INN
Summit Hotel Properties, Inc.
$5.59
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 74.6% below fair value
You pay
$5.59
Bear
$18.17
Fair
$22.01
Bull
$25.85
Bear
$18.17
+225.1%
$1.31 FFO × 18x
Fair
$22.01
+293.8%
$1.31 FFO × 22x
Bull
$25.85
+362.4%
$1.31 FFO × 26x
Adjust Assumptions
22.1x
$
Key Value Driver
FFO/share ($1.31) × default P/FFO multiple
Implied Market Multiple
4.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (14 analysts)
$7.00
Divergence from AlphaVal
214%
Summary
At $1.31 FFO/share with a 22x default REIT multiple, the base-case value is $22.01 per share. Dividend yield: 5.7%. DDM cross-check: $5.96.
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 5.7% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $5.96 (73% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $7.00 (from 14 analysts). Our estimate is 214% 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