FRACTIONAL INTERESTS IN REAL PROPERTY
Appraisal Economics Inc. has conducted an analysis of fractional interests in real estate located in the southern United States. The fractional interests were held as tenants-in-common. Tenant-in-common interests are held by two or more owners each having an undivided interest. In this type of ownership, the interests are not necessarily equal in size and no one owner has unilateral control of the property. Accordingly, each tenant effectively holds a non-controlling and illiquid interest in the underlying real estate. Appraisal Economics applied appropriate lack of control and lack of marketability discounts to the pro rata values of the tenant-in-common interests and determined the fair market values of the interests for estate tax purposes.
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COMMON STOCK OF A DAIRY MANUFACTURER AND DISTRIBUTOR
Appraisal Economics Inc. has valued the equity of a manufacturer and distributor of dairy products. The company distributes cheese and dairy products to national supermarket chains, grocery stores, and local bodegas throughout the eastern United States. The company produces a wide range of cheeses and dairy products including fresh, natural, aged, and melting cheeses, creams, drinkable yogurts, and desserts. Appraisal Economics Inc. valued the common equity of the company for gift and estate tax planning purposes. Our analysis included determining the business enterprise value and equity value of the company using the income approach and discounting the per share value for lack of control and lack of marketability to determine the fair market value of the company’s equity.
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MEDICAL PRACTICES
Appraisal Economics Inc. has valued a medical group consisting of six medical practices affiliated through one of the largest integrated healthcare delivery systems in the Northeast. The six practices are integrated with a management services organization (“MSO”), which administers most non-clinical aspects of the practices, including billing, collections, employment of non-clinical staff, and so forth. The MSO also owns most of the practices’ property and equipment, and leases the office space used by the practices. Appraisal Economics was engaged to determine the fair market value of the medical practices for financial reporting purposes related to their acquisition.
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PRIVATELY HELD DEBTS
Appraisal Economics Inc. valued dozens of privately held debt instruments due from companies, trusts, and high net worth individuals with an aggregate value of more than $40 million. Some of the debts were secured by specific collateral including interests in commercial real estate. Other promissory notes were only protected by the debtors’ general assets and creditworthiness. Appraisal Economics performed a detailed credit analysis to determine the appropriate discount rate for each security, and we calculated the fair market values of the underlying assets for estate tax purposes.
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