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BUSINESS NEWS HARLEY ELLIS DEVEREAUX CELEBRATES COMPLETION OF CIRCA RESIDENCES IN LOS ANGELES Harley Ellis Devereaux , a national architecture and engineering firm, is pleased to announce the substantial completion of the CIRCA residential towers in Los Angeles’ LA Live district. Totaling 2 million square feet on 2.7 acres at 12th Street between Figueroa and Flower, Circa includes 648 luxury rental units in two 35-story towers set on a 100-foot podium, along with 48,000 square feet of prime, ground-level retail and 2,000 parking spaces. The podium houses a two-acre amenity deck and 18,000 square feet of visually exciting LED displays along Figueroa Street to achieve an urban synergy of entertainment and residential activity that rivals New York City’s Times Square. In addition to the LED displays, there is a 12,500-square-foot static display facing Flower Street and at the crown of the towers. HED, working for a client partnership led by the Hankey Investment Company, Jamison Services, Inc. and Falcon California Investments, was responsible for the complete architectural and urban design of the project. In addition, for the shared amenity spaces HED also handled the interior design and FF&E. “The initial client goal focused on maximizing

the property’s leasable square footage, and since the northern edge was an ‘S-curved’ street, we chose a foundational curve concept for the project in response to this goal,” said Daniel Benjamin, HED’s principal leader on the project. “This curvilinear structure established a design concept for the project that was also well-aligned with the neighboring Staples Center, and of course it also makes for expansive view opportunities for the tenant, some with 180-degree fields of view.” Anchored by STAPLES Center, LA Live and the Los Angeles Convention Center, the development achieves an urban synergy of entertainment and residential activity. The project also represents the first residential option within the boundaries of the official LA Live District, an important milestone in the success of the 10-year-old development plan. “CIRCA has redefined what it means to play, work and live in the South Park area,” said Scott Dobbins, president of Hankey Investment Company, one of four investment entities that own 1200 Circa LLC. “The circular design sets it apart from any other structure. From the circular pool to the curves in the twin towers, which maximize the view corridors for each residential unit, this complex will provide a lifestyle that is unparalleled in the downtown Los Angeles area.”

Circa’s 648 rental units were created with luxury and European high-end finishes. The residential units begin above the 100-foot high amenity deck on the eighth floor, rising to three penthouse levels, topping out at 400 feet on the 35th floor. Units range from 600 to 4,000 square feet in the penthouses, with rents expected to range from $3,000 per month to $24,000 per month. HansonLA served as the interior architectural firm. An expansive amenity level, atop the eight- story podium, features a resort pool, a 75- foot lap pool, private cabanas, outdoor fire pits, spas, a clubhouse, two indoor-outdoor bar spaces, dog parks, a business center, an outdoor yoga and Pilates area, and more. All outdoor amenity spaces were designed in collaboration with LRM Landscape Architecture. Founded in 1908, HED seeks creative solutions that have a positive impact for its clients, the community, and the world. HED has earned a reputation for excellence in all facets of architecture, including design, consulting, engineering and planning services. The firm serves clients in a broad range of market sectors including workplace, housing, mixed use, science and technology, healthcare, higher education and pre-K-12 and community education from offices in six U.S. locations.

TRACEY EAVES, from page 9

contrasted by a small market existing for closely-held shares that are economically impaired due to the lack of access to an active market for those shares. Empirical evidence exists in studies of discounts on sales of restricted shares of pub- licly traded companies and discounts on sales of closely-held shares compared to prices of subsequent IPO offerings of the same company’s shares. In all, the studies result in a range of discounts from about 10 percent to more than 35 percent. As with the DLOC, multiple factors can have an impact on the appropriate discount for a subject interest. Factors include transfer rights, dividends or the lack thereof, the prospect of selling the firm, the existence of a market for the block of shares being valued, put rights, the existence of a buy-sell agreement, stability of earnings, etc. “Every decision made within a firm, from financial to corporate governance, will have an implication on a final value conclusion.” There are multiple considerations to be made when valuing a privately-held company and the assessment of the many moving parts. What shareholders should take away from this brief discussion is that every decision made within a firm, from financial to corporate governance, will have an implication on a final value conclusion. TRACEY EAVES, MBA, CBA, CVA, BCA, CMEA is a member of the valuation consulting team at Zweig Group. She has been valuing privately held company interests for more than 18 years. Contact Tracey at teaves@zweiggroup.com or directly at 505.258.8821.

❚ ❚ Market approach. The transaction data used in a market ap- proach methodology will have a direct correlation to the level of value produced. In a majority of our engagements, we use privately-held company transaction data, which is representa- tive of a control interest. With a brief review of the approaches and the levels of value produced, let’s get to the discounts: ❚ ❚ Discount for lack of control. A discount for a minority in- terest is taken from a control level value indication to account for the lack of control associated with a minority shareholder. Studies suggest the size of the minority interest discount are based upon control premium studies, resulting in average implied discounts of about 23 percent in today’s environ- ment. To properly develop an appropriate discount for a subject interest, an appraiser should consider several factors that could increase or decrease the discount. Factors include non-voting interests, extreme lack of consideration of minor- ity shareholders, an interest insufficient to stop corporate action or elect a director, the existence of put rights and the presence of enough minority owners sufficient to block cer- tain actions or have meaningful input on elections of direc- tors. ❚ ❚ Discount for lack of marketability. A discount for a lack of marketability is meant to account for the lack of liquid- ity (or marketability) of stock that is not traded on a public exchange. A market of readily willing buyers and sellers exists for publicly traded stocks, the market is able to consummate transactions in a short period of time and proceeds are usu- ally available within a few business days. The public market is

THE ZWEIG LETTER December 31, 2018, ISSUE 1277

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