REITs Accounting Question
Let's say you purchase a revenue generating building for ~$100 mm using debt. Cap rate of 10%
How does this flow through the 3 statements? Any thoughts?
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Is it:
Income Statement (since asset is revenue generating):
0.1=x/100
NOI=$10 mm
No Taxes
Net Income=$10 mm
Cash flow Statement:
Net Income=$10 mm
Cash Flow From Investing Activities=-$100mm
Cash Flow From Financing Activities=+$100mm
Net Change in Cash=$10mm
Balance Sheet:
Cash Up $10mm
PPE Up $100mm
Debt up $100mm
Retained Earnings Account up $10mm
Both sides balance? Just looking for some clarity here. Thank you!
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