THE REAL ESTATE EVALUATIONS OPERATIONAL HANDBOOK

Size: px
Start display at page:

Download "THE REAL ESTATE EVALUATIONS OPERATIONAL HANDBOOK"

Transcription

1 United Nations Economic Commission for Europe WORKING PARTY ON LAND ADMINISTRATION THE REAL ESTATE EVALUATIONS OPERATIONAL HANDBOOK Speaker: Mauro Iacobini Agenzia del Territorio Largo Leopardi, 5 Roma 06/ 05 / 2011

2 THE REAL ESTATE EVALUATIONS OPERATIONAL HANDBOOK Agenzia del Territorio Largo Leopardi, 5 Roma 06/05/2011 pag. 02

3 Therefore, it is increasing the gap beetwen: Traditional appraisal methodology GAP The wide variety of statistical and econometric techniques Agenzia del Territorio Largo Leopardi, 5 Roma 06/05/2011 pag. 03

4 The methods used by the Italian appraisers are based on: simple theoretical hypotheses; experience; subjective judgments. Result: Conflicting assessments Agenzia del Territorio Largo Leopardi, 5 Roma 06/05/2011 pag. 04

5 1. Valuation is a science that yields precise answers Reality 1: Valuations are always biased Truth 1.1: All valuations are biased. The only questions are how much and in which direction. Truth 1.2: The direction and magnitude of the bias in your valuation is directly proportional to who pays you and how much you are paid. Reality 2: Equity valuations are always imprecise but they are most valuable when they are most imprecise. Truth 2.1: There are no precise valuations Truth 2.2: The payoff to valuation is greatest when valuation is least precise. Reality 3: Complex valuations do not yield better estimates of value. Truth 3.1: One s understanding of a valuation model is inversely proportional to the number of inputs required for the model. Truth 3.2: Simpler valuation models do much better than complex ones. (Aswath Damodaran) Agenzia del Territorio Largo Leopardi, 5 Roma 06/05/2011 pag. 05

6 Agenzia del Territorio supports: ISVAP (public institute) in the supervision of insurance companies; Local authorities in the urban planning services; Public authorities in the activities of enhancement and disposal of their real estate assets; and it also provides: assessments related to feasibility studies for most important projects. Agenzia del Territorio Largo Leopardi, 5 Roma 06/05/2011 pag. 06

7 Necessary conditions for a right appraisal are: (1) Knowledge of the real estate market (specific economic information) (2) Knowledge of the real estate property and its location in the national area (characteristics of assets) Agenzia del Territorio Largo Leopardi, 5 Roma 06/05/2011 pag. 07

8 In particular, the economic information necessary for the real estate appraisal (knowledge of the real estate or housing market ) is represented by: Buying-selling prices, in order to use the Sales Comparison Approach; Construction costs, in order to use the Cost Approach; Rents, yields and costs in order to use the Income or Financial Approach. Agenzia del Territorio Largo Leopardi, 5 - Roma 06/05/2011 pag. 08

9 Initiatives undertaken by Agenzia del Territorio Implementation and improvement of statistical analysis on the real estate market; Drafting of an operational handbook for real estate appraisals; Training program addressed to the Agency's technical staff; Creation of a real estate estimates database in order to monitor and develop the best practice in the real estate field. Agenzia del Territorio Largo Leopardi, 5 - Roma 06/05/2011 pag. 9

10 Real Estate Market Observatory Detection of collection of basic market data; Explanation of the sources; Elaboration of criteria for determining the quotations; Quotations referred to the whole country (direct collection in ~ 1300/8100 municipalities). Agenzia del Territorio L.go Leopardi, 85 - Roma 06/05/2011 Pag 10

11 Activities for the future are: To improve data quality; To gather additional economic information (e.g. the unit construction costs related to different regional markets). Agenzia del Territorio Largo Leopardi, 5 - Roma 06/05/2011 pag. 11

12 THE REAL ESTATE EVALUATIONS OPERATIONAL HANDBOOK (the Italian acronym is MOSI) Main aim To standardize the behavior of the technicians working in the different Provincial Offices when enforcing various estimation procedures. Agenzia del Territorio Largo Leopardi, 5 - Roma 06/05/2011 pag. 12

13 THE REAL ESTATE EVALUATIONS OPERATIONAL HANDBOOK (MOSI) It is not a text of economic valuation; It defines: - the operating procedures to perform real estate appraisals also when (sufficient) economic information are missing; - the methodology to improve the knowledge of local housing market. Agenzia del Territorio Largo Leopardi, 5 - Roma 06/05/2011 pag. 13

14 Valuation approaches The variety of (direct and indirect) estimation methods necessarily requires a procedure choice to steer the Agency technicians. According to Agenzia del Territorio, it is better to use in turn simplified procedures or more complex methods depending on the specific case. Agenzia del Territorio Largo Leopardi, 5 - Roma 06/05/2011 pag. 14

15 Valuation Approaches Valuation approaches include: Market Approach; Cost Approach; Income Approach. Agenzia del Territorio Largo Leopardi, 5 - Roma 06/05/2011 pag. 15

16 Sales Comparison Approach The Sales Comparison approach is the most frequently used approach for estimating the market value of residential properties (including single and multifamily ones). Agenzia del Territorio makes use of a semi-empirical procedure, in order to assess real estate properties in markets having low-dynamic and low-transparency, and when it is not possible to use other approaches. Agenzia del Territorio Largo Leopardi, 5 - Roma 06/05/2011 pag. 16

17 Sales Comparison Approach The adjustment price of each real estate property characteristic is market-derived on the basis of activities carried out by the Agency Provincial offices. In the future, the market-derived adjustments could be identified through scientific methods, such as the Multiple Regression Analysis (MRA) and the Analytic Hierarchic Process (AHP). Agenzia del Territorio Largo Leopardi, 5 - Roma 06/05/2011 pag. 17

18 THE COST APPROACH assesses the market value of a real property by adding the prices of the different factors used in the production process. modern (new or recent) real estates, built with current technologies and distributive criterions, fittings endowments, comfort and safety levels consistent with standards in force cost for the asset duplicating COST VALUE REPRODUCTION COST ancient or historical real estates, built with outdated technologies and distributive criterions, fittings endowments, comfort and safety levels not consistent with standards in force cost of building a similar asset, using updated construction methods and materials SUBSTITUTION VALUE REPLACEMENT COST DECREASED ACCORDING TO DEPRECIATION Agenzia del Territorio Largo Leopardi, 5 Roma 06/05/2011 pag. 18

19 REPRODUCTION COST It deals with assuming normal real estate development activity appropriate to guarantee the reproduction of the property to be assessed, whether such reproduction is regarded as duplication or as replacement. V M Market value of the property FORMULA V M = C L + C B + B F + P D Market Value V M appraised through the procedure of the reproduction cost C L C B B F P D Cost of Land Construction Cost Financial burdens Entreprener Profit CL direct and indirect Costs of Land C B direct and indirect Construction Cost B F Financial burdens Ctc Technical Construction Cost Cic indirect Cost of Building P D Profit of the developer C BL B BL C FL C CS C ES B PSU B CC R P C LP E G E C B FL B FC P DL P DC Cost for buying land Burdens for buying land costs to make land suitable for building Construction Cost of Covered Surfaces Cost of arrangement of outdoor areas Burdens of Primary and Secondary Urbanization Contributions related to the cost of construction Professional fees Costs for connecting to public services General Expenses Marketing Expenses Financial burdens on the debt rate related to direct and indirect costs of the Land Financial burdens on the debt rate related to direct and indirect construction costs Profit of the developer on direct and indirect costs of the Land Profit of the developer on direct and indirect construction costs Ou Burdens of Urbanization Cg Management Costs of the real estate development Agenzia del Territorio Largo Leopardi, 5 Roma 06/05/2011 pag. 19

20 PARAMETRIC EVALUATION sources information unity of measure adjustments Specialized publications with index parametric costs typologies costs inpact times volume gross surface floor typical numbers location area works category C tc technical construction cost sources Local Specialized publications that collect the single costs of construction materials, working hours and other factors ANALYTICAL EVALUATION quantity costs metric calculation unitary prices amounts Agenzia del Territorio Largo Leopardi, 5 Roma 06/05/2011 pag. 20

21 PARAMETRIC EVALUATION sources information Agenzia del Territorio Largo Leopardi, 5 Roma 06/05/2011 pag. 21

22 ANALYTICAL EVALUATION sources metric calculation of the costs C TC pag. 22

23 INCOME APPROACH Direct Capitalization Yield Capitalization Discounted Cash Flow Analysis Agenzia del Territorio Largo Leopardi, 5 Roma 06/05/2011 pag. 23

24 Aswath Damodaran Valuation Inferno: Dante meets DCF Agenzia del Territorio Largo Leopardi, 5 Roma 06/05/2011 pag. 24

25 Agenzia del Territorio Largo Leopardi, 5 Roma 06/05/2011 pag. 25

26 Economic information necessary for the implementation of the DCFA in real estate appraisal (i.e. items likely to generate strong cash flows and the variables that affect its performance) are approximately the following: 1. gross annual income; 2. Inflation performance; 3. using period under the lease; 4. vacancy; 5. cost of purchasing the property (stamp duty, notary charges, etc.); 6. cost of debt; 7. operating costs of leased properties (local property tax, administration, insurance, maintenance etc.); when it is appropriate to assume a conversion of the property, the following must be added: 8. highest & Best Use; 9. any investment required for conversion (restructuring etc.); 10. any time for conversion (of the property) and to rent it out, compared to existing urban settlements and their constraints; 11. potential gross income of the converted property and for the last year flow (terminal value); 12. revaluation; 13. future market rents. Agenzia del Territorio Largo Leopardi, 5 Roma 06/05/2011 pag. 26

27 THANKS FOR YOUR ATTENTION! Agenzia del Territorio Largo Leopardi, 5 Roma 06/05/2011 pag. 27

HIDDEN BUILDINGS PROJECT

HIDDEN BUILDINGS PROJECT UNECE Working Party on Land Administration HIDDEN BUILDINGS PROJECT an Italian best practice for a more effective land administration Eng. Marco SELLERI WPLA SIXTH SESSION Geneva, 19 th of June, 2009 Agenzia

More information

International Valuation Guidance Note No. 9 Discounted Cash Flow Analysis for Market and Non-Market Based Valuations

International Valuation Guidance Note No. 9 Discounted Cash Flow Analysis for Market and Non-Market Based Valuations International Valuation Guidance Note No. 9 Discounted Cash Flow Analysis for Market and Non-Market Based Valuations 1.0 Introduction 1.1 Discounted cash flow (DCF) analysis is a financial modelling technique

More information

An Introduction to Valuation!

An Introduction to Valuation! An Introduction to Valuation! Fall 2012 Aswath Damodaran Aswath Damodaran 1 Some Initial Thoughts! " One hundred thousand lemmings cannot be wrong" Graffiti We thought we were in the top of the eighth

More information

Agenzia del Territorio - Largo Leopardi, 5-00185 Roma - THE ITALIAN CADASTRAL SYSTEM MANAGING BODY AGENZIA DEL TERRITORIO

Agenzia del Territorio - Largo Leopardi, 5-00185 Roma - THE ITALIAN CADASTRAL SYSTEM MANAGING BODY AGENZIA DEL TERRITORIO PLENARY SESSION 1 Knowledge to manage The Italian Cadastre and the Real Estate Taxation Franco Maggio Central Director for Cadastre and Cartography Agenzia del Territorio - Largo Leopardi, 5-00185 Roma

More information

Basics of Discounted Cash Flow Valuation. Aswath Damodaran

Basics of Discounted Cash Flow Valuation. Aswath Damodaran Basics of Discounted Cash Flow Valuation Aswath Damodaran 1 Discounted Cashflow Valuation: Basis for Approach t = n CF Value = t t =1(1+ r) t where, n = Life of the asset CF t = Cashflow in period t r

More information

Valuation of Intellectual Property Mark Weston, CA, CBV Director, Advisory and Transaction Services

Valuation of Intellectual Property Mark Weston, CA, CBV Director, Advisory and Transaction Services 9:30 am 10:15 am Valuation of Intellectual Property Mark Weston, CA, CBV Director, Advisory and Transaction Services Agenda General Valuation Approaches Cost Based Valuation Methods Market Based Valuation

More information

Before you develop or acquire a property, you must know how big it is size is the key metric for real estate.

Before you develop or acquire a property, you must know how big it is size is the key metric for real estate. Real Estate Development Key Terms If you want to understand real estate development, you need to know the key terms used to describe properties whether you re developing the properties from the ground

More information

Real Estate Appraisals Common Issues and Best Practices

Real Estate Appraisals Common Issues and Best Practices Real Estate Appraisals Common Issues and Best Practices Real estate appraisals are the first line of credit risk defense Common Issues Key Takeaways Common areas for improvement Selecting the best appraisers

More information

Sample Property 930 LaVergne Ln La Vergne, TN 37086

Sample Property 930 LaVergne Ln La Vergne, TN 37086 Property Report Sample Property Presented by: My Company 123 Main St Anywhere, CA 12345 Office: Mobile: Fax: You can customize the footer too! 1 Overview Sample Property Purchase Info Square Feet (2 Units)

More information

Re/Max Acclaimed Realty Commercial Division Industry Specific Training Program

Re/Max Acclaimed Realty Commercial Division Industry Specific Training Program Re/Max Acclaimed Realty Industry Specific Training Program This course is meant to get brand new agents up to speed with the industry knowledge quickly. If a brand new agent completes this course within

More information

METHOD FOR PROJECT APPRAISAL: NET PRESENT VALUE OR NPV The sum of discounted cash flows.

METHOD FOR PROJECT APPRAISAL: NET PRESENT VALUE OR NPV The sum of discounted cash flows. OBJECTIVE: ECONOMIC ANALYSIS OF A PROJECT, consisting of the operation of a new incineration plant by the municipality. In particular we are interested in the computaton of a Solid Waste Tariff, consistent

More information

Trading Costs and Taxes!

Trading Costs and Taxes! Trading Costs and Taxes! Aswath Damodaran Aswath Damodaran! 1! The Components of Trading Costs! Brokerage Cost: This is the most explicit of the costs that any investor pays but it is usually the smallest

More information

i) Question Type The following are guidelines on the type of questions and their approximate weightings:

i) Question Type The following are guidelines on the type of questions and their approximate weightings: Purpose Financial Accounting: Assets [FA2] Examination Blueprint 2014/2015 The Financial Accounting: Assets [FA2] examination has been constructed using an examination blueprint. The blueprint, also referred

More information

INCOME APPROACH. Leased Fee Income Approach Example

INCOME APPROACH. Leased Fee Income Approach Example INCOME APPROACH The Income Approach considers the return on Investment and is similar to the method that investors typically use to make their investment decisions. It is most directly applicable to income

More information

Equity Value and Per Share Value: A Test

Equity Value and Per Share Value: A Test Equity Value and Per Share Value: A Test Assume that you have done an equity valuation of Microsoft. The total value for equity is estimated to be $ 400 billion and there are 5 billion shares outstanding.

More information

Investing on hope? Small Cap and Growth Investing!

Investing on hope? Small Cap and Growth Investing! Investing on hope? Small Cap and Growth Investing! Aswath Damodaran Aswath Damodaran! 1! Who is a growth investor?! The Conventional definition: An investor who buys high price earnings ratio stocks or

More information

INCOME APPROACH Gross Income Estimate - $198,000 Vacancy and Rent Loss - $9,900

INCOME APPROACH Gross Income Estimate - $198,000 Vacancy and Rent Loss - $9,900 INCOME APPROACH The Income Approach considers the return on Investment and is similar to the method that investors typically use to make their investment decisions. It is most directly applicable to income

More information

Understanding the Appraisal

Understanding the Appraisal Understanding the Appraisal Understanding the Appraisal Much of the private, corporate and public wealth of the world consists of real estate. The magnitude of this fundamental resource creates a need

More information

Appraiser Qualifications Board

Appraiser Qualifications Board Appraiser Qualifications Board COURSE APPROVAL PROGRAM APPLICATION FOR INITIAL COURSE APPROVAL or RENEWAL If renewal, please provide state approval number (if applicable) INSTRUCTIONS: This application

More information

Cash Investments MORE: Multiple Owner Real Estate

Cash Investments MORE: Multiple Owner Real Estate Private Capital Corporation Inland Private Capital Corporation Cash Investments MORE: Multiple Owner Real Estate www.inland-investments.com Inland Private Capital Corporation 415 properties in 44 states

More information

SUPPLEMENTARY GREEN BOOK GUIDANCE

SUPPLEMENTARY GREEN BOOK GUIDANCE SUPPLEMENTARY GREEN BOOK GUIDANCE ADJUSTING FOR TAXATION IN PFI vs PSC COMPARISONS 1 INTRODUCTION 1.1 This guidance looks at the differential tax receipts that arise from the use of the Private Finance

More information

AN INTRODUCTION TO REAL ESTATE INVESTMENT ANALYSIS: A TOOL KIT REFERENCE FOR PRIVATE INVESTORS

AN INTRODUCTION TO REAL ESTATE INVESTMENT ANALYSIS: A TOOL KIT REFERENCE FOR PRIVATE INVESTORS AN INTRODUCTION TO REAL ESTATE INVESTMENT ANALYSIS: A TOOL KIT REFERENCE FOR PRIVATE INVESTORS Phil Thompson Business Lawyer, Corporate Counsel www.thompsonlaw.ca Rules of thumb and financial analysis

More information

QUADRANT SKEW CAPITAL Syllabus

QUADRANT SKEW CAPITAL Syllabus QUADRANT SKEW CAPITAL Syllabus OVERVIEW Quadrant Skew Capital s Equity Research Program focuses on material, content and skills that are directly applicable to real-world application. Our program provides

More information

COMMERCIAL REAL ESTATE INVESTING

COMMERCIAL REAL ESTATE INVESTING REDEFINING REAL ESTATE INVESTING CRE101: INTRODUCTION TO COMMERCIAL REAL ESTATE INVESTING COMMERCIAL REAL ESTATE INVESTING ABOUT REALCROWD RealCrowd is a private, secure and simple-to-use online platform

More information

Graduate Diploma In Applied Finance & Investment. Property Investment Analysis - E133. Topic 2 - Property Valuation Techniques

Graduate Diploma In Applied Finance & Investment. Property Investment Analysis - E133. Topic 2 - Property Valuation Techniques Graduate Diploma In Applied Finance & Investment Property Investment Analysis - E133 Topic 2 - Property Valuation Techniques Main Concepts Valuation Valuers Purpose and Basis of Valuations Highest & Best

More information

International Valuation Application 2 Valuation for Lending Purposes

International Valuation Application 2 Valuation for Lending Purposes International Valuation Application 2 Valuation for Lending Purposes Introduction 185 Scope 185 Definitions 186 Relationship to Accounting Standards 187 Application 187 Discussion 189 Disclosure Requirements

More information

The Debt-Equity Trade Off: The Capital Structure Decision

The Debt-Equity Trade Off: The Capital Structure Decision The Debt-Equity Trade Off: The Capital Structure Decision Aswath Damodaran Stern School of Business Aswath Damodaran 1 First Principles Invest in projects that yield a return greater than the minimum acceptable

More information

Breakeven Analysis. Breakeven for Services.

Breakeven Analysis. Breakeven for Services. Dollars and Sense Introduction Your dream is to operate a profitable business and make a good living. Before you open, however, you want some indication that your business will be profitable, if not immediately

More information

Introduction to Real Estate Investment Appraisal

Introduction to Real Estate Investment Appraisal Introduction to Real Estate Investment Appraisal Maths of Finance Present and Future Values Pat McAllister INVESTMENT APPRAISAL: INTEREST Interest is a reward or rent paid to a lender or investor who has

More information

Eagle Asset Management. REIT manager. Analyst Presentation. Acquisition of 3 Floors of Citibank Tower 4Q 2006 Version 1.0. Eagle Asset Management

Eagle Asset Management. REIT manager. Analyst Presentation. Acquisition of 3 Floors of Citibank Tower 4Q 2006 Version 1.0. Eagle Asset Management REIT manager Analyst Presentation Acquisition of 3 Floors of Citibank Tower 4Q 2006 Version 1.0 1 Important Notice This document may contain information which is proprietary, confidential and/or legally

More information

1. What is the difference between nominal returns and real returns?

1. What is the difference between nominal returns and real returns? End of Chapter 11 Questions and Answers 1. What is the difference between nominal returns and real returns? Answer: Nominal returns include inflation while real returns have inflation netted out. For example,

More information

Fundamentals Level Skills Module, Paper F9

Fundamentals Level Skills Module, Paper F9 Answers Fundamentals Level Skills Module, Paper F9 Financial Management June 2008 Answers 1 (a) Calculation of weighted average cost of capital (WACC) Cost of equity Cost of equity using capital asset

More information

Property Report : NW Washington DC Multi-Unit

Property Report : NW Washington DC Multi-Unit Property Report : NW Washington DC Multi-Unit Generated on: Dec 26, 2016 Author: Guest Page 1 of 11 Table of Contents Executive Summary 3 Property Description 4 Operational Effectivness 5 Financial Effectivness

More information

NOTICE: For details of the project history please look under the Work Plan section of this website.

NOTICE: For details of the project history please look under the Work Plan section of this website. NOTICE: This Exposure Draft is available to show the historic evolution of the project. It does not include changes made by the Board following the consultation process and therefore should not be relied

More information

Director s Guide to Credit

Director s Guide to Credit Federal Reserve Bank of Atlanta Director s Guide to Credit This guide was created by the Supervision and Regulation Division of the Federal Reserve Bank of Atlanta, 1000 Peachtree Street NE, Atlanta,

More information

March 31, 2014 Income from operations... $ 121,521 $ 136,082 $ 120,847

March 31, 2014 Income from operations... $ 121,521 $ 136,082 $ 120,847 Akamai Technologies, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures In addition to providing financial measurements based on generally accepted accounting principles in the United States of

More information

Dealing with Operating Leases in Valuation. Aswath Damodaran. Stern School of Business. 44 West Fourth Street. New York, NY 10012

Dealing with Operating Leases in Valuation. Aswath Damodaran. Stern School of Business. 44 West Fourth Street. New York, NY 10012 Dealing with Operating Leases in Valuation Aswath Damodaran Stern School of Business 44 West Fourth Street New York, NY 10012 adamodar@stern.nyu.edu Abstract Most firm valuation models start with the after-tax

More information

Keyware Technologies N.V- valuation highlights

Keyware Technologies N.V- valuation highlights Keyware Technologies N.V- valuation highlights This memorandum brings a short summary of Keyware Technologies N.V's (hereinafter 'Keyware' or the 'Company') valuation report as of December 31, 2014. This

More information

COST ACCOUNTING STANDARD ON OVERHEADS

COST ACCOUNTING STANDARD ON OVERHEADS COST ACCOUNTING STANDARD ON OVERHEADS The following is the text of the COST ACCOUNTING STANDARD 3 (CAS- 3) issued by the Council of the Institute of Cost and Works Accountants of India on Overheads. The

More information

The Match Game: Cap Rates and Cash Flows

The Match Game: Cap Rates and Cash Flows The Match Game: Cap Rates and Cash Flows 44 th Annual Wichita Program Appraisal for Ad Valorem Taxation Jay Fletcher Washington Department of Revenue jayf@dor.wa.gov Paul Simon Xcel Energy paul.a.simon@xcelenergy.com

More information

IFRS 13 FAIR VALUE MEASUREMENTAND COMMON PROPERTY VALUATION METHODOLOGIES

IFRS 13 FAIR VALUE MEASUREMENTAND COMMON PROPERTY VALUATION METHODOLOGIES IFRS 13 FAIR VALUE MEASUREMENTAND COMMON PROPERTY VALUATION METHODOLOGIES Presented for ZHONGHUI ANDA Professional Training Limited 30 October 2014 CONTENT Part I Introduction to IFRS 13 Part II Fair Value

More information

Valuation of Intangibles under IFRS 3R, IAS 36 and IAS 38

Valuation of Intangibles under IFRS 3R, IAS 36 and IAS 38 Valuation of Intangibles under IFRS 3R, IAS 36 and IAS 38 Jim Eales Agenda Overview of Purchase Price Allocation under IFRS 3R Valuation of Intangibles - Approaches & Methodologies Impairment Testing (IAS

More information

Accounting. Draft GCE AS and A level subject content

Accounting. Draft GCE AS and A level subject content Accounting Draft GCE AS and A level subject content September 2015 Contents The content for AS and A level accounting 3 Introduction 3 Aims and objectives 3 Subject content 4 Knowledge and understanding

More information

Accounting for Fixed Assets

Accounting for Fixed Assets 96 Accounting Standard (AS) 10 Accounting for Fixed Assets Contents INTRODUCTION Paragraphs 1-6 Definitions 6 EXPLANATION 7-17 Identification of Fixed Assets 8 Components of Cost 9 Self-constructed Fixed

More information

The value of information technology: A case study

The value of information technology: A case study ABSTRACT The value of information technology: A case study Lin Zhao Purdue University Calumet Songtao Mo Purdue University Calumet This case requires students to examine how to effectively assess the business

More information

Analytics Report Rental Market Report

Analytics Report Rental Market Report Analytics Report Rental Market Report 10 Dec 2014 SW12 Postcode District Rental Market Summary This report provides analysis of the rental market in the SW12 Postcode District using data on rental listings

More information

Sentinel Shared owners guide to staircasing

Sentinel Shared owners guide to staircasing Sentinel Shared owners guide to staircasing How to buy further shares in your home Making a difference What s staircasing? Once you ve completed your purchase you can buy more shares in your home. This

More information

Capital Investment Analysis and Project Assessment

Capital Investment Analysis and Project Assessment PURDUE EXTENSION EC-731 Capital Investment Analysis and Project Assessment Michael Boehlje and Cole Ehmke Department of Agricultural Economics Capital investment decisions that involve the purchase of

More information

The GRM does not include expenses such as property tax, insurance, operating costs, and vacancies.

The GRM does not include expenses such as property tax, insurance, operating costs, and vacancies. Common Real Estate Investment Formulas I. Introduction Many agents represent clients who are investors. These investor clients can vary from first time investors buying their first rental property to very

More information

Fully Amortized Loan: Fixed Rate This loan is the easiest payment to calculate since the payment stays the same throughout the term of the loan.

Fully Amortized Loan: Fixed Rate This loan is the easiest payment to calculate since the payment stays the same throughout the term of the loan. SECTION THREE: TYPES AND EXAMPLES OF LOANS This Section on types of loans, provides the opportunity to begin calculating actual loan payments. A basic understanding of the use of a financial calculator

More information

Valuing the Business

Valuing the Business Valuing the Business 1. Introduction After deciding to buy or sell a business, the subject of "how much" becomes important. Determining the value of a business is one of the most difficult aspects of any

More information

The 2014 Italian Presidency of the Permanent Committee on Cadastre in the E.U.

The 2014 Italian Presidency of the Permanent Committee on Cadastre in the E.U. The 2014 Italian Presidency of the Permanent Committee on Cadastre in the E.U. Athens, 25 th June 2014 Eng. Franco MAGGIO Central Director for Cadastre and Cartography Page 1 Agenda Overview of the Italian

More information

A Basic Introduction to the Methodology Used to Determine a Discount Rate

A Basic Introduction to the Methodology Used to Determine a Discount Rate A Basic Introduction to the Methodology Used to Determine a Discount Rate By Dubravka Tosic, Ph.D. The term discount rate is one of the most fundamental, widely used terms in finance and economics. Whether

More information

Real Estate Investment Analysis and Advanced Income Appraisal BUSI 331

Real Estate Investment Analysis and Advanced Income Appraisal BUSI 331 Real Estate Division Real Estate Investment Analysis and Advanced Income Appraisal BUSI 331 Presentation by Graham McIntosh Outline 1. Introduction 2. Investment Analysis vs. Appraisal 3. The After Tax

More information

Chapter 4: Liquor Store Business Valuation

Chapter 4: Liquor Store Business Valuation Chapter 4: Liquor Store Business Valuation In this section, we will utilize three approaches to valuing a liquor store. These approaches are the: (1) cost (asset based), (2) market, and (3) income approach.

More information

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

CONSOLIDATED INTERIM FINANCIAL STATEMENTS CONSOLIDATED INTERIM FINANCIAL STATEMENTS AND GROUP INTERIM MANAGEMENT REPORT SECOND QUARTER OF 2008 JUNE 30, 2008 FRANCONOFURT AG FRANKFURT AM MAIN FRANCONOFURT AG, FRANKFURT AM MAIN CONSOLIDATED INTERIM

More information

Ten reasons to be invested in European Listed Real Estate

Ten reasons to be invested in European Listed Real Estate Ten reasons to be invested in European Listed Real Estate Executive Summary At Petercam Institutional Asset, we are convinced that investing part of one s assets in European listed real estate makes sense.

More information

Reliable Valuations. Session 2 Discount Rates DCF Analyses And others

Reliable Valuations. Session 2 Discount Rates DCF Analyses And others OFFICE INDUSTRIAL APARTMENT HOSPITALITY Session 2 Discount Rates D Analyses And others RETAIL INDUSTRIAL LAND Session 1 Comparable Sales Capitalization Rates Discount Rates Discounted Cash Flow Band of

More information

State Tax Commission. Basic Income. MAAO Prerequisite Course. Published July 2014

State Tax Commission. Basic Income. MAAO Prerequisite Course. Published July 2014 State Tax Commission Basic Income MAAO Prerequisite Course Published July 2014 All rights reserved. This material may not be published, broadcast, rewritten or redistributed in whole or part without the

More information

Chapter 12. Introduction to Value Determination

Chapter 12. Introduction to Value Determination Chapter 12 Value Theory, Highest and Best Use Analysis, and the Cost Approach 11/17/2005 FIN4777 - Special Topics in Real Estate - Professor Rui Yao 1 Introduction to Value Determination Price is usually

More information

CORPORATE FINANCE THE PROJECT

CORPORATE FINANCE THE PROJECT 1 CORPORATE FINANCE THE PROJECT Aswath Damodaran The big picture.. 2 You should find a group to work with of between 4-8 people. You can make the judgment of optimal group size. If corporate finance is

More information

Discussion of Discounting in Oil and Gas Property Appraisal

Discussion of Discounting in Oil and Gas Property Appraisal Discussion of Discounting in Oil and Gas Property Appraisal Because investors prefer immediate cash returns over future cash returns, investors pay less for future cashflows; i.e., they "discount" them.

More information

Content Specification Outlines Certified Management Accountant (CMA) Examinations

Content Specification Outlines Certified Management Accountant (CMA) Examinations Effective January 1, 2015 Content Specification Outlines Certified Management Accountant (CMA) Examinations The content specification outlines presented below represent the body of knowledge that will

More information

THE APPRAISAL OF REAL ESTATE 3 RD CANADIAN EDITION BUSI 330

THE APPRAISAL OF REAL ESTATE 3 RD CANADIAN EDITION BUSI 330 THE APPRAISAL OF REAL ESTATE 3 RD CANADIAN EDITION BUSI 330 REVIEW NOTES by CHUCK DUNN CHAPTER 7 Copyright 2010 by the Real Estate Division and Chuck Dunn. All rights reserved CHAPTER 7 - THE VALUATION

More information

HOUSING FINANCE AND LOW-INCOME HOUSING TAX CREDITS. September 2012 With gratitude to Kathleen Foster

HOUSING FINANCE AND LOW-INCOME HOUSING TAX CREDITS. September 2012 With gratitude to Kathleen Foster BASIC AFFORDABLE HOUSING FINANCE AND LOW-INCOME HOUSING TAX CREDITS September 2012 With gratitude to Kathleen Foster Public Housing Finance Today Conventional Public Housing Finance: Capital and operating

More information

6. Debt Valuation and the Cost of Capital

6. Debt Valuation and the Cost of Capital 6. Debt Valuation and the Cost of Capital Introduction Firms rarely finance capital projects by equity alone. They utilise long and short term funds from a variety of sources at a variety of costs. No

More information

Real estate investment trusts (REITs) in Africa. By Knight Frank Kenya Valuers

Real estate investment trusts (REITs) in Africa. By Knight Frank Kenya Valuers Real estate investment trusts (REITs) in Africa By Knight Frank Kenya Valuers What is a REIT? The National Association of Real Estate Investment Trust (NAREIT) defines real estate investment trust as a

More information

Guidelines for Preparation of Review Protocols

Guidelines for Preparation of Review Protocols Guidelines for Preparation of Review Protocols Type of document: Policy _x_ Guideline Procedure Version: 1.0, January 1 2001 Decision: Steering Group, Date? A Campbell Systematic Review is meant to review

More information

Chapter 03.00F Physical Problem for Nonlinear Equations Industrial Engineering

Chapter 03.00F Physical Problem for Nonlinear Equations Industrial Engineering Chapter 3.F Physical Problem for Nonlinear Equations Industrial Engineering Problem Statement You have been recently employed by a start-up computer assembly company called the MOM AND POP COMPUTER SHOP.

More information

How should banks account for their investment in other real estate owned (OREO) property?

How should banks account for their investment in other real estate owned (OREO) property? TOPIC 5: OTHER ASSETS 5A. REAL ESTATE Question 1: (December 2008) How should banks account for their investment in other real estate owned (OREO) property? Detailed accounting guidance for OREO is provided

More information

Leases Summary of outreach meetings with investors and analysts on proposed accounting by lessees May September 2013

Leases Summary of outreach meetings with investors and analysts on proposed accounting by lessees May September 2013 Introduction 1. This summary outlines the feedback that the IASB and the FASB (the boards) received at meetings with investors and analysts on the lessee accounting proposals included in the Leases Exposure

More information

Three approaches to valuing intangible assets

Three approaches to valuing intangible assets CGMA TOOLs Three approaches to valuing intangible assets Powered by CONTENTS Two of the world s most prestigious accounting bodies, AICPA and CIMA, have formed a joint-venture to establish the Chartered

More information

Finding the Right Financing Mix: The Capital Structure Decision. Aswath Damodaran 1

Finding the Right Financing Mix: The Capital Structure Decision. Aswath Damodaran 1 Finding the Right Financing Mix: The Capital Structure Decision Aswath Damodaran 1 First Principles Invest in projects that yield a return greater than the minimum acceptable hurdle rate. The hurdle rate

More information

FRBSF ECONOMIC LETTER

FRBSF ECONOMIC LETTER FRBSF ECONOMIC LETTER 01-1 April, 01 Commercial Real Estate and Low Interest Rates BY JOHN KRAINER Commercial real estate construction faltered during the 00 recession and has improved only slowly during

More information

Appendix A to Part 3500 -- Instructions for Completing HUD - 1 and HUD - 1A Settlement Statements

Appendix A to Part 3500 -- Instructions for Completing HUD - 1 and HUD - 1A Settlement Statements Appendix A to Part 3500 -- Instructions for Completing HUD - 1 and HUD - 1A Settlement Statements The following are instructions for completing Sections A through L of the HUD - 1 settlement statement,

More information

--Works within Department to foster a culture of best practices and teamwork.

--Works within Department to foster a culture of best practices and teamwork. S23530, page 1 Nothing in this job description restricts management's right to reassign duties and responsibilities to this job at any time. DUTIES Serves as Real Estate Asset Manager in the Real Estate

More information

ED 6 IPSASB Conceptual Framework Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities

ED 6 IPSASB Conceptual Framework Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities 2.1 CONCEPTS 2.1.1 Introduction 2.1.1.1 Authorities shall prepare financial statements (including Group Accounts) in accordance with the International Accounting Standards Board (IASB) Framework for the

More information

Frequently Asked Questions on Residential Tract Development Lending (September 8, 2005)

Frequently Asked Questions on Residential Tract Development Lending (September 8, 2005) Board of Governors of the Federal Reserve System Federal Deposit Insurance Corporation National Credit Union Administration Office of the Comptroller of the Currency Office of Thrift Supervision Frequently

More information

Developing Commercial Property Price Indicators

Developing Commercial Property Price Indicators Developing Commercial Property Price Indicators Paolo Passerini* *European Commission, Eurostat Ottawa Group Copenhagen -1-3 May 2013 Abstract Commercial Property Price Indicators (CPPIs) are a new and

More information

ICASL - Business School Programme

ICASL - Business School Programme ICASL - Business School Programme Quantitative Techniques for Business (Module 3) Financial Mathematics TUTORIAL 2A This chapter deals with problems related to investing money or capital in a business

More information

Market Value Assessment in Saskatchewan Handbook

Market Value Assessment in Saskatchewan Handbook Market Value Assessment in Saskatchewan Handbook Saskatchewan Assessment Management Agency 2012 This document is a derivative work based upon a handbook entitled the "Market Value and Mass Appraisal for

More information

Calculation Guide Estate Master DF Summary Report Performance Indicators. August 2012

Calculation Guide Estate Master DF Summary Report Performance Indicators. August 2012 Calculation Guide Estate Master DF Summary Report Performance Indicators August 2012 Table of Contents Introduction... 3 Summary Report - Performance Indicators... 4 1. Gross Development Profit... 4 2.

More information

What's Your Business Worth? What you see isn't usually what you get - or want!

What's Your Business Worth? What you see isn't usually what you get - or want! What's Your Business Worth? What you see isn't usually what you get - or want! "How much is my business worth?" and "How do I know for sure?" and "Why should I care? After all, I have no intention of selling

More information

Information & Instructions: HUD 1 Settlement closing statement PREVIEW

Information & Instructions: HUD 1 Settlement closing statement PREVIEW Information & Instructions: HUD 1 Settlement closing statement 1. Section 5 of the Real Estate Settlement Procedures Act of 1974 (Public Law 93-533), effective on June 30, 1976 (RESPA), requires certain

More information

What is the fair market

What is the fair market 3 Construction Company Valuation Primer Fred Shelton, Jr., CPA, MBA, CVA EXECUTIVE SUMMARY This article explores the methods and techniques used in construction company valuation. Using an illustrative

More information

HOW TO VALUE A BUSINESS / BUSINESS VALUATIONS 1. INTRODUCTION BUSINESS VALUATION METHODS

HOW TO VALUE A BUSINESS / BUSINESS VALUATIONS 1. INTRODUCTION BUSINESS VALUATION METHODS 1. INTRODUCTION BUSINESS VALUATION METHODS The reasons that we need to undertake a business valuation is widespread and includes: > Looking to Purchase a Business > Looking to Sell a Business > Partnership/Shareholder

More information

City of Portland Job Code: 30001363. CLASS SPECIFICATION Housing Portfolio Finance Coordinator

City of Portland Job Code: 30001363. CLASS SPECIFICATION Housing Portfolio Finance Coordinator City of Portland Job Code: 30001363 CLASS SPECIFICATION Housing Portfolio Finance Coordinator FLSA Status: Exempt Union Representation: AFSCME - Housing GENERAL PURPOSE Under general supervision, collaborates

More information

APPEALS INDUSTRY SPECIALIZATION PROGRAM COORDINATED ISSUE PAPER. ISSUE: Valuation of an Acquired Retailer's Inventory

APPEALS INDUSTRY SPECIALIZATION PROGRAM COORDINATED ISSUE PAPER. ISSUE: Valuation of an Acquired Retailer's Inventory APPEALS INDUSTRY SPECIALIZATION PROGRAM COORDINATED ISSUE PAPER INDUSTRY: Retail ISSUE: Valuation of an Acquired Retailer's Inventory COORDINATOR: Joseph Butorac TELEPHONE: FTS: (612) 290-3867 UIL NO:

More information

HHIF Lecture Series: Financial Statement Analysis

HHIF Lecture Series: Financial Statement Analysis HHIF Lecture Series: Financial Statement Analysis Alexander Remorov Based on the Materials by Daanish Afzal University of Toronto November 5, 2010 Alexander Remorov, Daanish Afzal (University of Toronto)

More information

Commercial Real Estate Investing 101

Commercial Real Estate Investing 101 Commercial Real Estate Investing 101 RealCrowd invest@realcrowd.com 2013 RealCrowd. All rights reserved. A better way to invest in real estate. What is RealCrowd? RealCrowd offers direct real estate investing

More information

Income Property Valuation. The Origin of Value. Investment vs. Market Value. Income Property Value. Investment Value. Market Value

Income Property Valuation. The Origin of Value. Investment vs. Market Value. Income Property Value. Investment Value. Market Value Income Property Valuation The Origin of Value Income Property Value Expect to receive cash flows in the future Generated by both Rents and Reversion Basic Present Value Discounting Allows valuation of

More information

II. Estimating Cash Flows

II. Estimating Cash Flows II. Estimating Cash Flows DCF Valuation Aswath Damodaran 61 Steps in Cash Flow Estimation Estimate the current earnings of the firm If looking at cash flows to equity, look at earnings after interest expenses

More information

Statement of Position 81 1,

Statement of Position 81 1, 3 Indirect Costs of Contracts Fred Shelton, Jr., CPA, MBA, CVA and Mason Brugh, CPA EXECUTIVE SUMMARY Construction, by its very nature, is a risky business. Estimating is part of what makes it risky. Contractors

More information

CRMS Exam Study Guide

CRMS Exam Study Guide CRMS Exam Study Guide The following five sections of this study guide provide questions similar to the ones you will encounter in the CRMS exam. The number of questions appearing below is proportional

More information

Content Specification Outlines Certified Management Accountant (CMA) Examinations

Content Specification Outlines Certified Management Accountant (CMA) Examinations Effective May 1, 2010 Content Specification Outlines Certified Management Accountant (CMA) Examinations The content specification outlines presented below represent the body of knowledge that will be covered

More information

CC.2.1.HS.F.5 -- Essential Choose a level of accuracy appropriate to limitations on measurement when reporting quantities. 1 -- Essential. them.

CC.2.1.HS.F.5 -- Essential Choose a level of accuracy appropriate to limitations on measurement when reporting quantities. 1 -- Essential. them. Topic: 04-Business Expense Management Know: Understand: Do: CC.2.1.HS.F.5 -- Essential Choose a level of accuracy appropriate to limitations on measurement when reporting quantities. CC.2.2.HS.D.8 -- Essential

More information

Understanding the APOD How to Crunch the Numbers on Your Investment Transaction

Understanding the APOD How to Crunch the Numbers on Your Investment Transaction Understanding the APOD How to Crunch the Numbers on Your Investment Transaction Commercial Investment Education Alliance Commercial Success Series 105 1 Commercial Investment Education Alliance Please

More information

First Property Group plc. Commercial Investment Real Estate Investing through the cycles

First Property Group plc. Commercial Investment Real Estate Investing through the cycles First Property Group plc Commercial Investment Real Estate Investing through the cycles Table of Contents Liquidity: Property vs. Equities vs. Bonds Costs of Buying Commercial Property The Need for Yield

More information

National Occupational Standards in Accounting

National Occupational Standards in Accounting National Occupational Standards in Accounting 2 ACCOUNTANCY OCCUPATIONALS STANDARDS GROUP (AOSG) Contents Introduction to the Accounting Standards...4 Accounting Qualification Framework...6 Accounting

More information

Glossary of Lending Terms

Glossary of Lending Terms Glossary of Lending Terms Adjustable Rate Loan or Adjustable Rate Mortgage (ARM) A loan with an interest rate that changes during the term of the loan. The payments generally increase or decrease with

More information