EXHIBIT (b)(3)
[Letterhead of PKF Consulting]
Via Facsimile (415) 599-9234
Hard Copy to Follow
April 29, 1997
AIRCOA Hotel Partners, LP
c/o Mr. Anthony C. Dimond
Miramar Asset Management, Inc.
617 Veterans Boulevard, Suite 212
Redwood City, CA 91063
Re: AIRCOA Hotel Partners, LP
Dear Mr. Dimond:
Pursuant to your authorization, we have performed an evaluation
of the potential impact on the market value of the following
seven lodging facilities assuming they were to be sold as a
portfolio, rather than individually.
Hotel Name Location
---------- --------
Clarion Four Winds Bloomington, IN
Regal McCormick Ranch Scottsdale, AZ
Sheraton Buffalo Airport Cheektowaga, NY
Sheraton Inn Lakeside Kissimmee, FL
Regal University Hotel Durham, NC
Aurora Inn Aurora, OH
Trout Club Chagrin Falls, OH
Our work program to develop our opinion of the potential impact
on value, if any, assuming the sale of these properties as a
group included reviewing Arthur Andersen's individual appraisal
of the market value of each hotel as of January 1, 1997 as well
interviews with representatives of the following types of
enterprises, all of which are currently involved in the
acquisition of portfolios of properties:
- National "Branded" hotel company;
- Real estate investment trust (REIT); and,
- Private investor/operator of hotels similar
to the AIRCOA portfolio.
Based on our discussions with representatives of the above
entities, coupled with our review of the Arthur Anderson
appraisals and our general knowledge of the hotel industry, we
are of the opinion that a typical "willing and knowledgeable
investor", would not pay a premium for over the sum of the
individual property values for this group of hotels. To warrant
such a premium, the portfolio must offer some type of synergistic
cost savings or revenue enhancement. Neither of these attributes
are identifiable with this group of properties.
It should be noted that while we have relied upon the Arthur
Anderson appraisal of each hotel for general background
information. We have not performed a review of these appraisals
and express no opinion as to the reasonableness of their value
conclusions.
To the best of our belief, this letter report conforms to the
requirements of the Code of Professional Ethics and Standards of
Professional Appraisal Practice of the Appraisal Institute and
the Uniform Standards of Professional Appraisal Practice (USPAP)
established by the Appraisal Foundation. This letter is subject
to the Certification and Statement of General Assumptions and
Limiting Conditions presented in the Addenda to this letter.
If you have any questions pertaining to the foregoing, or if we
can be of any further assistance, please don't hesitate to call.
Very truly yours,
/s/
Thomas E. Callahan, CPA, CRE, MAI
Executive Vice President
TEC/dld
2
ADDENDA
ADDENDUM A
CERTIFICATION OF THE CONSULTANT
CERTIFICATION OF THE CONSULTANT
I, Thomas E. Callahan, CPA, CREl MAI, certify that, to the best of
my knowledge and belief:
- - The statements of fact contained in this report are true
and correct.
- - The reported analyses, opinions and conclusions are limited
only by the reported assumptions and limiting conditions, and
are my personal, unbiased professional analyses, opinions, and
conclusions.
- - I have no present or prospective interest in the properties
that are the subject of this report, and I have no personal
interest or bias with respect to the parties involved.
- - My compensation is not contingent upon an action or event
resulting from the analyses, opinions, or conclusions in, or
the use of, this report.
- - My analyses, opinions, and conclusions were developed, and
this report has been prepared, in conformity with the Uniform
Standards of Professional "Appraisal Practice.
- - I have not made a personal inspection of the properties that
are the subject of this report.
- - No one provided significant professional assistance to the
person signing this report.
- - The reported analyses, opinions and conclusions were
developed, and this report has been prepared, in conformity
with the requirements of the Code of Professional Ethics and
the Standards of Professional Appraisal Practice of the
Appraisal Institute.
- - The use of this report is subject to the requirements of the
Appraisal Institute relating to review by its duly authorized
representatives.
- - Thomas E. Callahan, CPA, CRE, MAI, is a Certified General Real
Estate Appraiser in the State of California.
- - As of the date of this report, Thomas E. Callahan, CPA, CRE,
MAI, has completed the requirements of the continuing
education program of the Appraisal Institute.
Respectfully submitted,
/s/___________________________
Thomas E. Callahan, CPA, CRE, MAI
Executive Vice President
California Certified General Appraiser #AG9618
ADDENDUM B
STATEMENT OF ASSUMPTIONS AND LIMITING CONDITIONS
STATEMENT OF ASSUMPTIONS AND LIMITING CONDITIONS
Date of value - The conclusions and opinions expressed in this
report apply to the date of value set forth in the letter of
transmittal accompanying this report. The dollar amount of any
value opinion or conclusion rendered or expressed in this report
is based upon the purchasing power of the American dollar
existing in the date of value.
Economic and Social Trends - The appraiser assumes no
responsibility for economic, physical or demographic factors
which may affect or alter the opinions in this report. If said
economic, physical or demographic factors were not present at the
date of the letter of transmittal accompanying this report. The
appraiser is not obligated to predict future political, economic
or social trends.
Information Furnished by Others - In preparing the report, the
appraiser was required to rely on information furnished by other
individuals or found in previously existing records and/or
documents. Unless otherwise indicated, such information is
presumed to be reliable. However, no warranty, either express or
implied, is given by the appraiser for the accuracy of such
information and the appraiser assumes no responsibility for
information relied upon later found to have been inaccurate. The
appraiser reserves the right to make such adjustments to the
analyses, opinions and conclusions set forth in this report as
may be required by consideration of additional data or more
reliable data that may become available.
Title - No opinion as the title of the subject property is
rendered. Data related to ownership and legal description was
obtained from the attached title report records and is considered
reliable. Title is assumed to be marketable and free and clear of
all liens, encumbrances, easements and restrictions except those
specifically discussed in the report. The property is appraised
assuming it to be under responsible ownership and competent
management, and available for its highest and best use.
Hidden Conditions - The appraiser assumes no responsibility for
hidden or unapparent conditions of the property, subsoil, ground
water or structures that render the subject property more or less
valuable. No responsibility is assumed for arranging for
engineering, geologic or environmental studies that may be
required to discover such hidden or unapparent conditions.
Hazardous Materials - The appraiser has not been provided any
information regarding the presence of any material or substance
on or in any portion of the subject property or improvements
thereon, which material or substance possesses or may possess
toxic, hazardous and/or other harmful and/or dangerous
characteristics. Unless otherwise stated in the report, the
appraiser did not become aware of the presence of any such
material or substance during the appraiser's inspection of the
subject property. However, the appraiser is not qualified to
investigate or test for the presence of such materials or
substances. The presence of such materials or substances may
adversely affect the value of the subject property. The value
estimated in this report is predicted on the assumption that no
such material or substance is present on or in the subject
property or in such proximity thereto that it would cause a loss
in value. The appraiser assumes no responsibility for the
presence of any such substance or material on or in the subject
property, nor for any expertise or engineering knowledge required to
discover the presence of such substance or material. Unless
otherwise stated, this report assumes the subject property is in
compliance with all federal, state and local environmental laws,
regulations and rules.
Zoning and Land Use - Unless otherwise stated, the subject
property is appraised assuming it to be in full compliance with
all applicable zoning and land use regulations and restrictions.
Licenses and Permits - Unless otherwise stated, the property is
appraised assuming that all required licenses, permits,
certificates, consents or other legislative and/or administrative
authority from any local, state or national government or private
entity or organization have been or can be obtained or renewed
for any use on which the value estimate contained in this report
is based.
Engineering Survey - No engineering survey has been made by the
appraiser. Except as specifically state, data relative to size
and area of the subject property was taken from sources
considered reliable and no encroachment of the subject property
is considered to exist.
Subsurface Rights - No opinion is expressed as to the value of
subsurface oil, gas or mineral rights or whether the property is
subject to surface entity for the exploration or removal of such
materials, except as is expressly stated.
Maps, Plats and Exhibits - Maps, plats and exhibits included in
this report are for illustration only to serve as an aid in
visualizing matters discussed within the report. They should not
be considered as surveys or relied upon for any other purpose,
nor should they be removed from, reproduced or used apart from
the report.
Legal Matters - No opinion is intended to be expressed for
matters which require legal expertise or specialized
investigation or knowledge beyond that customarily employed by
real estate appraisers.
Allocation Between Land and Improvements - The distribution, if
any, of the total valuation in this report between land and
improvements applies only under the stated program of
utilization. The separate allocations for land improvements must
not be used in conjunction with any other appraisal and are
invalid if so used.
Right of Publication - Possession of this report, or a copy of
it, does not carry with it the right of publication. Without the
written consent of the appraiser, this report may not be used for
any purpose by any person other than the party to whom it is
addressed. In any event, this report may be used only with
properly written qualification and only in its entirety for its
stated purpose.
Testimony in Court - Testimony or attendance in court or at any
other hearing is not required by reason of rendering this
appraisal, unless such arrangements are made a reasonable time in
advance of said hearing. Further, unless otherwise indicated,
separate arrangements shall be made concerning compensation for
the appraiser's time to prepare for and attend any such hearing.
B-2
Structural Deficiencies - The appraiser has personally inspected
the subject property, and except as noted in this report, finds
no obvious evidence of structural deficiencies in any
improvements located on the subject property. However, the
appraiser assumes no responsibility for hidden defects or
non-conformity with specific governmental requirements, such as
fire, building and safety, earthquake or occupancy codes, unless
inspections by qualified independent professionals or
governmental agencies were provide to the appraiser. Further, the
appraiser is not a license engineer or architect and assumes no
responsibility for structural deficiencies not apparent to the
appraiser at the time of this inspection.
Termite/Pest Infestation - No termite or pest infestation report
was made available to the appraiser. It is assumed that here is
no significant termite or pest damage or infestation, unless
otherwise stated.
Income Data Provided by Third Party - Income and expense data
related to the property being appraised was provided by the
client and is assumed, but not warranted, to be accurate.
Asbestos - The appraiser is not aware of the existence of
asbestos in any improvements on the subject property. However,
the appraiser is not trained to discover the presence of asbestos
and assumes no responsibility should asbestos be found in or at
the subject property. For the purposes of this report, the
appraiser assumes the subject property is free of asbestos and
that the subject property meets all federal, state and local laws
regarding asbestos abatement.
Archeological Significance - No investigation has been made by
the appraiser and no information has been provided to the
appraiser regarding potential archeological significance of the
subject property or any portion thereof. This report assumes no
portion of the subject property has archeological significance.
Compliance with the Americans with Disabilities Act - The
Americans with Disabilities Act ("ADA") became effective January
26, 1992. We have not made a specific compliance survey and
analysis of this property to determine whether or not it is in
conformity with the various detailed requirements of the ADA. It
is possible that a compliance survey of the property, together
with a detailed analysis of the requirements of the ADA could
reveal that the property is not in compliance with one or more of
the requirements of the Act. If so, this fact could have a
negative effect upon the value of the property. Since we have no
direct evidence relating to this issue, we did not consider
possible non-compliance with the requirements of ADA in
estimating the value of the property.
Definitions and Assumptions - The definitions and assumptions
upon which our analyses, opinions and conclusions are based are
set forth in appropriate sections of this report and are to be
part of these general assumptions as if included here in their
entirety.
Utilization of the Land and/or Improvements - It is assumed that
the utilization of the land and/or improvements is within the
boundaries or property described herein and that there is no
encroachment or trespass.
B-3
Encroachments - It is assumed that the utilization of the land
and/or improvements is within the boundaries or property
described herein and that there is no encroachment or trespass.
Dissemination of Material - Use and disclosure of the contents of
this reports is governed by the bylaws and regulations of the
Appraisal Institute. Neither all or any pat of the contents of
this report (especially the conclusions as to value, the identity
of the appraiser or the firm with which they are connected, or
any reference to the Appraisal Institute or to the MAI or RM
designations) shall be disseminated to the general public through
advertising or sales media, public relations media, new media or
other public means of communication without the prior written
consent and approval of the appraiser(s).
Distribution and Liability to Third Parties - The party of whom
this appraisal report was prepared may distribute copies of this
appraisal report only in its entirety to such third parties as
may be selected by the party selected by the party for whom this
appraisal report was prepared; however, portions of this
appraisal report shall not be given to third parties without our
written consent. Liability to third parties will not be accepted.
Use in Offering Materials - This appraisal report, including all
cash flow forecasts, market surveys and related data,
conclusions, exhibits and supporting documentation may not be
reproduced or references made to the report or to PKF Consulting
in any sale offering, prospectus, public or private placement
memorandum, proxy statement or other document ("Offering
Material") in connection with a merger, liquidation or other
corporate transaction unless PKF "Consulting has approve din
writing the text of any such reference or reproduction prior to
the distribution and filing thereof.
Limits to Liability - PKF Consulting cannot be held liable in any
cause of action resulting in litigation for any dollar amount
which exceeds the total fees collected from this individual
engagement.
Legal Expenses - Any legal expenses incurred in defending or
representing ourselves concerning this assignment will be the
responsibility of AIRCOA Hotel Partners, LP.
B-4