Estate of James Barudin, Deceased, Muriel B. Clarke, Executrix - Page 17

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          estimate operating expenses, as opposed to the $6,920,501                   
          estimate respondent's expert used, we use petitioner's expert's             
          figure.                                                                     
               With respect to the appropriate capitalization rate to be              
          used in determining the 1989 value of the Partnership Properties,           
          based on New York City's economic condition as of December 31,              
          1989, and the evidence indicating that lease rates for commercial           
          office space would not likely increase for a number of years, we            
          believe that application of an 8.5-percent capitalization rate              
          more accurately reflects the December 31, 1989, New York City               
          real estate investment environment.                                         
               At trial, respondent's expert acknowledged that with regard            
          to comparable sales (used in his report for corroboration of his            
          calculation of fair market value), adjustments for date of sale,            
          size, condition, and use of the buildings would be appropriate.             
          Respondent's expert, however, does not make any such adjustments            
          in his calculations.                                                        
               Respondent's expert considers three properties sold                    
          approximately 3 years prior to December of 1989, two properties             
          sold approximately 1 year prior to December of 1989, and one                
          property sold 5 months after December 1989.  These properties               
          were located in different neighborhoods throughout New York City.           
          Each was substantially smaller than the Partnership Properties              
          and sold for significantly less than respondent's expert's                  






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