SUNS
Sunrise Realty Trust, Inc.
$7.88
Real Estate Investment Trust
85%
P/FFO × Residential REIT Multiple
Strong
·
Conviction
Undervalued
Trading 62.1% below fair value
You pay
$7.88
Bear
$17.51
Fair
$20.80
Bull
$24.08
Bear
$17.51
+122.2%
$0.90 FFO × 21x
Fair
$20.80
+164.0%
$0.90 FFO × 25x
Bull
$24.08
+205.6%
$0.90 FFO × 29x
Key Value Driver
FFO/share ($0.90) × residential P/FFO multiple
Implied Market Multiple
8.8x
Summary
Our base-case estimate uses P/FFO × Residential REIT Multiple. We then blend that result with the average analyst price target of $15.25 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $20.80 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 15.2% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $15.25 (from 8 analysts). Our estimate is 46% 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