CLEVELAND—Forest City Enterprises said Tuesday afternoon that its board has approved a plan to convert the developer to a REIT, effective Jan. 1, 2016. Board chairman Charles A. Ratner calls the move “a major milestone for the future of Forest City,” adding that it “supports our strategic direction as a company and enhances our ability to create long-term shareholder value.”

David LaRue, the Cleveland-based company's president and CEO, says that implementing the company's strategic plan over the past three years has “substantially transformed Forest City” from being primarily a developer to having “a balanced focus on owning, operating and developing high-quality properties in core urban markets. During that time, we have significantly improved our balance sheet, focused our portfolio through non-core asset sales, reduced development exposure, raised cost-effective capital through financial partnerships and simplified our business.” Although there's more work to do, LaRue says, “our efforts to date have set the stage for today's announcement to pursue conversion to a REIT structure.”

LaRue calls Forest City's operating portfolio “undervalued” while being “well positioned to benefit from strong growth in the key urban markets where we are focused.” Citing a pipeline of additional opportunities in those markets, LaRue says the company will continue leveraging its core competencies while reshaping the business, improving its balance sheet and preparing for a REIT conversion.

GlobeSt.com will provide additional coverage of Forest City's decision as information becomes available. The company says it expects to have a strategic plan for its REIT conversion mapped out by mid-year.