Clarissa W. Lappo - Page 12

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          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.                    




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