SDDS Wiring-Guide

Definition:

Transfer taxes and purchaser’s costs which would be incurred by the purchaser when acquiring a property are generally deducted when determining the fair value of investment properties. 

The effect of an intended sale of shares of a property owning vehicle, rather than the property itself, should be taken into account when determining the amount of the deduction of transfer taxes and purchaser’s costs, to the extent this saving is expected to accrue to the seller when the property is sold.

The adjustment therefore represents the positive impact on the NAV of the possible reduction of the transfer taxes and purchaser’s costs for the benefit of the seller based on the expected sale of shares of the property owning investment vehicle. 

Disclosure should be made on how the estimate of the amount the vehicle manager expects to benefit from intended disposal strategies has been made. Reference should be made to both the current structure and prevailing market conditions.