WALNUT CREEK, CA-In today’s tumultuous commercial real estate industry, everyone is seeking an edge or opportunity to buy assets at attractive cap rates or create value in existing assets. In one of my prior articles, I discussed how to create commercial real estate Alpha through various property level and market based strategies. In this article, I will discuss how to create Enterprise Value in private real estate organizations.

In corporate finance, Enterprise Value is defined as the market value of the common equity plus the market value of the company’s debt less the amount of cash and cash equivalents. For this article, real estate Enterprise Value is defined as the owner’s net equity value in the real estate assets plus the imputed goodwill or market value attributed to the real estate operating organization. The market value of the real estate operating organization is derived from its reputation, property and asset management skill, financing prowess, development expertise, fee generation and growth potential.

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