KRC
Kilroy Realty Corporation
$36.47
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 37.1% below fair value
You pay
$36.47
Bear
$45.33
Fair
$57.94
Bull
$70.56
Bear
$45.33
+24.3%
$5.34 FFO × 10x
Fair
$57.94
+58.9%
$5.34 FFO × 13x
Bull
$70.56
+93.5%
$5.34 FFO × 16x
Adjust Assumptions
13.0x
$
Key Value Driver
FFO/share ($5.34) × office P/FFO multiple
Implied Market Multiple
6.8x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (28 analysts)
$37.13
Divergence from AlphaVal
56%
Summary
At $5.34 FFO/share with a 13x office REIT multiple, the base-case value is $57.94 per share. Dividend yield: 5.9%. DDM cross-check: $31.17.
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 5.9% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $31.17 (46% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $37.13 (from 28 analysts). Our estimate is 56% 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