Hi, Can someone please explain how REITA is the answer here.
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Price = NOI / cap rate
NOI = price × cap rate
REIT A’s cap rate is 75% of REIT B’s, REIT A’s NOI is about 75% of REIT B’s, so REIT A’s FFO is lower than REIT B’s, so REIT A’s P/FFO is greater than REIT B’s.
Understand now. Thanks so much s2000magician
You’re quite welcome.