HIW
Highwoods Properties, Inc.
$25.65
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Strong
·
Conviction
Undervalued
Trading 40.8% below fair value
You pay
$25.65
Bear
$34.15
Fair
$43.35
Bull
$52.56
Bear
$34.15
+33.1%
$4.12 FFO × 10x
Fair
$43.35
+69.0%
$4.12 FFO × 13x
Bull
$52.56
+104.9%
$4.12 FFO × 16x
Key Value Driver
FFO/share ($4.12) × office P/FFO multiple
Implied Market Multiple
6.2x
Summary
Our base-case estimate uses P/FFO × Office REIT Multiple. We then blend that result with the average analyst price target of $27.33 from 22 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $43.35 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 7.8% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $27.33 (from 22 analysts). Our estimate is 78% 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