TRTX
TPG RE Finance Trust, Inc.
$8.51
Real Estate Investment Trust
85%
P/FFO × Default REIT Multiple
Strong
·
Conviction
Undervalued
Trading 54.5% below fair value
You pay
$8.51
Bear
$15.41
Fair
$18.70
Bull
$22.00
Bear
$15.41
+81.2%
$0.94 FFO × 18x
Fair
$18.70
+119.9%
$0.94 FFO × 22x
Bull
$22.00
+158.7%
$0.94 FFO × 26x
Key Value Driver
FFO/share ($0.94) × default P/FFO multiple
Implied Market Multiple
9.0x
Summary
Our base-case estimate uses P/FFO × Default REIT Multiple. We then blend that result with the average analyst price target of $10.00 from 11 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $18.70 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 11.3% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $10.00 (from 11 analysts). Our estimate is 109% 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