AlphaMadera

SHO Sunstone Hotel Investors, Inc.

$12.59

Real Estate Investment Trust 85%

P/FFO × Default REIT Multiple

Moderate · Conviction

Fair Value

Trading 17.4% below fair value

You pay $12.59

Bear $12.61

Fair $15.25

Bull $17.88

Bear $12.61 +0.2% $0.86 FFO × 18x

Fair $15.25 +21.1% $0.86 FFO × 22x

Bull $17.88 +42.1% $0.86 FFO × 26x

Adjust Assumptions

P/FFO Multiple

22.1x

FFO per Share

0.86$

Key Value Driver

FFO/share ($0.86) × default P/FFO multiple

Terminal Value % of EV

Implied Market Multiple 14.7x

Market is pricing in (growth)

Analyst Consensus (External Reference)

Never blended into the bear/base/bull estimates above.

Average Target (28 analysts) $13.00

Divergence from AlphaVal 17%

Summary

At $0.86 FFO/share with a 22x default REIT multiple, the base-case value is $15.25 per share. Dividend yield: 2.9%. DDM cross-check: $6.71.

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.

ℹ Dividend-based valuation: $6.71 (56% 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