Valuing Fractional Interests in Real Estate 2.0
January 2022 Hardcover (485 pages)
Dennis A Webb
Milonguero Press
Webb provides a complete guide to concepts that, until now, have been very difficult for valuers to convey. His solutions are theoretically sound and entirely practical. As a result, this book is now your single resource for everything – every authority, every method, plus clarity and understanding matched nowhere else.
What's New
This book is your most important go-to reference for mastering critical, multidisciplinary valuation challenges.
Detailed how-to guidance
- Complete, authoritative guidance on exactly how to value fractional interests. Includes two complete case studies with detailed report text and special conditions guidance on 22 challenging circumstances.
- A helpful, annotated 225-word glossary of key terms originating in both professions and across multiple standards.
- The perfect combination of theoretical and practical to address virtually all fractional interest valuation needs.
Litigation support
- Keep your knowledge current and gain an edge in the courtroom.
- Offers both theoretical and entirely practical solutions that will resolve questions about methodology, authority and why your process is directly relevant for the case’s facts & circumstances.
Multidisciplinary project management
- How to get what you want/need from the business valuer or real estate appraiser.
- Learn specifics of the other discipline’s process so you can engage productively creatively, so both get what they need.
Table of Case Illustrations
Foreword
Acknowledgments
Preface
Part I – Introduction to Fractional Ownership
Chapter 1 Fractional Interests and Valuation
In the Beginning: How Fractional Interests are Created
Preparing for Generational Change
The Professional Valuation Landscape
The Three Keys
Chapter 2 Ownership Structures, Standards and Definitions
Ownership Structures and Rights
Levels of Value
Inside and Outside
Professional Standards
Definitions of Value
Part II – Limited Partnership Interests
Chapter 3 Limited Partnership Valuation
Definitions of Interest
Valuation Approaches and Scope of Work
Partnership Description
Chapter 4 Real Estate Appraisal
Introduction
Identifying the Problem and Scope of Work
Summary of Important Data and Conclusions
Market Area Data and Analysis
Highest & Best Use
Approaches to Value
Reconciliation and Value Conclusion
Real Estate Asset Overview for the Valuation Report
Chapter 5 Partnership Net Asset Value
Reconciling Outside and Inside
Financial Statements
Other Tangible Assets
Chapter 6 Lack of Control
Levels of Value
Market Evidence for Control Impairment
Management Considerations
Public Limited Partnership Secondary Market
Real Estate Investment Trusts
Discount Reconciliation and Conclusions
Subject Interest Control Attributes
Calculating the Minority-Marketable Value
Chapter 7 Lack of Marketability
Levels of Value
Market Data Studies
Estimating the Trading Market Discount
Value-Influencing Elements
Methods for Developing the Discount
Income Methods
Value Conclusion
Part III – Common Tenancy Interests
Chapter 8 Common Tenancy Valuation
The Common Tenancy Context
Definitions
Valuation Approaches and Scope of Work
Ownership Interest Description
Chapter 9 Common Tenancy Asset-Level Value
Reconciling Outside and Inside
Financial Statements
Chapter 10 Impaired Control and Marketability
Common Tenancy Issues
Levels of Value
The Partition Solution
Value-Influencing Elements
Methods for Developing the Discount
Income Methods
Partition Time and Cost Method
Direct Sales Comparison Method
Option Pricing Models
Discount Reconciliation
Value Conclusion
Part IV – Bringing it all Together
Chapter 11 Income Approach Methods
Methods as Market Mirror
Asset Methods
Levels of Value Revisited
Income Methods
Yields, Growth and the Build-Up Process
Restriction Period DCF Modeling
Chapter 12 The Black-Scholes Option Pricing Model
Extending Methodology to the Short Term
Market Observations
Black-Scholes
Short- and Long-Term Markets
The Volatility Term
Black-Scholes Formulae
Calculations
Discount Reconciliation
Conclusions
Chapter 13 Special Situations
Large Percentage Interests
Multiple Properties
Non-Income-Producing Properties
Balance Sheet Considerations
Classes, Splits and Preferences
Partner Buyouts
Tiered Entities
Short-Term Market Trends
Temporary Impairments
Chapter 14 PrimusPVXR Overview
Introduction
User Dashboard
The User’s Guided Process
Special Situations
User Valuation Summary
The Algorithm
Conclusions and Next Steps
Appendices
Appendices Contents
A. Real Property Information
B. Partnership Case Study 1
C. Real Estate Investment Trust Data
D. Common Tenancy Case Study 2
E. The Webb Discount Chart
