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You have been presented with the following set of financial statements for National Property Trust, a REIT that is about to make an initial stock
You have been presented with the following set of financial statements for National Property Trust, a REIT that is about to make an initial stock offering to the public. This REIT specializes in the acquisition and management of warehouses. Your firm, Blue Street Advisors, is an investment management company that is considering the purchase of National Property Trust shares. You have been asked to prepare a financial analysis of the REIT.
National Property Trust
Panel A Operating Statement Summary
Net revenue $
Less:
Operating expenses
Depreciation and amortization
General and administrative expenses
Management expense
Income from operations
Less:
Interest expense
Net income loss $
At interest only.
Panel B Balance Sheet Summary
Assets
Cash $
Rents receivable
Properties @ cost
Less: Accumulated depreciation
Propertiesnet
Total net assets $
Liabilities
Short term $
Mortgage debt
Total
Shareholder equity
Total liabilities and equity $
At interest only.
shares outstanding.
Required:
a Develop a set of financial ratios that will provide Blue Street Advisors with useful information in the evaluation and comparison of National Property Trust with other REITs.
b Your research also indicates that the shares of comparable REITs specializing in warehouse acquisitions in the same regions are selling at dividend yields in the range of percent. Price multiples for these REITs are about current FFO. What price range does this suggest for National shares?
c What is the NAV for National Property Trust assuming that a blended capitalization rate of percent would be applicable for the properties owned by Blue Street Advisors?
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