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involved. We round percentages to the third decimal point, and we
round dollar amounts to the nearest dollar.
The appraisers factored an 18-month marketing period into their
market value of each apartment complex. Thus, we do not take the
18-month period after the applicable valuation date into account to
arrive at the market absorption discount that applies herein. We
have concluded that it would take a total of 42 months to sell all
three complexes, or, in other words, 18 months after the end of the
6-month reasonable period of time starting 18 months after the
applicable valuation date. Thus, one complex would sell within the
reasonable time and the other two would not; of the two that would
sell outside this time, one would sell 6 months after the end of it
and the other would sell 18 months after the end of it.
The appraisers applied 9.738-percent capitalization rates to
Stonehenge and Fox Hill and a 10.238-percent capitalization rate to
The Landings in order to ascertain their values. We believe that
this capitalization rate reflects the time value of money, and that a
weighted average of the rates (i.e., 9.905 percent) is the
appropriate annual rate to use to determine the complexes' market
absorption discount. As to the base to which this rate is applied,
we use the average market value of the three complexes. We must
determine how much lower than the market value a hypothetical seller
will have to drop his or her price for each complex in order to sell
all three within a reasonable time after the applicable valuation
date. It would be inappropriate to apply the full discount to all
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