INN
Summit Hotel Properties, Inc.
$7.02
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 68.2% below fair value
You pay
$7.02
Bear
$18.25
Fair
$22.11
Bull
$25.96
Bear
$18.25
+160.0%
$1.31 FFO × 18x
Fair
$22.11
+214.9%
$1.31 FFO × 22x
Bull
$25.96
+269.8%
$1.31 FFO × 26x
Adjust Assumptions
22.1x
$
Key Value Driver
FFO/share ($1.31) × default P/FFO multiple
Implied Market Multiple
5.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (14 analysts)
$7.00
Divergence from AlphaVal
216%
Summary
At $1.31 FFO/share with a 22x default REIT multiple, the base-case value is $22.11 per share. Dividend yield: 4.6%. 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-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 216% 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