Forest City Announces Joint Ventures with Madison International Realty for 15 New York City Area Retail Centers

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Mar 29, 2011, 05:22 ET

CLEVELAND, March 29, 2011 /PRNewswire/ --Forest City Enterprises, Inc. (NYSE: FCEA and FCEB) and Madison International Realty, LLC today announced the creation and closing of joint ventures for ownership of a portfolio of Forest City's urban retail centers in the New York City metropolitan area.

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Under the terms of the joint ventures, an affiliated entity of Madison International Realty will enter into existing partnerships in 15 mature retail and entertainment properties that are valued by this transaction at $851.5 million, including $499.9 million of debt. Madison will receive a 49 percent equity interest in the partnerships in exchange for an investment of $172.3 million in cash. Subsidiaries of Forest City will retain 51 percent equity interest, will serve as asset and property manager, and will manage leasing for the joint ventures. The transaction's implied valuation represents a 6.9 percent cap rate on 2010 net operating income for the properties.

"We're pleased to complete these joint ventures with Madison International Realty," said Charles A. Ratner, Forest City president and chief executive officer. "Today's announcement demonstrates both the significant value represented in our mature portfolio, and our continuing ability to create liquidity by monetizing select elements of that portfolio. This transaction also positions us with an experienced and well-respected real estate investor in Madison, and we look forward to exploring other mutually beneficial opportunities with them in the future. I want to congratulate our entire transaction team, led by Bruce Ratner and Andy Silberfein in our Brooklyn office, for their creativity and hard work in making these joint ventures a reality."

"These are high-quality, productive specialty centers in good locations in one of the strongest markets in the country," said Ronald Dickerman, president and founder of Madison International Realty. "We believe these assets have the ability to generate above average NOI growth in this under-retailed market. We are also pleased to establish this relationship with Forest City, a premier developer, owner and manager of commercial and residential real estate. They are committed to New York as a core urban market and are continuing to create value with great projects here and across the country."

The properties included in the transaction are: the 42nd Street Retail and Entertainment Complex and Harlem Center (retail component) in Manhattan; Atlantic Center, Atlantic Terminal (retail component) and The Heights in Brooklyn; Queens Place, Steinway Street Theatres and Shops at Northern Boulevard in Queens; Shops at Bruckner Boulevard, Castle Center and Shops at Gun Hill Road in the Bronx; Shops at Richmond Avenue and Forest Avenue Cinemas on Staten Island; and Columbia Park in North Bergen, New Jersey.

About Forest City

Forest City Enterprises, Inc. is an NYSE-listed national real estate company with $11.8 billion in total assets. The Company is principally engaged in the ownership, development, management and acquisition of commercial and residential real estate and land throughout the United States. For more information, visit http://www.forestcity.net.

About Madison International

Founded in 1996, Madison International is a real estate private equity firm focused on providing secondary equity capital for Partner Replacements and Recapitalizations of Class A properties and portfolios located throughout the U.S., U.K. and Western Europe.

Safe Harbor Language

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

ON THE WEB

www.forestcity.net

www.madisonint.com

SOURCE Forest City Enterprises, Inc.