NEW YORK CITY-Forest City Enterprises, Inc. is in negotiations with Bruce C. Ratner to restructure their combined interest in a total of 30 properties and service companies currently joint owned. Ownership of joint projects currently in development, such as the Atlantic Yards in Brooklyn, will be negotiated when the projects are completed and valued.

All of the properties included in the portfolio except one are located in the New York City metropolitan area. Currently, Cleveland-based Forest City owns a majority interest in its New York portfolio. Upon closing of the proposed transaction, Forest City will be entitled to the remaining economic benefits of the properties. Forest City told GlobeSt.com it would not comment on the deal "while in negotiations."

According to the proposed transaction, Ratner will contribute his ownership interest and Forest City will contribute a portion of its ownership interest of the portfolio into a newly-formed limited liability company. Ratner will receive approximately $60 million in cash and 3.9 million units in the new limited liability company, although the mix of cash and units is still under consideration. This restructuring excludes the impact of any non-recourse debt related to these assets because it already is included in Forest City's consolidated financial statements.

Ratner will become an executive employee of Forest City and continue to be the president and CEO of Forest City Ratner Companies. Upon closing of the proposed transaction, Ratner will become a member of Forest City's board of directors.

Following a one-year lockup period, each of these units may be exchanged for one share of Forest City's Class A Common Stock or, at Forest City's option, cash equal to the market price of the stock at that time. For the first five years only, units that have not been exchanged will receive their proportionate share of an aggregate annual preferred payment of $2.5 million plus an amount equal to the dividends payable on Forest City stock. After five years, the annual preferred payment on the outstanding units will equal only the dividends payable on Forest City stock.

Forest City's Board of Directors has established a special committee of independent directors to consider and act upon the proposed transaction. The special committee has engaged Greenhill & Co., LLC as its adviser to evaluate the proposed transaction from a financial perspective.