Real estate operating model, part seven, equity investments. On the calculations page, we have a section beneath the real estate assets section called equity co-investments. And again, these are buildings where the REIT has purchased a non-controlling stake, typically between 20 and 50% of the building's value. So these are handled a little bit differently than other real estate assets because we don't control them. We have several assumptions for this section and we're gonna walk through them. The first is the equity co-investment rental and real estate assets. And what this represents is the total value of the building or buildings that the company has non-controlling or joint ownership of. This is going to grow at one plus this growth rate of 10%.

So again, now we have the forecasted amount of the total building value or values. So now what we can do is we can actually model the co-investment revenues. So that means that this particular REIT's share of the revenues and that's going to be forecast at 7.5% of the total amount. We also have an assumption for the net operating income from the co-invested assets, and that's again going to be 5.5% of the total real estate asset amount. And lastly, we have the non-operating expenses, which are 50% of the revenue amount. So now what we have to do is we have to take the information that we've just forecast and determine the amount of equity investment net income that we're going to report for this particular REIT on its income statement and then also how that will impact the balance sheet amount for this REIT. So with equity investments, and this is the same of corporates, we don't track them by their fair market value. We actually just track them by their earnings and by their losses. So the amounts go up by the amount of earnings and they go down by the amount of losses, and also dividends. So we're not considering dividends here. The first thing we'll do here is we'll calculate the equity co-invested investment net income amount and that's going to be the net operating income less the non-operating expenses.

Now we will take that net income amount and add it to our previous year's balance sheet amount and we will have our ending balance sheet amount for projected year one. Had this amount been a loss, we would have deducted it from the previous year's balance sheet amount. And now I'll simply copy all of this over, and since all of our assumptions don't change, I can actually go ahead and copy all of the rows. Had my assumptions been different in each year, I'd wanna be careful not to copy over my existing assumptions.

And again, this amount's going to go onto the balance sheet and I'm going to do that a little bit down the road. Now again, this amount will eventually go onto the balance sheet, but for right now, I'm going to leave it right here. And similar to depreciation, I do wanna bring this equity investment net income onto my operating model income statement. So I do that by finding the line on the income statement, which is row 28 and then linking back to row 42 on the calculations tab. I also wanna to go and remove the formatting so Alt + H + H + N for that. And then copyright. And I now have my equity income brought onto my income statement.