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The County of San Mateo leased the East retail space for the
period of March 2, 1987, to December 1, 1987. Rent was $4,720
per month, with the County of San Mateo paying utility expenses,
including gas, electrical, and janitorial services. However, the
Players were responsible for paying all real property taxes.
Based on our finding of 5,086 rentable square feet, the rental
rate paid by the County of San Mateo equates to $.93 (rounded)
per square foot per month.
We believe it is appropriate to estimate the value of the
retail/office component of the Redwood City Fox by incorporating
the actual income from the below-market Jacobs lease and from the
County of San Mateo lease to calculate the total gross income of
the property. We find that a vacancy and collection loss of 5
percent is appropriate under the circumstances to arrive at
effective gross income. However, we agree with Carneghi that the
vacancy and collection loss should not be deducted from the space
subject to the Jacobs lease, because of the nature of the lease.
From effective gross income, we agree with Mansbach that
deductions for management expenses of 3 percent of effective
gross income and for reserves of 2 percent of effective gross
income are appropriate. We also find that a deduction for the
real estate taxes the landlord must pay under the County of San
Mateo lease to be appropriate.49 Finally, with respect to the
49 Based on information provided by Mansbach in his
appraisal report, we estimate the deduction for the real estate
taxes to be $4,067. We note that no deduction for real estate
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