CARNEGHI and PARTNERS, INC. Chris Carneghi, MAI Certified General Real Estate Appraiser State of California No. AG001685 Bradley Carneghi Certified General Real Estate Appraiser State of California No. AG044571
"The subject property is part of a larger, very good quality, 23-story, mixed-use development known as “The 88” which was construction complete in 2008 and currently in very good condition. The larger development contains a total of approximately 197 residential condominium units and approximately 31,000 rentable square feet of ground floor retail space constructed over three levels of underground parking on an approximately 1.328 gross acre site." NEEDS A BEFORE AND AFTER VALUATION.
"Yield Capitalization or Discounted Cash Flow Analysis In the analysis of the subject property, a yield capitalization or Discounted Cash Flow (DCF) analysis is presented. In this analysis methodology, the present value of the future income stream is added to the estimated present value of the subject property at reversion." YIELD CAPITALIZATION IS NOT A VALID VALUATION APPROACH, IT MEASURES FUTURE (21 YEAR) PERFORMANCE (PRO-FORMA-GUESTIMATES.) IT IS AN INVESTMENT ANALYSIS. HE SHOULD KNOW BETTER.
"Direct Capitalization Analysis As an alternative analysis, direct capitalization is utilized. In direct capitalization, the market value of a property is estimated by deducting applicable expenses from the. . . This estimated net income is then capitalized at an appropriate overall capitalization rate commensurate with the risk inherent in ownership of the property. The appropriate overall rate utilized in capitalization of the net income is typically derived from comparable sales and supported by national investor surveys. Furthermore, direct capitalization analysis assumes the property is operating at stabilized income and occupancy. "
"The comparable parking garage sales included in the previous Valuation by the Direct Sales Comparison approach chapter indicate an overall rate range from approximately 4.50 to 6.58 percent. However, all of the selected comparables are located in San Francisco, considered a significantly superior market for parking garages as compared to the subject and an overall rate considerably above the high end of the range is indicated for the subject property. "
"Therefore, an overall rate above the range indicated by the selected comparables, but below the national average, at 9.50 percent, is considered reasonable for the subject property. " THIS IS TOTAL NONSENSE! HE WAS OBVIOUSLY SEARCHING FOR A CAP RATE TO MATCH HIS REDICULIOUS CONCLUSION IN HIS DCF "APPRAISAL." HIS CAP RATE SHOULD AT LEAST BE WITHIN THE COMPARABLE RANGE OF 4.5 TO 6.6.
"Less Income Shortfall (Years 1 & 2) ($160,000)" HE FURTHER LOWERS THE VALUE BY A CONTRIVED AMOUNT OF $160,000. WHO IS PAYING THIS GUYS FEE?
"Comparable Improved Sales Analysis Dividing the subject’s projected net operating income (on an annual per space basis) by those of the selected comparables indicates a net operating income adjustment factor for each of the selected comparables. As is demonstrated on the following Comparable Sales Adjustment Grid table, the selected comparable indicate net operating income adjustment factors ranging from approximately 11.25 to 24.35 percent." UNBELIEVABLE THAT HE WOULD USE BASTARDISED RESULTS FROM THE INCOME APPROACH TO SEVERELY REDUCE THE VALUE FO THE SUBJECT PROPERTY.
"RECONCILIATION AND FINAL VALUE CONCLUSIONS The “as is” market value of the subject property by the two approaches used in this appraisal assignment are as follows: Income Approach = $ 850,000 Direct Sales Comparison Approach = $1,000,000 Therefore, based on our research and analysis and subject to the limiting conditions and assumptions contained herein, it is the opinion of the appraisers that the “as is” fee simple market value of the subject property, as of November 17, 2014, is: EIGHT HUNDRED FIFTY THOUSAND DOLLARS ($850,000) " HE GAVE THE SALES COMPARISON METHOD 0% CONSIDERATION.
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