Core & Top Slice
Like Term & Reversion, Core & Top Slice is a variant of the Anglo-Saxon capitalized earnings method and is often used internationally to determine the market value of real estate.
Both variants have in common that a distinction is made between a relatively secure and a less secure future payment flow , which, however, in contrast to the discounted cash flow method (DCF), is not shown in annual slices but is viewed as stable. Core & Top Slice is often used if, in the opinion of the appraiser, the rent agreed at the time of the valuation is above the market rent (so-called "overrent"). In this case, the standard market rent as core slice forms the permanently achievable "core" of rental income, while the higher top slice (above the market rent) is only used for a limited period (e.g. until the end of the fixed rental period) . When used properly, both variants should lead to the same result.