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 $ 114,000,000

Less: Operating expenses 45,600,000

Depreciation and amortization 36,000,000

General and administrative expenses 7,400,000

Management expense 4,400,000

Income from operations 20,600,000

Less: Interest expense* 6,400,000

Net income (loss) $ 14,200,000 *At 8% interest only.

Panel B. Balance Sheet Summary

Assets Cash $ 52,900,000

Rents receivable 3,900,000

Properties @ cost 840,000,000

Less: Accumulated depreciation 464,000,000

Propertiesnet 376,000,000

Total net assets $ 432,800,000

Liabilities Short term $ 126,800,000

Mortgage debt* 80,000,000

Total 206,800,000

Shareholder equity 226,000,000

Total liabilities and equity $ 432,800,000 *At 8% interest only.

10,000,000 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 8 percent. Price multiples for these REITs are about 12 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 10 percent would be applicable for the properties owned by Blue Street Advisors?