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Answer part b please and thank you not part a, i repeat part b please and thank you. 2. Publicly traded REITs have long been
Answer part b please and thank you not part a, i repeat part b please and thank you.
2. Publicly traded REITs have long been considered safe investments because they have steady revenue generation streams - property rents for equity REITs or debt service payments for mortgage REITs. However, many REITs were forced to cut or suspend their dividend payments over the past year. Using the information from Q1, assume that Atlantis REIT completely suspended its dividend. In other words, it expects to pay $0 per share next fiscal year. The following year it expects to partially reinstate its dividend to $3.50 per share. Then in year 3, it expects to fully reinstate its dividend to $7.25 per share and to increase those dividends at about 3.0 percent per year in the future. Assume investors in REITS like Atlantis still require a return of 8.0 percent. a. (10 points) What value per share is indicated using a dividend discount model? b. (20 points) During times of crisis, what is the most appropriate way to value REITs: FFO multiples, dividend discount models, or net asset value estimations? What are the strengths and limitations of each approach? 2. Publicly traded REITs have long been considered safe investments because they have steady revenue generation streams - property rents for equity REITs or debt service payments for mortgage REITs. However, many REITs were forced to cut or suspend their dividend payments over the past year. Using the information from Q1, assume that Atlantis REIT completely suspended its dividend. In other words, it expects to pay $0 per share next fiscal year. The following year it expects to partially reinstate its dividend to $3.50 per share. Then in year 3, it expects to fully reinstate its dividend to $7.25 per share and to increase those dividends at about 3.0 percent per year in the future. Assume investors in REITS like Atlantis still require a return of 8.0 percent. a. (10 points) What value per share is indicated using a dividend discount model? b. (20 points) During times of crisis, what is the most appropriate way to value REITs: FFO multiples, dividend discount models, or net asset value estimations? What are the strengths and limitations of each approachStep by Step Solution
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