VNO
Vornado Realty Trust
$31.98
Real Estate Investment Trust
85%
P/FFO × Office REIT Multiple
Strong
·
Conviction
Undervalued
Trading 53.4% below fair value
You pay
$31.98
Bear
$53.58
Fair
$68.56
Bull
$83.54
Bear
$53.58
+67.5%
$7.37 FFO × 10x
Fair
$68.56
+114.4%
$7.37 FFO × 13x
Bull
$83.54
+161.2%
$7.37 FFO × 16x
Key Value Driver
FFO/share ($7.37) × office P/FFO multiple
Implied Market Multiple
4.3x
Summary
Our base-case estimate uses P/FFO × Office REIT Multiple. We then blend that result with the average analyst price target of $36.86 from 28 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $68.56 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 6.7% is unusually high — make sure the company generates enough cash to keep paying it.
Dividend-based valuation: $40.16 (49% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $36.86 (from 28 analysts). Our estimate is 115% 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