ARE
Alexandria Real Estate Equities, Inc.
$45.92
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Strong
·
Conviction
Undervalued
Trading 51.8% below fair value
You pay
$45.92
Bear
$74.53
Fair
$95.19
Bull
$115.86
Bear
$74.53
+62.3%
$8.11 FFO × 11x
Fair
$95.19
+107.3%
$8.11 FFO × 14x
Bull
$115.86
+152.3%
$8.11 FFO × 17x
Adjust Assumptions
13.9x
$
Key Value Driver
FFO/share ($8.11) × office P/FFO multiple
Implied Market Multiple
5.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (25 analysts)
$54.00
Divergence from AlphaVal
76%
Summary
At $8.11 FFO/share with a 14x office REIT multiple, the base-case value is $95.19 per share. Dividend yield: 6.3%. DDM cross-check: $53.67.
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 6.3% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $53.67 (44% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $54.00 (from 25 analysts). Our estimate is 76% above the consensus -- consider that gap carefully.
This stock is 43% below its 52-week high, with weak or declining earnings. That combination often signals real trouble, even though the valuation below is based on other fundamentals.
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