HAMPTON GREENS
10911 WOODMEADOW PARKWAY
DALLAS, TEXAS
MARKET VALUE -
FEE SIMPLE ESTATE
AS OF APRIL 28, 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 LOGO]
[AMERICAN APPRAISAL ASSOCIATES LOGO]
[AMERICAN APPRAISAL ASSOCIATES LETTERHEAD]
JULY 17, 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: HAMPTON GREENS
10911 WOODMEADOW PARKWAY
DALLAS, DALLAS COUNTY, TEXAS
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 309 units with a
total of 216,528 square feet of rentable area. The improvements were built in
1985. The improvements are situated on 9 acres. Overall, the improvements are in
average condition. As of the date of this appraisal, the subject property is 85%
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
HAMPTON GREENS, DALLAS, TEXAS
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 April 28, 2003 is:
($8,500,000)
Respectfully submitted,
AMERICAN APPRAISAL ASSOCIATES, INC.
-s- Frank Fehribach
July 17, 2003 Frank Fehribach, MAI
#053272 Managing Principal, Real Estate Group
Texas State Certified General Real Estate Appraiser
#TX-1323954-G
Report By:
Shayne Hatch
Texas Appraiser Trainee
# TX-1330454-T
AMERICAN APPRAISAL ASSOCIATES, INC. TABLE OF CONTENTS PAGE 3
HAMPTON GREENS, DALLAS, TEXAS
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............................................ 39
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
HAMPTON GREENS, DALLAS, TEXAS
EXECUTIVE SUMMARY
PART ONE - PROPERTY DESCRIPTION
PROPERTY NAME: Hampton Greens
LOCATION: 10911 Woodmeadow Parkway
Dallas, Texas
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: April 28, 2003
DATE OF REPORT: July 17, 2003
PHYSICAL DESCRIPTION - SITE & IMPROVEMENTS:
SITE:
Size: 9 acres, or 392,040 square feet
Assessor Parcel No.: 0085790N00002
Floodplain: Community Panel No. 48113C0360K (February 5,
2003)
Flood Zone X, an area outside the floodplain.
Zoning: MF-2 (A) (Multi Family District)
BUILDING:
No. of Units: 309 Units
Total NRA: 216,528 Square Feet
Average Unit Size: 701 Square Feet
Apartment Density: 34.3 units per acre
Year Built: 1985
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 523 $430 $0.82 $ 30,960 $ 371,520
1Br/1Ba - 1B10 652 $450 $0.69 $ 56,700 $ 680,400
1Br/1Ba - 1C10 745 $520 $0.70 $ 15,600 $ 187,200
1Br/1Ba - 1D10 748 $575 $0.77 $ 15,525 $ 186,300
2Br/2Ba - 2A20 892 $681 $0.76 $ 12,258 $ 147,096
2Br/2Ba - 2B20 958 $720 $0.75 $ 4,320 $ 51,840
2Br/2Ba - 2C20 1,079 $800 $0.74 $ 24,000 $ 288,000
Total $159,363 $1,912,356
OCCUPANCY: 85%
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 5
HAMPTON GREENS, DALLAS, TEXAS
ECONOMIC LIFE: 45 Years
EFFECTIVE AGE: 18 Years
REMAINING ECONOMIC LIFE: 27 Years
SUBJECT PHOTOGRAPHS AND LOCATION MAP:
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
EXTERIOR BUILDING EXTERIOR APARTMENT & LAUNDRY BUILDINGS
AREA MAP
[MAP]
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 6
HAMPTON GREENS, DALLAS, TEXAS
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
HAMPTON GREENS, DALLAS, TEXAS
PART TWO - ECONOMIC INDICATORS
INCOME CAPITALIZATION APPROACH
Amount $/Unit
------ ------
DIRECT CAPITALIZATION
Potential Rental Income $1,912,356 $ 6,189
Effective Gross Income $1,844,720 $ 5,970
Operating Expenses $ 935,899 $ 3,029 50.7% of EGI
Net Operating Income: $ 831,572 $ 2,691
Capitalization Rate 9.50%
DIRECT CAPITALIZATION VALUE $8,600,000 * $27,832 / UNIT
DISCOUNTED CASH FLOW ANALYSIS:
Holding Period 10 years
2002 Economic Vacancy 12%
Stabilized Vacancy & Collection Loss: 10%
Lease-up / Stabilization Period 12 months
Terminal Capitalization Rate 10.00%
Discount Rate 11.00%
Selling Costs 3.00%
Growth Rates:
Income 3.00%
Expenses: 3.00%
DISCOUNTED CASH FLOW VALUE $8,800,000 * $28,479 / UNIT
RECONCILED INCOME CAPITALIZATION VALUE $8,700,000 $28,155 / UNIT
SALES COMPARISON APPROACH
PRICE PER UNIT:
Range of Sales $/Unit (Unadjusted) $27,016 to $39,835
Range of Sales $/Unit (Adjusted) $30,015 to $38,222
VALUE INDICATION - PRICE PER UNIT $9,400,000 * $30,421 / UNIT
EGIM ANALYSIS
Range of EGIMs from Improved Sales 4.24 to 5.50
Selected EGIM for Subject 4.50
Subject's Projected EGI $1,844,720
EGIM ANALYSIS CONCLUSION $8,100,000 * $26,214 / UNIT
NOI PER UNIT ANALYSIS CONCLUSION $7,500,000 * $24,272 / UNIT
RECONCILED SALES COMPARISON VALUE $8,500,000 $27,508 / 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
HAMPTON GREENS, DALLAS, TEXAS
PART THREE - SUMMARY OF VALUE CONCLUSIONS
SALES COMPARISON APPROACH:
Price Per Unit $9,400,000
NOI Per Unit $7,500,000
EGIM Multiplier $8,100,000
INDICATED VALUE BY SALES COMPARISON $8,500,000 $27,508 / UNIT
INCOME APPROACH:
Direct Capitalization Method: $8,600,000
Discounted Cash Flow Method: $8,800,000
INDICATED VALUE BY THE INCOME APPROACH $8,700,000 $28,155 / UNIT
RECONCILED OVERALL VALUE CONCLUSION: $8,500,000 $27,508 / UNIT
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 9
HAMPTON GREENS, DALLAS, TEXAS
INTRODUCTION
IDENTIFICATION OF THE SUBJECT
The subject property is located at 10911 Woodmeadow Parkway, Dallas, Dallas
County, Texas. Dallas identifies it as 0085790N00002.
SCOPE OF THE ASSIGNMENT
The property, neighborhood, and comparables were inspected by Shayne Hatch on
April 28, 2003. Frank Fehribach, MAI has not made a personal inspection of the
subject property. Shayne Hatch performed the research, valuation analysis and
wrote the report. Frank Fehribach, MAI reviewed the report and concurs with the
value. Frank Fehribach, MAI and Shayne Hatch 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 April 28, 2003.
The date of the report is July 17, 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
HAMPTON GREENS, DALLAS, TEXAS
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 Hampton Greens CPGF 22
LP. 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
HAMPTON GREENS, DALLAS, TEXAS
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 Dallas, Texas. Overall, the neighborhood is
characterized as a suburban setting with the predominant land use being single
family residential. The subject's neighborhood is generally defined by the
following boundaries.
NEIGHBORHOOD BOUNDARIES
East - La Prada Drive and I-635
West - Barnes Bridge Road and Ferguson Road
South - La Prada Drive
North - I-635
MAJOR EMPLOYERS
Major employers in the subject's area include Bank of America, Baylor University
Medical Center, Children's Medical Center Dallas Medical City Dallas, Parkland
Memorial Hospital, Presbyterian Hospital-Dallas, Southwest Airlines Texas
Instruments Headquarters, UT Southwestern Med Center, and Vought. 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
HAMPTON GREENS, DALLAS, TEXAS
NEIGHBORHOOD DEMOGRAPHICS
AREA
--------------------------------------------
CATEGORY 1-MI. RADIUS 3-MI. RADIUS 5-MI. RADIUS MSA
- ------------------------------------------------------------------------------------------
POPULATION TRENDS
Current Population 17,242 136,112 288,954 3,673,578
5-Year Population 17,880 141,377 304,120 4,073,691
% Change CY-5Y 3.7% 3.9% 5.2% 10.9%
Annual Change CY-5Y 0.7% 0.8% 1.0% 2.2%
==========================================================================================
HOUSEHOLDS
Current Households 7,086 49,590 106,302 1,333,540
5-Year Projected Households 7,223 50,610 109,613 1,464,730
% Change CY - 5Y 1.9% 2.1% 3.1% 9.8%
Annual Change CY-5Y 0.4% 0.4% 0.6% 2.0%
==========================================================================================
INCOME TRENDS
Median Household Income $ 36,931 $ 39,713 $ 41,168 $ 52,302
Per Capita Income $ 20,514 $ 18,987 $ 20,568 $ 25,319
Average Household Income $ 49,922 $ 52,001 $ 55,889 $ 69,747
==========================================================================================
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 49.80% 38.15% 38.28% 36.71%
5-Year Projected % Renting 49.78% 38.33% 38.39% 36.11%
=======================================================================================
% of Households Owning 40.34% 53.74% 52.22% 53.58%
5-Year Projected % Owning 40.07% 53.54% 52.25% 54.86%
=======================================================================================
Source: Demographics Now
AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 13
HAMPTON GREENS, DALLAS, TEXAS
SURROUNDING IMPROVEMENTS
The following uses surround the subject property:
North - Apartments/ I-635
South - Golf Course
East - Apartments and Residential
West - Apartments and Residential
CONCLUSIONS
The subject is well located within the city of Dallas. The neighborhood is
characterized as being mostly suburban in nature and is currently in the stable
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
HAMPTON GREENS, DALLAS, TEXAS
MARKET ANALYSIS
The subject property is located in the city of Dallas in Dallas County. The
overall pace of development in the subject's market is more or less stable.
There is no new construction in the area of the subject. The following table
illustrates historical vacancy rates for the subject's market.
HISTORICAL VACANCY RATE
Period Region Submarket
- ------------------------------------------
4Q01 N/A 9.4%
1Q02 N/A 10.1%
2Q02 N/A 9.7%
3Q02 N/A 10.6%
4Q02 8.6% 10.7%
1Q03 9.4% 10.4%
Source: REIS
Occupancy trends in the subject's market are stable. Historically speaking, the
subject's submarket has underperformed the overall market. Vacancy rates in the
subject's submarket have been greater than those of the Dallas market. As of the
4th quarter of 2001 the vacancy rate in the submarket was 9.4%, and this has
increased during the last year to 10.4% for the 1st quarter of 2003.
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
- -------------------------------------------------------------------------------
4Q01 N/A - $621 -
1Q02 N/A N/A $609 -1.9%
2Q02 N/A N/A $619 1.6%
3Q02 N/A N/A $617 -0.3%
4Q02 N/A N/A $618 0.2%
1Q03 N/A N/A $619 0.2%
Source: REIS
The following table illustrates a summary of the subject's competitive set.
AMERICAN APPRAISAL ASSOCIATES, INC. MARKET ANALYSIS PAGE 15
HAMPTON GREENS, DALLAS, TEXAS
COMPETITIVE PROPERTIES
No. Property Name Units Ocpy. Year Built Proximity to subject
- ----------------------------------------------------------------------------------------------------------
R-1 La Prada Club Unk. NA 1988 0.25 Miles
R-2 Oak Meadow Apartments Unk. NA 1989 0.25 Miles
R-3 Gables Point Apartments 152 NA 1989 0.25 Miles
R-4 Honey Creek Apartments 656 NA 1989 0.75 Miles
R-5 Greens Crossing 364 NA 1988 0.25 Miles
Subject Hampton Greens 309 85% 1985
The market rental rates have remained virtually unchanged over the last year. At
year end 2001, the average rental rate for the subject's submarket was $621 per
unit. As of the 1st quarter of 2003 the submarket average rental rate was $619
per unit.
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 16
HAMPTON GREENS, DALLAS, TEXAS
PROPERTY DESCRIPTION
SITE ANALYSIS
Site Area 9 acres, or 392,040 square feet
Shape Irregular
Topography Level
Utilities All necessary utilities are available to the
site.
Soil Conditions Stable
Easements Affecting Site None other than typical utility easements
Overall Site Appeal Average
Flood Zone:
Community Panel 48113C0360K, dated February 5, 2003
Flood Zone Zone X
Zoning MF-2 (A), 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
- ----------------------------------------------------------------------------------------------------------
0085790N00002 $1,176,120 $7,384,710 $8,560,830 0.02803 $239,946
IMPROVEMENT ANALYSIS
Year Built 1985
Number of Units 309
Net Rentable Area 216,528 Square Feet
Construction:
Foundation Reinforced concrete slab
Frame Heavy or light wood
Exterior Walls Brick or masonry
Roof Composition shingle over a wood truss
structure
Project Amenities Amenities at the subject include a swimming
pool, spa/jacuzzi, gym room, barbeque
equipment, laundry room, business office, and
parking area.
Unit Amenities Individual unit amenities include a balcony,
fireplace, cable TV connection and washer
dryer connection. Appliances available in each
unit include a refrigerator, stove,
dishwasher, garbage disposal, and oven.
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 17
HAMPTON GREENS, DALLAS, TEXAS
Unit Mix:
Unit Area
Unit Type Number of Units (Sq. Ft.)
1Br/1Ba - 1A10 72 523
1Br/1Ba - 1B10 126 652
1Br/1Ba - 1C10 30 745
1Br/1Ba - 1D10 27 748
2Br/2Ba - 2A20 18 892
2Br/2Ba - 2B20 6 958
2Br/2Ba - 2C20 30 1,079
Overall Condition Average
Effective Age 18 years
Economic Life 45 years
Remaining Economic Life 27 years
Deferred Maintenance None
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
1985 and consist of a 309-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
HAMPTON GREENS, DALLAS, TEXAS
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
HAMPTON GREENS, DALLAS, TEXAS
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
HAMPTON GREENS, DALLAS, TEXAS
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
HAMPTON GREENS, DALLAS, TEXAS
SUMMARY OF COMPARABLE SALES -IMPROVED
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
- -----------------------------------------------------------------------------------------------------------------
Property Name Hampton Greens Enfield Apartments Stoney Creek Apartments
LOCATION:
Address 10911 Woodmeadow Parkway 11330 Amanda Lane 11333 Amanda Lane
City, State Dallas, Texas Dallas, TX Dallas, TX
County Dallas Dallas Dallas
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 216,528 208,376 276,296
Year Built 1985 1984 1984
Number of Units 309 286 364
Unit Mix: Type Total Type Total Type Total
1Br/1Ba - 1A10 72 1Br/1Ba- A 226 1Br/1Ba- A 288
1Br/1Ba - 1B10 126 2Br/2Ba- 2A 60 2Br/2Ba- 2A 76
1Br/1Ba - 1C10 30
1Br/1Ba - 1D10 27
2Br/2Ba - 2A20 18
2Br/2Ba - 2B20 6
2Br/2Ba- 2C20 30
Average Unit Size (SF) 701 729 759
Land Area (Acre) 9.0000 8.3800 14.7500
Density (Units/Acre) 34.3 34.1 24.7
Parking Ratio (Spaces/Unit) 1.41 1.48 1.37
Parking Type (Gr., Cov., etc.) Open Open Open
CONDITION: Average Good Average
APPEAL: Average Good Average
AMENITIES:
Pool/Spa Yes/Yes Yes/Yes Yes/Yes
Gym Room Yes Yes No
Laundry Room Yes Yes No
Secured Parking No Yes No
Sport Courts No No No
OCCUPANCY: 85% N/A N/A
TRANSACTION DATA:
Sale Date August, 2001 August, 2001
Sale Price ($) $10,000,000 $14,500,000
Grantor Winthrop Texas Investors Stoney Creek GPGF 22 (LP)
Grantee Dallas City Homes-Amanda Stoney Creek (LLC)
Lane LLC
Sale Documentation DAA-83004 DAA-77912
Verification Oboyle Properties Oboyle Properties
Telephone Number 972-934-3400 972-934-3400
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF
Potential Gross Income $ 0 $ 0 $0.00 $ 0 $ 0 $0.00
Vacancy/Credit Loss $ 0 $ 0 $0.00 $ 0 $ 0 $0.00
Effective Gross Income $2,040,048 $7,133 $9.79 $2,635,512 $7,240 $9.54
Operating Expenses $ 843,558 $2,950 $4.05 $1,071,671 $2,944 $3.88
Net Operating Income $1,196,490 $4,184 $5.74 $1,563,841 $4,296 $5.66
NOTES:
PRICE PER UNIT $34,965 $39,835
PRICE PER SQUARE FOOT $ 47.99 $ 52.48
EXPENSE RATIO 41.3% 40.7%
EGIM 4.90 5.50
OVERALL CAP RATE 11.96% 10.79%
Cap Rate based on Pro Forma or Actual Income? ACTUAL ACTUAL
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
- --------------------------------------------------------------------------------------------------------------------
Property Name Sunflower Apartments Canyon Parke Apartments Meadow Creek Apartments
LOCATION:
Address 8401 Skillman Street 2202 Hollybush Drive 518 Tacoma Drive
City, State Dallas, TX Dallas, TX Garland, TX
County Dallas Dallas Dallas
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 178,152 289,853 102,672
Year Built 1978 1975 1979
Number of Units 248 312 128
Unit Mix: Type Total Type Total Type Total
1 Bedroom Units 192 N/A 1Br/1Ba-A 32
2 Bedroom Units 56 2Br/1.5Ba-2A 16
2Br/1.5Ba-2B 16
2Br/1.5Ba-2C 16
2Br/2Ba-2D 32
2Br/2Ba-2E 16
Average Unit Size (SF) 718 929 802
Land Area (Acre) 8.1200 13.5500 7.3900
Density (Units/Acre) 30.5 23.0 17.3
Parking Ratio (Spaces/Unit) 1.44 N/A 1.50
Parking Type (Gr., Cov., etc.) Open Open Open
CONDITION: Average Fair Average
APPEAL: Average Fair Average
AMENITIES:
Pool/Spa Yes/No Yes/No Yes/No
Gym Room Yes No No
Laundry Room Yes Yes Yes
Secured Parking No Yes No
Sport Courts No No No
OCCUPANCY: N/A N/A N/A
TRANSACTION DATA:
Sale Date December, 2000 April, 2000 February, 2000
Sale Price ($) $6,700,000 $10,000,000 $3,690,000
Grantor Dek Associates Southwest Canyon Park MLD/HI-Life Properties (J.V.)
Partners (LP)
Grantee Sunflower Apartments Canyon Park 312 (Ltd) Meadow Creek Apartments
(LP)
Sale Documentation 20237-4945 200068-4892 200032-0517
Verification Oboyle Properties Lewis Mr. Gottsacker
Telephone Number 972-934-3400 972-458-7300 214-373-1322
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF Total $ $/Unit $/SF
Potential Gross Income $ 0 $ 0 $0.00 $ 0 $ 0 $0.00 $ 0 $ 0 $0.00
Vacancy/Credit Loss $ 0 $ 0 $0.00 $ 0 $ 0 $0.00 $ 0 $ 0 $0.00
Effective Gross Income $1,551,295 $6,255 $8.71 $ 0 $ 0 $0.00 $869,864 $6,796 $8.47
Operating Expenses $ 674,956 $2,722 $3.79 $ 0 $ 0 $0.00 $485,944 $3,796 $4.73
Net Operating Income $ 876,339 $3,534 $4.92 $ 0 $ 0 $0.00 $383,920 $2,999 $3.74
NOTES:
PRICE PER UNIT $27,016 $32,051 $28,828
PRICE PER SQUARE FOOT $ 37.61 $ 34.50 $ 35.94
EXPENSE RATIO 43.5% N/A 55.9%
EGIM 4.32 N/A 4.24
OVERALL CAP RATE 13.08% N/A 10.40%
Cap Rate based on Pro Forma or
Actual Income? ACTUAL ACTUAL
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 22
HAMPTON GREENS, DALLAS, TEXAS
IMPROVED SALES MAP
[MAP]
IMPROVED SALES ANALYSIS
The improved sales indicate a sales price range from $27,016 to $39,835 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 $30,015 to $38,222 per unit with a mean or average adjusted price
of $32,744 per unit. The median adjusted price is $31,058 per unit. Based on the
following analysis, we have concluded to a value of $31,000 per unit, which
results in an "as is" value of $9,400,000 (rounded after necessary adjustment,
if any).
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 23
HAMPTON GREENS, DALLAS, TEXAS
SALES ADJUSTMENT GRID
DESCRIPTION SUBJECT COMPARABLE COMPARABLE
I - 1 I - 2
Property Name Hampton Greens Enfield Apartments Stoney Creek Apartments
Address 10911 Woodmeadow Parkway 11330 Amanda Lane 11333 Amanda Lane
City Dallas, Texas Dallas, TX Dallas, TX
Sale Date August, 2001 August, 2001
Sale Price ($) $10,000,000 $14,500,000
Net Rentable Area (SF) 216,528 208,376 276,296
Number of Units 309 286 364
Price Per Unit $34,965 $39,835
Year Built 1985 1984 1984
Land Area (Acre) 9.0000 8.3800 14.7500
VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 08-2001 1% 08-2001 1%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $35,315 $40,234
Location Comparable 0% Comparable 0%
Number of Units 309 286 0% 364 0%
Quality / Appeal Good Comparable 0% Comparable 0%
Age / Condition 1985 1984 / Good 0% 1984 / Average 0%
Occupancy at Sale 85% N/A 0% N/A 0%
Amenities Good Comparable 0% Comparable 0%
Average Unit Size (SF) 701 729 -5% 759 -5%
PHYSICAL ADJUSTMENT -5% -5%
FINAL ADJUSTED VALUE ($/UNIT) $33,549 $38,222
DESCRIPTION COMPARABLE COMPARABLE COMPARABLE
I - 3 I - 4 I - 5
Property Name Sunflower Apartments Canyon Parke Apartments Meadow Creek Apartments
Address 8401 Skillman Street 2202 Hollybush Drive 518 Tacoma Drive
City Dallas, TX Dallas, TX Garland, TX
Sale Date December, 2000 April, 2000 February, 2000
Sale Price ($) $6,700,000 $10,000,000 $3,690,000
Net Rentable Area (SF) 178,152 289,853 102,672
Number of Units 248 312 128
Price Per Unit $27,016 $32,051 $28,828
Year Built 1978 1975 1979
Land Area (Acre) 8.1200 13.5500 7.3900
VALUE ADJUSTMENTS DESCRIPTION ADJ. DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate 0% Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 12-2000 1% 04-2000 2% 02-2000 2%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $27,286 $32,692 $29,405
Location Comparable 0% Superior -10% Inferior 10%
Number of Units 248 0% 312 0% 128 -10%
Quality / Appeal Inferior 5% Inferior 5% Inferior 10%
Age / Condition 1978 / Average 5% 1975 / Fair 10% 1979 / Average 5%
Occupancy at Sale N/A 0% N/A 0% N/A 0%
Amenities Comparable 0% Comparable 0% Comparable 0%
Average Unit Size (SF) 718 0% 929 -10% 802 -10%
PHYSICAL ADJUSTMENT 10% -5% 5%
FINAL ADJUSTED VALUE ($/UNIT) $30,015 $31,058 $30,875
SUMMARY
VALUE RANGE (PER UNIT) $30,015 TO $ 38,222
MEAN (PER UNIT) $32,744
MEDIAN (PER UNIT) $31,058
VALUE CONCLUSION (PER UNIT) $31,000
VALUE OF IMPROVEMENT & MAIN SITE $9,579,000
LESS: LEASE-UP COST -$ 59,000
PV OF CONCESSIONS -$ 123,000
VALUE INDICATED BY SALES COMPARISON $9,397,000
APPROACH
ROUNDED $9,400,000
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
HAMPTON GREENS, DALLAS, TEXAS
NOI PER UNIT COMPARISON
COMPARABLE NO. OF SALE PRICE NOI/ SUBJECT NOI ADJUSTMENT INDICATED
NO. UNITS PRICE/UNIT OAR NOI/UNIT SUBJ. NOI/UNIT FACTOR VALUE/UNIT
- ---------------------------------------------------------------------------------------------------------------
I-1 286 $10,000,000 11.96% $1,196,490 $831,572 0.643 $22,492
$ 34,965 $ 4,184 $ 2,691
I-2 364 $14,500,000 10.79% $1,563,841 $831,572 0.626 $24,953
$ 39,835 $ 4,296 $ 2,691
I-3 248 $ 6,700,000 13.08% $ 876,339 $831,572 0.762 $20,575
$ 27,016 $ 3,534 $ 2,691
I-4 312 $10,000,000 N/A $831,572
$ 32,051 $ 2,691
I-5 128 $ 3,690,000 10.40% $ 383,920 $831,572 0.897 $25,866
$ 28,828 $ 2,999 $ 2,691
PRICE/UNIT VALUE ANALYSIS BASED ON COMPARABLES NOI PER UNIT
- -----------------------------------------------------------------------------------------------------
Low High Average Median Estimated Price Per Unit $ 25,000
$20,575 $25,866 $23,471 $23,722 Number of Units 309
Value $7,725,000
Less: Lease-Up Cost -$ 59,000
PV of Concessions -$ 123,000
Value Based on NOI Analysis $ 7,543,000
Rounded $ 7,500,000
The adjusted sales indicate a range of value between $20,575 and $25,866 per
unit, with an average of $23,471 per unit. Based on the subject's competitive
position within the improved sales, a value of $25,000 per unit is estimated.
This indicates an "as is" market value of $7,500,000 (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
HAMPTON GREENS, DALLAS, TEXAS
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-1 286 $10,000,000 $2,040,048 $ 843,558 41.35% 4.90
$ 34,965
I-2 364 $14,500,000 $2,635,512 $1,071,671 40.66% 5.50
$ 39,835
I-3 248 $ 6,700,000 $1,551,295 $ 674,956 43.51% 50.73% 4.32
$ 27,016
I-4 312 $10,000,000
$ 32,051
I-5 128 $ 3,690,000 $ 869,864 $ 485,944 55.86% 4.24
$ 28,828
EGIM VALUE ANALYSIS BASED ON EGIM'S OF COMPARABLE SALES
- -------------------------------------- --------------------------------------------------
Low High Average Median Estimate EGIM 4.50
4.24 5.50 4.74 4.61 Subject EGI $1,844,720
Value $8,301,242
Less: Lease-Up Cost -$ 59,000
PV of -$ 123,000
Concessions
Value Based on EGIM
Analysis $8,119,242
Rounded $8,100,000
Value Per Unit $ 26,214
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 50.73% before reserves. The comparable sales
indicate a range of expense ratios from 40.66% to 55.86%, while their EGIMs
range from 4.24 to 5.50. Overall, we conclude to an EGIM of 4.50, which results
in an "as is" value estimate in the EGIM Analysis of $8,100,000.
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 $8,500,000.
Price Per Unit $9,400,000
NOI Per Unit $7,500,000
EGIM Analysis $8,100,000
Sales Comparison Conclusion $8,500,000
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 26
HAMPTON GREENS, DALLAS, TEXAS
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
HAMPTON GREENS, DALLAS, TEXAS
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
Average
Unit Area -------------------
Unit Type (Sq. Ft.) Per Unit Per SF %Occupied
- ---------------------------------------------------------------------------
1Br/1Ba - 1A10 523 $413 $0.79 81.9%
1Br/1Ba - 1B10 652 $464 $0.71 85.7%
1Br/1Ba - 1C10 745 $527 $0.71 100.0%
1Br/1Ba - 1D10 748 $529 $0.71 92.6%
2Br/2Ba - 2A20 892 $681 $0.76 83.3%
2Br/2Ba - 2B20 958 $687 $0.72 100.0%
2Br/2Ba- 2C20 1079 $712 $0.66 70.0%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 28
HAMPTON GREENS, DALLAS, TEXAS
RENT ANALYSIS
COMPARABLE RENTS
---------------------------------------------------
R-1 R-2 R-3 R-4 R-5
---------------------------------------------------
Oak Gables Honey
La Prada Meadow Point Creek Greens
SUBJECT SUBJECT Club Apartments Apartments Apartments Crossing
---------------------------------------------------
SUBJECT UNIT ACTUAL ASKING COMPARISON TO SUBJECT
---------------------------------------------------
DESCRIPTION TYPE RENT RENT Superior Similar Similar Similar Similar MIN MAX MEDIAN AVERAGE
----------- ---- ---- ---- -------- ------- ------- ------- ------- --- --- ------ -------
Monthly Rent 1BR/1BA - 1A10 $ 413 $ 590 $ 445 $ 420 $ 450 $ 405 $ 405 $ 590 $ 445 $ 462
Unit Area (SF) 523 523 630 456 514 518 512 456 630 514 526
Monthly Rent Per
Sq. Ft. $ 0.79 $ 0.94 $ 0.98 $ 0.82 $ 0.87 $ 0.79 $0.79 $0.98 $ 0.87 $ 0.88
Monthly Rent 1BR/1BA - 1B10 $ 464 $ 605 $ 450 $ 503 $ 470 $ 450 $ 605 $ 487 $ 507
Unit Area (SF) 652 652 647 639 686 667 639 686 657 660
Monthly Rent Per
Sq. Ft. $ 0.71 $ 0.94 $ 0.70 $ 0.73 $ 0.70 $0.70 $0.94 $ 0.72 $ 0.77
Monthly Rent 1BR/1BA - 1C10 $ 527 $ 695 $ 558 $ 535 $ 535 $ 485 $ 485 $ 695 $ 535 $ 562
Unit Area (SF) 745 745 729 743 723 759 702 702 759 729 731
Monthly Rent Per
Sq. Ft. $ 0.71 $ 0.95 $ 0.75 $ 0.74 $ 0.70 $ 0.69 $0.69 $0.95 $ 0.74 $ 0.77
Monthly Rent 1BR/1BA - 1D10 $ 529 $ 685 $ 685 $ 685 $ 685 $ 685
Unit Area (SF) 748 748 940 940 940 940 940
Monthly Rent Per
Sq. Ft. $ 0.71 $ 0.73 $0.73 $0.73 $ 0.73 $ 0.73
Monthly Rent 2BR/2BA - 2A20 $ 681 $ 710 $ 655 $ 560 $ 560 $ 710 $ 655 $ 642
Unit Area (SF) 892 892 841 867 852 841 867 852 853
Monthly Rent Per
Sq. Ft. $ 0.76 $ 0.84 $ 0.76 $ 0.66 $0.66 $0.84 $ 0.76 $ 0.75
Monthly Rent 2BR/2BA - 2B20 $ 687 $ 840 $ 765 $ 725 $ 720 $ 720 $ 840 $ 745 $ 763
Unit Area (SF) 958 958 987 996 953 927 927 996 970 966
Monthly Rent Per
Sq. Ft. $ 0.72 $ 0.85 $ 0.77 $ 0.76 $ 0.78 $0.76 $0.85 $ 0.77 $ 0.79
Monthly Rent 2BR/2BA- 2C20 $ 712 $ 890 $ 809 $ 809 $ 890 $ 850 $ 850
Unit Area (SF) 1,079 1,079 1,059 1,067 1,059 1,067 1,063 1,063
Monthly Rent Per
Sq. Ft. $ 0.66 $ 0.84 $ 0.76 $0.76 $0.84 $ 0.80 $ 0.80
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
Unit Area Market Rent Monthly Annual
--------------------
Unit Type Number of Units (Sq. Ft.) Per Unit Per SF Income Income
--------- --------------- --------- -------- ------ ------ ------
1Br/1Ba - 1A10 72 523 $ 430 $ 0.82 $ 30,960 $ 371,520
1Br/1Ba - 1B10 126 652 $ 450 $ 0.69 $ 56,700 $ 680,400
1Br/1Ba - 1C10 30 745 $ 520 $ 0.70 $ 15,600 $ 187,200
1Br/1Ba - 1D10 27 748 $ 575 $ 0.77 $ 15,525 $ 186,300
2Br/2Ba - 2A20 18 892 $ 681 $ 0.76 $ 12,258 $ 147,096
2Br/2Ba - 2B20 6 958 $ 720 $ 0.75 $ 4,320 $ 51,840
2Br/2Ba- 2C20 30 1,079 $ 800 $ 0.74 $ 24,000 $ 288,000
Total $159,363 $1,912,356
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 29
HAMPTON GREENS, DALLAS, TEXAS
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
HAMPTON GREENS, DALLAS, TEXAS
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 $2,069,227 $ 6,697 $2,117,656 $ 6,853 $2,017,162 $ 6,528 $1,996,072 $ 6,460
Vacancy $ 106,289 $ 344 $ 207,934 $ 673 $ 159,602 $ 517 $ 117,000 $ 379
Credit Loss/Concessions $ 53,567 $ 173 $ 139,312 $ 451 $ 87,571 $ 283 $ 54,900 $ 178
---------- -------- ---------- -------- ---------- -------- ---------- --------
Subtotal $ 159,856 $ 517 $ 347,246 $ 1,124 $ 247,173 $ 800 $ 171,900 $ 556
Laundry Income $ 0 $ 0 $ 19,884 $ 64 $ 21,119 $ 68 $ 21,648 $ 70
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 116,425 $ 377 $ 85,668 $ 277 $ 102,481 $ 332 $ 94,800 $ 307
---------- -------- ---------- -------- ---------- -------- ---------- --------
Subtotal Other Income $ 116,425 $ 377 $ 105,552 $ 342 $ 123,600 $ 400 $ 116,448 $ 377
---------- -------- ---------- -------- ---------- -------- ---------- --------
Effective Gross Income $2,025,796 $ 6,556 $1,875,962 $ 6,071 $1,893,589 $ 6,128 $1,940,620 $ 6,280
Operating Expenses
Taxes $ 211,131 $ 683 $ 266,704 $ 863 $ 232,061 $ 751 $ 240,993 $ 780
Insurance $ 25,556 $ 83 $ 39,968 $ 129 $ 60,483 $ 196 $ 69,531 $ 225
Utilities $ 87,433 $ 283 $ 106,706 $ 345 $ 80,283 $ 260 $ 108,600 $ 351
Repair & Maintenance $ 25,147 $ 81 $ 32,240 $ 104 $ 32,139 $ 104 $ 41,100 $ 133
Cleaning $ 73,357 $ 237 $ 77,563 $ 251 $ 61,393 $ 199 $ 66,600 $ 216
Landscaping $ 42,015 $ 136 $ 48,555 $ 157 $ 54,259 $ 176 $ 58,136 $ 188
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 34,489 $ 112 $ 32,543 $ 105 $ 30,105 $ 97 $ 44,910 $ 145
General Administrative $ 238,119 $ 771 $ 223,854 $ 724 $ 249,357 $ 807 $ 205,256 $ 664
Management $ 103,790 $ 336 $ 93,354 $ 302 $ 97,526 $ 316 $ 100,031 $ 324
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
---------- -------- ---------- -------- ---------- -------- ---------- --------
Total Operating Expenses $ 841,037 $ 2,722 $ 921,487 $ 2,982 $ 897,606 $ 2,905 $ 935,157 $ 3,026
Reserves $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
---------- -------- ---------- -------- ---------- -------- ---------- --------
Net Income $1,184,759 $ 3,834 $ 954,475 $ 3,089 $ 995,983 $ 3,223 $1,005,463 $ 3,254
ANNUALIZED 2003
-------------------
PROJECTION AAA PROJECTION
-----------------------------------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT %
- ----------- ----- -------- ----- -------- --
Revenues
Rental Income $1,899,076 $ 6,146 $1,912,356 $ 6,189 100.0%
Vacancy $ 194,376 $ 629 $ 152,988 $ 495 8.0%
Credit Loss/Concessions $ 135,136 $ 437 $ 38,247 $ 124 2.0%
---------- -------- ---------- -------- -----
Subtotal $ 329,512 $ 1,066 $ 191,236 $ 619 10.0%
Laundry Income $ 28,704 $ 93 $ 21,630 $ 70 1.1%
Garage Revenue $ 0 $ 0 $ 0 $ 0 0.0%
Other Misc. Revenue $ 111,064 $ 359 $ 101,970 $ 330 5.3%
---------- -------- ---------- -------- -----
Subtotal Other Income $ 139,768 $ 452 $ 123,600 $ 400 6.5%
---------- -------- ---------- -------- -----
Effective Gross Income $1,709,332 $ 5,532 $1,844,720 $ 5,970 100.0%
Operating Expenses
Taxes $ 241,460 $ 781 $ 254,925 $ 825 13.8%
Insurance $ 68,792 $ 223 $ 69,525 $ 225 3.8%
Utilities $ 87,152 $ 282 $ 92,700 $ 300 5.0%
Repair & Maintenance $ 20,248 $ 66 $ 33,990 $ 110 1.8%
Cleaning $ 51,912 $ 168 $ 69,525 $ 225 3.8%
Landscaping $ 55,036 $ 178 $ 55,620 $ 180 3.0%
Security $ 0 $ 0 $ 0 $ 0 0.0%
Marketing & Leasing $ 35,552 $ 115 $ 38,625 $ 125 2.1%
General Administrative $ 261,892 $ 848 $ 247,200 $ 800 13.4%
Management $ 89,148 $ 289 $ 73,789 $ 239 4.0%
Miscellaneous $ 0 $ 0 $ 0 $ 0 0.0%
Total Operating Expenses $ 911,192 $ 2,949 $ 935,899 $ 3,029 50.7%
---------- -------- ---------- -------- -----
Reserves $ 0 $ 0 $ 77,250 $ 250 8.3%
---------- -------- ---------- -------- -----
Net Income $ 798,140 $ 2,583 $ 831,572 $ 2,691 45.1%
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 10% based on
the subject's historical performance, as well as the anticipated future market
conditions.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 31
HAMPTON GREENS, DALLAS, TEXAS
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 no major
items remaining in need of repair or replacement that would require an expense
beyond our reserves for replacement. Therefore an allowance of $250 per unit
should be satisfactory in our reserves for replacement to cover future capital
expenditures.
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
HAMPTON GREENS, DALLAS, TEXAS
SUMMARY OF OVERALL
CAPITALIZATION RATES
COMP. NO. SALE DATE OCCUP. PRICE/UNIT OAR
- -----------------------------------------------------------
I-1 Aug-01 N/A $34,965 11.96%
I-2 Aug-01 N/A $39,835 10.79%
I-3 Dec-00 N/A $27,016 13.08%
I-4 Apr-00 N/A $32,051 N/A
I-5 Feb-00 N/A $28,828 10.40%
============================================================
High 13.08%
Low 10.40%
Average 11.56%
Based on this information, we have concluded the subject's overall
capitalization rate should be 9.50%. 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 3.00% 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 $8,800,000. In this instance, the reversion
figure contributes
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 33
HAMPTON GREENS, DALLAS, TEXAS
approximately 40% of the total value. Investors surveyed for this assignment
indicated they 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
HAMPTON GREENS, DALLAS, TEXAS
DISCOUNTED CASH FLOW ANALYSIS
HAMPTON GREENS
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 $1,912,356 $1,912,356 $1,950,603 $2,009,121 $2,069,395 $2,131,477 $2,195,421
Vacancy $ 220,973 $ 152,988 $ 156,048 $ 160,730 $ 165,552 $ 170,518 $ 175,634
Credit Loss $ 38,247 $ 38,247 $ 39,012 $ 40,182 $ 41,388 $ 42,630 $ 43,908
Concessions $ 57,371 $ 38,247 $ 19,506 $ 20,091 $ 20,694 $ 0 $ 0
---------- ---------- ---------- ---------- ---------- ---------- ----------
Subtotal $ 316,591 $ 229,483 $ 214,566 $ 221,003 $ 227,633 $ 213,148 $ 219,542
Laundry Income $ 21,630 $ 21,630 $ 22,063 $ 22,724 $ 23,406 $ 24,108 $ 24,832
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 101,970 $ 101,970 $ 104,009 $ 107,130 $ 110,344 $ 113,654 $ 117,063
---------- ---------- ---------- ---------- ---------- ---------- ----------
Subtotal Other Income $ 123,600 $ 123,600 $ 126,072 $ 129,854 $ 133,750 $ 137,762 $ 141,895
---------- ---------- ---------- ---------- ---------- ---------- ----------
Effective Gross Income $1,719,365 $1,806,473 $1,862,109 $1,917,972 $1,975,511 $2,056,091 $2,117,774
Operating Expenses:
Taxes $ 254,925 $ 262,573 $ 270,450 $ 278,563 $ 286,920 $ 295,528 $ 304,394
Insurance $ 69,525 $ 71,611 $ 73,759 $ 75,972 $ 78,251 $ 80,599 $ 83,016
Utilities $ 92,700 $ 95,481 $ 98,345 $ 101,296 $ 104,335 $ 107,465 $ 110,689
Repair & Maintenance $ 33,990 $ 35,010 $ 36,060 $ 37,142 $ 38,256 $ 39,404 $ 40,586
Cleaning $ 69,525 $ 71,611 $ 73,759 $ 75,972 $ 78,251 $ 80,599 $ 83,016
Landscaping $ 55,620 $ 57,289 $ 59,007 $ 60,777 $ 62,601 $ 64,479 $ 66,413
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 38,625 $ 39,784 $ 40,977 $ 42,207 $ 43,473 $ 44,777 $ 46,120
General Administrative $ 247,200 $ 254,616 $ 262,254 $ 270,122 $ 278,226 $ 286,573 $ 295,170
Management $ 68,775 $ 72,259 $ 74,484 $ 76,719 $ 79,020 $ 82,244 $ 84,711
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Operating Expenses $ 930,885 $ 960,232 $ 989,097 $1,018,770 $1,049,333 $1,081,665 $1,114,115
Reserves $ 77,250 $ 79,568 $ 81,955 $ 84,413 $ 86,946 $ 89,554 $ 92,241
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Operating Income $ 711,231 $ 766,674 $ 791,057 $ 814,789 $ 839,233 $ 884,872 $ 911,418
Operating Expense Ratio (% of EGI) 54.1% 53.2% 53.1% 53.1% 53.1% 52.6% 52.6%
Operating Expense Per Unit $ 3,013 $ 3,108 $ 3,201 $ 3,297 $ 3,396 $ 3,501 $ 3,606
YEAR APR-2011 APR-2012 APR-2013 APR-2014
FISCAL YEAR 8 9 10 11
REVENUE
Base Rent $2,261,284 $2,329,122 $2,398,996 $2,470,966
Vacancy $ 180,903 $ 186,330 $ 191,920 $ 197,677
Credit Loss $ 45,226 $ 46,582 $ 47,980 $ 49,419
Concessions $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ----------
Subtotal $ 226,128 $ 232,912 $ 239,900 $ 247,097
Laundry Income $ 25,577 $ 26,344 $ 27,134 $ 27,948
Garage Revenue $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 120,575 $ 124,193 $ 127,918 $ 131,756
---------- ---------- ---------- ----------
Subtotal Other Income $ 146,152 $ 150,537 $ 155,053 $ 159,704
---------- ---------- ---------- ----------
Effective Gross Income $2,181,307 $2,246,746 $2,314,149 $2,383,573
Operating Expenses:
Taxes $ 313,526 $ 322,931 $ 332,619 $ 342,598
Insurance $ 85,507 $ 88,072 $ 90,714 $ 93,436
Utilities $ 114,009 $ 117,430 $ 120,952 $ 124,581
Repair & Maintenance $ 41,803 $ 43,058 $ 44,349 $ 45,680
Cleaning $ 85,507 $ 88,072 $ 90,714 $ 93,436
Landscaping $ 68,406 $ 70,458 $ 72,571 $ 74,749
Security $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 47,504 $ 48,929 $ 50,397 $ 51,909
General Administrative $ 304,025 $ 313,146 $ 322,540 $ 332,216
Management $ 87,252 $ 89,870 $ 92,566 $ 95,343
Miscellaneous $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ----------
Total Operating Expenses $1,147,539 $1,181,965 $1,217,424 $1,253,947
Reserves $ 95,008 $ 97,858 $ 100,794 $ 103,818
---------- ---------- ---------- ----------
Net Operating Income $ 938,761 $ 966,923 $ 995,931 $1,025,809
Operating Expense Ratio (% of EGI) 52.6% 52.6% 52.6% 52.6%
Operating Expense Per Unit $ 3,714 $ 3,825 $ 3,940 $ 4,058
Gross Residual Deferred
Sale Price $10,258,091 Maintenance $ 0
Estimated Stabilized NOI $831,572 Sales Less: Sales Expense $307,743 Add: Excess Land $ 0
Expense Rate 3.00%
--------
Months to Stabilized 12 Discount Rate 11.00% Net Residual Sale Price $9,950,348 Other
Adjustments $ 0
----------
Stabilized Occupancy 92.0% Terminal Cap PV of Reversion $3,504,358 Value
Rate 10.00% Indicated By
"DCF" $8,754,193
Add: NPV of NOI $5,249,835 Rounded $8,800,000
--------
PV Total $8,754,193
"DCF" VALUE SENSITIVITY TABLE
TOTAL VALUE DISCOUNT RATE
-----------------------------------------------------------------------------
10.50% 10.75% 11.00% 11.25% 11.50%
- -----------------------------------------------------------------------------------------------------
9.50% $9,237,080 $9,086,210 $8,938,633 $8,794,266 $8,653,028
TERMINAL 9.75% $9,138,127 $8,989,468 $8,844,048 $8,701,785 $8,562,600
CAP 10.00% $9,044,122 $8,897,564 $8,754,193 $8,613,929 $8,476,694
RATE 10.25% $8,954,703 $8,810,143 $8,668,721 $8,530,358 $8,394,978
10.50% $8,869,542 $8,726,884 $8,587,319 $8,450,767 $8,317,154
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 35
HAMPTON GREENS, DALLAS, TEXAS
INCOME LOSS DURING LEASE-UP
The subject is currently 85% occupied, below our stabilized occupancy
projection. We have estimated a 12-month lease-up period. An adjustment must be
made to bring the subject to a stabilized operating level. To account for this
income loss during lease-up, we have compared the current DCF analysis to an "as
stabilized" DCF analysis assuming the subject's occupancy were stabilized. The
difference in net operating income during the lease-up period is discounted to a
present value figure of $59,000 as shown in the following table.
DESCRIPTION YEAR 1
----------- ------
"As Is" Net Operating Income $ 711,231
Stabilized Net Operating Income $ 776,496
---------
Difference $ 65,265
PV of Income Loss During Lease-Up $ 58,797
---------
Rounded $ 59,000
---------
CONCESSIONS
Due to softness in the market, concessions have been utilized at the subject
property and within the market. Based on our discussions with the subject's
property manager and those at competing properties, these concessions are
expected to continue in the near term until the market returns to a stabilized
level. Concessions have been included as a line item deduction within the
discounted cash flow analysis. The present value of these concessions equates to
$123,000 (rounded). This amount has been deducted from the Direct Capitalization
analysis, as well as the Sales Comparison Approach value.
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.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 36
HAMPTON GREENS, DALLAS, TEXAS
After considering the market transactions and the investor surveys, we
previously conclude that an overall rate of 9.50% percent is applicable to the
subject. The results of our direct capitalization analysis are as follows:
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 37
HAMPTON GREENS, DALLAS, TEXAS
HAMPTON GREENS
TOTAL PER SQ. FT. PER UNIT % OF EGI
REVENUE
Base Rent $1,912,356 $ 8.83 $ 6,189
Less: Vacancy & Collection Loss 10.00% $ 191,236 $ 0.88 $ 619
Plus: Other Income
Laundry Income $ 21,630 $ 0.10 $ 70 1.17%
Garage Revenue $ 0 $ 0.00 $ 0 0.00%
Other Misc. Revenue $ 101,970 $ 0.47 $ 330 5.53%
---------- ------- ------- -----
Subtotal Other Income $ 123,600 $ 0.57 $ 400 6.70%
EFFECTIVE GROSS INCOME $1,844,720 $ 8.52 $ 5,970
OPERATING EXPENSES:
Taxes $ 254,925 $ 1.18 $ 825 13.82%
Insurance $ 69,525 $ 0.32 $ 225 3.77%
Utilities $ 92,700 $ 0.43 $ 300 5.03%
Repair & Maintenance $ 33,990 $ 0.16 $ 110 1.84%
Cleaning $ 69,525 $ 0.32 $ 225 3.77%
Landscaping $ 55,620 $ 0.26 $ 180 3.02%
Security $ 0 $ 0.00 $ 0 0.00%
Marketing & Leasing $ 38,625 $ 0.18 $ 125 2.09%
General Administrative $ 247,200 $ 1.14 $ 800 13.40%
Management 4.00% $ 73,789 $ 0.34 $ 239 4.00%
Miscellaneous $ 0 $ 0.00 $ 0 0.00%
TOTAL OPERATING EXPENSES $ 935,899 $ 4.32 $ 3,029 50.73%
Reserves $ 77,250 $ 0.36 $ 250 4.19%
---------- ------- ------- -----
NET OPERATING INCOME $ 831,572 $ 3.84 $ 2,691 45.08%
"GOING IN" CAPITALIZATION RATE 9.50%
VALUE INDICATION $8,753,385 $ 40.43 $28,328
LESS: LEASE-UP COST ($ 59,000)
PV OF CONCESSIONS ($ 123,000)
"AS IS" VALUE INDICATION
(DIRECT CAPITALIZATION APPROACH) $8,571,385
ROUNDED $8,600,000 $ 39.72 $27,832
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 38
HAMPTON GREENS, DALLAS, TEXAS
DIRECT CAPITALIZATION VALUE SENSITIVITY TABLE
CAP RATE VALUE ROUNDED $/UNIT $/SF
- ----------------------------------------------------------------------
8.75% $ 9,321,675 $ 9,300,000 $ 30,097 $ 42.95
9.00% $ 9,057,684 $ 9,100,000 $ 29,450 $ 42.03
9.25% $ 8,807,963 $ 8,800,000 $ 28,479 $ 40.64
9.50% $ 8,571,385 $ 8,600,000 $ 27,832 $ 39.72
9.75% $ 8,346,939 $ 8,300,000 $ 26,861 $ 38.33
10.00% $ 8,133,716 $ 8,100,000 $ 26,214 $ 37.41
10.25% $ 7,930,894 $ 7,900,000 $ 25,566 $ 36.48
CONCLUSION BY THE DIRECT CAPITALIZATION METHOD
Applying the capitalization rate to our estimated NOI results in an estimated
value of $8,600,000.
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 $8,800,000
Direct Capitalization Method $8,600,000
Giving consideration to the indicated values provided by both techniques, we
have concluded the estimated value by the income capitalization approach to be
$8,700,000.
AMERICAN APPRAISAL ASSOCIATES, INC. RECONCILIATION AND CONCLUSION PAGE 39
HAMPTON GREENS, DALLAS, TEXAS
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 $ 8,500,000
Income Approach $ 8,700,000
Reconciled Value $ 8,500,000
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
April 28, 2003 the market value of the fee simple estate in the property is:
$8,500,000
AMERICAN APPRAISAL ASSOCIATES, INC. ADDENDA
HAMPTON GREENS, DALLAS, TEXAS
ADDENDA
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
HAMPTON GREENS, DALLAS, TEXAS
EXHIBIT A
SUBJECT PHOTOGRAPHS
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
HAMPTON GREENS, DALLAS, TEXAS
SUBJECT PHOTOGRAPHS
[EXTERIOR BUILDING PICTURE] [EXTERIOR APARTMENT & LAUNDRY BUILDINGS PICTURE]
[PARKING AREA VIEW PICTTURE] [ACROSS ROAD VIEW PICTURE]
[FRONT VIEW PICTURE] [INTERIOR BEDROOM PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
HAMPTON GREENS, DALLAS, TEXAS
SUBJECT PHOTOGRAPHS
[INTERIOR KITCHEN PICTURE] [EXTERIOR LAUNDRY BUILDING PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
HAMPTON GREENS, DALLAS, TEXAS
EXHIBIT B
SUMMARY OF RENT COMPARABLES
AND PHOTOGRAPH OF COMPARABLES
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
HAMPTON GREENS, DALLAS, TEXAS
PHOTOGRAPHS OF COMPARABLE SALE PROPERTIES
[PICTURE] [PICTURE] [PICTURE]
COMPARABLE I-1 COMPARABLE I-2 COMPARABLE I-3
ENFIELD APARTMENTS STONEY CREEK APARTMENTS SUNFLOWER APARTMENTS
11330 Amanda Lane 11333 Amanda Lane 8401 Skillman Street
Dallas, TX Dallas, TX Dallas, TX
[PICTURE] [PICTURE]
COMPARABLE I-4 COMPARABLE I-5
CANYON PARKE APARTMENTS MEADOW CREEK APARTMENTS
2202 Hollybush Drive 518 Tacoma Drive
Dallas, TX Garland, TX
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
HAMPTON GREENS, DALLAS, TEXAS
SUMMARY OF COMPARABLE RENTAL PROPERTIES
COMPARABLE
DESCRIPTION SUBJECT R- 1
==================================================================================================================
Property Name Hampton Greens La Prada Club
Management Company AIMCO NA
LOCATION:
Address 10911 Woodmeadow Parkway 1901 Pinehurst Lane
City, State Dallas, Texas Dallas, TX
County Dallas Dallas
Proximity to Subject 0.25 Miles
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 216,528 N/A
Year Built 1985 1988
Effective Age 18 15
Building Structure Type Brick Wood/Brick
Parking Type Open Covered, Open
(Gr., Cov., etc.)
Number of Units 309 Unk.
Unit Mix: Type Unit Qty Mo Type Unit Qty Mo
1 1 Br/1Ba - 1 A10 523 72 $ 413 1 1 Br/1Ba - A1 630 $590
2 1 Br/1Ba - 1 B10 652 126 $ 464 2 1 Br/1Ba - A2 647
3 1 Br/1Ba - 1 C10 745 30 $ 527 3 1 Br/1Ba - A3 729
4 1 Br/1Ba - 1 D10 748 27 $ 529 6 2 Br/2.5Ba - B1 987
5 2 Br/2Ba - 2 A20 892 18 $ 681 7 2 Br/2.5Ba - B2 1,059
6 2 Br/2Ba - 2 B20 958 6 $ 687
7 2 Br/2Ba - 2 C20 1,079 30 $ 712
Average Unit Size (SF) 701
Unit Breakdown: Efficiency 0% 2-Bedroom 17% Efficiency N/A 2-Bedroom N/A
1-Bedroom 83% 3-Bedroom 0% 1-Bedroom N/A 3-Bedroom
CONDITION: Average Average
APPEAL: Average Average
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling
Balcony X W/D Connect. Balcony X W/D Connect.
X Fireplace X Other X Fireplace Other
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
X Spa/Jacuzzi Car Wash Spa/Jacuzzi Car Wash
Basketball Court X BBQ Equipment Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball Meeting Hall Sand Volley Ball Meeting Hall
Tennis Court Secured Parking 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: 85% N/A
LEASING DATA:
Available Leasing Terms 6-12 months 6 and 12 months
Concessions Lowered rental rates 1 month free
Pet Deposit 250 350
Utilities Paid by Tenant: X Electric Natural Gas X Electric X Natural Gas
X Water X Trash X Water X Trash
Confirmation Greg
Telephone Number 972-686-1980
NOTES:
COMPARISON TO SUBJECT: Superior
COMPARABLE COMPARABLE
DESCRIPTION R - 2 R - 3
=========================================================================================================================
Property Name Honey Creek Apartments Greens Crossing
Management Company NA NA
LOCATION:
Address 11611 Ferguson Road 10700 Woodmeadow Apartments
City, State Dallas, TX Dallas, TX
County Dallas Dallas
Proximity to Subject 0.75 Miles 0.25 Miles
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) N/A 105,824
Year Built 1989 1989
Effective Age 14 14
Building Structure Type Wood/Brick Wood/Brick
Parking Type Covered, Open No Covered
(Gr., Cov., etc.)
Number of Units Unk. 152
Unit Mix: Type Unit Qty Mo Type Unit Qty Mo
1 1Br/1Ba- A1 456 $445 1 1Br/1Ba- A1 514 24 $420
1Br/1Ba- A2 521 $480 2 1Br/1Ba- A2 639 80 $ 4
3 1Br/1Ba- A3 743 $558 3 1Br/1Ba- A3 723 16 $ 5
5 1Br/Den/1Ba- A4 841 $710 4 2Br/2.5Ba- B1 940 16 $ 6
2Br/2Ba- B1 941 $735 2Br/2.5Ba- B2 985 16 $ 7
6 2Br/2Ba- B2 996 $765
Average Unit Size (SF) 696
Unit Breakdown: Efficiency N/A 2-Bedroom N/A Efficiency 0% 2-Bedroom 21%
1-Bedroom N/A 3-Bedroom N/A 1-Bedroom 79% 3-Bedroom 0%
CONDITION: Good Good
APPEAL: Good Good
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony X W/D Connect. X Balcony W/D Connect.
X Fireplace Other X Fireplace Other
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
Spa/Jacuzzi Car Wash Spa/Jacuzzi Car Wash
Basketball Court BBQ Equipment Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball Meeting Hall Sand Volley Ball Meeting Hall
Tennis Court X Secured Parking 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 Gym Room
OCCUPANCY: N/A N/A
LEASING DATA:
Available Leasing Terms 6,7,8 and 9 months 7 and 12 months
Concessions 0 deposit 1 month free
Pet Deposit 250
Utilities Paid by Tenant: X Electric Natural Gas X Electric Natural Gas
X Water Trash Water Trash
Confirmation Gwenn Nicole
Telephone Number 972-686-4380 972-279-4018
NOTES:
COMPARISON TO SUBJECT: Similar Similar
COMPARABLE COMPARABLE
DESCRIPTION R - 4 R - 5
=======================================================================================================================
Property Name Honey Creek Apartments Greens Crossing Apartments
Management Company NA NA
LOCATION:
Address 11611 Ferguson Road 10700 Woodmeadow Apartments
City, State Dallas, TX Dallas, TX
County Dallas Dallas
Proximity to Subject 0.75 Miles 0.25 Miles
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 487,368 N/A
Year Built 1989 1988
Effective Age 14 15
Building Structure Type Wood/Brick Brick/Wood
Parking Type No Covered Covered, Open
(Gr., Cov., etc.)
Number of Units 656 364
Unit Mix: Type Unit Qty Mo Type Unit Qty Mo
1 1Br/1Ba- A1 518 84 $450 1 1Br/1Ba- 1A 512 $405
2 1Br/1Ba- A2 686 276 $503 1Br/1Ba- 1B 606 $455
3 1Br/1Ba- A3 759 96 $535 2 1Br/1Ba- 1C 667 $470
5 2Br/2.5Ba- B1 867 104 $655 3 1Br/1Ba- 1D 702 $485
6 2Br/2.5Ba- B2 953 96 $725 5 1Br/1Ba- 1E 852 $560
6 2Br/2Ba- 2A 927 $720
2Br/2Ba- 2B 991 $750
7 2Br/2Ba- 2C 1,067 $809
Average Unit Size (SF) 743
Unit Breakdown: Efficiency 0% 2-Bedroom 30% Efficiency N/A 2-Bedroom N/A
1-Bedroom 48% 3-Bedroom 0% 1-Bedroom N/A 3-Bedroom N/A
CONDITION: Average Average
APPEAL: Average Average
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling X Attach. Garage Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
X Fireplace Other X Fireplace Other
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
Spa/Jacuzzi Car Wash X Spa/Jacuzzi Car Wash
Basketball Court X BBQ Equipment Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball Meeting Hall Sand Volley Ball Meeting Hall
Tennis Court Secured Parking Tennis Court X Secured Parking
Racquet Ball X Laundry Room Racquet Ball X Laundry Room
Jogging Track X Business Office Jogging Track X Business Office
Gym Room X Gym Room
OCCUPANCY: N/A N/A
LEASING DATA:
Available Leasing Terms 6 and 12 months 6 and 12 months
Concessions $109 move in Half of Deposit
Pet Deposit 400 300
Utilities Paid by Tenant: X Electric Natural Gas X Electric Natural Gas X
X Water Trash X Water Trash
Confirmation Ariceli Garcia Phillip
Telephone Number 1-888-923-8207 972-279-1485
NOTES:
COMPARISON TO SUBJECT: Similar Similar
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
HAMPTON GREENS, DALLAS, TEXAS
PHOTOGRAPHS OF COMPARABLE SALE PROPERTIES
[PICTURE] [PICTURE] [PICTURE]
COMPARABLE R-1 COMPARABLE R-2 COMPARABLE R-3
LA PRADA CLUB OAK MEADOW APARTMENTS GABLES POINT APARTMENTS
1901 Pinehurst Lane 11050 Woodmeadow 11111 Woodmeadow Apartments
Dallas, TX Dallas, TX Dallas, TX
[PICTURE] [PICTURE]
COMPARABLE R-4 COMPARABLE R-5
HONEY CREEK APARTMENTS GREENS CROSSINGS
11611 Ferguson Road 10700 Woodmeadow Parkway
Dallas, TX Dallas, TX
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
HAMPTON GREENS, DALLAS, TEXAS
EXHIBIT C
ASSUMPTIONS AND LIMITING CONDITIONS
(3 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
HAMPTON GREENS, DALLAS, TEXAS
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
HAMPTON GREENS, DALLAS, TEXAS
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
HAMPTON GREENS, DALLAS, TEXAS
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
HAMPTON GREENS, DALLAS, TEXAS
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. Shayne Hatch
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
HAMPTON GREENS, DALLAS, TEXAS
EXHIBIT E
QUALIFICATIONS OF APPRAISER
(2 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
HAMPTON GREENS, DALLAS, TEXAS
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
HAMPTON GREENS, DALLAS, TEXAS
PROFESSIONAL Appraisal Institute, MAI Designated Member
AFFILIATIONS Candidate Member of the CCIM Institute pursuing
Certified Commercial Investment Member (CCIM)
designation
PUBLICATIONS "An Analysis of the Determinants of Industrial
Property
-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.
HAMPTON GREENS, DALLAS, TEXAS
GENERAL SERVICE CONDITIONS
AMERICAN APPRAISAL ASSOCIATES, INC.
HAMPTON GREENS, DALLAS, TEXAS
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.