7. Blackstone Properties, a national office REIT, reported GAAP net income $78,806,000 in 2005. It also...
7. Blackstone Properties, a national office REIT, reported GAAP
net income $78,806,000 in 2005. It also reported the following
income statement items
Real estate deprecation: $147,746,000
Preferred stock dividends: $24,468,000
Allocation to OP unit holders $26,983,000
Net gains from sale of real estate assets: $2,058,000
Net loss from extraordinary items: $13,786,000
a. What was Blackstone’s funds from operations (FFO) for
2005?
b. Given that Blackstone reported a 2005 net straight-line rental
adjustment loss of $143,619,000 and capital expenditures of
$27,500,000, what was Blackstone’s adjusted funds from operation
(AFFO)?
c. What was Blackstone’s 2005 AFFO/GAAP net income ratio?
d. Given that the REIT paid out $143,826,000 in common stock
dividends in 2005, what was its dividend/FFO ratio?
e. What was Blackstone’s plowback ratio based on its AFFO (and
deducting distributions to preferred shareholder and OP until
holders as well as common dividends)?
f. By what percentage did Blackstone exceed the 90% minimum
earnings payout required (based on GAAP net income)?
Homework Answers
Here in this case blackstone dealing with REIT.
Requirement is for calculation of Fund From Operation (FFO),which can be calculated as follow :-
Ans.(a).
Fund from Operation =
Income as per GAAP. $78806000
Add. Real Estate Depreciation for the year. $147746000
= Fund from operation. $226552000
--------------------------------------------------
Ans(b).Adjusted fund from operation :-
Fund from operation. $226552000
Less.Rental Adjustment Loss. $143619000
Less.Capital Expenditure. $27500000
= Adjusted Fund from operation. $55433000.
--------------------------------------------------
Ans(c).AFFO / GAAP Income Ration
= AFFO $ 55433000 / GAAP Income $ 78806000
=0.7034
---------------------------------------------------
Ans(d).Dividend / FFO Ratio
= Dividend $ 143826000 / FFO $ 226552000
= 0.6348
-----------------------------------------------
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