IRT
Independence Realty Trust, Inc.
$16.61
Real Estate Investment Trust
85%
P/FFO × Residential REIT Multiple
Strong
·
Conviction
Undervalued
Trading 41.6% below fair value
You pay
$16.61
Bear
$23.94
Fair
$28.44
Bull
$32.93
Bear
$23.94
+44.1%
$1.27 FFO × 21x
Fair
$28.44
+71.2%
$1.27 FFO × 25x
Bull
$32.93
+98.3%
$1.27 FFO × 29x
Key Value Driver
FFO/share ($1.27) × residential P/FFO multiple
Implied Market Multiple
13.1x
Summary
Our base-case estimate uses P/FFO × Residential REIT Multiple. We then blend that result with the average analyst price target of $19.50 from 27 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $28.44 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.
Wall Street's average price target is $19.50 (from 27 analysts). Our estimate is 61% 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