Estate of Duilio Costanza - Page 23

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               We also disagree with the respondent’s assumptions on the              
          projected vacancy rate.  Mr. Bollinger assumed a 5-percent rate.            
          We find this estimate to be overly optimistic.  Taking into                 
          account its prior history, there is no indication that the                  
          building would be unusually successful in keeping tenants.  On              
          balance, we think that the projected gross income of the shopping           
          mall should be reduced by a proposed vacancy rate of 12 percent,            
          in addition to other expenses.  Mr. Bollinger also computed a               
          "leased fee" projection, taking into account current tenants’               
          rentals, plus anticipated fees, expenses, and vacancies over an             
          11-year period.  He noted that, at the time of valuation, the               
          building had an 18.2-percent vacancy rate.  This vacancy rate was           
          constant from April 1991 until December 1992.  Mr. Bollinger,               
          however, estimated a first year vacancy rate of 10 percent,                 
          reducing to a 5-percent rate in all subsequent years.  As noted             
          above, however, we find such a low projected vacancy rate to be             
               Mr. Rexroth and Mr. Bollinger both opine that the property             
          is over-assessed for local taxation.  Unlike Mr. Bollinger, Mr.             
          Rexroth makes an adjustment for the increased expense caused by             
          the over assessment by adjusting the capitalization rate.  (“Thus           
          the current tax rate applicable to the tax year has been built              
          into the Overall Capitalization Rate”.)  Mr. Rexroth concludes              
          that the capitalization rate of 11.5 percent should be adjusted             

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