Estate of Duilio Costanza - Page 17

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          overall value for the restaurant property, both land and                    
          improvements, was approximately $370,000 on December 15, 1992.              
               In their capitalization of income analyses, both appraisers            
          concluded that an independent owner of the property would expect            
          an effective rate of return of 11 percent.  Mr. Schmidt                     
          estimated, in 1991, that the building would produce rentals of              
          $7.50 per square foot.  After adjusting for anticipated vacancies           
          and expenses, he arrived at a value of $335,000.  Mr. Bollinger’s           
          later report assumed the same space should rent at $8 per square            
          foot.  After adjustments, he arrived at a value of $385,000.  Mr.           
          Schmidt’s appraisal relies on leases negotiated in 1985 and 1982.           
          Mr. Bollinger’s higher rate is based upon a comparison with three           
          other restaurants that were leased in 1991 and 1992.  We find               
          that Mr. Bollinger can justify the higher rental rate based upon            
          more recent data.  Nevertheless, both appraisers use other                  
          figures in the capitalization process that seem somewhat                    
          arbitrary.  For example, they assume widely differing vacancy               
          rates and expenses.  Each appraiser’s assumptions operate to                
          support that appraiser’s comparable sales valuations.  Neither              
          appraiser, however, justifies these assumptions in any meaningful           
          detail.  We believe under the facts herein that their comparable            
          sales analyses are more reliable.                                           
               The same considerations apply to the appraisers’ use of the            
          cost-less-depreciation method of valuation.  Mr. Schmidt arrives            

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