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Mr. Siwicki valued the subject limited partnership
interest using both the capitalization of income approach
and the net asset value approach. Under the capitalization
of income approach, it is necessary to identify the income
stream to be capitalized. The income stream is then
capitalized using a rate of return realized by hypothetical
investors on comparable investments. Under the net asset
value approach, it is necessary to determine the net asset
value of the asset. If necessary, that value is then
discounted to reflect the minority ownership of the
interest.
Mr. Siwicki started his valuation in this case by
reviewing the data on 85 publicly registered real estate
partnerships compiled in the May/June 1992 edition of "The
Perspective", a bimonthly publication of Partnership
Profiles, Inc., which provides market data for publicly
registered limited partnership interests. Mr. Siwicki
focused on limited partnerships that invested in
residential property, had little or no debt, and made cash
distributions to the limited partners. He identified seven
publicly registered real estate partnerships that he
believed were comparable to Hill House. They are listed
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