ESRT
Empire State Realty Trust, Inc.
$4.67
Real Estate Investment Trust
85%
P/FFO × Diversified REIT Multiple
Strong
·
Conviction
Undervalued
Trading 73.4% below fair value
You pay
$4.67
Bear
$14.46
Fair
$17.53
Bull
$20.61
Bear
$14.46
+209.7%
$1.41 FFO × 14x
Fair
$17.53
+275.5%
$1.41 FFO × 17x
Bull
$20.61
+341.3%
$1.41 FFO × 20x
Adjust Assumptions
17.0x
$
Key Value Driver
FFO/share ($1.41) × diversified P/FFO multiple
Implied Market Multiple
3.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (16 analysts)
$5.00
Divergence from AlphaVal
251%
Summary
At $1.41 FFO/share with a 17x diversified REIT multiple, the base-case value is $17.53 per share. Dividend yield: 3.0%. DDM cross-check: $2.61.
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 $5.00 (from 16 analysts). Our estimate is 251% 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