Robust Properties is planning to go public by creating a REIT that will offer $2\mathrm{.}04$ million shares of stock. It is currently trying to develop a pro forma set of financial statements. Robust is faced with a number of questions about its handling of some accounting and financial disclosure issues. Robust PropertiesI. Major Financial Information:$$a$.$ Assets$$properties $($actual cost$)$$ $101,000,000$b$.$ Depreciable basis$$buildings only$ $80,800,000$c$.$ Useful life$40$yearsd. Operating expenses$38\%$ of rentse. Management expenses$$third parties$5\%$ of rentsf. General and administrative expenses$3\%$ of rentsg. Mortgage @ $8\%$ interest only, $10$ years$ $30,100,000$h$.$ Financing fees$ $910,000$II$.$ Lease Information:$$a$.$ Average lease term$5$yearsb. Leasable space$1,000,000$square feetc. Base rents $($year $1)$$ $35$per square feetd. Escalation factor$$rents per year$5\%$e$.$ Lease commissions$4\%$ of year $1$ rentf. Tenant improvements$ $15\mathrm{.}00$per square feet The management of Robust Properties has asked you to prepare preliminary pro forma financials for the next year. Specifically, you should have $(1)$ a beginning balance sheet, $(2)$ operating statements for each of the next year, and $(3)$ all relevant financial ratios for year $1$ results only. Robust will pay all financing fees, tenant improvements, and lease commissions upon commencing operations. It would like to pay a minimum dividend of $$6\mathrm{.}85$ per share. In preparing your pro forma operating statements, Robust wants you to consider the effects of reporting in the following two ways: $$Approach $1$Approach $2$Lease commissionsAmortize, $5$ yearsExpense in year $1$Finance feesAmortize, $10$ yearsExpense in year $1$Tenant improvementsDepreciate, $40$ yearsDepreciate over $5-$year lease termBuildingsDepreciate, $40$ yearsDepreciate, $40$ years Required: a$.$ What would EPS, FFO, and ROC be under both approaches? Note: Do not round intermediate calculations. Round your intermediate calculations and final answers to $2$ decimal places. Robust Properties is planning to go public by creating a REIT that will offer $2\mathrm{.}04$ million shares of stock. It is currently trying to develop a pro forma set of financial statements. Robust is faced with a number of questions about its handling of some accounting and financial disclosure issues.

Robust Properties

I. Major Financial Information:

a$.$ Assets$-$properties $($actual cost$)\backslash (\backslash$$ $101,000,000\backslash )$

b$.$ Depreciable basis$-$buildings only $\backslash (\backslash$$ $80,800,000\backslash )$

c$.$ Useful life $40$ years

d$.$ Operating expenses $\backslash (\backslash$quad $38\backslash \%\backslash )$ of rents

e$.$ Management expenses$-$third parties $\backslash (\backslash$quad $5\backslash \%\backslash )$ of rents

$\backslash ($ f $\backslash ).$ General and administrative expenses $\backslash (\backslash$quad $3\backslash \%\backslash )$ of rents

g$.$ Mortgage @ $\backslash (8\backslash \%\backslash )$ interest only, $10$ years $\backslash (\backslash$$ $30,100,000\backslash )$

$\backslash ($ h $\backslash ).$ Financing fees $\backslash$$$910,000$

II$.$ Lease Information:

a$.$ Average lease term $5$ years

b$.$ Leasable space $1,000,000$ square feet

c$.$ Base rents $($year $1)\backslash$$$35$ per square feet

d$.$ Escalation factor$-$rents per year $5\backslash \%$

e$.$ Lease commissions $\backslash (4\backslash \%\backslash )$ of year $1$ rent

$\backslash ($ f $\backslash ).$ Tenant improvements $\backslash (\backslash$quad $\backslash$$ $15\mathrm{.}00\backslash )$ per square feet

The management of Rob