Monday, September 13, 2010

What's The Over / Under?
Inland announced today that is releasing the estimate per share value of its non-traded REIT Inland American on September 24.  There is an accompanying conference call late on Friday.   (Is there a coincidence that the 24th is a Friday, the usual day for releasing bad news?)   Inland American's portfolio is full of limited service hotels and retail properties, among other types of real estate.  Inland American raised over $7 billion and bought much of its portfolio in 2006 through 2008.  Does anyone want to start the guessing at a per share valuation?

Here is a quick back of the envelop guess.  Inland American's FFO per share for the first six months was $.2487 per share, and is $.497 on a straight annualization.  Using simple FFO multiples of 9 to 12 gives a per share value of $4.48 to $5.97.  I figure Inland will adjust the number in the REITs favor.  (I am not sure whether a third party is providing the valuation.)  I would set the over / under at $6.25 per share.

2 comments:

Kurt said...

I'll take the under. Back of a different envelope: NOI of $322 million for the first 6 months, $644 annualized, $8.05 billion value at 8% cap rate. Total tangible assets $9.6 billion, liabilities $5.8 billion, equity $3.7 billion, 835 million shares, $4.49 per share. FFO will give a higher valuation, I'm not so sure about $2+ per share.

Rational Realist said...

After I made this post i went back and saw the Inland valued its maligned Western REIT at $6.85 per share, which is something to bear in mind.

good analysis.