- 15 -
percent reflecting his assumption that leasing activity and
market rental rates would increase, and respondent's expert
concludes that the December 31, 1989, fair market value of the
Partnership Properties equals $120 million (respondent's expert's
estimated annual lease income of $9,424,990 divided by 7.9
percent equals $119,303,671, rounded to $120 million).
Using $120 million as the December 31, 1989, value of the
underlying Partnership Properties, respondent's expert subtracts
FC Partnership liabilities of $41,595,787 and calculates that the
1989 liquidation value of the FC Partnership was $78,404,213 and
that the pre-discount liquidation value of each ownership unit in
the FC Partnership equals $825,307 (1/95 of $78,404,213 equals
$825,307).
Respondent's expert acknowledges that, as of the end of
1989, New York City was in the midst of a recession and banks had
become considerably more conservative in their real estate
lending practices, and it was anticipated that the New York City
commercial real estate market would have difficulty recovering
from the economic recession. Respondent's expert, however, fails
to adequately take these factors into account in his
computations.
In our opinion, petitioner's expert more accurately takes
into account the above factors, and petitioner's expert properly
concludes that the value of the Partnership Properties declined
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011