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Simons agree that 1359 Bay, the duplex, would not compete with
the other Brocato properties. Ms. Simons also believes that 2360
Chestnut, the 42-unit building, would not compete with the other
Brocato properties. We agree with Ms. Simons. Based on its size
and value, we believe 2360 Chestnut would appeal to a different
pool of potential buyers. The other Brocato properties would
most likely be purchased by “Mom and Pop” buyers.3 Most likely,
these buyers would not have the resources to finance such a large
purchase as 2360 Chestnut, nor would they be interested in
running such a large apartment complex. We agree with respondent
that only seven of the Brocato properties–-25 Cervantes, 3637
Fillmore, 2395 Francisco, 15 Alhambra, 2000 Beach, 101 Capra, and
3737 Fillmore–-would compete with each other and are entitled to
a blockage discount.
Based on the number of properties in the same market in
1993, the San Francisco economy at that time, and the limited
pool of investors, we believe that the introduction of seven new
properties, 3.5 properties each 6 months, warrants an 11-percent
blockage discount.
3 “Mom and Pop” buyers are described by both experts as
individuals purchasing a rental property with the intention of
living on the premises and managing the property.
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