BDN
Brandywine Realty Trust
$3.00
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Strong
·
Conviction
Undervalued
Trading 56.9% below fair value
You pay
$3.00
Bear
$5.51
Fair
$6.97
Bull
$8.43
Bear
$5.51
+83.8%
$0.67 FFO × 10x
Fair
$6.97
+132.2%
$0.67 FFO × 13x
Bull
$8.43
+181.0%
$0.67 FFO × 16x
Key Value Driver
FFO/share ($0.67) × office P/FFO multiple
Implied Market Multiple
4.5x
Summary
Our base-case estimate uses P/FFO × Office REIT Multiple. We then blend that result with the average analyst price target of $3.00 from 24 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $6.97 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 yield of 13.0% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $3.00 (from 24 analysts). Our estimate is 176% 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