March 25, 2019 Off All,

Please read Chapter 21 of the book for additional reference. 1. REIT Report for AMERICAN REALTY CAPITAL HEALTHCARE TRUST (HCT) ¥ Maximum 10 pages, 12 point type, excluding appendix ¥ Executive Summary ¥ Introduction/ background ¥ Market/ Sector ¥ Strategy of the company ¥ Management team ¥ Competitors (identify at least 2) ¥ Outlook for the sector and the company ¥ Risk/Return analysis compared to competitors (2): remember lecture 1? Risk adjusted return analysis (5 years if possible) • Key points: What has been the trend for the last 3 years for the following items? Market Cap (end of the year) Stock price (end of the year) Number of shares outstanding Earnings per share Total Debt/Total Assets Beta Return on Equity Dividend Yields FFO per share AFFO if provided. If not, approximate. If you look at Cash Flow Statement, Section 2, there should be CAPEX amount. Use the following definition: FFO – CAPEX = AFFO

•Valuation (please provide a write up explaining your valuations – use snapshots of Excel and explain your calculations and findings: o DCF valuation using AFFO Use CAPM to calculate the Cost of Equity. Assume 2.8% for Risk Free rate and 6% for Market Risk Premium Use the template provided in previous lectures o FFO multiples based valuation Select comparables and average the FFO multiples and compare to your multiple. Is your REIT below or above average (benchmark) in terms of valuation? What is the forecasted or estimated growth rate for FFO? What is the expected stock price next year if the FFO multiple stayed the same in 2019 as it was in 2018? o NAV Estimate the NOI for 2018 (revenue minus opex) and also 2017 and 2016. What is the trend, or the growth rate?

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