PURCHASE PRICE ALLOCATION IN REAL ESTATE （购买价格分配在房地产）.pdf

PURCHASE PRICE ALLOCATION IN REAL ESTATE TRANSACTIONS: Does A + B + C Always Equal Value? 1 Morris A. Ellison, Esq. Womble Carlyle Sandridge Rice, LLP Nancy L. Haggerty, Esq. Michael Best Friedrich, LLP Purchasers of income-generating real estate generally focus solely on cash flow rather than the individual components generating that cash flow. This seeming truism has not been true either for larger transactions involving substantial personal property or goodwill or in the context of ad valorem taxation where taxing authorities generate separate tax bills, often at different rates, for real property, personal property and business licensing fees. This proposition is becoming less true in the current economic environment, as lenders face increasing regulatory pressure to “take less risk” by separately valuing the components generating the income and valuing the risk separately. Originating primarily in the context of valuing hotel properties for proper determination of the project’s real estate value for ad valorem tax purposes, the concept of component analysis 2 has far broader applications. The Appraisal Institute currently includes as potential additional candidates for component analysis: (i) health care facilities such as hospitals, nursing homes and ambulatory surgical centers; (ii) regional shopping centers, office buildings and apartments; (iii) restaurants and nightclubs; (iv) recreational facilities such as theme parks, theaters, sports venu