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UPDATE: ISI Group Initiates Forest City Enterprises at Strong Buy on Discounted Valuation

Hunt Companies Signs Definitive Agreement to Acquire Military Housing Portfolio with Long–Term Contracts from Forest City Enterprises
Earnings Scheduled For December 9, 2013

ISI Group initiated coverage on Forest City Enterprises (NYSE: FCEA) with a Strong Buy rating and a $22 price target.

ISI Group analyst Samit Parikh noted, "Forest City is a deep value investment in our opinion, trading at a 37% discount to our ~$27 NAV (8.2% implied cap rate), and 15% discount to GAV (adjusting value for leverage). Shares are trading at such a discount for a variety of reasons which we believe could reverse over the next 12+ months, including leverage, which is too high at 12.6x net debt to annualized EBITDA (59% debt to GAV), income upside that has not been realized in large development projects over the past 2 years, and lack of visibility with the dedicated REIT community as the company is not a REIT and out of most benchmarks, and multiple business segments makes it difficult to analyze and value."

Forest City Enterprises closed at $16.92 on Thursday.

Posted-In: ISI GroupAnalyst Color Initiation Analyst Ratings


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