DEA
Easterly Government Properties, Inc.
$23.22
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 33.7% below fair value
You pay
$23.22
Bear
$26.93
Fair
$35.00
Bull
$43.08
Bear
$26.93
+16.0%
$2.69 FFO × 10x
Fair
$35.00
+50.8%
$2.69 FFO × 13x
Bull
$43.08
+85.5%
$2.69 FFO × 16x
Adjust Assumptions
13.0x
$
Key Value Driver
FFO/share ($2.69) × office P/FFO multiple
Implied Market Multiple
8.6x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (8 analysts)
$26.00
Divergence from AlphaVal
35%
Summary
At $2.69 FFO/share with a 13x office REIT multiple, the base-case value is $35.00 per share. Dividend yield: 7.8%.
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 7.8% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $26.00 (from 8 analysts). Our estimate is 35% 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