- 12 -
2. Both parties are well informed or well advised,
and each acting in what he considers his own
best interest;
3. A reasonable time is allowed for exposure in the
open market;
4. Payment is made in terms of cash in U.S. dollars
or in terms of financial arrangements comparable
thereto; and
5. The price represents the normal consideration for
the property sold, unaffected by special or creative
financing or sale concessions granted by anyone
associated with the sale.
Having determined the "market value" was $9 million, Wieme
modified his analysis to determine the "value in use"
specifically to U of M, concluding the "value in use" was $12.2
million.11 In distinguishing between the $9 million figure and
the $12.2 million figure, Wieme testified:
Within the preceding pages, we have formulated a
value indication for the subject building based on the
premise that the subject would be acquired by a
'typical' purchaser/investor and would continue to be
utilized as a general office, multi-tenant facility.
The reality of the situation, however, is that the
subject building was acquired by the University of
Michigan.
* * * * * * *
In an effort to identify the Value In Use of the
subject building specifically to the University of
Michigan, the appraisers have performed a second
discounted cash flow analysis. The Value In Use is the
11Wieme modified various assumptions used given that U of M
would be the only occupant of the building. For example, Wieme
lowered the market rental rate and adjusted for a "refit cost" to
conform the building to U of M's needs.
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Last modified: May 25, 2011