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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 Less: Operating expenses Depreciation and amortization General and administrative expenses Management expense Income from operations Less: Interest expense* Net income (loss) *At 8% interest only. Panel B. Balance Sheet Summary Assets Cash Rents receivable Properties @ cost Less: Accumulated depreciation Properties-net $ 117,000,000 46,800,000 39,000,000 7,700,000 4,700,000 18,800,000 6,400,000 $ 12,400,000 $ 53,200,000 4,200,000 870,000,000 467,000,000 403.000.000

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 Less: Operating expenses Depreciation and amortization General and administrative expenses Management expense Income from operations Less: Interest expense* Net income (loss) *At 8% interest only. Panel B. Balance Sheet Summary Assets Cash Rents receivable Properties @ cost Less: Accumulated depreciation Properties-net $ 117,000,000 46,800,000 39,000,000 7,700,000 4,700,000 18,800,000 6,400,000 $ 12,400,000 $ 53,200,000 4,200,000 870,000,000 467,000,000 403.000.000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 21-1 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 Less: Operating expenses Depreciation and amortization General and administrative expenses Management expense Income from operations Less: Interest expense* Net income (loss) *At 8% interest only. Panel B. Balance Sheet Summary Assets Cash Rents receivable Properties @ cost Less: Accumulated depreciation Properties-net Total net assets. Liabilities $ 117,000,000 46,800,000 39,000,000 7,700,000 4,700,000 18,800,000 6,400,000 $ 12,400,000 $ 53,200,000 4,200,000 870,000,000 467,000,000 403,000,000 $ 460,400,000
Transcribed Image Text:Problem 21-1 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 Less: Operating expenses Depreciation and amortization General and administrative expenses Management expense Income from operations Less: Interest expense* Net income (loss) *At 8% interest only. Panel B. Balance Sheet Summary Assets Cash Rents receivable Properties @ cost Less: Accumulated depreciation Properties-net Total net assets. Liabilities $ 117,000,000 46,800,000 39,000,000 7,700,000 4,700,000 18,800,000 6,400,000 $ 12,400,000 $ 53,200,000 4,200,000 870,000,000 467,000,000 403,000,000 $ 460,400,000
Short term Mortgage debt* Total Shareholder equityt Liabilities Total liabilities and equity *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? Complete this question by entering your answers in the tabs below. Required A Required B EPS $ 151,400,000 80,000,000 231,400,000 229,000,000 $ 460,400,000 NOI Required C 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. (Round your intermediate calculations and final answers to 2 decimal places. Negative values should be indicated by a minus sign. ROA and ROE should be entered as percentages.)
Transcribed Image Text:Short term Mortgage debt* Total Shareholder equityt Liabilities Total liabilities and equity *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? Complete this question by entering your answers in the tabs below. Required A Required B EPS $ 151,400,000 80,000,000 231,400,000 229,000,000 $ 460,400,000 NOI Required C 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. (Round your intermediate calculations and final answers to 2 decimal places. Negative values should be indicated by a minus sign. ROA and ROE should be entered as percentages.)
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