HPP
Hudson Pacific Properties, Inc.
$15.53
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 36.8% below fair value
You pay
$15.53
Bear
$19.09
Fair
$24.58
Bull
$30.07
Bear
$19.09
+22.9%
$2.23 FFO × 13x
Fair
$24.58
+58.3%
$2.23 FFO × 17x
Bull
$30.07
+93.6%
$2.23 FFO × 21x
Key Value Driver
FFO/share ($2.23) × office P/FFO multiple
Implied Market Multiple
7.0x
Summary
Our base-case estimate uses P/FFO × Office REIT Multiple. We then blend that result with the average analyst price target of $11.20 from 23 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $24.58 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: $8.85 (70% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $11.20 (from 23 analysts). Our estimate is 159% 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