Valuation of Fractional Ownership Interests

We conduct valuations of fractional ownership interests in both companies that hold real estate and tenant-in-common interests.

One controversial issue in the valuation of fractional ownership interests is the determination of qualified, empirically-supported discounts for lack of control and lack of marketability. We acquire data from various databases in developing well-supported discounts for lack of control and lack of marketability, including: Partnership Profiles, Restricted Stock Studies, and Pre-IPO databases.

As a result of our research, we are able to develop credible, qualified valuations of fractional ownership interests.

Often, real estate assets are held in LLC's or Family Limited Partnerships where various members may hold various controlling or noncontrolling interests.

In valuing a non-controlling interest in a company that holds real estate, discounts for lack of control and lack of marketability are often required. Thus, the value of a non-controlling interest is typically discounted significantly from its net asset value (NAV). Increased scrutiny from the IRS in recent years has forced appraisers and valuation analysts to support these discounts with empirical market data; preferably comparable company transactions. We have significant experience valuing and supporting these discounts.

If you have been receiving fractional interest appraisals in the past which simply cited a few court cases resulting in a 3 to 5-page fractional interest discount report, the valuation may not contain appropriate support for the discounts. Call or email us to discuss our services.