Robust Properties is planning to go public by creating a REIT that will offer 1,740,000 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. Assetsproperties (actual cost) $ 100,700,000

b. Depreciable basisbuildings only $ 80,560,000

c. Useful life 40 years

d. Operating expenses 38 % of rents

e. Management expensesthird parties 5 % of rents

f. General and administrative expenses 3 % of rents g. Mortgage at 8% interest only, 10 years $ 30,070,000

h. Financing fees $ 907,000

II. Lease Information:

a. Average lease term 5 years

b. Leasable space 1,000,000 square feet

c. Base rents (year 1) $ 29 pounds per square feet

d. Escalation factorrents per year 5 %

e. Lease commissions 4 % of year 1 rent

f. Tenant improvements $ 13.50 pounds per square feet

The management of Robust Properties has asked you to prepare preliminary pro forma financials for the next three years. Specifically, you should have (1) a beginning balance sheet, (2) operating statements for each of the next three years, 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 $6.25 per share. In preparing your pro forma operating statements, Robust wants you to consider the effects of reporting in the following two ways: Required: a. What would EPS, FFO, and ROC be under both approaches? (Round your intermediate calculations and final answers to 2 decimal places.)