DEI
Douglas Emmett, Inc.
$10.17
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Strong
·
Conviction
Undervalued
Trading 61.7% below fair value
You pay
$10.17
Bear
$20.76
Fair
$26.55
Bull
$32.33
Bear
$20.76
+104.2%
$2.45 FFO × 10x
Fair
$26.55
+161.0%
$2.45 FFO × 13x
Bull
$32.33
+217.9%
$2.45 FFO × 16x
Adjust Assumptions
13.0x
$
Key Value Driver
FFO/share ($2.45) × office P/FFO multiple
Implied Market Multiple
4.2x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (33 analysts)
$13.50
Divergence from AlphaVal
97%
Summary
At $2.45 FFO/share with a 13x office REIT multiple, the base-case value is $26.55 per share. Dividend yield: 7.5%. DDM cross-check: $14.16.
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 7.5% 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 $13.50 (from 33 analysts). Our estimate is 97% 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