A Real Estate Investment Trust (REIT) has the following financial details for FY 2024-25: Total value of real estate assets: ₹1,000 crore Rental income: ₹120 crore Operating expenses: ₹30 crore Interest on borrowings: ₹2

CS Professional · Strategic Management and Corporate Finance · PYQS · June 2026
A Real Estate Investment Trust (REIT) has the following financial details for FY 2024-25: Total value of real estate assets: ₹1,000 crore Rental income: ₹120 crore Operating expenses: ₹30 crore Interest on borrowings: ₹20 crore Depreciation: ₹10 crore Capital gains from sale of property: ₹40 crore Units outstanding: 10 crore units Additional Information: REIT is required to distribute 90% of net distributable cash flows (NDCF) Out of capital gains, only 50% is considered for distribution Market price per unit: ₹120 Required: (i) Compute Net Distributable Cash Flow (NDCF) (ii) Calculate minimum distribution to unit holders (iii) Determine Distribution Per Unit (DPU) (iv) Compute yield to investors.

Answer & Explanation:

Answer 3(c) (i) Net Distributable Cash Flow (NDCF) Operating Income Rental income = ₹120 crore Less: Operating expenses = ₹30 crore Interest on borrowings = ₹20 crore = ₹120 - ₹30 - ₹20 = ₹70 crore Add: Capital Gains Property sale (50% considered) = ₹40 × 50% = ₹20 crore Net Distributable Cash Flow (NDCF) = ₹70 + ₹20 = ₹90 crore (Note: Depreciation is non-cash, so ignored) (ii) Minimum Distribution to unit holders = 90% × ₹90 = ₹81 crore (iii) Distribution Per Unit (DPU) Total units outstanding = 10 crore Distribution per unit = ₹81 crore / 10 crore = ₹8.10 per unit (iv) Yield to Investors = (₹8.10 / ₹120) × 100 = 6.75%

Topics: Corporate Finance

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic