LTC
LTC Properties, Inc.
$38.48
Real Estate Investment Trust
85%
P/FFO × Healthcare REIT Multiple
Mild
·
Conviction
Fair Value
Trading 13.7% below fair value
You pay
$38.48
Bear
$34.98
Fair
$44.60
Bull
$54.22
Bear
$34.98
-9.1%
$3.04 FFO × 16x
Fair
$44.60
+15.9%
$3.04 FFO × 20x
Bull
$54.22
+40.9%
$3.04 FFO × 25x
Key Value Driver
FFO/share ($3.04) × healthcare P/FFO multiple
Implied Market Multiple
12.6x
Summary
Our base-case estimate uses P/FFO × Healthcare REIT Multiple. We then blend that result with the average analyst price target of $36.00 from 22 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $44.60 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.
The 2.0% yield is low for a real estate company — investors are paying up because they expect above-average growth.
Dividend-based valuation: $14.16 (70% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $36.00 (from 22 analysts). Our estimate is 32% 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