What is your estimation for a fair market value

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Question - Consider a REIT that holds high quality office buildings in some of the best locations in the US. The REIT is currently traded at a price of $68/share and there are 120 million shares outstanding. Using the information below answer the following questions: Expected next year total revenue: $750M Expected next year total expenses (including interest and depreciation): $360M Expected next year depreciation: $90M Expected next year interest: $70M Total debt: $1.8B Current office CAP in the US: 4.5% to 6.0% depending on quality and location.

What is your estimation for a fair market value for a share of the REIT described? Show your work!

What is your estimation for a fair price to pay for a share of the REIT described, if you require an 8.0% rate of return on an unlevered basis and expect the REIT to increase NOI at an average rate of 2.5%? Should you buy shares of that REIT? Show your work!

Reference no: EM132206340

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