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i. Petitioner’s Expert
To select his guideline companies, Mr. Oliver started with
over 400 REITs and real estate companies listed in Moody’s Bank
and Finance Manual. From this initial group of over 400, he
eliminated all but seven companies (three REITS and four real
estate companies) as being insufficiently comparable to the
partnership.5 For instance, he eliminated numerous companies
that did not report current appraisals of their real estate
assets. He also eliminated other companies that he considered to
have investment characteristics dissimilar to the partnership.
We are not persuaded that Mr. Oliver’s guideline group is
sufficiently large or made up of companies sufficiently
comparable to the partnership. “While we have utilized small
samples in other valuation contexts, we have also recognized the
basic premise that ‘[a]s similarity to the company to be valued
decreases, the number of required comparables increases’.”
McCord v. Commissioner, 120 T.C. 358, 384 (2003) (quoting Estate
of Heck v. Commissioner, T.C. Memo. 2002-34). For the relevant
period, the four real estate companies included in Mr. Oliver’s
guideline group appear dissimilar to the partnership in
5 Mr. Oliver’s seven valuation guideline companies included
these three REITS: BRE Properties, Inc.; Cedar Income Fund,
Ltd.; and Meridian Industrial Trust, Inc. His guideline
companies included these four real estate companies: Arbor Prop.
Trust (Arbor); Catellus Dev. Corp. (Catellus); The Rouse Co.
(Rouse); and Shopco Laurel Centre, L.P. (Shopco).
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Last modified: May 25, 2011