ESS
Essex Property Trust, Inc.
$276.70
Real Estate Investment Trust
85%
P/FFO × Residential REIT Multiple
Moderate
·
Conviction
Fair Value
Trading 22.5% below fair value
You pay
$276.70
Bear
$301.02
Fair
$356.81
Bull
$412.59
Bear
$301.02
+8.8%
$19.92 FFO × 19x
Fair
$356.81
+29.0%
$19.92 FFO × 22x
Bull
$412.59
+49.1%
$19.92 FFO × 26x
Key Value Driver
FFO/share ($19.92) × residential P/FFO multiple
Implied Market Multiple
13.9x
Summary
Our base-case estimate uses P/FFO × Residential REIT Multiple. We then blend that result with the average analyst price target of $284.67 from 46 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $356.81 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: $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 $284.67 (from 46 analysts). Our estimate is 36% 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