REIT Operating Model part six, fixed assets. It is now time to model the fixed assets or the real estate assets for the REIT. On the calculations page, I have a section for net real estate assets. These are the total net fixed assets of the REIT. As mentioned, REITs are very asset intensive, so there's a lot going on in this account unlike a traditional corporate where you see just like maybe one or two things happening. Here, we have a lot of things happening. Fortunately for us at this point we've already done most of this modeling. We simply need to pull all of these various accounts into the real estate asset account so we can come up with our ending balance. The beginning net real estate assets is going to be equal to the ending net real estate assets. And remember, in any model, we never wanna recalculate the historical years calculations. We always wanna pull these directly from the balance sheet. Now, the acquisitions we have calculated below down in our acquisition section so I'm just gonna go in here and pick up that assumption. For developments, we've also done the calculating here, but we want to be careful, because we have an assumption for development starts, but we also have development projects that are going on from previous years, and there is some carryover. So what we want to do here is pick up the total annual development spending. Same thing for the redevelopment of real estate assets. We want to go down here to the redevelopment section and we don't want to pick up the starts, we want to pick up the total annual redevelopment spending. Now for the capital expenditure on rentals, this is essentially maintenance CapEx on the existing properties. If we go to the operating model, into the balance sheet section, we see that we have in row 39 an assumption for capital expenditures as a percentage of rental revenue. So I pick up the 6% and then I pick up the rental revenue from the same year. Now we also have disposals, or as we called it, recycling of real estate assets. So I'm going to go down to my schedule and I'm using a negative here because I want this to show up as a negative in the schedule. And when I go down to my disposals, I want to get the book value of dispositions.

Now, depreciation as well. I need to go and get the assumption on the operating model and that's gonna be at the top, depreciation as a percentage of the previous years net fixed assets. I also want to flip this to make it a negative.

And now I have the ability to sum this up as a total. And since everything looks more or less correct to me in terms of my sanity check, I can go ahead and copy that over. Eventually, I'm going to bring this onto the balance sheet, but I'm not ready to do that right now, so I'm just gonna leave this right here. One thing I do want to do at this point, however, is bring the depreciation number onto my income statement, row 21 for depreciation expense, I'm simply going to link back to my depreciation. Now I have it showing as a negative for the ease of summation on the calcs page, but I don't want it to be a negative here, because that's not the precedent that I've established. I also wanna remove my formatting, Alt HHN is the shortcut for that, and then I can copy across and I've got my income statement is one step closer to being completed.