Transactions
Portfolio sales: premium or discount?
Bundling only lifts value where the assets fit together. Otherwise the weakest location shapes the negotiation.
A portfolio premium is possible, but conditional. Bundling assets simply because you own them does not create an uplift.
Where discounts arise
At the weakest asset. Buyers price package risk conservatively, and findings at the weakest location shape the negotiation for the whole portfolio.
We therefore review before every package sale whether selling the weaker assets individually first makes sense. It costs process time but can relieve the price discussion for the core package.
Addressing cherry-picking in the process design
A typical pattern: a bidder submits a strong bid for the whole package and, after due diligence, reduces it to the strongest assets. What remains is then harder to place.
The process design can address this — through bid requirements for the whole package, individual prices only for purchase price allocation purposes, and clear rules on commitment after the confirmatory letter. The contractual effectiveness of such provisions forms part of the transaction documentation and should be reviewed legally.
In short
A portfolio is only worth more than its parts where it is homogeneous and the process design addresses partial withdrawals. Otherwise the weakest asset sets the price.
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The information on this website is provided for general information on real estate, financing and corporate transactions only. It does not constitute legal, tax or other individual professional advice and cannot replace case-specific advice from suitably qualified lawyers, tax advisers or other professionals.
The legal and tax consequences of a transaction depend in particular on its specific structure, the parties involved, existing contracts and the applicable legal and tax framework. Such questions should therefore be reviewed individually by the relevant professional advisers before any decision is taken.
Within the content presented on this website, Fox Capital does not provide legal or tax advice.