- 12 -
fundamental ways that might be expected to skew the price-to-NAV
discounts of the guideline companies upward.6
ii. Respondent’s Expert
Dr. Shapiro started with the “core coverage group” of 62
real estate companies as reported by Green Street Advisors, Inc.
(Green Street).7 He eliminated 10 companies that were not REITs
or that had what he believed were “substantially different
investment characteristics” from the partnership. The record
does not reveal the identities of the 52 REITs included in Dr.
Shapiro’s guideline group. Petitioner does not dispute, however,
that they are all REITs–-a consideration of some significance,
given that the parties agree that REITs are an appropriate
starting point for determining the minority interest discount.
6 For the relevant period, Catellus and Rouse were, unlike
the partnership, highly leveraged taxable entities. Shopco,
unlike the partnership, was in extreme financial trouble during
the relevant period. Arbor had cut its dividends by 36 percent
from the prior year, suggesting financial difficulty. The record
contains no suggestion that the partnership was experiencing
financial difficulties during any relevant period.
Although Mr. Oliver purports to make an adjustment to his
guideline data reflecting that the partnership was in a better
financial position than his guideline companies, as explained
below, this factor is simply included in undifferentiated fashion
among various other factors that result in his net adjustment
increasing the partnership’s price-to-NAV discount relative to
his guideline companies.
7 Green Street Advisors, Inc. (Green Street), is an
independent research and consulting firm concentrating on REITs
and other publicly traded real estate companies. Respondent
asserts, and petitioner does not dispute, that the REITs included
in the Green Street reports make up 80 percent of the market
capitalization of the overall market of about 200 REITs.
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011