HST
Host Hotels & Resorts, Inc.
$22.38
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 46.0% below fair value
You pay
$22.38
Bear
$34.13
Fair
$41.44
Bull
$48.75
Bear
$34.13
+52.5%
$2.28 FFO × 18x
Fair
$41.44
+85.2%
$2.28 FFO × 22x
Bull
$48.75
+117.8%
$2.28 FFO × 26x
Key Value Driver
FFO/share ($2.28) × default P/FFO multiple
Implied Market Multiple
9.8x
Summary
Our base-case estimate uses P/FFO × Default REIT Multiple. We then blend that result with the average analyst price target of $20.67 from 42 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $41.44 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 7.5% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $20.67 (from 42 analysts). Our estimate is 144% 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