HST
Host Hotels & Resorts, Inc.
$24.50
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 42.7% below fair value
You pay
$24.50
Bear
$35.24
Fair
$42.79
Bull
$50.34
Bear
$35.24
+43.9%
$2.28 FFO × 18x
Fair
$42.79
+74.7%
$2.28 FFO × 22x
Bull
$50.34
+105.5%
$2.28 FFO × 26x
Key Value Driver
FFO/share ($2.28) × default P/FFO multiple
Implied Market Multiple
10.8x
Summary
Our base-case estimate uses P/FFO × Default REIT Multiple. We then blend that result with the average analyst price target of $25.18 from 43 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $42.79 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 6.8% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $25.18 (from 43 analysts). Our estimate is 100% 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