Weighted Cap Rates
In this ever more complicated and competitive consulting environment, it is always helpful for the consultant to have yet another skill to offer their clients. This article presents a new technical, but easy to use, cost effective analysis that will reduce property taxes. It can be applied to all leased properties, including most office buildings, retail malls, and many industrial buildings, which the traditional tax assessment analysis cannot analyze.
When real estate taxes change, real estate tax recoveries also change. Changes in real estate tax recoveries change the property’s value. Traditional value and tax analyses can solve for value when only two items, taxes, and value, are unknown. This article presents a generalized analysis that works on up to three unknowns, value, taxes, and recoveries, and that can be used on all types of property, gross or net leased, single or multi-tenanted. Additionally, this article presents practical steps for employing the analysis.
Traditionally, analysts have employed a weighted (loaded) capitalization rate formula to analyze property values when the appropriate real estate tax expense was unknown. The first step is to estimate net operating income before real estate taxes In Archive May 2021 July 2020 June 2020 April 2020 March 2020 August 2017 August 2014 April 2014 (NOIbpt). Then, the effective tax rate is added to the capitalization rate to calculate the weighted capitalization rate (weighted cap rate). Next, the weighted cap rate is applied to the NOIbpt to determine the market value. Finally, the appropriate taxes can be calculated by applying the effective tax rate to the estimated market value.
This article will show that is the traditional analysis is only accurate for prefect gross leased properties. The traditional weighted cap rate analysis cannot accurately indicate value or taxes, for any net leased or partially gross (or partially net) leased property. Furthermore, if any tenant, space, or unit at a gross leased property, regardless of whether the property is single or multi-tenanted, should be or should become at any time over the analysis holding period, a net lease, or a partially net lease with respect to real estate taxes, then the traditional weighted cap rate analysis would not be accurate[MP1] .
Real Estate Taxes
Real estate taxes are also known as ad valorem taxes. Ad valorem is Latin for “according to the value”. Real estate taxes are based on the property’s value, technically the property’s market value.
When given the market value, the assessed value to market value ratio, and actual tax rate, the actual taxes can be calculated as follows:
Calculation of Real Estate Taxes
Market Value$6,090,000Assessed Value to Market Value Ratio50.0%Assessed Value$3,045,000Actual Tax Rate6.0%Real Estate Taxes $182,700
The assessed value to market value ratio is also known as the equalization ratio. The actual effective tax rate is 3.0%, (6.0% x 50.0%). When assessors and property owners dispute real estate taxes, the fundamental issue is determination of the property’s market value.
Market Value
Market value is determined by appraisal. There are three types of appraisal analyses used to determine market value: cost analysis, sales comparison analysis, and income analysis. The first two types of analysis present no problem for properties that have real estate tax recoveries in that they intrinsically reflect the impact of taxes and tax recoveries. If the analyses accurately, intrinsically reflect the taxes and recoveries, then the analyses will indicate an accurate value; however, the last type - the income analysis - presents significant problems, when used to simultaneously estimate the market value of, and hence the real estate taxes on a property, that has real estate tax recoveries.
Income Producing Properties
Of the three appraisal analyses, the income analysis is most important for income producing properties. There are two types of income analysis: the income capitalization analysis and the discounted cash flow analysis. This article focuses on the first type; however, the concepts in this article about real estate taxes and tax recoveries apply to both income analysis types.
Basic Income Capitalization Analysis
Total Gross Income$1,125,000Total Expenses$550,000Net Operating Income$575,000Capitalization Rate10.0%Indicated Market Value$5,750,000
Real Estate Tax Recoveries
Real estate tax recoveries are defined as rental payments made by the tenant that reimburse the landlord for real estate tax expenses. Real estate tax recoveries are also known as passthrough rental incomes or passthroughs. Real estate tax recoveries are based, in some way, on the real estate taxes. Commonly leases prescribe the tenant’s payments as a percentage share of the property’s total taxes. Often when real estate taxes increase or decrease, the tenants’ payments to the landlord also increase or decrease. Some leases call for minimums and maximums (bases and caps) for either the landlord or the tenant. Some tenants pay their share of the taxes directly to the tax collector; however, the landlord, as property owner, is ultimately responsible for the taxes.
Sometimes the taxes and the tenant’s recovery payments are not listed in the property’s operating statements.
In properties with all perfect gross leases (e.g., most apartment buildings), the landlord usually pays 100% of the taxes (landlord’s contribution: 100%) and the tenant pays no recoveries. In properties with all net leases (e.g., some warehouse buildings), the landlord’s tax contribution is usually 0.0% and the tenant pays 100% of the taxes; however, in net leased properties (or properties that are typically net leased) where the tenant usually pays 100% of the taxes, the landlord must pay the taxes during vacancy and credit loss periods.
Readers are asked to define real estate tax recoveries in the broadest sense, since the issues discussed within apply to many properties that do not at first glance appear to be relevant.
Property Value/Real Estate Tax Assessment Dilemma
Market value determines the real estate taxes. An appraisal determines the market value. On an income producing property, the income analysis is the most important part of the appraisal. The income analysis is based on net operating income. But real estate taxes effect net operating income. In fact, real estate taxes effect both the gross income (through real estate tax recoveries) and the operating expenses (obviously through real estate tax expenses). Hence, taxes effect the market value. The dilemma is that there is a circular analysis process for income producing properties. Market value determines the tax, but tax effects the market value. If either the market value or the taxes are given incorrectly, then the basic income analysis will yield incorrect taxes or market value, respectively.
On the next page is an example of a basic income capitalization analysis that assumes an incorrect real estate tax expense.
An Example of An Incorrect Tax Assumption
Total Gross Income$1,125,000Actual Real Estate Taxes250,000All Other Expenses300,000Total Expenses$550,000Net Operating Income$575,000Capitalization Rate10.0%Indicated Market Value$5,750,000Actual Effective Tax Rate3.0%Indicated Real Estate Taxes$172,500
Note that the actual taxes do not match the indicated taxes. Obviously, a tax appeal is needed. But what should the taxes be? On what market value should the taxes be based?
Basic Value & Tax Assessment Analysis
Analysts long ago figured out a basic algebraic formula that, for certain types of properties, solves for both the market value and taxes, when neither the market value nor the taxes are known. The formula avoids the difficulties of the iteration mathematics and has become a standard within the real estate analysis community.
Presented on the next page is an example of a basic value and tax analysis.
Basic Value & Tax Assessment Analysis
Total Gross Income$1,125,000Actual Real Estate TaxesNAAll Other Expenses300,000Total Expenses$300,000Net Operating Income$825,000Actual Effective Tax Rate3.0%Capitalization Rate10.0%Tax Adjusted Capitalization Rate13.0%Indicated Market Value, Rounded$6,350,000Actual Effective Tax Rate3.0%First Indicated Real Estate Taxes$190,500
If we cross-check the above basic income capitalization analysis but use the indicated taxes instead of the actual taxes, we find seemingly consistent results. Presented on the next page is a proof that the indicated results a basic value and tax analysis appear to be accurate[MP2] .
Cross-Check Proof
Total Gross Income$1,125,000Indicated Real Estate Taxes190,500All Other Expenses300,000Total Expenses$490,500Net Operating Income$634,500Capitalization Rate10.0%Indicated Market Value, Rounded$6,350,000Actual Effective Tax Rate3.0%Second Indicated Real Estate Taxes$190,500
Seemingly Consistent?
The indicated value and taxes in this analysis would be correct, if all the other income and expense data were correct; however, as shown on the next pages in the Inconsistency Proof, this is, in fact, not correct for many important types of properties. The problem arises when gross income is affected by real estate taxes. When a property has real estate tax recoveries, the level of tax expense directly effects the gross income.
For the sake of the presentation, assume that the actual lease (and market lease terms) calls for the tenant to pay 50% of the real estate taxes.
Actual Taxes and Tax Recoveries
Actual Real Estate Tax Recoveries$125,000All Other Rents, Income and Recoveries1,000,000Total Gross Income$1,125,000Actual Real Estate Taxes$250,000All Other Expenses300,000Total Expenses$550,000Net Operating Income$575,000
In this case, real estate taxes are recovered at a rate of 50% ($125,000 / $250,000). The tenant’s tax contribution is the total real estate tax expense paid by the tenant. This means the landlord’s tax contribution is 50% (100%-50% tenant contribution). The landlord’s tax contribution is the difference between the total real estate tax expense and total real estate tax recoveries divided by the total real estate tax expense.
The calculations below show the inconsistencies with the basic tax assessment analysis. Given the indicated taxes of $190,500 and the landlord’s tax contribution of 50%, we calculate the total indicated real estate tax recoveries to be $95,250. Because the indicated real estate tax recoveries are different from the actual amount, the indicated market value and its resultant indicated taxes are inconsistent.
Inconsistency Proof
Indicated Real Estate Tax Recoveries$95,250All Other Rents, Income and Recoveries$1,000,000Total Gross Income$1,095,250Indicated Real Estate Taxes190,500All Other Expenses300,000Total Expenses$490,500Net Operating Income$604,750Capitalization Rate10.0%Indicated Market Value, Rounded$6,050,000Actual Effective Tax Rate3.0%Indicated Real Estate Taxes$181,500
Generalized Value and Tax Assessment Analysis
The problem with the basic value and tax assessment analysis is that it cannot solve for three co-dependent variables: market value, taxes, and tax recoveries. If taxes are not appropriately assessed, then any real estate tax recoveries based on these taxes will not be appropriate either. Such real estate tax recoveries should not be used in the calculation of gross or net income; however, the property still has the value created by the potential for real estate tax recoveries. To capture this value, the capitalization rate must be adjusted for the potential real estate tax recoveries.
The capitalization rate can be adjusted for the potential real estate tax recoveries by adjusting the effective tax rate for the landlord’s tax contribution. The effective tax rate is adjusted by multiplying the effective tax rate by the landlord’s tax contribution and is thereby converted into the landlord’s effective tax rate. By adding the landlord’s effective tax rate, instead of the full tax rate, the adjusted capitalization rate truly reflects the landlord’s equity interest (the fee estate or leased fee estate) in the property.
Generalized Value and Tax Assessment Analysis
Actual Real Estate Tax RecoveriesNAAll Other Rents, Income and Recoveries$1,000,000Total Gross Income$1,000,000Actual Real Estate TaxesNAAll Other Expenses300,000Total Expenses$300,000Net Operating Income$700,000Actual Effective Tax Rate3.0%Real Estate Taxes Not Recovered50.0%Landlord’s Tax Contribution1.5%Capitalization Rate10.0%Tax Adjusted Capitalization Rate11.5%Indicated Market Value, Rounded$6,090,000Actual Effective Tax Rate3.0%Indicated Real Estate Taxes$182,700Real Estate Tax Recovery Rate50.0%Indicated Real Estate Tax Recoveries$91,350
Consistency Proof
Indicated Real Estate Tax Recoveries$91,350All Other Rents, Income and Recoveries$1,000,000Total Gross Income$1,091,350Indicated Real Estate Taxes$182,700All Other Expenses300,000Total Expenses$482,700Net Operating Income$608,650Capitalization Rate10.0%Indicated Market Value, Rounded$6,090,000Actual Effective Tax Rate3.0%Indicated Real Estate Taxes$182,700Real Estate Tax Recovery Rate50.0%Indicated Real Estate Tax Recoveries$91,350
The proof indicates consistency for all three variables: market value, taxes, and tax recoveries. The generalized formula works!
Estimating Landlord’s Tax Contribution
The analyst has two methods of estimating the landlord’s tax contribution and its inverse, the percentage of real estate taxes recovered by the landlord: a trend-based projection method and a lease-by-lease analysis method.
Trend-Based Projection
A trend-based projection is an analysis of the property’s historical experience and/or an analysis of market-wide experiences. When estimating real estate tax recoveries, the analyst must be aware of the usual pitfalls encountered when estimating and forecasting income and expenses, such as above or below market experiences at the subject property, unusually variable income or expense item experiences at the subject property, the incomparability of market data.
Example of a Trend-Based Projection Analysis
1 Years Ago2 Years AgoLast YearProjectionSubject Property60%55%50%50%Market Comparables60%60%50%
Lease-by-Lease Analysis
A lease-by-lease analysis is an analysis of every lease for its real estate tax recoveries potential. The percentage of taxes to be paid by each tenant should be tallied to ascertain the landlord’s contribution for taxes for the entire property. Any percentage estimated using the actual leases must be adjusted for expectations of stabilized vacancy and credit loss, and for rollover to market lease terms, and local assessment procedures.
Example of Lease-by-Lease Analysis
Landlord’s TaxContributionSquare FeetSq.Ft Weighted ContributionRemaining Lease TermMarket LeaseTerms?Lease #160%20,00012,0003 yrsYesLease #260%25,00015,0004 yrsYesLease #x55%30,00016,5003 yrsYesVacant Unit #155%20,00011,0005 yrsYesVacant Unit #x55%30,00016,5005 yrsYesTotal 125,00071,000
If property was 100% occupied, the tenants would pay 57% (71,000/125,000) of the taxes. The landlord’s building wide tax contribution, at 100% occupancy, is estimated at 43% (100%-57%); however, market expectations call for a vacancy and credit loss rate of 7%. Therefore, the landlord’s building wide tax contribution, at stabilized vacancy and credit loss, is estimated at 50% (43% + 7%).
Net Leased Properties and Average Vacancy & Credit Loss
Unless properties are net leased for very long terms, say more than 20 years to high credit rated tenants, the basic value and tax assessment analysis will not work, and the generalized value and tax assessment analysis must be used. Over a typical holding period, most properties are expected to experience some vacancy and credit loss. If a property has some vacancy and credit loss over a holding period, then its average or stabilized vacancy and credit loss represent the percentage of real estate taxes not recovered by the landlord.
A generalized analysis can be constructed as follows. No tax recovery income and no taxes should be included in the net income estimate. The stabilized vacancy and credit loss should continue to be deducted from all other potential rents, income, and recoveries. No vacancy and credit loss are taken against the potential tax recovery income. The taxes, the tax recovery income, and its vacancy and credit loss should only be reflected in the adjustment to the capitalization rate.
Benefits to Property Owner & Consultant
The generalized tax assessment analysis for a net leased property shown on the next page yields additional savings over the basic tax assessment analysis of $4,200. It may take the consultant one hour to complete the analysis and one hour to explain the procedure. On a 25% contingency fee basis, the consultant would earn a healthy $1,050 fee.
Generalized Value and Tax Assessment Analysis for a Net Leased Property
Basic Value And Tax AnalysisGeneralized Value and Tax AnalysisHolding Period10 Years10 YearsAverage/Stabilized Vacancy & Credit Loss: On All Other Rents, Income and Recoveries7%7%On Real Estate Tax RecoveriesNA7%Potential Real Estate Tax RecoveriesNANAVacancy & Credit Loss Real Estate Tax RecoveriesNANAEffective Gross Real Estate Tax RecoveriesNANAPotential All Other Rents, Income and Recoveries$1,075,269$1,075,269Vacancy & Credit Loss All Other Income and Recoveries7%7%Effective Gross All Other Income and Recoveries$1,000,000$1,000,000Real Estate Tax RecoveriesNANAAll Other Rents, Income and Recoveries$1,000,000$1,000,000Total Gross Income$1,000,000$1,000,000Real Estate TaxesNANAAll Other Expenses300,000300,000Total Expenses$300,000$300,000Net Operating Income$700,000$700,000Actual Effective Tax Rate3.0%3.0%Real Estate Taxes Not Recovered0.0%7.0%Landlord’s Tax Contribution0.0%0.2%Capitalization Rate10.0%10.0%Tax Adjusted Capitalization Rate10.0%10.2%Indicated Market Value, Rounded$7,000,000$6,860,000Actual Effective Tax Rate3.0%3.0%Indicated Real Estate Taxes$210,000$205,800Real Estate Tax Recovery Rate100.0%93.0%Indicated Real Estate Tax Recoveries$210,000$191,394
Discounted Cash Flow Analyses
The principle of not using tax recovery income that is based on inappropriately assessed taxes is equally applicable to discounted cash flows (DCF’s); however, the generalized capitalization rate adjustment procedure described above cannot be applied to the discount rate in a DCF. Analysts must use an iteration process (the generalized cap rate adjustment procedure can be applied to the reversionary capitalization rate in a DCF). Depending on the DCF software used, various iteration techniques can be used instead of the algebraic formula discussed above. In certain software packages, the analyst sets up the tax recoveries as dependent upon the data entered in the taxes cash flow. When the time comes for the analyst to calculate the property value, the analyst enters a guess estimate of the taxes and calculates the first value. This first value is analyzed to find the indicated taxes. If the indicated taxes do not match the guess estimate, then the analyst must make a second guess estimate, recalculate the property value, and reanalyze the second property value for its second indicated taxes. If the second indicated taxes do not match the second guess estimate, then the analyst must repeat the above steps until they match.
Conclusion
In conclusion, the basic tax assessment analysis is not valid for many important types of properties, including most office buildings, retail malls, and many industrial buildings. For such properties, the generalized analysis must be employed. The basic analysis remains valid for properties with only gross leases, such as residential apartment buildings, but the generalized analysis can be used for all properties. This easy-to-use analysis will save property owners tax dollars and earn fees for tax consultants.
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Articles
Articles & Materials Published by Federal Appraisal LLC Professionals. Our library contains numerous resources that are free to use, including articles and reports written by the professionals at Federal Appraisal LLC. Links to several popular titles in our library are provided below.
The Appraisal of Power Plants (PDF)
This article won the 2014 Swango Award. The Appraisal Journal’s Editorial Board presents the Swango Award to the best article published during the previous year on residential, general, or technology-related topics, or for original research of benefit to real estate analysts and valuers.
The Appraisal of Liquid Fuel Refineries (PDF)
The Appraisal of an Appraisal Company (PDF)
Defining and Supporting Entrepreneurial Profit and Incentive, and External Obsolescence (PDF)
From “The Appraisal Journal, Fall 2009.”
Corridor Valuation, the ATF Method, and Maximally Productive Uses - Railroad (PDF)
From “Right of Way, August 2008”
Benford’s Law and Appraisal (PDF)
From The Appraisal Journal, Fall 2017 Edition.
If you are interested in testing whether or not there is fraud in your data, please contact us for consultation at mark@federalappraisal.com or 908-534-3590!
Building Our Alternative Energy Future (PDF)
From “RICS Property World, Winter 2009”
Managing Commercial Real Estate Before and During Economic Recessions
Relationships between the Overall Property and its Parts, and the Three Approaches to Value
From “The Appraisal Journal, Winter 2009”
Tax Saving Ideas, November 2001
Federal Appraisal LLC has compiled a list of often overlooked expenses and tax deductions that could improve after tax cash flow and pertain to the real estate industry.
Business and Cash Flow Improvement Ideas (How To), How to Improve Your Business by Managing Your Real Estate and Using Appraisal and Appraisal Consulting Services, November 2001.
Real estate represents one of the largest capital outlays for businesses. Yet few businesses have professional staff dedicated to the management of their real estate. Consequently, all too often real estate assets are not maximizing their potential yield for their businesses. Here are several actions that businesses can take to maximize their real estate investment yields and values.
Weighted Cap Rates & Taxes, by Mark Pomykacz, MAI, February 2001
This article presents a new technical, but easy to use, cost effective analysis that will reduce property taxes. It can be applied to all leased properties, including most office buildings, retail malls, and many industrial buildings, which the traditional tax assessment analysis can not analyze.
Power Asset Property Taxes, A Silver Lining!, by Mark Pomykacz, July, 2003
Utility companies are currently suffering a double body blow. They are currently suffering a dramatic industry-wide decline. And in many areas of the country, they are suffering through the negative effects of deregulation; however, while these conditions certainly have a negative impact on power asset values, the effects can be mitigated by acting to reduce property taxes. The tax manager who is knowledgeable of recent industry and assessment events and their implications can find a silver lining in property tax management. Given that property taxes are often the third largest operating expense (behind fuel and payroll), the proper management of property taxes can substantially improve net income and thus preserve company value.
Correcting Property Taxes on High-Value Properties, The Variable Tax Rate Phenomenon in Tax-Adjusted Cap Rate Formulas ©, by Mark Pomykacz, July 2003
It is now widely acknowledged that capitalization rates can and should be adjusted for the property tax rate, while the net income should be calculated without the property tax expense, in order to accurately estimate the market value of income producing properties, for property tax assessment purposes; however, the standard property tax adjusting methods assume that the property tax rate is invariable. In fact, for high-value assets, those that represent a substantial portion of the taxing jurisdiction’s taxable base, the property tax rate is dependent on the market and assessed values of the high-value asset. Applying the standard property tax adjusting methods to high-value assets will result in over-estimated market and assessed values, but under-estimated tax rates, and municipal budget short falls. This article explains this phenomenon and presents a formulaic solution that greatly improves appraisal accuracy and budgeting. The formula is easy to use and cost effective. It is expected that the formulas and processes presented herein will be widely used in the planning, negotiation, litigation, and settlement of property tax disputes for high-value properties to the benefit of both the tax payer and the taxing jurisdiction. The taxing jurisdiction will benefit from the avoidance of previously unexpected changes to the tax rate, allowing more accurate budget planning. Furthermore, it will permit the full capture of the taxable base. For the taxpayer, it will provide sound appraisal rationale for relief from under-estimated tax rates, which result in over-estimated assessments and over taxation.
Valuation and Litigation, by Mark Pomykacz, MAI, Spring 2000
Perhaps today, litigating our differences has become a normal business venue. Certainly, experience indicates that even the best intentions and the most prudent management practices can offer no guarantee of avoiding litigation. Given that real estate is one of the most expensive business and personal activities, it is not surprising that subtle differences between parties lead to disputes over large dollar amounts.
Disputed real estate valuations often range in the $10 of millions and sometimes in the $100 of millions. Even leasing disputes can amount very large, disputed valuations. Over a seven-to-ten-year lease period, many aggregated lease payments will exceed the value (sale price) of the property. Furthermore, the complexity of real estate valuation unfortunately leaves room for dramatically different opinions of value, rent, and damages. The scale of real estate valuations and the complexity of such valuations require the use of real estate valuation experts.
Reducing Property Taxes, by Mark Pomykacz, MAI, February 1998
It is again time to celebrate a rising real estate market. Rents are rising. Vacancy is declining. Inflation and expenses remain stable. These fundamentals are increasing values and are increasing property tax assessments. As the real estate community turns its attention to the joys of deal making and development, the diligent will do better as they remember those still important operations efforts, such as property tax appeals. Furthermore, the sophisticated will do best as they employ the full range of tax appeal tools, while many others are conceding that the increased assessments are inevitable.
Plain Language Dictionary, by Mark Pomykacz, MAI
Mark Pomykacz, MAI, has compiled a plain language dictionary of real estate terms that are commonly misunderstood. While technical and legal definitions abound in the real estate industry, there remains a gap between the highly technical expert’s understanding and the beginner’s understanding. The purpose of this dictionary is to bridge that gap, help prevent costly mistakes and to improve market performance. Mr. Pomykacz provides plain language definitions for these commonly misunderstood terms, along with real world examples and practical advice. Readers of this page are encouraged to also read the common fallacies and mistakes pages.
Common Fallacies & Mistakes, by Mark Pomykacz, MAI
Mark Pomykacz, MAI, has compiled a list of the most common fallacies and mistakes surrounding real estate appraisal and consulting. Some of these fallacies could be considered humorous if it weren’t for the fact that they cause significant problems and cost of the real estate community millions of dollars. Mostly, it is layman and novices who succumb, but all too often real estate experts also fall victim, while the real estate community does little to dispel these myths.
Survey Research Reports
Selection Of Approaches to Value for Power Plants
As the electricity generation industry shifts from a regulated to a deregulated market, valuation paradigms are also shifting. The purpose of this survey is to examine opinions regarding the most applicable method or methods to value these types of assets.
“Options in Real Estate Valuation”, The Appraisal Journal, Summer 2013
Reviewer for the “Real Estate Valuation in Global Markets”, Second Edition, The Appraisal Institute, 2010, ISBN 978-1-935328-12-4
“Defining and Supporting Entrepreneurial Profit and Incentive, and External Obsolescence”, The Appraisal Journal, Winter 2010
“The Energy for Change: Building Our Alternative Energy Future”, Property World, Royal Institution of Chartered Surveyors, Winter 2009
“Corridor Valuation, the ATF Method, and Maximally Productive Uses, Recent Observations from the Rail Line”, Right of Way Journal, International Right of Way Association, September 2008
“Correcting Property Taxes on High-Value Properties”, Unpublished, July 2004
"A Generalized Analysis to Determine Three Unknowns; Value, Real Estate Taxes and Real Estate Tax Recoveries”, Assessment Journal, Summer 2003
“Property Taxes, A Silver Lining”, Energy Pulse, July 2003
"Considerations for Valuation and Litigation”, Deloitte & Touche Real Estate Newsletter, New York, April 2000
"Reducing Property Taxes in a Rising Market", Real Estate New York, February 1998
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Presentations
The people at Federal Appraisal LLC regularly speak and present publicly about real estate and business appraisal. Please see a partial list of our presentations below.
Steven L. Newman Real Estate Institute“Exuberant Bubble” or “Fundamentally Sound” Where are Real Estate Prices Going? (PowerPoint)September 2005
IAAO Councils & Sections Public Utility SectionReconciling the Reconciliation (PowerPoint)Charlotte, NC, 2006
Millennials and Real Estate Trends (PowerPoint)
2009 Ethanol Bankruptcy & Acquisitions ConferenceCreating, Maintaining and Measuring of Ethanol Plants (PowerPoint)
EMP BahrainSustaining Growth of Infrastructure in Emerging Markets (PowerPoint)Bahrain, 2009
NJCTBA Annual Meeting and ConventionThe Appraisal of Solar Power Assets for Assessment (PowerPoint)
2015 Northeastern Regional Association of Assessing Officers Annual ConferenceAssessing Real & Personal Property & Biz Intangibles (PowerPoint)Portsmouth, NH 2015
New Jersey Seminar of the Society of Professional AppraisersGo Dark Theory (PowerPoint)
The 46th Annual Wichita ProgramWhen Obsolescence is Accelerating (PowerPoint)Wichita, KS, 2016
PowerPoint Presentations American Bar Association/Institute for Professionals in TaxationAdvanced Property Tax SeminarImpact of Millennials on Industrial Real Estate & The Go Dark HypothesisNew Orleans, LA, 2017
NRAAO, Annual ConferenceImpact of Millennials on Real EstateMystic, CT, 2017
New Jersey State Bar Association Annual ConferenceBorgata Decision! Appraisal ImplicationsAtlantic City, NJ, 2014
PEI Infrastructure Investor: New YorkManaging Infrastructure Assets: In a Post-Cheap Deb WorldNew York, NY, 2009
Power & Electricity World: Latin America ConferenceCreating and Measuring Value: A Power Plant DevelopmentCoral Gables Florida, 2009
Corpbanca Seminar InvitationFair Value Appraisal for the Real Estate Industry in ChileSantiago, Chile, 2008
The Pan Pacific Valuation ConferenceThe Effects of Deregulation/Privatization on the Selection of Valuation Methodology23rd Pan Pacific Valuation Conference,San Francisco, 2006
Baruch College (CUNY),“Exuberant Bubble” or “Fundamentally Sound”: Where are Real Estate Prices Going?New York, September, 2005
The Center for Business Intelligence, now Platts, a division of McGraw-HillValuing Generation Assets – Employing Effective Due DiligencePower Asset Mergers and Acquisitions Conference, 2004
Methodologies for Portfolio Valuation of Power Plant Assets6th Annual Electric Asset Valuation Conference, 2004
Sophisticated Valuation Techniques – Theory and Practice5th Annual Electric Asset Valuation Conference, 2003
The International Association of Assessing Officers (IAAO)Reconciling the Reconciliation, Power Plants and UtilitiesIAAO Public Utility Section, Charleston, 2006
Recognizing & Separating Real Property, Personal Property, and Intangible Values in Common Indications of ValueIAAO Public Utility Section, Milwaukie, 2006
Cell Towers and Telecommunications PropertyIAAO Legal Update, San Francisco, 2006
Valuing Complex Properties, Power PlantsIAAO Public Utility Section, Boston, 2004
Preparation and Trial Seminar (Mock Trial)IAAO, Las Vegas, May, 2007
Preparing for the Big One – The Trial of a $1 Billion Case; How a Complex Case Illustrates Basic Principles of Valuation and Trial PracticeCAAO 14th Fall Symposium, 2008
The Wichita State University Annual Conference on the Appraisal for Ad Valorem Taxation of Communications, Energy and Transportation Properties
Preparing for the Big One – The Trial of a $1 Billion Case; How a Complex Case Illustrates Basic Principles of Valuation and Trial Practice37th Annual Conference, 2007
Rate Basics – Back to the Basics for Experts, Finding a Common Language40th Annual Conference, 2010
When Obsolescence is Accelerating46th Annual Conference 2016
Rutgers University, Office of Continuing EducationBrownfields: Emerging Issues, The Economics of GreenRutgers University, New Brunswick, New Jersey, 2008
The Long Island Society of Certified Public AccountantsUnderstanding Key Appraisal Concepts: Methodologies and Procedures, and Capitalization RatesReal Estate Committee, October, 2005
The Society of Professional AssessorsDark Store v the Force of Market Value, Big Box, Little Box and the Dark Store HypothesisHasbrouck Heights, NJ, April, 2016
Borgata Decision - Separating Real, Personal and Intangible PropertyHasbrouck Heights, NJ, April, 2014
A Case Study in Complex Litigation: Wheelabrator v City of BridgeportHaddam, CT, November, 2013
Appraising Complex Properties for Property Taxes: A Power Plant Case StudyMystic, CT, October, 2005
How low can you go? Cap Rates and Yield Rates Methodologies, Procedures, Market Cycle, and Current IssuesRutherford, NJ, April, 2006
The Institute for Professionals in Taxation, IPT, Annual Property Tax SymposiumValuation of Electric Generating Stations Owned by Independent Power ProducersAustin, Texas, November 2, 2010
Connecticut Association of Assessing OfficersDark Store v the Force of Market Value, Big Box, Little Box and the Dark Store HypothesisUniversity of Connecticut, CT, June, 2016
The Appraisal and Assessment of Big Box and Large Owner-Occupied PropertiesSeptember, 2011
New Jersey County Tax Board AssociationAppraising Solar Power Assets for Property TaxationSeptember, 2011
South Jersey Chapter of the Appraisal InstituteAppraising Solar Power Assets
September, 2011
Articles and Publications
“Benford’s Law in Appraisal”, The Appraisal Journal, Fall 2018
“The Appraisal of Power Plants”, The Appraisal Journal, Summer 2014This article won the 2014 Swango Award. The Appraisal Journal’s Editorial Board presents the Swango Award to the best article published during the previous year on residential, general, or technology-related topics, or for original research of benefit to real estate analysts and valuers.
“Options in Real Estate Valuation”, The Appraisal Journal, Summer 2013
Reviewer for the “Real Estate Valuation in Global Markets”, Second Edition, The Appraisal Institute, 2010, ISBN 978-1-935328-12-4
“Defining and Supporting Entrepreneurial Profit and Incentive, and External Obsolescence”, The Appraisal Journal, Winter 2010
“Relationships between the Overall Property and Its Parts, and the Three Approaches to Value”, The Appraisal Journal, Winter 2009
“The Energy for Change: Building Our Alternative Energy Future”, Property World, Royal Institution of Chartered Surveyors, Winter 2009
“Corridor Valuation, the ATF Method, and Maximally Productive Uses, Recent Observations from the Rail Line”, Right of Way Journal, International Right of Way Association, September 2008
“Correcting Property Taxes on High-Value Properties”, Unpublished, July 2004
"A Generalized Analysis to Determine Three Unknowns; Value, Real Estate Taxes and Real Estate Tax Recoveries”, Assessment Journal, Summer 2003
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