Seeking Alpha: After A Solid Run, Valuation At Forest City Enterprises Seems More Reasonable

There is a lot more that Forest City Enterprises (NYSE:FCE.A) could do to create/enhance value for its shareholders. This soon-to-be-REIT has a lot of room left to reduce operating expenses, reduce leverage, and reduce complexity - all of which play into valuation in a negative way. I also believe that there is also room to improve communication with the investment community and adopt a more shareholder-friendly corporate structure.

But for those positives, I see enough negatives to not be so favorably inclined towards the shares as I was back in August. Asset sales have developed at a slower-than-expected pace and I'm concerned that major asset sales like Barclays, the Nets, and 625 Fulton could disappoint. I also think that reducing corporate expenses is easier projected than done and that the conversion to a REIT structure isn't a panacea. Same-store net operating income growth remains solid and I do believe the shares are undervalued, but the 10% to 15% undervaluation I see isn't enough to leave me as bullish on the shares as I was 20% ago.

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After A Solid Run, Valuation At Forest City Enterprises Seems More Reasonable