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comparison of the number of properties listed in the Marina
District/northern San Francisco area during 1992 and 1993 and the
number of Brocato properties. Mr. Talmage gathered these market
statistics from the multiple listing service (MLS) and Comps Inc.
(Comps). Mr. Talmage’s report also refers to the San Francisco
economy, investor pessimism, earthquake concerns, size of the
Brocato properties, and potential pool of investors in
determining an appropriate blockage discount.
2. Ms. Simons’ Report
Ms. Simons’ report determines a blockage discount of
$116,627 (approximately 1.92 percent). Ms. Simons assumed a sale
of all properties within a certain time period and used a
discounted cash-flow analysis to determine her blockage discount
(blockage discount model). She chose a discount rate of 12.5
percent.
Ms. Simons determined that the normal marketing period was 4
months and the Brocato properties could reasonably be sold two at
a time. Thus, in total, Ms. Simons concluded that it would take
16 months to market successfully the Brocato properties.
Ms. Simons also found that only seven of the Brocato
properties would compete in the same market; therefore, she
applied the blockage discount only to these seven properties
(excluding 1359 Bay and 2360 Chestnut).
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