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Unit 9 Quiz

Terms in this set (20)

At least _______ percent of the value of a REIT s assets must consist of real estate assets, cash, and government securities.
95
65
75
85
75
Funds from operation (FFO), is calculated by ______________ depreciation and amortization and other non-cash deductions to ( from) _____________.
adding back, earnings
subtracting out, operating expenses
subtracting out, gross revenue
subtracting out, earnings
adding back, earnings
Mortgage REITs ______________________ financing to increase their capital bases.
use debt
use quity
are required to use a mix of debt and equity
are not allowed to use debt or equity
are required to use a mix of debt and equity
REITs must distribute to stockholders at least ___________ percent of taxable income.
100
75
80
90
90
The most common type of REITs in today's market are:
Partnership trusts
Hybrid trusts
Equity trusts
Mortgage trusts
Equity trusts
A REIT must have at least ________200 shareholders.
25
500
200
100
100
Which of the following REIT types is NOT likely to own real property?
Hybrid REIT
Equity REIT
Mortgage REIT
All of the above
Mortgage REIT
A REIT has an NOI of $15 as share and currently pays a dividend of $10 a share. The dividend is projected to increase by 4 percent by next year and continue to increase by 4 percent per year thereafter. Assuming that the blended cap rate is 9.75 percent and the required rate of return is 10.5 percent, what value would the Gordon Dividend Discount Model provide?
$60.15
$190.00
$71.89
$160.00
$153.85
$160.00
A REIT has an NOI of $15 as share and currently pays a dividend of $10 a share. The dividend is projected to increase by 4 percent by next year and continue to increase by 4 percent per year thereafter. Assume a blended cap rate of 9.75 percent and a required rate of return is 10.5 percent. What is the net asset value (NAV) of the REIT?
$60.15
$160.00
$71.89
$190.00
$153.85
$153.85
A REIT with 100 shares outstanding earns $1,000 in rent and incurs operating expenses of $400. In addition, the REIT owns property with an historic cost of $6,000 and depreciates it over a15 year period using straight-line depreciation. What are the funds from operations per share and the earnings per share for this REIT?
$6 and $2, respectively
$4 and $3, respectively
$4 and $2, respectively
$6 and $3, respectively
$6 and $2, respectively
A REIT with 100 shares outstanding earns $1,000 in rent and incurs operating expenses of $400. In addition, the REIT owns property with an historic cost of $6,000 and depreciates it over a15 year period using straight-line depreciation. What is the very least dividend payment the REIT must it make to maintain its tax exempt status?
$3.80
$1.90
$5.70
$2.85
$1.90
An investor pays $63.00 per share for stock in a given REIT. The REIT declares a dividend of $4.00 per share and has an EPS of $2.37. Considering the recovery of capital (ROC), what is the new cost basis of the stock acquired by the investor?
$60.63
$64.63
$61.37
$63.00
$61.37
Which of the following REIT types is organized to acquire the specific property or properties described in its prospectus?
An exchange trust
A purchasing trust
A property trust
A mixed trust
A purchasing trust
Which of the following is likely to occur upon the sale of a REIT-owned property?
If a capital gain is realized, the REIT can distribute the gain as a dividend to shareholders who will realize it as dividend income for individual tax reporting purposes
If a capital gain is realized, the REIT can retain the gain for future investment and be taxed at the shareholder s capital gains tax rate
If a capital gain is realized, the REIT can retain the gain for future investment and be taxed at the appropriate corporate capital gains tax rate
If a capital loss is realized, the loss can be passed through to individual investors
If a capital gain is realized, the REIT can retain the gain for future investment and be taxed at the appropriate corporate capital gains tax rate
The funds from operations (FFO) for a REIT is roughly equal to:
NOI plus interest deductions
Earnings before tax plus depreciation deductions
Earnings per share plus capital gains
NOI less interest deductions
Earnings before tax plus depreciation deductions
Once an entity has been terminated as a REIT, the entity cannot make a new election to be taxed as a REIT until __ years after the termination.
3
4
2
5
5
REIT dividends are considered ________ income and thus do not qualify as passive income to offset passive losses.
Operating
Trading
Outside professional
Portfolio
Portfolio
Recovery of capital (ROC) results in:
An increase in the value of the stock
An increase in the dividend available to the investor
A reduction in losses on the stock
A reduction in the cost basis of acquired stock
A reduction in the cost basis of acquired stock
The early growth of the REIT industry in the 1970s was mainly attributed to which of the following?
Declined performance of other investments
Deregulation of the industry
Popularity of mortgage trusts
Increased value of real property throughout the country
Popularity of mortgage trusts
Consider the financial statements for a REIT, given below. Price multiples for comparable REITs are about 10 times current funds from operation (FFO). What price does this suggest for the REIT's shares if 1,000,000 shares are issued?
$89.20 per share
$4.52 per share
$8.92 per share
$45.20 per share
$89.20 per share
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