You are a financial analyst at an investment management company that focuses on real estate investment....
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You are a financial analyst at an investment management company that focuses on real estate investment. You are required to do a valuation analysis on the following office REIT: Operating Information Estimated NOI next year ■ ▪ Share price ▪ Total debt & liabilities Cash & cash equivalent ■ Account receivables ▪ Net income ■ Depreciation ▪ Gains on sale of Property I Recurring capital expenditures Other information ▪ Share outstanding ▪ Earnings per share ▪ Properties cap rate Investors expected return in office REITS ▪ Risk-free rate $100,000 $6.30 $850,000 $230,000 $50,000 $85,000 $8,000 $10,000 $16,000 ■ Average comparable REITS P/FFO multiple ▪ Average comparable REITS P/AFFO multiple (1) method (1) 100,000 $1.50 8% 12% 2% 8x 10x (a) Based on the given information, estimate the value per share of the office REIT using: (6 marks) NAVPS (Net Asset Value Per Share) using direct capitalization (5 marks) P/FFO (Price to Funds From Operations) and (5 marks) P/AFFO (Price to Adjusted Funds From Operations) (b) (4 marks) Evaluate whether the office REIT is overvalued or undervalued. You are a financial analyst at an investment management company that focuses on real estate investment. You are required to do a valuation analysis on the following office REIT: Operating Information Estimated NOI next year ■ ▪ Share price ▪ Total debt & liabilities Cash & cash equivalent ■ Account receivables ▪ Net income ■ Depreciation ▪ Gains on sale of Property I Recurring capital expenditures Other information ▪ Share outstanding ▪ Earnings per share ▪ Properties cap rate Investors expected return in office REITS ▪ Risk-free rate $100,000 $6.30 $850,000 $230,000 $50,000 $85,000 $8,000 $10,000 $16,000 ■ Average comparable REITS P/FFO multiple ▪ Average comparable REITS P/AFFO multiple (1) method (1) 100,000 $1.50 8% 12% 2% 8x 10x (a) Based on the given information, estimate the value per share of the office REIT using: (6 marks) NAVPS (Net Asset Value Per Share) using direct capitalization (5 marks) P/FFO (Price to Funds From Operations) and (5 marks) P/AFFO (Price to Adjusted Funds From Operations) (b) (4 marks) Evaluate whether the office REIT is overvalued or undervalued.
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a Estimating the Value per Share i NAVPS Net Asset Value Per Share using Direct Capitalization Method NAVPS fracNOI Recurring CapExCap Rate Cap Rate fracNOIProperty Value Property Value fracNOICap Rat... View the full answer
Related Book For
Financial Accounting Tools for Business Decision Making
ISBN: 978-1118024492
5th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
Posted Date:
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