BFS
Saul Centers, Inc.
$36.59
Real Estate Investment Trust
85%
P/FFO × Retail REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 26.6% below fair value
You pay
$36.59
Bear
$40.37
Fair
$49.85
Bull
$59.32
Bear
$40.37
+10.3%
$3.93 FFO × 12x
Fair
$49.85
+36.2%
$3.93 FFO × 15x
Bull
$59.32
+62.1%
$3.93 FFO × 18x
Key Value Driver
FFO/share ($3.93) × retail P/FFO multiple
Implied Market Multiple
9.3x
Summary
Our base-case estimate uses P/FFO × Retail REIT Multiple. We then blend that result with the average analyst price target of $43.50 from 7 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $49.85 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 6.4% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $34.05 (34% 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