REIT Operating Model, step 10, Dividends. Before we complete our balance sheet, we have a couple more calculations to do involving the equity section.

The first thing is dividends which are hugely important to a REIT. Typically, the way a dividend is calculated in a REIT is based on its funds from operations. So in order to calculate our dividends we're gonna have to first calculate our funds from operations because our dividend assumption is gonna be driven by our FFO, funds from operation, as we have seen is the net income attributable to the parent plus the depreciation, plus any losses on property sales or minus any gains on property sales. We've already done all of these calculations we can simply link to them. Now, I have the historical calculation already done here so I can really just copy this over again to be safe but just to see where it's coming from. Net income is coming from my income statement appreciation of course, as well, coming from my income statement, my gain or loss on sale of property is coming from row 30 and in this case it is a gain. So I'm gonna want to subtract that out. Now this is a kind of a cash flow calculation and technically when we do cash flow calculations it's nice to show them as positive, negative depending on the cash flow. So what I'd like to do here is I'd like to actually change what I have and show this as a negative.

And what it'll allow me to do is it'll actually allow me to go and just use a sum function for this total FFO calculation. So now I'm just taking the sum of my net income, my depreciation, and I'm backing out the gain. To calculate the total dividends paid, I have to use the assumption for dividends as a percentage of FFO. I have this on my out model, so I'm gonna go to my out model and I'm gonna go to my balance sheet. I have it in the balance sheet section primarily because it's a big part of what's driving the equity. It could also go in the income statement section as well. So I see here an assumption for 60% as a percentage of FFO. So what I need to do is I need to link that. Now, I wanna be careful, I don't want to copy this because this is actually a formula that helped me derive my assumption. I want to get my assumption from the balance sheet section of the operating model, and now I can go ahead and calculate my dividends by taking my total FFO by the dividend assumption. Now this is showing a little high As a sanity check. It looks like it's quite a big jump and the primary reason is because I haven't actually completed my income statement yet, it's still missing my interest, income and expense, and interest expense, again, for a REIT is going to be quite high. So we can do a sanity check of all these numbers after we've completed the model. But for now at least I've checked the formulas and they look pretty good.