Integrating property management into overall business and financial planning

Abstract

Property is often treated as integral to an organisation's core business needs, but rarely as being integral to business or Financial planning. The current surge in real estate values, driven primarily by the sheer amount of capital chasing property-related investment, is bringing the real estate debate into sharp focus for operating businesses that are property-heavy. Sale and leasebacks of retail and leisure assets have been concluded at EBITDA multiples of between 14 and 17 times. Business acquisition multiples in the same sectors have been between 8 and 10 times. More recently, the two sets of multiples have been migrating towards each other. The premise for investors is that they can achieve superior yields by assuming greater risk in previously non-core activity. The heat being generated in the real estate market is leading most retail and leisure businesses to consider realising capital from their real estate assets. Although conceptually simple, releasing value from the property assets is complex from an operational, fiscal, and accounting standpoint. Businesses should consider the opportunity to take advantage of real estate investor demand very carefully and should at all times keep all aspects and consequences of the transaction in view. [ABSTRACT FROM AUTHOR]