Case Study: Sand Mine
Determining the best use of a complex Westhampton site.
The Challenge
SVS was hired by a lender to appraise the value of a 115-acre Westhampton property that was to be purchased by a real estate developer. At the time, a portion of the property was being used as a sand mine, and the site was also encumbered by complicated zoning requirements–certain parts were situated within a designated Residential Receiving Area District (RRAD), while others fell within the core preservation area of the Central Pine Barrens Plan.
The Process
Through extensive research and examination, SVS was able to determine the fair value of the site. We also advised the lender regarding the most profitable use of the property. Our analysis incorporated a discounted cash flow model which included both the income stream generated by the ongoing mining operation as well as the subsequent sale of individual building lots.
The Result
Based on our valuation, which included an extensive Highest and Best Use analysis, the lender was able to assess the risk associated with the requested loan. The real estate developer has since begun development plans for the site, subdividing a portion for single family homes and landscaping the rest of the property with man-made lakes and trails. Based on our analysis, the developer was also able to obtain transferable development rights, or Pine Barrens Credits, to recapture some lost value of the site.
