Real estate development projects are frequently hosted in dedicated corporate entities to isolate risks and structure financing. This corporate architecture naturally leads to favoring share deals upon exit. Curiously, these transactions are often treated as ordinary real estate sales. However, this shift into corporate finance radically changes the nature of the transaction: it is no longer a simple asset deal, but a genuine corporate sale that requires a combined mastery of financial analysis and the technical or administrative challenges specific to the project.

Flow structure rather than asset structure

The real estate project company—also known as an SPV (Special Purpose Vehicle) or development company—derives its value from its development potential rather than from current revenue, which is often non-existent. Whether it is a residential project, a land subdivision, or a commercial development, this company holds a land bank whose value is intrinsically linked to the success of a future construction scenario.

Unlike a traditional real estate holding company, which generates rental income and offers immediate yield (or near-immediate, accounting for vacancy rates), a project SPV resembles a future "flow" structure. Its fundamentally prospective value spans a long time horizon and remains dependent on external administrative and technical parameters.

Valuation specifics

Unlike a traditional SME, which is generally valued based on an EBITDA multiple (Earnings Before Interest, Taxes, Depreciation, and Amortization), the value of a real estate SPV depends entirely on its project. Here, there is no historical data to analyze; valuation relies on the credibility of the development scenario. Several methods can be used:

  • The residual land value method (or developer's residual approach): involves deducting all costs (construction works, taxes, financial costs) as well as the developer's target margin from the projected revenue. The remaining balance corresponds to what an operator can pay for the land, and thus for the company holding it.

  • Scenario analysis: key assumptions (exit prices, costs, timelines) are tested under contrasting scenarios (best-case and worst-case) to measure value sensitivity. A few margin points on key assumptions can lead to significant variations.

  • Project DCF (Discounted Cash Flow): a valuation method that consists of discounting future cash flows. For large-scale operations, this discounting explicitly incorporates the time factor and the development's risk profile.

  • Market comparables: observed prices per square meter of buildable or saleable floor space, land charges from similar transactions, used primarily as a sanity check for consistency.

Combining these approaches yields a well-argued valuation reflecting both the technical feasibility and the risk level of the project.

Key focus points and advisory requirements

For the buyer, examining a target company amounts to a comprehensive project due diligence. As a reminder, due diligence (or acquisition audit) is a thorough verification process covering all financial, legal, and technical aspects of a target prior to a transaction. The main points of attention are:

  • Legal and real estate control: securing effective ownership and clearing any encumbrances, easements, options, or restrictive covenants is mandatory.

  • Planning and zoning status: the status of the building permit, its compliance with zoning regulations, and its finality (absence of appeals) are the main drivers of value. Timeframes for approval and the quality of exchanges with local planning authorities are decisive factors here.

  • Technical constraints: beyond geotechnical, pollution, or flooding risks that can erode profitability, special attention must be paid to utility connections (electricity, water, sewerage) and mobility requirements.

  • Economic viability: the strength of the business plan must be stress-tested by evaluating the realism of exit costs and the depth of the local market.

  • Financial and banking structure: the buyer assumes the debt, guarantees, and contractual commitments of the company, requiring complete and consistent documentation.

Selling a real estate project is not something to be improvised. Too often, owners initiate a sale process without structuring their file like a true M&A (Mergers & Acquisitions) transaction, which undermines the project's credibility with investors.

Given the interconnected nature of these issues, this type of transaction goes beyond standard real estate brokerage. Engaging an experienced M&A advisor is therefore a critical success factor. Acting as a orchestrator, the M&A advisor prepares a structured deal package (Teaser, Information Memorandum, Data Room), identifies relevant counterparties, and manages the competitive bidding process to reveal true market value. The M&A advisor thinks in terms of enterprise value and risk structuring. The goal is to present the land as a genuine investment project, combining target yield with a clear timeline. You are not selling a plot of land: you are valuing a value-creating project where risks are fully controlled.

Article originally published in La Libre Économique by Tanguy della Faille, Partner at Fondaris, on 12/02/2026. Published/updated version on the Fondaris website with the author’s permission.