 1,474 acres that may be acquired through an option held by the Company for additional development over the course of the next 8 years. Over and above the developable land that may be purchased through an option held by the Company, 1,116 acres of Stapleton are reserved for regional parks and open space, of which 683 acres are under development or have been completed. Aside from land development and sales activities, Stapleton currently has over 2 million square feet of retail space, approximately 350,000 square feet of office space, over 1.2 million of other commercial space and 484 apartment units in place.

Additionally, as of the end of fiscal 2009, the Company had purchased 3,175 acres at Mesa del Sol, of which 2,336 saleable acres are on hand as of January 31, 2010. This leaves a balance of 5,731 acres to be acquired for additional development over the course of the next 25 to 50 years. Aside from land development and sales activities, Mesa del Sol currently has 375,000 square feet of office space in place, which is included in the Commercial Group segment.

In addition to sales activities of the Land Development Group, the Company also sells land acquired by its Commercial Group and Residential Group adjacent to their respective projects. Proceeds and related costs from such land sales are included in the revenues and expenses of such groups.

The Nets

On August 16, 2004 the Company purchased an ownership interest in The Nets, a member of the National Basketball Association (“NBA”). The Company accounts for its investment on the equity method of accounting. Although the Company has a legal ownership interest of approximately 23% in The Nets, the Company recognized approximately 68%, 54% and 25% of the net loss for the years ended January 31, 2010, 2009 and 2008, respectively, because profits and losses are allocated to each member based on an analysis of the respective member’s claim on the net book equity assuming a liquidation at book value at the end of the accounting period without regard to unrealized appreciation (if any) in the fair value of The Nets.

The purchase of the interest in The Nets was the first step in the Company’s efforts to pursue development projects, which include a new entertainment arena complex and adjacent urban developments combining housing, offices, shops and public open space. The Nets segment is primarily comprised of and reports on the sports operations of the basketball team.

On December 15, 2009, the Company entered into a purchase agreement with an affiliate of Onexim Group, an international private investment fund, to create a strategic partnership. Pursuant to the terms of the agreement, entities to be formed by Onexim Group will invest $200,000,000 and make certain contingent funding commitments to acquire 80% of The Nets, 45% of the Arena project and the right to purchase up to 20% of the Atlantic Yards Development Company. The Company will retain a noncontrolling ownership interest in The Nets under the agreement. The closing of the strategic partnership requires certain consents and is subject to the satisfaction of various conditions. While the parties are proceeding in good faith to obtain the consents and satisfy the conditions, the Company cannot assure you that it will be successful.

Competition

The real estate industry is highly competitive in many of the markets in which the Company operates. There are numerous other developers, managers and owners of commercial and residential real estate and undeveloped land that compete with the Company nationally, regionally and/or locally, some of whom may have greater financial resources and market share than the Company. They compete with the Company for management and leasing opportunities, land for development, properties for acquisition and disposition, and for anchor stores and tenants for properties. The Company may not be able to successfully compete in these areas. In addition, competition could over-saturate any market; as a result, the Company may not have sufficient cash to meet the nonrecourse debt service requirements on certain of its properties. Although the Company may attempt to negotiate a restructuring with the mortgagee, it may not be successful, particularly in light of current credit markets, which could cause a property to be transferred to the mortgagee.

Tenants at the Company’s retail properties face continual competition in attracting customers from retailers at other shopping centers, catalogue companies, online merchants, warehouse stores, large discounters, outlet malls, wholesale clubs, direct mail and telemarketers. The Company’s competitors and those of its tenants could have a material adverse effect on the Company’s ability to lease space in its properties and on the rents it can charge or the concessions it can grant. This in turn could materially and adversely affect the Company’s results of operations and cash flows, and could affect the realizable value of its assets upon sale.

In addition to real estate competition, the Company faces competition related to the operation of The Nets. Specifically, The Nets are in competition with other major league sports, college athletics and other sports-related and non-sports related entertainment. If The Nets are not able to successfully manage this risk, they may incur additional losses resulting in an increase of the Company’s share of the total losses, which are allocated to each member based on an analysis of the respective member’s claim on the net book equity assuming a liquidation at book value at the end of the accounting period without regard to unrealized appreciation (if any) in the fair value of The Nets.

Number of Employees

The Company had 3,019 employees as of January 31, 2010, of which 2,706 were full-time and 313 were part-time.

Available Information

Forest City Enterprises, Inc. is an Ohio corporation and its executive offices are located at Suite 1100, 50 Public Square, Cleveland, Ohio 44113. The Company makes available, free of charge, on its website at www.forestcity.net, its annual, quarterly and current reports, including amendments to such reports, as soon as reasonably practicable after the Company electronically files such material with, or furnishes such material to, the Securities and Exchange Commission (“SEC”). The Company’s SEC filings can also be obtained from the SEC website at www.sec.gov.

The Company’s corporate governance guidelines including the Company’s Code of Ethical and Legal Conduct and committee charters are also available on the Company’s website at www.forestcity.net or in print to any stockholder upon written request addressed to Corporate Secretary, Forest City Enterprises, Inc., Suite 1360, 50 Public Square, Cleveland, Ohio 44113.

The information found on the Company’s website or the SEC website is not part of this Annual Report on Form 10-K.

Item 1A. Risk Factors

Lending and Capital Market Conditions May Negatively Impact Our Liquidity and Our Ability to Finance or Refinance Projects or Repay Our Debt

Ongoing economic conditions have negatively impacted the lending and capital markets, particularly for real estate. The capital markets have witnessed significant adverse conditions, including a substantial reduction in the availability of and access to capital. Financial institutions have significantly reduced their lending with an emphasis on lessening their exposure to real estate. Originations of new loans for commercial mortgage backed securities are extremely limited. Underwriting standards are being tightened with lenders requiring lower loan-to-values, increased debt service coverage levels and higher lender spreads. These market conditions, combined with the volatility in the financial markets, have made our ability to access capital challenging. We may not be able to obtain financings on terms comparable to those we secured prior to the economic downturn, and our financing costs may be significantly higher. These conditions have required us to curtail our investment in new development projects, which will negatively impact the future growth of our business. If these conditions do not improve, we may be required to further curtail our development, redevelopment or expansion projects and potentially write down our investments in some projects.

The adverse market conditions also impact our ability to, and the cost at which we, refinance our debt and obtain renewals or replacement of credit enhancement devices, such as letters of credit. While some of our current financings have extension options, some of those are contingent upon pre-determined underwriting qualifications. We cannot assure you that a given project will meet the required conditions to qualify for such extensions. Our inability to extend, repay or refinance our debt when it becomes due, including upon a default or acceleration event, could result in foreclosure on the properties pledged as collateral thereof, which could result in a loss of our full investment in such properties. While we are actively working to refinance or extend our maturing debt obligations, we cannot assure you that we will be able to do so on a timely basis. Moreover, we expect refinancing to occur on less favorable terms. Lenders in these market conditions will typically require a higher rate of interest, repayment of a portion of the outstanding principal or additional equity infusions to the project.

Of our total outstanding long-term debt of approximately $8.6 billion at January 31, 2010, approximately $850.1 million becomes due in fiscal 2010, approximately $1.1 billion becomes due in fiscal 2011 and approximately $1.3 billion becomes due in fiscal 2012. If these amounts cannot be refinanced, extended or repaid from other sources, such as sales of properties or new equity, our cash flow may not be sufficient to repay all maturing debt. This risk is heightened with respect to our revolving credit facility, which is due February 1, 2012, and our senior debt, as we have limited sources to fund such repayment.

Our total outstanding debt listed above is inclusive of credit enhanced mortgage debt we have obtained for a number of our properties to back the bonds that are issued by a government authority and then remarketed to the public. Generally, the credit enhancement, such as a letter of credit, expires prior to the terms of the underlying mortgage debt and must be renewed or replaced to prevent acceleration of the underlying mortgage debt. We treat credit enhanced debt as maturing in the year the credit enhancement expires. However, if the credit enhancement is called upon due to the inability to remarket the bonds due to reasons including but not limited to market dislocation or a downgrade in the credit rating of the credit enhancer, the bonds would not only incur additional interest expense, but it could accelerate the debt maturity to as early as 90 days after the advancement occurs.

With the turmoil in the lending and capital markets, an increasing number of financial institutions have sought federal assistance or failed. The failure of these financial institutions has further reduced the number of lenders willing to lend to commercial real estate entities and may further hinder our ability to access capital. In the event of a failure of a lender or counterparty to a financial contract, obligations under the financial contract might not be honored and many forms of assets may be at risk and may not be fully returned to us. Should a financial institution, particularly a construction lender, fail to fund its committed amounts when contractually obligated to do so, our ability to meet our obligations and complete projects could be adversely impacted.

Finally, while we recently extended our revolving credit facility, giving us access to liquidity through February 1, 2012, it was with reduced maximum borrowing levels, increased restrictions on our use of cash and requirements for the permanent reductions of borrowings available under the credit facility as we generate net proceeds from specified transactions. As a result, our access to liquidity has decreased as it relates to borrowing available under the credit facility, which may adversely affect the future growth of our business and our ability to continue our development activities.

The Ownership, Development and Management of Real Estate is Exceptionally Challenging in the Current Economic Environment and We Do Not Anticipate Meaningful Improvement in the Near Term

The current economic environment has significantly impacted the real estate industry in which we operate. Unemployment continues to remain at historically high levels and consumer confidence is low, putting downward pressure on retail sales. Commercial and residential tenants are experiencing financial pressure and are placing increasing demands on landlords to provide rent concessions. The financial hardships on some tenants are so severe that they are leaving the market entirely or declaring bankruptcy, creating increased vacancy rates in residential and commercial properties. The tenants with good financial condition are considering offers from the many competing projects in the real estate industry and are waiting for the best possible deal before committing.

The stress currently experienced by the real estate industry is particularly evident in our development projects. Projects that had good demographics and strong retailer interest to support a retail development when we began construction are experiencing leasing difficulty. When the financial markets began experiencing volatility in the second half of 2008 and the economy entered a recession, we experienced a corresponding volatility in retailer interest for our projects. Retailers continue to express interest in the projects, but are reluctant to commit to any new stores in the current economic environment. As a result of this difficult environment, we have delayed anticipated openings, reduced anticipated rents and incurred additional carrying costs, all resulting in an adverse impact on our business. If we are unable to or decide not to proceed with certain projects, we could incur write-offs, some of which could be substantial, which would have an adverse affect on our results of operations.

Until the economy, in general, and the real estate industry in particular, experience sustained improvement, fundamentals for the development and management of real estate will remain weak and we will continue to operate in a difficult environment with no near-term expectation of improvement.

We Are Subject to Risks Associated with Investments in Real Estate

The value of, and our income from, our properties may decline due to developments that adversely affect real estate generally and those developments that are specific to our properties. General factors that may adversely affect our real estate portfolios if they were to occur or continue include:

	•		Increases in interest rates;
	•		The availability of financing, including refinancings or extensions of our nonrecourse mortgage debt maturities, on acceptable terms, or at all;
	•		A decline in the economic conditions at the national, regional or local levels, particularly a decline in one or more of our primary markets;
	•		Decreases in rental rates;
	•		An increase in competition for tenants and customers or a decrease in demand by tenants and customers;
	•		The financial condition of tenants, including the extent of bankruptcies and defaults;
	•		An increase in supply or decrease in demand of our property types in our primary markets;
	•		Declines in consumer confidence and spending during an economic recession that adversely affect our revenue from our retail centers;
	•		Lingering declines in housing markets that adversely affect our revenue from our land segment;
	•		The adoption on the national, state or local level of more restrictive laws and governmental regulations, including more restrictive zoning, land use or environmental regulations and increased real estate taxes.; and
	•		Opposition from local community or political groups with respect to the development, construction or operations at a particular site.

In addition, there are factors that may adversely affect the value of specific operating properties or result in reduced income or unexpected expenses. As a result, we may not achieve our projected returns on the properties and we could lose some or all of our investments in those properties. Those operational factors include:

	•		Adverse changes in the perceptions of prospective tenants or purchasers of the attractiveness of the property;
	•		Our inability to provide adequate management and maintenance;
	•		The investigation, removal or remediation of hazardous materials or toxic substances at a site;
	•		Our inability to collect rent or other receivables;
	•		Vacancies and other changes in rental rates;
	•		An increase in operating costs that cannot be passed through to tenants;
	•		Introduction of a competitor’s property in or in close proximity to one of our current markets;
	•		Underinsured or uninsured natural disasters, such as earthquakes, floods or hurricanes; and
	•		Our inability to obtain adequate insurance.

We Are Subject to Real Estate Development Risks

In addition to the risks described above, which could also adversely impact our development projects, our development projects are subject to significant risks relating to our ability to complete our projects on time and on budget. Factors that may result in a development project exceeding budget, being delayed or being prevented from completion include:

	•		An inability to secure sufficient financing on favorable terms, or at all, including an inability to refinance or extend construction loans;
	•		Construction delays or cost overruns, either of which may increase project development costs;
	•		An increase in commodity costs;
	•		An inability to obtain zoning, occupancy and other required governmental permits and authorizations;
	•		An inability to secure tenants or anchors necessary to support the project;
	•		Failure to achieve or sustain anticipated occupancy or sales levels; and
	•		Threatened or pending litigation.

Some of these development risks have been magnified given current adverse industry and market conditions. See also “Lending and Capital Market Conditions May Negatively Impact Our Liquidity and Our Ability to Finance or Refinance Projects or Repay Our Debt” and “The Ownership, Development and Management of Real Estate is Exceptionally Challenging in the Current Economic Environment and We Do Not Anticipate Meaningful Improvement in the Near Term” above. If any of these events occur, we may not achieve our projected returns on properties under development and we could lose some or all of our investments in those properties. In addition, the lead time required to develop, construct and lease-up a development property has substantially increased, which could adversely impact our projected returns or result in a termination of the development project.

In the past, we have elected not to proceed, or have been prevented from proceeding, with certain development projects, and we anticipate that this may occur again from time to time in the future. In addition, development projects may be delayed or terminated because a project partner or prospective anchor withdraws or a third party challenges our entitlements or public financing.

We periodically serve as either the construction manager or the general contractor for our development projects. The construction of real estate projects entails unique risks, including risks that the project will fail to conform to building plans, specifications and timetables. These failures could be caused by labor strikes, weather, government regulations and other conditions beyond our control. In addition, we may become liable for injuries and accidents occurring during the construction process that are underinsured.

In the construction of new projects, we generally guarantee the lender of the construction loan the lien-free completion of the project. This guaranty is recourse to us and places the risk of construction delays and cost overruns on us. In addition, from time to time, we guarantee our construction obligations to major tenants and public agencies. These types of guarantees are released upon completion of the project, as defined. We may have significant expenditures in the future in order to comply with our lien-free completion obligations which could have an adverse impact on our cash flows.

Examples of projects that face these and other development risks include the following:

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Brooklyn Atlantic Yards. We are in the process of developing Brooklyn Atlantic Yards, which will cost approximately $4.9 billion over the anticipated construction and development period. This long-term mixed-use project in downtown Brooklyn is expected to feature a state of the art sports and entertainment arena for The Nets basketball team, a member of the NBA. The acquisition and development of Brooklyn Atlantic Yards has been formally approved by the required state governmental authorities and final documentation of the transactions was executed on December 23, 2009. Tax exempt financing for the arena also closed on December 23, 2009, the proceeds of which will become available upon the satisfaction of certain conditions, including vacant possession of the project site. In the event these conditions are not satisfied by December 17, 2010, the bonds that were issued for the arena financing will be subject to mandatory redemption. Construction activities have commenced for (i) the potential removal, remediation or other activities to address environmental contamination at, on, under or emanating to or from the land, (ii) demolition of existing structures on the developments site, and (iii) infrastructure and other work necessary for the development of the arena and other elements of the greater Atlantic Yards development project. As a result of prior litigation, this project has experienced delays and may continue to experience further delays.

			There is also the potential for increased costs and further delays to the project as a result of (i) increasing construction costs, (ii) scarcity of labor and supplies, (iii) a delay in satisfying the conditions of the tax-exempt financing and the potential mandatory redemption of the bonds issued for the arena financing, or the availability of additional needed financing, (iv) our or our partners’ inability or failure to meet required equity contributions, (v) increasing rates for financing, (vi) loss of arena sponsorships and related revenues, (vii) our inability to meet certain agreed upon deadlines for the development of the project and (viii) other potential litigation seeking to enjoin or prevent the project or litigation for which there may not be insurance coverage. The development of Brooklyn Atlantic Yards is being done in connection with the proposed move of The Nets to the planned arena. The arena itself (and its plans) along with any movement of the team is subject to approval by the NBA, which we may not receive. In addition, as applicable contractual and other deadlines and decision points approach, we could have less time and flexibility to plan and implement our responses to these or other risks to the extent that any of them may actually arise.
			If any of the foregoing risks were to occur we may: (i) not be able to develop Brooklyn Atlantic Yards to the extent intended or at all resulting in a potential write-off of our investment, (ii) be required to repay the City and/or State of New York amounts previously advanced under public subsidies, plus penalties if applicable, and (iii) be in default of our non-recourse mortgages on the project. Together, costs associated with the risks outlined in (i) through (iii) in this paragraph, are approximately $590 million and could have a significant, material adverse effect on our business, cash flows and results of operations. Even if we were able to continue with the development, or a portion thereof, we would likely not be able to do so as quickly as originally planned, would be likely to incur additional costs and may need to write-off a portion of the development.
	•		Ridge Hill. Retail leasing at our Ridge Hill development project in Westchester County, New York has progressed slowly. Currently, the center is 28% leased and, recently, Saks Fifth Avenue cancelled their non-binding letter of intent and informed us that they no longer intend to lease space in this center. The retail center is under construction and subject to a completion guaranty to the lender. As of January 31, 2010, we have $164,000,000 invested in Ridge Hill. The projected phased opening dates may be impacted by the final outcome of our continuous leasing effort which in turn could increase our equity requirements into this project.
	•		Military Family Housing. We have formed various partnerships, primarily with the United States Department of the Navy, to engage in the ownership, redevelopment and operation of United States Navy and United States Marine Corps military family housing communities. We have also formed a joint venture partnership to redevelop and operate, under a ground lease, United States Air Force military family communities. These military family communities, comprising approximately 12,000 housing units, are located primarily on the islands of Oahu and Kauai, Hawaii; Chicago, Illinois; Seattle, Washington; and Colorado Springs, Colorado. The number of military personnel stationed in these areas could be affected by future Defense Base Closure and Realignment Commission decisions. In addition, our partnerships are at risk that future federal appropriations for Basic Allowance for Housing (“BAH”) and local market adjustments to BAH do not keep pace with increases in property taxes, utilities and other operating expenses for the partnerships. We are also subject to the risk of competition from other local housing options available to the military personnel.

The Proposed Transaction With an Affiliate of Onexim Group to Create a Strategic Partnership for our Brooklyn Atlantic Yards Project May Not Close, Which Could Subject Us to Liquidity Risks.

The purchase agreement that we executed with an affiliate of Onexim Group requires certain consents and is subject to the satisfaction of various conditions. Both parties continue to negotiate reasonably and in good faith to obtain the consents, including consent from the NBA, and satisfy the conditions. However, the proposed transaction may not close and the strategic partnership for the Brooklyn Atlantic Yards project may not be realized. If the strategic partnership is not formed and the $200 million investment is not received, we could have heightened exposure to the development risks associated with the Brooklyn Atlantic Yards project. See “We Are Subject to Real Estate Development Risks” above for a more thorough discussion of the risks associated with the Brooklyn Atlantic Yards project and the impact those risks may pose to us.

In addition, if the proposed transaction does not close, we could also have heightened exposure to the risks associated with our investment in the Nets. See “The Investment in a Professional Sports Franchise Involves Certain Risks and Future Losses Are Expected for The Nets” below for a more thorough discussion of the risks associated with that investment and the impact those risks may pose to us.

Vacancies in Our Properties May Adversely Affect Our Results of Operations and Cash Flows

Our results of operations and cash flows may be adversely affected if we are unable to continue leasing a significant portion of our commercial and residential real estate portfolio. We depend on commercial and residential tenants in order to collect rents and other charges. The current economic downturn has impacted our tenants on many levels. The downturn has been particularly hard on commercial retail tenants, many of whom have announced store closings and scaled backed growth plans. If we are unable to sustain historical occupancy levels in our real estate portfolio, our cash flows and results of operations could be adversely affected. Our ability to sustain our current and historical occupancy levels also depends on many other factors that are discussed elsewhere in this section.

The Downturn in the Housing Market May Continue to Adversely Affect Our Results of Operations and Cash Flows

The United States has experienced a sustained downturn in the residential real estate markets, resulting in a decline in both the demand for, and price of, housing. We depend on homebuilders and condominium builders and buyers, which have been significantly and adversely impacted by the housing downturn, to continue buying our land held for sale. We do not know how long the downturn in the housing market will last or if we will ever see a return to previous conditions. Our ability to sustain our historical sales levels of land depends in part on the strength of the housing market and will continue to suffer until conditions improve. Our failure to successfully sell our land held for sale on favorable terms would adversely affect our results of operations and cash flows and could result in a write-down in the value of our land due to impairment.

Our Properties and Businesses Face Significant Competition

The real estate industry is highly competitive in many of the markets in which we operate. Competition could over-saturate any market, as a result of which we may not have sufficient cash to meet the nonrecourse debt service requirements on certain of our properties. Although we may attempt to negotiate a restructuring with the mortgagee, we may not be successful, particularly in light of current credit markets, which could cause a property to be transferred to the mortgagee.

There are numerous other developers, managers and owners of commercial and residential real estate and undeveloped land that compete with us nationally, regionally and/or locally, some of whom have greater financial resources and market share than us. They compete with us for management and leasing opportunities, land for development, properties for acquisition and disposition, and for anchor stores and tenants for properties. We may not be able to successfully compete in these areas.

Tenants at our retail properties face continual competition in attracting customers from retailers at other shopping centers, catalogue companies, online merchants, warehouse stores, large discounters, outlet malls, wholesale clubs, direct mail and telemarketers. Our competitors and those of our tenants could have a material adverse effect on our ability to lease space in our properties and on the rents we can charge or the concessions we can grant. This in turn could materially and adversely affect our results of operations and cash flows, and could affect the realizable value of our assets upon sale.

We May Be Unable to Sell Properties to Avoid Losses or to Reposition Our Portfolio

Because real estate investments are relatively illiquid, we may be unable to dispose of underperforming properties and may be unable to reposition our portfolio in response to changes in national, regional or local real estate markets. As a result, we may incur operating losses from some of our properties and may have to write-down the value of some properties due to impairment.

Our Results of Operations and Cash Flows May Be Adversely Affected by Tenant Defaults or Bankruptcy

Our results of operations and cash flows may be adversely affected if a significant number of our tenants are unable to meet their obligations or do not renew their leases, or if we are unable to lease a significant amount of space on economically favorable terms. In the event of a default by a tenant, we may experience delays in payments and incur substantial costs in recovering our losses.

Based on tenants with net base rent of greater than 2% of total net base rent as of January 31, 2010, our five largest office tenants by leased square feet are the City of New York, Millennium Pharmaceuticals, Inc., U.S. Government, Morgan Stanley & Co and Securities Industry Automation, Corp. Given our large concentration of office space in New York City, we may be adversely affected by the consolidation or failure of certain financial institutions. Based on tenants with net base rent of greater than 1% of total net base rent as of January 31, 2010, our five largest retail tenants by leased square feet are AMC Entertainment, Inc., Bass Pro Shops, Inc., Regal Entertainment Group, TJX Companies and The Gap.

Our ability to collect rents and other charges will be even more difficult if the tenant is bankrupt or insolvent. While our tenants have from time to time filed for bankruptcy or been involved in insolvency proceedings, there has been an increased number of bankruptcies with the current recession. We may be required to expense costs associated with leases of bankrupt tenants and may not be able to replace future rents for tenant space rejected in bankruptcy proceedings which could adversely affect our properties. The current bankruptcies of some of our tenants, and the potential bankruptcies of other tenants in the future could make it difficult for us to enforce our rights as lessor and protect our investment.

We May Be Negatively Impacted by the Consolidation or Closing of Anchor Stores

Our retail centers are generally anchored by department stores or other “big box” tenants. We could be adversely affected if one or more of these anchor stores were to consolidate, close or enter into bankruptcy. Given the current economic environment for retailers, we are at a heightened risk that an anchor store could close or enter into bankruptcy. Although non-tenant anchors generally do not pay us rent, they typically contribute towards common area maintenance and other expenses. Even if we own the anchor space, we may be unable to re-lease this area or to re-lease it on comparable terms. The loss of these revenues could adversely affect our results

of operations and cash flows. Further, the temporary or permanent loss of any anchor likely would reduce customer traffic in the retail center, which could lead to decreased sales at other retail stores. Rents obtained from other tenants may be adversely impacted as a result of co-tenancy clauses in their leases. One or more of these factors could cause the retail center to fail to meet its debt service requirements. The consolidation of anchor stores may also negatively affect current and future development and redevelopment projects.

We May Be Negatively Impacted by International Activities

While our international activities are currently limited in scope and generally focused on evaluating various international opportunities, we may expand our international efforts subjecting us to risks that could have an adverse effect on the projected returns on the international projects or our overall results of operations. We have limited experience in dealing with foreign economies or cultures, changes in political environments or changes in exchange rates for foreign currencies. In addition, international activities would subject us to a wide variety of local laws and regulations governing these foreign properties with which we have no prior experience. We may experience difficulties in managing international properties, including the ability to successfully integrate these properties into our business operations and the ambiguities that arise when dealing with foreign cultures. Each of these factors may adversely affect our projected returns on foreign investments, which could in turn have an adverse effect on our results of operations.

Terrorist Attacks and Other Armed Conflicts May Adversely Affect Our Business

We have significant investments in large metropolitan areas, including New York City/Philadelphia, Boston, Washington D.C./Baltimore, Denver, Chicago, Los Angeles and San Francisco, which face a heightened risk related to terrorism. Some tenants in these areas may choose to relocate their business to less populated, lower-profile areas of the United States that are not as likely to be targets of terrorist activity. This could result in a decrease in the demand for space in these areas, which could increase vacancies in our properties and force us to lease our properties on less favorable terms. In addition, properties in our real estate portfolio could be directly impacted by future terrorist attacks which could cause the value of our property and the level of our revenues to significantly decline.

Future terrorist activity, related armed conflicts or prolonged or increased tensions in the Middle East could cause consumer confidence and spending to decrease and adversely affect mall traffic. Additionally, future terrorist attacks could increase volatility in the United States and worldwide financial markets. Any of these occurrences could have a significant impact on our revenues, costs and operating results.

The Investment in a Professional Sports Franchise Involves Certain Risks and Future Losses Are Expected for The Nets

On August 16, 2004, we purchased a legal ownership interest in The Nets. This interest is reported on the equity method of accounting and as a separate segment. The purchase of the interest in The Nets was the first step in our efforts to pursue development projects at Brooklyn Atlantic Yards. For a more thorough discussion of the risks associated with the Brooklyn Atlantic Yards project see “We Are Subject to Real Estate Developments Risks.”

The Nets are currently operating at a loss and are projected to continue to operate at a loss at least as long as they remain in New Jersey. Such operating losses will need to be funded by the contribution of equity. Even if we are able to relocate The Nets to Brooklyn, there can be no assurance that The Nets will be profitable in the future. Losses are currently allocated to each member of the limited liability company that owns The Nets based on an analysis of the respective member’s claim on the net book equity assuming a liquidation at book value at the end of each accounting period without regard to unrealized appreciation (if any) in the fair value of The Nets. Therefore, losses allocated to us have exceeded our legal ownership interest and may become significant. While the allocation of losses would be reduced in future periods if our proposed transaction with an affiliate of Onexim Group closes, we cannot assure you that the proposed transaction will occur. See “The Proposed Transaction With an Affiliate of Onexim Group to Create a Strategic Partnership for Our Brooklyn Atlantic Yards Project May Not Close, Which Could Subject Us to Liquidity Risks.”

Our investment in The Nets is subject to a number of operational risks, including risks associated with operating conditions, competitive factors, economic conditions and industry conditions. If The Nets are not able to successfully manage the following operational risks, The Nets may incur additional operating losses:

	•		Competition with other major league sports, college athletics and other sports-related and non sports-related entertainment;
	•		Dependence on competitive success of The Nets;
	•		Fluctuations in the amount of revenues from advertising, sponsorships, concessions, merchandise, parking and season and other ticket sales, which are tied to the popularity and success of The Nets and general economic conditions;
	•		Uncertainties of increases in players’ salaries;

	•		Dependence on talented players;
	•		Risk of injuries to key players;
	•		Uncertainties relating to labor relations in professional sports, including the expiration of the NBA’s current collective bargaining agreement, or a player or management initiated stoppage after such expiration; and
	•		Dependence on television and cable network, radio and other media contracts.

Our High Debt Leverage May Prevent Us from Responding to Changing Business and Economic Conditions

Our high degree of debt leverage could limit our ability to obtain additional financing or adversely affect our liquidity and financial condition. We have a high ratio of debt (consisting of nonrecourse mortgage debt, a revolving credit facility and senior and subordinated debt) to total market capitalization. This ratio was approximately 83.1% and 92.2% at January 31, 2010 and January 31, 2009, respectively, based on our long-term debt outstanding at that date and the market value of our outstanding Class A common stock and Class B common stock. Our high leverage may adversely affect our ability to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes and may make us more vulnerable to a prolonged downturn in the economy.

Nonrecourse mortgage debt is collateralized by individual completed rental properties, projects under development and undeveloped land. We do not expect to repay a substantial amount of the principal of our outstanding debt prior to maturity or to have available funds from operations sufficient to repay this debt at maturity. As a result, it will be necessary for us to refinance our debt through new debt financings or through equity offerings. If interest rates are higher at the time of refinancing, our interest expense would increase, which would adversely affect our results of operations and cash flows. Cash flows and our liquidity would also be adversely affected if we are required to repay a portion of the outstanding principal or contribute additional equity to obtain the refinancing. In addition, in the event we were unable to secure refinancing on acceptable terms, we might be forced to sell properties on unfavorable terms, which could result in the recognition of losses and could adversely affect our financial position, results of operations and cash flows. If we were unable to make the required payments on any debt collateralized by a mortgage on one of our properties or to refinance that debt when it comes due, the mortgage lender could take that property through foreclosure and, as a result, we could lose income and asset value as well harm our Company reputation. See also “Market Conditions May Negatively Impact Our Liquidity and Our Ability to Finance or Refinance Projects or Repay Our Debt” above.

Our Corporate Debt Covenants Could Adversely Affect Our Financial Condition

We have guaranteed the obligations of our wholly-owned subsidiary, Forest City Rental Properties Corporation, or FCRPC, under the FCRPC Second Amended and Restated Credit Agreement entered into on January 29, 2010, among FCRPC and the banks named therein, and amended on March 4, 2010. This credit agreement and related guaranty (collectively “Credit Agreement”) impose a number of restrictive covenants on us, including a prohibition on certain consolidations and mergers, limitations on the amount of debt, guarantees and property liens that we may incur, restrictions on the pledging of ownership interests in subsidiaries, limitations on the use of cash sources, a prohibition on our common stock dividends through the maturity date and limitations on our ability to pay dividends on our preferred stock. The Credit Agreement also requires us to maintain a specified minimum liquidity, debt service and cash flow coverage ratios and consolidated shareholders’ equity.

The Indentures under which our senior and subordinated debt is issued also contain certain restrictive covenants, including, among other things, limitations on our ability to incur debt, pay dividends, acquire our common or preferred stock, permit liens on our properties or dispose of assets.

While we are in compliance with all of our covenants at January 31, 2010, we cannot guarantee our future compliance with any of the covenants. The failure to comply with any of our financial or non-financial covenants could result in an event of default and accelerate some or all of our indebtedness, which could have a material adverse effect on our financial condition. Our ability to comply with these covenants will depend upon our future economic performance. These covenants may adversely affect our ability to finance our future operations or capital needs or to engage in other business activities that may be desirable or advantageous to us.

We Are Subject to Risks Associated With Hedging Agreements

We will often enter into interest rate swap agreements and other interest rate hedging contracts, including caps and floors to manage our exposure to interest rate volatility or to satisfy lender requirements. While these agreements may help reduce our exposure to interest rate volatility, they also expose us to additional risks, including a risk that the counterparties will not perform. Moreover, there can be no assurance that the hedging agreement will qualify for hedge accounting or that our hedging activities will have the desired beneficial impact on our results of operations. Should we desire to terminate a hedging agreement there could be significant costs and cash requirements involved to fulfill our initial obligation under the hedging agreement.

When a hedging agreement is required under the terms of a mortgage loan it is often a condition that the hedge counterparty agree to certain conditions which include, but are not limited to, maintaining a specified credit rating. With the current volatility in the financial markets there is a reduced pool of eligible counterparties that can meet or are willing to agree to the required conditions which has resulted in an increased cost for hedging agreements. This could make it difficult to enter into hedging agreements in the future. Additionally, if the counterparty failed to satisfy any of the required conditions and we were unable to renegotiate the required conditions with the lender or find an alternative counterparty for such hedging agreements, we could be in default under the loan and the lender could take that property through foreclosure.

Our bonds that are structured in a total rate of return swap arrangement (“TRS”) have maturities reflected in the year the bond matures as opposed to the TRS maturity date, which is likely to be earlier. Throughout the life of the TRS, if the property is not performing at designated levels or due to changes in market conditions, the property may be obligated to make collateral deposits with the counterparty. At expiration of the TRS arrangement, the property must pay or is entitled to the difference, if any, between the fair market value of the bond and par. If the property does not post collateral or make the counterparty whole at expiration, the counterparty could foreclose on the property.

Any Rise in Interest Rates Will Increase Our Interest Costs

Including the effect of the protection provided by the interest rate swaps, caps and long-term contracts in place as of January 31, 2010, a 100 basis point increase in taxable interest rates (including properties accounted for under the equity method and corporate debt and the effect of interest rate floors) would increase the annual pre-tax interest cost for the next 12 months of our variable-rate debt by approximately $9,407,000 at January 31, 2010. Although tax-exempt rates generally move in an amount that is smaller than corresponding changes in taxable interest rates, a 100 basis point increase in tax-exempt rates (including properties accounted for under the equity method) would increase the annual pre-tax interest cost for the next 12 months of our tax-exempt variable-rate debt by approximately $9,890,000 at January 31, 2010. The analysis above includes a portion of our taxable and tax-exempt variable-rate debt related to construction loans for which the interest expense is capitalized. For variable rate bonds, during times of market illiquidity, a premium interest rate could be charged on the bonds to successfully market them which would result in even higher interest rates.

If We Are Unable to Obtain Tax-Exempt Financings, Our Interest Costs Would Rise

We regularly utilize tax-exempt financings and tax increment financings, which generally bear interest at rates below prevailing rates available through conventional taxable financing. We cannot assure you that tax-exempt bonds or similar government subsidized financing will continue to be available to us in the future, either for new development or acquisitions, or for the refinancing of outstanding debt. Our ability to obtain these financings or to refinance outstanding debt on favorable terms could significantly affect our ability to develop or acquire properties and could have a material adverse effect on our results of operations, cash flows and financial position.

Downgrades in Our Credit Rating Could Adversely Affect Our Performance

We are periodically rated by nationally recognized rating agencies. Any downgrades in our credit rating could impact our ability to borrow by increasing borrowing costs as well as limiting our access to capital. In addition, a downgrade could require us to post cash collateral and/or letters of credit to cover our self-insured property and liability insurance deductibles, surety bonds, energy contracts and hedge contracts which would adversely affect our cash flow and liquidity.

Our Business Will Be Adversely Impacted Should an Uninsured Loss or a Loss in Excess of Insurance Limits Occur

We carry comprehensive insurance coverage for general liability, property, flood, earthquake and rental loss (and environmental insurance on certain locations) with respect to our properties within insured limits and policy specifications that we believe are customary for similar properties. There are, however, specific types of potential losses, including environmental loss or losses of a catastrophic nature, such as losses from wars, terrorism, hurricanes, earthquakes or other natural disasters, that in our judgment, cannot be purchased at a commercially viable cost or whereby such losses, if incurred, would exceed the insurance limits procured. In the event of an uninsured loss or a loss in excess of our insurance limits, or a failure by an insurer to meet its obligations under a policy, we could lose both our invested capital in, and anticipated profits from, the affected property and could be exposed to liabilities with respect to that which we thought we had adequate insurance to cover. Any such uninsured loss could materially and adversely affect our results of operations, cash flows and financial position. Under our current policies, which expire October 31, 2010, our properties are insured against acts of terrorism, subject to various limits, deductibles and exclusions for acts of war and terrorist acts involving biological, chemical and nuclear damage. Once these policies expire, we may not be able to obtain adequate terrorism coverage at a commercially reasonable cost. In addition, our insurers may not be able to maintain reinsurance sufficient to cover any losses we may incur as a result of terrorist acts. As a result, our insurers’ ability to provide future insurance for any damages that we sustain as a result of a terrorist attack may be reduced.

Additionally, most of our current project mortgages require special all-risk/special form property insurance, and we cannot assure you that we will be able to obtain policies that will satisfy lender requirements. We are self-insured as to the first $500,000 of commercial general liability coverage per occurrence. The first $250,000 of property damage per occurrence is self-insured through our wholly-owned captive insurance company that is licensed, regulated and capitalized in accordance with state of Arizona statutes. While we believe that our self-insurance reserves are adequate, we cannot assure you that we will not incur losses that exceed these self insurance reserves.

We May Be Adversely Impacted by Environmental Matters

We are subject to various foreign, federal, state and local environmental protection and health and safety laws and regulations governing, among other things: the generation, storage, handling, use and transportation of hazardous materials; the emission and discharge of hazardous materials into the ground, air or water; and the health and safety of our employees. In some instances, federal, state and local laws require abatement or removal of specific hazardous materials such as asbestos-containing materials or lead-based paint, in the event of demolition, renovations, remodeling, damage or decay. Laws and regulations also impose specific worker protection and notification requirements and govern emissions of and exposure to hazardous or toxic substances, such as asbestos fibers in the air. We incur costs to comply with such laws and regulations, but we cannot assure you that we have been or will be at all times in complete compliance with such laws and regulations.

Under certain environmental laws, an owner or operator of real property may become liable for the costs of the investigation, removal and remediation of hazardous or toxic substances at that property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of the hazardous or toxic substances. Certain contamination is difficult to remediate fully and can lead to more costly design specifications, such as a requirement to install vapor barrier systems, or a limitation on the use of the property and could preclude development of a site at all. The presence of hazardous substances on a property could also result in personal injury, contribution or other claims by private parties. In addition, persons who arrange for the disposal or treatment of hazardous or toxic wastes may also be liable for the costs of the investigation, removal and remediation of those wastes at the disposal or treatment facility, regardless of whether that facility is owned or operated by that person.

We have invested, and will in the future, invest in properties that are or have been used for or are near properties that have had industrial purposes in the past. As a result, our properties are or may become contaminated with hazardous or toxic substances. We will incur costs to investigate and possibly to remediate those conditions and it is possible that some contamination will remain in or under the properties even after such remediation. While we investigate these sites and work with all relevant governmental authorities to meet their standards given our intended use of the property, it is possible that there will be new information identified in the future that indicates there are additional unaddressed environmental impacts, there could be technical developments that will require new or different remedies to be undertaken in the future, and the regulatory standards imposed by governmental authorities could change in the future.

As a result of the above, the value of our properties could decrease, our income from developed properties could decrease, our projects could be delayed, we could become obligated to third parties pursuant to indemnification agreements or guarantees, our expense to remediate or maintain the properties could increase, and our ability to successfully sell, rent or finance our properties could be adversely affected by environmental matters in a manner that could have a material adverse effect on our financial position, cash flows or results of operation. While we maintain insurance for certain environmental matters, we cannot assure you that we will not incur losses related to environmental matters, including losses that may materially exceed any available insurance. See “Our Business Will Be Adversely Impacted Should an Uninsured Loss or a Loss in Excess of Insurance Limits Occur.”

We Are Controlled by the Ratner, Miller and Shafran Families, Whose Interests May Differ from Those of Other Shareholders

Our authorized common stock consists of Class A common stock and Class B common stock. The economic rights of each Class of common stock are identical, but the voting rights differ. The Class A common stock, voting as a separate Class, is entitled to elect 25% of the members of our board of directors, while the Class B common stock, voting as a separate Class, is entitled to elect the remaining 75% of our board of directors. On all other matters, the Class A common stock and Class B common stock vote together as a single Class, with each share of our Class A common stock entitled to one vote per share and each share of Class B common stock entitled to ten votes per share. At February 26, 2010, members of the Ratner, Miller and Shafran families, which include members of our current board of directors and executive officers, owned 84.4% of the Class B common stock. RMS, Limited Partnership (“RMS LP”), which owned 83.9% of the Class B common stock, is a limited partnership, comprised of interests of these families, with seven individual general partners, currently consisting of:

	•		Samuel H. Miller, Treasurer of Forest City and Co-Chairman of our Board of Directors;
	•		Charles A. Ratner, President and Chief Executive Officer of Forest City and a Director;
	•		Ronald A. Ratner, Executive Vice President of Forest City and a Director;

	•		Brian J. Ratner, Executive Vice President of Forest City and a Director;
	•		Deborah Ratner Salzberg, President of Forest City Washington, Inc., a subsidiary of Forest City, and a Director;
	•		Joan K. Shafran, a Director; and
	•		Abraham Miller.

Charles A. Ratner, James A. Ratner, Executive Vice President of Forest City and a Director, and Ronald A. Ratner are brothers. Albert B. Ratner, Co-Chairman of our Board of Directors, is the father of Brian J. Ratner and Deborah Ratner Salzberg and is first cousin to Charles A. Ratner, James A. Ratner, Ronald A. Ratner, Joan K. Shafran, and Bruce C. Ratner, Executive Vice President of Forest City and a Director. Samuel H. Miller was married to Ruth Ratner Miller (now deceased), a sister of Albert B. Ratner, and is the father of Abraham Miller. General partners holding 60% of the total voting power of RMS LP determine how to vote the Class B common stock held by RMS LP. No person may transfer his or her interest in the Class B common stock held by RMS LP without complying with various rights of first refusal.

In addition, at February 26, 2010, members of these families collectively owned 10.8% of the Class A common stock. As a result of their ownership in Forest City, these family members and RMS LP have the ability to elect a majority of our board of directors and to control the management and policies of Forest City. Generally, they may also determine, without the consent of our other shareholders, the outcome of any corporate transaction or other matters submitted to our shareholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets and prevent or cause a change in control of Forest City.

Even if these families or RMS LP reduce their level of ownership of Class B common stock below the level necessary to maintain a majority of the voting power, specific provisions of Ohio law and our Amended Articles of Incorporation may have the effect of discouraging a third party from making a proposal to acquire us or delaying or preventing a change in control or management of Forest City without the approval of these families or RMS LP.

RMS Investment Corp. Provides Property Management and Leasing Services to Us and Is Controlled By Some of Our Affiliates

We paid approximately $423,000 and $307,000 as total compensation during the years ended January 31, 2010 and 2009, respectively, to RMS Investment Corp. for property management and leasing services. RMS Investment Corp. is controlled by members of the Ratner, Miller and Shafran families, some of whom are our directors and executive officers.

RMS Investment Corp. manages and provides leasing services to our Cleveland-area specialty retail center, Golden Gate, which has 361,000 square feet. The current rate of compensation for this management service is 4% of all rental income, plus a leasing fee of generally 3% to 4% of rental income of all new or renewed leases. Management believes these fees are comparable to those other management companies would charge to non-affiliated third parties.

Our Directors and Executive Officers May Have Interests in Competing Properties, and We Do Not Have Non-Compete Agreements with Certain of Our Directors and Executive Officers

Under our current policy, no director or executive officer, including any member of the Ratner, Miller and Shafran families, is allowed to invest in a competing real estate opportunity without first obtaining the approval of the audit committee of our board of directors. We do not have non-compete agreements with any director, officer or employee, other than Charles Ratner, James Ratner, Ronald Ratner and Bruce Ratner who entered into non-compete agreements on November 9, 2006. Upon leaving Forest City, any other director, officer or employee could compete with us. Notwithstanding our policy, we permit our principal shareholders who are officers and employees to develop, expand, operate or sell, independent of our business, certain commercial, industrial and residential properties that they owned prior to the implementation of our policy. As a result of their ownership of these properties, a conflict of interest may arise between them and Forest City, which may not be resolved in our favor. The conflict may involve the development or expansion of properties that may compete with our properties and the solicitation of tenants to lease these properties.

We are Subject to Recapture Risks Associated with Sale of Tax Credits

As part of our financing strategy, we have financed several real estate projects through limited partnerships with investment partners. The investment partner, typically a large, sophisticated institution or corporate investor, invests cash in exchange for a limited partnership interest and special allocations of expenses and the majority of tax losses and credits associated with the project. These partnerships typically require us to indemnify, on an after-tax or “grossed up” basis, the investment partner against the failure to receive or the loss of allocated tax credits and tax losses. Due to the economic structure and related economic substance, we have consolidated each of these entities in our consolidated financial statements.

We believe that all the necessary requirements for qualification for such tax credits have been and will be met and that our investment partners will be able to receive expense allocations associated with these properties. However, we cannot assure you that this will, in fact, be the case or that we will not be required to indemnify our investment partners on an after-tax basis for these amounts. Any indemnification payment could have a material adverse effect on our results of operations and cash flows.

We Face Risks Associated with Developing and Managing Properties in Partnership with Others

We use partnerships and limited liability companies, or LLCs, to finance, develop or manage some of our real estate investments. Acting through our wholly-owned subsidiaries, we typically are a general partner or managing member in these partnerships or LLCs. There are, however, instances in which we do not control or even participate in management or day-to-day operations of these properties. The use of partnerships and LLCs involve special risks associated with the possibility that:

	•		Another partner or member may have interests or goals that are inconsistent with ours;
	•		A general partner or managing member may take actions contrary to our instructions, requests, policies or objectives with respect to our real estate investments; or
	•		A partner or a member could experience financial difficulties that prevent it from fulfilling its financial or other responsibilities to the project or its lender or the other partners or members.

In the event any of our partners or members files for bankruptcy, we could be precluded from taking certain actions affecting our project without bankruptcy court approval, which could diminish our control over the project even if we were the general partner or managing member. In addition, if the bankruptcy court were to discharge the obligations of our partner or member, it could result in our ultimate liability for the project being greater than we would have otherwise been obligated for.

To the extent we are a general partner, we may be exposed to unlimited liability, which may exceed our investment or equity in the partnership. If one of our subsidiaries is a general partner of a particular partnership it may be exposed to the same kind of unlimited liability.

Failure to Continue to Maintain Effective Internal Controls in Accordance with Section 404 of the Sarbanes-Oxley Act of 2002 Could Have a Material Adverse Effect on Our Ability to Ensure Timely and Reliable Financial Reporting

Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, requires our management to evaluate the effectiveness of, and our independent registered public accounting firm to attest to, our internal control over financial reporting. We will continue our ongoing process of testing and evaluating the effectiveness of, and remediating any issues identified related to, our internal control over financial reporting. The process of documenting, testing and evaluating our internal control over financial reporting is complex and time consuming. Due to this complexity and the time-consuming nature of the process and because currently unforeseen events or circumstances beyond our control could arise, we cannot assure you that we ultimately will be able to continue to comply fully in subsequent fiscal periods with Section 404 in our Annual Report on Form 10-K. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404, which could adversely affect public confidence in our ability to record, process, summarize and report financial data to ensure timely and reliable external financial reporting.

Compliance or Failure to Comply with the Americans with Disabilities Act and Other Similar Laws Could Result in Substantial Costs

The Americans with Disabilities Act generally requires that public buildings, including office buildings and hotels, be made accessible to disabled persons. In the event that we are not in compliance with the Americans with Disabilities Act, the federal government could fine us or private parties could be awarded damages against us. If we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affect our results of operations and cash flows.

We may also incur significant costs complying with other regulations. Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and safety requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. We believe that our properties are currently in material compliance with all of these regulatory requirements. However, existing requirements may change and compliance with future requirements may require significant unanticipated expenditures that could adversely affect our cash flows and results of operations.

Legislative and regulatory actions taken now or in the future could adversely affect our business.

Current economic conditions have resulted in governmental regulatory agencies and political bodies placing increased focus and scrutiny on the financial services industry. This increased scrutiny has resulted in unprecedented programs and actions targeted at restoring stability in the financial markets. There is increasing pressure on the U.S. Congress to finalize a financial regulatory reform plan that would, if enacted, represent a sweeping reform of the current financial services regulation. While we do not operate in the financial services industry, the proposed legislation, as well as other legislation that could be proposed in the future, if enacted, could have an adverse impact on our financial condition and results of operations, perhaps materially, by increasing our costs for financial instruments, such as non-recourse mortgage loans and interest rate swaps, requiring additional cash collateral deposits and further reducing our access to capital.

Changes in Market Conditions Could Continue to Hurt the Market Price of Our Publicly Traded Securities

The market price of our publicly traded securities has been volatile and will continue to fluctuate with various market conditions, which may change from time to time. The market conditions that may affect the market price of our publicly traded securities include the following:

	•		Investor perception of us and the industry in which we operate;
	•		The extent of institutional investor interest in us;
	•		The reputation of the real estate industry generally;
	•		The appeal of other real estate securities in comparison to securities issued by other entities (including securities issued by real estate investment trusts);
	•		Our financial condition and performance; and
	•		General market volatility and economic conditions.

The stock market has experienced volatile conditions resulting in substantial price and volume fluctuations that are often unrelated or disproportionate to the financial performance of companies. Negative market volatility may cause the market price of our publicly traded securities to decline. Further declines in the price of our Class A common stock could have an adverse effect on our business by reducing our ability to generate capital through sales of our Class A common stock, subjecting us to further credit rating downgrades and increasing the risk of not satisfying the New York Stock Exchange’s continued listing standards.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The Corporate headquarters of Forest City Enterprises, Inc. are located in Cleveland, Ohio and are owned by the Company. The Company’s core markets include Boston, the state of California, Chicago, Denver, the New York City/Philadelphia metropolitan area and the Greater Washington D.C./Baltimore metropolitan area.

The following tables present information on properties opened in 2009 and those that are under construction as of January 31, 2010.

     

Forest City Enterprises, Inc.
Development Pipeline
January 31, 2010
2009 Openings and Acquisitions

Date

Consolidated (C)

Sq. ft./

Gross

Dev (D)

Opened /

FCE Legal

Unconsolidated (U)

Total

No. of

Leasable

Property

Location

Acq (A)

Acquired

Ownership %

(c)

Cost

Units

Area

(in millions)

Retail Centers:

Promenade in Temecula Expansion

Temecula, CA

D

Q1-09

75.0%

C

$

107.8

127,000

127,000

East River Plaza (Costco) (d)

Manhattan, NY

D

Q4-09

35.0%

U

0.0

110,000

110,000

$

107.8

237,000

237,000

Residential:

North Church Towers (a)

Parma Heights, OH

A

Q3-09

100.0%

C

$

5.6

399

80 DeKalb (b)

Brooklyn, NY

D

Q4-09/10

80.0%

C

163.3

365

$

168.9

764

Total Openings and Acquisitions

$

276.7

Residential Phased-In Units (b):

Opened in ’09 / Total

Cobblestone Court

Painesville, OH

D

2006-09

50.0%

U

$

30.3

96/400

Sutton Landing

Brimfield, OH

D

2007-09

50.0%

U

15.9

36/216

Stratford Crossing

Wadsworth, OH

D

2007-10

50.0%

U

25.3

36/348

Total

$

71.5

168/964

See attached footnotes.

     

Forest City Enterprises, Inc.
Development Pipeline
January 31, 2010
Under Construction

Consolidated (C)

Sq. ft./

Gross

Dev (D)

Anticipated

FCE Legal

Unconsolidated (U)

Total

No. of

Leasable

Lease

Property

Location

Acq (A)

Opening

Ownership %

(c)

Cost

Units

Area

Commitment %

(in millions)

Retail Centers:

East River Plaza (Total including Costco) (e)

Manhattan, NY

D

2010

35.0%

U

$

398.1

527,000

527,000

93%

Village at Gulfstream Park

Hallandale Beach, FL

D

February 2010

50.0%

C

204.2

510,000

510,000

(f)

70%

Ridge Hill (b)

Yonkers, NY

D

2011/2012

70.0%

C

798.7

1,336,000

1,336,000

(g)

28%

$

1,401.0

2,373,000

2,373,000

Office:

Waterfront Station - East 4th & West 4th Buildings

Washington, D.C.

D

Q1-10

45.0%

C

$

326.7

631,000

(h)

97%

Residential:

Presidio Landmark

San Francisco, CA

D

Q3-10

100.0%

C

$

110.9

161

Beekman (b)

Manhattan, NY

D

Q1-11/12

49.0%

C

875.7

904

$

986.6

1,065

Arena:

Barclays Center

Brooklyn, NY

D

2012

23.3%(j)

U

$

911.1

670,000

18,000 seats

(i)

Total Under Construction

$

3,625.4

Residential Phased-In Units (b):

Under Const./Total

Stratford Crossing

Wadsworth, OH

D

2007-10

50.0%

U

$

25.3

96/348

Fee Development:

Sq.ft.

Las Vegas City Hall (k)

Las Vegas, NV

D

Q1-12

-

U

$

146.2

270,000

See attached footnotes.

Military Housing – see footnote l.

     

Development Pipeline

January 31, 2010 Footnotes

(a)		The Company exchanged its 50% ownership interest in Boulevard Towers, an apartment community located in Amherst, New York, for 100% ownership in North Church Towers, in a nonmonetary exchange.
(b)		Phased-in openings. Costs are representative of the total project.
(c)		Unconsolidated entities are reported under the equity method of accounting. This method represents a measure for investments in which the Company is not deemed to have control or to be the primary beneficiary of our investments in a variable interest entity.
(d)		Phased-In opening. See the Under Construction pipeline for total cost details.
(e)		Includes the total cost and square footage of the center, including Costco which opened in Q4-2009. The cost of the property also includes construction of the 1,248-space parking garage and structural upgrades to accommodate a possible future residential project above the retail center.
(f)		Includes 89,000 square feet of office space. Excluding this office space from the calculation of the preleased percentage would result in the retail space being 85% preleased. In addition, includes 35,000 square feet site for Crate & Barrel which opened in Q4-2009. The remainder of the center opened on February 11, 2010.
(g)		Includes 156,000 square feet of office space.
(h)		Includes 85,000 square feet of retail space.
(i)		The Nets, a member of the NBA, has a 37 year license agreement to use the arena.
(j)		Upon closing of the strategic partnership with an affiliate of Onexim Group, the Company’s legal ownership will increase to approximately 27%.
(k)		This is a fee development project, owned by the City of Las Vegas. Therefore, these costs are not included on the Company’s balance sheet.
(l)		Below is a summary of the Company’s equity method investments for Military Housing Development projects. The Company provides development, construction, and management services for these projects and receives agreed upon fees for these services.

				Anticipated		Completed
Property		Location		Opening		Cost				No. of Units
						(in millions)
Military Housing - Under Construction (c)
Navy Midwest		Chicago, IL		2006-2010		$	248.8				1,658
Pacific Northwest Communities		Seattle, WA		2007-2010			280.5				2,986
Midwest Millington		Memphis, TN		2008-2010			37.0				318
Marines, Hawaii Increment II		Honolulu, HI		2007-2011			293.3				1,175
Navy, Hawaii Increment III		Honolulu, HI		2007-2011			535.1				2,520
Air Force Academy		Colorado Springs, CO		2007-2013			69.5				427
Hawaii Phase IV		Kaneohe, HI		2007-2014			364.0				917
Total Military Housing Under Construction						$	1,828.2				10,001

The following table provides summary information concerning the Company’s real estate portfolio as of January 31, 2010. Consolidated properties are properties that we control and/or hold a variable interest in and are deemed to be the primary beneficiary. Unconsolidated properties are properties that we do not control and/or are not deemed to be the primary beneficiary and are accounted for under the equity method.

     

Forest City Enterprises, Inc. Portfolio of Real Estate as of January 31, 2010

COMMERCIAL GROUP
OFFICE BUILDINGS

		Date of																				Leasable
		Opening/																Leasable				Square
		Acquisition/				Legal				Pro-Rata								Square				Feet at Pro-
Name		Expansion				Ownership(1)				Ownership(2)				Location		Major Tenants		Feet				Rata %
Consolidated Office Buildings
2 Hanson Place			2004				100.00	%			100.00	%		Brooklyn, NY		Bank of New York, HSBC			399,000				399,000
250 Huron			1991				100.00	%			100.00	%		Cleveland, OH		Leasing in progress			119,000				119,000
3055 Roslyn (formerly Stapleton Medical Office Building)			2006				90.00	%			90.00	%		Denver, CO		University of Colorado Hospital			45,000				41,000
35 Landsdowne Street			2002				100.00	%			100.00	%		Cambridge, MA		Millennium Pharmaceuticals			202,000				202,000
40 Landsdowne Street			2003				100.00	%			100.00	%		Cambridge, MA		Millennium Pharmaceuticals			215,000				215,000
45/75 Sidney Street			1999				100.00	%			100.00	%		Cambridge, MA		Millennium Pharmaceuticals; Novartis			277,000				277,000
4930 Oakton			2006				100.00	%			100.00	%		Skokie, IL		Sanford Brown College			40,000				40,000
65/80 Landsdowne Street			2001				100.00	%			100.00	%		Cambridge, MA		Partners HealthCare System			122,000				122,000
88 Sidney Street			2002				100.00	%			100.00	%		Cambridge, MA		Alkermes, Inc.			145,000				145,000
Ballston Common Office Center			2005				100.00	%			100.00	%		Arlington, VA		US Coast Guard			174,000				174,000
Colorado Studios			2007				90.00	%			90.00	%		Denver, CO		Colorado Studios			75,000				68,000
Commerce Court			2007				100.00	%			100.00	%		Pittsburgh, PA		US Bank; Wesco Distributors; Cardworks Services; Marc USA			379,000				379,000
Edgeworth Building			2006				100.00	%			100.00	%		Richmond, VA		Hirschler Fleischer; Ernst and Young			137,000				137,000
Eleven MetroTech Center			1995				85.00	%			85.00	%		Brooklyn, NY		City of New York - DoITT; E-911			216,000				184,000
Fairmont Plaza			1998				85.00	%			85.00	%		San Jose, CA		Littler Mendelson; Merrill Lynch; UBS Financial; Camera 12 Cinemas; Accenture			405,000				344,000
Fifteen MetroTech Center			2003				95.00	%			95.00	%		Brooklyn, NY		Wellchoice, Inc.; City of New York - HRA			650,000				618,000
Halle Building			1986				100.00	%			100.00	%		Cleveland, OH		Case Western Reserve University; Grant Thornton; CEOGC			409,000				409,000
Harlem Center			2003				100.00	%			100.00	%		Manhattan, NY		Office of General Services-Temporary Disability & Assistance; State Liquor Authority			147,000				147,000
(3) Higbee Building			1990				100.00	%			100.00	%		Cleveland, OH		Greater Cleveland Partnership; Key Bank			815,000				815,000
Illinois Science and Technology Park
- 4901 Searle (A)			2006				100.00	%			100.00	%		Skokie, IL		Northshore University Health System			224,000				224,000
- 8025 Lamon (P)			2006				100.00	%			100.00	%		Skokie, IL		NanoInk, Inc.; Midwest Bio Research; Vetter Development Services			128,000				128,000
- 8045 Lamon (Q)			2007				100.00	%			100.00	%		Skokie, IL		Astellas; Polyera			161,000				161,000
Jackson Building			1987				100.00	%			100.00	%		Cambridge, MA		Ariad Pharmaceuticals			99,000				99,000
Johns Hopkins - 855 North Wolfe Street			2008				76.60	%			76.60	%		East Baltimore, MD		Johns Hopkins; Brain Institute; Howard Hughes Institute			279,000				214,000
New York Times			2007				100.00	%			100.00	%		Manhattan, NY		ClearBridge Advisors, LLC, a Legg Mason Co.; Covington & Burling; Osler Hoskin; Seyfarth Shaw			738,000				738,000
Nine MetroTech Center North			1997				85.00	%			85.00	%		Brooklyn, NY		City of New York - Fire Department			317,000				269,000
One MetroTech Center			1991				82.50	%			82.50	%		Brooklyn, NY		JP Morgan Chase; National Grid			937,000				773,000
One Pierrepont Plaza			1988				100.00	%			100.00	%		Brooklyn, NY		Morgan Stanley; Goldman Sachs; U.S. Probation			659,000				659,000

     

Forest City Enterprises, Inc. Portfolio of Real Estate as of January 31, 2010

COMMERCIAL GROUP
OFFICE BUILDINGS (continued)

		Date of																				Leasable
		Opening/																Leasable				Square
		Acquisition/				Legal				Pro-Rata								Square				Feet at Pro-
Name		Expansion				Ownership (1)				Ownership (2)				Location		Major Tenants		Feet				Rata %
Consolidated Office Buildings (continued)
Post Office Plaza			1990				100.00	%			100.00	%		Cleveland, OH		Washington Group; Chase Manhattan Mortgage Corp; Educational Loan Servicing Corp; Quicken Loans			476,000				476,000
Richards Building			1990				100.00	%			100.00	%		Cambridge, MA		Genzyme Biosurgery; Alkermes, Inc.			126,000				126,000
Richmond Office Park			2007				100.00	%			100.00	%		Richmond, VA		The Brinks Co.; Wachovia Bank			568,000				568,000
Skylight Office Tower			1991				92.50	%			100.00	%		Cleveland, OH		Cap Gemini; Ulmer & Berne, LLP			321,000				321,000
Ten MetroTech Center			1992				100.00	%			100.00	%		Brooklyn, NY		Internal Revenue Service			365,000				365,000
Terminal Tower			1983				100.00	%			100.00	%		Cleveland, OH		Forest City Enterprises, Inc.; Cuyahoga Community College			589,000				589,000
Twelve MetroTech Center			2004				100.00	%			100.00	%		Brooklyn, NY		National Union Fire Insurance Co.			177,000				177,000
Two MetroTech Center			1990				82.50	%			82.50	%		Brooklyn, NY		Securities Industry Automation Corp.; City of New York - Board of Education			522,000				431,000
University of Pennsylvania			2004				100.00	%			100.00	%		Philadelphia, PA		University of Pennsylvania			122,000				122,000
*  Waterfront Station - East 4th & West 4th Bldgs			2010				45.00	%			45.00	%		Washington, D.C.		Washington, D.C. Government			631,000				284,000
Consolidated Office Buildings Subtotal																			12,410,000				11,559,000
Unconsolidated Office Buildings
350 Massachusetts Ave			1998				50.00	%			50.00	%		Cambridge, MA		Star Market; Tofias; Novartis			169,000				85,000
(3) 818 Mission Street			2008				50.00	%			50.00	%		San Francisco, CA		Denny’s			28,000				14,000
Bulletin Building			2006				50.00	%			50.00	%		San Francisco, CA		Great West Life and Annuity; Corinthian School			78,000				39,000
Chagrin Plaza I & II			1969				66.67	%			66.67	%		Beachwood, OH		Nine Sigma; Benihana; H&R Block			113,000				75,000
Clark Building			1989				50.00	%			50.00	%		Cambridge, MA		Sanofi Pasteur Acambis			122,000				61,000
Enterprise Place			1998				50.00	%			50.00	%		Beachwood, OH		University of Phoenix; Advance Payroll; PS Executive Centers			132,000				66,000
Liberty Center			1986				50.00	%			50.00	%		Pittsburgh, PA		Federated Investors; Direct Energy Business			526,000				263,000
Mesa del Sol - 5600 University SE (formerly Advent Solar)			2006				47.50	%			47.50	%		Albuquerque, NM		Applied Materials			87,000				41,000
Mesa del Sol - Aperture Center (Town Center)			2008				47.50	%			47.50	%		Albuquerque, NM		Leasing in progress			76,000				36,000
Mesa del Sol - Fidelity			2008/2009				47.50	%			47.50	%		Albuquerque, NM		Fidelity Investments			210,000				100,000
Signature Square I			1986				50.00	%			50.00	%		Beachwood, OH		Ciuni & Panichi; PCC Airfoils; Liberty Bank			79,000				40,000
Signature Square II			1989				50.00	%			50.00	%		Beachwood, OH		Pro Ed Communications; Goldberg Co.; Resillience Mgt.			82,000				41,000
Unconsolidated Office Buildings Subtotal																			1,702,000				861,000
Total Office Buildings at January 31, 2010																			14,112,000				12,420,000
Total Office Buildings at January 31, 2009																			14,093,000				12,404,000

     

Forest City Enterprises, Inc. Portfolio of Real Estate as of January 31, 2010

COMMERCIAL GROUP
RETAIL CENTERS

		Date of																				Total								Gross
		Opening/																Total				Square				Gross				Leasable
		Acquisition/				Legal				Pro-Rata								Square				Feet at Pro-				Leasable				Area at Pro-
Name		Expansion				Ownership (1)				Ownership (2)				Location		Major Tenants		Feet				Rata %				Area				Rata %
Consolidated Regional Malls
Antelope Valley Mall			1990/1999				78.00	%			78.00	%		Palmdale, CA		Sears; JCPenney; Harris Gottschalks; Dillard’s; Forever 21; Cinemark Theatre			1,196,000				933,000				363,000				283,000
Ballston Common Mall			1986/1999				100.00	%			100.00	%		Arlington, VA		Macy’s; Sport & Health; Regal Cinemas			579,000				579,000				311,000				311,000
Galleria at Sunset			1996/2002				100.00	%			100.00	%		Henderson, NV		Dillard’s; Macy’s; JCPenney; Dick’s Sporting Goods; Kohl’s			1,048,000				1,048,000				412,000				412,000
Mall at Robinson			2001				56.67	%			100.00	%		Pittsburgh, PA		Macy’s; Sears; JCPenney; Dick’s Sporting Goods			880,000				880,000				384,000				384,000
Mall at Stonecrest			2001				66.67	%			66.67	%		Atlanta, GA		Kohl’s; Sears; JCPenney; Dillard’s; AMC Theatre; Macy’s			1,226,000				817,000				397,000				265,000
Northfield at Stapleton			2005/2006				95.00	%			100.00	%		Denver, CO		Bass Pro; Target; Harkins Theatre; JCPenney; Macy’s			1,127,000				1,127,000				664,000				664,000
Orchard Town Center			2008				100.00	%			100.00	%		Westminster, CO		JCPenney; Macy’s; Target; AMC Theatre			1,018,000				1,018,000				482,000				482,000
Promenade Bolingbrook			2007				100.00	%			100.00	%		Bolingbrook, IL		Bass Pro; Macy’s; Village Roadshow			771,000				771,000				575,000				575,000
++ Promenade in Temecula			1999/2002/2009				75.00	%			100.00	%		Temecula, CA		JCPenney; Sears; Macy’s; Edwards Cinema			1,275,000				1,275,000				540,000				540,000
^* Ridge Hill			2011/2012				70.00	%			100.00	%		Yonkers, NY		National Amusements; Whole Foods; LL Bean; Cheesecake Factory			1,336,000				1,336,000				1,336,000				1,336,000
Shops at Wiregrass			2008				50.00	%			100.00	%		Tampa, FL		JCPenney; Dillard’s; Macy’s			734,000				734,000				349,000				349,000
Short Pump Town Center			2003/2005				50.00	%			100.00	%		Richmond, VA		Nordstrom; Macy’s; Dillard’s; Dick’s Sporting Goods			1,303,000				1,303,000				591,000				591,000
Simi Valley Town Center			2005				85.00	%			100.00	%		Simi Valley, CA		Macy’s			612,000				612,000				351,000				351,000
South Bay Galleria			1985/2001				100.00	%			100.00	%		Redondo Beach, CA		Macy’s; Nordstrom; Kohl’s			956,000				956,000				389,000				389,000
Victoria Gardens			2004/2007				80.00	%			80.00	%		Rancho Cucamonga, CA		Bass Pro; Macy’s; JCPenney; AMC Theater			1,401,000				1,121,000				829,000				663,000
Consolidated Regional Malls Subtotal																			15,462,000				14,510,000				7,973,000				7,595,000