1. On an annualized basis, what is the current market value of EQR's assets?
2. What is the value of total liabilities?
3. Using the answers from 7 & 8 above, calculate the current NAV.
4. If EQR's multi-family peers trade at a 10% premium to NAV is the stock overvalued or undervalued on a relative basis?

Current Share Price: $56.00

AFFO Adjustment Assumptions and Guidance:

Capital expenditures: $150 million per annum

No non-cash adjustments needed

Net Asset Value Assumptions and Guidance:

Apply a 4.5% capitalization rate to net operating income (NOI) for asset valuation.

Add cash and cash equivalents, land held for development and projects under development at the current book value

Obligations

Subtract all liabilities (simplifying assumption) and preferred stock

REIT Problem Set

Funds From Operations (FFO)

2. On an annualized basis, what is EQR's current normalized (diluted) FFO?
4. What FFO multiple (x) is the stock trading at based on the current share price?
6. Assuming EQR's closest multi-family peers trade at a 20x normalized FFO multiple, how does EQR's multiple compare?(is the stock overvalued, undervalued; are there other observations?)

Adjusted Funds From Operations (AFFO)

2. Calculate the annualized per share impact of capital expenditures?
4. On an annualized basis, calculate EQR's current normalized AFFO multiple (x) based on the current share price?
6. If AFFO is projected to grow by 10% in the following year, what is the forward AFFO multiple?

Net Asset Value (NAV)

2. 
   

Leverage

2. What is the gross book value of assets?
4. What is the book value of total debt?
6. Compute leverage as defined by total debt / (total debt + gross value of assets).
8. The CFO indicated on a quarterly conference call that the firm would like to decrease leverage, as measured by net debt to recurring operating EBITDA, from 7x down to 6x.What can he do to reduce corporate leverage?