ESS
Essex Property Trust, Inc.
$277.29
Real Estate Investment Trust
85%
P/FFO × Residential REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 28.5% below fair value
You pay
$277.29
Bear
$327.10
Fair
$387.72
Bull
$448.35
Bear
$327.10
+18.0%
$19.92 FFO × 19x
Fair
$387.72
+39.8%
$19.92 FFO × 22x
Bull
$448.35
+61.7%
$19.92 FFO × 26x
Adjust Assumptions
22.4x
$
Key Value Driver
FFO/share ($19.92) × residential P/FFO multiple
Implied Market Multiple
13.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (47 analysts)
$305.91
Divergence from AlphaVal
27%
Summary
At $19.92 FFO/share with a 22x residential REIT multiple, the base-case value is $387.72 per share. Dividend yield: 3.7%. DDM cross-check: $252.67.
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: $252.67 (35% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $305.91 (from 47 analysts). Our estimate is 27% 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