HIW
Highwoods Properties, Inc.
$31.22
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 28.3% below fair value
You pay
$31.22
Bear
$34.28
Fair
$43.52
Bull
$52.76
Bear
$34.28
+9.8%
$4.12 FFO × 10x
Fair
$43.52
+39.4%
$4.12 FFO × 13x
Bull
$52.76
+69.0%
$4.12 FFO × 16x
Key Value Driver
FFO/share ($4.12) × office P/FFO multiple
Implied Market Multiple
7.6x
Summary
Our base-case estimate uses P/FFO × Office REIT Multiple. We then blend that result with the average analyst price target of $28.00 from 22 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $43.52 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 yield of 6.4% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $28.00 (from 22 analysts). Our estimate is 74% 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