Forest City Enterprises has grown from treeline to skyline. Founded in 1920 as a lumber dealer, the company now focuses on commercial and residential real estate development in metropolitan areas across the US. Forest City, which has more than $10 billion in assets, owns and develops commercial properties, including 45 retail centers and shopping malls, 50 office buildings, and a couple of hotels in about 15 states. The company's residential group owns and manages some 120 upscale and middle-market apartments, condominiums, and senior housing communities, as well as more than 14,000 military housing units. Forest City also owns about 10,000 acres of land, most of which is held for sale.
Major tenants in Forest City's commercial properties include AMC Entertainment, Bass Pro Shops, Regal Entertainment, the City of New York, the US Government, Morgan Stanley, and Millennium Pharmaceuticals).
Although Forest City's portfolio is geographically diverse, it considers its core markets to be New York City, Philadelphia, Denver, Boston, Chicago, Los Angeles, San Francisco, and the Washington, DC metropolitan area. The company makes selective acquisitions in urban markets such as Dallas, Texas and Albuquerque, New Mexico.
Forest City is mainly focused on its core portfolio of apartments, retail, and office properties. As a result, the company plans to sell much of its land holdings. Growing demand for rental properties has the company focused on that segment and it is looking to develop new multifamily projects in Washington, DC and Dallas, and Denver. In efforts to diversify itself, Forest City has created various partnerships with federal military entities to redevelop military family communities in Hawaii, Illinois, Washington, and Colorado. However, military housing remains a small portion of Forest City's overall business (some 4% in revenue).
As the commercial and residential real estate market suffered during the recession, Forest City took several steps to manage the challenges it faced during the economic downturn. Revenues and net income dipped during the recession. However, the company curtailed development and focused on maintaining its portfolio. It also worked to manage its debt and cut costs by reducing its workforce. Forest City also sold some properties in order to reverse losses. Forest City took advantage of stress in the market to make land acquisitions at favorable prices. Improving asset value also allowed the company to unlock value in the portfolio by making some sales.
By 2011 the economy began to recover. The strength in Forest City's residential and retail business portfolio helped the company achieve favorable earnings results that year. However, lower gains on property sales and joint ventures drove down profits and Forest City reported a net loss of more than $86 million. Revenues in 2011 also were down compared to 2010. But timing is everything in the real estate business and as major projects are completed in the future, Forest City expects to benefit from increased revenue.
The interrelated Ratner, Miller, and Shafran families own Forest City. The Ratner family and Forest City once held a majority stake in the New Jersey Nets basketball team. In 2010 they sold 80% of the team to billionaire Mikhail Prokhorov, the richest man in Russia. The sale provided subsidiary Forest City Ratner with capital to begin the much-delayed, controversial Atlantic Yards mixed-use development in Brooklyn. The $5 billion project includes a new arena for The Nets basketball team. As part of the deal Prokhorov also holds a 45% stake in the arena (named the Barclays Center).
In 2011 Forest City's Charles Ratner stepped down as president and CEO. However, he remained chairman of the board. Ratner was succeeded by David LaRue, the former executive vice president and COO of Forest City. LaRue is the first chief executive in Forest City's history who is not related to the founding family.