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This question and the one that follows pertains to the discussion we had in class about valuing a REIT on an Net Asset Value basis.

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This question and the one that follows pertains to the discussion we had in class about valuing a REIT on an Net Asset Value basis. For reference, you may want to refer to the Excel file for Problem Set 2, Tab NAV. Assume a REIT has an annual NOI of $200M. Net debt equals $1000M. The company has 100M shares outstanding. If the stock trades at $5 per share, and the stock price is equal to the value of NAV per share, what is the implied cap rate? 8.07% 13.33% 10.0% 7.5%

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