KREF
KKR Real Estate Finance Trust Inc.
$5.80
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 72.1% below fair value
You pay
$5.80
Bear
$17.22
Fair
$20.79
Bull
$24.35
Bear
$17.22
+196.9%
$1.22 FFO × 16x
Fair
$20.79
+258.4%
$1.22 FFO × 20x
Bull
$24.35
+319.9%
$1.22 FFO × 23x
Adjust Assumptions
19.7x
$
Key Value Driver
FFO/share ($1.22) × default P/FFO multiple
Implied Market Multiple
4.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (12 analysts)
$8.25
Divergence from AlphaVal
152%
Summary
At $1.22 FFO/share with a 20x default REIT multiple, the base-case value is $20.79 per share. Dividend yield: 12.1%. DDM cross-check: $13.05.
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 12.1% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $13.05 (37% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $8.25 (from 12 analysts). Our estimate is 152% 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