see this question on REIT
An analyst gathers the following information for two REITs:
P/NAV
P/AFFO
AFFO Payout Ratio
Est. annual AFFO growth
REIT A
98%
12.8 X
50%
4.0%
REIT B
101%
13.0 X
90%
3.5%
All else being equal, if both REITs have a 10 percent rate of return on retained and reinvested cash flows, which of the REITs is most attractively priced?
Can someone take me through why B is the right answer?
Also the whole Alternative Investment to me is like a huge blur, how much do we need to know?
An analyst gathers the following information for two REITs:
P/NAV
P/AFFO
AFFO Payout Ratio
Est. annual AFFO growth
REIT A
98%
12.8 X
50%
4.0%
REIT B
101%
13.0 X
90%
3.5%
All else being equal, if both REITs have a 10 percent rate of return on retained and reinvested cash flows, which of the REITs is most attractively priced?
Can someone take me through why B is the right answer?
Also the whole Alternative Investment to me is like a huge blur, how much do we need to know?