TIER - TIER REIT Is Priced For Perfection
The short thesis
TIER REIT (TIER) is trading at a lofty valuation of 34X true FFO, which is the highest in the office sector. We find such a multiple to be egregious for a company with a litany of problems, including:
- History of negative shareholder returns.
- Significant oversupply.
- Weak/negative same-store NOI and FFO/share growth.
- Excessive free rent, tenant improvement costs, leasing commissions, and maintenance capex.
This article will detail each of the above points and why we believe TIER has a fair value of $14.80 or about 37% below current market price.