EQR
Equity Residential
$63.66
Real Estate Investment Trust
85%
P/FFO × Residential REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 30.2% below fair value
You pay
$63.66
Bear
$76.88
Fair
$91.15
Bull
$105.42
Bear
$76.88
+20.8%
$5.68 FFO × 16x
Fair
$91.15
+43.2%
$5.68 FFO × 19x
Bull
$105.42
+65.6%
$5.68 FFO × 22x
Adjust Assumptions
19.0x
$
Key Value Driver
FFO/share ($5.68) × residential P/FFO multiple
Implied Market Multiple
11.2x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (46 analysts)
$72.30
Divergence from AlphaVal
26%
Summary
At $5.68 FFO/share with a 19x residential REIT multiple, the base-case value is $91.15 per share. Dividend yield: 4.4%. DDM cross-check: $51.92.
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-based valuation: $51.92 (43% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $72.30 (from 46 analysts). Our estimate is 26% 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