Commercial owner occupier appraisal

[Bharath Raj]

My medical practice (PLLC) is a tenant in a multitenant bldg that' in my holding company. I am looking to refinance it. The bank gave me great terms as a owner occupier, but required an appraisal. The appraiser' report just came in. He makes a "extraordinary assumption" in the beginning of the appraisal, which says that this is less than arm' length since my holding company leases it to my practice. He then proceeds to assume that the owner occupier portion is vacant, puts in high TI dollars, additional vacancy factor, to then compress my NOI, & hence the final valuation. To make matters worse, he counts this hypothetical TI against my NOI (TI is paid only once during the duration of the whole lease) & calculates the new number as the true NOI. This still meets the amount which I was planning to pull out of the building, however, it may restrict me from pulling out any more cash in the next year. The bank had said that the appraisal would be good for a whole year. My assumption going in was that the building would be valued the same, whether owner occupier or not. I did not know that they won't even factor in my lease. Any thoughts?

[Cason Acor]

I think first steps would be to dispute the appraisal, on the grounds that you just shared with us. The bank should order a new appraisal from a different appraiser.