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	$100,000,000
Less:
Operating expenses	40,000,000
Depreciation and amortization	22,000,000
General and administrative expenses	6,000,000
Management expense	3,000,000
Income from operations	29,000,000
Less:
Interest expense (at 8% interest only)	6,400,000
	$22,600,000
Panel B. Balance Sheet Summary
Assets
Cash	$51,500,000
Rents receivable	2,500,000
Properties @ cost	700,000,000
Less: Accumulated depreciation	450,000,000
Properties - net	250,000,000
Total net assets	$304,000,000
Liabilities
Short term	$12,000,000
Mortgage debt (at 8% interest only)	80,000,000
Total	92,000,000
Shareholder equity (10,000,000 shares outstanding)	212,000,000
Total liabilities and equity	$304,000,000

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.

EPS
NOI
FFO
Dividend per share (90% x EPS)
ROC
Cash Retention per share
Net assets per share
Equity or Book Value per share
ROA	%
ROE	%

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 8 percent. Price multiples for these REITs are about 12 current FFO.

(1) What price does this suggest for National shares based on dividend yield?

$

(2) What price does this suggest for National shares based on FFO?

$

(3) What dividend would National have to pay to be in line with comparable REITs?

$