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Because market risk for EA83-XII and EA84-III
related to multiple units acquired in bulk sales
and not single units acquired in separate
transactions and the appraisals obtained by Epic
for the properties were only on an individual
basis using market and cost approaches, the
separate appraisals for each property did not
realistically reflect the market risk or value
to EA83-XII and 84-III. [Emphasis supplied.]
We agree with Dr. Hewitt that each partnership made
bulk purchases of the properties and received special
discounts from the sellers and that each partnership
undoubtedly paid a fair price for the properties that it
purchased. We agree with Dr. Hewitt that each partnership
purchased the properties for resale. As Dr. Hewitt stated:
Someone buying, in the case of Epic, 40, 100, 200
homes at a pop, obviously, is not going to live
in those homes. The intent from a typical market
purchaser's standpoint, if you were to buy a
hundred homes, would be to resell those.
We further agree with Dr. Hewitt that the contemporaneous
appraisals valuing each property individually do not
reflect the bulk purchases made by each partnership.
The question that we must decide, however, is whether,
for purposes of determining the bona fides of the subject
indebtedness, the fair market value of the properties must
be determined in the wholesale market, the market in which
the partnerships purchased the properties, or the retail
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