Valuations that reconcile the property view of a park or motel with the business view.

A caravan park or motel valuation is an independent assessment of market value for an asset that sits on the boundary between property and business. Prismi values the freehold going concern on a capitalisation rate, cross-checks the operating business on an earnings multiple, reconciles the two figures, and prices the permanent-versus-tourist site mix explicitly, concluding at the most supportable position within a defensible range.

When a caravan park or motel needs a formal valuation

Park and motel valuations are commissioned around ownership and finance events: sale or purchase of a freehold going concern or a leasehold interest, bank finance and refinance, admission or exit of a partner or family member, transfer of the park between related entities, and restructures of the holding arrangements. The tax triggers are the familiar ones — a related-party transfer engages the market value substitution rule in s 116-30 ITAA 1997, an exit may engage the Division 152 small business CGT concessions, and a restructure may rely on the Subdivision 328-G rollover — each requiring a market valuation prepared with ATO market valuation expectations in mind. Parks add two triggers of their own: feasibility work on converting a tourist or mixed park to a land lease community model, and estate or family law matters where the park is the dominant family asset. Because land and operations are commonly split across entities, the engagement must be explicit about which interest is being valued — the freehold going concern, the operating business alone, or the passive freehold subject to lease — before any methodology is chosen. Prismi prepares every report under APES 225 (the professional standard for valuation engagements), with fees fixed at engagement and never contingent on the outcome, and every report is senior-reviewer signed with a formal independence statement.

Freehold going concern, leasehold and passive freehold are different assets

The same park or motel supports three distinct interests, and they trade on very different returns. The freehold going concern — land, improvements and business sold as one line — is the tightest-priced interest, because the purchaser acquires the land backing, the trading income and the redevelopment optionality in a single asset. The leasehold interest — the business plus a lease over the land — trades at materially higher income yields, because the asset amortises toward nil as the lease runs down and the operator carries rent as a fixed obligation; remaining tenure, options, the rent-to-turnover ratio and the review mechanism drive value more than last year's profit. The passive freehold investment — the landlord's interest subject to the lease — prices like property, at the tightest yield of the three, on the strength of the tenant covenant and the review profile. Lease-based motel structures and management rights over strata-titled holiday accommodation follow the same logic as leasehold: the buyer of a motel lease, or of caretaking and letting agreements with a manager's unit, is buying a wasting contractual interest priced on a multiple of net operating profit that must repay the purchase price within the remaining term, so agreement tenure dominates the multiple. A report that quotes 'the value of the motel' without stating which interest it is valuing is not usable — the differential between the interests is the largest single number in the analysis.

Permanent residents versus tourist sites: revenue quality drives the rate

A caravan park's mix of permanent, annual and tourist sites is its risk profile, and each stream is priced differently in a valuation because each carries different income quality. Permanent and annual sites produce contracted, low-churn income at near-certain occupancy — but the income is regulated under state residential parks and land lease community legislation, with protected tenure, controlled fee-increase mechanisms and prescribed processes on termination and park closure, which caps the upside and constrains repositioning. Tourist sites and cabins earn far more per occupied night but carry seasonality, weather and fuel-price exposure, staffing intensity and genuine occupancy risk. The supportable approach values the streams on their own quality — a tighter capitalisation of the permanent income, a riskier treatment of the tourist stream — or, where a single blended rate is adopted, evidences why that blend fits this park's mix rather than a sector average. The mix also matters for tax positions: income from permanent residents can take the character of rent, which is relevant to the exclusion in s 152-40 ITAA 1997 for assets whose main use is to derive rent, while serviced short-stay accommodation is more readily business income — the ATO's determination TD 2006/78 works through accommodation examples on exactly this boundary. Prismi is not a registered tax agent and does not advise on eligibility; the report's role is to document the site mix, the income-character evidence and the market value that the accountant's Division 152 analysis relies on.

Reconciling the cap rate with the earnings multiple

Property valuers capitalise a park's net operating income at a rate drawn from park and motel transaction evidence; business analysts apply an earnings multiple to EBITDA after deducting a market-rate salary for the owner-operator or manager. Both describe the same cash flows, yet the two conclusions routinely diverge — and the divergence is information, not error. The cap-rate view imports property-market pricing: land security, lender appetite for accommodation assets and the redevelopment optionality embedded in comparable sales. The earnings view imports business risk: management dependency, capital expenditure intensity and the volatility of the tourist stream. The common failure modes are a property-style analysis that never deducts a management wage — overstating income and flattering the rate — and a business-style analysis that ignores the land backing entirely. Prismi's reports state the earnings multiple implied by the adopted capitalisation rate and reconcile it against what a business purchaser would rationally pay; where the implied multiple exceeds business-market evidence, the excess is land and development value and the report names it as such rather than laundering it through the rate. Both workings, and the reconciliation between them, sit in the working file, which is retained for ten years.

The land value floor and highest and best use

The land under a caravan park can be worth more redeveloped than operated as a park, and testing for that is a required step in every park valuation, not an optional extra. Market value reflects the most advantageous use available to the willing-but-not-anxious purchaser contemplated in Spencer v Commonwealth (1907) and applied consistently with the market value basis in IVS 104. Coastal and metropolitan-fringe parks can carry an underlying land value — as residential development land or as a land lease community conversion — that exceeds the going-concern value; where it does, the land sets the floor and the trading analysis becomes the cross-check rather than the conclusion. The test must be done honestly: alternative-use value is assessed net of planning risk, demolition and remediation, holding costs through the approval period, and the statutory obligations owed to permanent residents on park closure, which are material in every state. An unapproved rezoning hope is not a floor. Equally, for many regional and remote parks the land floor is irrelevant and the business is the value. The report states which regime the subject property is in and why — zoning, overlays, comparable englobo evidence and any approvals in place all belong in the file.

What the valuation file needs from a park or motel

• ·Financial statements and tax returns for the trading and property-owning entities, three to five years
• ·Site schedule from the park management system: permanent, annual, tourist and cabin numbers, tariffs and occupancy by season
• ·Site agreements for permanent residents, the standard tourist terms, and any land lease community agreements
• ·For leasehold interests: the lease, remaining tenure and options, rent history and the review mechanism
• ·Title, zoning and planning information, including overlays and any current or lapsed development approvals
• ·Capital expenditure history and forward requirements — amenities blocks, cabins, compliance and fire safety
• ·Approvals to operate under the relevant state caravan park or residential parks legislation, plus insurance schedules
• ·Management and staffing arrangements, including any caretaking, letting or franchise agreements

Which Prismi tier fits a caravan park or motel valuation

Most park and motel engagements are Comprehensive (from $3,995 + GST, 15–25 business days): sale and purchase positions, refinance support and related-party transfers where the freehold-versus-leasehold framing and the site-mix analysis need a fully reasoned report. The Defensible Valuation File (from $8,995 + GST, 25–35 business days) is the right tier where the number is likely to be tested — Division 152 claims on a park exit, contested family or partnership matters, and any conclusion resting on a land-value floor that may face review — because it documents the cap-rate-to-earnings reconciliation and the highest-and-best-use evidence at working-paper depth. Essential (from $1,495 + GST, 10–14 business days) suits indicative planning on smaller leasehold and motel-lease interests. Where advisers need alternatives modelled — land lease community conversion feasibility, permanent-to-tourist remixing, or redevelopment against continued trading — the Valuation Range & Scenario Review (from $12,995 + GST, 30–45 business days) prices the scenarios explicitly. Retrospective valuations are $495 per historical date; additional entities are $750 each, which matters here because land and operations are so often held separately; rush delivery is +30%. Fees are fixed at engagement and never contingent on the outcome — and if a target number is required rather than a supportable one, we will say so and decline the engagement on those terms.