UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

x		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended January 31, 2009
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  o     NO  x

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  x

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

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

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 $1,894,505,746.

The number of shares of registrant’s common stock outstanding on March 25, 2009 was 80,766,501 and 22,686,427 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 5, 2009 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, 2008

Table of Contents

PART I

						Page
		Item 1.		Business			2
		Item 1A.		Risk Factors			4
		Item 1B.		Unresolved Staff Comments			16
		Item 2.		Properties			16
		Item 3.		Legal Proceedings			30
		Item 4.		Submission of Matters to a Vote of Security Holders			30
				Executive Officers of the Registrant			30
PART II
		Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			31
		Item 6.		Selected Financial Data			33
		Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			34
		Item 7A.		Quantitative and Qualitative Disclosures About Market Risk			78
		Item 8.		Financial Statements and Supplementary Data			82
		Item 9.		Changes in and Disagreements With Accountants on Accounting and Financial Disclosure			144
		Item 9A.		Controls and Procedures			144
		Item 9B.		Other Information			146
PART III
		Item 10.		Directors, Executive Officers and Corporate Governance			146
		Item 11.		Executive Compensation			146
		Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			146
		Item 13.		Certain Relationships and Related Transactions, and Director Independence			146
		Item 14.		Principal Accountant Fees and Services			146
PART IV
		Item 15.		Exhibits and Financial Statements Schedules			147
				Signatures			156
EX-21
EX-23
EX-24
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, 2009, the Company had approximately $11.4 billion in consolidated assets, of which approximately $10.6 billion was invested in real estate, at cost. The Company’s core markets include the New York City/Philadelphia metropolitan area, Denver, Boston, the Greater Washington D.C./Baltimore metropolitan area, Chicago and the state of California. 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 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”) and Corporate Activities. Financial information about industry segments required by this item is included in Item 8 - Financial Statements and Supplementary Data, Note L - 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. 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, 2009, the Commercial Group owned interests in 101 completed properties, including 47 retail properties (approximately 14.6 million gross leasable square feet), 48 office properties (approximately 13.3 million gross leasable square feet) and 5 hotels (1,823 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, 2009, the Commercial Group’s retail portfolio consisted of 19 regional malls (including 2 under construction) with gross leasable area (“GLA”) of 9.9 million square feet and 31 specialty retail centers (including 1 under construction) with a total GLA of 7.0 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.

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. Additionally, the Company also owns a select number of supported-living facilities.

At January 31, 2009, the Residential Group’s operating portfolio consisted of 36,257 units in 122 properties in which Forest City has an ownership interest. In addition, the Company owns a residual interest in and manages 8 properties containing 1,260 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, 2009, the Company owned approximately 10,840 acres of undeveloped land for these commercial and residential development purposes. The Company has an option to purchase 1,488 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 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 2008, the Company had purchased 1,447 acres at Stapleton, leaving a balance of 1,488 acres that may be acquired through an option held by the Company for additional development over the course of the next 7 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 604 acres is under development or has been completed. Aside from land sales activities, Stapleton currently has over 2,000,000 square feet of retail space, approximately 350,000 square feet of office space, over 1.3 million of other commercial space and 484 apartment units in place.

Additionally, as of the end of fiscal 2008, the Company had purchased 3,175 acres at Mesa del Sol, leaving 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 sales activities, Mesa del Sol currently has 198,000 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 franchise 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 54%, 25% and 17% of the net loss for the years ended January 31, 2009, 2008 and 2007, 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.

Competition

The real estate industry is highly competitive in many of the markets in which the Company operates. Competition could over-saturate any market; as a result, the Company may not have sufficient cash to meet the 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, 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 land that compete with us nationally, regionally and/or locally, some of whom may have greater financial resources. They compete with the Company for management and leasing revenues, land for development, properties for acquisition and disposition, anchor stores and tenants for properties. The Company may not be able to successfully compete in these areas.

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, a professional sports franchise.  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 members’ 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 3,237 employees as of January 31, 2009, of which 2,845 were full-time and 392 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 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 filings can be read and copied at the SEC’s Public Reference Room office at 100 F Street N.E., Washington, D.C. 20549. Information on the operation of the SEC’s Public Reference Room can be obtained by calling 1-800-SEC-0330.

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

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. The risk premium demanded by capital suppliers has increased markedly, as they are demanding greater compensation for credit risk. Lending spreads have widened from recent levels and originations of new loans for the commercial mortgage backed securities have essentially ceased. Underwriting standards are being tightened. In addition, recent failures and consolidations of certain financial institutions have decreased the number of potential lenders, resulting in reduced lending levels available to the market. The continuation of these market conditions, combined with the volatility in the financial markets, has made our ability to access capital increasingly challenging. It is very unlikely that we will be able to obtain financings today on terms comparable to those we have secured in the past, 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. A continuation of these conditions may require us 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 acceleration, 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 $8.3 billion at January 31, 2009, approximately $882.7 million becomes due in fiscal 2009, approximately $1.05 billion becomes due in fiscal 2010 and approximately $862.5 million becomes due in fiscal 2011. 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 inability to repay is heightened with our revolving credit facility and senior debt as we have limited sources to fund such repayment.

At January 31, 2009, we have one non-recourse mortgage amounting to $12.5 million that has matured and is currently past due. If we are unable to negotiate an extension or refinancing of the mortgage, the lender could commence foreclosure proceedings and we could lose the property. Four of our joint ventures accounted for under the equity method of accounting have non-recourse mortgages that are past due or in default at January 31, 2009. If we are unable to negotiate an extension or refinancing or cure the default on those mortgages, the lender could commence foreclosure proceedings and we could lose our investment in the projects amounting to $8.0 million. Under the terms of three of the loans we have guaranteed the lender the lien free completion of the project. This guaranty is recourse to us and the lender could enforce the completion guaranty which would have an adverse affect on our cash flows. While we are actively negotiating with the lenders to resolve these past due loans, we cannot assure you that we will be successful.

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 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. As of January 31, 2009, no bonds were held with the credit enhancer. On March 23, 2009, the counterparty providing the credit enhancement for our Beekman residential project in Manhattan, New York was downgraded and as a result, if new investors are not identified for approximately $440,000,000 in underlying bonds, the bonds could be tendered to the credit enhancer. It that event occurs, we will have a two year window in which to remarket the underlying bonds. Any of the bonds remaining with the credit enhancer at the end of that two year period will accelerate and become due and payable beginning in March 2011.

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.

With the turmoil in the capital markets, an increasing number of financial institutions have sought federal assistance or failed. 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. This was the case with amounts due to us from Lehman Brothers, Inc. of $13.8 million related to a bond remarketing performance fee at our Stapleton project in Denver, Colorado. 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 currently have access to liquidity through our $750 million revolving credit facility, the facility matures in March 2010. In light of the very challenging market conditions, lenders under our facility may not agree to renew or extend the agreement at current commitment levels, on similar terms or at all. We are currently negotiating with our lenders to extend the revolving credit facility. While the ultimate outcome of the extension is unknown, we anticipate an extension will result in a reduced commitment from the lenders, increased borrowing costs and modification to the financial covenants. As a result, our financing costs will increase and our access to liquidity will decrease, which would adversely affect the future growth of our business and our ability to continue our development activities.

We Are Subject to Risks Associated with Investments in Real Estate

There is a particular concern for the real estate industry as the nation is in the midst of a recession. There have been significant declines in housing markets across the United States, which originated in the sub-prime residential mortgage market and later extended to the broader real estate markets. There has been a significant tightening of the credit markets, reduced access to liquidity and rising unemployment all of which have had a negative impact on the national economy, affecting consumer confidence and spending and negatively impacting the volume of real estate transactions. If this recession were to continue, or worsen, the value of our properties, as well as the income we receive from our properties would be adversely affected.

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 on acceptable terms, or at all, particularly given the recent and significant market deterioration, which has resulted in the tightening of lending standards and reduced access to capital;
	•		The availability of lender financing necessary to extend or refinance our nonrecourse mortgage debt maturities;
	•		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;
	•		Further 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 “Market Conditions May Negatively Impact Our Liquidity and Our Ability to Finance or Refinance Projects or Repay Our Debt” 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.

The overall economic climate remains challenging, as a result of the ongoing stress on the capital markets, including the reduced availability of debt financings and continued interest rate volatility. We are party to financial arrangements and tenant leases with some of the companies most impacted by these events. We have slowed the pace of our development, redevelopment and expansion projects and are taking prudent steps to mitigate risk to our portfolio and maintain optimum levels of liquidity and profitability. 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. If circumstances require us or we elect to delay projects, we would incur additional carrying costs, which could negatively impact our liquidity and/or profitability.

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.

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

•

Brooklyn Atlantic Yards.  We are in the process of developing Brooklyn Atlantic Yards, a long-term $4.0 billion mixed-use project in downtown Brooklyn expected to feature a state of the art sports and entertainment arena for the Nets basketball team, a franchise of the NBA. The acquisition and development of Brooklyn Atlantic Yards has been formally approved by the required state governmental authorities but final documentation of the transactions are subject to the completion of negotiations with local and state governmental authorities, including negotiation of the applicable

development documentation and public subsidies. Pre-construction activities have commenced for the potential removal, remediation or other activities to address environmental contamination at, on, under or emanating to or from the land. There is also one lawsuit pending challenging the use of eminent domain which may not be resolved in our favor resulting in Brooklyn Atlantic Yards not being developed at all or not being developed with the features we anticipate. As a result of the foregoing, this project has experienced delays and may continue to experience further delays. There is also the potential for increased costs and delays to the project as a result of (i) increasing construction costs, (ii) scarcity of labor and supplies, (iii) our inability to obtain tax-exempt financing or the availability of financing or public subsidies, or our inability to retain the current land acquisition financing, (iv) our or our partners’ inability or failure to meet required equity contributions, (v) increasing rates for financings, (vi) loss of arena sponsorships and related revenues and (vii) 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. If any of the foregoing risks were to occur, we may not be able to develop Brooklyn Atlantic Yards to the extent intended or at all. Even if we are able to continue with the development, we would likely not be able to do so as quickly as originally planned.

	•		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.
	•		For-Sale Condominiums.  We are engaged in the development of condominiums in selected markets. Current condominium projects include Mercury, a previously unfinished office building in Los Angeles, California, and Central Station in Chicago, Illinois. While we have previously developed for-sale condominium projects with partners, we are developing some of these projects during a housing downturn without the development assistance of one or more partners. We may not be able to sell the units at the projected sales prices for a number of reasons, including, without limitation, a rise in interest rates, continued deterioration of the housing market and the inability of prospective buyers to secure financing, which risk has been heightened due to the current financial crisis affecting the national economy.

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 continuing dramatic 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 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, 2009, our five largest office tenants by leased square feet are the City of New York, Millennium Pharmaceuticals, Inc., U.S. Government, Wellchoice, Inc., and Morgan Stanley & Co. 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, 2009, our five largest retail tenants by leased square feet are AMC Entertainment, Inc., Bass Pro Shops, Inc., Regal Entertainment Group, The Gap and TJX Companies.

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 which could adversely affect our properties. Circuit City, a retail tenant that leased 241,032 square feet at eight properties, filed for bankruptcy in November 2008 and recently liquidated and closed all of their stores. As a result, we expensed approximately $2,935,000 of costs associated with the Circuit City leases during the three months ended January 31, 2009. Additionally, we will not receive and may not be able to replace the future rents we had anticipated for their space at those eight properties. The Circuit City bankruptcy, as well as 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, which are expected to include a new entertainment arena complex and adjacent developments combining housing, offices, shops and public open space. The relocation of The Nets is, among other items, subject to various approvals by the NBA, and we cannot assure you we will receive these approvals on a timely basis or at all. If we are unable to or delayed in moving The Nets to Brooklyn, we may be unable to achieve our projected returns on the related development projects, which could result in a delay in the return of, termination of, or losses on our investment. 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, which is expected to be until at least 2011, and possibly longer. 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 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.

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, which are allocated to each member based on an analysis of the respective members’ 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:

	•		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 92.2% and 64.0% at January 31, 2009 and January 31, 2008, 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 continued 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 Amended and Restated credit agreement as most recently amended on January 30, 2009, among FCRPC, the banks named therein, KeyBank National Association, as administrative agent, National City Bank, as syndication agent and Bank of America, N.A., as documentation agent. This guaranty imposes a number of restrictive covenants on Forest City, including a prohibition on certain consolidations and mergers, limitations on the amount of debt, guarantees and property liens that Forest City may incur and a prohibition on dividends through the maturity date. The guaranty also requires Forest City to maintain a specified minimum cash flow coverage ratio, consolidated shareholders’ equity and Earnings Before Depreciation and Taxes, or EBDT.

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 stock, permit liens on our properties or dispose of assets.

While we are in compliance with all of our covenants at January 31, 2009, 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. Forest City’s ability and FCRPC’s ability to comply with these covenants will depend upon the future economic performance of Forest City and FCRPC. 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 maintains a specified credit rating. With the current volatility in the financial markets there is an increased risk that hedge counterparties could have their credit rating downgraded to a level that would not be acceptable under the loan provisions. If we were unable to renegotiate that requirement with the lender or find an alternative counterparty with acceptable credit rating for current and future hedge requirements, we could be in default under the loan and the lender could take that property through foreclosure.

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, 2009, 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 $13,606,000 at January 31, 2009. 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 $9,752,000 at January 31, 2009. 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 further 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 further 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, 2009, 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 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 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 liability coverage and on the first $250,000 of property damage per occurrence 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 27, 2009, members of the Ratner, Miller and Shafran families, which include members of our current board of directors and executive officers, owned 83.2% of the Class B common stock. RMS, Limited Partnership (“RMS LP”), which owned 82.7% of the Class B common stock, is a limited partnership, comprised of interests of these families, with eight 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;
	•		Joseph Shafran; and
	•		Abraham Miller.

Joan K. Shafran is the sister of Joseph Shafran. 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, Joseph 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 27, 2009, members of these families collectively owned 14.6% 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 $307,000 and $237,000 as total compensation during the years ended January 31, 2009 and 2008, 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 Face Potential Liability from Properties Accounted For on the Equity Method and Other Partnership Risks

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 properties 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.

In addition to partnerships, we also use limited liability companies, or LLCs, to finance some of our projects with third party lenders. 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. The use of a structure where we do not control the management of the entity involves 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.

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 continue to 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 the New York City/Philadelphia metropolitan area, Denver, Boston, the Greater Washington D.C./Baltimore metropolitan area, Chicago and the state of California.

The following table provides summary information concerning the Company’s real estate portfolio as of January 31, 2009. 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

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 (formerly Chase Financial Tower)			1991				95.00	%			100.00	%		Cleveland, OH		Leasing in progress			119,000				119,000
		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
		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				70.00	%			100.00	%		Pittsburg, PA		US Bank; Wesco Distributors; Cardworks Services; Marc USA			379,000				379,000
		Edgeworth Building			2006				100.00	%			100.00	%		Richmond, VA		Hirschler Fleischer			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; Calpine; 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				75.00	%			100.00	%		Cleveland, OH		Case Western Reserve University; Grant Thornton; CEOGC			406,000				406,000
		Harlem Center			2003				100.00	%			100.00	%		Manhattan, NY		Office of General Services-Temporary Disability & Assistance; State Liquor Authority			147,000				147,000
(5)		Higbee Building			1990				100.00	%			100.00	%		Cleveland, OH		Greater Cleveland Partnership; Key Bank			815,000				815,000
		Illinois Science and Technology Park
		- Building A			2006				100.00	%			100.00	%		Skokie, IL		Northshore University Hospital			224,000				224,000
		- Building P			2006				100.00	%			100.00	%		Skokie, IL		NanoInk, Inc.; Midwest Bio Research			128,000				128,000
		- Building Q			2007				100.00	%			100.00	%		Skokie, IL		Astellas Pharmacy; NanoInk, Inc.; Polyera			158,000				158,000
		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 Company; Covington & Burling; Osler Hoskin; Seyfarth Shaw			737,000				737,000
		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			656,000				656,000
		Post Office Plaza (formerly M. K. Ferguson)			1990				100.00	%			100.00	%		Cleveland, OH		Washington Group; Chase Manhattan Mortgage Corp; Educational Loan Servicing Corp; Quicken Loans			476,000				476,000
(5)		Resurrection Health Care (4930 Oakton)			2006				100.00	%			100.00	%		Skokie, IL		Leasing in progress			40,000				40,000
		Richards Building			1990				100.00	%			100.00	%		Cambridge, MA		Genzyme Biosurgery; Alkermes, Inc.			126,000				126,000

     

Forest City Enterprises, Inc. Portfolio of Real Estate

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)
		Richmond Office Park			2007				100.00	%			100.00	%		Richmond, VA		Anthem Blue Cross Blue Shield; The Brinks Co.; Wachovia Bank			570,000				570,000
		Skylight Office Tower			1991				92.50	%			100.00	%		Cleveland, OH		Cap Gemini; Ulmer & Berne, LLP			321,000				321,000
		Stapleton Medical Office Building			2006				90.00	%			90.00	%		Denver, CO		University of Colorado Hospital			45,000				41,000
		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			584,000				584,000
		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			521,000				430,000
		University of Pennsylvania			2004				100.00	%			100.00	%		Philadelphia, PA		University of Pennsylvania			122,000				122,000
(3)     *		Waterfront Station - East 4th & West 4th Bldgs			2010				45.00	%			45.00	%		Washington, D.C.		Washington, D.C. Government			628,000				283,000
		Consolidated Office Buildings Subtotal																			12,393,000				11,544,000
Unconsolidated Office Buildings
		350 Massachusetts Ave			1998				50.00	%			50.00	%		Cambridge, MA		Star Market; Tofias			169,000				85,000
(5)     +		818 Mission Street			2008				50.00	%			50.00	%		San Francisco, CA		Denny’s			28,000				14,000
		Advent Solar			2006				47.50	%			47.50	%		Albuquerque, NM		Advent Solar			87,000				41,000
(5)		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		National City Bank; Benihana; H&R Block			113,000				75,000
		Clark Building			1989				50.00	%			50.00	%		Cambridge, MA		Santa Fe 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			526,000				263,000
+		Mesa Del Sol Town Center			2008				47.50	%			47.50	%		Albuquerque, NM		Leasing in progress			74,000				35,000
^*		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			79,000				40,000
		Signature Square II			1989				50.00	%			50.00	%		Beachwood, OH		Cleveland Clinic Ophthalmology; Allen Telecom, Inc.			82,000				41,000
		Unconsolidated Office Buildings Subtotal																			1,700,000				860,000
		Total Office Buildings at January 31, 2009																			14,093,000				12,404,000
		Total Office Buildings at January 31, 2008																			13,451,000				12,050,000

     

Forest City Enterprises, Inc. Portfolio of Real Estate

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			995,000				776,000				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				310,000				310,000
		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				383,000				383,000
		Mall at Stonecrest			2001				66.67	%			100.00	%		Atlanta, GA		Kohl’s; Sears; JCPenney; Dillard’s; AMC Theatre; Macy’s			1,171,000				1,171,000				397,000				397,000
		Northfield at Stapleton			2005/2006				95.00	%			100.00	%		Denver, CO		Bass Pro; Target; Harkins Theatre; JCPenney; Macy’s			1,106,000				1,106,000				664,000				664,000
+		Orchard Town Center			2008				100.00	%			100.00	%		Westminster, CO		JCPenney; Macy’s; Target; AMC Theatre			980,000				980,000				565,000				565,000
		Promenade Bolingbrook			2007				100.00	%			100.00	%		Bolingbrook, IL		Bass Pro; Macy’s; Village Roadshow			750,000				750,000				575,000				575,000
**		Promenade in Temecula			1999/2002/2009				75.00	%			100.00	%		Temecula, CA		JCPenney; Sears; Macy’s; Edwards Cinema			1,140,000				1,140,000				540,000				540,000
^*		Ridge Hill			2010/2011				70.00	%			100.00	%		Yonkers, NY		National Amusements; Whole Foods; LL Bean; Cheesecake Factory			1,200,000				1,200,000				1,200,000				1,200,000
(3)   +		Shops at Wiregrass			2008				50.00	%			100.00	%		Tampa, FL		JCPenney; Dillard’s; Macy’s			642,000				642,000				356,000				356,000
		Short Pump Town Center			2003/2005				50.00	%			100.00	%		Richmond, VA		Nordstrom; Macy’s; Dillard’s; Dick’s Sporting Goods			1,193,000				1,193,000				582,000				582,000
		Simi Valley Town Center			2005				85.00	%			100.00	%		Simi Valley, CA		Macy’s			612,000				612,000				351,000				351,000
(5)		South Bay Galleria			1985/2001				100.00	%			100.00	%		Redondo Beach, CA		Macy’s; Nordstrom; Kohl’s; AMC Theatre			955,000				955,000				389,000				389,000
		Victoria Gardens			2004/2007				80.00	%			80.00	%		Rancho Cucamonga, CA		Bass Pro; Macy’s; JCPenney; AMC Theatre			1,342,000				1,074,000				829,000				663,000
(3)    *		Village of Gulfstream			2010				50.00	%			50.00	%		Hallendale, FL		Crate & Barrel; Pottery Barn; The Container Store; Texas de Brazil; III Forks			500,000				250,000				500,000				250,000
		Consolidated Regional Malls Subtotal																			15,093,000				14,356,000				8,416,000				7,920,000

     

Forest City Enterprises, Inc. Portfolio of Real Estate

COMMERCIAL GROUP
RETAIL CENTERS (continued)

				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 Specialty Retail Centers
		42nd Street		1999			100.00	%			100.00	%		Manhattan, NY		AMC Theatre; Madame Tussaud’s Wax Museum; Modell’s; Dave & Buster’s			309,000				309,000				309,000				309,000
		Atlantic Center		1996			100.00	%			100.00	%		Brooklyn, NY		Pathmark; OfficeMax; Old Navy; Marshall's; Sterns; NYC - Dept. of Motor Vehicles			399,000				399,000				392,000				392,000
		Atlantic Center Site V		1998			100.00	%			100.00	%		Brooklyn, NY		Modell’s			17,000				17,000				17,000				17,000
		Atlantic Terminal		2004			100.00	%			100.00	%		Brooklyn, NY		Target; Designer Shoe Warehouse; Chuck E. Cheese’s; Daffy’s			373,000				373,000				371,000				371,000
		Avenue at Tower City Center		1990			100.00	%			100.00	%		Cleveland, OH		Hard Rock Café; Morton’s of Chicago; Cleveland Cinemas			365,000				365,000				365,000				365,000
		Brooklyn Commons		2004			100.00	%			100.00	%		Brooklyn, NY		Lowe’s			151,000				151,000				151,000				151,000
		Bruckner Boulevard		1996			100.00	%			100.00	%		Bronx, NY		Conway; Old Navy			113,000				113,000				113,000				113,000
		Columbia Park Center		1999			75.00	%			75.00	%		North Bergen, NJ		Shop Rite; Old Navy; Staples; Bally’s; Shopper’s World			347,000				260,000				347,000				260,000
		Court Street		2000			100.00	%			100.00	%		Brooklyn, NY		United Artists; Barnes & Noble			103,000				103,000				102,000				102,000
		Eastchester		2000			100.00	%			100.00	%		Bronx, NY		Pathmark			63,000				63,000				63,000				63,000
		Forest Avenue		2000			100.00	%			100.00	%		Staten Island, NY		United Artists			70,000				70,000				70,000				70,000
		Grand Avenue		1997			100.00	%			100.00	%		Queens, NY		Stop & Shop			119,000				119,000				119,000				119,000
		Gun Hill Road		1997			100.00	%			100.00	%		Bronx, NY		Home Depot; Chuck E. Cheese’s			147,000				147,000				147,000				147,000
		Harlem Center		2002			100.00	%			100.00	%		Manhattan, NY		Marshall’s; CVS/Pharmacy; Staples; H&M			126,000				126,000				126,000				126,000
		Kaufman Studios		1999			100.00	%			100.00	%		Queens, NY		United Artists			84,000				84,000				84,000				84,000
		Market at Tobacco Row		2002			100.00	%			100.00	%		Richmond, VA		Rich Foods; CVS/Pharmacy			43,000				43,000				43,000				43,000
		Northern Boulevard		1997			100.00	%			100.00	%		Queens, NY		Stop & Shop; Marshall’s; Old Navy; AJ Wright			218,000				218,000				218,000				218,000
		Quartermaster Plaza		2004			100.00	%			100.00	%		Philadelphia, PA		Home Depot; BJ’s Wholesale; Staples; PetSmart; Walgreen’s			459,000				459,000				456,000				456,000
		Quebec Square		2002			90.00	%			90.00	%		Denver, CO		Wal-Mart; Home Depot; Sam’s Club; Ross Dress for Less; Office Depot; PetSmart			739,000				665,000				216,000				194,000
		Queens Place		2001			100.00	%			100.00	%		Queens, NY		Target; Best Buy; Macy’s Furniture; Designer Shoe Warehouse			455,000				455,000				221,000				221,000
		Richmond Avenue		1998			100.00	%			100.00	%		Staten Island, NY		Staples			76,000				76,000				76,000				76,000
		Saddle Rock Village		2005			80.00	%			100.00	%		Aurora, CO		Target; JoAnn Fabrics; PetSmart; OfficeMax			279,000				279,000				97,000				97,000
(5)		South Bay Southern Center		1978			100.00	%			100.00	%		Redondo Beach, CA		Bank of America			78,000				78,000				78,000				78,000

     

Forest City Enterprises, Inc. Portfolio of Real Estate

COMMERCIAL GROUP
RETAIL CENTERS (continued)

				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 Specialty Retail Centers (continued)
		Station Square		1994/2002			100.00	%			100.00	%		Pittsburgh, PA		Hard Rock Café; Grand Concourse Restaurant; Buca Di Beppo			291,000				291,000				291,000				291,000
+		White Oak Village		2008			50.00	%			100.00	%		Richmond, VA		Target; Lowes; Sam’s Club; JCPenney; OfficeMax; PetSmart; Ukrop’s			800,000				800,000				294,000				294,000
		Woodbridge Crossing		2002			100.00	%			100.00	%		Woodbridge, NJ		Modell’s; Thomasville Furniture; Party City			284,000				284,000				284,000				284,000
		Consolidated Specialty Retail Centers Subtotal																	6,508,000				6,347,000				5,050,000				4,941,000
		Consolidated Retail Centers Total																	21,601,000				20,703,000				13,466,000				12,861,000
Unconsolidated Regional Malls
		Boulevard Mall		1996/2000			50.00	%			50.00	%		Amherst, NY		JCPenney; Macy’s; Sears; Michael’s			912,000				456,000				336,000				168,000
		Charleston Town Center		1983			50.00	%			50.00	%		Charleston, WV		Macy’s; JCPenney; Sears			897,000				449,000				363,000				182,000
		San Francisco Centre		2006			50.00	%			50.00	%		San Francisco, CA		Nordstrom; Bloomingdale’s; Century Theaters			1,462,000				731,000				788,000				394,000
		Unconsolidated Regional Malls Subtotal																	3,271,000				1,636,000				1,487,000				744,000
Unconsolidated Specialty Retail Centers
(4)^*		East River Plaza		2009/2010			35.00	%			50.00	%		Manhattan, NY		Home Depot; Target; Best Buy			517,000				259,000				517,000				259,000
		Golden Gate		1958			50.00	%			50.00	%		Mayfield Hts., OH		OfficeMax; Old Navy; Marshall’s; Cost Plus; HHGregg			361,000				181,000				361,000				181,000
		Marketplace at Riverpark		1996			50.00	%			50.00	%		Fresno, CA		JCPenney; Best Buy; Marshall’s; OfficeMax; Old Navy; Target; Sports Authority			471,000				236,000				296,000				148,000
(5)		Metreon		2006			50.00	%			50.00	%		San Francisco, CA		AMC Loews			279,000				140,000				279,000				140,000
		Plaza at Robinson Town Center		1989			50.00	%			50.00	%		Pittsburgh, PA		T.J. Maxx; Marshall’s; IKEA; Value City; JoAnn Fabrics; OfficeMax			507,000				254,000				507,000				254,000
		Unconsolidated Specialty Retail Centers Subtotal																	2,135,000				1,070,000				1,960,000				982,000
		Unconsolidated Retail Centers Total																	5,406,000				2,706,000				3,447,000				1,726,000
		Total Retail Centers at January 31, 2009																	27,007,000				23,409,000				16,913,000				14,587,000
		Total Retail Centers at January 31, 2008																	26,930,000				23,034,000				16,303,000				13,829,000

     

Forest City Enterprises, Inc. Portfolio of Real Estate

COMMERCIAL GROUP
HOTELS

		Date of
		Opening/
		Acquisition/		Legal				Pro-Rata										Hotel Rooms at
Name		Expansion		Ownership (1)				Ownership (2)				Location		Rooms				Pro-Rata %
Consolidated Hotels
Charleston Marriott		1983			95.00	%			100.00	%		Charleston, WV			352				352
Ritz-Carlton, Cleveland		1990			100.00	%			100.00	%		Cleveland, OH			206				206
Sheraton Station Square		1998/2001			100.00	%			100.00	%		Pittsburgh, PA			399				399
Consolidated Hotels Subtotal															957				957
Unconsolidated Hotels
Courtyard by Marriott		1985			3.97	%			3.97	%		Detroit, MI			250				10
Westin Convention Center		1986			50.00	%			50.00	%		Pittsburgh, PA			616				308
Unconsolidated Hotels Subtotal															866				318
Total Hotel Rooms at January 31, 2009															1,823				1,275
Total Hotel Rooms at January 31, 2008															1,823				1,275

Forest City Enterprises, Inc. Portfolio of Real Estate

RESIDENTIAL GROUP
APARTMENTS

						Date of
						Opening/
						Acquisition/		Legal				Pro-Rata						Leasable				Leasable Units
Name						Expansion		Ownership (1)				Ownership (2)				Location		Units				at Pro-Rata %
Consolidated Apartment Communities
				100 Landsdowne Street		2005			100.00	%			100.00	%		Cambridge, MA			203				203
				101 San Fernando		2000			95.00	%			95.00	%		San Jose, CA			323				307
				1251 S. Michigan		2006			0.01	%			100.00	%		Chicago, IL			91				91
	^*			80 DeKalb		2009/2010			70.00	%			100.00	%		Brooklyn, NY			365				365
				American Cigar Company		2000			100.00	%			100.00	%		Richmond, VA			171				171
				Ashton Mill		2005			90.00	%			100.00	%		Cumberland, RI			193				193
				Autumn Ridge		2002			100.00	%			100.00	%		Sterling Heights, MI			251				251
	^*			Beekman		2010/2011			49.00	%			70.00	%		Manhattan, NY			904				633
				Botanica on the Green (East 29th Avenue Town Center)		2004			90.00	%			90.00	%		Denver, CO			78				70
				Botanica II		2007			90.00	%			90.00	%		Denver, CO			154				139
				Bowin		1998			95.05	%			95.05	%		Detroit, MI			193				183
				Cambridge Towers		2002			100.00	%			100.00	%		Detroit, MI			250				250
				Cameron Kinney		2007			100.00	%			100.00	%		Richmond, VA			259				259
				Consolidated-Carolina		2003			89.99	%			100.00	%		Richmond, VA			158				158
				Coraopolis Towers		2002			80.00	%			80.00	%		Coraopolis, PA			200				160
				Crescent Flats (East 29th Avenue Town Center)		2004			90.00	%			90.00	%		Denver, CO			66				59
				Cutter’s Ridge at Tobacco Row		2006			100.00	%			100.00	%		Richmond, VA			12				12
				Donora Towers		2002			100.00	%			100.00	%		Donora, PA			103				103
				Drake		1998			95.05	%			95.05	%		Philadelphia, PA			284				270
				Easthaven at the Village		1994-1995			100.00	%			100.00	%		Beachwood, OH			360				360
				Emerald Palms		1996/2004			100.00	%			100.00	%		Miami, FL			505				505
				Grand		1999			85.50	%			85.50	%		North Bethesda, MD			549				469
				Grand Lowry Lofts		2000			100.00	%			100.00	%		Denver, CO			261				261
				Grove		2003			100.00	%			100.00	%		Ontario, CA			101				101
	^+			Hamel Mill Lofts		2008/2009			100.00	%			100.00	%		Haverhill, MA			305				305
				Heritage		2002			100.00	%			100.00	%		San Diego, CA			230				230
(3)				Independence Place I		1973			50.00	%			50.00	%		Parma Hts., OH			202				101
				Independence Place II		2003			100.00	%			100.00	%		Parma Hts., OH			201				201
				Kennedy Biscuit Lofts		1990			98.90	%			100.00	%		Cambridge, MA			142				142