HST
Host Hotels & Resorts, Inc.
$23.85
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 52.6% below fair value
You pay
$23.85
Bear
$41.44
Fair
$50.32
Bull
$59.20
Bear
$41.44
+73.8%
$2.28 FFO × 18x
Fair
$50.32
+111.0%
$2.28 FFO × 22x
Bull
$59.20
+148.2%
$2.28 FFO × 26x
Adjust Assumptions
22.1x
$
Key Value Driver
FFO/share ($2.28) × default P/FFO multiple
Implied Market Multiple
10.5x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (43 analysts)
$25.53
Divergence from AlphaVal
97%
Summary
At $2.28 FFO/share with a 22x default REIT multiple, the base-case value is $50.32 per share. Dividend yield: 7.0%.
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 7.0% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $25.53 (from 43 analysts). Our estimate is 97% 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