Pennsylvania Real Estate Investment Trust (NYSE: PEI) is currently trading at $1
ID: 2807031 • Letter: P
Question
Pennsylvania Real Estate Investment Trust (NYSE: PEI) is currently trading at $10.44. Given the following information on some of its competitors, PEI’s FFO/share of $0.61, and using a FFO multiple approach is PEI overvalued or undervalued? By how much (per share)? Assume you equally weight each of the competitors in your analysis. If the stock is overvalued, enter your answer as a positive number, if the stock is undervalued enter your answer as a negative number. Round your answer to the nearest cent.
REIT stock
Price to FFO
Ventas (VTR)
21.0
Preferred Apartment REIT (APTS)
10.5
Simon Property Group (SPG)
17.6
REIT stock
Price to FFO
Ventas (VTR)
21.0
Preferred Apartment REIT (APTS)
10.5
Simon Property Group (SPG)
17.6
Explanation / Answer
PEI has a FFO per share of $0.61
=> its Price to FFO = 10.44/0.61 = 17.11
The average Price to FFO is = (21 + 10.5 + 17.6)/3 = 49.1/3 = 16.37
=> PEI is overvalued by 0.74 times.
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