Fair Value and Recommendation
We performed a valuation exercise on the shares of KPREIT using two (2) valuation methods and both were relative value approaches. The first was based on an applied Price-to-Funds from Operations (P/FFO) multiple, while the second was based on an applied Price-to-Book (P/B) Method.
We projected that Funds from Operations for FY 2022 will see a 7% Increase
on a per-share basis after accounting for dilution amounting to USD 1,454,130.0. Assuming the additional capital is deployed over the next 1-1.5 years and utilized a forward P/FFO of 27.5x (compared to a trailing P/FFO of ~30.0x) to arrive at a price target of $9.24. We then used the company’s trailing Price to Book (P/B) ratio and applied a discount to the trailing multiple of 1.25x, to arrive at a multiple of 1.00x, implying a value of $7.54. The average fair value estimate of both methods Is $8.39, an 11.81% upside to the APO price of $7.5.
| P/FFO Valuation | J$9.24 |
|---|---|
| P/B Valuation | J$7.54 |
| Average Estimated Fair Value | J$8.39 |
| Implied Price Upside | 11.81% |
April 12, 2022
Full APO analysis
