Originally Posted by
Ferg
I'm not sure what you are driving at but that line of thinking is much like the 'float' terminology - in that it is interesting, but ultimately incorrect. Think of it like a Venn diagram with two circles that may or may not overlap and if they do overlap it's not necessarily the case the smaller circle is fully enclosed by the larger circle. The first smaller circle is drawn based on the pool of units and suites that were sold during the reporting period. This is the realised profit that is added to underlying earnings. This part is calculated by Management.
A second larger circle is drawn using a different process by the independent valuers across the entire portfolio - of which the recently sold units is clearly a subset (but not necessarily the exact same values). Some of the inputs in deriving the portfolio value may include some of the values observed in deriving the realised profit value. So on a 'per unit' basis there may be some overlap between the two methods such that some (not necessarily all*) of the values used in the realised profit calculation may also be observed in the unrealised profit calculation.
In conclusion two different methods are employed by different people to derive the two values. But given some of the inputs may be the same, that's why I say "Think of it like a Venn diagram with two circles that may or may not overlap and if they do overlap it's not necessarily the case the smaller circle is fully enclosed by the larger circle." Hence the reason you cannot simply deduct the realised value from the unrealised value. And I reiterate it is an interesting way of looking at it, but it is not a correct interpretation of the method used to derive the value for the entire portfolio.