GOOD
Gladstone Commercial Corporation
$12.82
Real Estate Investment Trust
85%
P/FFO × Diversified REIT Multiple
Strong
·
Conviction
Undervalued
Trading 52.5% below fair value
You pay
$12.82
Bear
$22.32
Fair
$27.03
Bull
$31.74
Bear
$22.32
+74.0%
$1.60 FFO × 18x
Fair
$27.03
+110.7%
$1.60 FFO × 22x
Bull
$31.74
+147.5%
$1.60 FFO × 26x
Adjust Assumptions
22.1x
$
Key Value Driver
FFO/share ($1.60) × diversified P/FFO multiple
Implied Market Multiple
8.0x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (14 analysts)
$14.00
Divergence from AlphaVal
93%
Summary
At $1.60 FFO/share with a 22x diversified REIT multiple, the base-case value is $27.03 per share. Dividend yield: 3.1%. DDM cross-check: $7.45.
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: $7.45 (72% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $14.00 (from 14 analysts). Our estimate is 93% 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