PGRE
Paramount Group, Inc.
$6.60
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Moderate
·
Conviction
Fair Value
Trading 23.8% below fair value
You pay
$6.60
Bear
$6.72
Fair
$8.66
Bull
$10.59
Bear
$6.72
+1.9%
$0.87 FFO × 10x
Fair
$8.66
+31.2%
$0.87 FFO × 13x
Bull
$10.59
+60.5%
$0.87 FFO × 16x
Key Value Driver
FFO/share ($0.87) × office P/FFO multiple
Implied Market Multiple
7.6x
Summary
Our base-case estimate uses P/FFO × Office REIT Multiple. We then blend that result with the average analyst price target of $8.47 from 13 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $8.66 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-based valuation: $2.61 (70% 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