TRADE RELATED PROPERTY

TRP was defined in GN12 as “any type of real property designed for a specific type of business where the property value reflects the trading potential for that business.” The GN went on to give hotels, theatres and fuel stations as common examples of TRP.

The rationale for the GN was that because TRP was often exchanged at a price that reflected its future earning potential for the business for which it was designed guidance was required on the valuation principles needed to reflect this.

It indicated that TRP was typically valued on the basis of its potential earnings before interest, taxes, depreciation and amortisation (EBITDA), based on the trading of a “reasonably efficient operator”.

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