MFA
MFA Financial, Inc.
$8.83
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 75.7% below fair value
You pay
$8.83
Bear
$29.98
Fair
$36.41
Bull
$42.83
Bear
$29.98
+239.5%
$1.75 FFO × 17x
Fair
$36.41
+312.3%
$1.75 FFO × 21x
Bull
$42.83
+385.0%
$1.75 FFO × 24x
Adjust Assumptions
20.8x
$
Key Value Driver
FFO/share ($1.75) × default P/FFO multiple
Implied Market Multiple
5.0x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (23 analysts)
$10.75
Divergence from AlphaVal
239%
Summary
At $1.75 FFO/share with a 21x default REIT multiple, the base-case value is $36.41 per share. Dividend yield: 16.3%.
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 16.3% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $10.75 (from 23 analysts). Our estimate is 239% 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