IIPR
Innovative Industrial Properties, Inc.
$57.26
Real Estate Investment Trust
85%
P/FFO × Industrial REIT Multiple
Strong
·
Conviction
Undervalued
Trading 69.2% below fair value
You pay
$57.26
Bear
$152.13
Fair
$185.93
Bull
$219.74
Bear
$152.13
+165.7%
$6.50 FFO × 23x
Fair
$185.93
+224.7%
$6.50 FFO × 29x
Bull
$219.74
+283.8%
$6.50 FFO × 34x
Adjust Assumptions
28.6x
$
Key Value Driver
FFO/share ($6.50) × industrial P/FFO multiple
Implied Market Multiple
8.8x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (11 analysts)
$84.67
Divergence from AlphaVal
120%
Summary
At $6.50 FFO/share with a 29x industrial REIT multiple, the base-case value is $185.93 per share. Dividend yield: 13.3%. DDM cross-check: $162.56.
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 13.3% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $84.67 (from 11 analysts). Our estimate is 120% 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