ESRT
Empire State Realty Trust, Inc.
$5.54
Real Estate Investment Trust
85%
P/FFO × Diversified REIT Multiple
Strong
·
Conviction
Undervalued
Trading 62.3% below fair value
You pay
$5.54
Bear
$12.13
Fair
$14.70
Bull
$17.28
Bear
$12.13
+118.9%
$1.41 FFO × 14x
Fair
$14.70
+165.3%
$1.41 FFO × 17x
Bull
$17.28
+211.9%
$1.41 FFO × 20x
Key Value Driver
FFO/share ($1.41) × diversified P/FFO multiple
Implied Market Multiple
3.9x
Summary
Our base-case estimate uses P/FFO × Diversified REIT Multiple. We then blend that result with the average analyst price target of $6.00 from 16 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $14.70 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: $2.61 (85% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $6.00 (from 16 analysts). Our estimate is 193% 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