Income Approach. (1) The income approach, when utilized, shall be implemented by calibrating and applying valuation models as follows:
Income Approach. Consideration of the income approach to value will be made when the income or potential income generated by the real estate is deemed likely to affect the property’s resale value. Data to be analyzed will include economic rents, typical vacancy rates and typical operation expense ratios. In the valuation of property by the income approach, adequate records will be prepared, showing a reconstruction of income and expenses, as well as all calculations used to arrive at market value, including formulas and capitalization rates as appropriate to the type of property being appraised.
Income Approach. The purpose of the income approach is to value an income-producing property by analyzing likely future income and expenses to the property. Xxxxxxx & Wakefield employed a direct capitalization analysis on each of the Properties by dividing a forecast of NOI by an appropriate capitalization rate, which Xxxxxxx & Xxxxxxxxx believed to be 9.75% for the Century II Apartments and 9.25% for the Park Place Tower Apartments. Capitalization rates are extracted from comparable market sales as an indication of value. Xxxxxxx & Wakefield relied on a variety of sources as the basis of the forecast of NOI, including an analysis of each Property's income and expenses based on historical figures and comparable projects. In its income approach, Xxxxxxx & Xxxxxxxxx first examined the potential gross income ("PGI") for the Park Place Tower Apartments, which includes apartment rental collections, retail/commercial rental collections, parking revenues and other income. Combining the expected revenues generated by these various components resulted in an annual estimated gross potential income of $12,139,488 for the Park Place Tower Apartments in 1999 compared with a PGI of $10,996,240 in 1996, $11,180,834 in 1997 and $11,780,643 in 1998. Between 1996 and 1997, Park Place's PGI increased 1.68%, while between 1997 and 1998, PGI grew by 5.36%. Xxxxxxx & Wakefield's estimate represent a 3.05% increase over the 1998 achieved PGI, a figure near, but slightly below the mid-point of the demonstrated growth rates. In addition, the Partnership reflects a budgeted PGI in 1999 of $12,099,168. Based on historical collections, the indicated annual growth rates and the Partnership's projected figure, Xxxxxxx & Wakefield believed their PGI estimate of $12,139,488 was reasonable and supported by operations at Park Place. Xxxxxxx & Xxxxxxxxx then calculated Park Place's effective gross income ("EGI") by addressing a vacancy and collection loss factor, income lost to non-revenue units and any concessions which may or may not be relevant. Once the EGI were established, operating expenses were stabilized and deducted from the EGI in order to arrive at a NOI for Park Place. Xxxxxxx & Xxxxxxxxx deducted an estimated vacancy and collection loss of $595,724 and $119,145, respectively, and an estimated concession charge of $50,000 plus the lost income associated with non-revenue producing units of $61,692 from the previously established PGI of $12,139,488, and arrived at an estimated EGI of $11,312,927 ...
Income Approach. The discounted cash flow (DCF) approach has been adopted for this income approach valuation, while free cashflow of the entity has been selected. The value of the entire equity interests is obtained indirectly through the valuation of the overall value of the entity. This valuation is based on free net cashflow of the entity for certain years in the future. The value of overall operating assets of the entity, calculated through adding up the discounted values with the adoption of an appropriate discount rate, is added to surplus assets and non-operating assets less interest-bearing liabilities in order to derive the value of the entire equity interests.
Income Approach. The income approach is the most widely used and, in our opinion, generally the most reliable approach to valuing transactions similar to the purchase of Park. Other clients have relied upon the income approach, primarily, in its prior purchases of similar utilities. PFM will develop a cash flow pro forma over a 30 year period, income statement and balance sheet for Park. The pro forma provides the foundation for estimating the value of Park in the proposed transaction.
Income Approach. This approach to value may or may not be utilized by the Contractor during this statistical update. Given the short timing of this contract, Income and Expense forms and responses may not be returned in time to complete the final value presentation of July 15, 2020. Contractor will make best efforts to gain rental and expense information from local businesses.
Income Approach. Under this method, the appraiser derives a value indication for an income- producing property by converting its anticipated benefits (cash flows and reversion) into property value. This conversion can be accomplished in two ways. One year’s income expectancy can be capitalized at a market-derived capitalization rate or at a capitalization rate that reflects a specified income pattern returns on investment and change in the value of the investment. Alternatively, the annual cash flows for the holding period and the reversion can be discounted at a specified yield rate. The Income Approach method of valuation may only be used for Agency Non- Program Properties such as Real Estate Owned (REO) or Non-Program Loan Assumptions. USPAP Standards Rule 2-2 (a) (viii) require the appraisal report to summarize the information analyzed, the appraisal methods and techniques employed, and reasoning that supports the analyses, opinions, and conclusions; and also, exclusion of the sales comparison approach, cost approach, or income approach must be explained.
