CUBE
CubeSmart
$42.28
Real Estate Investment Trust
85%
P/FFO × Industrial REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 35.3% below fair value
You pay
$42.28
Bear
$53.48
Fair
$65.37
Bull
$77.26
Bear
$53.48
+26.5%
$2.61 FFO × 23x
Fair
$65.37
+54.6%
$2.61 FFO × 28x
Bull
$77.26
+82.7%
$2.61 FFO × 33x
Key Value Driver
FFO/share ($2.61) × industrial P/FFO multiple
Implied Market Multiple
16.2x
Summary
Our base-case estimate uses P/FFO × Industrial REIT Multiple. We then blend that result with the average analyst price target of $43.86 from 29 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $65.37 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.
Wall Street's average price target is $43.86 (from 29 analysts). Our estimate is 65% 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