Property portfolio valuation: a performance management tool

Unlike the valuation of individual properties, the valuation of a portfolio requires an overall approach that takes into account risk diversification, liquidity and the financial performance of each asset.

• Optimising the overall yield: the yield of a portfolio must be optimised in the light of rental income and potential capital gains, but also of macroeconomic conditions. An accurate valuation makes it possible to adjust the asset mix over the long term.
• Risk management: rental vacancy, depreciation, market risks. Regular valuation makes it possible to reassess these risks and adjust allocations, based on cash flow projections founded on current data.
• Optimising liquidity: in times of uncertainty, investors must be able to dispose of parts of their portfolio quickly while minimising the impact on overall performance. A strategic valuation identifies the assets with high liquidity potential and those least exposed to fluctuations.

The traditional comparison approach is often not sufficient for large portfolios:

• Discounted cash flow (DCF): estimating the performance of assets on the basis of their current and projected income, taking into account discount rates and the stability of rental income.
• Opportunity cost and repositioning: an office building may be converted into residential or hybrid space. This approach assesses the current profitability of a property against its potential after repositioning.
• Multi-criteria risk analysis: local economic resilience, forthcoming infrastructure, environmental, social and governance factors.

Full pre-transaction due diligence; market values of assets and portfolios; valuation of the components (property, business, property and business); current value and reinstatement value; rent affordability and rental values. We cross-check approaches (DCF, capitalisation, comparison) to guarantee a rigorous, reasoned and signed valuation.

Since 1972, Frerault Expertises has been assisting institutional investors, funds and asset managers in analysing their property portfolios, with in-depth knowledge of the French market and methods that comply with the profession’s standards.