Clarissa W. Lappo - Page 13

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          Moreover, we believe the size of Dr. Shapiro’s sample was                   
          sufficiently large to make tolerable any dissimilarities between            
          the partnership and the REITs in his guideline group.  See McCord           
          v. Commissioner, supra at 385.                                              
               Petitioner complains that Dr. Shapiro’s guideline group is             
          inappropriate because Green Street derived NAVs using a valuation           
          method different from that used to value the partnership’s real             
          estate.  The valuation method used by Green Street, however,                
          appears similar to that used to value the partnership’s real                
          estate.8  In any event, even if the valuation methods are not               
          identical, insofar as each method is reliable and unbiased (and             
          petitioner does not contend that either is not), each might be              
          expected to produce reasonable valuations so as to provide a                
          meaningful basis for comparing share prices to net asset values.            
                    b.  Price-to-NAV Discounts                                        
                         i.  Petitioner’s Expert                                      
               To determine the NAVs of his seven guideline companies, Mr.            
          Oliver reviewed their reported book values and then made what his           
          expert report tersely describes as “certain adjustments” to                 
          adjust these book values upward to reflect “appraised values                


               8 The parties generally agree that Green Street derived its            
          NAVs in large part by applying various capitalization rates to              
          the real estate net operating income generated by each company’s            
          portfolio.  The appraisal report upon which the agreed-upon value           
          of the partnership’s real estate is based reflects a similar                
          valuation method based on a discounted cashflow analysis of the             
          partnership’s net rental income stream.                                     




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