CIO
City Office REIT, Inc.
$6.99
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Strong
·
Conviction
Undervalued
Trading 52.0% below fair value
You pay
$6.99
Bear
$11.38
Fair
$14.55
Bull
$17.73
Bear
$11.38
+62.8%
$1.03 FFO × 13x
Fair
$14.55
+108.2%
$1.03 FFO × 17x
Bull
$17.73
+153.6%
$1.03 FFO × 21x
Key Value Driver
FFO/share ($1.03) × office P/FFO multiple
Implied Market Multiple
6.8x
Summary
Our base-case estimate uses P/FFO × Office REIT Multiple. We then blend that result with the average analyst price target of $15.00 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $14.55 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 5.7% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $7.45 (48% 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