AAT
American Assets Trust, Inc.
$22.78
Real Estate Investment Trust
85%
P/FFO × Diversified REIT Multiple
Strong
·
Conviction
Undervalued
Trading 53.7% below fair value
You pay
$22.78
Bear
$40.65
Fair
$49.17
Bull
$57.69
Bear
$40.65
+78.4%
$3.24 FFO × 18x
Fair
$49.17
+115.9%
$3.24 FFO × 22x
Bull
$57.69
+153.3%
$3.24 FFO × 26x
Key Value Driver
FFO/share ($3.24) × diversified P/FFO multiple
Implied Market Multiple
7.0x
Summary
Our base-case estimate uses P/FFO × Diversified REIT Multiple. We then blend that result with the average analyst price target of $18.50 from 11 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $49.17 per share.
Warnings
Standard profit figures are misleading for real estate companies — large non-cash accounting charges make profits look artificially low. Dividend yield and funds from operations are better measures.
Dividend yield of 6.0% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $22.58 (60% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $18.50 (from 11 analysts). Our estimate is 207% above the consensus -- consider that gap carefully.
Key Risks
- P/E and EV/EBITDA are structurally wrong for REITs — use P/FFO and NAV
- Interest rate sensitivity: REIT multiples compress when rates rise
- FFO approximation (NI + D&A) may include gains on property sales — verify