Martens Appraisal completes restaurant appraisal in Wichita, Kansas
Josh Adamson with Martens Appraisal recently completed a restaurant appraisal in Wichita, Kansas. The report was prepared for traditional lending.
A recent report by the National Restaurant Association projected 2019 restaurant sales in the amount of $863 billion dollars in 2019 and equal 4 percent of the U.S. gross domestic product.
With all that demand it’s no wonder that Martens Appraisal completes many restaurant appraisals in Wichita, Kansas each year.
A restaurant appraisal in Wichita, Kansas involves assessing its physical assets such as the building, land, and in some cases, equipment and furniture, and examining the financial performance of the establishment such as the recent cash flow, loans, balance sheet, insurance policies, and long-term leases.
In many instances, buyers and sellers are interested in the value of the real property, which may involve a long-term triple net lease, an owner-operated property, or a tenant with only a short term remaining on the lease. Each of these scenarios requires different data sets and expertise in understanding the market. For instance, does the tenant have 50 locations and a successful 20-year history, or is this their first venture into fast-food. This will measurably impact the value of the real property, and your appraiser needs to understand these market conditions.
An additional important consideration in to valuation of a lease asset is if the corporate franchisor is backing the lease. A lease backed by Yum Brands may produce a completely difficult value than a Taco Bell franchisee with three units. It is imperative the valuation expert understand these variations in lease terms.
Also, the valuation of an owner occupied asset presents a different set of challenges. Is a lender involved? Some lenders require an as-dark (vacant) value, others allow for an assignment condition that considers the possibility the property could be leased. This subtle difference could result in a value variance of as much as 50%. It is important the borrower, lender and appraiser are all fully on the same page before the assignment begins. It may impact which lender a borrower chooses when seeking financing.
In restaurant valuation, it is extremely important to focus on an income approach “excess earnings approach”, which focuses heavily on the market rent, a real estate capitalization rate, and a business multiple. This method is popular across the industry because of the credible results it produces. It is also important for appraisers to differentiate between restaurants and recognize whether the establishment has a regional or national presence.
Martens Appraisal has expert knowledge of all aspects of restaurant appraisals and can properly value the property.
About Josh Adamson
Joshua is a graduate of Wichita State University with a Bachelor of Business Administration Degree in Entrepreneurship with an emphasis in Real Estate. He joined Martens Appraisal in 2005.
Josh has experience with general and medical office properties, automobile sales and/or service facilities, retail properties including restaurants, neighborhood centers, and retail strip centers, “big-box” retailers, small and medium-size industrial properties and vacant commercial land. Additional experience includes proposed construction of general and medical office, automobile sales and/or service facilities, restaurants, retail strip centers and “big-box” retail type properties.
About Martens Appraisal
Martens Appraisal has been providing commercial real estate services in Wichita and throughout Kansas since 1948. Under the leadership of four MAI designated appraisers, our appraisal team comprises over 100 years of combined experience.
If you would like to know more about our firm, please visit https://www.martensappraisal.com/ or contact Andrew Braun today to order an appraisal.