[ProjectEnd]

You're correct; Loblaws won, but the board are not experts, and don't understand appraisal, specifically the concept of Highest and Best use, which is the foundation of any valuation.

The board is saying Loblaws is right, and that the current use value is the correct value to assess the property at as of 2016-1-1. As in, the current use of the site is the ultimate highest and best use of the site at that date and the property's worth is that of the grocery store use only - that no other conceivable use could be expected on that date between a willing buyer and seller on that date. This is obviously false as we know the value of land in this area being regeneration land allows the site to be worth much much more.

If you or I were to buy this Loblaws site, do you think they would sell it for $28 mill? Absolutely not. Think land value alone here being along the same lines as the LCBO lands sale or Pinnacle One Yonge. With a downward adjustment for being further away from Yonge Street to some degree. The structure on site is an interim use, not a highest and best use. No one is going to sell the site based on just the current use.
The board doesn't understand HBU analysis at all. Their threshold to prove the HBU of a site isn't the current use is unattainable.

It's not just the land value though, it's also the income value of the asset. A typical Loblaws brings in so much NOI it makes taking them offline an almost nonstarter. This is the reason Choice exists: to increase the nominal paper value of the property while protecting the underlying asset value of the current operation. The 5+ year loss in operating income, as well as the potential cost of temporarily relocating the store (not to mention the loss of customer base if they did move) would be so monumental it simply doesn't make sense. Leaving the current market slump out of it, even in the heat of things, the "highest and best use" of this land, with this building and store on it, really is a low rise grocery store.

 

[UrbanAffair]

Ah, I think I see the confusion. Business enterprise value vs. fair market value for the site and building..
Assessment doesn't consider BEV value, its strictly about what this site would sell for on the open market for the fee simple interest, between a willing buyer and a willing seller, unencumbered.
If it were vacant land, it would sell based on the HBU to develop as of 2016 according to the OP essentially. As improved, the improvement does not have a rental stream so you'd need to look at sales of similar properties or cost the building. The cost for the improvement is nothing, sales of similar property are for land value only, therefore all the value is in the land, and the best evidence of land value is other land sales nearby.