Abstract
This chapter explores a major premise of the teachings and practices of James Graaskamp. It explores the concept of entrepreneurial profits and their impact on the value of an individual piece of real estate. He believed that the profit centers within a real estate enterprise often created a substantial part of the value of an asset and that the income must be attributed correctly to its different sources within a real estate venture. In this chapter, we use a case-study approach and analyze the financial statements of an operating luxury hotel over the period 1991 to 1996 to examine this fundamental concept of real estate value and explore the impact of separating the various income streams. Results indicate that, on average, nonrealty assets (furniture, fixtures, and equipment; intangible assets; profit centers) account for 32 percent of the going concern value of this operating downtown luxury hotel.
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Kinnard, W.N., Worzala, E.M. (2000). Graaskamp and Business Enterprise Value: It’s in the Profit Centers. In: DeLisle, J.R., Worzala, E.M. (eds) Essays in Honor of James A. Graaskamp: Ten Years After. Research Issues in Real Estate, vol 6. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-1703-0_12
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DOI: https://doi.org/10.1007/978-1-4615-1703-0_12
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