Valuation of MR Assets (3)

This post is pure research opinion, data obtained from listings via theonsitemanager.com.au

Graphic 1

We’d like to start with the conclusion that using a multiple regression model, contract term seems the most significant variable in determine valuation multiple.

(graphic 3)

Running a multiple regression done on the five factors that influences the valuation multiple less geographic location. Smoothing the data by removing 3 outlier sites (graphic 3 and 4), we have a regression with R-squared of 0.5, p-value of contract terms at 0.02406. That’s with 29 data points. The problem here is that this data doesn’t account for geographic location which (from pure observation) we see that there is disparity with multiples for sites close to inner Brisbane and Gold Coast regions versus North Queensland and border regions.

(graphic 4)

Now, to improve upon this model, we removed the sites that were in areas of Northern Queensland and near the border of Qld and NSW (such as Tweed Heads). So holding geographic location as constant as possible, we derive to a multiple regression at R-square 0.89 and p-value of contract term at 0.03820 (graphic 2).

Holding geography constant, we can draw from this small study that probably contract terms is the most significant variable. Through R-square we can see that The multiple regression model at least explains 89% (graphic 2) of the variability in the target model as compared to the single factor regression at 69.7% (graphic 1).

One weakness of this study was smooth out for geography we are left with 17 data points.