UMH
UMH Properties, Inc.
$15.30
Real Estate Investment Trust
85%
P/FFO × Residential REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 28.8% below fair value
You pay
$15.30
Bear
$18.14
Fair
$21.50
Bull
$24.85
Bear
$18.14
+18.6%
$1.09 FFO × 19x
Fair
$21.50
+40.5%
$1.09 FFO × 23x
Bull
$24.85
+62.4%
$1.09 FFO × 27x
Key Value Driver
FFO/share ($1.09) × residential P/FFO multiple
Implied Market Multiple
14.0x
Summary
Our base-case estimate uses P/FFO × Residential REIT Multiple. We then blend that result with the average analyst price target of $16.50 from 15 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $21.50 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 5.9% is unusually high — make sure the company generates enough cash to keep paying it.
Wall Street's average price target is $16.50 (from 15 analysts). Our estimate is 40% 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