Everyone has a story to share about Ron Ratner. One business associate recalls how Ratner stayed up nearly all night reviewing every single floor plan of a new property and reworking the plans until each one was absolutely perfect. Another colleague remembers how Ratner completely changed a building's design halfway through the construction process.
But perhaps the most memorable Ratner anecdote involves a restaurant and a handful of architects. The Forest City Residential executive decided he needed to sketch a floor plan for his meal companions, and without a sheet of paper handy, he grabbed the next best thing within arm's reach: a linen tablecloth. Ratner didn't think anything of his substitute notepaper, but the restaurant sure did. Six weeks later, the hosting architect got the bill for the meal–and the tablecloth.
These legendary tales capture the Forest City executive's colorful, and sometimes eccentric, personality. The highly energetic and meticulous Ratner won't stop until he's completely satisfied with a project–a work ethic that is helping him change America's urban landscape one community at a time. "Ron has such a big vision of the world," says Gary Gross, a partner at North Royalton, Ohio-based Gross Builders, which has partnered with Forest City on projects since the '60s. "Look at the projects he does. He wants to create communities and transform the world by doing it."
And Ratner is doing just that as president and CEO of Forest City Residential, a division of the mega-giant Forest City Enterprises, based in Cleveland. (He also serves as executive vice president of the overall company.) The nearly $8 billion public real estate company–headed by three generations of the Ratner, Miller, and Shafran families–owns, develops, manages, and acquires both urban and suburban residential and commercial real estate and land throughout the country.
The company focuses its efforts on reclaiming America's cities and is one of the country's most ambitious urban developers in markets such as Boston, Washington, D.C., Philadelphia, Chicago, Los Angeles, and San Francisco. As such, it has tackled projects both large and small, from the massive redevelopment of Denver's Stapleton International Airport, which ultimately will be home to 30,000 people, to niche projects such as River Lofts at Ashton Mill near Providence, R.I., which transformed a Civil War-era cotton mill into 193 loft apartments.
Regardless of the size of the project, though, there's always one powerful force behind it: Ron Ratner, Multifamily Executive's 2006 Executive of the Year. "He is a tremendous innovator, and he understands the development business better than anybody else I know," says Greg Vilkin, who heads up the company's West Coast operations as president of Forest City Residential West.
Journey Home
"Our family still goes on canoe trips, and Ronnie is always the guy on those canoe trips who's the hardest worker, puts in the most effort, carries the most on his back, and designs the camp site." –Chuck Ratner, president and CEO of Forest City Enterprises and Ron's brother
Ron Ratner vividly recalls his first taste of the business world–which occurred at age eight. Too young to join his three older brothers at camp, he spent the summer working in the family's lumber business. (They sold the business in 2004; for more company history, see "Family Matters" below.) But the only task the 8-year-old Ronnie could physically handle was moving small garage windows from one stack to another, which he did diligently. (Ratner only realized later that the department head would move the pile back to its original location each evening so the young future executive would have something to do the next day.)
As he grew up, Ratner naturally learned more about the family business. "I think we all grew up interested in real estate," says Chuck Ratner, president and CEO of Forest City Enterprises and Ron's brother. "It was the talk of the shabbos [Jewish holiday] table." Ratner worked at the company on and off over the summers, and his first three jobs in the real estate business were actually working for Forest City's partners. "Albert [Ratner, a cousin and Forest City Enterprises' co-chairman of the board] was my mentor, and he said, 'You shouldn't get your first experience working in the company; you've got to learn what it's like to work for somebody else,'" says Ron Ratner.
But when Ratner graduated from Brandeis University in 1969, he didn't immediately gravitate to the family business–and that was OK. "I think Chuck might have said there was pressure [as the oldest], but being the youngest son, by the time I came along, as long as I didn't burn the house down I was considered to be a great success," Ratner says. "I had tremendous support from my brothers and from my family."
After college, Ratner spent three months in the Peace Corps and two years as a special education teacher before going to graduate school. He was accepted to both business and law school, but instead chose to pursue a master's in architecture from the University of California, Los Angeles, thinking it would be good background if he did go into real estate. "When I started the program, I actually got very interested and said, 'Geez, maybe I really want to do this,'" Ratner recalls. "But then I realized that that there were a couple of my colleagues who were really talented, and I said, 'Whoops.'"
He officially joined Forest City in 1974, bringing his newfound knowledge to the family tradition. "The intellectual discipline of architecture is wonderful and a tremendous part of what I brought to the business," says Ratner.
Others agree. "It's not unusual for a developer to be into architecture, but it's unusual to be as into architecture and to be as smart as he is," says Daniel Gehman, a principal at Thomas P. Cox: Architects, an Irvine, Calif.-based firm that has designed several Forest City properties. "When he says something, it carries a lot of weight."
And it's not just because of his last name, which he says offers little protection from the pressure that any real estate leader encounters. "As a family executive, this is really pass or fail; you either get an A or you flunk," Ratner says. "You are under constant pressure to perform, and you have to be willing to accept that." Other family members have come and gone because they couldn't make it in the business.
City Vision
"We often send Ronnie materials the night before a meeting; he hates coming into a meeting not having seen the documents beforehand. Sometimes project managers will bristle against that idea, because if you send him papers ahead of time, he will absolutely go through every one of them and change every one of them." –Daniel Gehman, principal, Thomas P. Cox: Architects
"I'm an organizational nightmare," Ratner declares, shaking his head as he walks into his office on the 11th floor of the Terminal Tower, part of Forest City's Tower City Center redevelopment project. Ratner isn't exaggerating: His desk is piled so high with stacks of papers that the desk's surface is hidden from view, while floor plans and project submittal binders line the floor and windowsills.
But the strategy works. Ratner, together with a highly skilled executive team of both relatives and non-family members, has grown the company's residential arm into one of Forest City's best performing divisions. "Ronnie's business alone is bigger than the whole company was 10 years ago," says Chuck Ratner. At the end of fiscal 2005, the residential group's assets were $2.2 billion, or 27 percent of the total assets of Forest City Enterprises. (The company owns interests in 34,829 apartment units at 123 properties, ranging from senior and assisted living projects to high-end luxury communities.) The division also contributes about one-third of the company's earnings.
Such numbers are the result of some grand plans by Ratner and his team. Among the company's mega mixed-use endeavors: Atlantic Yards, a mixed-use development in Brooklyn expected to include a new Frank Gehry-designed arena for the New Jersey Nets basketball team (in which Forest City is an investor); the redevelopment of a 42-acre former military site in Washington, D.C., into the Southeast Federal Center mixed-use community; the 2 million-square-foot Waterfront project in D.C., which involves the redevelopment of the former Waterside Mall; and the newly completed University Park at MIT, a 27-acre project adjacent to MIT's Cambridge campus. (For more on University Park, look for the November 2006 issue of Multifamily Executive.)
As big and intimidating as these projects may be, they never seem to scare Ratner, says Gross, a long-time colleague. "The size of a project doesn't seem to faze him," Gross observes. "He will just go about analyzing a project–whether it's big or small–in the same way. He's great at conceptualizing a project, which is the real genius of a work."
"He has what I consider super intellect and will go ahead with projects where others fear to tread," says Sam Miller, Forest City Enterprises' co-chairman of the board and treasurer. "He never takes no for an answer, and at the end of the day I know very few undertakings that Ronnie has done that haven't been eminently successful."
Yet while Ratner sees the big picture, he can also focus on the fine points of a project or property. "He cares a great deal about detail," says Chuck Ratner. "He's very concerned about what the kitchen countertops look like and what appliances and light fixtures are used." But the design-minded CEO never forgets the bottom line. When Ratner visited an old office building in L.A. that Forest City was converting into condos, he noticed an unnecessary elevator shaft that could be removed and replaced with a unit on each level. "He added substantial value to the building," says his brother.
And Ratner, who is nearly 60, does all this work with an enormous amount of verve. "Ron is a ball of energy," say Judith Rawson, mayor of Shaker Heights, Ohio, a Cleveland suburb where Forest City is working on a major transit-oriented development. "We could use a thousand more just like him."
Deal Makers
"Everyone kids Ronnie that he talks too much. Ronnie's cell phone message is, 'You've reached the offices of Ron Ratner. At the tone, please start listening.'"
–Chuck Ratner
Ratner's energy is coupled with a charisma and a gift of gab that helps the company get its always-ambitious projects off the ground. A vast majority of Forest City's projects are developed through public/private partnerships, which requires the developer to work with localities, universities, and other public institutions to secure zoning and permitting approvals and maximize economic incentives and tax-exempt financing.
Ratner, who has been working with public entities for decades, has developed a real knack for community development work. "He is good at communicating," says Rich Moore, a real estate analyst at RBC Capital Markets. "He's very dynamic and a very excitable guy." And he's equally knowledgeable. "When Ron walked me through Stapleton, his knowledge of what was going on was very extensive," adds Moore. "If you take a project of that size and understand it the way he clearly understood it and was able to communicate it to me, that has to be a plus when you are trying to work with government entities that want to understand why it's important that they shell out financial assistance to you."
Forest City doesn't usually have too tough a time convincing cities to form a partnership, as the company helps cities with neglected properties or difficult projects that other developers might deliberately ignore. "Because these guys are the best at doing [urban projects], the city has a huge interest in lending a hand," says Moore. Plus, Forest City's core philosophies and business strategies as a long-term property holder and a financially transparent public firm align well with cities' needs. One such case: At Stapleton, the city was looking for a major national developer with a long-term commitment to ownership, mixed-use talents, and the ability and desire to work with a neighborhood development corporation and citizen advisory board. Forest City fit the bill perfectly, says Ratner.
To get its frequently complicated projects done, Forest City relies on a host of financing tools: federal and state historic tax credits, low-income housing tax credits, and, quite often, federal tax-exempt bond financing, which generally requires developers to make 20 percent of the units available to residents earning 50 percent or less of the area mean household income. And, whenever possible, the company will combine these types of financial incentives to make the deal work.
That's what it did with Sky55, a 411-unit apartment high-rise in Chicago. The city offered Forest City a 50 percent abatement of real estate taxes in exchange for making one-third of the units affordable. "Cook County happens to have the highest rental real estate taxes that we pay anywhere in the country, so while the 50 percent abatement is usually significant, the income loss was [still] staggering," explains Ratner. By obtaining bond financing for the deal, Forest City was able to recoup some of that lost income.
While Ratner readily admits that an affordable component can make a project's numbers pencil out, he sees much more than a simple math equation. Providing housing for all socioeconomic groups fits the company's overarching philosophy. "We just believe we have a commitment to do affordable housing when we're working in urban environments," he says.
And knowing Ron Ratner, he'll personally ensure that Forest City does just that. "As a leader, I am someone who really plunges in," he says. "I tend not to just stand on the side of the lake and say, 'OK, you swim here, you swim there.' I jump in and say, 'There's an island out there in the lake, let's get there.'"
Forest City Enterprises
Founded: 1921
Headquarters: Cleveland
Employees: 4,190
2005 Revenue (residential group): $585 million
Residential units owned: 34,829 (as of Jan. 31, 2006)
Residential units under development (projected) year-end '06: 10,869
Geographic coverage: National
Leadership Lessons: Ronald Ratner
Age: 59
First job: High school special education teacher
Ideal leader: My father, Max Ratner (a company founder)
Best business decision: Deciding to surround myself with the best and brightest colleagues I could find.
Greatest challenge as a leader: Constantly maintaining a balance between the entrepreneurial drive necessary to do great real estate and the administrative discipline necessary to survive the experience.
Hobbies: Wooden boat building and architectural moonlighting
Community involvement: Includes board or committee memberships at Brandeis University, Western Reserve Historical Society, Park Synagogue, NMHC, and NAHB
Family Matters
Family values run deep at Forest City Enterprises.
The Ratner family name is a powerful one in the real estate industry–and for good reason. The multi-generational family business, which dates back 80-plus years, has become one of the most dominant players in both the residential and commercial real estate industries.
The company's history shows the American dream at work. After the Ratner family immigrated to the United States from Poland in the early 20th century, four siblings (including Ron Ratner's father, Max) started a lumber business in Cleveland in 1921. The business naturally morphed into a land development business, since land could be bought cheaply during and after the Great Depression. The company went public in 1960, and today its nearly $8 billion portfolio includes approximately 35,000 rental units, 2,500 hotel rooms, 22 million square feet of retail stores, and 11 million square feet of office buildings in 25 states and the District of Columbia.
A strong family bond and core ethics have helped keep the company afloat from one generation to the next, say family members and business colleagues. "In most family businesses you find them jockeying for positions," says Victor MacFarlane, managing principal of San Francisco-based MacFarlane Partners, a pension fund manager that partners with Forest City. "This family gets it that the sum of the parts is greater collectively than it is individually. Because of that, they have created something that is big enough for each of them to shine in their own individual way."
Marching Orders
Forest City enters the military housing segment. Ron Ratner is putting his famous detail-oriented skills to work in a new area: military housing. Two years ago, Forest City entered the military housing niche, looking for opportunity during the apartment market's downturn, and now Ratner's office windowsills are lined with thick three-ring binders and handbooks detailing U.S. Navy lingo, guidelines, and executive updates for the company's two military housing projects in Hawaii and Illinois.
But Ratner isn't intimidated. "We have done a lot of programs where we work with public housing authorities, have a targeted market, and partner with a public entity in the same way we are a partner with the various military branches," says the Forest City Residential president and CEO.
Military housing projects represent an immense undertaking, even for a company of Forest City's scale. But the company quickly learned how to work effectively with the federal government, says Joseph F. Calcara, chief of real estate for the Army Corp. of Engineers in Washington, D.C. "I would put them in the upper tier of flexibility and adaptibliity in terms of dealing with some of the challenges out there."
Such large-scale projects are critical to the company's success, Ratner believes. "If we are going to add to the value of the company and add to our shareholder value–which is really what the game is all about–we have to do something of reasonably large scale."
Hall of Fame
As Multifamily Executive's 2006 Executive of the Year, Ron Ratner joins an impressive crowd. Past winners include:
2005: Tom Bozzuto, The Bozzuto Group
2004: Steven LeBlanc, Summit Properties
2003:George S. Quay, Village Green Cos.
2002: H. Eric Bolton, Mid-America Apartment Communities
2001:Arthur Evans, A.F. Evans Co.Properties