Question: only answer part two please 2. Publicly traded REITs are widely considered safe investments because they have steady revenue generation streams - property rents for
2. Publicly traded REITs are widely considered safe investments because they have steady revenue generation streams - property rents for equity REITs or debt service payments for mortgage REITs. However, many REITs cut or suspended their dividend payments in 2020 during the COVID crisis. Using the information from question 1 above, assume that Aztec REIT completely suspended its dividend. In other words, it expects to pay $0 per share next fiscal year (i.e., year 1). The following two years (.e., years 2 and 3), it expects to partially reinstate its dividend to $3.75 per share. Then in year 4, it expects to fully reinstate its dividend to $8.75 per share. Each year after (i.e., year 5 onward), it plans on increasing its dividends by 3.25 percent per year. Assume investors in REITs like Aztec still require a return of 7.8 percent. a. (10 points) What value per share is indicated using a dividend discount model? b. (20 points) During times of crisis, what is the most appropriate way to value REITs: FFO multiples, dividend discount models, or net asset value estimations? Discuss the strengths and limitations of each approach and justify your selection? *You can use the textbook and outside data sources to answer question 2b. Remember to cite your source(s) if you use outside material/data in your response
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