FOUR WINDS APARTMENTS
8000 PERRY ROAD
OVERLAND PARK, KANSAS
MARKET VALUE -
FEE SIMPLE ESTATE
AS OF MAY 8, 2003
PREPARED FOR:
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(AIMCO)
C/O LINER YANKELEVITZ SUNSHINE & REGENSTREIF LLP
&
LIEFF CABRASER HEIMANN & BERNSTEIN
ON BEHALF OF NUANES, ET. AL.
[AMERICAN APPRAISAL ASSOCIATES(R) LOGO]
[AMERICAN APPRAISAL ASSOCIATES(R) LOGO]
[AMERICAN APPRAISAL ASSOCIATES(R) LETTERHEAD]
JULY 9, 2003
Apartment Investment and Management
Company ("AIMCO") c/o
Mr. Steven A. Velkei, Esq.
Liner Yankelevitz Sunshine & Regenstreif LLP
1100 Glendon Avenue, 14th Floor
Los Angeles, California 90024-3503
Nuanes, et al.( "Plaintiffs ") c/o
Ms. Joy Kruse
Lieff Cabraser Heimann & Bernstein
Embarcadero Center West
275 Battery Street, 30th Floor
San Francisco, California 94111
RE: FOUR WINDS APARTMENTS
8000 PERRY ROAD
OVERLAND PARK, JOHNSON COUNTY, KANSAS
In accordance with your authorization, we have completed the appraisal of the
above-referenced property. This complete appraisal is intended to report our
analysis and conclusions in a summary format.
The subject property consists of an apartment project having 350 units with a
total of 312,094 square feet of rentable area. The improvements were built in
1986. The improvements are situated on 24.4711 acres. Overall, the improvements
are in average condition. As of the date of this appraisal, the subject property
is 92% occupied.
It is our understanding the appraisal will be used by the clients to assist the
San Mateo Superior Court in the settlement of litigation between the above
mentioned clients. The appraisal is intended to conform to the Uniform Standards
of Professional Appraisal Practice ("USPAP") as promulgated by the Appraisal
Standards Board of the Appraisal Foundation and the Code of Professional Ethics
and Standards of Professional Practice of the Appraisal Institute. The appraisal
is presented in a summary report, and the Departure Provision of USPAP has not
been invoked in this appraisal. It is entirely inappropriate to use this value
conclusion or the report for any purpose other than the one stated.
AMERICAN APPRAISAL ASSOCIATES, INC. LETTER OF TRANSMITTAL PAGE 2
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
The opinions expressed in this appraisal cover letter can only be completely
understood by reading the narrative report, addenda, and other data, which is
attached. The appraisal is subject to the attached general assumptions and
limiting conditions and general service conditions.
As a result of our investigation, it is our opinion that the fee simple market
value of the subject, effective May 8, 2003 is:
($16,500,000)
Respectfully submitted,
AMERICAN APPRAISAL ASSOCIATES, INC.
-s- Frank Fehribach
July 9, 2003 Frank Fehribach, MAI
#053272 Managing Principal, Real Estate Group
Texas State Certified General Real Estate Appraiser
#TX-1323954-G
Report By:
Kim Cook
AMERICAN APPRAISAL ASSOCIATES, INC. TABLE OF CONTENTS PAGE 3
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
TABLE OF CONTENTS
Cover
Letter of Transmittal
Table of Contents
APPRAISAL DATA
Executive Summary ........................................................ 4
Introduction ............................................................. 9
Area Analysis ............................................................ 11
Market Analysis .......................................................... 14
Site Analysis ............................................................ 16
Improvement Analysis ..................................................... 16
Highest and Best Use ..................................................... 17
VALUATION
Valuation Procedure ...................................................... 18
Sales Comparison Approach ................................................ 20
Income Capitalization Approach ........................................... 26
Reconciliation and Conclusion ............................................ 38
ADDENDA
Exhibit A - Photographs of Subject Property
Exhibit B - Summary of Rent Comparables and Photograph of Comparables
Exhibit C - Assumptions and Limiting Conditions
Exhibit D - Certificate of Appraiser
Exhibit E - Qualifications
General Service Conditions
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 4
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
EXECUTIVE SUMMARY
PART ONE - PROPERTY DESCRIPTION
PROPERTY NAME: Four Winds Apartments
LOCATION: 8000 Perry Road
Overland Park, Kansas
INTENDED USE OF ASSIGNMENT: Court Settlement
PURPOSE OF APPRAISAL: "As Is" Market Value of the Fee Simple Estate
INTEREST APPRAISED: Fee simple estate
DATE OF VALUE: May 8, 2003
DATE OF REPORT: July 9, 2003
PHYSICAL DESCRIPTION - SITE & IMPROVEMENTS:
SITE:
Size: 24.4711 acres, or 1,065,961 square feet
Assessor Parcel No.: NP21100000 0002; (Assessed Value)
Floodplain: Community Panel No. 2001740202F (June 17, 2002)
Flood Zone X, an area outside the floodplain.
Zoning: RP-3 (Residential Planned Development District)
BUILDING:
No. of Units: 350 Units
Total NRA: 312,094 Square Feet
Average Unit Size: 892 Square Feet
Apartment Density: 14.3 units per acre
Year Built: 1986
UNIT MIX AND MARKET RENT:
GROSS RENTAL INCOME PROJECTION
- --------------------------------------------------------------
Square Market Rent Monthly Annual
Unit Type Feet Per Unit Per SF Income Income
- --------------------------------------------------------------
1Br/1Ba - 1A10 720 $590 $0.82 $ 24,780 $ 297,360
1Br/1Ba - 1B10 740 $560 $0.76 $ 11,200 $ 134,400
1Br/1Ba - 1C10 760 $600 $0.79 $ 56,400 $ 676,800
1Br/1Ba - 1D10 792 $600 $0.76 $ 3,600 $ 43,200
1Br/1Ba - 1E10 800 $699 $0.87 $ 15,378 $ 184,536
2Br/1Ba - 2A10 969 $700 $0.72 $ 49,000 $ 588,000
-------- ----------
Total $233,358 $2,800,296
============================
OCCUPANCY: 92%
ECONOMIC LIFE: 45 Years
EFFECTIVE AGE: 17 Years
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 5
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
REMAINING ECONOMIC LIFE: 28 Years
SUBJECT PHOTOGRAPHS AND LOCATION MAP:
SUBJECT PHOTOGRAPHS
[ENTRANCE TO SUBJECT AND VIEW OF 81ST STREET FACING EAST PICTURE] [EXTERIOR - TYPICAL THREE-STORY BUILDING PICTURE]
AREA MAP
[AREA MAP]
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 6
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
NEIGHBORHOOD MAP
[MAP]
HIGHEST AND BEST USE:
As Vacant: Hold for future multi-family development
As Improved: Continuation as its current use
METHOD OF VALUATION: In this instance, the Sales Comparison and
Income Approaches to value were utilized.
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 7
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
PART TWO - ECONOMIC INDICATORS
INCOME CAPITALIZATION APPROACH
DIRECT CAPITALIZATION Amount $/Unit
Potential Rental Income $ 2,800,296 $8,001
Effective Gross Income $ 2,786,271 $7,961
Operating Expenses $ 1,206,814 $3,448 43.3% of EGI
Net Operating Income: $ 1,491,957 $4,263
Capitalization Rate 9.00%
DIRECT CAPITALIZATION VALUE $16,500,000 * $47,143 / UNIT
DISCOUNTED CASH FLOW ANALYSIS:
Holding Period 10 years
2002 Economic Vacancy 9%
Stabilized Vacancy & Collection Loss: 8.5%
Lease-up / Stabilization Period N/A
Terminal Capitalization Rate 10.00%
Discount Rate 11.00%
Selling Costs 2.00%
Growth Rates:
Income 2.50%
Expenses: 2.50%
DISCOUNTED CASH FLOW VALUE $16,500,000 * $47,143 / UNIT
RECONCILED INCOME CAPITALIZATION VALUE $16,500,000 $47,143 / UNIT
SALES COMPARISON APPROACH
PRICE PER UNIT:
Range of Sales $/Unit (Unadjusted) $51,121 to $69,324
Range of Sales $/Unit (Adjusted) $44,855 to $50,468
VALUE INDICATION - PRICE PER UNIT $16,600,000 * $47,429 / UNIT
EGIM ANALYSIS
Range of EGIMs from Improved Sales 6.49 to 7.33
Selected EGIM for Subject 6.00
Subject's Projected EGI $ 2,786,271
EGIM ANALYSIS CONCLUSION $16,600,000 * $47,429 / UNIT
NOI PER UNIT ANALYSIS CONCLUSION $16,600,000 * $47,429 / UNIT
RECONCILED SALES COMPARISON VALUE $16,600,000 $47,429 / UNIT
* Value indications are after adjustments for concessions, deferred maintenance,
excess land and lease-up costs, if any.
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 8
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
PART THREE - SUMMARY OF VALUE CONCLUSIONS
SALES COMPARISON APPROACH:
Price Per Unit $16,600,000
NOI Per Unit $16,600,000
EGIM Multiplier $16,600,000
INDICATED VALUE BY SALES COMPARISON $16,600,000 $47,429 / UNIT
INCOME APPROACH:
Direct Capitalization Method: $16,500,000
Discounted Cash Flow Method: $16,500,000
INDICATED VALUE BY THE INCOME APPROACH $16,500,000 $47,143 / UNIT
RECONCILED OVERALL VALUE CONCLUSION: $16,500,000 $47,143 / UNIT
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 9
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
INTRODUCTION
IDENTIFICATION OF THE SUBJECT
The subject property is located at 8000 Perry Road, Overland Park, Johnson
County, Kansas. Overland Park identifies it as NP21100000 0002.
SCOPE OF THE ASSIGNMENT
The property, neighborhood, and comparables were inspected by Kim Cook on May 8,
2003. Frank Fehribach, MAI has not made a personal inspection of the subject
property. Kim Cook performed the research, valuation analysis and wrote the
report. Frank Fehribach, MAI reviewed the report and concurs with the value.
Frank Fehribach, MAI and Kim Cook have extensive experience in appraising
similar properties and meet the USPAP competency provision.
The scope of this investigation comprises the inspection of the property and the
collection, verification, and analysis of general and specific data pertinent to
the subject property. We have researched current improved sales and leases of
similar properties, analyzing them as to their comparability, and adjusting them
accordingly. We completed the Sales Comparison and Income Capitalization
Approaches to value. From these approaches to value, a concluded overall value
was made.
DATE OF VALUE AND REPORT
This appraisal was made to express the opinion of value as of May 8, 2003. The
date of the report is July 9, 2003.
PURPOSE AND USE OF APPRAISAL
The purpose of the appraisal is to estimate the market value of the fee simple
interest in the subject property. It is understood that the appraisal is
intended to assist the clients in litigation settlement proceedings. The
appraisal was not based on a requested minimum valuation, a specific valuation,
or the approval of a loan.
PROPERTY RIGHTS APPRAISED
We have appraised the Fee Simple Estate in the subject property (as applied in
the Sales & Income Approaches), subject to the existing short-term leases. A Fee
Simple Estate is
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 10
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
defined in The Dictionary of Real Estate Appraisal, 3rd ed. (Chicago: Appraisal
Institute, 1993), as:
"Absolute ownership unencumbered by any other interest or estate,
subject only to the limitations imposed by the governmental powers of
taxation, eminent domain, police power, and escheat."
MARKETING/EXPOSURE PERIOD
MARKETING PERIOD: 6 to 12 months
EXPOSURE PERIOD: 6 to 12 months
HISTORY OF THE PROPERTY
Ownership in the subject property is currently vested in Century Properties
Growth Fund XXII. To the best of our knowledge, no transfers of ownership or
offers to purchase the subject are known to have occurred during the past three
years.
AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 11
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
AREA / NEIGHBORHOOD ANALYSIS
NEIGHBORHOOD ANALYSIS
A neighborhood is a group of complementary land uses. The function of the
neighborhood analysis is to describe the immediate surrounding environs. The
subject is located in the city of Overland Park, Kansas. Overall, the
neighborhood is characterized as a suburban setting with the predominant land
use being residential. The subject's neighborhood is generally defined by the
following boundaries.
NEIGHBORHOOD BOUNDARIES
East - US 169/Metcalf Avenue
West - Interstate 35
South - West 87th Street
North - West 75th Street
MAJOR EMPLOYERS
Major employers in the subject's area include Sprint Corporation (21,173
employees), Applebees International (2,200 employees), Yellow Corporation (1,500
employees), and JC Penney Catalog Logistics Center (1,500 employees). The
overall economic outlook for the area is considered favorable.
DEMOGRAPHICS
We have reviewed demographic data within the neighborhood. The following table
summarizes the key data points.
AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 12
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
NEIGHBORHOOD DEMOGRAPHICS
- --------------------------------------------------------------------------------
AREA
CATEGORY 1-MI. RADIUS 3-MI. RADIUS 5-MI. RADIUS MSA
- --------------------------------------------------------------------------------
POPULATION TRENDS
Current Population 11,489 107,149 232,047 1,807,569
5-Year Population 11,522 106,201 232,808 1,892,507
% Change CY-5Y 0.3% -0.9% 0.3% 4.7%
Annual Change CY-5Y 0.1% -0.2% 0.1% 0.9%
HOUSEHOLDS
Current Households 5,172 46,227 99,220 709,949
5-Year Projected Households 5,232 46,604 101,430 750,540
% Change CY - 5Y 1.2% 0.8% 2.2% 5.7%
Annual Change CY-5Y 0.2% 0.2% 0.4% 1.1%
INCOME TRENDS
Median Household Income $45,469 $ 58,244 $ 65,788 $ 49,518
Per Capita Income $23,135 $ 27,576 $ 30,666 $ 24,363
Average Household Income $51,889 $ 63,908 $ 71,765 $ 62,029
Source: Demographics Now
The subject neighborhood's population is expected to show increases below that
of the region. The immediate market offers inferior income levels as compared to
the broader market.
The following table illustrates the housing statistics in the subject's
immediate area, as well as the MSA region.
HOUSING TRENDS
- --------------------------------------------------------------------------------
AREA
CATEGORY 1-MI. RADIUS 3-MI. RADIUS 5-MI. RADIUS MSA
- --------------------------------------------------------------------------------
HOUSING TRENDS
% of Households Renting 63.19% 36.61% 30.83% 29.10%
5-Year Projected % Renting 58.38% 34.84% 29.50% 28.33%
% of Households Owning 30.33% 58.03% 64.23% 62.84%
5-Year Projected % Owning 34.84% 59.74% 65.54% 64.03%
Source: Demographics Now
AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 13
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
SURROUNDING IMPROVEMENTS
The following uses surround the subject property:
North - Drainage ditch and retail development
South - Aspen Lodge Apartments and single-family residential
East - Large vacant site under development with a luxury apartment complex
West - Four Winds retail center, Wellesley Inn and Suites, good quality
office-warehouse
CONCLUSIONS
The subject is well located within the city of Overland Park. The neighborhood
is characterized as being mostly suburban in nature and is currently in the
growth stage of development. The economic outlook for the neighborhood is judged
to be favorable with a good economic base.
AMERICAN APPRAISAL ASSOCIATES, INC. MARKET ANALYSIS PAGE 14
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
MARKET ANALYSIS
The subject property is located in the city of Overland Park in Johnson County.
The overall pace of development in the subject's market is more or less stable.
REIS reports that 56 completions are scheduled for 2004, 92 in 2005, 99, 2006
and 107 units in 2007. The following table illustrates historical vacancy rates
for the subject's market.
HISTORICAL VACANCY RATE
- ---------------------------------------------------
Period Region Submarket
- ---------------------------------------------------
1st Quarter 2003 8.0% 8.1%
4th Quarter 2002 7.1% 6.8%
Average Per Ending 12/31/02 6.2% 5.8%
Source: REIS, Subtrend Futures, Kansas City Apartment, Overland Park North, 1st
Quarter 2003
Occupancy trends in the subject's market are decreasing. Historically speaking,
the subject's submarket has equated the overall market.
Market rents in the subject's market have been following a stable trend. The
following table illustrates historical rental rates for the subject's market.
HISTORICAL AVERAGE RENT
- --------------------------------------------------
Period Region % Change Submarket % Change
- --------------------------------------------------
1st Q 2003 NA NA $644 -
1st Q 2002 NA NA $676 5.0%
1st Q 2001 NA NA $652 -3.6%
1st Q 2002 NA NA $671 2.9%
Source: REIS, Subtrend Futures, Kansas City Apartment, Overland Park North, 1st
Quarter 2003
The following table illustrates a summary of the subject's competitive set.
AMERICAN APPRAISAL ASSOCIATES, INC. MARKET ANALYSIS PAGE 15
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
COMPETITIVE PROPERTIES
- ---------------------------------------------------------------------------------------------
No. Property Name Units Ocpy. Year Built Proximity to subject
- ---------------------------------------------------------------------------------------------
R-1 Aspen Lodge 307 99% 1987 Across street from subject
R-2 Chesapeake Estates Apartments 568 91% 1987 5 miles SW of the subject
R-3 Rosehill Pointe Apartments 500 95% 1987 2.5 miles SW of the subject
R-4 Cedar Crest Apartments 466 90% 1987 3.5 miles SE of the subject
R-5
Subject Four Winds Apartments 350 92% 1986
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 16
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
PROPERTY DESCRIPTION
SITE ANALYSIS
Site Area 24.4711 acres, or 1,065,961 square feet
Shape Irregular
Topography Rolling
Utilities All necessary utilities are available to the
site.
Soil Conditions Stable
Easements Affecting Site None other than typical utility easements
Overall Site Appeal Good
Flood Zone:
Community Panel 2001740202F, dated June 17, 2002
Flood Zone Zone X
Zoning RP-3, the subject improvements represent a
legal conforming use of the site.
REAL ESTATE TAXES
ASSESSED VALUE - 2002
--------------------------------- TAX RATE / PROPERTY
PARCEL NUMBER LAND BUILDING TOTAL MILL RATE TAXES
NP21100000
0002; (Assessed $145,140 $1,843,716 $1,988,856 0.08178 $162,656
Value)
IMPROVEMENT ANALYSIS
Year Built 1986
Number of Units 350
Net Rentable Area 312,094 Square Feet
Construction:
Foundation Reinforced concrete slab
Frame Heavy or light wood
Exterior Walls Wood or vinyl siding
Roof Composition shingle over a wood truss structure
Project Amenities Amenities at the subject include a swimming
pool, spa/jacuzzi, basketball court, tennis
court, gym room, meeting hall, laundry room,
business office, and parking area.
Unit Amenities Individual unit amenities include a garage,
balcony, fireplace, cable TV connection,and
washer dryer
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 17
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
connection. Appliances available in each unit
include a refrigerator, stove, dishwasher,
water heater, garbage disposal, and oven.
Unit Mix:
Unit Area
Unit Type Number of Units (Sq. Ft.)
1Br/1Ba - 1A10 42 720
1Br/1Ba - 1B10 20 740
1Br/1Ba - 1C10 94 760
1Br/1Ba - 1D10 6 792
1Br/1Ba - 1E10 22 800
2Br/1Ba - 2A10 70 969
Overall Condition Average
Effective Age 17 years
Economic Life 45 years
Remaining Economic Life 28 years
Deferred Maintenance The deferred maintenance at the subject
property was estimated for a total
amount of $75,000.
HIGHEST AND BEST USE ANALYSIS
In accordance with the definition of highest and best use, an analysis of the
site relating to its legal uses, physical possibilities, and financial
feasibility is appropriate. The highest and best use as vacant is to hold for
future multi-family development. The subject improvements were constructed in
1986 and consist of a 350-unit multifamily project. The highest and best use as
improved is for a continued multifamily use. Overall, the highest and best use
of the subject property is the continued use of the existing apartment project.
AMERICAN APPRAISAL ASSOCIATES, INC. VALUATION PROCEDURE PAGE 18
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
THE VALUATION PROCEDURE
There are three traditional approaches, which can be employed in establishing
the market value of the subject property. These approaches and their
applicability to the valuation of the subject are summarized as follows:
THE COST APPROACH
The application of the Cost Approach is based on the principle of substitution.
This principle may be stated as follows: no one is justified in paying more for
a property than that amount by which he or she can obtain, by purchase of a site
and construction of a building, without undue delay, a property of equal
desirability and utility. In the case of a new building, no deficiencies in the
building should exist.
In the case of income-producing real estate, the cost of construction plays a
minor and relatively insignificant role in determining market value. The Cost
Approach is typically only a reliable indicator of value for: (a) new
properties; (b) special use properties; and (c) where the cost of reproducing
the improvements is easily and accurately quantified and there is no economic
obsolescence. In all instances, the issue of an appropriate entrepreneurial
profit - the reward for undertaking the risk of construction, remains a highly
subjective factor especially in a market lacking significant speculative
development.
THE SALES COMPARISON APPROACH
The Sales Comparison Approach is an estimate of value based upon a process of
comparing recent sales of similar properties in the surrounding or competing
areas to the subject property. Inherent in this approach is the principle of
substitution.
The application of this approach consists of comparing the subject property with
similar properties of the same general type, which have been sold recently or
currently are available for sale in competing areas. This comparative process
involves judgment as to the similarity of the subject property and the
comparable sale with respect to many value factors such as location, contract
rent levels, quality of construction, reputation and prestige, age and
condition, among others. The estimated value through this approach represents
the probable price at which a willing seller would sell the subject property to
a willing and knowledgeable buyer as of the date of value.
AMERICAN APPRAISAL ASSOCIATES, INC. VALUATION PROCEDURE PAGE 19
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
THE INCOME CAPITALIZATION APPROACH
The theory of the Income Capitalization Approach is based on the premise that
present value is the value of the cash flow and reversionary value the property
will produce over a reasonable holding (ownership) period.
The Discounted Cash Flow Analysis will convert equity cash flows (including cash
flows and equity reversion) into a present value utilizing an internal rate of
return (or discount rate). The Internal Rate of Return (IRR) will be derived
from a comparison of alternate investments, a comparative analysis of IRR's used
by recent buyers of similar properties, and a review of published industry
surveys.
The Direct Capitalization Analysis converts one year of income into an overall
value using overall capitalization rates from similar sales. The overall rates
take into consideration buyers assumptions of the market over the long-term.
The results of the Income Capitalization Analysis are usually the primary value
indicator for income producing properties. Investors expect a reasonable rate of
return on their equity investment based on the ownership risks involved; this
approach closely parallels the investment decision process.
RECONCILIATION
In this instance, we have completed the Sales Comparison and Income
Capitalization Approaches to value. As an income producing property, the income
approach is a primary approach to value. The Sales Comparison Approach is also
considered reliable as investors are buying similar buildings in the market.
Our research indicates that market participants are generally not buying,
selling, investing, or lending with reliance placed on the methodology of the
Cost Approach to establish the value. Therefore, we have decided that the Cost
Approach is not a reliable indicator of value for the subject, and this approach
has not been utilized.
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 20
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
SALES COMPARISON APPROACH
Use of market or comparable sales requires the collection and analysis of
comparable sales data. Similar properties recently sold are compared to the
subject and adjusted based on any perceived differences. This method is based on
the premise that the costs of acquiring a substitute property would tend to
establish a value for the subject property. The premise suggests that if a
substitute is unavailable in the market, the reliability of the approach may be
subordinate to the other approaches.
The reliance on substitute properties produces shortcomings in the validity of
this approach. Geographic and demographic characteristics from each submarket
restrict which sales may be selected. Recent sales with a similar physical
characteristics, income levels, and location are usually limited. The sales we
have identified, however, do establish general valuation parameters as well as
provide support to our conclusion derived through the income approach method.
The standard unit of comparison among similar properties is the sales price per
unit and price per square foot of net rentable area. To accurately adjust prices
to satisfy the requirements of the sales comparison approach, numerous
calculations and highly subjective judgments would be required including
consideration of numerous income and expense details for which information may
be unreliable or unknown. The sales price per unit and square foot are
considered relevant to the investment decision, but primarily as a parameter
against which value estimates derived through the income approach can be judged
and compared.
In examining the comparable sales, we have applied a subjective adjustment
analysis, which includes specific adjustments derived from our experience and
consulting with the market participants.
SALES COMPARISON ANALYSIS
Detailed on the following pages are sales transactions involving properties
located in the subject's competitive investment market.
Photographs of the sale transactions are located in the Addenda. Following the
summary of sales is an adjustment grid that is used to arrive at a value.
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 21
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
SUMMARY OF COMPARABLE SALES -IMPROVED
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
Property Name Four Winds Apartments Nieman Square Casa de Fuentes
LOCATION:
Address 8000 Perry Road 11115 West 64th Terrace 11700 Stearns
City, State Overland Park, Kansas Shawnee, KS Overland Park, KS
County Johnson Johnson County Johnson County
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) 312,094 114,359 241,384
Year Built 1986 1986 1986
Number of Units 350 152 288
Unit Mix: Type Total Type Total Type Total
1Br/1Ba - 1A10 42 1Br/1Ba 98 1Br/1Ba NA
1Br/1Ba - 1B10 20 2Br/1Ba 27 2Br/2Ba NA
1Br/1Ba - 1C10 94 2Br/2Ba 27
1Br/1Ba - 1D10 6
1Br/1Ba - 1E10 22
2Br/1Ba - 2A10 70
2Br/2Ba - 2A20 76
3Br/2Ba - 3A20 20
Average Unit Size (SF) 892 752 838
Land Area (Acre) 24.4711 8.5500 30.1400
Density (Units/Acre) 14.3 17.8 9.6
Parking Ratio (Spaces/Unit) 1.86 1.99 1.99
Parking Type (Gr., Cov., etc.) Open 177 Open, 126 Covered 500 Open, 72 Covered
CONDITION: Average Average Good
APPEAL: Average Average Good
AMENITIES:
Pool/Spa Yes/Yes Yes/Yes Yes/Yes
Gym Room Yes Yes Yes
Laundry Room Yes Yes Yes
Secured Parking No No No
Sport Courts Yes Yes Yes
Washer/Dryer Connection Yes (in 2&3 Br units) Yes Yes
OCCUPANCY: 92% 91% 89%
TRANSACTION DATA:
Sale Date August, 2002 July, 2002
Sale Price ($) $7,770,350 $14,900,000
Grantor Five States Associates, LP WXI/SPN Real Estate LP
Grantee Cashill, Spalding Coolidge-CLK Casa de
Fuentes, LLC
Sale Documentation Document 216225 Document 212107
Verification Broker Broker
Telephone Number
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF
Potential Gross Income $1,249,988 $8,224 $10.93 $2,438,255 $8,466 $10.10
Vacancy/Credit Loss $ 131,014 $ 862 $ 1.15 $ 260,414 $ 904 $ 1.08
Effective Gross Income $1,118,974 $7,362 $ 9.78 $2,177,841 $7,562 $ 9.02
Operating Expenses $ 480,364 $3,160 $ 4.20 $1,031,690 $3,582 $ 4.27
Net Operating Income $ 638,610 $4,201 $ 5.58 $1,146,151 $3,980 $ 4.75
NOTES: Sale price includes $170,350 The grantee also purchased
for repair of siding and Aspen Lodge, Improved
paving Comparable I-3.
PRICE PER UNIT $51,121 $51,736
PRICE PER SQUARE FOOT $ 67.95 $ 61.73
EXPENSE RATIO 42.9% 47.4%
EGIM 6.94 6.84
OVERALL CAP RATE 8.22% 7.69%
Cap Rate based on Pro Forma or Actual Income? ACTUAL ACTUAL
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
Property Name Aspen Lodge Corinth Place Apartments Concorde Bridge Townhomes
(now Sheridan Bridge)
LOCATION:
Address 8100 Perry Road 3815 Somerset Drive 8403 Carter Street
City, State Overland Park, KS Prairie Village, KS Overland Park, KS
County Johnson County Johnson County Johnson County
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) 277,054 75,280 403,196
Year Built 1987 1986 1971
Number of Units 307 76 248
Unit Mix: Type Total Type Total Type Total
1Br/1Ba NA 1Br/Ba NA 1Br/Ba NA
1Br/1Ba NA 2Br/2Ba NA 2Br/2Ba NA
2Br/1Ba NA
2Br/2Ba NA
3Br/2Ba NA
Average Unit Size (SF) 902 991 1,626
Land Area (Acre) 33.5000 6.9000 25.8900
Density (Units/Acre) 9.2 11.0 9.6
Parking Ratio (Spaces/Unit) 1.49 NA 1.99
Parking Type (Gr., Cov., etc.) 304 Open, 154 Covered Open 375 Open, 119 Covered
CONDITION: Average Average Average
APPEAL: Average Average Average
AMENITIES:
Pool/Spa Yes/Yes Yes/No Yes/Yes
Gym Room Yes Yes Yes
Laundry Room Yes Yes Yes
Secured Parking No No No
Sport Courts Yes Yes No
Washer/Dryer Connection Yes Yes Yes
OCCUPANCY: 90% 97% 94%
TRANSACTION DATA:
Sale Date July, 2002 May, 2001 January, 2001
Sale Price ($) $16,850,000 $5,268,658 $16,801,300
Grantor WXI/SPN Real Estate LP Highwoods Realty Limited Capreit Concorde Bridge
Partnership Limited Partnership
Grantee Coolidge-CLK Aspen, LLC TVO Corinth Place, LLC Sheridan Ridge LLC
Sale Documentation Document 212108 Document 190389 Document 184907
Verification Broker Broker Confidential
Telephone Number
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF Total $ $/Unit $/SF
Potential Gross Income $2,713,792 $8,840 $9.80 $737,573 $9,705 $9.80 $ 0 $ 0 $0.00
Vacancy/Credit Loss $ 218,105 $ 710 $0.79 $ 18,520 $ 244 $0.25 $ 0 $ 0 $0.00
Effective Gross Income $2,495,687 $8,129 $9.01 $719,053 $9,461 $9.55 $2,589,305 $10,441 $6.42
Operating Expenses $1,122,740 $3,657 $4.05 $240,912 $3,170 $3.20 $ 829,237 $ 3,344 $2.06
Net Operating Income $1,372,947 $4,472 $4.96 $478,141 $6,291 $6.35 $1,760,068 $ 7,097 $4.37
NOTES: The grantee also purchased This property was purchased The sale price includes
Casa de Fuentes, Improved as part of a bulk sale. The $1,201,300 in deferred
Comparable I-2. sale price was allocated maintenance and renovation.
based on appraisals
PRICE PER UNIT $54,886 $69,324 $67,747
PRICE PER SQUARE FOOT $ 60.82 $69.99 $ 41.67
EXPENSE RATIO 45.0% 33.5% 32.0%
EGIM 6.75 7.33 6.49
OVERALL CAP RATE 8.15% 9.08% 10.48%
Cap Rate based on Pro Forma or
Actual Income? ACTUAL ACTUAL PRO FORMA
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 22
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
IMPROVED SALES MAP
[IMPROVED SALES MAP]
IMPROVED SALES ANALYSIS
The improved sales indicate a sales price range from $51,121 to $69,324 per
unit. Adjustments have been made to the sales to reflect differences in
location, age/condition and quality/appeal. Generally speaking, larger
properties typically have a lower price per unit when compared to smaller
properties, all else being equal. Similarly, those projects with a higher
average unit size will generally have a higher price per unit. After appropriate
adjustments are made, the improved sales demonstrate an adjusted range for the
subject from $44,855 to $50,468 per unit with a mean or average adjusted price
of $47,825 per unit. The median adjusted price is $47,586 per unit. Based on the
following analysis, we have concluded to a value of $47,500 per unit, which
results in an "as is" value of $16,600,000 (rounded after necessary adjustment,
if any).
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 23
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
SALES ADJUSTMENT GRID
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
- --------------------------------------------------------------------------------------------------------------
Property Name Four Winds Apartments Nieman Square Casa de Fuentes
Address 8000 Perry Road 11115 West 64th Terrace 11700 Stearns
City Overland Park, Kansas Shawnee, KS Overland Park, KS
Sale Date August, 2002 July, 2002
Sale Price ($) $7,770,350 $14,900,000
Net Rentable Area (SF) 312,094 114,359 241,384
Number of Units 350 152 288
Price Per Unit $51,121 $51,736
Year Built 1986 1986 1986
Land Area (Acre) 24.4711 8.5500 30.1400
VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 08-2002 2% 07-2002 2%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $52,143 $52,771
Location Comparable 0% Comparable 0%
Number of Units 350 152 -10% 288 -5%
Quality / Appeal Average Comparable 0% Superior -10%
Age / Condition 1986 1986 / Average 0% 1986 / Good 0%
Occupancy at Sale 92% 91% 0% 89% 0%
Amenities Fair Comparable 0% Comparable 0%
Average Unit Size (SF) 892 752 5% 838 0%
PHYSICAL ADJUSTMENT -5% -15%
FINAL ADJUSTED VALUE ($/UNIT) $49,536 $44,855
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
- -------------------------------------------------------------------------------------------------------------------
Property Name Aspen Lodge Corinth Place Apartments Concorde Bridge Townhomes
(now Sheridan Bridge)
Address 8100 Perry Road 3815 Somerset Drive 8403 Carter Street
City Overland Park, KS Prairie Village, KS Overland Park, KS
Sale Date July, 2002 May, 2001 January, 2001
Sale Price ($) $16,850,000 $5,268,658 $16,801,300
Net Rentable Area (SF) 277,054 75,280 403,196
Number of Units 307 76 248
Price Per Unit $54,886 $69,324 $67,747
Year Built 1987 1986 1971
Land Area (Acre) 33.5000 6.9000 25.8900
VALUE ADJUSTMENTS DESCRIPTION ADJ. DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate 0% Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 07-2002 2% 05-2001 4% 01-2001 6%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $55,984 $72,097 $71,812
Location Comparable 0% Comparable 0% Comparable 0%
Number of Units 307 0% 76 -15% 248 -5%
Quality / Appeal Comparable 0% Superior -10% Comparable 0%
Age / Condition 1987 / Average 0% 1986 / Average 0% 1971 / Average 5%
Occupancy at Sale 90% 0% 97% 0% 94% 0%
Amenities Superior -15% Comparable 0% Comparable 0%
Average Unit Size (SF) 902 0% 991 -5% 1,626 -35%
PHYSICAL ADJUSTMENT -15% -30% -35%
FINAL ADJUSTED VALUE ($/UNIT) $47,586 $50,468 $46,678
SUMMARY
VALUE RANGE (PER UNIT) $44,855 TO $ 50,468
MEAN (PER UNIT) $47,825
MEDIAN (PER UNIT) $47,586
VALUE CONCLUSION (PER UNIT) $47,500
VALUE OF IMPROVEMENT & MAIN SITE $16,625,000
DEFERRED MAINTENANCE -$75,000
VALUE INDICATED BY SALES COMPARISON APPROACH $16,550,000
ROUNDED $16,600,000
NET OPERATING INCOME (NOI) ANALYSIS
We have also conducted a net operating income (NOI) comparison analysis. The NOI
effectively takes into account the various physical, location, and operating
aspects of the sale. When the subject's NOI is compared to the sale NOI, a
percent adjustment can be arrived at. The following table illustrates this
analysis.
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 24
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
NOI PER UNIT COMPARISON
- --------------------------------------------------------------------------------------------------
SALE PRICE NOI/ SUBJECT NOI
COMPARABLE NO. OF ----------- -------------------------- ADJUSTMENT INDICATED
NO. UNITS PRICE/UNIT OAR NOI/UNIT SUBJ. NOI/UNIT FACTOR VALUE/UNIT
- --------------------------------------------------------------------------------------------------
I-1 152 $7,770,350 8.22% $ 638,610 $1,491,957 1.015 $ 51,867
$ 51,121 $ 4,201 $ 4,263
I-2 288 $14,900,000 7.69% $1,146,151 $1,491,957 1.071 $ 55,416
$ 51,736 $ 3,980 $ 4,263
I-3 307 $16,850,000 8.15% $1,372,947 $1,491,957 0.953 $ 52,316
$ 54,886 $ 4,472 $ 4,263
I-4 76 $ 5,268,658 9.08% $ 478,141 $1,491,957 0.678 $ 46,971
$ 69,324 $ 6,291 $ 4,263
I-5 248 $16,801,300 10.48% $1,760,068 $1,491,957 0.601 $ 40,691
$ 67,747 $ 7,097 $ 4,263
PRICE/UNIT VALUE ANALYSIS BASED ON COMPARABLES NOI PER UNIT
- --------------------------------------------------------------------------------------------------
Low High Average Median Estimated Price Per Unit $ 47,500
-----------
Number of Units 350
$40,691 $55,416 $49,452 $51,867
Value $16,625,000
Deferred Maintenance -$75,000
-----------
Value Based on NOI Analysis $16,550,000
Rounded $16,600,000
The adjusted sales indicate a range of value between $40,691 and $55,416 per
unit, with an average of $49,452 per unit. Based on the subject's competitive
position within the improved sales, a value of $47,500 per unit is estimated.
This indicates an "as is" market value of $16,600,000 (rounded after necessary
adjustment, if any) for the NOI Per Unit Analysis.
EFFECTIVE GROSS INCOME MULTIPLIER (EGIM) ANALYSIS
The effective gross income multiplier (EGIM) is derived by dividing the sales
price by the total effective gross income. The following table illustrates the
EGIMs for the comparable improved sales.
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 25
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
EFFECTIVE GROSS INCOME MULTIPLIER COMPARISON
- -----------------------------------------------------------------------------------------------
COMPARABLE NO. OF SALE PRICE EFFECTIVE OPERATING SUBJECT
NO. UNITS PRICE/UNIT GROSS INCOME EXPENSE OER PROJECTED OER EGIM
- -----------------------------------------------------------------------------------------------
I-1 152 $ 7,770,350 $1,118,974 $ 480,364 42.93% 6.94
$ 51,121
I-2 288 $14,900,000 $2,177,841 $1,031,690 47.37% 6.84
$ 51,736
I-3 307 $16,850,000 $2,495,687 $1,122,740 44.99% 43.31% 6.75
$ 54,886
I-4 76 $ 5,268,658 $ 719,053 $ 240,912 33.50% 7.33
$ 69,324
I-5 248 $16,801,300 $2,589,305 $ 829,237 32.03% 6.49
$ 67,747
EGIM VALUE ANALYSIS BASED ON EGIM'S OF COMPARABLE SALES
Low High Average Median Estimate EGIM 6.00
Subject EGI $ 2,786,271
6.49 7.33 6.87 6.84
Value $16,717,625
Deferred Maintenance -$75,000
Value Based on EGIM Analysis $16,642,625
Rounded $16,600,000
Value Per Unit $ 47,429
There is an inverse relationship, which generally holds among EGIMs and
operating expenses. Properties, which have higher expense ratios, typically sell
for relatively less and therefore produce a lower EGIM. As will be illustrated
in the Income Capitalization Approach of this report, the subject's operating
expense ratio (OER) is estimated at 43.31% before reserves. The comparable sales
indicate a range of expense ratios from 32.03% to 47.37%, while their EGIMs
range from 6.49 to 7.33. Overall, we conclude to an EGIM of 6.00, which results
in an "as is" value estimate in the EGIM Analysis of $16,600,000.
SALES COMPARISON CONCLUSION
The three valuation methods in the Sales Comparison Approach are shown below.
The overall value via the Sales Comparison Approach is estimated at $16,600,000.
Price Per Unit $16,600,000
NOI Per Unit $16,600,000
EGIM Analysis $16,600,000
Sales Comparison Conclusion $16,600,000
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 26
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
INCOME CAPITALIZATION APPROACH
The income capitalization approach is based on the premise that value is created
by the expectation of future benefits. We estimated the present value of those
benefits to derive an indication of the amount that a prudent, informed
purchaser-investor would pay for the right to receive them as of the date of
value.
This approach requires an estimate of the NOI of a property. The estimated NOI
is then converted to a value indication by use of either the direct
capitalization or the discounted cash flow analysis (yield capitalization).
Direct capitalization uses a single year's stabilized NOI as a basis for a value
indication by dividing the income by a capitalization rate. The rate chosen
accounts for a recapture of the investment by the investor and should reflect
all factors that influence the value of the property, such as tenant quality,
property condition, neighborhood change, market trends, interest rates, and
inflation. The rate may be extracted from local market transactions or, when
transaction evidence is lacking, obtained from trade sources.
A discounted cash flow analysis focuses on the operating cash flows expected
from the property and the proceeds of a hypothetical sale at the end of a
holding period (the reversion). The cash flows and reversion are discounted to
their present values using a market-derived discount rate and are added together
to obtain a value indication. Because benefits to be received in the future are
worth less than the same benefits received in the present, this method weights
income in the early years more heavily than the income and the sale proceeds to
be received later. The strength of the discounted cash flow method is its
ability to recognize variations in projected net income, such as those caused by
inflation, stepped leases, neighborhood change, or tenant turnover. Its weakness
is that it requires many judgments regarding the actions of likely buyers and
sellers of the property in the future.
In some situations, both methods yield a similar result. The discounted cash
flow method is typically more appropriate for the analysis of investment
properties with multiple or long-term leases, particularly leases with
cancellation clauses or renewal options. It is especially useful for
multi-tenant properties in volatile markets. The direct capitalization
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 27
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
method is normally more appropriate for properties with relatively stable
operating histories and expectations.
A pro forma analysis for the first year of the investment is made to estimate a
reasonable potential net operating income for the Subject Property. Such an
analysis entails an estimate of the gross income the property should command in
the marketplace. From this total gross income must be deducted an allowance for
vacancy/collection loss and operating expenses as dictated by general market
conditions and the overall character of the subject's tenancy and leased income
to arrive at a projected estimate of net operating income. Conversion of the net
operating income to an indication of value is accomplished by the process of
capitalization, as derived primarily from market data.
MARKET RENT ANALYSIS
In order to determine a market rental rate for the subject, a survey of
competing apartment communities was performed. This survey was displayed
previously in the market analysis section of the report. Detailed information
pertaining to each of the comparable rental communities, along with photographs,
is presented in the Addenda of this report.
The following charts display the subject's current asking and actual rent rates
as well as a comparison with the previous referenced comparable rental
properties.
SUMMARY OF ACTUAL AVERAGE RENTS
Unit Area Average
Unit Type (Sq. Ft.) Per Unit Per SF %Occupied
1Br/1Ba - 1A10 720 $592 $0.82 95.3%
1Br/1Ba - 1B10 740 $561 $0.76 77.8%
1Br/1Ba - 1C10 760 $606 $0.80 91.6%
1Br/1Ba - 1D10 792 $582 $0.73 100.0%
1Br/1Ba - 1E10 800 $623 $0.78 90.9%
2Br/1Ba - 2A10 969 $676 $0.70 92.9%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 28
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
RENT ANALYSIS
COMPARABLE RENTS
-----------------------------------------------------
R-1 R-2 R-3 R-4 R-5
------------------------------------------------------
Chesapeake Rosehill
Aspen Estates Pointe Cedar Crest
Lodge Apartments Apartments Apartments
------------------------------------------------------
SUBJECT SUBJECT COMPARISON TO SUBJECT
SUBJECT UNIT ACTUAL ASKING ------------------------------------------------------
DESCRIPTION TYPE RENT RENT Similar Superior Similar Superior Superior
----------- ---- ---- ---- ------- -------- ------- -------- --------
Monthly Rent 1BR/1BA - 1A10 $ 592 $ 501 $ 659 $ 575
Unit Area (SF) 720 720 720 644
Monthly Rent Per Sq. Ft. $ 0.82 $ 0.70 $ 0.92 $ 0.89
Monthly Rent 1BR/1BA - 1B10 $ 561 $ 541 $ 575
Unit Area (SF) 740 740 720
Monthly Rent Per Sq. Ft. $ 0.76 $ 0.73 $ 0.80
Monthly Rent 1BR/1BA - 1C10 $ 606 $ 571 $ 559
Unit Area (SF) 760 760 720
Monthly Rent Per Sq. Ft. $ 0.80 $ 0.75 $ 0.78
Monthly Rent 1BR/1BA - 1D10 $ 582 $ 671 $ 590 $ 559
Unit Area (SF) 792 792 794 794
Monthly Rent Per Sq. Ft. $ 0.73 $ 0.85 $ 0.74 $ 0.70
Monthly Rent 1BR/1BA - 1E10 $ 623 $ 720
Unit Area (SF) 800 800 800
Monthly Rent Per Sq. Ft. $ 0.78 $ 0.90
Monthly Rent 2BR/1BA - 2A10 $ 676 $ 765 $ 710 $ 640 $ 709
Unit Area (SF) 969 969 969 906 904 904
Monthly Rent Per Sq. Ft. $ 0.70 $ 0.79 $ 0.78 $ 0.71 $ 0.78
Monthly Rent 2BR/2BA - 2A20 $ 768 $ 840
Unit Area (SF) 1,062 1,062 1,062
Monthly Rent Per Sq. Ft. $ 0.72 $ 0.79
Monthly Rent 3BR/2BA - 3A20 $ 902 $ 980 $ 850 $ 842 $ 837
Unit Area (SF) 1,236 1,236 1,236 1,185 1,263 1,263
Monthly Rent Per Sq. Ft. $ 0.73 $ 0.79 $ 0.72 $ 0.67 $ 0.66
DESCRIPTION MIN MAX MEDIAN AVERAGE
----------- --- --- ------ -------
Monthly Rent $ 575 $ 659 $ 617 $ 617
Unit Area (SF) 644 720 682 682
Monthly Rent Per Sq. Ft. $ 0.89 $ 0.92 $ 0.90 $ 0.90
Monthly Rent $ 575 $ 575 $ 575 $ 575
Unit Area (SF) 720 720 720 720
Monthly Rent Per Sq. Ft. $ 0.80 $ 0.80 $ 0.80 $ 0.80
Monthly Rent $ 559 $ 559 $ 559 $ 559
Unit Area (SF) 720 720 720 720
Monthly Rent Per Sq. Ft. $ 0.78 $ 0.78 $ 0.78 $ 0.78
Monthly Rent $ 559 $ 590 $ 575 $ 575
Unit Area (SF) 794 794 794 794
Monthly Rent Per Sq. Ft. $ 0.70 $ 0.74 $ 0.72 $ 0.72
Monthly Rent $ 720 $ 720 $ 720 $ 720
Unit Area (SF) 800 800 800 800
Monthly Rent Per Sq. Ft. $ 0.90 $ 0.90 $ 0.90 $ 0.90
Monthly Rent $ 640 $ 765 $ 710 $ 706
Unit Area (SF) 904 969 905 921
Monthly Rent Per Sq. Ft. $ 0.71 $ 0.79 $ 0.78 $ 0.77
Monthly Rent $ 840 $ 840 $ 840 $ 840
Unit Area (SF) 1,062 1,062 1,062 1,062
Monthly Rent Per Sq. Ft. $ 0.79 $ 0.79 $ 0.79 $ 0.79
Monthly Rent $ 837 $ 980 $ 846 $ 877
Unit Area (SF) 1,185 1,263 1,250 1,237
Monthly Rent Per Sq. Ft. $ 0.66 $ 0.79 $ 0.69 $ 0.71
CONCLUDED MARKET RENTAL RATES AND TERMS
Based on this analysis above, the subject's concluded market rental rates and
gross rental income is calculated as follows:
GROSS RENTAL INCOME PROJECTION
Market Rent
Unit Area ----------------- Monthly Annual
Unit Type Number of Units (Sq. Ft.) Per Unit Per SF Income Income
--------- --------------- --------- -------- ------ ------ ------
1Br/1Ba - 1A10 42 720 $ 590 $ 0.82 $ 24,780 $ 297,360
1Br/1Ba - 1B10 20 740 $ 560 $ 0.76 $ 11,200 $ 134,400
1Br/1Ba - 1C10 94 760 $ 600 $ 0.79 $ 56,400 $ 676,800
1Br/1Ba - 1D10 6 792 $ 600 $ 0.76 $ 3,600 $ 43,200
1Br/1Ba - 1E10 22 800 $ 699 $ 0.87 $ 15,378 $ 184,536
2Br/1Ba - 2A10 70 969 $ 700 $ 0.72 $ 49,000 $ 588,000
Total $233,358 $2,800,296
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 29
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
PRO FORMA ANALYSIS
For purposes of this appraisal, we were provided with income and expense data
for the subject property. A summary of this data is presented on the following
page.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 30
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
SUMMARY OF HISTORICAL INCOME & EXPENSES
FISCAL YEAR 2000 FISCAL YEAR 2001 FISCAL YEAR 2002 FISCAL YEAR 2003
--------------------------------------------------------------------------------------
ACTUAL ACTUAL ACTUAL MANAGEMENT BUDGET
--------------------------------------------------------------------------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT
- -----------------------------------------------------------------------------------------------------------------
Revenues
Rental Income $3,001,874 $ 8,577 $3,021,007 $ 8,631 $2,931,256 $ 8,375 $2,906,112 $ 8,303
Vacancy $ 166,532 $ 476 $ 189,408 $ 541 $ 130,214 $ 372 $ 158,300 $ 452
Credit Loss/Concessions $ 65,120 $ 186 $ 126,233 $ 361 $ 126,179 $ 361 $ 105,000 $ 300
--------------------------------------------------------------------------------------
Subtotal $ 231,652 $ 662 $ 315,641 $ 902 $ 256,393 $ 733 $ 263,300 $ 752
Laundry Income $ 1,104 $ 3 $ 1,601 $ 5 $ 2,692 $ 8 $ 27,708 $ 79
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 167,567 $ 479 $ 210,754 $ 602 $ 282,034 $ 806 $ 236,900 $ 677
--------------------------------------------------------------------------------------
Subtotal Other Income $ 168,671 $ 482 $ 212,355 $ 607 $ 284,726 $ 814 $ 264,608 $ 756
--------------------------------------------------------------------------------------
Effective Gross Income $2,938,893 $ 8,397 $2,917,721 $ 8,336 $2,959,589 $ 8,456 $2,907,420 $ 8,307
Operating Expenses
Taxes $ 177,948 $ 508 $ 173,373 $ 495 $ 255,331 $ 730 $ 196,620 $ 562
Insurance $ 5,798 $ 17 $ 55,089 $ 157 $ 62,407 $ 178 $ 68,780 $ 197
Utilities $ 151,305 $ 432 $ 151,052 $ 432 $ 162,420 $ 464 $ 106,500 $ 304
Repair & Maintenance $ 32,444 $ 93 $ 74,255 $ 212 $ 62,580 $ 179 $ 73,464 $ 210
Cleaning $ 4,702 $ 13 $ 3,029 $ 9 $ 3,317 $ 9 $ 0 $ 0
Landscaping $ 56,129 $ 160 $ 45,486 $ 130 $ 41,775 $ 119 $ 43,200 $ 123
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 134,789 $ 385 $ 89,147 $ 255 $ 85,229 $ 244 $ 77,900 $ 223
General Administrative $ 301,002 $ 860 $ 369,008 $ 1,054 $ 349,563 $ 999 $ 319,704 $ 913
Management $ 150,132 $ 429 $ 152,027 $ 434 $ 146,435 $ 418 $ 153,000 $ 437
Miscellaneous $ 101,846 $ 291 $ 110,777 $ 317 $ 120,124 $ 343 $ 103,360 $ 295
--------------------------------------------------------------------------------------
Total Operating Expenses $1,116,095 $ 3,189 $1,223,243 $ 3,495 $1,289,181 $ 3,683 $1,142,528 $ 3,264
Reserves $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
--------------------------------------------------------------------------------------
Net Income $1,822,798 $ 5,208 $1,694,478 $ 4,841 $1,670,408 $ 4,773 $1,764,892 $ 5,043
ANNUALIZED 2003
--------------------
PROJECTION AAA PROJECTION
----------------------------------------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT %
- --------------------------------------------------------------------------------
Revenues
Rental Income $2,822,420 $ 8,064 $2,800,296 $ 8,001 100.0%
Vacancy $ 130,968 $ 374 $ 140,015 $ 400 5.0%
Credit Loss/Concessions $ 92,192 $ 263 $ 98,010 $ 280 3.5%
----------------------------------------------------
Subtotal $ 223,160 $ 638 $ 238,025 $ 680 8.5%
Laundry Income $ 8,348 $ 24 $ 14,000 $ 40 0.5%
Garage Revenue $ 0 $ 0 $ 0 $ 0 0.0%
Other Misc. Revenue $ 217,860 $ 622 $ 210,000 $ 600 7.5%
----------------------------------------------------
Subtotal Other Income $ 226,208 $ 646 $ 224,000 $ 640 8.0%
----------------------------------------------------
Effective Gross Income $2,825,468 $ 8,073 $2,786,271 $ 7,961 100.0%
Operating Expenses
Taxes $ 197,312 $ 564 $ 201,250 $ 575 7.2%
Insurance $ 65,776 $ 188 $ 66,500 $ 190 2.4%
Utilities $ 169,096 $ 483 $ 168,000 $ 480 6.0%
Repair & Maintenance $ 56,948 $ 163 $ 63,000 $ 180 2.3%
Cleaning $ 6,636 $ 19 $ 7,000 $ 20 0.3%
Landscaping $ 5,920 $ 17 $ 45,500 $ 130 1.6%
Security $ 0 $ 0 $ 0 $ 0 0.0%
Marketing & Leasing $ 64,948 $ 186 $ 78,750 $ 225 2.8%
General Administrative $ 369,436 $ 1,056 $ 350,000 $ 1,000 12.6%
Management $ 143,304 $ 409 $ 139,314 $ 398 5.0%
Miscellaneous $ 98,696 $ 282 $ 87,500 $ 250 3.1%
----------------------------------------------------
Total Operating Expenses $1,178,072 $ 3,366 $1,206,814 $ 3,448 43.3%
Reserves $ 0 $ 0 $ 87,500 $ 250 7.3%
----------------------------------------------------
Net Income $1,647,396 $ 4,707 $1,491,957 $ 4,263 53.5%
REVENUES AND EXPENSES
The subject's revenue and expense projections are displayed on the previous
chart. Rental income is based on the market analysis previously discussed. Other
income consists of forfeited deposits, laundry income, late rent payments, month
to month fees, pet fees, vending machine revenue, etc.
We forecasted the property's annual operating expenses after reviewing its
historical performance at the subject property. We analyzed each item of expense
and attempted to forecast amounts a typical informed investor would consider
reasonable.
VACANCY AND COLLECTION LOSS
An investor is primarily interested in the annual revenue an income property is
likely to produce over a specified period of time, rather than the income it
could produce if it were always 100% occupied and all tenants were paying their
rent in full and on time. An investor normally expects some income loss as
tenants vacate, fail to pay rent, or pay their rent late.
We have projected a stabilized vacancy and collection loss rate of 8.5% based on
the subject's historical performance, as well as the anticipated future market
conditions.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 31
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
RESERVES FOR REPLACEMENT
"Reserves for replacements" is a contingency account allocated to the expenses
of the property to provide for replacement of short-lived items and for
unforeseen necessary capital expenditures. We have utilized the Korpacz Real
Estate Investor Survey of the national apartment market, which reports a range
of replacement reserves between $150 and $400 per unit. For purposes of this
analysis, we have included an allowance of $250 per unit for reserves for
replacement.
CAPITAL EXPENDITURES
Capital expenditures represent expenses for immediate repair or replacement of
items that have average to long lives. Based on our inspection of the property
as well as discussions with property management personnel, there are some major
items remaining in need of repair or replacement that would require an expense
beyond our reserves for replacement. Therefore an additional $75,000 has been
deducted.
DISCOUNTED CASH FLOW ANALYSIS
As the subject is a multi-tenant income property, the Discounted Cash Flow
Method is considered appropriate. This method is especially meaningful in that
it isolates the timing of the annual cash flows and discounts them, along with
the expected equity reversion, to a present value. The present value of the cash
flow is added to the present value of the reversion, resulting in a total
property value.
INVESTMENT CRITERIA
Appropriate investment criteria will be derived for the subject based upon
analysis of comparable sales and a survey of real estate investors. The
following table summarizes the findings of Korpacz National Investor Survey for
the most recent period.
KORPACZ NATIONAL INVESTOR SURVEY
1ST QUARTER 2003
NATIONAL APARTMENT MARKET
- ---------------------------------------------
CAPITALIZATION RATES
-------------------------------------------
GOING-IN TERMINAL
-------------------------------------------
LOW HIGH LOW HIGH
-------------------------------------------
RANGE 6.00% 10.00% 7.00% 10.00%
AVERAGE 8.14% 8.47%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 32
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
SUMMARY OF OVERALL
CAPITALIZATION RATES
- ------------------------------------------------
COMP. NO. SALE DATE OCCUP. PRICE/UNIT OAR
- ------------------------------------------------
I-1 Aug-02 91% $51,121 8.22%
I-2 Jul-02 89% $51,736 7.69%
I-3 Jul-02 90% $54,886 8.15%
I-4 May-01 97% $69,324 9.08%
I-5 Jan-01 94% $67,747 10.48%
High 10.48%
Low 7.69%
Average 8.72%
Based on this information, we have concluded the subject's overall
capitalization rate should be 9.00%. The terminal capitalization rate is applied
to the net operating income estimated for the year following the end of the
holding period. Based on the concluded overall capitalization rate, the age of
the property and the surveyed information, we have concluded the subject's
terminal capitalization rate to be 10.00%. Finally, the subject's discount rate
or yield rate is estimated based on the previous investor survey and an
examination of returns available on alternative investments in the market. Based
on this analysis, the subject's discount rate is estimated to be 11.00%.
HOLDING PERIOD
The survey of investors indicates that most investors are completing either
10-year cash flows or extending the analysis to the end of the lease if it is
more than 10-years. A 10-year period has been used in the analysis of the
subject with the eleventh year stabilized NOI used to determine the reversion.
SELLING COSTS
Sales of similar size properties are typically accomplished with the aid of a
broker and will also incur legal and other transaction related cost. Based on
our survey of brokers and a review of institutional investor projections, an
allowance of 2.00% of the sale amount is applied.
DISCOUNTED CASH FLOW CONCLUSION
Discounting the annual cash flows and the equity reversion at the selected rate
of 11.00% indicates a value of $16,500,000. In this instance, the reversion
figure contributes approximately 39% of the total value. Investors surveyed for
this assignment indicated they
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 33
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
would prefer to have the cash flow contribute anywhere from 50% to 60%. Overall,
the blend seems reasonable. The cash flow and pricing matrix are located on the
following pages.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 34
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
DISCOUNTED CASH FLOW ANALYSIS
FOUR WINDS APARTMENTS
YEAR APR-2004 APR-2005 APR-2006 APR-2007 APR-2008 APR-2009 APR-2010
FISCAL YEAR 1 2 3 4 5 6 7
REVENUE
Base Rent $2,800,296 $2,856,302 $2,913,428 $2,971,697 $3,031,130 $3,106,909 $3,184,581
Vacancy $ 140,015 $ 142,815 $ 145,671 $ 148,585 $ 151,557 $ 155,345 $ 159,229
Credit Loss $ 98,010 $ 99,971 $ 101,970 $ 104,009 $ 106,090 $ 108,742 $ 111,460
Concessions $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
----------------------------------------------------------------------------------------
Subtotal $ 238,025 $ 242,786 $ 247,641 $ 252,594 $ 257,646 $ 264,087 $ 270,689
Laundry Income $ 14,000 $ 14,280 $ 14,566 $ 14,857 $ 15,154 $ 15,533 $ 15,921
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 210,000 $ 214,200 $ 218,484 $ 222,854 $ 227,311 $ 232,994 $ 238,818
----------------------------------------------------------------------------------------
Subtotal Other Income $ 224,000 $ 228,480 $ 233,050 $ 237,711 $ 242,465 $ 248,526 $ 254,740
----------------------------------------------------------------------------------------
EFFECTIVE GROSS INCOME $2,786,271 $2,841,996 $2,898,836 $2,956,813 $3,015,949 $3,091,348 $3,168,632
OPERATING EXPENSES:
Taxes $ 201,250 $ 205,275 $ 209,381 $ 213,568 $ 217,839 $ 223,285 $ 228,868
Insurance $ 66,500 $ 67,830 $ 69,187 $ 70,570 $ 71,982 $ 73,781 $ 75,626
Utilities $ 168,000 $ 171,360 $ 174,787 $ 178,283 $ 181,849 $ 186,395 $ 191,055
Repair & Maintenance $ 63,000 $ 64,260 $ 65,545 $ 66,856 $ 68,193 $ 69,898 $ 71,646
Cleaning $ 7,000 $ 7,140 $ 7,283 $ 7,428 $ 7,577 $ 7,766 $ 7,961
Landscaping $ 45,500 $ 46,410 $ 47,338 $ 48,285 $ 49,251 $ 50,482 $ 51,744
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 78,750 $ 80,325 $ 81,932 $ 83,570 $ 85,242 $ 87,373 $ 89,557
General Administrative $ 350,000 $ 357,000 $ 364,140 $ 371,423 $ 378,851 $ 388,323 $ 398,031
Management $ 139,314 $ 142,100 $ 144,942 $ 147,841 $ 150,797 $ 154,567 $ 158,432
Miscellaneous $ 87,500 $ 89,250 $ 91,035 $ 92,856 $ 94,713 $ 97,081 $ 99,508
----------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES $1,206,814 $1,230,950 $1,255,569 $1,280,680 $1,306,294 $1,338,951 $1,372,425
Reserves $ 87,500 $ 89,250 $ 91,035 $ 92,856 $ 94,713 $ 97,081 $ 99,508
----------------------------------------------------------------------------------------
NET OPERATING INCOME $1,491,957 $1,521,796 $1,552,232 $1,583,277 $1,614,943 $1,655,316 $1,696,699
========================================================================================
Operating Expense Ratio (% of EGI) 43.3% 43.3% 43.3% 43.3% 43.3% 43.3% 43.3%
Operating Expense Per Unit $ 3,448 $ 3,517 $ 3,587 $ 3,659 $ 3,732 $ 3,826 $ 3,921
========================================================================================
FOUR WINDS APARTMENTS
YEAR APR-2011 APR-2012 APR-2013 APR-2014
FISCAL YEAR 8 9 10 11
REVENUE
Base Rent $3,264,196 $3,345,801 $3,429,446 $3,515,182
Vacancy $ 163,210 $ 167,290 $ 171,472 $ 175,759
Credit Loss $ 114,247 $ 117,103 $ 120,031 $ 123,031
Concessions $ 0 $ 0 $ 0 $ 0
-------------------------------------------------
Subtotal $ 277,457 $ 284,393 $ 291,503 $ 298,790
Laundry Income $ 16,319 $ 16,727 $ 17,145 $ 17,574
Garage Revenue $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 244,789 $ 250,909 $ 257,181 $ 263,611
-------------------------------------------------
Subtotal Other Income $ 261,108 $ 267,636 $ 274,327 $ 281,185
-------------------------------------------------
EFFECTIVE GROSS INCOME $3,247,847 $3,329,044 $3,412,270 $3,497,576
OPERATING EXPENSES:
Taxes $ 234,589 $ 240,454 $ 246,465 $ 252,627
Insurance $ 77,516 $ 79,454 $ 81,441 $ 83,477
Utilities $ 195,831 $ 200,727 $ 205,745 $ 210,889
Repair & Maintenance $ 73,437 $ 75,273 $ 77,154 $ 79,083
Cleaning $ 8,160 $ 8,364 $ 8,573 $ 8,787
Landscaping $ 53,038 $ 54,364 $ 55,723 $ 57,116
Security $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 91,796 $ 94,091 $ 96,443 $ 98,854
General Administrative $ 407,981 $ 418,181 $ 428,635 $ 439,351
Management $ 162,392 $ 166,452 $ 170,613 $ 174,879
Miscellaneous $ 101,995 $ 104,545 $ 107,159 $ 109,838
-------------------------------------------------
TOTAL OPERATING EXPENSES $1,406,736 $1,441,904 $1,477,952 $1,514,900
Reserves $ 101,995 $ 104,545 $ 107,159 $ 109,838
-------------------------------------------------
NET OPERATING INCOME $1,739,117 $1,782,594 $1,827,159 $1,872,838
=================================================
Operating Expense Ratio (% of EGI) 43.3% 43.3% 43.3% 43.3%
Operating Expense Per Unit $ 4,019 $ 4,120 $ 4,223 $ 4,328
=================================================
"DCF" VALUE ANALYSIS
Estimated Stabilized NOI $1,491,957 Sales Expense Rate 2.00%
Months to Stabilized 0 Discount Rate 11.00%
Stabilized Occupancy 95.0% Terminal Cap Rate 10.00%
Gross Residual Sale Price $18,728,383 Deferred Maintenance -$75,000
Less: Sales Expense $ 374,568 Add: Excess Land $ 0
----------- Other Adjustments $ 0
Net Residual Sale Price $18,353,815 -----------
PV of Reversion $ 6,463,929 Value Indicated By "DCF" $16,495,936
Add: NPV of NOI $10,107,008 Rounded $16,500,000
-----------
PV Total $16,570,936
"DCF" VALUE SENSITIVITY TABLE
- ------------------------------------------------------------------------------------------
TOTAL VALUE DISCOUNT RATE
- ------------------------------------------------------------------------------------------
10.50% 10.75% 11.00% 11.25% 11.50%
9.50% $17,466,180 $17,185,615 $16,911,143 $16,642,612 $16,379,873
9.75% $17,283,657 $17,007,171 $16,736,678 $16,472,028 $16,213,075
TERMINAL CAP RATE 10.00% $17,110,262 $16,837,650 $16,570,936 $16,309,974 $16,054,618
10.25% $16,945,324 $16,676,398 $16,413,280 $16,155,824 $15,903,890
10.50% $16,788,240 $16,522,824 $16,263,130 $16,009,015 $15,760,339
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 35
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
INCOME LOSS DURING LEASE-UP
The subject is currently near or at a stabilized condition. Therefore, there is
no income loss during lease-up at the subject property.
CONCESSIONS
Concessions have historically not been utilized at the subject property or in
the subject's market. Therefore, no adjustment was included for concessions.
DIRECT CAPITALIZATION METHOD
After having projected the income and expenses for the property, the next step
in the valuation process is to capitalize the net income into an estimate of
value. The selected overall capitalization rate ("OAR") covers both return on
and return of capital. It is the overall rate of return an investor expects.
After considering the market transactions and the investor surveys, we
previously conclude that an overall rate of 9.00% percent is applicable to the
subject. The results of our direct capitalization analysis are as follows:
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 36
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
FOUR WINDS APARTMENTS
TOTAL PER SQ. FT. PER UNIT %OF EGI
REVENUE
Base Rent $ 2,800,296 $ 8.97 $ 8,001
Less: Vacancy & Collection Loss 8.50% $ 238,025 $ 0.76 $ 680
Plus: Other Income
Laundry Income $ 14,000 $ 0.04 $ 40 0.50%
Garage Revenue $ 0 $ 0.00 $ 0 0.00%
Other Misc. Revenue $ 210,000 $ 0.67 $ 600 7.54%
------------------------------------------
Subtotal Other Income $ 224,000 $ 0.72 $ 640 8.04%
EFFECTIVE GROSS INCOME $ 2,786,271 $ 8.93 $ 7,961
OPERATING EXPENSES:
Taxes $ 201,250 $ 0.64 $ 575 7.22%
Insurance $ 66,500 $ 0.21 $ 190 2.39%
Utilities $ 168,000 $ 0.54 $ 480 6.03%
Repair & Maintenance $ 63,000 $ 0.20 $ 180 2.26%
Cleaning $ 7,000 $ 0.02 $ 20 0.25%
Landscaping $ 45,500 $ 0.15 $ 130 1.63%
Security $ 0 $ 0.00 $ 0 0.00%
Marketing & Leasing $ 78,750 $ 0.25 $ 225 2.83%
General Administrative $ 350,000 $ 1.12 $ 1,000 12.56%
Management 5.00% $ 139,314 $ 0.45 $ 398 5.00%
Miscellaneous $ 87,500 $ 0.28 $ 250 3.14%
TOTAL OPERATING EXPENSES $ 1,206,814 $ 3.87 $ 3,448 43.31%
Reserves $ 87,500 $ 0.28 $ 250 3.14%
------------------------------------------
NET OPERATING INCOME $ 1,491,957 $ 4.78 $ 4,263 53.55%
==========================================
"GOING IN" CAPITALIZATION RATE 9.00%
VALUE INDICATION $16,577,303 $53.12 $47,364
DEFERRED MAINTENANCE ($ 75,000)
LESS: LEASE-UP COST
{OTHER VALUE ADJUSTMENTS}
"AS IS" VALUE INDICATION
(DIRECT CAPITALIZATION APPROACH) $16,502,303
ROUNDED $16,500,000 $52.87 $47,143
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 37
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
DIRECT CAPITALIZATION VALUE SENSITIVITY TABLE
- ---------------------------------------------------
CAP RATE VALUE ROUNDED $/UNIT $/SF
- ---------------------------------------------------
8.25% $18,009,331 $18,000,000 $51,429 $57.67
8.50% $17,477,439 $17,500,000 $50,000 $56.07
8.75% $16,975,941 $17,000,000 $48,571 $54.47
9.00% $16,502,303 $16,500,000 $47,143 $52.87
9.25% $16,054,268 $16,100,000 $46,000 $51.59
9.50% $15,629,814 $15,600,000 $44,571 $49.98
9.75% $15,227,126 $15,200,000 $43,429 $48.70
CONCLUSION BY THE DIRECT CAPITALIZATION METHOD
Applying the capitalization rate to our estimated NOI results in an estimated
value of $16,500,000.
CORRELATION AND CONCLUSION BY THE INCOME APPROACH
The two methods used to estimate the market value of the subject property by the
income approach resulted in the following indications of value:
Discounted Cash Flow Analysis $16,500,000
Direct Capitalization Method $16,500,000
Giving consideration to the indicated values provided by both techniques, we
have concluded the estimated value by the income capitalization approach to be
$16,500,000.
AMERICAN APPRAISAL ASSOCIATES, INC. RECONCILIATION AND CONCLUSION PAGE 38
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
RECONCILIATION AND CONCLUSION
This appraisal was made to express an opinion as of the Market Value of the fee
simple estate in the property.
AS IS MARKET VALUE OF THE FEE SIMPLE ESTATE
Cost Approach Not Utilized
Sales Comparison Approach $16,600,000
Income Approach $16,500,000
Reconciled Value $16,500,000
The Income Capitalization Method is considered a reliable indicator of value.
Income and expenses were estimated and projected based on historical operating
statements and market oriented expenses. This method is primarily used by
investors in their underwriting analysis. Furthermore, there was good support
for an overall rate in the Direct Capitalization Method.
The Sales Comparison Approach to value supported the value conclusion by the
Income Approach and was given secondary consideration. Investment-grade,
income-producing properties such as the subject are not typically traded based
on cost. Therefore, the Cost Approach has not been considered in our valuation.
FINAL VALUE - FEE SIMPLE ESTATE
Based on the investigation and premise outlined, it is our opinion that as of
May 8, 2003 the market value of the fee simple estate in the property is:
$16,500,000
AMERICAN APPRAISAL ASSOCIATES, INC. ADDENDA
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
ADDENDA
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
EXHIBIT A
SUBJECT PHOTOGRAPHS
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
SUBJECT PHOTOGRAPHS
[PICTURE]
ENTRANCE TO SUBJECT AND VIEW OF 81ST STREET
[PICTURE]
EXTERIOR - TYPICAL THREE-STORY BUILDING
[PICTURE]
TYPICAL TWO-STORY BUILDING
[PICTURE]
POOL
[PICTURE]
VIEW OF TENNIS COURTS
[PICTURE]
VIEW OF OFFICE/CLUBHOUSE
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
SUBJECT PHOTOGRAPHS
[PICTURE]
INTERIOR VIEW - MODEL
[PICTURE]
INTERIOR VIEW -MODEL
[PICTURE]
INTERIOR - VACANT APARTMENT UNIT
[PICTURE]
INTERIOR -VACANT APARTMENT UNIT
[PICTURE]
CLUBHOUSE INTERIOR VIEW
[PICTURE]
VIEW OF TYPICAL CARPORT
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
EXHIBIT B
SUMMARY OF RENT COMPARABLES
AND PHOTOGRAPH OF COMPARABLES
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
PHOTOGRAPHS OF COMPARABLE SALE PROPERTIES
COMPARABLE I-1 COMPARABLE I-2 COMPARABLE I-3
NIEMAN SQUARE CASA DE FUENTES ASPEN LODGE
11115 West 64th Terrace 11700 Stearns 8100 Perry Road
Shawnee, KS Overland Park, KS Overland Park, KS
[PICTURE] [PICTURE] [PICTURE]
COMPARABLE I-4 COMPARABLE I-5
CORINTH PLACE APARTMENTS CONCORDE BRIDGE TOWNHOMES (NOW SHERIDAN BRIDGE)
3815 Somerset Drive 8403 Carter Street
Prairie Village, KS Overland Park, KS
[PICTURE] [PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
SUMMARY OF COMPARABLE RENTAL PROPERTIES
COMPARABLE
DESCRIPTION SUBJECT R - 1
----------- ------- -----
Property Name Four Winds Apartments Aspen Lodge
Management Company AIMCO LEDIC Management Group
LOCATION:
Address 8000 Perry Road 8100 Perry Road
City, State Overland Park, Kansas Overland Park, KS
County Johnson Johnson
Proximity to Subject Across street from subject
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) 312,094 277,054
Year Built 1986 1987
Effective Age 17 16
Building Structure Type Viny1 siding, flat roofs Wood siding, pitched composition shingle
roofs
Parking Type (Gr., Cov.,
etc.) Open, carports Open, carports
Number of Units 350 307
Unit Mix: Type Unit Qty. Mo.Rent Type Unit Qty. Mo.
---- ---- ---- ------- ---- ---- ---- ---
1 1Br/1Ba - 1A10 720 42 $ 592 1 1Br/1Ba 720 NA $ 659
2 1Br/1Ba - 1B10 740 20 $ 561 5 1Br/1Ba 800 NA $ 720
3 1Br/1Ba - 1C10 760 94 $ 606 6 2Br/1Ba 969 NA $ 765
4 1Br/1Ba - 1D10 792 6 $ 582 7 2Br/2Ba 1,062 NA $ 840
5 1Br/1Ba - 1E10 800 22 $ 623 8 3Br/2Ba 1,236 NA $ 980
6 2Br/1Ba - 2A10 969 70 $ 676
7 2Br/2Ba - 2A20 1,062 76 $ 768
8 3Br/2Ba - 3A20 1,236 20 $ 902
Average Unit Size (SF) 892 902
Unit Breakdown: Efficiency 0% 2-Bedroom 39% Efficiency 0% 2-Bedroom NA
1-Bedroom 61% 3-Bedroom 0% 1-Bedroom NA 3-Bedroom NA
CONDITION: Average Average
APPEAL: Average Average
AMENITIES:
Unit Amenities X Attach. Garage Vaulted Ceiling Attach. Garage X Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
X Fireplace X Fireplace
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
X Spa/Jacuzzi Car Wash X Spa/Jacuzzi Car Wash
X Basketball Court BBQ Equipment Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball X Meeting Hall Sand Volley Ball X Meeting Hall
X Tennis Court Secured Parking X Tennis Court Secured Parking
Racquet Ball X Laundry Room Racquet Ball X Laundry Room
Jogging Track X Business Office Jogging Track X Business Office
X Gym Room X Gym Room
OCCUPANCY: 92% 99%
LEASING DATA:
Available Leasing Terms 6 to 12 Months 12 months
Concessions 1/2 Month free rent on one-bedrooms
Pet Deposit $300 $300
Utilities Paid by
Tenant: X Electric Natural Gas X Electric Natural Gas
X Water Trash X Water Trash
Confirmation May __, 2003; Roxane Tevis (Property May 28, 2003; (Leasing Agent)
Manager)
Telephone Number (913)648-4339 (877)895-7785
NOTES:
COMPARISON TO SUBJECT: Similar
COMPARABLE COMPARABLE
DESCRIPTION R - 2 R - 3
----------- ----- -----
Property Name Chesapeake Estates Apartments Rosehill Pointe Apartments
Management Company Price Management Company Equity Apartments
LOCATION:
Address 9250 Lichtenauer Drive 12701 West 88th Street
City, State Lenexa, KS Lenexa, KS
County Johnson County Johnson County
Proximity to Subject 5 miles SW of the subject 2.5 miles SW of the subject
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) 493,430 393,776
Year Built 1987 1987
Effective Age 16 16
Building Structure Type Brick, siding, pitched composition Wood siding, pitched composition shingle
shingle roofs roof
Parking Type (Gr., Cov.,
etc.) Open, carports Open, carports
Number of Units 568 500
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
---- ---- ---- --- ---- ---- ---- ---
1 1Br/1Ba 610 NA $ 565 2 1Br/1Ba 720 NA $ 575
1 1Br/1Ba 678 NA $ 585 4 1Br/1Ba 794 NA $ 590
6 2Br/2Ba 906 NA $ 710 6 2Br/1Ba 904 NA $ 640
8 2Br/2Ba 1,185 NA $ 850 8 2Br/2Ba 1,263 NA $ 754
8 2Br/2Ba 1,263 NA $ 929
Average Unit Size (SF) 869 788
Unit Breakdown: Efficiency 0% 2-Bedroom 0% Efficiency 0% 2-Bedroom 0%
1-Bedroom 0% 3-Bedroom 0% 1-Bedroom 0% 3-Bedroom 0%
CONDITION: Good Average
APPEAL: Good Average
AMENITIES:
Unit Amenities Attach. Garage X Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
X Fireplace X Fireplace
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
X Spa/Jacuzzi Car Wash X Spa/Jacuzzi X Car Wash
Basketball Court X BBQ Equipment X Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
X Sand Volley Ball X Meeting Hall Sand Volley Ball X Meeting Hall
X Tennis Court Secured Parking X Tennis Court X Secured Parking
X Racquet Ball X Laundry Room Racquet Ball X Laundry Room
Jogging Track X Business Office Jogging Track X Business Office
X Gym Room X Gym Room
OCCUPANCY: 91% 95%
LEASING DATA:
Available Leasing Terms 6 or 12 months 6 to 12 months
Concessions Discounts on selected units None
Pet Deposit $150 $300
Utilities Paid by
Tenant: X Electric Natural Gas X Electric Natural Gas
X Water Trash X Water Trash
Confirmation May 28, 2003; (Leasing Agent) May 28, 2003; (Leasing Agent)
Telephone Number (913)888-1505 (877)566-3702
NOTES:
COMPARISON TO SUBJECT: Superior Similar
COMPARABLE COMPARABLE
DESCRIPTION R - 4 R - 5
----------- ----- -----
Property Name Cedar Crest Apartments
Management Company Equity Apartments
LOCATION:
Address 6500 West 91st Street
City, State Overland Park, KS
County Johnson County
Proximity to Subject 3.5 miles SE of the subject
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) NA
Year Built 1987
Effective Age 16
Building Structure Type Wood siding, composition shingle roofs
Parking Type (Gr., Cov.,
etc.) Open, carports
Number of Units 466
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
---- ---- ---- --- ---- ---- ---- ---
3 1Br/1Ba 720 $ 559
4 1Br/1Ba 794 $ 559
6 2Br/1Ba 904 $ 709
8 2Br/2Ba 1,263 $ 785
8 2Br/2Ba 1,263 $ 889
Average Unit Size (SF) NA
Unit Breakdown: Efficiency 0% 2-Bedroom 0% Efficiency 0% 2-Bedroom 0%
1-Bedroom 0% 3-Bedroom 0% 1-Bedroom 0% 3-Bedroom 0%
CONDITION: Average Average
APPEAL: Average Average
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony X W/D Connect. Balcony W/D Connect.
X Fireplace Fireplace
X Cable TV Ready Cable TV Ready
Project Amenities X Swimming Pool Swimming Pool
X Spa/Jacuzzi Car Wash Spa/Jacuzzi Car Wash
X Basketball Court X BBQ Equipment Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball X Meeting Hall Sand Volley Ball Meeting Hall
X Tennis Court X Secured Parking Tennis Court Secured Parking
Racquet Ball X Laundry Room Racquet Ball Laundry Room
Jogging Track X Business Office Jogging Track Business Office
X Gym Room Gym Room
OCCUPANCY: 90%
LEASING DATA:
Available Leasing Terms 6 to 12 Months
Concessions None
Pet Deposit $700
Utilities Paid by
Tenant: X Electric Natural Gas Electric Natural Gas
X Water Trash Water Trash
Confirmation May 27, 2003; (Leasing Agent)
Telephone Number (504)394-6161
NOTES:
COMPARISON TO SUBJECT: Superior Superior
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
PHOTOGRAPHS OF COMPARABLE RENT PROPERTIES
COMPARABLE R-1 COMPARABLE R-2 COMPARABLE R-3
ASPEN LODGE CHESAPEAKE ESTATES APARTMENTS ROSEHILL POINTE APARTMENTS
8100 Perry Road 9250 Lichtenauer Drive 12701 West 88th Street
Overland Park, KS Lenexa, KS Lenexa, KS
[PICTURE OF LODGE] [PICTURE OF LODGE] [PICTURE OF LODGE]
COMPARABLE R-4 COMPARABLE R-5
CEDAR CREST APARTMENTS
6500 West 91st Street
Overland Park, KS
[PICTURE OF LODGE] N/A
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
EXHIBIT C
ASSUMPTIONS AND LIMITING CONDITIONS
(3 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
No responsibility is assumed for matters legal in nature. No investigation has
been made of the title to or any liabilities against the property appraised. In
this appraisal, it is presumed that, unless otherwise noted, the owner's claim
is valid, the property rights are good and marketable, and there are no
encumbrances which cannot be cleared through normal processes.
To the best of our knowledge, all data set forth in this report are true and
accurate. Although gathered from reliable sources, no guarantee is made nor
liability assumed for the accuracy of any data, opinions, or estimates
identified as being furnished by others which have been used in formulating this
analysis.
Land areas and descriptions used in this appraisal were obtained from public
records and have not been verified by legal counsel or a licensed surveyor.
No soil analysis or geological studies were ordered or made in conjunction with
this report, nor were any water, oil, gas, or other subsurface mineral and use
rights or conditions investigated.
Substances such as asbestos, urea-formaldehyde foam insulation, other chemicals,
toxic wastes, or other potentially hazardous materials could, if present,
adversely affect the value of the property. Unless otherwise stated in this
report, the existence of hazardous substance, which may or may not be present on
or in the property, was not considered by the appraiser in the development of
the conclusion of value. The stated value estimate is predicated on the
assumption that there is no material on or in the property that would cause such
a loss in value. No responsibility is assumed for any such conditions, and the
client has been advised that the appraiser is not qualified to detect such
substances, quantify the impact on values, or develop the remedial cost.
No environmental impact study has been ordered or made. Full compliance with
applicable federal, state, and local environmental regulations and laws is
assumed unless otherwise stated, defined, and considered in the report. It is
also assumed that all required licenses, consents, or other legislative or
administrative authority from any local, state, or national government or
private entity organization either have been or can be obtained or renewed for
any use which the report covers.
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
It is assumed that all applicable zoning and use regulations and restrictions
have been complied with unless a nonconformity has been stated, defined, and
considered in the appraisal report. Further, it is assumed that the utilization
of the land and improvements is within the boundaries of the property described
and that no encroachment or trespass exists unless noted in the report.
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 on the value of the
property. Since we have no direct evidence relating to this issue, we did not
consider the possible noncompliance with the requirements of ADA in estimating
the value of the property.
We have made a physical inspection of the property and noted visible physical
defects, if any, in our report. This inspection was made by individuals
generally familiar with real estate and building construction. However, these
individuals are not architectural or structural engineers who would have
detailed knowledge of building design and structural integrity. Accordingly, we
do not opine on, nor are we responsible for, the structural integrity of the
property including its conformity to specific governmental code requirements,
such as fire, building and safety, earthquake, and occupancy, or any physical
defects which were not readily apparent to the appraiser during the inspection.
The value or values presented in this report are based upon the premises
outlined herein and are valid only for the purpose or purposes stated.
The date of value to which the conclusions and opinions expressed apply is set
forth in this report. The value opinion herein rendered is based on the status
of the national business economy and the purchasing power of the U.S. dollar as
of that date.
Testimony or attendance in court or at any other hearing is not required by
reason of this appraisal unless arrangements are previously made within a
reasonable time in advance for
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
such testimony, and then such testimony shall be at American Appraisal
Associates, Inc.'s, prevailing per diem for the individuals involved.
Possession of this report or any copy thereof does not carry with it the right
of publication. No portion of this report (especially any conclusion to use, the
identity of the appraiser or the firm with which the appraiser is connected, or
any reference to the Appraisal Institute or the designations awarded by this
organization) shall be disseminated to the public through prospectus,
advertising, public relations, news, or any other means of communication without
the written consent and approval of American Appraisal Associates, Inc.
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT D
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
EXHIBIT D
CERTIFICATE OF APPRAISER
(1 PAGE)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT D
CERTIFICATE OF APPRAISER
I 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 represent the
unbiased professional analyses, opinions, and conclusions of American
Appraisal Associates, Inc.
American Appraisal Associates, Inc. and I personally, have no present
or prospective interest in the property that is the subject of this
report and have no personal interest or bias with respect to the
parties involved.
Compensation for American Appraisal Associates, Inc. is not contingent
on an action or event resulting from the analyses, opinions, or
conclusions in, or the use of, this report.
The analyses, opinions, and conclusions were developed, and this report
has been prepared, in conformity with the requirements of the Uniform
Standards of Professional Appraisal Practice and the Code of
Professional Ethics and the Standards of Professional 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.
I personally did not inspect the subject property. Kim Cook provided
significant real property appraisal assistance in the preparation of
this report.
I am currently in compliance with the Appraisal Institute's continuing
education requirements.
-s- Frank Fehribach
Frank Fehribach, MAI
Managing Principal, Real Estate Group
Texas State Certified General Real Estate
Appraiser #TX-1323954-G
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
EXHIBIT E
QUALIFICATIONS OF APPRAISER
(2 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
FRANK A. FEHRIBACH, MAI
MANAGING PRINCIPAL, REAL ESTATE GROUP
POSITION Frank A. Fehribach is a Managing Principal for the Dallas Real
Estate Group of American Appraisal Associates, Inc. ("AAA").
EXPERIENCE
Valuation Mr. Fehribach has experience in valuations for resort hotels;
Class A office buildings; Class A multifamily complexes;
industrial buildings and distribution warehousing; multitract
mixed-use vacant land; regional malls; residential subdivision
development; and special-purpose properties such as athletic
clubs, golf courses, manufacturing facilities, nursing homes,
and medical buildings. Consulting assignments include
development and feasibility studies, economic model creation
and maintenance, and market studies.
Mr. Fehribach also has been involved in overseeing appraisal
and consulting assignments in Mexico and South America.
Business Mr. Fehribach joined AAA as an engagement director in 1998. He
was promoted to his current position in 1999. Prior to that, he
was a manager at Arthur Andersen LLP. Mr. Fehribach has been in
the business of real estate appraisal for over ten years.
EDUCATION University of Texas - Arlington
Master of Science - Real Estate
University of Dallas
Master of Business Administration - Industrial Management
Bachelor of Arts - Economics
STATE State of Arizona
CERTIFICATIONS Certified General Real Estate Appraiser, #30828
State of Arkansas
State Certified General Appraiser, #CG1387N
State of Colorado
Certified General Appraiser, #CG40000445
State of Georgia
Certified General Real Property Appraiser, #218487
State of Michigan
Certified General Appraiser, #1201008081
State of Texas
Real Estate Salesman License, #407158 (Inactive)
State of Texas State
Certified General Real Estate Appraiser, #TX-1323954-G
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
PROFESSIONAL Appraisal Institute, MAI Designated Member Candidate Member of
AFFILIATIONS the CCIM Institute pursuing Certified Commercial Investment
Member (CCIM) designation
PUBLICATIONS "An Analysis of the Determinants of Industrial Property
Valuation," Co-authored with Dr. Ronald C. Rutherford and Dr.
Mark Eakin, The Journal of Real Estate Research, Vol. 8, No. 3,
Summer 1993, p. 365.
AMERICAN APPRAISAL ASSOCIATES, INC.
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
GENERAL SERVICE CONDITIONS
AMERICAN APPRAISAL ASSOCIATES, INC.
FOUR WINDS APARTMENTS, OVERLAND PARK, KANSAS
GENERAL SERVICE CONDITIONS
The services(s) provided by AAA will be performed in accordance with
professional appraisal standards. Our compensation is not contingent in any way
upon our conclusions of value. We assume, without independent verification, the
accuracy of all data provided to us. We will act as an independent contractor
and reserve the right to use subcontractors. All files, workpapers or documents
developed by us during the course of the engagement will be our property. We
will retain this data for at least five years.
Our report is to be used only for the specific purpose stated herein; and any
other use is invalid. No reliance may be made by any third party without our
prior written consent. You may show our report in its entirety to those third
parties who need to review the information contained herein. No one should rely
on our report as a substitute for their own due diligence. We understand that
our reports will be described in public tender offer documents distributed to
limited partners. We reserve the right to review the public tender offer
documents prior to their issuance to confirm that disclosures of facts from the
current appraisals are accurate. No reference to our name or our report, in
whole or in part, in any other SEC filing or private placement memorandum you
prepare and/or distribute to third parties may be made without our prior written
consent.
The Tender Offer Partnerships, as that term is defined in the Settlement
Agreement, agree to indemnify and hold us harmless against and from any and all
losses, claims, actions, damages, expenses or liabilities, including reasonable
attorneys' fees, to which we may become subject in connection with this
engagement except where such losses, claims, actions, damages, expenses or
liabilities, including reasonable attorney's fees, arise or result from AAA's
misconduct, bad faith or negligence. Co-Clients will not be liable for any of
our acts or omissions.
AAA is an equal opportunity employer.