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 |
A globally active company with over 400 employees, Jonas & Redmann was looking for an optimised solution for financial planning and project controlling. The choice of software platform was made in favour of Board, which impressed the customer with a perfect combination of planning and reporting as well as a high degree of flexibility.
Good planning is crucial for business success. This is especially true in the fast-food business, where speed of response and quick adaptation to changing consumer trends are essential. As the business grew, so did KFC’s restaurant planning requirements, which meant that the Excel-based planning system was soon unable to keep pace with growth and needed to be replaced with a more powerful solution.
Real estate represents significant assets. A precise valuation of such properties is essential – for financial reporting in accordance with international accounting standards such as IFRS, for investor communication or for strategic management decisions. A particularly widespread and recognised method is the Discounted Cash Flow method, or DCF for short. But how exactly does this method work – and why is it considered to be so particularly meaningful?
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