How to present DCF residual value when we know that actual land value is more than business value

How can we effectively use DCF analysis when we know that the residual sale value returned at the end of hold period is much less than the potential land value of the property.
In General Area - Asked by Manju S. - Mar 18, 2009
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Chris G.
Broker/Agent
Lynchburg, VA

Are you saying that the current use of the property is not the highest and best use of the site? I am assuming that you are suggesting that the property value if it were a vacant site exceeds the attributable value as it is currently developed. I think your DCF analysis may reveal that the current use does not meet the "highest and best use" definition. I guess this is a good thing if you are buying the property, but not so much if you are selling. If you are selling the property and trying to justify the price, I think that you can support the value through other means. A DCF analysis would not be appropriate in this case, in my opinion.

Mar 23, 2009
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