KREF
KKR Real Estate Finance Trust Inc.
$6.48
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 63.2% below fair value
You pay
$6.48
Bear
$14.59
Fair
$17.59
Bull
$20.58
Bear
$14.59
+125.2%
$1.12 FFO × 16x
Fair
$17.59
+171.5%
$1.12 FFO × 20x
Bull
$20.58
+217.6%
$1.12 FFO × 23x
Key Value Driver
FFO/share ($1.12) × default P/FFO multiple
Implied Market Multiple
5.8x
Summary
Our base-case estimate uses P/FFO × Default REIT Multiple. We then blend that result with the average analyst price target of $7.00 from 12 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $17.59 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.
Dividend yield of 13.1% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $7.00 (from 12 analysts). Our estimate is 189% 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