MFA
MFA Financial, Inc.
$6.61
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 85.0% below fair value
You pay
$6.61
Bear
$36.70
Fair
$43.97
Bull
$51.24
Bear
$36.70
+455.7%
$1.75 FFO × 17x
Fair
$43.97
+565.8%
$1.75 FFO × 21x
Bull
$51.24
+675.8%
$1.75 FFO × 24x
Adjust Assumptions
20.8x
$
Key Value Driver
FFO/share ($1.75) × default P/FFO multiple
Implied Market Multiple
3.8x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (23 analysts)
$10.25
Divergence from AlphaVal
329%
Summary
At $1.75 FFO/share with a 21x default REIT multiple, the base-case value is $43.97 per share. Dividend yield: 21.8%. DDM cross-check: $61.64.
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 21.8% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $61.64 (40% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $10.25 (from 23 analysts). Our estimate is 329% 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