RLJ
RLJ Lodging Trust
$12.14
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 61.0% below fair value
You pay
$12.14
Bear
$25.66
Fair
$31.16
Bull
$36.66
Bear
$25.66
+111.3%
$1.41 FFO × 18x
Fair
$31.16
+156.6%
$1.41 FFO × 22x
Bull
$36.66
+201.9%
$1.41 FFO × 26x
Adjust Assumptions
22.1x
$
Key Value Driver
FFO/share ($1.41) × default P/FFO multiple
Implied Market Multiple
8.6x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (18 analysts)
$11.75
Divergence from AlphaVal
165%
Summary
At $1.41 FFO/share with a 22x default REIT multiple, the base-case value is $31.16 per share. Dividend yield: 4.9%.
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.
Wall Street's average price target is $11.75 (from 18 analysts). Our estimate is 165% 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