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 $ 112,000,000 Less: Operating expenses 44,800,000 Depreciation and amortization 34,000,000 General and administrative expenses 7,200,000 Management expense 4,200,000 Income from operations 21,800,000 Less: Interest expense* 6,400,000 Net income (loss) $ 15,400,000 At 8% interest only. Panel B. Balance Sheet Summary Assets Cash $ 52,700,000 Rents receivable 3,700,000 Properties @ cost 820,000,000 Less: Accumulated depreciation 462,000,000 Properties—net 358,000,000 Total net assets $ 414,400,000 Liabilities Short term $ 110,400,000 Mortgage debt 80,000,000 Total 190,400,000 Shareholder equity† 224,000,000 Total liabilities and equity $ 414,400,000 *At 8% interest only. †10,000,000 shares outstanding. 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. EPS = NOI = FFO = ROC = Cash Retention per Share = Net Assets per Share = Equity or Book Value per Share = ROA = ROE =

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 2CP

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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	$ 112,000,000
Less:
Operating expenses	44,800,000
Depreciation and amortization	34,000,000
General and administrative expenses	7,200,000
Management expense	4,200,000
Income from operations	21,800,000
Less:
Interest expense*	6,400,000
Net income (loss)	$ 15,400,000

*At 8% interest only.

Panel B. Balance Sheet Summary
Assets
Cash	$ 52,700,000
Rents receivable	3,700,000
Properties @ cost	820,000,000
Less: Accumulated depreciation	462,000,000
Properties—net	358,000,000
Total net assets	$ 414,400,000
Liabilities
Short term	$ 110,400,000
Mortgage debt*	80,000,000
Total	190,400,000
Shareholder equity†	224,000,000
Total liabilities and equity	$ 414,400,000

*At 8% interest only.
†10,000,000 shares outstanding.

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.

EPS =

NOI =

FFO =

ROC =

Cash Retention per Share =

Net Assets per Share =

Equity or Book Value per Share =

ROA =

ROE =

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