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A. John A. Young
John A. Young, a real estate appraiser offered by
petitioners, prepared a fractionalization discount study in which
he concluded that fractionalized interest discounts should be at
least 50 percent of the proportionate fee value. Mr. Young’s
conclusion was based on his analysis of what he considered to be
six comparable sales of fractional interests in timberland in
northwest Louisiana. Generally, Mr. Young was able to find hard
evidence of the sale price for a fractional interest.
In order to determine the fair market value of a full fee
interest Mr. Young resorted to secondary information and opinion.
Through conversations with parties to the transactions and other
related information, he predicated a fee fair market value for
each property. In some instances, the fee values were a matter
of conjecture and were not based on actual or comparable sales.
However, using the full fee value as a base, Mr. Young calculated
the percentage discount of known partial sales.
The first property regarded as comparable by Mr. Young was a
160-acre tract of timberland that was owned by Pennzoil
Exploration and several other owners. The buyer was interested
in harvesting the timber and wanted to acquire the 160-acre
tract. Seven different partial interests were purchased during
the period May 1995 through February 1996. These purchases gave
the buyer a cumulative interest of almost 32 percent of the
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