Many family limited partnership agreements contain more transfer restrictions than the agreements of the public limited partnerships or REITs against which they are often compared, or they have inferior assets and management performance.
These data represent the 2002 yields seen in public limited partnerships containing commercial properties, as reported by Partnership Profiles.
This discount is then subtracted from the indication from comparable public limited partnerships to give the net minority interest (control) discount.
The discount should not be reconciled outside the indicated range, even if provisions in the agreement are obviously more onerous than those typically found in public limited partnerships. Such elements can exhibit strong nonlinearities, which would not be understood in any quantitative way without usable data for guidance.
The most direct method uses a regression analysis of the discount differential between reasonably similar REITs and larger public limited partnerships.
The discount for lack of control was developed from market transactions for public limited partnerships. The analytic process uses multiple linear regression to identify significant elements of comparison, and to quantify adjustments to the subject.
This is an informal market consisting of about 15 independent broker-dealers that match up buyers and sellers of public limited partnership interests.
