- 36 -
conditions, to apply a discounted cash-flow analysis which
included an absorption discount, which he also referred to as a
subdivision analysis, to arrive at the values of such properties.
Mr. Egan acknowledged that if all the remaining unimproved real
properties could have been sold within a reasonable period of
time after the valuation date, which he assumed to be one year,
the prices established under the comparable sales method would
have been the equivalent of the fair market value of each of
those properties. However, Mr. Egan opined, and Mr. Guice
conceded, that, because of market conditions, the remaining
unimproved real properties could not have been sold within a one-
year period of time. Consequently, as a result of the prevailing
market conditions on the valuation date, Mr. Egan concluded that
it was necessary to use a discounted cash-flow analysis, which he
considers to be the same as a subdivision analysis. According to
Mr. Egan, such an analysis considers a regular stream of income
over a period of time from the sale of multiple properties, such
as the remaining unimproved properties that Marrero Land owned on
the valuation date, and discounts the net periodic cash flow
projected for such properties to a present value with an ap-
propriate discount rate that reflects market conditions. Mr.
Egan indicated that a discounted cash-flow analysis or subdivi-
sion analysis, which includes an absorption discount, is not
limited to multiple parcels of real property that are in a single
Page: Previous 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 NextLast modified: May 25, 2011