Question: Middle point Industrial Property Trust reports the following financial information, on a per share basis:
GAAP Net Income [Earnings per Share (EPS)] = $4.00
Depreciation & Amortization (GAAP) = $3.00
Dividend Paid = $4.75
Debt = $50, with an average interest rate = 7% Estimated share price premium to net asset value = 10%, based on an estimated private property market cap rate of 8% (weighted average firm level cap rate).
(a) Determine the minimum dividend the firm must pay to shareholders to be a REIT.
(b) Explain how the REIT can pay a dividend in excess of earnings per share. Calculate funds from operation (FFO) as part of your answer.
(c) Determine the aggregate NOI on Middle point's properties.
(d) Determine the current public market price of a share of Middle point stock.