Grain silos & Seed Cleaning
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PPE Valuations have surveyed numerous grain silos across South Africa. Most silo facilities are operated by large agricultural companies and normally these facilities also supply a grain cleaning service for seed grain.
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Silo facilities are specialised properties and therefore the most common approach to the valuation is the Depreciated Replacement Cost method. Two alternative methods can be used as control methods. These are the Income Approach and the Profits Approach. 

Under the Income Approach, the silo is viewed as a rentable property, but in stead of floor space, storage volume is rented. A net annual income is then calculated and capitalised to arrive at a market value. Under the Profits Approach, the fair maintainable operating profit (FMOP) which would be achieved by a reasonable efficient operator (REO) is calculated from the financial statements of the client. The profit is then split into an operator’s profit and a rental component. The rental component is then capitalised to arrive at a market value.