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Having reviewed each of their determinations, we believe
that a price of $48 per square foot as of December 15, 1992, is
appropriate. Mr. Rexroth’s aggregate value of $44.75 reflects
substantial discounts that he applied to the comparable
properties, based upon their allegedly superior locations. We
believe that these discounts are too pessimistic. On the other
hand, Mr. Bollinger’s valuation gives insufficient consideration
to the perpendicular orientation of the retail plaza building on
its lot. This orientation had an adverse impact upon its value.
Having considered both reports, we believe that the retail office
plaza would have sold for $48 per square foot on December 15,
1992, or a total of $528,000.
Each party also performed a capitalization-of-earnings
approach. For petitioner, Mr. Rexroth found that the shopping
center building property ought to generate rentals of $8.50 per
square foot per year, or a total of $93,500. From this amount,
he deducted $25,750 to reflect expenses and vacancies, producing
an annual net income $67,750. He further concluded that a
capitalization factor of 11.5 percent was appropriate, but,
because he determined that the property paid too much in local
taxes, he increased that factor to 14.5 percent. The presumed
net rentals of $67,750, capitalized at the 14.5-percent rate,
would produce a value of $467,500.
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