PDM
Piedmont Office Realty Trust, Inc.
$9.68
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 25.6% below fair value
You pay
$9.68
Bear
$10.24
Fair
$13.01
Bull
$15.79
Bear
$10.24
+5.8%
$1.12 FFO × 10x
Fair
$13.01
+34.4%
$1.12 FFO × 13x
Bull
$15.79
+63.1%
$1.12 FFO × 16x
Adjust Assumptions
13.0x
$
Key Value Driver
FFO/share ($1.12) × office P/FFO multiple
Implied Market Multiple
8.6x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (11 analysts)
$10.50
Divergence from AlphaVal
24%
Summary
At $1.12 FFO/share with a 13x office REIT multiple, the base-case value is $13.01 per share. Dividend yield: 5.2%. DDM cross-check: $9.32.
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 5.2% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $9.32 (28% 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