Net Asset Valuation, Part Three, equity investment and other assets. The next section on the balance sheet that we need to value are the equity co-investments. These are going to be valued very similarly to the established assets and the other business segments. We're going to start with the forward NOI and then we'll apply the replacement reserve adjustment and then the cap rate. The one thing that we have to look out for here is that typically what we do is we start with the total NOI from the assets, all of the building assets, even the percentage which the REIT does not own and then we make an adjustment at the end for their percentage of ownership. What I'm going to do here is I'm gonna link my equity co-investment NOI. This is the nominal NOI to the equity co-investment section and the net operating income is in row 37. Again, this is the net operating income for the building assets as a whole.

I will apply the replacement reserve and I can do that simply by copying that formula and then I can net the two. Now the cap rate will be divided into the economic NOI, and I will get my equity co-investment asset value. Now again, this is the value of the assets as a whole. If we do some digging around in the annual report, we should be able to find some kind of estimate of how much of the buildings this particular REIT owns. It's not necessarily broken out or given but you can kind of derive it by looking at the assets on the books versus the total value of the building assets and that is always published in the annual report. So based on that research, I have applied an assumption of 50%, which means that they're basically co-investing at a 50% rate in these buildings. I will apply that 50% to the building value as a whole and I get a building value estimate for the REITs ownership portion. The next thing I need to do is value the management revenue stream, and again, this is a very kind of touchy thing because the management contracts that the REITs are typically awarded to manage other buildings are very cancelable, and as a result, they usually carry a much higher cap rate, the risk is much higher. So we have an assumption and a calculation for these on our operating model. So if we go to the operating model, we can see the management and other fees, and we want the year one fees. There's no replacement reserve here because it's not related to an asset, it's simply an earning stream. So we can simply put a formula in or just link it to the actual management fee, and then we'll take the management fee and divide it by the cap rate to come up with a capitalized income stream for the management fees. Now, we need to find the values of our other balance sheet assets, often referred to as the other operating assets and these are typically valued at or around 100%. So we are going to simply link to their book value and assume they are at 100%. You could also have an assumption here for that valuation but we are simply going to link to the balance sheet. Now, the one catch is that we're not looking at the projected balance sheet, we're looking at the balance sheet as of the valuation date, or in this case, it's going to be as of the last fiscal year close. So that's going to be equal and I'm gonna go over to column F, which is my historical year zero or the last fiscal year and I'm gonna link to my cash and equivalence. And if I copy down, I get my notes and other receivables, as well as my prepaid expenses and other. Now, one quick note on the other assets that are included in here, we want to make sure that we're not including any goodwill because we never want to include goodwill in evaluation. You'd have to do a search in the annual report or 10K or 10Q, whichever is the last published document to find out if there is any goodwill buried in that account. And now I can take the sum of all of my balance sheet assets.

And I get a market value of the assets.