UHT
Universal Health Realty Income Trust
$38.15
Real Estate Investment Trust
85%
P/FFO × Healthcare REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 31.0% below fair value
You pay
$38.15
Bear
$43.95
Fair
$55.28
Bull
$66.62
Bear
$43.95
+15.2%
$3.34 FFO × 14x
Fair
$55.28
+44.9%
$3.34 FFO × 18x
Bull
$66.62
+74.6%
$3.34 FFO × 22x
Adjust Assumptions
18.0x
$
Key Value Driver
FFO/share ($3.34) × healthcare P/FFO multiple
Implied Market Multiple
11.4x
Summary
At $3.34 FFO/share with a 18x healthcare REIT multiple, the base-case value is $55.28 per share. Dividend yield: 7.8%. DDM cross-check: $43.85.
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 7.8% is unusually high — make sure the company generates enough cash to keep paying it.
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