WSR
Whitestone REIT
$18.99
Real Estate Investment Trust
85%
P/FFO × Retail REIT Multiple
Strong
·
Conviction
Undervalued
Trading 41.8% below fair value
You pay
$18.99
Bear
$26.09
Fair
$32.61
Bull
$39.13
Bear
$26.09
+37.4%
$1.67 FFO × 16x
Fair
$32.61
+71.7%
$1.67 FFO × 20x
Bull
$39.13
+106.1%
$1.67 FFO × 23x
Adjust Assumptions
19.5x
$
Key Value Driver
FFO/share ($1.67) × retail P/FFO multiple
Implied Market Multiple
11.4x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (16 analysts)
$17.33
Divergence from AlphaVal
88%
Summary
At $1.67 FFO/share with a 20x retail REIT multiple, the base-case value is $32.61 per share. Dividend yield: 2.0%.
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.
The 2.0% yield is low for a real estate company — investors are paying up because they expect above-average growth.
Wall Street's average price target is $17.33 (from 16 analysts). Our estimate is 88% 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