KRG
Kite Realty Group Trust
$26.08
Real Estate Investment Trust
85%
P/FFO × Retail REIT Multiple
Strong
·
Conviction
Undervalued
Trading 60.3% below fair value
You pay
$26.08
Bear
$52.57
Fair
$65.71
Bull
$78.86
Bear
$52.57
+101.6%
$3.37 FFO × 16x
Fair
$65.71
+152.0%
$3.37 FFO × 20x
Bull
$78.86
+202.4%
$3.37 FFO × 23x
Adjust Assumptions
19.5x
$
Key Value Driver
FFO/share ($3.37) × retail P/FFO multiple
Implied Market Multiple
7.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (26 analysts)
$30.50
Divergence from AlphaVal
115%
Summary
At $3.37 FFO/share with a 20x retail REIT multiple, the base-case value is $65.71 per share. Dividend yield: 5.0%.
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 5.0% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $30.50 (from 26 analysts). Our estimate is 115% 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