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discounts. The record does not adequately reflect the management
disclosures that led to Mr. Oliver’s upward adjustments of the
companies’ reported book values, with a directly corresponding
upward effect on his price-to-NAV discount computations.9
Moreover, Mr. Oliver has failed adequately to explain the
apparent volatility in his recommended price-to-NAV discounts
over less than 3 months (decreasing from 29.3 percent on April
19, 1996, to 20.3 percent on July 2, 1996).10 It seems most
likely that the volatility results from the small size of his
sample and the inclusion of entities that are insufficiently
comparable to the partnership.11
Moreover, we are unconvinced of the appropriateness of the
upward adjustments Mr. Oliver made to this volatile guideline
company data to account for factors specific to the partnership.
9 Some of these upward adjustments are very large. For
instance, in determining a $25,928,000 NAV for Shopco as of July
2, 1996, Mr. Oliver started with a reported book value of
$4,862,000 and adjusted it upward by $21,066,000.
10 When questioned about this volatility at trial, Mr.
Oliver merely observed that the discount rates changed “because
the stock prices of these guideline companies are changing.”
11 If we exclude from Mr. Oliver’s guideline group the four
real estate companies that we have found to be dissimilar to the
partnership (admittedly thereby exacerbating the problem of the
smallness of his sample), the median price-to-NAV relationship
for the remaining three REITs is, as of Apr. 19, 1996, a 5.3-
percent discount, and as of July 2, 1996, a .5-percent premium.
As we shall presently see, these data are generally in line with
the price-to-NAV data indicated by Dr. Shapiro’s REITs guideline
group.
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