DEI
Douglas Emmett, Inc.
$12.01
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Strong
·
Conviction
Undervalued
Trading 46.5% below fair value
You pay
$12.01
Bear
$17.56
Fair
$22.47
Bull
$27.36
Bear
$17.56
+46.2%
$2.48 FFO × 10x
Fair
$22.47
+87.1%
$2.48 FFO × 13x
Bull
$27.36
+127.8%
$2.48 FFO × 16x
Key Value Driver
FFO/share ($2.48) × office P/FFO multiple
Implied Market Multiple
4.8x
Summary
Our base-case estimate uses P/FFO × Office REIT Multiple. We then blend that result with the average analyst price target of $12.33 from 33 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $22.47 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 6.3% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $14.16 (47% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $12.33 (from 33 analysts). Our estimate is 117% 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