AVB
AvalonBay Communities, Inc.
$184.06
Real Estate Investment Trust
85%
P/FFO × Residential REIT Multiple
Moderate
·
Conviction
Fair Value
Trading 16.3% below fair value
You pay
$184.06
Bear
$185.40
Fair
$219.82
Bull
$254.24
Bear
$185.40
+0.7%
$13.77 FFO × 16x
Fair
$219.82
+19.4%
$13.77 FFO × 19x
Bull
$254.24
+38.1%
$13.77 FFO × 22x
Adjust Assumptions
19.0x
$
Key Value Driver
FFO/share ($13.77) × residential P/FFO multiple
Implied Market Multiple
13.4x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (42 analysts)
$198.83
Divergence from AlphaVal
11%
Summary
At $13.77 FFO/share with a 19x residential REIT multiple, the base-case value is $219.82 per share. Dividend yield: 3.8%. DDM cross-check: $122.40.
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 (44% 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