Appraisal Economics Inc. has performed valuations under a series of proposed terms to assist company management in the design of its long-term incentive plan (LTIP). The company that granted the LTIP units is a large publicly traded real estate investment trust (REIT) that owns hundreds of office and industrial properties across the United States and internationally. The LTIPs are incentive units granted to management that vest into shares of the company’s common stock if certain market-based performance conditions are met. The long-term incentive plan has an absolute component, with vesting hurdles based on the Company’s total shareholder return (TSR) performance compared to fixed targets, and a relative component, with vesting hurdles based on the percentile rank of the Company’s TSR compared to the constituents of a real estate index. As part of our analysis, we determined the fair value of the LTIP units under a wide range of possible scenarios, each with different sets of absolute and relative performance hurdles. Our valuations helped enable management to design the terms of the LTIPs to best suit the Company’s needs.

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