Calculating Total Enterprise Value by subtracting a Cost EV from Freehold EV?
Hi WSO,
I am reviewing a model where the client has calculated the EV of their Freehold Portfolio, by subtracting a central cost EV. So they have taken the freehold and leasehold portfolio EBITDA * EV/EBITDA Multiple (of 12.5x) and then subtracted Central Costs * EV/Central Cost multiple (of 9x).. I have never seen this before. Why would they do it that way rather than just multiplying EBITDA by the multiple to get EV. The underlying business is operational real estate.
Any help would be much appreciated!
Gracias,
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