REFI
Chicago Atlantic Real Estate Finance, Inc.
$11.30
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 66.2% below fair value
You pay
$11.30
Bear
$27.52
Fair
$33.42
Bull
$39.32
Bear
$27.52
+143.5%
$1.70 FFO × 18x
Fair
$33.42
+195.8%
$1.70 FFO × 22x
Bull
$39.32
+248.0%
$1.70 FFO × 26x
Key Value Driver
FFO/share ($1.70) × default P/FFO multiple
Implied Market Multiple
6.7x
Summary
Our base-case estimate uses P/FFO × Default REIT Multiple. We then blend that result with the average analyst price target of $17.00 from 6 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $33.42 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 16.6% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $17.00 (from 6 analysts). Our estimate is 121% above the consensus -- consider that gap carefully.
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