O
Realty Income Corporation
$65.54
Real Estate Investment Trust
85%
P/FFO × Retail REIT Multiple
Mild
·
Conviction
Overvalued
Trading 9.8% above fair value
You pay
$65.54
Bear
$48.01
Fair
$59.70
Bull
$71.39
Bear
$48.01
-26.8%
$3.79 FFO × 16x
Fair
$59.70
-8.9%
$3.79 FFO × 20x
Bull
$71.39
+8.9%
$3.79 FFO × 23x
Key Value Driver
FFO/share ($3.79) × retail P/FFO multiple
Implied Market Multiple
17.3x
Summary
Our base-case estimate uses P/FFO × Retail REIT Multiple. We then blend that result with the average analyst price target of $67.47 from 34 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $59.70 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 1.7% yield is low for a real estate company — investors are paying up because they expect above-average growth.
Dividend-based valuation: $15.63 (72% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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