Impairment Testing

Impairment Testing

Dominic Burke MRICS

Dominic Burke MRICS

Corporate Valuation Services

dominic.burke@cbre.com

Kate Robinson

Kate Robinson

Corporate Valuation Services

kate.robinson@cbre.com

Impairment Testing

  • The threats companies face if property they own is inadequately tested for impairment
  • Companies perform impairment testing when ‘indications of impairment’ are shown
  • Properties can become impaired for many reasons and this effect is often exaggerated in periods of economic downturn
  • Distribution units single let to retailers proving less attractive.
  • Often when a company’s core business function is removed from real estate, physical asset value is rarely considered and impairment testing becomes an afterthought
  • If impairment is assessed too late it can lead to problems. An obvious example is when a company fails to achieve the anticipated sale price on disposal of a property. Events like this can trigger uncertainty across a wider property portfolio and lead to large scale impairment testing

 

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