Beruflich Dokumente
Kultur Dokumente
Competitors: Equity Office Properties (EOP), Mack-Cali (CLI), and Vornado (VNO),
Assignment: Download the spreadsheet FFOForecast07.xls and use the data in the
workbook together with the assumptions at the end of this case to answer the following
questions.
1. Income Statement for REIT Comparables and BXP (10 points): Using the 1. Income
Stmt (Comps) worksheet and the financial statements for EOP, CLI, VNO, and BXP,
reconstruct the income statement for each REIT as well as the Peer Group aggregate
(EOP + CLI + VNO) for various line items in income statement by filling in the area
highlighted in yellow.
2. Balance Sheet for REIT Comparables and BXP (10 points): Using the 2. Balance
Sheet (Comps) worksheet and the financial statements for EOP, CLI, VNO, and
BXP, reconstruct the balance sheet for each REIT as well as the Peer Group
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aggregate (EOP + CLI + VNO) for various line items in balance sheet by filling in the
area highlighted in yellow.
3. Margin Analysis (10 points): Using the results that you obtained in the preceding
questions and the 3. Margin Analysis worksheet, perform a margin analysis e.g.,
calculate the appropriate ratios for the years given by filling in the area highlighted in
yellow for each REIT and the Peer Group.
4. Projecting “Other Assets” for the Next Two years (5 points): Using the information
given in the 4. Calc (Other Assets) worksheet, generate an XY(Scatter) graph. Next,
add a trendline to the graph by right-clicking on the scatterplot dots → selecting Add
Trendline… → Under the tab, Type click on Linear → click on the Options tab and
select the boxes labeled Display equation on chart and Display R-squared value
on chart → click on the OK button. Using the equation, forecast the dollar amount of
“Other Assets” for year 2006 and year 2007. The X (independent variable) in the
equation is time where X = 8 for year 2006 and X = 9 for year 2007.
5. Forecasting Financial Statements (65 points). Using the worksheet labeled "5.
Forecast of Fin Stmt (BXP)", please complete the following
a. Assumption Box and Forecasting FFO (60 points): Fill in the numbers for
12/31/2005 and also the assumptions (see the last page of this handout for the
forecasting assumptions). The area to be filled in is highlighted in yellow. Next,
forecast the income statement and balance sheet for 12/31/2006 and 12/31/2007
using the assumptions given in conjunction with the numbers for 12/31/2005. Also
assume that Boston Properties will maintain a 60% Debt to Total Capital ratio
(assume that this is their target capital structure). After you have finished
forecasting net income and funds from operations (FFO), calculate the FFO per
share (EPS) for BXP. How close are your FFO estimates to those of Wall Street
analysts using the “Analysts FFO (BXP)” worksheet? Is it within the Maximum
and Minimum range of analysts’ forecasts?
b. Sensitivity Analysis (5 points): Given your forecasted FFO per share for 2006 and
2007, use the Data Table command in Excel to perform a FFO sensitivity analysis
based on changes in the growth rate in base rent. Please round your answer to
two decimal places.
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Assumptions Used in Forecasting Financial Statements:
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Assumptions Used in Forecasting Financial Statements:
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When this case was written, we could not access historical default spread matrices and so we are using 12/11/2006
default spreads and Treasury rates even though we assume that this analysis is as of March 1, 2006.
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Debt = .025*(Debt + Equity) = .025*Debt + .025*Equity ⇒ Debt - .025*Debt = .025*Equity
⇒ .975*Debt = .025*Equity ⇒ Debt = (.025/.975)*Equity = .0256*Equity
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Assumptions Used in Forecasting Financial Statements:
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Assumptions Used in Forecasting Financial Statements:
Note: If there is a -- in a particular cell of your data spreadsheet, set it equal to zero e.g.,
-- = 0.