BFS
Saul Centers, Inc.
$29.09
Real Estate Investment Trust
85%
P/FFO × Retail REIT Multiple
Strong
·
Conviction
Undervalued
Trading 43.1% below fair value
You pay
$29.09
Bear
$41.41
Fair
$51.12
Bull
$60.84
Bear
$41.41
+42.3%
$3.90 FFO × 12x
Fair
$51.12
+75.7%
$3.90 FFO × 15x
Bull
$60.84
+109.1%
$3.90 FFO × 18x
Adjust Assumptions
15.0x
$
Key Value Driver
FFO/share ($3.90) × retail P/FFO multiple
Implied Market Multiple
7.5x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (7 analysts)
$43.50
Divergence from AlphaVal
18%
Summary
At $3.90 FFO/share with a 15x retail REIT multiple, the base-case value is $51.12 per share. Dividend yield: 8.1%. DDM cross-check: $34.05.
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 8.1% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $34.05 (33% 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