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Bullock Commercial Appraisal, LLC

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Partial Interest Valuation


A partial interest valuation involves the appraisal of a portion of the ownership of a property, limited partnership, general partnership, corporation, LLC or LLP.  Partial interest valuation is more complex than most valuation problems and requires significant research and analysis.  Partial interest valuations are typically related to estate tax valuation or estate tax planning but could involve divorce, business dissolution or valuation of collateral for a bank.


Partial interests are almost always worth less than an undivided interest because they are less marketable and there is a lack control.  It is very difficult to sell a limited interest in a property or nonpublic company.  In addition, the sale of a partial interest in many entities is subject to approval by other owners and other owner’s can often choose to block the sale at their sole discretion.


The owner of a partial interest has less control than the owner of the entire property or entity. Even if someone owns a controlling interest their actions are subject to review and scrutiny by the owners of the balance of the property or entity.  The owner of a noncontrolling interest typically has very limited ability to control decisions or influence the management and policies for a property or entity.  Following are some of the detrimental effects of not having control of a property or entity:


  • Difficult or impossble to sell, perhaps in advance of declining market;
  • Limited or no ability to impact the quality of, or to change management; 
  • Limited or no ability to impact business policies;
  • Limited or no ability to impact strategies or tactics;
  • Limited or no ability to impact refinancing the property;
  • Limited or no ability to impact the level of financial leverage;
  • Discounts for a partial interest are often 20% to 50% of the entity value.


Some of the factors determining the degree of discount for a partial interest include the percentage of ownership, whether it is a controlling interest, asset performance, the number of partners, the relationship between the partners, issues with the property (such as risk, condition and financing), market conditions and trends, and the quality of the general partner.


The steps involved in a partial interest valuation are as follows:

  • Value the entire property or entity;
  • Calculate the value of the proportionate share in the property or entity;
  • Determine the appropriate discount for lack of control (DLOC); 
  • Determine the appropriate discount for lack of maketability (DLOM); 
  • Calculate value of the proportionate share after cumulative DLOC & DLOM discount.


We typically provide partial interest valuations throughout New England but have the capability to perform these specialized assignments nationwide for a single property/entity or a large  portfolio of properties in one or more entities.