Value a REIT share by discounted cash flow, by net asset value and by relative value using price-to-FFO and price-to-AFFO multiples, and interpret the results

Three routes lead to a value for a REIT share. The asset route uses net asset value per share, perhaps with a premium or discount for management quality or balance-sheet risk. Relative valuation applies a multiple taken from peers and adjusted for differences in growth, leverage and property quality: value = P/FFO multiple × FFO per share or P/AFFO multiple × AFFO per share. The discounted cash flow route forecasts dividends for a few years, adds a terminal value, often a multiple of the following year's AFFO, and discounts everything at the required return on equity. The traps are mixing measures, such as applying a P/AFFO multiple to FFO, and discounting the terminal value over the wrong number of years.