Proprietary Earnings of Assisted Living and Nursing Facilities under HUD Valuation Guidelines

This article examines treatment of proprietary earnings and management expenses under HUD's lending program for assisted living and skilled nursing facilities. HUD valuation guidelines require allocation of a portion of NOI to proprietary earnings with the remainder of NOI corresponding to real...

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Bibliographic Details
Published in:The Appraisal journal 2005-01, Vol.73 (1), p.56
Main Authors: Tellatin, James K, Short, Sterling E, Hansen, C Mark
Format: Article
Language:English
Subjects:
Appraisals
Appraisers
Assisted living facilities
Commercial credit
Dictionaries
Federal regulation
Fees & charges
Government agencies
Intangible assets
Loans
Nursing
Nursing homes
Property values
Proprietary
Real estate appraisal
Sales
State court decisions
Third party
Underwriting
Valuation
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Summary:This article examines treatment of proprietary earnings and management expenses under HUD's lending program for assisted living and skilled nursing facilities. HUD valuation guidelines require allocation of a portion of NOI to proprietary earnings with the remainder of NOI corresponding to real estate and major movable equipment. Misapplications of valuation techniques for proprietary earnings and management expenses often lead to overstated value conclusions. The best approach includes management expenses and applies a capitalization rate derived from sales after netting out proprietary value and earnings. [PUBLICATION ABSTRACT]
ISSN:0003-7087