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Question on how REIT rental revenue that been earned but not paid.

I am underwriting a borrower that has seen ~90% rental collections during the pandemic. The proposed definitions for EBITDA and NOI in the credit agreement adjust out "non-cash" items.

My question though is whether non-cash items would just be referencing typical adjustments such as straight-line rent or if it would look through rental revenue and adjust out amounts not received to get to a true cash figure.

2 comments 17 Sep 2020 - tcbanker

Hi guys,

I'm trying to learn some basic IB technicals and was really hoping for help with a few concepts please:

  1. Isn't it better to value a company using EBIT rather than EBITDA because EBIT accounts for DA which is significant expense on the income statement?

  2. Do people in investment banks sometimes value a company by applying a multiples to EBIT rather than EBITDA?

6 comments 11 Nov 2017 - NiceADG

Monkeys - which of the two approaches are you using to calculate EBITDA, top down or bottom up? What line of work are you in?

I'm in corporate banking and have always gone the top down route (I.e. Revenues - cogs - opex +/- non-cash and non-recurring items embedded within the aforementioned categories). I now work with a few folks who are used to the bottom up calc and rooted in their old ways.

8 comments 27 Jun 2017 - B2Banker

Bubble Gum Co.’s operating profit is 5,000. It has a litigation charge of 1,000 in SG&A. D&A is 500. What is EBITDA?

I thought the answer would be $4,500. EBIT or operating income = Revenue -Expenses so $5000-$1000 of litigation expense. and then add D+A which would be $4000+$500=$4,500 turns out the correct answer is $6,500.

Any one care to explain?

2 comments 26 May 2017 - bigblue23