A Shakespearean-style tale of finance, fair dealing, and physician partnerships.

Written in the spirit of Master Shakespeare, where boardrooms are the new courtrooms, and spreadsheets the stage. This tale, though modern in subject, is told in the voice of a wiser age, when logic wore doublets and balance sheets bore smudged ink. Imagine, if you will, a cast of physician-partners grappling not with daggers and destiny, but with cap rates and swaps, in a valuation far more subtle than it seems...

In a fair state, not far nor near, stood a house - not of royal lineage, but of real estate. Its keepers were physicians, partners in both practice and property. Their bond was forged in stone and steel, their wealth measured in rent and repayment. Yet lo! A time came when one partner sought to join, and another to depart. And thus was summoned the age-old question: How shall we value the keep?

Not merely the bricks and mortar, nay, but also a shadowy thing, unseen and oft misunderstood: an interest rate swap. It lurked in the margins of financial statements, carried a value both real and fluctuating, and now demanded judgment.

“Shall it be included in the buy-in? Or the buyout?” Thus spoke the chorus of accountants and counselors. Two schools of thought emerged, as ever they do.

The First: The Appraiser’s Path
Here enters the certified, the credentialed, the licensed Seer of Value - who, with charts and comps and market whispers, declares: “Behold, thy building is worth X!” But what drives his hand? What stirs his ink? Interest rates, my lord, and nothing else so greatly.

As rates fall, the building’s value rises; as rates climb, so do appraiser’s concerns. And here lies the truth: the swap and the appraised value are of the same blood. Both respond to the same force. To include one and not the other is folly - to include both is wisdom.

Therefore, if thou dost use an appraisal to divine thy building’s worth, thou must include the swap’s value, be it blessing or burden. Else, thy judgment is flawed, and thy fairness in doubt.

The Second: The Formulaic Path
This method, favored by the cautious and the consistent, heeds not the market’s whims. It says simply: “Value shall be NOI divided by cap rate.” Here, interest rates play no part. The cap rate is chosen, not discovered; it is fixed, not floating. The building’s value depends only on the income it brings.

And thus, if interest rates are not in the formula, then the swap - being a creature of rates - has no rightful place. To include it would be to bring thunder to a play about silence, to mix tempests with taxes.

So what, then, shall be done?

Let thy valuation method be thy compass:

• If thou employest an appraisal, include the swap.
• If thou usest a formula, exclude it.

Consistency, dear reader, is the very soul of equity. To veer from it is to invite suspicion, quarrel, and perhaps litigation - a fate more tragic than even Hamlet’s own.

Thus ends our tale.
Let it be read aloud in boardrooms and break rooms, pondered by partners and paraprofessionals alike. For though the tools are modern, the truth is timeless: Fair value must follow fair method.