The estimated intrinsic value of American Assets Trust, Inc. (AAT) using a Price-to-Funds From Operations (P/FFO) model is $50.31 (based on the recommended P/FFO method), compared to the current stock price of $20.15. This suggests the stock may be undervalued by 149.7% relative to its intrinsic value.
For Real Estate Investment Trusts (REITs), standard DCF models can be misleading because depreciation — a large non-cash charge — distorts net income. Instead, SharesGrow uses a Price-to-FFO (Funds From Operations) model: Intrinsic Value = FFO Per Share × 17 (sector-average P/FFO multiple). FFO adds back depreciation to net income, providing a more accurate picture of a REIT's recurring cash-generating ability — the industry-standard metric for REIT valuation.
The valuation uses a CAPM-derived discount rate of 5.58% (CAPM-derived from beta of 0.95). For comparison, the standard 20-year DCF model produces: Operating Cash Flow (OCF): $9.50.
ℹ Why does our Intrinsic Value (IV) differ from analyst targets?
Our Discounted Cash Flow (DCF) model estimates Intrinsic Value (IV) at $50.31, while the analyst consensus target is $18.00 — a 179.5% gap.
Operating Cash Flow (OCF) exceeds Net Income (NI) significantly. This is common with companies that have large Stock-Based Compensation (SBC) or depreciation charges. Our Discounted Cash Flow (DCF) model may be using a cash flow base that is higher than earnings, but the method choice matters — check the recommended method below.
High debt relative to cash flow. Our Discounted Cash Flow (DCF) model deducts net debt from the present value of future cash flows, which significantly reduces equity value per share. Analyst price targets typically do not subtract debt in the same way.
Tip: Try adjusting the growth rate and discount rate below to see how different assumptions affect the valuation.
DCF-20 Year
AAT
Intrinsic Value Calculator —
American Assets Trust, Inc.
