Valuation Waterfall and Model for Gramercy Property Trust (GPT)

by Erik Kobayashi-Solomon | Mar 26, 2018 | Research

Brave Eagle Wealth Management’s founder, Robert Ruggirello, CFA, has been doing some very detailed and thorough valuation work on a misunderstood Industrial REIT called Gramercy Property Trust (GPT) and sees it as an attractive, long-term REIT holding. From his research note:

We believe Gramercy Property Trust (GPT) is undervalued from an intrinsic value perspective based on cash flows and is priced below NAV (net asset value). Our fundamental analysis indicates an asymmetrical return profile. Gramercy is currently priced at our worst-case scenario price and sits at the low end of our estimated valuation range. Potential upside is about 25% to the average value ($28) and 52% to the top end ($34) of the valuation range. Gramercy’s stock is also priced well below the analyst estimated NAV range indicating a potential discount to fair value of the assets between 11% and 26%.

The firm is transitioning and data for its operating history is not reflective of its new business — supplying modern warehouse space for eCommerce retailers — which now generates around 80% of its net operating income.

To get a background on REITs, please see the videos of my interview with Robert, done during an Office Hour session in December, 2017. You can also post questions and comments on the Framework Forum chain dedicated to GPT.

Robert has supplied a great deal of research on GPT, so take a look at these resources as well as the Valuation Waterfall below. Note that the Valuation Model does not contain historical operating numbers as they are not comparable / meaningful to the firm’s present operations.