BRSP
BrightSpire Capital, Inc.
$5.67
Real Estate Investment Trust
85%
P/FFO × Diversified REIT Multiple
Moderate
·
Conviction
Overvalued
Trading 23.5% above fair value
You pay
$5.67
Bear
$3.89
Fair
$4.59
Bull
$5.30
Bear
$3.89
-31.4%
$0.05 FFO × 16x
Fair
$4.59
-19.0%
$0.05 FFO × 20x
Bull
$5.30
-6.6%
$0.05 FFO × 23x
Key Value Driver
FFO/share ($0.05) × diversified P/FFO multiple
Implied Market Multiple
119.3x
Summary
Our base-case estimate uses P/FFO × Diversified REIT Multiple. We then blend that result with the average analyst price target of $6.00 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $4.59 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 11.3% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $11.93 (181% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $6.00 (from 8 analysts). Our estimate is 29% below 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