AVB
AvalonBay Communities, Inc.
$185.65
Real Estate Investment Trust
85%
P/FFO × Residential REIT Multiple
Mild
·
Conviction
Fair Value
Trading 13.3% below fair value
You pay
$185.65
Bear
$180.61
Fair
$214.15
Bull
$247.69
Bear
$180.61
-2.7%
$14.13 FFO × 16x
Fair
$214.15
+15.4%
$14.13 FFO × 19x
Bull
$247.69
+33.4%
$14.13 FFO × 22x
Key Value Driver
FFO/share ($14.13) × residential P/FFO multiple
Implied Market Multiple
13.1x
Summary
Our base-case estimate uses P/FFO × Residential REIT Multiple. We then blend that result with the average analyst price target of $191.27 from 42 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $214.15 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: $120.00 (46% 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