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Development Rights and Partial Interests
Development Rights and Partial Interests are more complex appraisal issues. Federal Appraisal specializes in complex appraisal issues, such as these.
Partial Interest concepts begin with leases on fee simple property, creating leased fee and leasehold interests. It is not uncommon in modern real estate for breakdowns in communication between unsure appraisers and clients. Such undisciplined practice by appraisers can lead to the appraisal of the wrong interests and inappropriate value conclusions. Some lease deals are so complex and old that the implications of the lease are difficult to discern for all but the most experienced appraisers, such as those from Federal Appraisal.
Federal Appraisal LLC has appraised thousands of leased interests around the United States, from standard leases on general purpose commercial real estate to complex leases on very high value/complex facilities, such as corporate headquarters and campuses, power plants, and special manufacturing facilities.
Fee Simple, Leased Fee, Leasehold
Ground Leases
Long Term Leases
Lease Renewal Terms and Negotiations
Operating and Capital Leases
Leasehold Improvements
Partial Interest concepts continue with a divided interests in a fee estate, such as business partnerships and family limited partnerships. Depending on the context, these partial interests do not represent their pro rata share of the fee value. A 50% owner in an investment property does not have 50% of the value of the underlying investment property. The appraisal is complex because first, Federal will establish the value of the underlying investment property. Then, Federal will establish the discount to the pro rata share. This discount study is a second appraisal, which has its own requirements depending on the users of the appraisal. The IRS has very complex and distinct requirements from others such as bankruptcy courts or partnership dispute resolutions.
Federal Appraisal specializes in appraisal for accounting and legal purposes, such as discount studies for the IRS and litigation.
Partial Interest
Minority Interest
Discount for Lack of Marketability
Discount for Lack of Control
Development Rights are another type of partial interests. Arising from general land development rights, development rights are the rights to develop that can be transferred to other landowners. Development rights represent part of the land rights that are inherent in a full fee simple estate. In urban areas, where land sales are rare and land values are very high, development rights present very difficult appraisal problems but often yield very high values.
Federal Appraisal has decades of experience appraising development rights.
Transferrable Development Rights
Air Rights
Floor Area Ratio FAR Square Feet
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Fee Simple, Leased Fee, Leasehold, Development Rights, Partial Interests Appraisal
Even though land is relatively inexpensive or contributes a relatively small portion to the overall value of the property or business, land appraisal is often disproportionately complicated and difficult. Sometimes the appraisal context, the client’s purpose and use for the appraisal, dictate appraisal hypothetical assumptions. For example, when appraising for property taxation, even if the property is leased (a leased fee estate), many states require the appraisal to assume a fee simple estate. Improvements can diminish or enhance land value. Most commonly, various intangible characteristics of the land, such as permits, approvals, deed restrictions, encumbrances, easements, and rights of way, etc., have dramatic impacts on the value of the land. Further, the development potential of land, either vacant, surplus, or excess land, can be difficult to discern, even before air rights and transferable rights issues are encountered. The credible appraisal of land requires extensive experience.
Federal Appraisal has decades of intensive land appraisal experience and is able to ensure cost effective credible land appraisal. Hiring Federal Appraisal is like an insurance policy against future accounting, tax and legal problems concerning land appraisals.
land developments and feasibility and market studies
residential and commercial land
rail road land, land for transmission lines and pipelines
special use land
fee simple, leased fee, leasehold, easements, rights of way
partial interests, temporary interests
land sales approach and land residual
condemnation
litigation, damage
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Land Appraisal, Subdivisions, Easements, Rights of Way
While often a relatively small contribution to the overall real property value or overall business value, land frequently presents challenging appraisal issues.
The issues often make the land valuation the most volatile of the appraised components of the overall real property value or overall business value. Without an experienced hand, land valuation can become problematic.
Federal Appraisal specializes in the appraisal of land and all of its land rights variations, such as:
fee simple land
leased fee and leasehold land, ground leases, permits, licenses
easements (permanent or temporary), right of ways, encumbrances, appurtenance rights
air rights, development rights, transferable development rights, FAR
partial interests
Federal Appraisal has been appraising land for 36 years. We have worked on numerous types of land development, such as:
residential lots and subdivision site
commercial, retail, industrial land
utility and infrastructure land
Our land appraisal and advisory work is utilized in many issues, including
redevelopment
loan underwriting and financing
feasibility studies and market studies
condemnation
acquisition and disposition due diligence
property tax assessment and litigation
income tax reporting, transfer tax reporting
investor reporting
litigation and expert witness
zoning and variance issues
cost segregation and purchase price allocation, ASC 805 reporting
conservation (Green Acres)
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Real Property Portfolios
Federal Appraisal LLC specializes in the appraisal of real property portfolios. This type of appraisal is complex because of the sheer volume of work, the diversity of geographies/markets, and the purpose and use for the appraisals, which are often complicating; however, this is exactly what Federal Appraisal was founded to appraise. Federal Appraisal has a full team of specially trained appraisers who frequently appraise portfolios. We have licenses around the country, in nearly all major markets, which makes Federal Appraisal a one-stop shop for our clients. In any case, we will manage the appraisal of the entire portfolio, which will ensure consistency and quality throughout the appraisal process. Lastly, since portfolio appraisals are typically needed for complex purposes and uses, such as estates and estate planning, gifts, litigation, acquisition, or disposition due diligence, it is essential that the appraisers have such experience. Federal has expertise with complex purposes and uses and with portfolio appraisals.
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