HIW
Highwoods Properties, Inc.
$29.21
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 40.0% below fair value
You pay
$29.21
Bear
$38.35
Fair
$48.68
Bull
$59.01
Bear
$38.35
+31.3%
$4.12 FFO × 10x
Fair
$48.68
+66.7%
$4.12 FFO × 13x
Bull
$59.01
+102.0%
$4.12 FFO × 16x
Adjust Assumptions
13.0x
$
Key Value Driver
FFO/share ($4.12) × office P/FFO multiple
Implied Market Multiple
7.1x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (22 analysts)
$32.50
Divergence from AlphaVal
50%
Summary
At $4.12 FFO/share with a 13x office REIT multiple, the base-case value is $48.68 per share. Dividend yield: 6.8%. DDM cross-check: $37.27.
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 6.8% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $32.50 (from 22 analysts). Our estimate is 50% 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