PLANTATION CREEK
6925 ROSWELL ROAD
ATLANTA, GEORGIA
MARKET VALUE -
FEE SIMPLE ESTATE
AS OF MAY 22, 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]
JUNE 27, 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: PLANTATION CREEK
6925 ROSWELL ROAD
ATLANTA, FULTON COUNTY, GEORGIA
In accordance with your authorization, we have completed the appraisal of the
abovereferenced 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 484 units with a
total of 550,360 square feet of rentable area. The improvements were built in
1976. The improvements are situated on 34.96 acres. Overall, the improvements
are in good condition. As of the date of this appraisal, the subject property is
98% 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
PLANTATION CREEK, ATLANTA, GEORGIA
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 22, 2003 is:
($22,300,000)
Respectfully submitted,
AMERICAN APPRAISAL ASSOCIATES, INC.
-s- Michael Bates
June 27, 2003 Michael Bates, MAI
#053272 Assistant Manager, Real Estate Group
State of Georgia, Certified General Real Property
Appraiser
#CG00685
Report By:
Steven M. Zenkovich, ASA
State of Georgia, Certified General Real Property Appraiser
#CG004796
AMERICAN APPRAISAL ASSOCIATES, INC. TABLE OF CONTENTS PAGE 3
PLANTATION CREEK, ATLANTA, GEORGIA
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................................................... 37
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
PLANTATION CREEK, ATLANTA, GEORGIA
EXECUTIVE SUMMARY
PART ONE - PROPERTY DESCRIPTION
PROPERTY NAME: Plantation Creek
LOCATION: 6925 Roswell Road
Atlanta, Georgia
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 22, 2003
DATE OF REPORT: June 27, 2003
PHYSICAL DESCRIPTION - SITE & IMPROVEMENTS:
SITE:
Size: 34.96 acres, or 1,522,858 square feet
Assessor Parcel No.: 17-0073-LL-041-1; 17-0073-LL-042-9
Floodplain: Community Panel No. 135160 0153E
(June 22, 1998)
Flood Zone X, an area outside the
floodplain.
Zoning: A (Medium Density Apartment District)
BUILDING:
No. of Units: 484 Units
Total NRA: 550,360 Square Feet
Average Unit Size: 1,137 Square Feet
Apartment Density: 13.8 units per acre
Year Built: 1976
UNIT MIX AND MARKET RENT:
GROSS RENTAL INCOME PROJECTION
MARKET RENT
SQUARE ------------------- MONTHLY ANNUAL
UNIT TYPE FEET PER UNIT PER SF INCOME INCOME
- -------------- ------ -------- ------ -------- -----------
1Br/1Ba-1A10 810 $ 616 $ 0.76 $ 76,384 $ 916,608
2Br/1Ba-2A10 1,080 $ 700 $ 0.65 $ 56,000 $ 672,000
2Br/2Ba-2A2 1,100 $ 714 $ 0.65 $ 49,980 $ 599,760
2Br/2.5Ba-2A25 1,380 $ 852 $ 0.62 $ 20,448 $ 245,376
2Br/2Ba-2B2 1,300 $ 754 $ 0.58 $ 96,512 $ 1,158,144
3Br/2Ba-3A2 1,500 $ 839 $ 0.56 $ 48,662 $ 583,944
------ -------- -----------
Total $347,986 $ 4,175,832
OCCUPANCY: 98%
ECONOMIC LIFE: 45 Years
EFFECTIVE AGE: 20 Years
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 5
PLANTATION CREEK, ATLANTA, GEORGIA
REMAINING ECONOMIC LIFE: 25 Years
SUBJECT PHOTOGRAPHS AND LOCATION MAP:
SUBJECT PHOTOGRAPHS
[EXTERIOR - TYPICAL APARTMENT BUILDING PICTURE] [LEASING OFFICE PICTURE]
AREA MAP
[MAP]
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 6
PLANTATION CREEK, ATLANTA, GEORGIA
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
PLANTATION CREEK, ATLANTA, GEORGIA
PART TWO - ECONOMIC INDICATORS
INCOME CAPITALIZATION APPROACH
DIRECT CAPITALIZATION Amount $/Unit
- --------------------- ------------ --------------
Potential Rental Income $4,175,832 $8,628
Effective Gross Income $3,923,374 $8,106
Operating Expenses $1,811,761 $3,743 46.2% of EGI
Net Operating Income: $1,990,613 $4,113
Capitalization Rate 9.00%
DIRECT CAPITALIZATION VALUE $21,800,000 * $45,041 / Unit
DISCOUNTED CASH FLOW ANALYSIS:
Holding Period 10 years
2002 Economic Vacancy 30%
Stabilized Vacancy & Collection Loss: 13%
Lease-up / Stabilization Period N/A
Terminal Capitalization Rate 9.50%
Discount Rate 11.00%
Selling Costs 2.00%
Growth Rates:
Income 3.00%
Expenses: 3.00%
DISCOUNTED CASH FLOW VALUE $22,200,000 * $45,868 / UNIT
RECONCILED INCOME CAPITALIZATION VALUE $22,000,000 $45,455 / UNIT
SALES COMPARISON APPROACH
PRICE PER UNIT:
Range of Sales $/Unit (Unadjusted) $45,313 to $52,311
Range of Sales $/Unit (Adjusted) $44,464 to $49,844
VALUE INDICATION - PRICE PER UNIT $22,700,000 * $46,901 / UNIT
EGIM ANALYSIS
Range of EGIMs from Improved Sales 5.59 to 6.44
Selected EGIM for Subject 6.10
Subject's Projected EGI $3,923,374
EGIM ANALYSIS CONCLUSION $23,600,000 * $48,760 / UNIT
NOI PER UNIT ANALYSIS CONCLUSION $21,500,000 * $44,421 / UNIT
RECONCILED SALES COMPARISON VALUE $22,500,000 $46,488 / 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
PLANTATION CREEK, ATLANTA, GEORGIA
PART THREE - SUMMARY OF VALUE CONCLUSIONS
SALES COMPARISON APPROACH:
Price Per Unit $22,700,000
NOI Per Unit $21,500,000
EGIM Multiplier $23,600,000
INDICATED VALUE BY SALES COMPARISON $22,500,000 $46,488 / UNIT
INCOME APPROACH:
Direct Capitalization Method: $21,800,000
Discounted Cash Flow Method: $22,200,000
INDICATED VALUE BY THE INCOME APPROACH $22,000,000 $45,455 / UNIT
RECONCILED OVERALL VALUE CONCLUSION: $22,300,000 $46,074 / UNIT
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 9
PLANTATION CREEK, ATLANTA, GEORGIA
INTRODUCTION
IDENTIFICATION OF THE SUBJECT
The subject property is located at 6925 Roswell Road, Atlanta, Fulton County,
Georgia. Atlanta identifies it as 17-0073-LL-041-1; 17-0073-LL-042-9.
SCOPE OF THE ASSIGNMENT
The property, neighborhood, and comparables were inspected by Steven M.
Zenkovich, ASA on May 22, 2003. Michael Bates, MAI has not made a personal
inspection of the subject property. Steven M. Zenkovich, ASA performed the
research, valuation analysis and wrote the report. Michael Bates, MAI reviewed
the report and concurs with the value. Both, Michael Bates, MAI and Steven M.
Zenkovich, ASA 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 22, 2003. The
date of the report is June 27, 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
PLANTATION CREEK, ATLANTA, GEORGIA
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 Find 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
PLANTATION CREEK, ATLANTA, GEORGIA
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 Atlanta, Georgia. 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 - Georgia Highway 400
West - Roswell Road
South - Abernathy Road
North - Dalrymple Road
MAJOR EMPLOYERS
Major employers in the subject's area include Home Depot, Delta Air Lines, and
United Parcel Service, which are the largest employers in Atlanta. Delta Air
Lines continues to reduce their work force due to the downturn in the air
transportation sector. The unemployment rate in Atlanta is up, but is still much
lower than nationally. The overall economic outlook for the area is considered
very 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
PLANTATION CREEK, ATLANTA, GEORGIA
NEIGHBORHOOD DEMOGRAPHICS
AREA
--------------------------------------------
CATEGORY 1-Mi. RADIUS 3-Mi. RADIUS 5-Mi. RADIUS MSA
- --------------------------- ------------ ------------ ------------ ----------
POPULATION TRENDS
Current Population 11,752 75,371 184,145 4,326,075
5-Year Population 12,656 82,660 198,191 4,877,672
% Change CY-5Y 7.7% 9.7% 7.6% 12.8%
Annual Change CY-5Y 1.5% 1.9% 1.5% 2.6%
HOUSEHOLDS
Current Households 5,374 34,445 79,857 1,580,438
5-Year Projected Households 5,815 38,272 86,828 1,773,314
% Change CY - 5Y 8.2% 11.1% 8.7% 12.2%
Annual Change CY-5Y 1.6% 2.2% 1.7% 2.4%
INCOME TRENDS
Median Household Income $66,324 $68,715 $ 76,846 $ 61,400
Per Capita Income $37,315 $43,848 $ 46,779 $ 25,922
Average Household Income $80,938 $94,890 $108,163 $ 70,955
Source: Demographics Now
The subject neighborhood's population is expected to show increases below that
of the region. The immediate market offers superior 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 49.41% 47.12% 38.21% 30.54%
5-Year Projected % Renting 51.08% 49.08% 39.53% 29.71%
% of Households Owning 35.28% 43.71% 53.53% 61.85%
5-Year Projected % Owning 34.51% 42.41% 52.68% 63.29%
Source: Demographics Now
AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 13
PLANTATION CREEK, ATLANTA, GEORGIA
SURROUNDING IMPROVEMENTS
The following uses surround the subject property:
North - Multifamily housing
South - Multifamily housing
East - Multifamily housing
West - Roswell Road and multifamily housing
CONCLUSIONS
The subject is well located within the city of Atlanta. 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
very favorable with a good economic base.
AMERICAN APPRAISAL ASSOCIATES, INC. MARKET ANALYSIS PAGE 14
PLANTATION CREEK, ATLANTA, GEORGIA
MARKET ANALYSIS
The subject property is located in the city of Atlanta in Fulton County. The
overall pace of development in the subject's market is more or less decreasing.
Demand for new apartment development in the local market has decreased
significantly. There are no known projects under construction at this time. The
following table illustrates historical vacancy rates for the subject's market.
HISTORICAL VACANCY RATE
PERIOD REGION SUBMARKET
- ------------- ------ ---------
1998 Year-End 6.9% 6.8%
1999 Year-End 6.5% 6.3%
2000 Year-End 4.8% 5.1%
2001 Year-End 9.0% 7.9%
2002 Year-End 10.1% 9.2%
2003 1Q03 11.3% 9.9%
Source: Reis Subtrend Futures, 1st Quarter 2003
Occupancy trends in the subject's market are decreasing. Historically speaking,
the subject's submarket has outperformed the overall market. Rent concessions
have become prevalent over the past 1-2 years. Competing projects are typically
offering two months of free rent prorated over a 12-month term. Lease agreements
at the subject property typically reflect reduced rent in lieu of free rent
concessions.
Market rents in the subject's market have been following a decreasing trend. The
following table illustrates historical rental rates for the subject's market.
HISTORICAL AVERAGE RENT
PERIOD REGION % CHANGE SUBMARKET % CHANGE
- ------------- ------ -------- --------- --------
1998 Year-End N/A - $874 -
1999 Year-End N/A N/A $902 3.2%
2000 Year-End N/A N/A $939 4.1%
2001 Year-End N/A N/A $947 0.9%
2002 Year-End N/A N/A $958 1.2%
2003 1Q03 N/A N/A $958 0.0%
Source: Reis Subtrend Futures, 1st Quarter 2003
The following table illustrates a summary of the subject's competitive set.
AMERICAN APPRAISAL ASSOCIATES, INC. MARKET ANALYSIS PAGE 15
PLANTATION CREEK, ATLANTA, GEORGIA
COMPETITIVE PROPERTIES
NO. PROPERTY NAME UNITS OCPY. YEAR BUILT PROXIMITY TO SUBJECT
- ------- ----------------------------- ----- ----- ---------- ---------------------------
R-1 The Magnolia at Sandy Springs 268 93% 1980 1-mile north of subject
R-2 Greystone Apartments 150 78% 1965 Directly across the street
R-3 Morgan Falls 972 85% 1986, 1991 3-miles north of the subject
R-4 The Cliffs of Dunwoody 419 77% 1969 2-miles north of subject
R-5 Stonecourt of Sandy Springs 147 92% 1973 Directly across the street
Subject Plantation Creek 484 98% 1976
The above table reflects average asking rents, and does not reflect rent
concessions. Average asking rents outpaced the inflation rate in 1999 and 2000.
Growth rates slowed significantly as the market contracted. At present, rental
rates remain static, and concessions are routinely offered.
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 16
PLANTATION CREEK, ATLANTA, GEORGIA
PROPERTY DESCRIPTION
SITE ANALYSIS
Site Area 34.96 acres, or 1,522,858 square feet
Shape Irregular
Topography Moderate slope
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 135160 0153E, dated June 22, 1998
Flood Zone Zone X
Zoning 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
- --------------- ---------- ---------- ---------- --------- --------
17-0073-LL-041-
1; 17-0073-LL-
042-9 $1,336,200 $8,401,120 $9,737,320 $0.03630 $353,426
IMPROVEMENT ANALYSIS
Year Built 1976
Number of Units 484
Net Rentable Area 550,360 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, tennis
court, car wash, barbeque equipment, laundry room, picnic
area, and parking area.
Unit Amenities Individual unit amenities include a balcony, cable TV
connection, alarm system, and washer dryer connection. Appliances
available in each unit include a refrigerator,
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 17
PLANTATION CREEK, ATLANTA, GEORGIA
stove, dishwasher, water heater, garbage disposal, and oven.
Unit Mix:
UNIT AREA
UNIT TYPE NUMBER OF UNITS (SQ. FT.)
- -------------- --------------- ---------
1Br/1Ba-1A10 124 810
2Br/1Ba-2A10 80 1,080
2Br/2Ba-2A2 70 1,100
2Br/2.5Ba-2A25 24 1,380
2Br/2Ba-2B2 128 1,300
3Br/2Ba-3A2 58 1,500
Overall Condition Good
Effective Age 20 years
Economic Life 45 years
Remaining Economic Life 25 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
1976 and consist of a 484-unit multifamily project. The highest and best use as
improved is for 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
PLANTATION CREEK, ATLANTA, GEORGIA
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
PLANTATION CREEK, ATLANTA, GEORGIA
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
PLANTATION CREEK, ATLANTA, GEORGIA
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
PLANTATION CREEK, ATLANTA, GEORGIA
SUMMARY OF COMPARABLE SALES -IMPROVED
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
----------- ------- ---------- ----------
Property Name Plantation Creek Cumberland Pines Concord Crossing
LOCATION:
Address 6925 Roswell Road 3339 Seven Pines Court 2935 Old Concord Road SE
City, State Atlanta, Georgia Atlanta, GA Smyrna, GA
County Fulton Cobb Cobb
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 550,360 185,246 207,460
Year Built 1976 1973 1975
Number of Units 484 216 190
Unit Mix: Type Total Type Total Type Total
1Br/1Ba - 1A10 124 1Br/1Ba 90 1Br/1Ba 30
2Br/1Ba - 2A10 80 2Br/2Ba 118 2Br/2Ba 127
2Br/2Ba -2A2 70 3Br/2Ba 8 3Br/2Ba 33
2Br/2.5Ba-2A25 24
2Br/2Ba - 2B2 128
3Br/2Ba - 3A2 58
Average Unit Size (SF) 1,137 858 1,092
Land Area (Acre) 34.9600 13.6000 15.7800
Density (Units/Acre) 13.8 15.9 12.0
Parking Ratio (Spaces/Unit) 2.00 2.50 N/A
Parking Type (Gr., Cov., etc.) Open Open Open
CONDITION: Good Good Good
APPEAL: Good Fair Fair
AMENITIES:
Pool/Spa Yes/No Yes/Yes Yes/Yes
Gym Room No Yes Yes
Laundry Room Yes Yes No
Secured Parking No No No
Sport Courts No Yes Yes
Washer/Dryer Connection Yes Yes Yes
Other
Other
OCCUPANCY: 98% 90% 91%
TRANSACTION DATA:
Sale Date March, 2003 July, 2002
Sale Price ($) $10,800,000 $9,200,000
Grantor Earl Phillips (LLC) Garden Woodsong
Grantee Vinings Vista (LLC) Woodsong Apartments
Sale Documentation Book 13703, Page 4724 Book 13561, Page 2533
Verification AAA Files, Comps Inc. AAA Files, Comps Inc.
Telephone Number
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF
- ----------------------------------------------------------------------------------------------------------------------------
Potential Gross Income $1,864,080 $8,630 $10.06 $1,601,328 $8,428 $7.72
Vacancy/Credit Loss $ 186,408 $ 863 $ 1.01 $ 160,133 $ 843 $0.77
-----------------------------------------------------------
Effective Gross Income $1,677,672 $7,767 $ 9.06 $1,441,195 $7,585 $6.95
Operating Expenses $ 777,600 $3,600 $ 4.20 $ 627,000 $3,300 $3.02
-----------------------------------------------------------
Net Operating Income $ 900,072 $4,167 $ 4.86 $ 814,195 $4,285 $3.92
-----------------------------------------------------------
NOTES: None None
PRICE PER UNIT $50,000 $48,421
PRICE PER SQUARE FOOT $ 58.30 $ 44.35
EXPENSE RATIO 46.3% 43.5%
EGIM 6.44 6.38
OVERALL CAP RATE 8.33% 8.85%
Cap Rate based on
Pro Forma or Actual Income? PRO FORMA PRO FORMA
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
----------- ---------- ---------- ----------
Property Name Copper Mill Madison at Forest Glen Silver Oaks
LOCATION:
Address 6860 Bebout Drive 4236 Austell Road 3640 Peachtree Corners Circle
City, State Norcross, GA Austell, GA Norcross, GA
County Gwinnett Cobb Gwinnett
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 263,028 290,700 115,400
Year Built 1970 1986 1975
Number of Units 320 264 108
Unit Mix: Type Total Type Total Type Total
1Br/1Ba 166 1Br/1Ba 60 1Br/1Ba 48
2Br/2Ba 128 2Br/2Ba 204 2Br/2Ba 60
3Br/2Ba 26 3Br/2Ba 3Br/2Ba
Average Unit Size (SF) 822 1,101 1,069
Land Area (Acre) 20.7600 26.4000 12.5500
Density (Units/Acre) 15.4 10.0 8.6
Parking Ratio (Spaces/Unit) N/A 2.00 1.96
Parking Type (Gr., Cov., etc.) Open Open Open
CONDITION: Good Good Good
APPEAL: Fair Good Good
AMENITIES:
Pool/Spa Yes/Yes Yes/Yes Yes/Yes
Gym Room Yes Yes Yes
Laundry Room Yes Yes Yes
Secured Parking Yes Yes Yes
Sport Courts Yes Yes Yes
Washer/Dryer Connection Yes Yes Yes
Other
Other
OCCUPANCY: 90% 93% 92%
TRANSACTION DATA:
Sale Date October, 2001 February, 2002 August, 2001
Sale Price ($) $14,500,000 $13,810,000 $5,250,000
Grantor Atlanta Ridgecrest (LP) Lincoln Walden Atlanta Pineland Woods (LP)
Grantee Dunwoody Forest Assoc. Forest Glen Apartments DR Sanctuary (LLC)
Sale Documentation Book 24867, Page 0047 Book 13501, Page 2716 Book 24316, Page 0045
Verification AAA Files, Comps Inc. AAA Files, Comps Inc. AAA Files, Comps Inc.
Telephone Number
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF Total $ $/Unit $/SF
- --------------------------------------------------------------------------------------------------------------------------
Potential Gross Income $2,715,660 $8,486 $10.32 $2,513,592 $9,521 $8.65 N/A
Vacancy/Credit Loss $ 271,566 $ 849 $ 1.03 $ 175,951 $ 666 $0.61 N/A
-----------------------------------------------------------------------------------------
Effective Gross Income $2,444,094 $7,638 $ 9.29 $2,337,641 $8,855 $8.04 $938,880 $8,693 $8.14
Operating Expenses $1,056,562 $3,302 $ 4.02 $1,003,200 $3,800 $3.45 $368,093 $3,408 $3.19
-----------------------------------------------------------------------------------------
Net Operating Income $1,387,532 $4,336 $ 5.28 $1,334,441 $5,055 $4.59 $570,787 $5,285 $4.95
-----------------------------------------------------------------------------------------
NOTES: None None None
PRICE PER UNIT $45,313 $52,311 $48,611
PRICE PER SQUARE FOOT $ 55.13 $ 47.51 $ 45.49
EXPENSE RATIO 43.2% 42.9% 39.2%
EGIM 5.93 5.91 5.59
OVERALL CAP RATE 9.57% 9.66% 10.87%
Cap Rate based on
Pro Forma or Actual Income? PRO FORMA PRO FORMA ACTUAL
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 22
PLANTATION CREEK, ATLANTA, GEORGIA
IMPROVED SALES MAP
[MAP]
IMPROVED SALES ANALYSIS
The improved sales indicate a sales price range from $45,313 to $52,311 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 $44,464 to $49,844 per unit with a mean or average adjusted price
of $47,282 per unit. The median adjusted price is $47,500 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 $22,700,000 (rounded after necessary adjustment,
if any).
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 23
PLANTATION CREEK, ATLANTA, GEORGIA
SALES ADJUSTMENT GRID
COMPARABLE COMPARABLE COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2 I - 3 I - 4 I - 5
- -------------- ------------ ----------------- --------------------- ------------------- ------------------- -------------------
Property Name Plantation Cumberland Concord Crossing Copper Mill Madison at Silver Oaks
Creek Pines Forest Glen
Address 6925 Roswell 3339 Seven 2935 Old Concord 6860 Bebout 4236 Austell 3640 Peachtree
Road Pines Court Road SE Drive Road Corners Circle
City Atlanta, Atlanta, GA Smyrna, GA Norcross, GA Austell, GA Norcross, GA
Georgia
Sale Date March, 2003 July, 2002 October, 2001 February, 2002 August, 2001
Sale Price ($) $10,800,000 $9,200,000 $14,500,000 $13,810,000 $5,250,000
Net Rentable Area 550,360 185,246 207,460 263,028 290,700 115,400
(SF)
Number of Units 484 216 190 320 264 108
Price Per Unit $ 50,000 $ 48,421 $ 45,313 $ 52,311 $ 48,611
Year Built 1976 1973 1975 1970 1986 1975
Land Area (Acre) 34.9600 13.6000 15.7800 20.7600 26.4000 12.5500
VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION ADJ. DESCRIPTION ADJ. DESCRIPTION ADJ. DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Fee Simple Fee Simple 0% Fee Simple 0% Fee Simple 0% Fee Simple 0% Fee Simple 0%
Conveyed Estate Estate Estate Estate Estate Estate
Financing Cash To 0% Cash To Seller 0% Cash To Seller 0% Cash To Seller 0% Cash To Seller 0%
Seller
Conditions of Sale Arm's Length 0% Arm's Length 0% Arm's Length 0% Arm's Length 0% Arm's Length 0%
Date of Sale 03-2003 0% 07-2002 0% 10-2001 0% 02-2002 0% 08-2001 0%
(Time)
VALUE AFTER $50,000 $48,421 $45,313 $52,311 $48,611
TRANS. ADJUST.
($/UNIT)
Location Superior -5% Comparable 0% Comparable 0% Comparable 0% Comparable 0%
Number of Units 484 216 -5% 190 0% 320 0% 264 -5% 108 -5%
Quality / Appeal Good Comparable 0% Comparable 0% Comparable 0% Comparable 0% Comparable 0%
Age / Condition 1976 1973 / Good 0% 1975 / Good 0% 1970 / Good 5% 1986 / Good -10% 1975 / Good 0%
Occupancy at Sale 98% 90% 0% 91% 0% 90% 0% 93% 0% 92% 0%
Amenities Good Comparable 0% Comparable 0% Comparable 0% Comparable 0% Comparable 0%
Average Unit Size 1,137 858 5% 1,092 0% 822 5% 1,101 0% 1,069 0%
(SF)
PHYSICAL -5% 0% 10% -15% -5%
ADJUSTMENT
FINAL ADJUSTED $47,500 $48,421 $49,844 $44,464 $46,181
VALUE ($/UNIT)
SUMMARY
VALUE RANGE (PER UNIT) $44,464 TO $49,844
MEAN (PER UNIT) $47,282
MEDIAN (PER UNIT) $47,500
VALUE CONCLUSION (PER UNIT) $47,500
VALUE OF IMPROVEMENT & MAIN SITE $ 22,990,000
PV OF CONCESSIONS -$ 327,000
VALUE INDICATED BY SALES COMPARISON APPROACH $ 22,663,000
ROUNDED $ 22,700,000
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
PLANTATION CREEK, ATLANTA, GEORGIA
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-1 216 $10,800,000 8.33% $ 900,072 $1,990,613 0.987 $ 49,350
$ 50,000 $ 4,167 $ 4,113
I-2 190 $ 9,200,000 8.85% $ 814,195 $1,990,613 0.960 $ 46,473
$ 48,421 $ 4,285 $ 4,113
I-3 320 $14,500,000 9.57% $1,387,532 $1,990,613 0.949 $ 42,980
$ 45,313 $ 4,336 $ 4,113
I-4 264 $13,810,000 9.66% $1,334,441 $1,990,613 0.814 $ 42,563
$ 52,311 $ 5,055 $ 4,113
I-5 108 $ 5,250,000 10.87% $ 570,787 $1,990,613 0.778 $ 37,829
$ 48,611 $ 5,285 $ 4,113
PRICE/UNIT
----------
Low High Average Median
$37,829 $49,350 $ 43,839 $42,980
VALUE ANALYSIS BASED ON COMPARABLES NOI PER UNIT
------------------------------------------------
Estimated Price Per Unit $ 45,000
Number of Units 484
Value $21,780,000
PV of Concessions -$ 327,000
-----------
Value Based on NOI Analysis $21,453,000
Rounded $21,500,000
The adjusted sales indicate a range of value between $37,829 and $49,350 per
unit, with an average of $43,839 per unit. Based on the subject's competitive
position within the improved sales, a value of $45,000 per unit is estimated.
This indicates an "as is" market value of $21,500,000 (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
PLANTATION CREEK, ATLANTA, GEORGIA
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-1 216 $10,800,000 $1,677,672 $ 777,600 46.35% 6.44
$ 50,000
I-2 190 $ 9,200,000 $1,441,195 $ 627,000 43.51% 6.38
$ 48,421
I-3 320 $14,500,000 $2,444,094 $1,056,562 43.23% 5.93
46.18%
$ 45,313
I-4 264 $13,810,000 $2,337,641 $1,003,200 42.92% 5.91
$ 52,311
I-5 108 $ 5,250,000 $ 938,880 $ 368,093 39.21% 5.59
$ 48,611
EGIM
----
LOW HIGH AVERAGE MEDIAN
- ---- ---- ------- ------
5.59 6.44 6.05 5.93
VALUE ANALYSIS BASED ON EGIM'S OF COMPARABLE SALES
- --------------------------------------------------
Estimate EGIM 6.10
Subject EGI $ 3,923,374
Value $23,932,580
PV of Concessions -$ 327,000
------------
Value Based on EGIM Analysis $23,605,580
Rounded $23,600,000
Value Per Unit $ 48,760
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 46.18% before reserves. The comparable sales
indicate a range of expense ratios from 39.21% to 46.35%, while their EGIMs
range from 5.59 to 6.44. Overall, we conclude to an EGIM of 6.10, which results
in an "as is" value estimate in the EGIM Analysis of $23,600,000.
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 $22,500,000.
Price Per Unit $22,700,000
NOI Per Unit $21,500,000
EGIM Analysis $23,600,000
Sales Comparison Conclusion $22,500,000
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 26
PLANTATION CREEK, ATLANTA, GEORGIA
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
PLANTATION CREEK, ATLANTA, GEORGIA
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 810 $616 $0.76 95.0%
2Br/1Ba-2A10 1080 $700 $0.65 100.0%
2Br/2Ba-2A2 1100 $714 $0.65 99.0%
2Br/2.5Ba-2A25 1380 $852 $0.62 100.0%
2Br/2Ba-2B2 1300 $754 $0.58 99.0%
3Br/2Ba-3A2 1500 $839 $0.56 98.0%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 28
PLANTATION CREEK, ATLANTA, GEORGIA
RENT ANALYSIS
COMPARABLE RENTS
---------------------------------------------------------------
R-1 R-2 R-3 R-4 R-5
---------------------------------------------------------------
The
Magnolia at The Cliffs Stonecourt
Sandy Greystone Morgan of of Sandy
Springs Apartments Falls Dunwoody Springs
---------------------------------------------------------------
COMPARISON TO SUBJECT
SUBJECT SUBJECT ---------------------------------------------------------------
SUBJECT UNIT ACTUAL ASKING Slightly Slightly
DESCRIPTION TYPE RENT RENT Similar Inferior Superior Inferior Inferior
- ------------------------ ---------------- ------- ------- ------------- ---------- ---------- --------- ----------
Monthly Rent 1Br/1Ba - 1A10 $ 616 $ 699 $ 780 $ 744 $ 738 $ 703 $ 751
Unit Area (SF) 810 810 854 900 747 771 750
Monthly Rent Per Sq. Ft. $ 0.76 $ 0.86 $ 0.91 $ 0.83 $ 0.99 $ 0.91 $ 1.00
Monthly Rent 2Br/1Ba - 2A10 $ 700 $ 799 $ 975 $ 861 $ 780 $ 745 $ 846
Unit Area (SF) 1,080 1,080 1,142 1,000 906 950 1,050
Monthly Rent Per Sq. Ft. $ 0.65 $ 0.74 $ 0.85 $ 0.86 $ 0.86 $ 0.78 $ 0.81
Monthly Rent 2Br/2Ba -2A2 $ 714 $ 829 $ 975 $ 861 $ 868 $ 825 $ 903
Unit Area (SF) 1,100 1,100 1,142 1,000 1,097 1,105 1,200
Monthly Rent Per Sq. Ft. $ 0.65 $ 0.75 $ 0.85 $ 0.86 $ 0.79 $ 0.75 $ 0.75
Monthly Rent 2Br/2.5Ba-2A25 $ 852 $ 999 $ 950 $ 861 $ 933 $ 840 $ 956
Unit Area (SF) 1,380 1,380 1,350 1,000 1,250 1,155 1,300
Monthly Rent Per Sq. Ft. $ 0.62 $ 0.72 $ 0.70 $ 0.86 $ 0.75 $ 0.73 $ 0.74
Monthly Rent 2Br/2Ba - 2B2 $ 754 $ 849 $ 980 $ 861 $ 860 $ 825 $ 956
Unit Area (SF) 1,300 1,300 1,350 1,000 1,190 1,105 1,300
Monthly Rent Per Sq. Ft. $ 0.58 $ 0.65 $ 0.73 $ 0.86 $ 0.72 $ 0.75 $ 0.74
Monthly Rent 3Br/2Ba - 3A2 $ 839 $ 1,029 $ 1,040 $ 999 $1,048 $ 975 $1,218
Unit Area (SF) 1,500 1,500 1,530 1,200 1,300 1,305 1,600
Monthly Rent Per Sq. Ft. $ 0.56 $ 0.69 $ 0.68 $ 0.83 $ 0.81 $ 0.75 $ 0.76
DESCRIPTION MIN MAX MEDIAN AVERAGE
- ------------------------ ------ ------ ------ -------
Monthly Rent $ 703 $ 780 $ 744 $ 743
Unit Area (SF) 747 900 771 804
Monthly Rent Per Sq. Ft. $ 0.83 $ 1.00 $ 0.91 $ 0.93
Monthly Rent $ 745 $ 975 $ 846 $ 841
Unit Area (SF) 906 1,142 1,000 1,010
Monthly Rent Per Sq. Ft. $ 0.78 $ 0.86 $ 0.85 $ 0.83
Monthly Rent $ 825 $ 975 $ 868 $ 886
Unit Area (SF) 1,000 1,200 1,105 1,109
Monthly Rent Per Sq. Ft. $ 0.75 $ 0.86 $ 0.79 $ 0.80
Monthly Rent $ 840 $ 956 $ 933 $ 908
Unit Area (SF) 1,000 1,350 1,250 1,211
Monthly Rent Per Sq. Ft. $ 0.70 $ 0.86 $ 0.74 $ 0.75
Monthly Rent $ 825 $ 980 $ 861 $ 896
Unit Area (SF) 1,000 1,350 1,190 1,189
Monthly Rent Per Sq. Ft. $ 0.72 $ 0.86 $ 0.74 $ 0.76
Monthly Rent $ 975 $1,218 $1,040 $1,056
Unit Area (SF) 1,200 1,600 1,305 1,387
Monthly Rent Per Sq. Ft. $ 0.68 $ 0.83 $ 0.76 $ 0.77
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 124 810 $616 $0.76 $ 76,384 $ 916,608
2Br/1Ba-2A10 80 1,080 $700 $0.65 $ 56,000 $ 672,000
2Br/2Ba-2A2 70 1,100 $714 $0.65 $ 49,980 $ 599,760
2Br/2.5Ba-2A25 24 1,380 $852 $0.62 $ 20,448 $ 245,376
2Br/2Ba-2B2 128 1,300 $754 $0.58 $ 96,512 $1,158,144
3Br/2Ba-3A2 58 1,500 $839 $0.56 $ 48,662 $ 583,944
Total $347,986 $4,175,832
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 29
PLANTATION CREEK, ATLANTA, GEORGIA
SUMMARY OF HISTORICAL INCOME & EXPENSES
FISCAL YEAR 2000 FISCAL YEAR 2001 FISCAL YEAR 2002
----------------------- ---------------------- -----------------------
ACTUAL ACTUAL ACTUAL
----------------------- ---------------------- -----------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT
----------- ---------- -------- ---------- -------- ---------- ----------
Revenues
Rental Income $4,647,424 $9,602 $4,819,248 $9,957 $4,395,964 $9,083
Vacancy $ 339,212 $ 701 $ 501,295 $1,036 $ 724,795 $1,498
Credit Loss/Concessions $ 206,229 $ 426 $ 548,383 $1,133 $ 574,550 $1,187
Subtotal $ 545,441 $1,127 $1,049,678 $2,169 $1,299,345 $2,685
Laundry Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 190,385 $ 393 $ 287,330 $ 594 $ 363,885 $ 752
Subtotal Other Income $ 190,385 $ 393 $ 287,330 $ 594 $ 363,885 $ 752
Effective Gross Income $4,292,368 $8,869 $4,056,900 $8,382 $3,460,504 $7,150
Operating Expenses
Taxes $ 400,231 $ 827 $ 392,022 $ 810 $ 363,573 $ 751
Insurance $ 54,477 $ 113 $ 87,614 $ 181 $ 94,128 $ 194
Utilities $ 296,931 $ 613 $ 300,564 $ 621 $ 365,512 $ 755
Repair & Maintenance $ 61,038 $ 126 $ 61,468 $ 127 $ 214,206 $ 443
Cleaning $ 94,184 $ 195 $ 117,903 $ 244 $ 218,210 $ 451
Landscaping $ 41,739 $ 86 $ 64,362 $ 133 $ 97,031 $ 200
Security $ 25,936 $ 54 $ 37,811 $ 78 $ 33,408 $ 69
Marketing & Leasing $ 69,691 $ 144 $ 70,572 $ 146 $ 111,711 $ 231
General Administrative $ 407,840 $ 843 $ 417,324 $ 862 $ 431,597 $ 892
Management $ 221,893 $ 458 $ 211,739 $ 437 $ 191,108 $ 395
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Total Operating Expenses $1,673,960 $3,459 $1,761,379 $3,639 $2,120,484 $4,381
Reserves $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Net Income $2,618,408 $5,410 $2,295,521 $4,743 $1,340,020 $2,769
FISCAL YEAR 2003 ANNUALIZED 2003
---------------------- -----------------------
MANAGEMENT BUDGET PROJECTION AAA PROJECTION
---------------------- ----------------------- ---------------------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT %
----------- ---------- -------- ---------- -------- ---------- -------- ------
Revenues
Rental Income $4,195,000 $8,667 $3,982,676 $8,229 $4,175,832 $8,628 100.0%
Vacancy $ 634,000 $1,310 $ 552,092 $1,141 $ 375,825 $ 776 9.0%
Credit Loss/Concessions $ 244,800 $ 506 $ 339,268 $ 701 $ 167,033 $ 345 4.0%
Subtotal $ 878,800 $1,816 $ 891,360 $1,842 $ 542,858 $1,122 13.0%
Laundry Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 0.0%
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 0.0%
Other Misc. Revenue $ 261,600 $ 540 $ 357,432 $ 738 $ 290,400 $ 600 7.0%
Subtotal Other Income $ 261,600 $ 540 $ 357,432 $ 738 $ 290,400 $ 600 7.0%
Effective Gross Income $3,577,800 $7,392 $3,448,748 $7,126 $3,923,374 $8,106 100.0%
Operating Expenses
Taxes $ 381,488 $ 788 $ 372,692 $ 770 $ 381,392 $ 788 9.7%
Insurance $ 99,274 $ 205 $ 97,480 $ 201 $ 99,220 $ 205 2.5%
Utilities $ 362,000 $ 748 $ 439,776 $ 909 $ 363,000 $ 750 9.3%
Repair & Maintenance $ 138,000 $ 285 $ 88,252 $ 182 $ 84,700 $ 175 2.2%
Cleaning $ 175,000 $ 362 $ 219,552 $ 454 $ 145,200 $ 300 3.7%
Landscaping $ 189,500 $ 392 $ 81,972 $ 169 $ 82,280 $ 170 2.1%
Security $ 0 $ 0 $ 16,080 $ 33 $ 24,200 $ 50 0.6%
Marketing & Leasing $ 102,400 $ 212 $ 52,196 $ 108 $ 72,600 $ 150 1.9%
General Administrative $ 354,504 $ 732 $ 409,056 $ 845 $ 363,000 $ 750 9.3%
Management $ 202,780 $ 419 $ 149,956 $ 310 $ 196,169 $ 405 5.0%
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 0.0%
Total Operating Expenses $2,004,946 $4,142 $1,927,012 $3,981 $1,811,761 $3,743 46.2%
Reserves $ 0 $ 0 $ 0 $ 0 $ 121,000 $ 250 6.7%
Net Income $1,572,854 $3,250 $1,521,736 $3,144 $1,990,613 $4,113 50.7%
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 13% based on
the subject's historical performance, as well as the anticipated future market
conditions.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 30
PLANTATION CREEK, ATLANTA, GEORGIA
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 31
PLANTATION CREEK, ATLANTA, GEORGIA
SUMMARY OF OVERALL
CAPITALIZATION RATES
COMP. NO. SALE DATE OCCUP. PRICE/UNIT OAR
- --------- --------- ------ ---------- ---
I-1 Mar-03 90% $ 50,000 8.33%
I-2 Jul-02 91% $ 48,421 8.85%
I-3 Oct-01 90% $ 45,313 9.57%
I-4 Feb-02 93% $ 52,311 9.66%
I-5 Aug-01 92% $ 48,611 10.87%
High 10.87%
Low 8.33%
Average 9.46%
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 9.50%. 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 $22,200,000. In this instance, the reversion
figure contributes
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 32
PLANTATION CREEK, ATLANTA, GEORGIA
approximately 41% 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 APPROACH PAGE 33
PLANTATION CREEK, ATLANTA, GEORGIA
DISCOUNTED CASH FLOW ANALYSIS
PLANTATION CREEK
YEAR APR-2004 APR-2005 APR-2006 APR-2007 APR-2008 APR-2009
FISCAL YEAR 1 2 3 4 5 6
- -----------------------------------------------------------------------------------------------------------------------
REVENUE
Base Rent $4,175,832 $4,175,832 $4,301,107 $4,430,140 $4,563,044 $4,699,936
Vacancy $ 375,825 $ 375,825 $ 387,100 $ 398,713 $ 410,674 $ 422,994
Credit Loss $ 167,033 $ 167,033 $ 172,044 $ 177,206 $ 182,522 $ 187,997
Concessions $ 250,550 $ 125,275 $ 0 $ 0 $ 0 $ 0
--------------------------------------------------------------------------------
Subtotal $ 793,408 $ 668,133 $ 559,144 $ 575,918 $ 593,196 $ 610,992
Laundry Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 290,400 $ 290,400 $ 299,112 $ 308,085 $ 317,328 $ 326,848
--------------------------------------------------------------------------------
Subtotal Other Income $ 290,400 $ 290,400 $ 299,112 $ 308,085 $ 317,328 $ 326,848
--------------------------------------------------------------------------------
EFFECTIVE GROSS INCOME $3,672,824 $3,798,099 $4,041,075 $4,162,307 $4,287,177 $4,415,792
OPERATING EXPENSES:
Taxes $ 381,392 $ 392,834 $ 404,619 $ 416,757 $ 429,260 $ 442,138
Insurance $ 99,220 $ 102,197 $ 105,262 $ 108,420 $ 111,673 $ 115,023
Utilities $ 363,000 $ 373,890 $ 385,107 $ 396,660 $ 408,560 $ 420,816
Repair & Maintenance $ 84,700 $ 87,241 $ 89,858 $ 92,554 $ 95,331 $ 98,191
Cleaning $ 145,200 $ 149,556 $ 154,043 $ 158,664 $ 163,424 $ 168,327
Landscaping $ 82,280 $ 84,748 $ 87,291 $ 89,910 $ 92,607 $ 95,385
Security $ 24,200 $ 24,926 $ 25,674 $ 26,444 $ 27,237 $ 28,054
Marketing & Leasing $ 72,600 $ 74,778 $ 77,021 $ 79,332 $ 81,712 $ 84,163
General Administrative $ 363,000 $ 373,890 $ 385,107 $ 396,660 $ 408,560 $ 420,816
Management $ 183,641 $ 189,905 $ 202,054 $ 208,115 $ 214,359 $ 220,790
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
--------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES $1,799,233 $1,853,965 $1,916,035 $1,973,516 $2,032,722 $2,093,704
Reserves $ 121,000 $ 124,630 $ 128,369 $ 132,220 $ 136,187 $ 140,272
--------------------------------------------------------------------------------
NET OPERATING INCOME $1,752,591 $1,819,504 $1,996,671 $2,056,571 $2,118,268 $2,181,816
================================================================================
Operating Expense Ratio (% of EGI) 49.0% 48.8% 47.4% 47.4% 47.4% 47.4%
Operating Expense Per Unit $ 3,717 $ 3,831 $ 3,959 $ 4,078 $ 4,200 $ 4,326
YEAR APR-2010 APR-2011 APR-2012 APR-2013 APR-2014
FISCAL YEAR 7 8 9 10 11
- ---------------------------------------------------------------------------------------------------------
REVENUE
Base Rent $4,840,934 $4,986,162 $5,135,747 $5,289,819 $5,448,514
Vacancy $ 435,684 $ 448,755 $ 462,217 $ 476,084 $ 490,366
Credit Loss $ 193,637 $ 199,446 $ 205,430 $ 211,593 $ 217,941
Concessions $ 0 $ 0 $ 0 $ 0 $ 0
------------------------------------------------------------------
Subtotal $ 629,321 $ 648,201 $ 667,647 $ 687,676 $ 708,307
Laundry Income $ 0 $ 0 $ 0 $ 0 $ 0
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 336,653 $ 346,753 $ 357,155 $ 367,870 $ 378,906
------------------------------------------------------------------
Subtotal Other Income $ 336,653 $ 346,753 $ 357,155 $ 367,870 $ 378,906
------------------------------------------------------------------
EFFECTIVE GROSS INCOME $4,548,266 $4,684,714 $4,825,255 $4,970,013 $5,119,113
OPERATING EXPENSES:
Taxes $ 455,402 $ 469,064 $ 483,136 $ 497,630 $ 512,559
Insurance $ 118,474 $ 122,028 $ 125,689 $ 129,460 $ 133,343
Utilities $ 433,441 $ 446,444 $ 459,838 $ 473,633 $ 487,842
Repair & Maintenance $ 101,136 $ 104,170 $ 107,295 $ 110,514 $ 113,830
Cleaning $ 173,376 $ 178,578 $ 183,935 $ 189,453 $ 195,137
Landscaping $ 98,247 $ 101,194 $ 104,230 $ 107,357 $ 110,577
Security $ 28,896 $ 29,763 $ 30,656 $ 31,576 $ 32,523
Marketing & Leasing $ 86,688 $ 89,289 $ 91,968 $ 94,727 $ 97,568
General Administrative $ 433,441 $ 446,444 $ 459,838 $ 473,633 $ 487,842
Management $ 227,413 $ 234,236 $ 241,263 $ 248,501 $ 255,956
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0
------------------------------------------------------------------
TOTAL OPERATING EXPENSES $2,156,515 $2,221,210 $2,287,846 $2,356,482 $2,427,176
Reserves $ 144,480 $ 148,815 $ 153,279 $ 157,878 $ 162,614
------------------------------------------------------------------
NET OPERATING INCOME $2,247,271 $2,314,689 $2,384,129 $2,455,653 $2,529,323
==================================================================
Operating Expense Ratio (% of EGI) 47.4% 47.4% 47.4% 47.4% 47.4%
Operating Expense Per Unit $ 4,456 $ 4,589 $ 4,727 $ 4,869 $ 5,015
Estimated Stabilized NOI $1,990,613 Sales Expense Rate 2.00%
Months to Stabilized 1 Discount Rate 11.00%
Stabilized Occupancy 91.0% Terminal Cap Rate 9.50%
Gross Residual Sale Price $26,624,452 Deferred Maintenance $ 0
Less: Sales Expense $ 532,489 Add: Excess Land $ 0
-----------
Net Residual Sale Price $26,091,962 Other Adjustments $ 0
-----------
PV of Reversion $ 9,189,184 Value Indicated By "DCF" $22,169,289
Add: NPV of NOI $12,980,105 Rounded $22,200,000
===========
PV Total $22,169,289
"DCF" VALUE SENSITIVITY TABLE
DISCOUNT RATE
-------------------------------------------------------------------------------------------
TOTAL VALUE 10.50% 10.75% 11.00% 11.25% 11.50%
- ---------------------------------------------------------------------------------------------------------------
9.00% $23,444,751 $23,058,039 $22,679,800 $22,309,820 $21,947,893
9.25% $23,170,491 $22,789,907 $22,417,646 $22,053,498 $21,697,260
TERMINAL CAP RATE 9.50% $22,910,665 $22,535,887 $22,169,289 $21,810,667 $21,459,819
9.75% $22,664,164 $22,294,894 $21,933,669 $21,580,289 $21,234,554
10.00% $22,429,987 $22,065,950 $21,709,830 $21,361,429 $21,020,552
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME APPROACH PAGE 34
PLANTATION CREEK, ATLANTA, GEORGIA
INCOME LOSS DURING LEASE-UP
The subject is currently near or at stabilized condition. Therefore, there is no
income loss during lease-up at the subject property.
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
$327,000 (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.
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 APPROACH PAGE 35
PLANTATION CREEK, ATLANTA, GEORGIA
PLANTATION CREEK
TOTAL PER SQ.FT. PER UNIT %OF EGI
- ------------------------------------------------------------------------------------------------------------
REVENUE
Base Rent $ 4,175,832 $ 7.59 $ 8,628
Less: Vacancy & Collection Loss 13.00% $ 542,858 $ 0.99 $ 1,122
Plus: Other Income
Laundry Income $ 0 $ 0.00 $ 0 0.00%
Garage Revenue $ 0 $ 0.00 $ 0 0.00%
Other Misc. Revenue $ 290,400 $ 0.53 $ 600 7.40%
----------- ------------ ----------- ---------
Subtotal Other Income $ 290,400 $ 0.53 $ 600 7.40%
EFFECTIVE GROSS INCOME $ 3,923,374 $ 7.13 $ 8,106
OPERATING EXPENSES:
Taxes $ 381,392 $ 0.69 $ 788 9.72%
Insurance $ 99,220 $ 0.18 $ 205 2.53%
Utilities $ 363,000 $ 0.66 $ 750 9.25%
Repair & Maintenance $ 84,700 $ 0.15 $ 175 2.16%
Cleaning $ 145,200 $ 0.26 $ 300 3.70%
Landscaping $ 82,280 $ 0.15 $ 170 2.10%
Security $ 24,200 $ 0.04 $ 50 0.62%
Marketing & Leasing $ 72,600 $ 0.13 $ 150 1.85%
General Administrative $ 363,000 $ 0.66 $ 750 9.25%
Management 5.00% $ 196,169 $ 0.36 $ 405 5.00%
Miscellaneous $ 0 $ 0.00 $ 0 0.00%
TOTAL OPERATING EXPENSES $ 1,811,761 $ 3.29 $ 3,743 46.18%
Reserves $ 121,000 $ 0.22 $ 250 3.08%
----------- ------------ ----------- ---------
NET OPERATING INCOME $ 1,990,613 $ 3.62 $ 4,113 50.74%
=========== ============ =========== =========
"GOING IN" CAPITALIZATION RATE 9.00%
VALUE INDICATION $22,117,924 $ 40.19 $ 45,698
PV OF CONCESSIONS ($ 327,000)
"AS IS" VALUE INDICATION
(DIRECT CAPITALIZATION APPROACH) $21,790,924
ROUNDED $21,800,000 $ 39.61 $ 45,041
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME APPROACH PAGE 36
PLANTATION CREEK, ATLANTA, GEORGIA
DIRECT CAPITALIZATION VALUE SENSITIVITY TABLE
- --------------------------------------------------------------------------
CAP RATE VALUE ROUNDED $/UNIT $/SF
- --------------------------------------------------------------------------
8.25% $23,801,644 $23,800,000 $49,174 $43.24
8.50% $23,091,978 $23,100,000 $47,727 $41.97
8.75% $22,422,865 $22,400,000 $46,281 $40.70
9.00% $21,790,924 $21,800,000 $45,041 $39.61
9.25% $21,193,142 $21,200,000 $43,802 $38.52
9.50% $20,626,823 $20,600,000 $42,562 $37.43
9.75% $20,089,545 $20,100,000 $41,529 $36.52
CONCLUSION BY THE DIRECT CAPITALIZATION METHOD
Applying the capitalization rate to our estimated NOI results in an estimated
value of $21,800,000.
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 $22,200,000
Direct Capitalization Method $21,800,000
Giving consideration to the indicated values provided by both techniques, we
have concluded the estimated value by the income capitalization approach to be
$22,000,000.
AMERICAN APPRAISAL ASSOCIATES, INC. RECONCILIATION AND CONCLUSION PAGE 37
PLANTATION CREEK, ATLANTA, GEORGIA
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 $22,500,000
Income Approach $22,000,000
Reconciled Value $22,300,000
The Direct 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 22, 2003 the market value of the fee simple estate in the property is:
$22,300,000
AMERICAN APPRAISAL ASSOCIATES, INC. ADDENDA
PLANTATION CREEK, ATLANTA, GEORGIA
ADDENDA
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
PLANTATION CREEK, ATLANTA, GEORGIA
EXHIBIT A
SUBJECT PHOTOGRAPHS
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
PLANTATION CREEK, ATLANTA, GEORGIA
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
EXTERIOR - TYPICAL APARTMENT BUILDING LEASING OFFICE
[PICTURE] [PICTURE]
EXTERIOR - TYPICAL APARTMENT BUILDING EXTERIOR - TYPICAL APARTMENT BUILDING
[PICTURE] [PICTURE]
INTERIOR - APARTMENT UNIT INTERIOR - APARTMENT UNIT
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
PLANTATION CREEK, ATLANTA, GEORGIA
EXHIBIT B
SUMMARY OF RENT COMPARABLES
AND PHOTOGRAPH OF COMPARABLES
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
PLANTATION CREEK, ATLANTA, GEORGIA
PHOTOGRAPHS OF COMPARABLE SALE PROPERTIES
COMPARABLE I-1 COMPARABLE I-2 COMPARABLE I-3
CUMBERLAND PINES CONCORD CROSSING COPPER MILL
3339 Seven Pines Court 2935 Old Concord Road SE 6860 Bebout Drive
Atlanta, GA Smyrna, GA Norcross, GA
[PICTURE] [PICTURE] [PICTURE]
COMPARABLE I-4 COMPARABLE I-5
MADISON AT FOREST GLEN SILVER OAKS
4236 Austell Road 3640 Peachtree Corners Circle
Austell, GA Norcross, GA
[PICTURE] [PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
PLANTATION CREEK, ATLANTA, GEORGIA
SUMMARY OF COMPARABLE RENTAL PROPERTIES
COMPARABLE
DESCRIPTION SUBJECT R - 1
----------- ------- ----------
Property Name Plantation Creek The Magnolia at Sandy Springs
Management Company AIMCO Capreit
LOCATION:
Address 6925 Roswell Road 7100 Roswell Road
City, State Atlanta, Georgia Atlanta, GA
County Fulton Fulton
Proximity to Subject 1-mile north of subject
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 550,360 N/A
Year Built 1976 1980
Effective Age 20 23
Building Structure Type Brick & wood siding walls; asphalt shingle roof Wood and stucco walls; asphalt shingle roof
Parking Type (Gr., Cov., etc.) Garage, Open Covered Open
Number of Units 484 268
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
1 1Br/1Ba - 1A10 810 124 $616 1 1BD/1BH - Heather 854 $ 780
2 2Br/1Ba - 2A10 1,080 80 $700 2 2BD/2BH - Iris 1,142 $ 975
3 2Br/2Ba -2A2 1,100 70 $714 3 2BD/2BH - Iris 1,142 $ 975
4 2Br/2.5Ba-2A25 1,380 24 $852 4 2BD/2BH - Laurel 1,350 $ 950
5 2Br/2Ba - 2B2 1,300 128 $754 5 2BD/2BH - Laurel 1,350 $ 950
6 3Br/2Ba - 3A2 1,500 58 $839 5 2BD/2BH - Lily 1,350 $1,010
6 3BD/2BH-Magnolia 1,530 $1,040
Average Unit Size (SF) 1,137
Unit Breakdown: Efficiency 0% 2-Bedroom 39% Efficiency 0% 2-Bedroom 0%
1-Bedroom 61% 3-Bedroom 0% 1-Bedroom 0% 3-Bedroom 0%
CONDITION: Good Good
APPEAL: Fair Good
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
Fireplace X Alarm System X Fireplace Alarm System
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
Spa/Jacuzzi X Car Wash Spa/Jacuzzi X 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
X Tennis Court Secured Parking X Tennis Court X Secured Parking
Racquet Ball X Laundry Room Racquet Ball X Laundry Room
Jogging Track Business Office Jogging Track X Business Office
Gym Room X Picnic Area X Gym Room Picnic Area
OCCUPANCY: 98% 93%
LEASING DATA:
Available Leasing Terms 6 to 15 Months 6 to 24 Months
Concessions 1 - 1 1/2 Months Free Up to 1 Month Free
Pet Deposit $300 - $500 $350 - $500
Utilities Paid by Tenant: X Electric X Natural Gas X Electric X Natural Gas
X Water Trash X Water Trash
Confirmation May 1, 2003; Joseph Beard (Property Manager) May 22, 2003; Carl Vitner, Service Manager
Telephone Number (972)234-1231 770-393-9999
NOTES:
COMPARISON TO SUBJECT: Similar
COMPARABLE COMPARABLE
DESCRIPTION R - 2 R - 3
----------- ---------- ----------
Property Name Greystone Apartments Morgan Falls
Management Company Equity Residential LBK Management
LOCATION:
Address 6940 Roswell Road 7600 Roswell Road
City, State Atlanta, GA Atlanta, GA
County Fulton Fulton
Proximity to Subject Directly across the street 3-miles north of the subject
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) N/A N/A
Year Built 1965 1986, 1991
Effective Age 28 16
Building Structure Type Wood and brick walls; asphalt shingle roof Wood siding walls; asphalt shingle roof
Parking Type (Gr., Cov., etc.) Open Open
Number of Units 150 972
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
1 1BD/1BH 900 $744 1 1BD/1BH - A 565 $ 668
2 2BD/1.5BH 1,000 $861 1 1BD/1BH - A-1 745 $ 738
3 2BD/1.5BH 1,000 $861 1 1BD/1BH - A-S 800 $ 773
4 2BD/1.5BH 1,000 $861 1 1BD/1BH -A-M 878 $ 773
5 2BD/1.5BH 1,000 $861 2 2BD/1BH - B 906 $ 780
6 3BD/1.5BH 1,200 $999 3 2BD/2BH - B-1 1,077 $ 848
3 2BD/2BH - B-2 1,116 $ 888
5 2BD/2BH - B-2M 1,190 $ 860
4 2BD/2BH - B-3 1,250 $ 933
6 2BD/2BH - B-2 1,300 $1,048
Average Unit Size (SF)
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 Very Good
APPEAL: Fair Very Good
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage X Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
Fireplace X Alarm System X Fireplace Alarm System
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 BBQ Equipment Basketball Court X BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball Meeting Hall X Sand Volley Ball Meeting Hall
Tennis Court Secured Parking X Tennis Court X Secured Parking
Racquet Ball X Laundry Room X Racquet Ball X Laundry Room
Jogging Track Business Office X Jogging Track X Business Office
Gym Room X Picnic Area X Gym Room X Picnic Area
OCCUPANCY: 78% 85%
LEASING DATA:
Available Leasing Terms 6 to 14 Months 6 to 12 Months
Concessions Up to $200 per month discount $116 - $201 off per month
Pet Deposit $200 $350 - $500
Utilities Paid by Tenant: X Electric Natural Gas X Electric X Natural Gas
X Water Trash X Water Trash
Confirmation May 22, 2003; Shawn Phillips, Leasing May 2, 2003; Amanda Westbrook, Leasing
Consultant
Telephone Number 770-396-1222 770-396-0222
NOTES: Older community with inferior appeal and Modern garden style apartment complex
amenities
COMPARISON TO SUBJECT: Inferior Superior
COMPARABLE COMPARABLE
DESCRIPTION R - 4 R - 5
----------- ---------- ----------
Property Name The Cliffs of Dunwoody Stonecourt of Sandy Springs
Management Company AMD Management GJMG Realty
LOCATION:
Address 7275 Roswell Road 6980 Roswell Road
City, State Atlanta, GA Atlanta, GA
County Fulton Fulton
Proximity to Subject 2-miles north of subject Directly across the street
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) N/A N/A
Year Built 1969 1973
Effective Age 34 30
Building Structure Type Wood and brick walls; asphalt shingle roof Brick siding walls; asphalt and wood shingle roof
Parking Type (Gr., Cov., etc.) Garage Open
Number of Units 419 147
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
1 1BD/1BH - A-1 612 $670 1 1BD/1BH-C'bridge 600 $ 713
1 1BD/1BH - A-2 950 $745 1 1BD/1.5BH-C'bury 900 $ 788
1 1BD/1BH - A-3 750 $695 2 1BD/1.5BH-C'bury 900 $ 788
2 2BD/1BH - B-1 950 $745 2 2BD/1BH-Oxford 1,200 $ 903
2 2BD/1BH - B-2 950 $745 3 2BD/1BH-Oxford 1,200 $ 903
3 2BD/2BH - B-3 1,105 $825 4 2BD/1BH-Oxford 1,200 $ 903
4 2BD/2BH - B-4 1,155 $840 5 2BD/1BH-Oxford 1,200 $ 903
5 2BD/2BH - B-5 1,105 $825 4 2BD/1.5BH-Hunt'n 1,400 $1,008
6 3BD/2BH - C-1 1,305 $975 5 2BD/1.5BH-Hunt'n 1,400 $1,008
6 3BD/2.5BH-Buck'm 1,600 $1,218
Average Unit Size (SF)
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 Good
APPEAL: Fair Fair
AMENITIES:
Unit Amenities Attach. Garage X Vaulted Ceiling Attach. Garage Vaulted Ceiling
Balcony X W/D Connect. X Balcony X W/D Connect.
X Fireplace Alarm System Fireplace Alarm System
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 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
X Gym Room X Picnic Area X Gym Room Picnic Area
OCCUPANCY: 77% 92%
LEASING DATA:
Available Leasing Terms 6 to 12 Months 6 to 12 Months
Concessions 2 months free 2 Months Free
Pet Deposit $250 - $450 200 - $300
Utilities Paid by Tenant: X Electric X Natural Gas X Electric X Natural Gas
X Water Trash X Water Trash
Confirmation May 22, 2003; Holly Caine, Assistant May 22, 2003; April McPherson, Assistant Manager
Manager
Telephone Number 770-393-0550 770-393-3723
NOTES: Older facility located north of the Older complex with inferior amenities.
subject
COMPARISON TO SUBJECT: Slightly Inferior Slightly Inferior
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
PLANTATION CREEK, ATLANTA, GEORGIA
PHOTOGRAPHS OF COMPARABLE RENT PROPERTIES
COMPARABLE R-1
THE MAGNOLIA AT SANDY SPRINGS
7100 Roswell Road
Atlanta, GA
[PICTURE]
COMPARABLE R-2
GREYSTONE APARTMENTS
6940 Roswell Road
Atlanta, GA
[PICTURE]
COMPARABLE R-3
MORGAN FALLS
7600 Roswell Road
Atlanta, GA
[PICTURE]
COMPARABLE R-4
THE CLIFFS OF DUNWOODY
7275 Roswell Road
Atlanta, GA
[PICTURE]
COMPARABLE R-5
STONECOURT OF SANDY SPRINGS
6980 Roswell Road
Atlanta, GA
[PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
PLANTATION CREEK, ATLANTA, GEORGIA
EXHIBIT C
ASSUMPTIONS AND LIMITING CONDITIONS
(3 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
PLANTATION CREEK, ATLANTA, GEORGIA
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
PLANTATION CREEK, ATLANTA, GEORGIA
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
PLANTATION CREEK, ATLANTA, GEORGIA
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 American Society of Appraisers 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
PLANTATION CREEK, ATLANTA, GEORGIA
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. Steven M. Zenkovich,
ASA provided significant real property appraisal assistance in the
preparation of this report.
I am currently in compliance with the Appraisal Institutes continuing
education requirements.
-s- Michael Bates
------------------------------------
Michael Bates, MAI
Assistant Manager, Real Estate Group
State of Georgia, Certified General Real
Property Appraiser #CG00685
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
PLANTATION CREEK, ATLANTA, GEORGIA
EXHIBIT E
QUALIFICATIONS OF APPRAISER
(3 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
PLANTATION CREEK, ATLANTA, GEORGIA
MICHAEL P. BATES, MAI
DIRECTOR - HEALTHCARE REAL ESTATE
AND ASSISTANT MANAGER,
REAL ESTATE GROUP
POSITION Michael P. Bates is the Assistant Manager of the Atlanta Real
Estate Group of American Appraisal Associates, Inc. ("AAA").
He shares responsibility for the management, quality control,
and review of commercial real estate assignments principally
in the southeast United States. Mr. Bates is also the national
Director - Healthcare Real Estate for AAA and is responsible
for the management and valuation process for specialty health
care facility assignments.
EXPERIENCE
Valuation Mr. Bates has 17 years of commercial appraisal experience. He
has performed appraisals in 43 states and Canada, and he is
currently a certified general appraiser in 21 states.
Court Mr. Bates has been accepted as an expert witness and given
testimony in federal bankruptcy court in Delaware. He has
prepared many other appraisals that were submitted as expert
evidence to federal bankruptcy court, but those cases were
settled prior to testimony being required. Mr. Bates has
testified in property tax appeal cases in California,
Missouri, and Texas, and his hospital appraisals have been
submitted in tax appeal cases in Pennsylvania, South Carolina,
and South Dakota.
Business Mr. Bates joined AAA in 1997. Prior to joining AAA, he was
president of his own valuation company and was previously a
vice president for both Gulf/Atlantic Valuation Services,
Inc., and Valuation Counselors. Prior to gaining his appraisal
experience, Mr. Bates worked seven years in commercial
mortgage financing.
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
PLANTATION CREEK, ATLANTA, GEORGIA
EDUCATION University of Tennessee - Knoxville
Master of Business Administration - Finance and
Management Bachelor of Science - Marketing
STATE State of Alabama, Certified General Real Property
CERTIFICATIONS Appraiser, #G00503
State of Arizona, Certified General Real Estate
Appraiser, #31067
State of Arkansas, State Certified General Appraiser,
#CG1414N
State of California, Certified General Real Estate
Appraiser, #AG026120
State of Colorado, Certified General Appraiser,
#CG40023849
State of Delaware, Certified General Appraiser,
#X1-0000352
State of Florida, Certified General Appraiser, #0002494
State of Georgia, Certified General Real Property
Appraiser, #CG00685
State of Illinois, State Certified General Real Estate
Appraiser, #153001243
State of Maryland, Certified General Real Estate
Appraiser, #10814
State of Michigan, Certified General Appraiser,
#1201069262
State of Mississippi, State Certified General Real
Estate Appraiser, #GA-629
State of New Jersey, General Appraiser, #42KG00195600
State of New York, Real Estate General Appraiser,
#46000041317
State of North Carolina, Certified General Real Estate
Appraiser, #A4095
Commonwealth of Pennsylvania, Certified General
Appraiser, #GA001817R
State of South Carolina, Certified Real Estate
Appraiser, #CG3059
State of Tennessee, Certified General Real Estate
Appraiser,
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
PLANTATION CREEK, ATLANTA, GEORGIA
#00051881
State of Texas, State Certified General Real Estate
Appraiser, #TX-1328483-G
Commonwealth of Virginia, Certified General Real Estate
Appraiser, #4001005254
State of Washington, Certified General Real Estate
Appraiser, #1100998
PROFESSIONAL Appraisal Institute, MAI Designated Member
AFFILIATIONS
VALUATION AND Appraisal Institute
SPECIAL All required courses
COURSES Standards of Professional Practice, Parts A and B
The Appraiser as an Expert Witness: Preparation and
Testimony
Litigation Appraising: Specialized Topics and
Applications Separating Real and Personal Property from
Intangible Business Assets
Specialty Courses
Hotel/Motel Valuation and Investment Seminar Valuation of
Special-Purpose Properties
AMERICAN APPRAISAL ASSOCIATES, INC.
PLANTATION CREEK, ATLANTA, GEORGIA
GENERAL SERVICE CONDITIONS
AMERICAN APPRAISAL ASSOCIATES, INC.
PLANTATION CREEK, ATLANTA, GEORGIA
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.