VNO
Vornado Realty Trust
$32.19
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Strong
·
Conviction
Undervalued
Trading 59.6% below fair value
You pay
$32.19
Bear
$62.22
Fair
$79.62
Bull
$97.02
Bear
$62.22
+93.3%
$7.43 FFO × 10x
Fair
$79.62
+147.3%
$7.43 FFO × 13x
Bull
$97.02
+201.4%
$7.43 FFO × 16x
Adjust Assumptions
13.0x
$
Key Value Driver
FFO/share ($7.43) × office P/FFO multiple
Implied Market Multiple
4.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (29 analysts)
$37.67
Divergence from AlphaVal
111%
Summary
At $7.43 FFO/share with a 13x office REIT multiple, the base-case value is $79.62 per share. Dividend yield: 6.7%. DDM cross-check: $40.16.
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 6.7% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $40.16 (50% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $37.67 (from 29 analysts). Our estimate is 111% 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