PDM
Piedmont Office Realty Trust, Inc.
$9.88
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Moderate
·
Conviction
Fair Value
Trading 22.8% below fair value
You pay
$9.88
Bear
$10.06
Fair
$12.79
Bull
$15.53
Bear
$10.06
+1.8%
$1.15 FFO × 10x
Fair
$12.79
+29.5%
$1.15 FFO × 13x
Bull
$15.53
+57.1%
$1.15 FFO × 16x
Key Value Driver
FFO/share ($1.15) × office P/FFO multiple
Implied Market Multiple
8.6x
Summary
Our base-case estimate uses P/FFO × Office REIT Multiple. We then blend that result with the average analyst price target of $11.00 from 11 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $12.79 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.
Dividend yield of 5.1% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $9.32 (30% 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