partial acquisitions: to move or not to move
DESCRIPTION
PARTIAL ACQUISITIONS: TO MOVE OR NOT TO MOVE IRWA’s 59 th Annual International Education Conference Charleston, WV Presented by: International Relocation Assistance Committee International Valuation Committee June 24, 2013. Rick Pino Partner Petersen LaChance Regan Pino, LLC. - PowerPoint PPT PresentationTRANSCRIPT
PARTIAL ACQUISITIONS: TO MOVE OR NOT TO MOVE
IRWA’s 59th Annual International Education ConferenceCharleston, WV
Presented by:International Relocation Assistance Committee
International Valuation Committee
June 24, 2013
Rick PinoPartner
Petersen LaChance Regan Pino, LLC
FUNDAMENTAL ELEMENTSKnow purpose and the jurisdiction under which you are performing the
valuation assignment
Establish the basis for valuation development and reporting requirements Uniform Standards of Professional Appraisal Practice (USPAP) Uniform Appraisal Standards for Federal Land Acquisitions (UASFLA) Other entities with eminent domain power
Non-federal governmental (state, county, municipal) Public and quasi-public agency or authorities Private entities
Determine critical definitions Market Value Real Estate/Real Property Personal Property
Unity of title
Unity of use
Contiguity or proximity
Tests Legally Permissible Physically Possible Financially Feasible Maximally Productive
As if Vacant
As Improved
Before and After Method
Value of Property Before the Acquisition (Larger Parcel)
Less the Value of Property After Acquisition (Remainder)
Value Difference
Value of Part Acquired
Value of the Acquisition(Plus) + Severance Damages(Less) - Special Benefits
Value Difference
Type of Property: Newly constructed 21,320 SF retail building 14,820 SF – Walgreens (drive-through)6,500 SF – Typical retail spacePad site for 3,260 SF Wendy’s137,538 SF (3.16 Acres) Site
Highest & Best Use: As Vacant – Retail developmentAs Improved – As developed
Rents: 40.00 – Pharmacy $28.00 – Typical Retail
Capitalization Rates: 6% - Pharmacy7% - Typical Retail
Type of Property: Newly constructed 21,320 SF retail building 14,820 SF – Typical retail space 6,500 SF – Typical retail space99,137 SF (2.28 Acres) Site
Highest & Best Use: As Vacant – Retail developmentAs Improved – As developed
Rent: $28.00 – Typical Retail
Capitalization Rate: 7% - Typical Retail
Change in Highest & Best UseValue Before: $ 14,700,000Value After: $ 8,000,000Difference $ 6,700,000
No Change in Highest & Best UseValue Before: $ 14,700,000Value After: $ 12,200,000Difference $ 2,500,000
Acquisition: Washington Street, Lynn, Massachusetts Design: Single story commercial building, plus
adjacent parking lot Use: Juvenile court facility Site: 18,042 square feet, irregular shape with 50
feet of frontage on Washington St. and 50 feet on Central St., plus adjacent parking lot
Improvements: 18,042 square feet of building area History: Recently renovated for $1,971,174 or
$109.25/SF of leasable area and recentlyleased for $28.20/SF of leasable area. Grossrent including tenant imp. costs over term
Zoning: Central Business Zoning District Assessment: $1,321,400 R. E. Taxes: $43,936.55
As Vacant
Assemblage parcel for parking and/or future development
$9.00/SF of land area based on commercialdevelopment and/or parking sales range of $6.05 to$11.47, with average of $8.47/SF of land area
As Improved
Existing use of the property for juvenile court facility
Build-to-suit rents courthouse facility rents range from $24.23 to $32.50, with average of $29.77/SF of leased building area
As Vacant Assemblage parcel for parking and/or future development
As ImprovedUse of the property for commercial/industrial use
Comparable sales range from $31.74 to $50.97, with average of $40.61/SF of building area
Rents range from $3.39 to $6.75/SF, with 10% vacancy, 7.5% expense ratio and cap rates 9% to 12%
Requires $180,420 or $10.00/SF for demolition andremoval of existing tenant improvement to return the space to market standard
Before and After Method $2,900,000 (Large Parcel)
(Less) - $541,000 (Remainder)$2,359,000 (Value Difference)
Value of Portion Acquired = $162,000
Importance of an in-depth BEFORE and AFTER Highest and Best Use Analysis
Outcome of the analysis may affect the Agency’s project plan
Proper planning may include advising agency of changes in use - proactive and may allow time for exploring other design alternatives
Janet Cruppi, SR/WA, R/W-RAC
Michelle Colby, SR/WA, R/W-RAC, R/W- NAC
Moderators
This same concept is used in relocation planning
A thorough Non-residential Occupancy Interview is critical to establish the BEFORE
The AFTER - What is the effect of the partial acquisition on the business’s: Access Deliveries Parking Circulation Ability to operate in a similar manner
Partial acquisition from a cattle ranch, Thermopolis, Wyoming
Partial acquisition from a restaurant in Homer, Alaska
Partial acquisition from a custom truck building facility in Anchorage, Alaska
Rick EtterAirports Acquisition SpecialistFederal Aviation Administration
Relocate on Airport? Not a displacement for Airfield Users, e.g. Airlines, other support services.
Relocate Off Airport? On airport business leased property needed for project, nowhere to move on airport. Typically displaced.
Off airport service business. Project need several years in future. Option not to be displaced. May leaseback acquired property long term.
Closed Airport. Tenant aviation business. Not displaced, no obligation in lease to continue operations.
Airfield (AOA) Tenant Leases Not Displaced by Airport Development (Works/Support for On-airport Operations)Example: Airline Hangar to be Removed for Airfield Construction Airfield Lease is Re-negotiated with AirportNew Hangar Location Developed by AirportAs applicable credit unamortized value of Improvements/Moving Expense
Other Issues with Airfield Leases: Subtenants? Subject to Airfield Lease
Example: On-airport Rental CarAirport Lease must be broken to use land for project (poor planning)
No on-airport location available, so displaced for project
Eligible for Relocation Assistance and Payments
Example: Off Airport Parking, displaced business owner desires to stay on property as long as possible.
Continued Occupancy offers:
Full relocation assistance and payment eligibility must be offered and available now when property purchased. Or;
Leaseback property pending project development in 5 years.Subject to an 18 month lease, with three 12 month renewal options (extends a maximum of 60 months)If tenant terminates lease within initial 18 month period, eligible for offered relocation eligibility.
Marshall WainrightLead Realty SpecialistFHWA Resource CenterFederal Highway Administration
Janet Cruppi, SR/WA, R/W-RAC
Michelle Colby, SR/WA, R/W-RAC, R/W- NAC
Moderators
THANK YOU FOR ATTENDING