Untangling Real Estate Value From Business Value

By John Clark

The asking price isn’t being disclosed. The Vancouver Sun reported the property’s assessed value is $89.9 million.

But assessed value is a measure of the value of the real estate on which the building rests, as well as the building itself. This does not take into account the value of the business operating on the premises.

These are unrelated – at least in theory. In practice, they often become quite tangled, and not just in the tourism and hospitality sector. This entanglement is often accidental. Sometimes it’s deliberate – a subtle exercise in turning a blind eye some owners may believe will serve their tax planning objectives. Trying to shave dollars from one tax bill, however, may just end up costing you more down the road and leave you painted into a corner.

But even with the best of intentions, distinguishing real estate from business value can be a challenging valuation scenario.

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Source: RENX