REIT Valuation Calculator
Calculate the intrinsic value of Real Estate Investment Trusts (REITs) using discounted cash flow analysis. Determine fair value based on FFO, growth rates, and required returns.
Step 1: REIT Financials
REIT Valuation Formula
Intrinsic Value = Σ (FFOₜ / (1+r)ᵗ) + Terminal Value / (1+r)ⁿ
Where: FFOₜ = FFO in year t, r = discount rate, n = projection years
Step 2: Valuation Parameters
Common REIT Metrics
Discount rates: 7-12% depending on risk
Growth rates: 2-8% based on property type
Terminal growth: 2-3% (inflation plus)
FFO multiples: 10-20x depending on quality
REIT Valuation Results
Estimated Intrinsic Value per Share
REIT Type Comparison
| REIT Type | Typical FFO Yield | Growth Rate | Typical Multiple |
|---|
REIT Valuation Formula
Discounted Cash Flow (DCF) Model for REITs
Intrinsic Value = Σ [FFOₜ / (1 + r)ᵗ] + [FFOₙ × (1 + g) / (r – g)] / (1 + r)ⁿ
Where:
• FFOₜ = Funds From Operations in year t
• r = Discount rate (required return)
• g = Terminal growth rate
• n = Projection period in years
FFO Multiple = Price / FFO per share
Margin of Safety = (Intrinsic Value – Market Price) / Intrinsic Value
Example Calculation
Example: Residential REIT
Current FFO: $4.50 per share
Growth rate: 5% for 10 years
Discount rate: 8.5%
Terminal growth: 2.5%
Present Value of 10-year FFO: $35.42
Terminal Value: $65.80
Present Value of Terminal Value: $33.00
Total Intrinsic Value: $68.42 per share
If market price is $60.00:
FFO Multiple = 13.3x
Margin of Safety = 12.3%
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