KRG
Kite Realty Group Trust
$24.68
Real Estate Investment Trust
85%
P/FFO × Retail REIT Multiple
Strong
·
Conviction
Undervalued
Trading 62.6% below fair value
You pay
$24.68
Bear
$52.86
Fair
$66.07
Bull
$79.28
Bear
$52.86
+114.2%
$3.39 FFO × 16x
Fair
$66.07
+167.7%
$3.39 FFO × 20x
Bull
$79.28
+221.2%
$3.39 FFO × 23x
Adjust Assumptions
19.5x
$
Key Value Driver
FFO/share ($3.39) × retail P/FFO multiple
Implied Market Multiple
7.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (26 analysts)
$26.75
Divergence from AlphaVal
147%
Summary
At $3.39 FFO/share with a 20x retail REIT multiple, the base-case value is $66.07 per share. Dividend yield: 5.3%.
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 5.3% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $26.75 (from 26 analysts). Our estimate is 147% 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