The interest calculated above is the lessee's interest in the real estate only, however, it is common for the lessee of a brewery hotel to sell goodwill to the incoming tenant as well. The value of such goodwill is really a business valuation and is usually determined by some arbitrary formula for example, $10 000 for every $1 000 of weekly takings. Goodwill reflects the following:
Beer companies are better landlords (from a tenant's point of view) than private hotel owner.
Tax advantages from a cash business.
There is a strong and readily identifiable submarket in beer company hotel leases
In private hotel leases the owner is better able to clawback tax advantages by way of higher rents. Therefore, private leases are the best evidence of rental value but unfortunately for valuation purposes, there are not many available. If the valuer is called upon to value goodwill as well as real estate, it should be a separate part of the valuation report clearly stating that it is not part of the real estate.
is better for the real estate valuer to leave the value of plant,
equipment and goodwill to specialists in that area such as business
brokers and plant and machinery valuers. Stock at hand is usually
valued by way of agreement after the sale of the hotel – Stock at
Value clause (SAV).
The lessor's interest consists of 2 parts:
1. Present value of the current lease
The reversionary interest.
Present value of the current rent due:
2.402 * 8000 = 19216
If the expected market rent at the end of the lease period is $15 000 per annum and the capitalization rate is 8% the unencumbered value will be:
15000 * 100/8 =$187500
The reversionary value is the present value in 3 year time. Using 12% per annum:
0.7718 * 187500= 133459 say $134000
Therefore, the lessor's interest: =19216 + 134000 = 153 216
say $153 000