Inputs: Outputs:

Current share price $86.00 NOI $ 496,000 Year

Revenue $893,000 K Current "Debt free" private market value $11,711,622 K 0 1 2 3 4 5

Expenses $751,000 K Current private market value of equity $8,682,622 K NOI $504,928 $514,017 $523,269 $532,688 $542,276 Depreciation $257,000 K Current private market value per share $ 97.01 Interest $(96,928) $(96,928) $(96,928) $(96,928) $(96,928) Interest $97,000 K "Debt free" value @ Req. return $9,349,386 K Inv/Disp $(7,697,000) $7,146,863 Current Market CAP 4.50% Value per share @ Req. return $70.62 CF $(7,697,000) $408,000 $417,089 $426,341 $435,760 $7,592,211 Req. unlevered return 7.50% Terminal CAP 5.70%

Req. levered return 10% CAP IRR 4.22%

NOI growth rate 1.80%

Risk premium 4.50%

Total debt $3,029,000 K

Shares outstanding 89,500 K

Projected 10-year treasury 3.00%

Quality adjustment 0.00%

Value of other assets $491,000 K

Borrowing cost 3.20%

Expected return on unlevered basis 6.73% Expected return on equity 8.12%

For each of the following scenarios, and all other things equal, determine whether each scenario will increase, decrease or won't affect the probability that new investors will achieve their levered required rate of return.

a. The price of the REIT is lower.

b. A distribution is defined for NOI growth rate, where the average value remains the same, but the right "tail" of the distribution is longer than the left "tail".

c. The projected 10-year treasury rate is higher.

d. The quality adjustment value is lower.

e. The risk premium is lower.

f. The current market cap is higher.

g. The required levered return is higher.