- 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
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