This document discusses marriage valuation, which is a type of property valuation that recognizes the increased value created when two assets are combined physically or legally into a single new asset. Marriage valuation is not an exact science and requires judgment based on market analysis. There are challenges in developing standardized approaches to assessing marriage value due to uncertainties and lack of consensus. Examples where marriage value exists include business mergers/acquisitions involving real estate, and situations where combining two adjacent properties creates higher value than keeping them separate. The document also provides examples of calculating marriage value in leasehold property transactions.
This document discusses marriage valuation, which is a type of property valuation that recognizes the increased value created when two assets are combined physically or legally into a single new asset. Marriage valuation is not an exact science and requires judgment based on market analysis. There are challenges in developing standardized approaches to assessing marriage value due to uncertainties and lack of consensus. Examples where marriage value exists include business mergers/acquisitions involving real estate, and situations where combining two adjacent properties creates higher value than keeping them separate. The document also provides examples of calculating marriage value in leasehold property transactions.
This document discusses marriage valuation, which is a type of property valuation that recognizes the increased value created when two assets are combined physically or legally into a single new asset. Marriage valuation is not an exact science and requires judgment based on market analysis. There are challenges in developing standardized approaches to assessing marriage value due to uncertainties and lack of consensus. Examples where marriage value exists include business mergers/acquisitions involving real estate, and situations where combining two adjacent properties creates higher value than keeping them separate. The document also provides examples of calculating marriage value in leasehold property transactions.
This document discusses marriage valuation, which is a type of property valuation that recognizes the increased value created when two assets are combined physically or legally into a single new asset. Marriage valuation is not an exact science and requires judgment based on market analysis. There are challenges in developing standardized approaches to assessing marriage value due to uncertainties and lack of consensus. Examples where marriage value exists include business mergers/acquisitions involving real estate, and situations where combining two adjacent properties creates higher value than keeping them separate. The document also provides examples of calculating marriage value in leasehold property transactions.
• Marriage valuation, a specialised type, reflects the recognition that by
combining or recombining two assets – legally or physically – it may be possible to create a third asset that is more valuable than the sum of the parts (Aluko and Amidu, 2005). • However, one of the most vexing problems confronting valuers or appraisers is the uncertainty and confusion surrounding its recognition or existence as well as lack of a unifying body of literature on the meaning of the concept • There are reasons for this: first, perhaps, because property valuation is not an exact • science, hence, the science of marriage valuation is purely an art. Its valuation therefore requires a certain measure of flair and judgement that is partly intuitive and • partly derived from experience in analyzing market data to arrive at an opinion of marriage value. • Little wonder that Lusht (1983) illustrated this problem with a game where a group of people whispers one word from one person to another until the last person repeats it to the entire group. He concluded that the final report would barely relate to the original thought • The latter illustration leads naturally to a second reason why there is no adequate, broadly understood approach(es) or methodology(ies) to assessing marriage value • Where two assets or real properties, either physically or legally, merge into one: the new one produces a higher value than the values of both when they are separately disposed of • Similarly, Baum, Mackmin and Nunnington (1987; 1997; 2006) opined that marriage value might be shown to exist where a property is split into multiple interests, either physically or legally, or both… the total values of these values will not necessarily equate with the market value of the freehold in possession of the whole property. • This is what Reenstierna (1988) referred to as “abutters value”, where two abutting properties are acquired or bought and united into one ownership or prescribed by Also, Albert, Banton and Pearson (1982) agreed that marriage value exists when valuing real estate under conditions of bilateral monopoly. EXAMPLES OF MARRIAGE VALUATION • In practical situations, marriage value had been found to exist in the following: • In business combinations including mergers and acquisitions, where real properties constitute integral part of the assets of a company, marriage or abutter value subsists. • A merger will make economic sense to the acquiring firm if shareholders benefit. • Thus, considerable entrepreneurial effort is devoted to creating and adding value; one firm may takeover another believing that the combined firm will be more valuable than the two separate entities. Valuation of this is well documented in Aluko and Amidu (2005). • A is the freeholder of an office block, the FRV of which is P2,800,000 p.a on FRI terms. 14 years ago A let the whole to B on a 40 year lease at a rent of is P1,000,000 p.a on FRI terms. B sublets to C 6 years ago, at a rent of is P1,800,000 p.a, FRI, for a term of 25 years. B wishes to become the freeholder in possession of the office block. Advise him how much he should offer for the interest of A and C. • How much should they accept? Assume a freehold rate of 10%. Example F is the freeholder of a shop and the current full rental value (FRV) is P 280,000 p.a. on full repair and insurance terms (FRI). F let the shop to L for P100,000 p.a. (FRI). The lease has an unexpired term of 26 years and there are no rent reviews. Comparable shops let at FRV and with regular rent reviews yield about 8%. F wishes to become freeholder in possession