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selected partnerships that owned real estate (residential
and/or commercial), had low debt or leverage, had cash
flows greater than their distributions and capital
expenditures, and had assets that were valued by
independent appraisers. Dr. Kursh's criteria produced 16
comparables. According to his report, investors in these
16 comparables “anticipated annual returns from cash
distributions ranging from 9.31 percent to 11.58 percent.”
Dr. Kursh selected the midpoint of those yields, 10.45
percent, as the rate of return an investor would require
for a minority interest investment in a limited partnership
with the characteristics of the comparables.
Dr. Kursh then made three adjustments to the average
yield of the comparables to take into account the
particular characteristics of Hill House. First, Dr. Kursh
added 50 basis points to account for the fact that Hill
House owned only one piece of property and thus lacked
diversity, while the comparables owned multiple pieces of
property. Second, Dr. Kursh subtracted 100 basis points to
account for the fact that the general partner of Hill House
was also a limited partner. According to Dr. Kursh, this
commonality of interest would tend to ensure cash
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