Clarissa W. Lappo - Page 16

                                       - 16 -                                         
          He does not explain how he quantified each factor, how the                  
          factors were netted, or why the net effect should result in an              
          upward adjustment to the median guideline company discounts,                
          rather than a downward adjustment or a wash.12  Nor does Mr.                
          Oliver explain why this fixed set of factors should result in a             
          5.7-percent upward adjustment for petitioner’s April 1996 gifts             
          but a 9.7-percent (70-percent larger) upward adjustment for                 
          another gift less than 3 months later.  It seems most likely that           
          Mr. Oliver’s upward adjustments are, to some extent, plug numbers           
          used to justify his ultimate, very round minority interest                  
          discount figures of 35 percent and 30 percent for April 19, 1996,           
          and July 2, 1996, respectively.                                             
               Mr. Oliver opined that the reasonableness of his recommended           
          minority interest discounts was confirmed by reference to the               
          average 36-percent price-to-NAV discount that he calculated for a           
          select group of 14 publicly registered, nonpublicly traded real             
          estate limited partnerships (RELPs).13  The record provides,                


               12 More particularly, although Mr. Oliver acknowledges that            
          the partnership was stronger financially than his guideline                 
          companies and that this factor augurs for a smaller discount for            
          the partnership interests, he does not explain how he ultimately            
          concluded that netting this factor against various other factors            
          results in the particular upward adjustments to his guideline               
          company discounts referenced above.                                         
               13 To make these calculations, Mr. Oliver relied on a study            
          by Partnership Profiles, Inc., of Dallas, Tex., comparing the               
          NAVs of RELPs with their trading prices in the secondary market.            
          He used as his guideline group 14 of the 167 RELPs covered by the           
                                                             (continued...)           




Page:  Previous  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  Next

Last modified: May 25, 2011