Changes in a firm's operating prospects are due either to changes in return prospects or changes in risk exposure having a similar prospect. The expected return on real estate may justify ownership (as opposed to leasing) of real estate in periods when the firm prospects are poor, but this relationship can reverse when firm prospects improve. The magnitude of the value increment created by changes in the use of a firm's real estate obviously depends on how much value the new use adds to the property.
The potential to increase firm value suggests that firms should consistently review the performance and the value of their real estate. A corporation must understand how its real estate holdings are affecting its total marketvalue, in order to determine how to utilize this asset. This requires a valuation model of real estate within the corporate setting.
Also, there is a need of deciding which financing alternative is the most appropriate. On deciding which alternative is best we should have in mind the objectives for corporate real estate management suggested by Miles et al. [1] which are: