WSR
Whitestone REIT
$18.99
Real Estate Investment Trust
85%
P/FFO × Retail REIT Multiple
Moderate
·
Conviction
Undervalued
Trading 34.5% below fair value
You pay
$18.99
Bear
$23.19
Fair
$29.00
Bull
$34.79
Bear
$23.19
+22.1%
$1.67 FFO × 16x
Fair
$29.00
+52.7%
$1.67 FFO × 20x
Bull
$34.79
+83.2%
$1.67 FFO × 23x
Key Value Driver
FFO/share ($1.67) × retail P/FFO multiple
Implied Market Multiple
11.4x
Summary
Our base-case estimate uses P/FFO × Retail REIT Multiple. We then blend that result with the average analyst price target of $18.25 from 16 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $29.00 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.
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 $18.25 (from 16 analysts). Our estimate is 79% 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