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Accordingly, the discount percentages represented by that type of
transaction are inapposite.
Next, Hulberg addressed what he called the “Fractional
Discounting Method”. That method was set out in an April 1992
journal article, Davidson, “Fractional Interests in Real Estate
Limited Partnerships, The Appraisal Journal, Apr. 1992, at 184-
194, in which 10 factors were used to analyze the amount of a
fractional interest discount. The factors employed, include:
“Relative risk of the assets held, Historical consistency of
distributions, Condition of the assets, Market’s growth
potential, Portfolio diversification, Strength of management.”
Those factors, to which Hulberg assigned values to arrive at an
estimated 41-percent discount, appear to be the type of factors
that are used in analyzing a going partnership business and not
the simple coownership of raw land. The remaining four factors
address the control aspects, or lack thereof, of a fractional or
partial interest. Of the cumulative 41-percent discount reached
by Hulberg, only 12 percent of it was attributable to the lack of
marketability/control factors. The remaining factors depended
heavily on the fact that the entity was a going partnership
(income sources, etc.) and would, therefore, not be applicable to
measure the partial interest discount in this case.
Next, Hulberg used a “REIT Survey Method” that “involves an
analysis of discounts found in real estate investment trust
(REIT’s).” Hulberg indicated that the average discount was 39
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