APLE
Apple Hospitality REIT, Inc.
$16.56
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 29.3% below fair value
You pay
$16.56
Bear
$19.34
Fair
$23.42
Bull
$27.52
Bear
$19.34
+16.8%
$1.56 FFO × 18x
Fair
$23.42
+41.5%
$1.56 FFO × 22x
Bull
$27.52
+66.2%
$1.56 FFO × 26x
Key Value Driver
FFO/share ($1.56) × default P/FFO multiple
Implied Market Multiple
10.6x
Summary
Our base-case estimate uses P/FFO × Default REIT Multiple. We then blend that result with the average analyst price target of $16.00 from 17 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $23.42 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.
The 1.9% yield is low for a real estate company — investors are paying up because they expect above-average growth.
Dividend-based valuation: $5.96 (77% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $16.00 (from 17 analysts). Our estimate is 62% 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