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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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