AVB
AvalonBay Communities, Inc.
$189.61
Real Estate Investment Trust
85%
P/FFO × Residential REIT Multiple
Mild
·
Conviction
Fair Value
Trading 11.5% below fair value
You pay
$189.61
Bear
$180.65
Fair
$214.19
Bull
$247.73
Bear
$180.65
-4.7%
$13.84 FFO × 16x
Fair
$214.19
+13.0%
$13.84 FFO × 19x
Bull
$247.73
+30.7%
$13.84 FFO × 22x
Key Value Driver
FFO/share ($13.84) × residential P/FFO multiple
Implied Market Multiple
13.7x
Summary
Our base-case estimate uses P/FFO × Residential REIT Multiple. We then blend that result with the average analyst price target of $198.83 from 42 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $214.19 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-based valuation: $122.40 (45% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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