STWD
Starwood Property Trust, Inc.
$16.48
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 37.3% below fair value
You pay
$16.48
Bear
$21.91
Fair
$26.30
Bull
$30.68
Bear
$21.91
+33.0%
$1.33 FFO × 16x
Fair
$26.30
+59.6%
$1.33 FFO × 19x
Bull
$30.68
+86.2%
$1.33 FFO × 23x
Key Value Driver
FFO/share ($1.33) × default P/FFO multiple
Implied Market Multiple
12.4x
Summary
Our base-case estimate uses P/FFO × Default REIT Multiple. We then blend that result with the average analyst price target of $19.33 from 21 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $26.30 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 11.7% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $35.78 (25% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $19.33 (from 21 analysts). Our estimate is 48% 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