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  "documentTitle": "A&M Valuation Insights November 2023",
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  "notes": "Includes dual-axis charts showing P/FFO multiples alongside indexed FFO, Market Cap, and Net Income.",
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      "text": "P/FFO multiples fell well below the 10x mark. In the coming years, only a slight recovery of the multiple is expected.",
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      "text": "P/FFO multiples of commercial real estate companies",
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      "text": "P/FFO multiples of residential real estate companies",
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      "text": "P/FFO multiple (residential real estate): 10.7x",
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      "text": "Besides the P/NAV ratio which focusses on the value of the companies' net assets, a key multiple for the relative valuation of real estate companies is the market capitalization relative to the companies' funds from operations (P/FFO).",
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      "text": "A similar development can be observed for the commercial real estate companies: Between 2018-21, the P/FFO multiples ranged between 12x and 16x and declined to 7.7x in 2022. In the following years, P/FFO multiples are expected to remain low, with only a slight recovery being projected for the year 2025.",
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      "text": "The change in the multiples is driven by the decrease in the companies' market capitalization: While the FFOs remain so far relatively constant over time, the market capitalization of German real estate companies saw a sharp decline. Contrary to the companies' funds from operations, which remain robust, net profits have decreased sharply in 2022 and are even expected to be negative in 2023 as a result of the anticipated revaluation losses.",
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      "text": "For residential real estate companies, a P/FFO multiple of around 20x could be observed throughout the years 2018-21. However, following the interest rate hikes and the resulting sharp decline in market capitalization, the P/FFO multiples fell well below the 10x mark. In the coming years, only a slight recovery of the multiple is expected.",
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      "text": "Source: S&P Capital IQ, A&M Analysis",
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