Nodal Logistic Corporation is a Real Estate Investment Trust (REIT) that centers obtaining of modern stockrooms and logistics property in high thickness markets. It acquires the dominant part of its incomes from rents and rents. With the aim of reinforcing its long haul aggressive position, NLC is anticipating putting $45 million in a 800,000 square foot modern property venture in Sao Paulo, Brazil. Sao Paulo had 250 million square feet of out of date mechanical space including stockrooms. In addition, nearby regions to Sao Paulo contained some prevalent nature of modern space.
Value of Net Income in 2009
Brazilian real-denominated loan
Per year Interest
Net Income After Interest- Paid to Bank
Sum of Net income in dollars
Brazilian Reais Spot and Forward Quotes
1. Why is Nodal Logistics interested in entering the Brazilian market and what special challenges do they face in regard to this move?
2. What kind of currency risk does the Brazilian project pose to Nodal?
3. What are the primary ways in which Nodal can try to manage this currency risk?
4. What degree of exposure would Nodal face if they chose to remain uncovered and to what extend can currency risk management alleviate this exposure?
5. What is your recommendation to John Penman? Other Teams: Prepare a one-pager on the following question: Assess Nodalâ€™s currency risk exposure and their options to manage it.