In: Finance
The next few questions relate to the discussion we had in class concerning a REITs financial statements. For reference, please refer to the Excel file Problem Set 2, Tab FFO. So, getting on, let's make the following assumptions about a simplified REIT income statement. (All of the numbers are in millions). 250 in revenues; 100 in operating expenses; 50 in depreciation; 50 shares outstanding; 10 in Cap Expenditures; 40% tax rate.
What is the REITs Adjusted Funds from Operations?
140 |
||
105 |
||
110 |
||
52 |
What is the REITs taxable income on a GAAP basis?
105 |
||
100 |
||
48 |
||
46 |
What are the Adjusted Funds from Operations per Share?
5.00 |
||
2.8 |
||
5.50 |
||
14 |
Answer :
1. 140
REITs Adjusted Funds from Operations :
= Revenue - operating expense - capital expenditure
= 250 - 100 - 10
= 140
2. 100
REITs taxable income on a GAAP basis :
= Revenue - operating exoense - depreciation
= 250 - 100 - 50
= 100
3. 2.80
Adjusted Funds from Operations per Share :
= Adjusted funds from operation / shares outstanding
= 140 / 50
= 2.80