23RD ANNUAL PACIFIC RIM REAL ESTATE SOCIETY CONFERENCE SYDNEY, NEW SOUTH WALES, AUSTRALIA 15TH – 18TH JANUARY 2017
Prof. Alan Millington’s paper advocated ‘The Profits Method’ as an alternative method to value the ‘current market rent for a retail lease. He states it is widely used in the United Kingdom.
This involves a thorough forensic analysis of the Business Metrics and, often, Key Performance Indicators (‘KPI’s’) of the business itself, stripping back the financial reporting of several years’ worth of Annual Financial Statements.
If the “land” aka the property is owned by the proprietor, this is obviously not necessary, but if it is leased, the residual sum is rent. The result of this examination leads to a deliberate, informed view on the rent.