Fiduciary DeclarationFiduciary duty runs exclusively to the lender and agency — not to the borrower. Determinations are independent and never revised under commercial pressure. Non-negotiable since 1998. · International assignments accepted on a case-by-case basis — experience is global.
Program Experience
Highest and Best Use (HBU) Studies
Our Highest and Best Use (HBU) studies provide developers, investors, and lenders with rigorous analysis to determine the most legally permissible, physically possible, financially feasible, and maximally productive use of real estate assets.
Wert-Berater, Inc. completed an independent Highest and Best Use Study for two contiguous parcels totaling approximately 1.89 acres on a suburban commercial corridor in Mundelein, Lake County, Illinois. Applying Appraisal Institute four-test methodology, the study concluded that small-format commercial redevelopment emphasizing restaurant and small-shop retail uses represents the highest and best use of the combined assemblage, supported by an 8.0 percent stabilized yield on cost and a 17.7 percent ten-year equity IRR. A hybrid concept preserving a wedding and event venue component was also tested at the client's request and ranked fourth among ten alternatives examined.
Repositioning analysis of a vacant 17-story, 184,960-square-foot tower in Durham, North Carolina — a full highest and best use study built around ten redevelopment scenarios spanning market-rate apartments, condominium sell-out, medical and life-sciences conversion, mixed-use, upper-upscale hotel, senior living, demolition with land resale, and continuation as Class A office. Each scenario was modeled through discounted cash flow with IRR, MIRR, XIRR, DSCR, ROE, and residual land value calculations, then ranked on capitalized value, land residual, debt capacity, and risk.
What the Project Included
The comparative grid put hard numbers against every path: market-rate apartments at $95,000,000 total project cost producing $121,000,000 of capitalized value and a 13.90 percent IRR; condominium sell-out at a 14.10 percent IRR; an upper-upscale hotel generating the highest revenue but carrying $110,000,000 of cost; demolition and land resale at $22,000,000; and Class A office conversion at a negative ten percent IRR — the decisive evidence that continuation in office use is not the highest and best use in today’s leasing market.
Capital Structure
Each scenario was capitalized at approximately 65 percent loan-to-cost debt with the balance — 35 percent of total project cost — as sponsor equity, with hard costs, soft costs, sales and lease-up costs, and entrepreneurial profit expectations carried separately so that the residual land value under each program could be compared on a consistent basis.
Feasibility Study Challenges
The analytical problem was discipline against wishful thinking: a highly visible tower invites every reuse idea, and the study’s job was to eliminate most of them. Heavy commercial allocations and all-large-unit residential mixes drove land residuals to breakeven or below; the hotel scenario carried the largest absolute cost and flag-related lease-up expense; and the office-continuation case, far from supporting any land value, produced a negative residual in the prevailing leasing market. The concluded apartment-anchored program won on the combination of land residual, financeability, and risk diversification rather than on any single headline figure.
A consulting engagement commissioned in March 2026 to determine the highest and best use of a commercial parcel on East Colorado Boulevard in Pasadena. Four candidate development scenarios were modeled in full and ranked under the Appraisal Institute four-test sequential framework. The study is a consulting work product prepared under that framework; it is not an appraisal and renders no opinion of value.
Analytical Approach
Each scenario carried its own development budget, absorption schedule, financing structure, and return stack, with the concluded program differentiated on levered internal rate of return, equity multiple, and profit margin rather than on gross value alone. Conclusions were benchmarked against recent land sales in the corridor so that the residual implied by the concluded use is observable in the local market rather than purely model-derived.
Why It Matters to a Lender
A highest and best use determination of this kind gives a construction or bridge lender an independent, scenario-tested basis for the use assumption embedded in any subsequent appraisal — the analysis demonstrates not only that the concluded program is feasible, but that the competing programs are inferior and by how much.
Underwriting Perspective
The differentiation between scenarios was driven by structural factors — density achievable under the corridor zoning, parking ratios, and the cost-to-revenue relationship of each program — rather than by aggressive rent or pricing assumptions, which were held to market evidence across all four models.
A highest and best use study of a commercial corridor parcel in Chino, California, evaluated under the four required tests of legal permissibility, physical possibility, financial feasibility, and maximal productivity. The candidate uses screened included retail-only development, mixed-use development, a gasoline station with ground-lease pad, and an express tunnel car wash with ground-lease pad, in both branded and unbranded configurations.
Residual Analysis
A land residual indications grid was constructed for each feasible use, deriving stabilized net operating income, applying market capitalization rates, and netting total development cost to an implied land residual. Retail-only development produced a comparatively low residual; mixed-use development at approximately $38 million of cost did not support land value at current cost and rent levels; the gasoline alternative performed strongly but carries environmental and fuel-margin volatility; and the branded car wash plus pad configuration produced the highest residual of the set.
Concluded Use
The branded express tunnel car wash integrated with a national drive-through ground-lease pad demonstrated strong capital efficiency, balanced active and passive income, a manageable stabilization timeline, and favorable financing capacity — the configuration that generates the most value relative to cost among the tested programs. A corridor car wash saturation analysis was performed to confirm depth of unmet demand before the use was concluded.
Feasibility Study Challenges
The discipline of the engagement lay in keeping the screening honest: each alternative was carried through the full four-test sequence rather than eliminated early, so that the conclusion rests on a complete comparative record — including the finding that a financially feasible use (the gas station alternative) is nonetheless not maximally productive once environmental exposure and margin volatility are priced.
Highest and best use analysis of an 8.343-acre, 363,429-square-foot commercial assemblage fronting N State Road 19 in Eustis, Lake County — a site whose developable footprint is defined by its constraints: 6.054 upland acres suitable for development, two wetland areas totaling approximately 2.3 acres (1.869 and 0.420 acres), and a portion lying within FEMA Flood Zone AE, producing a net buildable envelope estimated at 4.5 to 4.8 acres, or roughly 195,000 square feet after parking and stormwater requirements.
What the Project Included
Each candidate use — medical office, flex space, bank branch, self-storage, urgent care, grocery, and combinations — was run through discounted cash flow modeling with residual land value calculation, terminal value discounting, entrepreneurial profit expectations, and submarket rent evidence averaging approximately $24.70 per square foot. Medical office and flex space emerged as the strongest single uses, bank branches as stabilizers, storage and urgent care as feasible but lower-productivity, and grocery as unsupportable on residual land value as a primary format.
Capital Structure
Twenty single-use scenarios were costed in the feasibility ranking table at total costs of $5,550,000 to $7,550,000 — the highest and best use emerging not from any one of them but from the phased mixed program: Phase 1 delivers the flex space and bank pad for early income and equity recycling at roughly 65% loan-to-cost with a 1.30x DSCR sizing constraint, and Phase 2 delivers the medical office once tenants are secured. Each scenario carried site acquisition, preparation, hard and soft costs, and a twelve percent entrepreneurial profit, so the residual land values compare on a consistent, financeable basis.
Feasibility Study Challenges
Constrained-site HBU work is subtraction before addition: wetlands and the Zone AE floodplain had to be carved out and stormwater compliance engineered before any program could be sized, and only a subset of uses that achieve positive residual land value also produce returns above market expectations — the study’s ranking framework was built to find that intersection. The conclusion is a defensible, supported program identification rather than a single-use bet.
Highest and best use study of three parcels in downtown Mountain Home held under common ownership — two fronting N Main Street and one fronting N 2nd East — determining, parcel by parcel, the uses that are legally permissible, physically possible, financially feasible, and maximally productive, both individually and for the ownership viewed as a coordinated but not unified holding. The report explicitly rejects the convenient assumption that proximate parcels on a sketch constitute a seamless development tract.
What the Project Included
The analytical framework treated the public alley system as a real boundary, which reorganized the entire conclusion: the western parcels form the Main Street–oriented retail component while the N 2nd East parcel stands alone with its own use determination, each evaluated on frontage role, parcel geometry, likely tenancy, downtown rent creation, and traffic pattern including the one-way access logic. Scenario testing included a build-ready commercial pad for long-term ground lease against build-to-suit alternatives, compared on land residual, financeability, and equity return under the user’s requested financing assumptions.
Capital Structure
Screening feasibility tables priced every concept per parcel — total project costs from $1,300,000 to $3,100,000 for vertical programs, sized against a 1.30x DSCR maximum loan, equity required, value at an 8% capitalization rate, and land residual — under the ownership’s requested financing assumptions of prime plus a margin. 470 N Main Street, at 14,985 square feet the largest parcel and the strongest long-term vertical opportunity, was concluded as the primary future redevelopment parcel while failing the immediate financial feasibility test for speculative development. The city’s development-incentive ordinance, requiring minimum qualifying investment of not less than $500,000, was factored as a threshold condition rather than a direct abatement.
Feasibility Study Challenges
The hardest part of small-market downtown HBU work is resisting overstatement: a ground-lease benchmark can flatter a parcel’s value while leaving the residual only marginally positive, and the study said so plainly, concluding where the ownership would leave value on the table through fragmented disposition versus coordinated development. The conclusion strengthens downtown identity goals while remaining anchored to what actual market conditions and actual parcel geometry support.
Highest-and-best-use study for a development site in Rotonda West, evaluating assisted-living, multifamily-housing, and retail alternatives. The work considers zoning, market conditions, and financial feasibility; it is not a market-value appraisal.
Highest-and-best-use analysis of an improved commercial parcel in Irvine. The study evaluates legal permissibility, physical possibility, financial feasibility, and maximum productivity across office, medical-office, commercial, and residential alternatives.
Highest-and-best-use and feasibility analysis for a commercial development site in Winter Garden. The study evaluates legally permissible, physically possible, financially feasible, and maximally productive alternatives across hospitality, residential, retail, and office scenarios.
Legal disclosure. Wert-Berater, Inc. offices are mailing addresses only. Following the COVID-19 pandemic the firm has elected to work remotely; its office locations receive mail and are not staffed for visitors or in-person meetings. Headquarters mailing address: 1968 South Coast Hwy, Ste 2382, Laguna Beach, CA 92651.
Wert-Berater, Inc. is an independent provider of feasibility studies and other related services. The firm does not provide financing or equity investment advice, and does not arrange, broker, or place debt or equity capital of any kind.
All appraisal assignments are performed by Bruce E. Jones, MAI, ASA-GC, BCA, CMEA, a member of the Appraisal Institute since 2006, a staff member of Wert-Berater, Inc. and owner of Special Purpose Realty Valuation.
