ESS
Essex Property Trust, Inc.
$269.43
Real Estate Investment Trust
85%
P/FFO × Residential REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 29.8% below fair value
You pay
$269.43
Bear
$323.86
Fair
$383.90
Bull
$443.95
Bear
$323.86
+20.2%
$19.92 FFO × 19x
Fair
$383.90
+42.5%
$19.92 FFO × 22x
Bull
$443.95
+64.8%
$19.92 FFO × 26x
Adjust Assumptions
22.4x
$
Key Value Driver
FFO/share ($19.92) × residential P/FFO multiple
Implied Market Multiple
13.5x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (47 analysts)
$300.77
Divergence from AlphaVal
28%
Summary
At $19.92 FFO/share with a 22x residential REIT multiple, the base-case value is $383.90 per share. Dividend yield: 3.8%. DDM cross-check: $239.94.
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: $239.94 (38% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $300.77 (from 47 analysts). Our estimate is 28% 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