Welcome

2023 Project Destined– Real Property

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 SPEAKERS

Maggie Donahue, CMI

Director, Property Tax
Commercial
312-980-1193 Direct
maggie.donahue@ryan.com

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 Real Property:
Land and everything permanently attached to it

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 Assessors Function: Appraise all real property within their jurisdiction, as of
the lien date, according to their state statute

• Jurisdictional familiarity
• General knowledge of each site
• Field Inspections
• Blueprints/Plans
• Interviews
• Articles
• General Market Data

Ryan: Through a comprehensive analysis, determine if the value

established by the assessor is a true reflection of the market value

• Financial data
• Rent Rolls
• Income & Expense Statements
• Owner insight (SCIF)
• Actual Cost Data

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 Assessor - Mass Appraisal Method

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 COST APPROACH
1. Typically the high-end of value
2. New Construction
3. Value in Use
4. Very Subjective (Depreciation)
5. Where no sales or income data available

The Cost Approach is based on the value principle of substitution which makes the assumption
that an informed buyer would not pay more for an existing property than the market value of
vacant land plus the cost to construct an equally desirable property with similar utility

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 Replacement Cost New:
• Direct Costs (Hard Costs)
• Indirect Costs (Soft Costs)
Less: Depreciation
• Physical
 Incurable
 Curable
• Functional
 Incurable
 Curable
• Economic

Add: Site Improvements

Add: Land Value at the highest and best use
Yields: Indicated value

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 SALES COMPARISON APPROACH
A subject’s property value is directly related to the sales prices of similar properties that have
recently sold

Advantages:
Disadvantages:
1. Applies to most properties 1. Must have a good sales pool
2. Based on market conditions 2. Unreliable sales
3. Easy to explain 3. Requires
verification of sales
4. Most persuasive in court 4. Adjustments
5. No forecasting Required
Arms-Length Transaction:
Willing Buyer and Seller
Not under duress
On the open market
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 WHAT IS A COMPARABLE?
Units of Comparison
• $/SF
• $/Acre
• $/Screen
• $/Bed
• $/Door
• $/Key

Units of Measure:
• Median
• Mean
• Mode

Sales/Listing Data: CoStar

Broker Websites

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 Single Tenant Industrial Single Tenant Industrial

Year Built: 2022 Year Built: 2010

Square Footage: 74,620 Square Footage: 62,378
Wall Height: 32’ Wall Height: 27’
Docks: 26 Exterior Docks: 18 Exterior
Lot Size: 5.18 Acres Lot Size: 4.26 Acres
Location: Industrial Park Location: Industrial Park

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 Restaurant Restaurant

Year Built: 2004 Year Built: 1987

Square Footage: 8,325 SF Square Footage: 7,750
Use: Full Service Use: Full Service
Construction: Masonry Construction: Masonry
Lot Size: 1.02 Acres Lot Size: 1.10 Acres
Location: Shopping Center Location: Off of Main Street

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 INCOME APPROACH
The value of the property is developed by estimating a properties ability to generate future
income and converting that into a present value

Potential Gross Income (PGI)

Less: Vacancy & Collection Loss
(V&C)
Effective Gross Income (EGI)

Less: Expenses

Reserves for Replacement

Net Operating Income (NOI)

Divided By: Capitalization Rate

Yields: Market Value

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 EQUITY (UNIFORMITY) ANALYSIS
1. Illinois, Wisconsin, Texas …
2. Assessor Priority?
3. Balance of Tax Burden
4. Property Owners

Components:
• Comparables
 Like kind
 Location
 Land
• Units of Comparison

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 ADVANTAGE RYAN!

• Know Your Opponent

• Superior Information

• Education
- English Comp 101
- LUST and the EPA

• Negotiation Methods:
-The Art and the Science

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