Real estate’s influence on enterprise value Available to Purchase

A firm’s real estate exposure can have a pronounced effect on the way investors value the enterprise in its entirety. Most of the literature of corporate real estate is mute on the topic of firm valuation and the influence of real estate thereon. When the literature does address the topic of finance, it typically discusses the various schemes available for the capitalisation of real estate, but does not address this in the larger context of firm capitalisation and value. The purpose of this paper is to raise the issue of how real estate’s presence on the balance sheet may influence investors’ views of firm value. We look at a few simple measures and propose a rationale for understanding the effect of real estate on valuation.