Real Estate & REITs
In REIT M&A, a deal can be FFO-accretive but NAV-dilutive. Explain the tension and which test should govern.
Model answer
FFO accretion is an EARNINGS test: fund an acquisition with cheap debt or moderately priced equity and FFO per share rises almost mechanically, because the acquired NOI exceeds the financing cost -…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 2,300+ — or go Pro for unlimited reps.
Pro unlocks every model answer — $19.99/mo.
More from Real Estate & REITs
- What is net operating income (NOI), and what does it exclude?
- What is a cap rate, and how do you use it to value a property?
- Why does a LOWER cap rate mean a HIGHER property value?
- What drives cap rates up or down?
- How should you think about the spread between cap rates and interest rates?
- What is the difference between a going-in cap rate and an exit cap rate, and why do underwriters usually assume the exit cap is higher?
Try the real thing
1 / 3LBO & Paper LBO
What is a leveraged buyout?
Superday coming up? Take the cheat sheet.
The technicals and stories to have cold before you walk in — free, one email, no mailing list.
Free tier: 20 cards + 10 daily reps + ALL drills — no credit card required.