How do you value a company which has a real estate development pipeline not yet completed/stabilised?
Wondering if anyone can help here.
I am trying to value a small US and European RE company which has two divisions. One is a successful operating arm where the property is fully stabilised at 95% occupancy (easy to value this piece). The second is a development divison, it has 32 developments which are yet to complete and those which are complete, are not near stabilisation. It takes a long time to fill the properties (about 2 yrs) due to some specific reasons but this is more due to the sector in which they operate and similar across competitors.
So I'm doing aand wondering how to tackle the developement piece which will be about 40% occupied at the time of exit. Obviously it would be unfair to just capitalise the current income, as u end up leaving a lot of value on the table.
Any thoughts/links hugely appreciated!