DCF Studio

    FRT · NYQ · Real Estate

    Federal Realty Investment Trust

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 28.01

    Market price

    USD 110.91

    Implied upside

    -74.7%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 28.01-74.7%
    Exit multiple
    USD 123.01+10.9%
    Market price
    USD 110.91

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m310m619mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 1.4bnUSD 1.4bnUSD 1.5bnUSD 1.6bnUSD 1.7bn+6.0%
    EBITUSD 472.7mUSD 501.0mUSD 531.0mUSD 562.7mUSD 596.4m+6.0%
    NOPATUSD 472.7mUSD 501.0mUSD 531.0mUSD 562.7mUSD 596.4m+6.0%
    Add depreciation & amortisationUSD 385.7mUSD 408.8mUSD 433.2mUSD 459.2mUSD 486.6m+6.0%
    Less capital expenditureUSD -371.3mUSD -393.5mUSD -417.0mUSD -442.0mUSD -468.4m+6.0%
    Less increase in working capitalUSD 3.7mUSD 4.0mUSD 4.2mUSD 4.5mUSD 4.7m-6.0%
    Free cashflow to firmUSD 490.9mUSD 520.2mUSD 551.3mUSD 584.3mUSD 619.3m+6.0%
    Discount factor0.96040.88580.81690.75350.6949-
    Present valueUSD 471.4mUSD 460.8mUSD 450.4mUSD 440.3mUSD 430.4m-2.3%
    Present Value Of The ForecastUSD 2.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.946Reported 0.919, pulled toward 1.0 (Blume)
    Cost of equity10.20%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 9.7bn65.8% of capital
    Total debtUSD 5.0bn34.2% of capital, book value as a proxy
    Tax rate0.0%Effective, capped at statutory
    WACC8.42%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 28.01

    69% of EV

    Forecast FCFF, final year
    USD 619.3m
    Capex at depreciation, working capital in reinvestment
    USD 601.6m
    Less reinvestment at g/ROIC (29.7% of NOPAT)
    USD -178.6m
    Capitalised
    USD 423.1m
    ROIC (WACC floor)
    8.4%
    Terminal value, undiscounted
    USD 7.3bn
    Terminal value, discounted
    USD 5.1bn
    Enterprise value
    USD 7.3bn
    Less net debt
    USD 4.9bn
    Equity value
    USD 2.4bn

    Exit at 17.7x EBITDA

    Value per shareUSD 123.01

    86% of EV

    Terminal value, undiscounted
    USD 19.1bn
    Terminal value, discounted
    USD 13.3bn
    Enterprise value
    USD 15.5bn
    Less net debt
    USD 4.9bn
    Equity value
    USD 10.6bn

    Spread between methods: 126%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.42%53.5053.9154.3254.7355.14
    7.42%38.7139.0539.3939.7340.07
    8.42%27.4427.7228.0128.3028.59
    9.42%18.5618.8119.0519.3019.55
    10.42%11.3911.6111.8212.0312.25

    Outlined: this model. Green text: above today's price of 110.91. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year6.0%23.3%+17.3pp
    EBIT margin34.9%69.5%+34.6pp
    Discount rate8.4%4.8%-3.7pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.