In July 2020, our company received an administrative case with a court ruling to value the building of a multifunctional office and hotel complex at the address: Moscow, Samarskaya str., 1. The complex consists of the Radisson Blu Olimpiyskiy Hotel and the Novion business center, the total area of the facility is about 70 thousand square meters.m. The cost must be determined as of 01.01.2019.
The multifunctional complex under study opened its doors in October 2018, just 2 months before the cost determination date. The Radisson Blu Olympic Hotel, managed by the international hotel operator Radisson Hotel Group (formerly "Residor Rush A/S"), by the time of opening, had been classified as objects of the tourism industry with the assignment of a 5-star category (Upper Upscale segment). The Avion business Center belongs to Class A in terms of its characteristics, and at the time of opening it was leasing offices in shell & core condition (for finishing). At the time of the study, in the summer of 2020, all offices were leased to large international and Russian companies, only the premises for a restaurant and spa remained vacant (and even then, there are already applications for these premises, and they were being prepared for transfer to tenants).
The case of challenging the cadastral value has been conducted since September 2019. The administrative defendants did not agree with the results of the initial examination. According to the Department of Urban Property of the City of Moscow, the expert made a number of mistakes that led to an underestimation of the market value of the object. In the initial examination, as pointed out by the Department of Urban Property of the City of Moscow, really important factors were not taken into account. The valuation of the hotel was carried out methodologically correctly by the expert, however, the expert unreasonably did not take into account 60% of the room stock, which led to a significant distortion of the total cost of the entire complex. At the same time, the value of the capital construction facility received by him amounted to 6.85 billion rubles, which is as comparable as possible with the stated claims.
At the request of the Department of Urban Property of the City of Moscow, a second forensic examination was ordered, which the court assigned to Walrus experts.
After reviewing the case materials, the expert came to the conclusion that it was necessary to request additional documents both on the operating activities of the hotel and on the rental income of the business center. To track the actual moment when rental income began to be received, the amount of rental rates, the dynamics of hotel occupancy and income, etc., data was needed not only for the period preceding the date of determining the cost, but also for subsequent years
In response to the expert's request, the plaintiff submitted documents to the court, but after they were attached and studied, it became clear that, firstly, some of the data was presented in a format that made it extremely difficult to work with them, and the plaintiff actually refused to provide data after the valuation date.
After digitizing the presented information, which was used as the starting point of the valuation model, the forecast for subsequent periods is based on average market indicators for similar real estate. At the same time, according to all the main indicators, the expert was based on a conservative script, based on the principle of prudence and not overstating the obligations of the taxpayer.
The resulting market value of the capital construction facility amounted to 7.6 billion rubles (with a cadastral value of 7.7 billion rubles). This result has now left the plaintiff dissatisfied, on whose side a number of objections to the expert's opinion were submitted. The plaintiff tried to object both on methodological issues (for example, that different methodologies were supposedly unreasonably applied to the office and hotel parts of the building, as well as that the expert applied a method not named in Federal Security Service No. 7 - the capitalization method according to the general rate of return), and to find contradictions and calculation errors in the study. The expert gave convincing answers to all questions.
In a number of remarks, the plaintiff tried to point out the alleged inconsistency of the assumptions made by the expert with market conditions or the actual condition of the object. In addition to responding to specific objections, the expert's written explanations indicated that the expert had requested factual data. Data after the valuation date can be used to confirm confirmation of trends, and providing this information could reduce the number of assumptions in determining value. However, they were not provided knowingly by the plaintiff. And if the administrative plaintiff insists that it is necessary to implement a profitable approach taking into account the actually achieved indicators of the business center and the hotel in 2019-2020 (however, without taking into account the impact of the pandemic as force majeure, which could not have been foreseen at the date of determining the cost), then such a study can be performed as part of an additional forensic examination with by assigning the costs of its implementation to the administrative plaintiff, since it is his refusal to provide relevant information and unfair procedural behavior that will be the reason for conducting this study.
After reviewing the Expert's comments, the court decided to establish the cadastral value of the real estate object in the amount of the market value based on the results of the expertise of Kartsev's Consulting Company VALRUS.
Excerpt from the reasoning part of the decision in the case:
The administrative plaintiff disagreed with the conclusion of the re-examination, provided comments on the conclusion of the re-examination and filed a petition for another re-evaluation of the forensic examination in the case. However, after providing written answers from the expert, the representative of the administrative plaintiff refused the request to appoint a second forensic examination in the case.