Estate of Ethel Josephine Spowart Hinz - Page 39




                                       - 39 -                                         
          from market analysis” of $3,082,200 ($6.60/sq. ft. x 467,000 sq.            
          ft.) directly in his cost approach.  Table 6 shows Atkinson’s               
          three valuation approaches as he reported them (supra table 4),             
          and as they would be if adjusted to take account of the                     
          directional (i.e., plus versus minus) errors Atkinson makes in              
          his matrix, without changing the size of each adjustment.                   
                                       Table 6                                        
          Approach            Atkinson’s Report        Amount Corrected               
          Comparable Sales    $2,892,000               $3,932,000                     
          Income              2,822,000                3,862,000                      
          Cost                    3,023,000            4,465,200                      
               A significant defect in all of Atkinson’s approaches is that           
          he did not give adequate consideration to the fact that the then-           
          present lease term had 3 years to run.  As a result, the property           
          should have been valued as a leased fee.  Hulberg and                       
          Kidder/Kirby agreed that leased fee was the proper status of the            
          Lafayette Property.  They agreed that the discounted cash-flow              
          approach was the best way to value the Lafayette Property.  With            
          the then-current lease apparently being at below-market rates,              
          the discounted cash-flow approach overlay on Atkinson’s work                
          would lead to a valuation less than the $4 million or more that             
          might have been supported by the corrections embodied supra in              
          table 6.                                                                    
               Hulberg broke the Lafayette Property into its two original             
          components.  See supra note 4.  He valued the fee interest in one           






Page:  Previous  29  30  31  32  33  34  35  36  37  38  39  40  41  42  43  44  45  46  47  48  Next

Last modified: May 25, 2011