IIPR
Innovative Industrial Properties, Inc.
$54.21
Real Estate Investment Trust
85%
P/FFO × Industrial REIT Multiple
Strong
·
Conviction
Undervalued
Trading 69.4% below fair value
You pay
$54.21
Bear
$146.45
Fair
$177.42
Bull
$208.39
Bear
$146.45
+170.2%
$6.84 FFO × 23x
Fair
$177.42
+227.3%
$6.84 FFO × 29x
Bull
$208.39
+284.4%
$6.84 FFO × 34x
Adjust Assumptions
28.6x
$
Key Value Driver
FFO/share ($6.84) × industrial P/FFO multiple
Implied Market Multiple
7.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (11 analysts)
$56.25
Divergence from AlphaVal
215%
Summary
At $6.84 FFO/share with a 29x industrial REIT multiple, the base-case value is $177.42 per share. Dividend yield: 14.0%. DDM cross-check: $135.13.
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 14.0% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $56.25 (from 11 analysts). Our estimate is 215% 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