- 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
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