This client is a 100+ year old property management business that acquires properties out of bankruptcy and rarely sells. It generally buys properties for 20-25 cents on the dollar compared to current replacement costs.
Due to the age of the building, mid 1970s, an RCN, replacement cost new value, had to be established for this property in order to determine the available value for the study. Because this business purchases at such a high discount from the replacement cost, the savings must be adjusted to match their total spend. Property owners are only able to receive benefit based on the actual purchase cost. For this site, this meant the value of the study was 20% of the RCN value. Had the business purchased this site at the current market value, savings would have approximated $300,000.
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