EQR
Equity Residential
$66.20
Real Estate Investment Trust
85%
P/FFO × Residential REIT Multiple
Moderate
·
Conviction
Fair Value
Trading 22.6% below fair value
You pay
$66.20
Bear
$72.17
Fair
$85.56
Bull
$98.96
Bear
$72.17
+9.0%
$5.69 FFO × 16x
Fair
$85.56
+29.3%
$5.69 FFO × 19x
Bull
$98.96
+49.5%
$5.69 FFO × 22x
Key Value Driver
FFO/share ($5.69) × residential P/FFO multiple
Implied Market Multiple
11.6x
Summary
Our base-case estimate uses P/FFO × Residential REIT Multiple. We then blend that result with the average analyst price target of $70.83 from 46 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $85.56 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-based valuation: $53.80 (41% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $70.83 (from 46 analysts). Our estimate is 30% 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