PECO
Phillips Edison & Co.
$37.27
Real Estate Investment Trust
85%
P/FFO × Retail REIT Multiple
Mild
·
Conviction
Fair Value
Trading 12.1% below fair value
You pay
$37.27
Bear
$34.02
Fair
$42.38
Bull
$50.74
Bear
$34.02
-8.7%
$2.93 FFO × 16x
Fair
$42.38
+13.7%
$2.93 FFO × 20x
Bull
$50.74
+36.1%
$2.93 FFO × 23x
Adjust Assumptions
19.5x
$
Key Value Driver
FFO/share ($2.93) × retail P/FFO multiple
Implied Market Multiple
12.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (15 analysts)
$43.14
Divergence from AlphaVal
2%
Summary
At $2.93 FFO/share with a 20x retail REIT multiple, the base-case value is $42.38 per share. Dividend yield: 1.2%. DDM cross-check: $7.74.
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 1.2% yield is low for a real estate company — investors are paying up because they expect above-average growth.
Dividend-based valuation: $7.74 (82% 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