PROPERTY VALUATION
WITH THE DISCOUNTED
CASH FLOW METHOD
at alstria
In order to continuously optimise corporate planning, alstria office REIT-AG has been working with bdg for several years on various business intelligence (BI) and enterprise performance management (EPM) projects. The aim of this co-operation is the gradual implementation of fully integrated corporate planning, which includes financial, HR and operations planning.
An important building block on this path was the development of a property valuation tool that enables the fair market valuation of properties based on the discounted cash flow (DCF) method. The introduction of this solution should not only reduce dependence on external service providers, but also enable alstria to value its property portfolios more efficiently, quickly and cost-effectively overall.
In Excel, the data volumes were simply no longer manageable and the processes took an enormous amount of time – we would not have been able to realise our required evaluation frequency under these conditions. Now the amount of data is no longer a problem at all and we can use our time for analyses.
The project focused on implementing a standardised valuation approach for the entire property portfolio. The solution was to precisely calculate property values based on the discounted cash flow (DCF) method. This combines a long-term cash flow forecast with a discount factor to determine the market value of a property.
The aim was to simplify standard valuations: In order to fulfil the requirements of the parent company, which is subject to US stock corporation regulations (SOX), alstria carries out eight valuations per year for each property. Previously, property valuations were conducted externally. The internal tool was designed to simplify the process and make it more efficient, so that only one valuation per year is carried out externally and the other seven valuations can be done internally.
… and learn about all the highlights in detail:
Development of a valuation tool for commercial property using the DCF method
Seamless integration into existing corporate planning processes
Improved efficiency and process reliability
Cooperative collaboration and high commitment to the success of the project
alstria office REIT-PLC is a German public limited company with its registered office in Hamburg. The company has been operating under the legal form of a REIT (Real Estate Investment Trust) since 2007 and was the first PLC of its kind in Germany. alstria owns and manages a high-quality portfolio of office properties in major German office centres. As a long-term oriented company, alstria manages the properties over their entire life cycle: from acquisition to leasing, ongoing management, modernisation and possible sale. A detailed concept is developed for each individual building, and modernising the properties is an essential part of the business model in order to create consistent value.
| Industry | Region | Application | Number of users |
|---|---|---|---|
| Real Estate | Hamburg, Germany | Controlling/Real Estate Operations | 90 |
When are modernizations due, which contracts are about to expire? The solution developed by bdg and alstria for property planning in the real estate industry collects these and countless other data in one slick application.
Planning and controlling are easier, and media discontinuities are avoided. All in all: an absolute win.
The classic Excel-based planning process for merchandise planning reached its limits with the constant growth of Zalando, Europe’s largest online platform for fashion. Too time-consuming, error-prone and not very homogeneous: Merchandise planning was no longer in line with the dynamic business environment and was in danger of completely losing sight of important key factors in an overly sluggish planning process.
Zalando relied on bdg to implement a complex solution in Jedox for merchandise planning.
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