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Consider a REIT that holds high quality office buildings in some of the best locations in the US . The REIT is currently traded at
Consider a REIT that holds high quality office buildings in some of the best
locations in the US The REIT is currently traded at a price of $share and there are
million shares outstanding. Using the information below answer the following questions:
Expected next year total revenue: $M
Expected next year total expenses including interest and depreciation: $M
Expected next year depreciation: $M
Expected next year interest: $M
Total debt: $B
Current office CAP in the US: to depending on quality and location.
a What is your estimation for a fair market value for a share of the REIT described? Show
your work!
b What is your estimation for a fair price to pay for a share of the REIT described, if you
require a rate of return on an unlevered basis and expect the REIT to increase
NOI at an average rate of Should you buy shares of that REIT? Show your work!
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