VENTURA LANDING
6203 CURRY FORD ROAD
ORLANDO, FLORIDA
MARKET VALUE -
FEE SIMPLE ESTATE
AS OF MAY 26, 2003
PREPARED FOR:
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(AIMCO)
C/O LINER YANKELEVITZ SUNSHINE & REGENSTREIF LLP
&
LIEFF CABRASER HEIMANN & BERNSTEIN
ON BEHALF OF NUANES, ET. AL.
[AMERICAN APPRAISAL ASSOCIATES(R) LOGO]
[AMERICAN APPRAISAL ASSOCIATES(R) LOGO]
[AMERICAN APPRAISAL ASSOCIATES(R) LETTERHEAD]
July 7, 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: VENTURA LANDING
6203 CURRY FORD ROAD
ORLANDO, ORANGE COUNTY, FLORIDA
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 184 units with a
total of 166,760 square feet of rentable area. The improvements were built in
1973. The improvements are situated on 12.869035 acres. Overall, the
improvements are in average condition. As of the date of this appraisal, the
subject property is 95% 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
VENTURA LANDING, ORLANDO, FLORIDA
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 26, 2003 is:
($6,000,000)
Respectfully submitted,
AMERICAN APPRAISAL ASSOCIATES, INC.
-s- Alice MacQueen
July 7, 2003 Alice MacQueen
#053272 Vice President, Real Estate Group
Florida Certified General Real Estate Appraiser
#RZ0002202
Assisted By:
Michael L. Kersten
AMERICAN APPRAISAL ASSOCIATES, INC. TABLE OF CONTENTS PAGE 3
VENTURA LANDING, ORLANDO, FLORIDA
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
VENTURA LANDING, ORLANDO, FLORIDA
EXECUTIVE SUMMARY
PART ONE - PROPERTY DESCRIPTION
PROPERTY NAME: Ventura Landing
LOCATION: 6203 Curry Ford Road
Orlando, Florida
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 26, 2003
DATE OF REPORT: July 7, 2003
PHYSICAL DESCRIPTION - SITE & IMPROVEMENTS:
SITE:
Size: 12.869035 acres, or 560,575 square feet
Assessor Parcel No.: 03-23-30-1656-00-050
Floodplain: Community Panel No. 12095C 0270E (December 6,
2000)
Flood Zone X, an area outside the floodplain.
Zoning: R-3B (Medium Intensity Development District)
BUILDING:
No. of Units: 184 Units
Total NRA: 166,760 Square Feet
Average Unit Size: 906 Square Feet
Apartment Density: 14.3 units per acre
Year Built: 1973
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 - The Martin 725 $575 $0.79 $ 36,800 $ 441,600
2Br/1.5Ba - The Osprey 930 $675 $0.73 $ 64,800 $ 777,600
3Br/2Ba - The Falcon 1,295 $825 $0.64 $ 19,800 $ 237,600
Total $121,400 $1,456,800
OCCUPANCY: 95%
ECONOMIC LIFE: 45 Years
EFFECTIVE AGE: 20 Years
REMAINING ECONOMIC LIFE: 25 Years
SUBJECT PHOTOGRAPHS AND LOCATION MAP:
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 5
VENTURA LANDING, ORLANDO, FLORIDA
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
EXTERIOR - OFFICE EXTERIOR - VIEW FROM CURRY FORD ROAD
AREA MAP
[MAP]
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 6
VENTURA LANDING, ORLANDO, FLORIDA
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
VENTURA LANDING, ORLANDO, FLORIDA
PART TWO - ECONOMIC INDICATORS
INCOME CAPITALIZATION APPROACH
DIRECT CAPITALIZATION Amount $/Unit
--------------------- ------ ------
Potential Rental Income $ 1,456,800 $ 7,917
Effective Gross Income $ 1,309,120 $ 7,115
Operating Expenses $ 668,056 $ 3,631 51.0% of EGI
Net Operating Income: $ 595,064 $ 3,234
Capitalization Rate 10.00%
DIRECT CAPITALIZATION VALUE $ 5,900,000 * $ 32,065 / UNIT
DISCOUNTED CASH FLOW ANALYSIS:
Holding Period 10 years
2002 Economic Vacancy 29%
Stabilized Vacancy & Collection Loss: 15%
Lease-up / Stabilization Period N/A
Terminal Capitalization Rate 11.00%
Discount Rate 12.50%
Selling Costs 2.00%
Growth Rates:
Income 3.00%
Expenses: 3.00%
DISCOUNTED CASH FLOW VALUE $ 6,000,000 * $32,609 / UNIT
RECONCILED INCOME CAPITALIZATION VALUE $ 6,000,000 $32,609 / UNIT
SALES COMPARISON APPROACH
PRICE PER UNIT:
Range of Sales $/Unit (Unadjusted) $25,000 to $43,000
Range of Sales $/Unit (Adjusted) $34,400 to $37,500
VALUE INDICATION - PRICE PER UNIT $6,400,000 * $34,783 / UNIT
EGIM ANALYSIS
Range of EGIMs from Improved Sales 4.39 to 5.60
Selected EGIM for Subject 4.75
Subject's Projected EGI $1,309,120
EGIM ANALYSIS CONCLUSION $6,100,000 * $33,152 / UNIT
NOI PER UNIT ANALYSIS CONCLUSION $6,400,000 * $34,783 / UNIT
RECONCILED SALES COMPARISON VALUE $6,400,000 $34,783 / 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
VENTURA LANDING, ORLANDO, FLORIDA
PART THREE - SUMMARY OF VALUE CONCLUSIONS
SALES COMPARISON APPROACH:
Price Per Unit $6,400,000
NOI Per Unit $6,400,000
EGIM Multiplier $6,100,000
INDICATED VALUE BY SALES COMPARISON $6,400,000 $34,783 / UNIT
INCOME APPROACH:
Direct Capitalization Method: $5,900,000
Discounted Cash Flow Method: $6,000,000
INDICATED VALUE BY THE INCOME APPROACH $6,000,000 $32,609 / UNIT
RECONCILED OVERALL VALUE CONCLUSION: $6,000,000 $32,609 / UNIT
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 9
VENTURA LANDING, ORLANDO, FLORIDA
INTRODUCTION
IDENTIFICATION OF THE SUBJECT
The subject property is located at 6203 Curry Ford Road, Orlando, Orange County,
Florida. Orlando identifies it as 03-23-30-1656-00-050.
SCOPE OF THE ASSIGNMENT
The property, neighborhood, and comparables were inspected by Michael L. Kersten
on May 26, 2003. Alice MacQueen has not made a personal inspection of the
subject property. Michael L. Kersten assisted Alice MacQueen with the research,
valuation analysis and writing the report. Alice MacQueen reviewed the report
and concurs with the value. Alice MacQueen and Michael L. Kersten 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 26, 2003. The
date of the report is July 7, 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
VENTURA LANDING, ORLANDO, FLORIDA
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 CCP 3. 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
VENTURA LANDING, ORLANDO, FLORIDA
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 Orlando, Florida. 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 - Goldenrod Road
West - Conway Road
South - Hoffner Avenue
North - East West Expressway
MAJOR EMPLOYERS
Major employers in the subject's area include Walt Disney Company (55,000),
Florida Hospital (12,808), Universal Orlando (12,000), Orlando Regional
Healthcare (12,000), Lockheed Martin (5,053), Central Florida Investments
(5,000), University of Central Florida (4,808), Darden Restaurants (4,675),
Sprint (4,295), and SeaWorld (4,000).. 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
VENTURA LANDING, ORLANDO, FLORIDA
NEIGHBORHOOD DEMOGRAPHICS
AREA
-----------------------------------------
CATEGORY 1-MI. RADIUS 3-MI. RADIUS 5-MI. RADIUS MSA
- --------------------------- ------------ ------------ ------------ ----------
POPULATION TRENDS
Current Population 24,426 121,187 230,503 1,721,904
5-Year Population 26,001 129,066 245,725 1,921,950
% Change CY-5Y 6.4% 6.5% 6.6% 11.6%
Annual Change CY-5Y 1.3% 1.3% 1.3% 2.3%
HOUSEHOLDS
Current Households 10,125 48,206 94,791 655,258
5-Year Projected Households 10,754 51,041 100,505 731,362
% Change CY - 5Y 6.2% 5.9% 6.0% 11.6%
Annual Change CY-5Y 1.2% 1.2% 1.2% 2.3%
INCOME TRENDS
Median Household Income $ 32,016 $ 35,441 $ 37,406 $ 40,114
Per Capita Income $ 17,041 $ 18,768 $ 21,478 $ 21,799
Average Household Income $ 41,464 $ 47,148 $ 52,290 $ 57,283
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 48.44% 39.16% 39.13% 30.55%
5-Year Projected % Renting 47.20% 38.67% 38.65% 30.11%
% of Households Owning 39.21% 52.00% 53.05% 60.90%
5-Year Projected % Owning 40.51% 52.59% 53.74% 61.87%
Source: Demographics Now
AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 13
VENTURA LANDING, ORLANDO, FLORIDA
SURROUNDING IMPROVEMENTS
The following uses surround the subject property:
North - Single-family subdivision
South - Curry Ford Road and residential condos
East - City park
West - Apartments
CONCLUSIONS
The subject is well located within the city of Orlando. 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
VENTURA LANDING, ORLANDO, FLORIDA
MARKET ANALYSIS
The subject property is located in the city of Orlando in Orange County. The
overall pace of development in the subject's market is more or less stable. New
construction in the immediate area is limited to several smaller retail
projects. Both Walgreens and CVS have new stores in the area. None of the
apartment complexes in the area appear to be newer than 15 years old. With the
exception of several 4- to 8-unit condominium complexes, there appears to have
been no recent multiple-family residential construction in the subject
neighborhood. The following table illustrates historical vacancy rates for the
subject's market.
HISTORICAL VACANCY RATE
Period Region Submarket
- ------ ------ ---------
1Q03 9.3% 9.0%
4Q02 8.9% 8.3%
2002 7.6% 6.5%
3Q02 N/A 6.9%
2Q02 N/A 6.7%
1Q02 N/A 6.1%
4Q01 N/A 4.6%
3Q01 N/A 4.9%
2Q01 N/A 4.2%
Source: REIS
Occupancy trends in the subject's market are decreasing. Historically speaking,
the subject's submarket has outperformed the overall market. As illustrated
above, vacancy rates for region and submarket are increasing.
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.
AMERICAN APPRAISAL ASSOCIATES, INC. MARKET ANALYSIS PAGE 15
VENTURA LANDING, ORLANDO, FLORIDA
HISTORICAL AVERAGE RENT
Period Region % Change Submarket % Change
- ------ ------ -------- --------- --------
2Q01 N/A - $697 -
3Q01 N/A N/A $698 0.1%
4Q01 N/A N/A $696 -0.3%
1Q02 N/A N/A $679 -2.4%
2Q02 N/A N/A $684 0.7%
3Q02 N/A N/A $688 0.6%
4Q02 N/A N/A $695 1.0%
1Q03 N/A N/A $685 -1.4%
Source: REIS
The following table illustrates a summary of the subject's competitive set.
COMPETITIVE PROPERTIES
No. Property Name Units Ocpy. Year Built Proximity to subject
- ------- ---------------------- ----- ----- ---------- ------------------------------
R-1 Cypress Run 248 89% 1990 1 mile southeast of the subject
R-2 Grove Park 184 90% 1968 1 mile west of the subject
R-3 Hollowbrook Apartments 144 90% 1969 1 mile west of the subject
R-4 Dovetail Villas Ph I 232 89% 1981 Across Curry Ford Road
R-5 Highland Pointe 272 91% 1985 1mile northeast of the subject
Subject Ventura Landing 184 95% 1973
Three bedroom units appear to be in short supply. Many complexes are offering
concessions on one-bedroom units.
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 16
VENTURA LANDING, ORLANDO, FLORIDA
PROPERTY DESCRIPTION
SITE ANALYSIS
Site Area 12.869035 acres, or 560,575 square feet
Shape Generally rectangular
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 Good
Flood Zone:
Community Panel 12095C 0270E, dated December 6, 2000
Flood Zone Zone X
Zoning R-3B, the subject improvements represent a legal
conforming use of the site.
REAL ESTATE TAXES
ASSESSED VALUE - 2003
------------------------------------ TAX RATE/ PROPERTY
PARCEL NUMBER LAND BUILDING TOTAL MILL RATE TAXES
- -------------- ---------- ---------- ---------- --------- --------
03-23-30-1656-00-050 $1,288,000 $3,085,931 $4,373,931 0.02200 $96,247
IMPROVEMENT ANALYSIS
Year Built 1973
Number of Units 184
Net Rentable Area 166,760 Square Feet
Construction:
Foundation Reinforced concrete slab
Frame Heavy or light wood
Exterior Walls Stucco wall
Roof Composition shingle over a wood truss structure
Project Amenities Amenities at the subject include a swimming
pool, spa/jacuzzi, basketball court,
volleyball court, tennis court, gym room,
picnic area, car wash, barbeque equipment,
meeting hall, community room, and parking
area.
Unit Amenities Individual unit amenities include a balcony,
cable TV connection, and washer dryer
connection Appliances available in each unit
include a refrigerator, stove,
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 17
VENTURA LANDING, ORLANDO, FLORIDA
dishwasher, water heater, garbage disposal, and oven.
Unit Mix:
Unit Area
Unit Type Number of Units (Sq. Ft.)
- ---------------------- --------------- ---------
1Br/1Ba - The Martin 64 725
2Br/1.5Ba - The Osprey 96 930
3Br/2Ba - The Falcon 24 1,295
Overall Condition Average
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
1973 and consist of a 184-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
VENTURA LANDING, ORLANDO, FLORIDA
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
VENTURA LANDING, ORLANDO, FLORIDA
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
VENTURA LANDING, ORLANDO, FLORIDA
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
VENTURA LANDING, ORLANDO, FLORIDA
SUMMARY OF COMPARABLE SALES -IMPROVED
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
- -------------------------------------------------------------------------------------------------------------------------
Property Name Ventura Landing Hollowbrook Apartments Windscape Apartments
LOCATION:
Address 6203 Curry Ford Road 5465 Curry Ford Road 5300 Cinderline Parkway
City, State Orlando, Florida Orlando, Florida Orlando, Florida
County Orange Orange Orange
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 166,760 148,220 130,584
Year Built 1973 1969 1984
Number of Units 184 144 144
Unit Mix: Type Total Type Total Type Total
1Br/1Ba - The Martin 64 1Br/1Ba 28 1Br/1Ba 24
2Br/1.5Ba - The Osprey 96 2Br/2Ba 46 2Br/2Ba 120
3Br/2Ba - The Falcon 24 2Br/1.5Ba Twn 56
3Br/2Ba 12
Average Unit Size (SF) 906 1,029 907
Land Area (Acre) 12.8690 6.3017 7.0000
Density (Units/Acre) 14.3 22.9 20.6
Parking Ratio (Spaces/Unit) 1.76 2.43 2.92
Parking Type (Gr., Cov., etc.) Garage, Open Covered Open Open
CONDITION: Good Average Average
APPEAL: Good Average Average
AMENITIES:
Pool/Spa Yes/Yes Yes/No Yes/Yes
Gym Room Yes Yes Yes
Laundry Room No Yes Yes
Secured Parking No No Yes
Sport Courts Yes Yes Yes
Washer/Dryer Connection Yes No No
OCCUPANCY: 95% 96% 97%
TRANSACTION DATA:
Sale Date January, 2000 January, 2000
Sale Price ($) $5,750,000 $4,521,500
Grantor H&G Partnership, LP Sun Pointe Bay, LLC
Grantee RHA/Affordable Housing III, CRM B/K Co-Partners, LLC
Inc.
Sale Documentation Book 5928, Page 2499 Book 5917 Page 4192
Verification Comps, Inc. Comps, Inc.
Telephone Number
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF
Potential Gross Income $1,155,500 $8,024 $7.80 $1,061,445 $7,371 $8.13
Vacancy/Credit Loss $ 57,775 $ 401 $0.39 $ 31,843 $ 221 $0.24
Effective Gross Income $1,097,725 $7,623 $7.41 $1,029,602 $7,150 $7.88
Operating Expenses $ 525,000 $3,646 $3.54 $ 504,000 $3,500 $3.86
Net Operating Income $ 572,725 $3,977 $3.86 $ 525,602 $3,650 $4.03
NOTES: None None
PRICE PER UNIT $39,931 $31,399
PRICE PER SQUARE FOOT $ 38.79 $ 34.63
EXPENSE RATIO 47.8% 49.0%
EGIM 5.24 4.39
OVERALL CAP RATE 9.96% 11.62%
Cap Rate based on Pro Forma PRO FORMA ACTUAL
or Actual Income?
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
- ------------------------------------------------------------------------------------------------------------------------------------
Property Name Stone Mill Run Tara Oaks Apartments The Ashley of Spring Valley
LOCATION:
Address 5101-5125 Curry Ford Road 523-525 East Michigan St. 693 South Wymore Road
City, State Orlando, Florida Orlando, Florida Altamonte Springs, Florida
County Orange Orange Seminole
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 25,663 99,000 280,000
Year Built 1974 1965 1974
Number of Units 44 96 260
Unit Mix: Type Total Type Total Type Total
1Br/1Ba 44 1Br/1Ba 32 1Br/1Ba N/A
2Br/1Ba 32 2Br/1Ba N/A
3Br/2Ba 32 2Br/2Ba N/A
Average Unit Size (SF) 583 1,031 1,077
Land Area (Acre) 3.1767 5.6300 15.8713
Density (Units/Acre) 13.9 17.1 16.4
Parking Ratio (Spaces/Unit) 1.36 1.45 4.80
Parking Type (Gr., Cov., etc.) Open Open Open
CONDITION: Average Average Good
APPEAL: Fair Average Good
AMENITIES:
Pool/Spa No/No No/No Yes/Yes
Gym Room Yes Yes Yes
Laundry Room Yes Yes No
Secured Parking No Yes Yes
Sport Courts No No Yes
Washer/Dryer Connection No Yes Yes
OCCUPANCY: 95% 90% 92%
TRANSACTION DATA:
Sale Date May, 2002 June, 2001 August, 2001
Sale Price ($) $1,100,000 $3,500,000 $11,180,000
Grantor St. Regis Apartments
Grantee Stone Mill Run, LLC Maplecroft Development, LLC Altamonte Ashley, LLC
Sale Documentation Book 6530, Page 3784 Book 6295, Page 7722 Book 4160, Page 27
Verification Comps, Inc. Comps, Inc. Seminole County Property
Telephone Number Appraisers' Office
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF Total $ $/Unit $/SF
Potential Gross Income $245,520 $5,580 $9.57 $ 714,240 $ 7,440 $ 7.21 $2,100,000 $8,077 $7.50
Vacancy/Credit Loss $ 12,276 $ 279 $0.48 $ 71,424 $ 744 $ 0.72 $ 105,000 $ 404 $0.38
Effective Gross Income $233,244 $5,301 $9.09 $ 642,816 $ 6,696 $ 6.49 $1,995,000 $7,673 $7.13
Operating Expenses $104,960 $2,385 $4.09 $ 288,000 $ 3,000 $ 2.91 $ 900,000 $3,462 $3.21
Net Operating Income $128,284 $2,916 $5.00 $ 354,816 $ 3,696 $ 3.58 $1,095,000 $4,212 $3.91
NOTES: None. None None
PRICE PER UNIT $25,000 $36,458 $43,000
PRICE PER SQUARE FOOT $ 42.86 $ 35.35 $ 39.93
EXPENSE RATIO 45.0% 44.8% 45.1%
EGIM 4.72 5.44 5.60
OVERALL CAP RATE 11.66% 10.14% 9.79%
Cap Rate based on Pro Forma ACTUAL PRO FORMA
or Actual Income? PRO FORMA
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 22
VENTURA LANDING, ORLANDO, FLORIDA
IMPROVED SALES MAP
[MAP]
IMPROVED SALES ANALYSIS
The improved sales indicate a sales price range from $25,000 to $43,000 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 $34,400 to $37,500 per unit with a mean or average adjusted price
of $35,737 per unit. The median adjusted price is $34,959 per unit. Based on the
following analysis, we have concluded to a value of $35,000 per unit, which
results in an "as is" value of $6,400,000 (rounded after necessary adjustment,
if any).
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 23
VENTURA LANDING, ORLANDO, FLORIDA
SALES ADJUSTMENT GRID
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
- ----------------------------------------------------------------------------------------------------------------
Property Name Ventura Landing Hollowbrook Apartments Windscape Apartments
Address 6203 Curry Ford Road 5465 Curry Ford Road 5300 Cinderline Parkway
City Orlando, Florida Orlando, Florida Orlando, Florida
Sale Date January, 2000 January, 2000
Sale Price ($) $5,750,000 $4,521,500
Net Rentable Area (SF) 166,760 148,220 130,584
Number of Units 184 144 144
Price Per Unit $39,931 $31,399
Year Built 1973 1969 1984
Land Area (Acre) 12.8690 6.3017 7.0000
VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 01-2000 3% 01-2000 3%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $41,128 $32,341
Location Comparable 0% Inferior 20%
Number of Units 184 144 0% 144 0%
Quality / Appeal Good Inferior 5% Inferior 20%
Age / Condition 1973 1969 / Average 0% 1984 / Average -10%
Occupancy at Sale 95% 96% -15% 97% -15%
Amenities Good Comparable 0% Comparable 0%
Average Unit Size (SF) 906 1,029 -5% 907 0%
PHYSICAL ADJUSTMENT -15% 15%
FINAL ADJUSTED VALUE ($/UNIT) $34,959 $37,192
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
- --------------------------------------------------------------------------------------------------------------------------
Property Name Stone Mill Run Tara Oaks Apartments The Ashley of Spring Valley
Address 5101-5125 Curry Ford Road 523-525 East Michigan St. 693 South Wymore Road
City Orlando, Florida Orlando, Florida Altamonte Springs, Florida
Sale Date May, 2002 June, 2001 August, 2001
Sale Price ($) $1,100,000 $3,500,000 $11,180,000
Net Rentable Area (SF) 25,663 99,000 280,000
Number of Units 44 96 260
Price Per Unit $25,000 $36,458 $43,000
Year Built 1974 1965 1974
Land Area (Acre) 3.1767 5.6300 15.8713
VALUE ADJUSTMENTS DESCRIPTION ADJ. DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate 0% Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 05-2002 0% 06-2001 0% 08-2001 0%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $25,000 $36,458 $43,000
Location Comparable 0% Comparable 0% Comparable 0%
Number of Units 44 10% 96 0% 260 0%
Quality / Appeal Inferior 20% Inferior 15% Comparable 0%
Age / Condition 1974 / Average 0% 1965 / Average 0% 1974 / Good 0%
Occupancy at Sale 95% -15% 90% -15% 92% -15%
Amenities Inferior 25% Comparable 0% Comparable 0%
Average Unit Size (SF) 583 10% 1,031 -5% 1,077 -5%
PHYSICAL ADJUSTMENT 50% -5% -20%
FINAL ADJUSTED VALUE ($/UNIT) $37,500 $34,635 $34,400
SUMMARY
VALUE RANGE (PER UNIT) $34,400 TO $37,500
MEAN (PER UNIT) $35,737
MEDIAN (PER UNIT) $34,959
VALUE CONCLUSION (PER UNIT) $35,000
VALUE OF IMPROVEMENT & MAIN SITE $6,440,000
PV OF CONCESSIONS -$ 81,000
VALUE INDICATED BY SALES COMPARISON APPROACH $6,359,000
ROUNDED $6,400,000
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
VENTURA LANDING, ORLANDO, FLORIDA
NOI PER UNIT COMPARISON
SALE PRICE NOI/ SUBJECT NOI
COMPARABLE NO. OF ------------ --------------------------- ADJUSTMENT INDICATED
NO. UNITS PRICE/UNIT OAR NOI/UNIT SUBJ. NOI/UNIT FACTOR VALUE/UNIT
- ---------------------------------------------------------------------------------------------------
I-1 144 $ 5,750,000 9.96% $ 572,725 $ 595,064 0.813 $ 32,469
$ 39,931 $ 3,977 $ 3,234
I-2 144 $ 4,521,500 11.62% $ 525,602 $ 595,064 0.886 $ 27,821
$ 31,399 $ 3,650 $ 3,234
I-3 44 $ 1,100,000 11.66% $ 128,284 $ 595,064 1.109 $ 27,731
$ 25,000 $ 2,916 $ 3,234
I-4 96 $ 3,500,000 10.14% $ 354,816 $ 595,064 0.875 $ 31,901
$ 36,458 $ 3,696 $ 3,234
I-5 260 $ 11,180,000 9.79% $1,095,000 $ 595,064 0.768 $ 33,020
$ 43,000 $ 4,212 $ 3,234
PRICE/UNIT
Low High Average Median
$27,731 $33,020 $30,588 $31,901
VALUE ANALYSIS BASED ON COMPARABLES NOI PER UNIT
Estimated Price Per Unit $ 35,000
----------
Number of Units 184
Value $6,440,000
PV of Concessions -$ 81,000
----------
Value Based on NOI Analysis $6,359,000
Rounded $6,400,000
The adjusted sales indicate a range of value between $27,731 and $33,020 per
unit, with an average of $30,588 per unit. Based on the subject's competitive
position within the improved sales, a value of $35,000 per unit is estimated.
This indicates an "as is" market value of $6,400,000 (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
VENTURA LANDING, ORLANDO, FLORIDA
EFFECTIVE GROSS INCOME MULTIPLIER COMPARISON
SALE PRICE
COMPARABLE NO. OF ------------ EFFECTIVE OPERATING SUBJECT
NO. UNITS PRICE/UNIT GROSS INCOME EXPENSE OER PROJECTED OER EGIM
- --------------------------------------------------------------------------------------------------------
I-1 144 $ 5,750,000 $ 1,097,725 $ 525,000 47.83% 5.24
$ 39,931
I-2 144 $ 4,521,500 $ 1,029,602 $ 504,000 48.95% 4.39
$ 31,399
I-3 44 $ 1,100,000 $ 233,244 $ 104,960 45.00% 51.03% 4.72
$ 25,000
I-4 96 $ 3,500,000 $ 642,816 $ 288,000 44.80% 5.44
$ 36,458
I-5 260 $ 11,180,000 $ 1,995,000 $ 900,000 45.11% 5.60
$ 43,000
EGIM
Low High Average Median
- --- ---- ------- ------
4.39 5.60 5.08 5.24
VALUE ANALYSIS BASED ON EGIM'S OF COMPARABLE SALES
Estimate EGIM 4.75
----------
Subject EGI $1,309,120
Value $6,218,320
PV of Concessions -$ 81,000
----------
Value Based on EGIM Analysis $6,137,320
Rounded $6,100,000
Value Per Unit $ 33,152
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 51.03% before reserves. The comparable sales
indicate a range of expense ratios from 44.80% to 48.95%, while their EGIMs
range from 4.39 to 5.60. Overall, we conclude to an EGIM of 4.75, which results
in an "as is" value estimate in the EGIM Analysis of $6,100,000.
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 $6,400,000.
Price Per Unit $6,400,000
NOI Per Unit $6,400,000
EGIM Analysis $6,100,000
Sales Comparison Conclusion $6,400,000
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 26
VENTURA LANDING, ORLANDO, FLORIDA
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
VENTURA LANDING, ORLANDO, FLORIDA
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 - The Martin 725 $ 569 $ 0.78 93.8%
2Br/1.5Ba - The Osprey 930 $ 659 $ 0.71 94.8%
3Br/2Ba - The Falcon 1295 $ 819 $ 0.63 95.8%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 28
VENTURA LANDING, ORLANDO, FLORIDA
RENT ANALYSIS
COMPARABLE RENTS
-------------------------------------------------------
R-1 R-2 R-3 R-4 R-5
-------------------------------------------------------
Cypress Hollowbrook Dovetail Highland
Run Grove Park Apartments Villas Ph I Pointe
-------------------------------------------------------
COMPARISON TO SUBJECT
SUBJECT SUBJECT -------------------------------------------------------
SUBJECT UNIT ACTUAL ASKING Slightly Slightly Slightly
DESCRIPTION TYPE RENT RENT Superior Inferior Similar Superior Superior
- --------------------------------------------------------------------------------------------------------------------
Monthly Rent 1Br/1Ba - THE $ 569 $ 823 $ 650 $ 550 $ 555 $ 645 $ 610
Unit Area (SF) MARTIN 725 725 780 728 745 875 900
Monthly Rent Per Sq. Ft. $ 0.78 $ 1.13 $ 0.83 $ 0.76 $ 0.74 $ 0.74 $ 0.68
Monthly Rent 2Br/1.5Ba - THE $ 659 $ 838 $ 750 $ 670 $ 659 $ 749 $ 735
Unit Area (SF) OSPREY 930 930 1,050 1,040 1,082 1,203 1,100
Monthly Rent Per Sq. Ft. $ 0.71 $ 0.90 $ 0.71 $ 0.64 $ 0.61 $ 0.62 $ 0.67
Monthly Rent 3Br/2Ba - THE $ 819 $ 885 $ 900 $ 785 $ 840 $ 815
Unit Area (SF) FALCON 1,295 1,295 1,200 1,240 1,375 1,300
Monthly Rent Per Sq. Ft. $ 0.63 $ 0.68 $ 0.75 $ 0.63 $ 0.61 $ 0.63
DESCRIPTION MIN MAX MEDIAN AVERAGE
- ---------------------------------------------------------
Monthly Rent $ 550 $ 650 $ 610 $ 602
Unit Area (SF) 728 900 780 806
Monthly Rent Per Sq. Ft. $ 0.68 $ 0.83 $ 0.74 $ 0.75
Monthly Rent $ 659 $ 750 $ 735 $ 713
Unit Area (SF) 1,040 1,203 1,082 1,095
Monthly Rent Per Sq. Ft. $ 0.61 $ 0.71 $ 0.64 $ 0.65
Monthly Rent $ 785 $ 900 $ 828 $ 835
Unit Area (SF) 1,200 1,375 1,270 1,279
Monthly Rent Per Sq. Ft. $ 0.61 $ 0.75 $ 0.63 $ 0.66
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 - The Martin 64 725 $ 575 $ 0.79 $ 36,800 $ 441,600
2Br/1.5Ba - The Osprey 96 930 $ 675 $ 0.73 $ 64,800 $ 777,600
3Br/2Ba - The Falcon 24 1,295 $ 825 $ 0.64 $ 19,800 $ 237,600
-------- ----------
Total $121,400 $1,456,800
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
VENTURA LANDING, ORLANDO, FLORIDA
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 $1,326,224 $ 7,208 $1,388,459 $ 7,546 $1,428,172 $ 7,762 $1,419,600 $ 7,715
Vacancy $ 86,688 $ 471 $ 80,455 $ 437 $ 136,006 $ 739 $ 101,914 $ 554
Credit Loss/Concessions $ 29,094 $ 158 $ 41,882 $ 228 $ 283,164 $ 1,539 $ 157,032 $ 853
-----------------------------------------------------------------------------------------------------
Subtotal $ 115,782 $ 629 $ 122,337 $ 665 $ 419,170 $ 2,278 $ 258,946 $ 1,407
Laundry Income $ 10,097 $ 55 $ 6,333 $ 34 $ 4,821 $ 26 $ 10,284 $ 56
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 64,622 $ 351 $ 57,969 $ 315 $ 194,500 $ 1,057 $ 102,600 $ 558
-----------------------------------------------------------------------------------------------------
Subtotal Other Income $ 74,719 $ 406 $ 64,302 $ 349 $ 199,321 $ 1,083 $ 112,884 $ 614
-----------------------------------------------------------------------------------------------------
Effective Gross Income $1,285,161 $ 6,985 $1,330,424 $ 7,231 $1,208,323 $ 6,567 $1,273,538 $ 6,921
Operating Expenses
Taxes $ 90,543 $ 492 $ 96,663 $ 525 $ 93,644 $ 509 $ 107,472 $ 584
Insurance $ 16,867 $ 92 $ 69,393 $ 377 $ 47,441 $ 258 $ 46,654 $ 254
Utilities $ 44,442 $ 242 $ 44,523 $ 242 $ 94,266 $ 512 $ 54,240 $ 295
Repair & Maintenance $ 179,847 $ 977 $ 152,180 $ 827 $ 170,896 $ 929 $ 157,920 $ 858
Cleaning $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Landscaping $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 31,128 $ 169 $ 29,213 $ 159 $ 27,665 $ 150 $ 24,000 $ 130
General Administrative $ 176,266 $ 958 $ 185,148 $ 1,006 $ 169,215 $ 920 $ 160,644 $ 873
Management $ 65,511 $ 356 $ 70,762 $ 385 $ 60,067 $ 326 $ 66,886 $ 364
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------
Total Operating Expenses $ 604,604 $ 3,286 $ 647,882 $ 3,521 $ 663,194 $ 3,604 $ 617,816 $ 3,358
Reserves $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------
Net Income $ 680,557 $ 3,699 $ 682,542 $ 3,709 $ 545,129 $ 2,963 $ 655,722 $ 3,564
ANNUALIZED 2003
-----------------------
PROJECTION AAA PROJECTION
----------------------- --------------------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT %
- ---------------------------------------------------------------------------------------
Revenues
Rental Income $1,422,928 $ 7,733 $1,456,800 $ 7,917 100.0%
Vacancy $ 94,136 $ 512 $ 189,384 $ 1,029 13.0%
Credit Loss/Concessions $ 258,672 $ 1,406 $ 29,136 $ 158 2.0%
---------------------------------------------------------
Subtotal $ 352,808 $ 1,917 $ 218,520 $ 1,188 15.0%
Laundry Income $ 0 $ 0 $ 6,440 $ 35 0.4%
Garage Revenue $ 0 $ 0 $ 0 $ 0 0.0%
Other Misc. Revenue $ 64,840 $ 352 $ 64,400 $ 350 4.4%
---------------------------------------------------------
Subtotal Other Income $ 64,840 $ 352 $ 70,840 $ 385 4.9%
---------------------------------------------------------
Effective Gross Income $1,134,960 $ 6,168 $1,309,120 $ 7,115 100.0%
Operating Expenses
Taxes $ 106,832 $ 581 $ 119,600 $ 650 9.1%
Insurance $ 46,004 $ 250 $ 46,000 $ 250 3.5%
Utilities $ 27,992 $ 152 $ 46,000 $ 250 3.5%
Repair & Maintenance $ 215,624 $ 1,172 $ 174,800 $ 950 13.4%
Cleaning $ 0 $ 0 $ 0 $ 0 0.0%
Landscaping $ 0 $ 0 $ 0 $ 0 0.0%
Security $ 0 $ 0 $ 0 $ 0 0.0%
Marketing & Leasing $ 77,884 $ 423 $ 32,200 $ 175 2.5%
General Administrative $ 166,420 $ 904 $ 184,000 $ 1,000 14.1%
Management $ 59,648 $ 324 $ 65,456 $ 356 5.0%
Miscellaneous $ 0 $ 0 $ 0 $ 0 0.0%
---------------------------------------------------------
Total Operating Expenses $ 700,404 $ 3,807 $ 668,056 $ 3,631 51.0%
Reserves $ 0 $ 0 $ 46,000 $ 250 6.9%
---------------------------------------------------------
Net Income $ 434,556 $ 2,362 $ 595,064 $ 3,234 45.5%
REVENUES AND EXPENSES
The subject's revenue and expense projections are displayed on the previous
chart. Rental income is based on the market analysis previously discussed. Other
income consists of forfeited deposits, laundry income, late rent payments, month
to month fees, pet fees, vending machine revenue, etc.
We forecasted the property's annual operating expenses after reviewing its
historical performance at the subject property. We analyzed each item of expense
and attempted to forecast amounts a typical informed investor would consider
reasonable.
VACANCY AND COLLECTION LOSS
An investor is primarily interested in the annual revenue an income property is
likely to produce over a specified period of time, rather than the income it
could produce if it were always 100% occupied and all tenants were paying their
rent in full and on time. An investor normally expects some income loss as
tenants vacate, fail to pay rent, or pay their rent late.
We have projected a stabilized vacancy and collection loss rate of 15% based on
the subject's historical performance, as well as the anticipated future market
conditions.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 30
VENTURA LANDING, ORLANDO, FLORIDA
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
VENTURA LANDING, ORLANDO, FLORIDA
SUMMARY OF OVERALL
CAPITALIZATION RATES
COMP. NO. SALE DATE OCCUP. PRICE/UNIT OAR
- ----------------------------------------------------
I-1 Jan-00 96% $ 39,931 9.96%
I-2 Jan-00 97% $ 31,399 11.62%
I-3 May-02 95% $ 25,000 11.66%
I-4 Jun-01 90% $ 36,458 10.14%
I-5 Aug-01 92% $ 43,000 9.79%
High 11.66%
Low 9.79%
Average 10.64%
Based on this information, we have concluded the subject's overall
capitalization rate should be 10.00%. 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 11.00%. 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 12.50%.
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 12.50% indicates a value of $6,000,000. In this instance, the reversion
figure contributes
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 32
VENTURA LANDING, ORLANDO, FLORIDA
approximately 37% 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 33
VENTURA LANDING, ORLANDO, FLORIDA
DISCOUNTED CASH FLOW ANALYSIS
VENTURA LANDING
YEAR APR-2004 APR-2005 APR-2006 APR-2007 APR-2008 APR-2009
FISCAL YEAR 1 2 3 4 5 6
- ------------------------------------------------------------------------------------------------------------------------
REVENUE
Base Rent $1,456,800 $1,500,504 $1,545,519 $1,591,885 $1,639,641 $1,688,830
Vacancy $ 189,384 $ 195,066 $ 200,917 $ 206,945 $ 213,153 $ 219,548
Credit Loss $ 29,136 $ 30,010 $ 30,910 $ 31,838 $ 32,793 $ 33,777
Concessions $ 65,556 $ 22,508 $ 7,728 $ 0 $ 0 $ 0
--------------------------------------------------------------------------------
Subtotal $ 284,076 $ 247,583 $ 239,555 $ 238,783 $ 245,946 $ 253,325
Laundry Income $ 6,440 $ 6,633 $ 6,832 $ 7,037 $ 7,248 $ 7,466
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 64,400 $ 66,332 $ 68,322 $ 70,372 $ 72,483 $ 74,657
--------------------------------------------------------------------------------
Subtotal Other Income $ 70,840 $ 72,965 $ 75,154 $ 77,409 $ 79,731 $ 82,123
--------------------------------------------------------------------------------
EFFECTIVE GROSS INCOME $1,243,564 $1,325,886 $1,381,118 $1,430,511 $1,473,426 $1,517,629
OPERATING EXPENSES:
Taxes $ 119,600 $ 123,188 $ 126,884 $ 130,690 $ 134,611 $ 138,649
Insurance $ 46,000 $ 47,380 $ 48,801 $ 50,265 $ 51,773 $ 53,327
Utilities $ 46,000 $ 47,380 $ 48,801 $ 50,265 $ 51,773 $ 53,327
Repair & Maintenance $ 174,800 $ 180,044 $ 185,445 $ 191,009 $ 196,739 $ 202,641
Cleaning $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Landscaping $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 32,200 $ 33,166 $ 34,161 $ 35,186 $ 36,241 $ 37,329
General Administrative $ 184,000 $ 189,520 $ 195,206 $ 201,062 $ 207,094 $ 213,306
Management $ 62,178 $ 66,294 $ 69,056 $ 71,526 $ 73,671 $ 75,881
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
--------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES $ 664,778 $ 686,972 $ 708,354 $ 730,003 $ 751,903 $ 774,460
Reserves $ 46,000 $ 47,380 $ 48,801 $ 50,265 $ 51,773 $ 53,327
--------------------------------------------------------------------------------
NET OPERATING INCOME $ 532,786 $ 591,534 $ 623,962 $ 650,242 $ 669,750 $ 689,842
Operating Expense Ratio (% of EGI) 53.5% 51.8% 51.3% 51.0% 51.0% 51.0%
Operating Expense Per Unit $ 3,613 $ 3,734 $ 3,850 $ 3,967 $ 4,086 $ 4,209
YEAR APR-2010 APR-2011 APR-2012 APR-2013 APR-2014
FISCAL YEAR 7 8 9 10 11
- ----------------------------------------------------------------------------------------------------------
REVENUE
Base Rent $1,739,495 $1,791,680 $1,845,431 $1,900,794 $1,957,817
Vacancy $ 226,134 $ 232,918 $ 239,906 $ 247,103 $ 254,516
Credit Loss $ 34,790 $ 35,834 $ 36,909 $ 38,016 $ 39,156
Concessions $ 0 $ 0 $ 0 $ 0 $ 0
------------------------------------------------------------------
Subtotal $ 260,924 $ 268,752 $ 276,815 $ 285,119 $ 293,673
Laundry Income $ 7,690 $ 7,920 $ 8,158 $ 8,403 $ 8,655
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 76,897 $ 79,204 $ 81,580 $ 84,027 $ 86,548
------------------------------------------------------------------
Subtotal Other Income $ 84,587 $ 87,124 $ 89,738 $ 92,430 $ 95,203
------------------------------------------------------------------
EFFECTIVE GROSS INCOME $1,563,158 $1,610,052 $1,658,354 $1,708,105 $1,759,348
OPERATING EXPENSES:
Taxes $ 142,809 $ 147,093 $ 151,506 $ 156,051 $ 160,732
Insurance $ 54,926 $ 56,574 $ 58,271 $ 60,020 $ 61,820
Utilities $ 54,926 $ 56,574 $ 58,271 $ 60,020 $ 61,820
Repair & Maintenance $ 208,720 $ 214,982 $ 221,431 $ 228,074 $ 234,917
Cleaning $ 0 $ 0 $ 0 $ 0 $ 0
Landscaping $ 0 $ 0 $ 0 $ 0 $ 0
Security $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 38,448 $ 39,602 $ 40,790 $ 42,014 $ 43,274
General Administrative $ 219,706 $ 226,297 $ 233,086 $ 240,078 $ 247,281
Management $ 78,158 $ 80,503 $ 82,918 $ 85,405 $ 87,967
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0
------------------------------------------------------------------
TOTAL OPERATING EXPENSES $ 797,694 $ 821,625 $ 846,273 $ 871,662 $ 897,811
Reserves $ 54,926 $ 56,574 $ 58,271 $ 60,020 $ 61,820
------------------------------------------------------------------
NET OPERATING INCOME $ 710,538 $ 731,854 $ 753,809 $ 776,424 $ 799,716
Operating Expense Ratio (% of EGI) 51.0% 51.0% 51.0% 51.0% 51.0%
Operating Expense Per Unit $ 4,335 $ 4,465 $ 4,599 $ 4,737 $ 4,879
Estimated Stabilized NOI $595,064 Sales Expense Rate 2.00%
Months to Stabilized 1 Discount Rate 12.50%
Stabilized Occupancy 87.0% Terminal Cap Rate 11.00%
Gross Residual Sale Price $7,270,148 Deferred Maintenance $ 0
Less: Sales Expense $ 145,403 Add: Excess Land $ 0
----------
Net Residual Sale Price $7,124,745 Other Adjustments $ 0
----------
PV of Reversion $2,194,038 Value Indicated By "DCF" $6,007,056
Add: NPV of NOI $3,813,018 Rounded $6,000,000
----------
PV Total $6,007,056
"DCF" VALUE SENSITIVITY TABLE
DISCOUNT RATE
-------------------------------------------------------------------------------
TOTAL VALUE 12.00% 12.25% 12.50% 12.75% 13.00%
- ------------------------------------------------------------------------------------------------------
10.50% $6,306,090 $6,207,768 $6,111,534 $6,017,334 $5,925,119
10.75% $6,250,201 $6,153,112 $6,058,080 $5,965,054 $5,873,984
TERMINAL 11.00% $6,196,853 $6,100,940 $6,007,056 $5,915,150 $5,825,173
CAP RATE 11.25% $6,145,876 $6,051,087 $5,958,299 $5,867,464 $5,778,532
11.50% $6,097,115 $6,003,401 $5,911,663 $5,821,851 $5,733,918
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 34
VENTURA LANDING, ORLANDO, FLORIDA
INCOME LOSS DURING LEASE-UP
The subject is currently near or at a stabilized condition. Therefore, there is
no income loss during lease-up at the subject property.
CONCESSIONS
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
$81,000 (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 10.00% percent is applicable to the
subject. The results of our direct capitalization analysis are as follows:
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 35
VENTURA LANDING, ORLANDO, FLORIDA
VENTURA LANDING
TOTAL PER SQ. FT. PER UNIT % OF EGI
---------------------------------------------------
REVENUE
Base Rent $ 1,456,800 $ 8.74 $ 7,917
Less: Vacancy & Collection Loss 15.00% $ 218,520 $ 1.31 $ 1,188
Plus: Other Income
Laundry Income $ 6,440 $ 0.04 $ 35 0.49%
Garage Revenue $ 0 $ 0.00 $ 0 0.00%
Other Misc. Revenue $ 64,400 $ 0.39 $ 350 4.92%
- ----------------------------------------------
Subtotal Other Income $ 70,840 $ 0.42 $ 385 5.41%
EFFECTIVE GROSS INCOME $ 1,309,120 $ 7.85 $ 7,115
OPERATING EXPENSES:
Taxes $ 119,600 $ 0.72 $ 650 9.14%
Insurance $ 46,000 $ 0.28 $ 250 3.51%
Utilities $ 46,000 $ 0.28 $ 250 3.51%
Repair & Maintenance $ 174,800 $ 1.05 $ 950 13.35%
Cleaning $ 0 $ 0.00 $ 0 0.00%
Landscaping $ 0 $ 0.00 $ 0 0.00%
Security $ 0 $ 0.00 $ 0 0.00%
Marketing & Leasing $ 32,200 $ 0.19 $ 175 2.46%
General Administrative $ 184,000 $ 1.10 $ 1,000 14.06%
Management 5.00% $ 65,456 $ 0.39 $ 356 5.00%
Miscellaneous $ 0 $ 0.00 $ 0 0.00%
TOTAL OPERATING EXPENSES $ 668,056 $ 4.01 $ 3,631 51.03%
Reserves $ 46,000 $ 0.28 $ 250 3.51%
- ----------------------------------------------
NET OPERATING INCOME $ 595,064 $ 3.57 $ 3,234 45.46%
"GOING IN" CAPITALIZATION RATE 10.00%
VALUE INDICATION $ 5,950,640 $ 35.68 $ 32,340
PV OF CONCESSIONS ($ 81,000)
"AS IS" VALUE INDICATION
(DIRECT CAPITALIZATION APPROACH) $ 5,869,640
ROUNDED $ 5,900,000 $ 35.38 $ 32,065
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 36
VENTURA LANDING, ORLANDO, FLORIDA
DIRECT CAPITALIZATION VALUE SENSITIVITY TABLE
CAP RATE VALUE ROUNDED $/UNIT $/SF
- --------------------------------------------------------------
9.25% $ 6,352,124 $ 6,400,000 $ 34,783 $ 38.38
9.50% $ 6,182,832 $ 6,200,000 $ 33,696 $ 37.18
9.75% $ 6,022,221 $ 6,000,000 $ 32,609 $ 35.98
10.00% $ 5,869,640 $ 5,900,000 $ 32,065 $ 35.38
10.25% $ 5,724,502 $ 5,700,000 $ 30,978 $ 34.18
10.50% $ 5,586,276 $ 5,600,000 $ 30,435 $ 33.58
10.75% $ 5,454,479 $ 5,500,000 $ 29,891 $ 32.98
CONCLUSION BY THE DIRECT CAPITALIZATION METHOD
Applying the capitalization rate to our estimated NOI results in an estimated
value of $5,900,000.
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 $6,000,000
Direct Capitalization Method $5,900,000
Giving consideration to the indicated values provided by both techniques, we
have concluded the estimated value by the income capitalization approach to be
$6,000,000.
AMERICAN APPRAISAL ASSOCIATES, INC. RECONCILIATION AND CONCLUSION PAGE 37
VENTURA LANDING, ORLANDO, FLORIDA
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 $ 6,400,000
Income Approach $ 6,000,000
Reconciled Value $ 6,000,000
The Income Capitalization Method is considered a reliable indicator of value.
Income and expenses were estimated and projected based on historical operating
statements and market oriented expenses. This method is primarily used by
investors in their underwriting analysis. Furthermore, there was good support
for an overall rate in the Direct Capitalization Method.
The Sales Comparison Approach to value supported the value conclusion by the
Income Approach and was given secondary consideration. Investment-grade,
income-producing properties such as the subject are not typically traded based
on cost. Therefore, the Cost Approach has not been considered in our valuation.
FINAL VALUE - FEE SIMPLE ESTATE
Based on the investigation and premise outlined, it is our opinion that as of
May 26, 2003 the market value of the fee simple estate in the property is:
$6,000,000
AMERICAN APPRAISAL ASSOCIATES, INC. ADDENDA
VENTURA LANDING, ORLANDO, FLORIDA
ADDENDA
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
VENTURA LANDING, ORLANDO, FLORIDA
EXHIBIT A
SUBJECT PHOTOGRAPHS
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
VENTURA LANDING, ORLANDO, FLORIDA
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
EXTERIOR - OFFICE EXTERIOR - VIEW FROM CURRY FORD ROAD
[PICTURE] [PICTURE]
EXTERIOR - APARTMENT BUILDING INTERIOR - MODEL APARTMENT UNIT
[PICTURE] [PICTURE]
EXTERIOR - SWIMMING POOL EXTERIOR - APARTMENT BUILDINGS
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
VENTURA LANDING, ORLANDO, FLORIDA
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
INTERIOR - COMMUNITY CENTER INTERIOR - MODEL APARTMENT
[PICTURE] [PICTURE]
INTERIOR - APARTMENT UNIT INTERIOR - APARTMENT UNIT
[PICTURE] [PICTURE]
EXTERIOR - VIEW OF PROJECT LOOKING EAST ALONG CURRY FORD ROAD
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
VENTURA LANDING, ORLANDO, FLORIDA
EXHIBIT B
SUMMARY OF RENT COMPARABLES
AND PHOTOGRAPH OF COMPARABLES
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
VENTURA LANDING, ORLANDO, FLORIDA
PHOTOGRAPHS OF COMPARABLE SALE PROPERTIES
COMPARABLE I-1 COMPARABLE I-2 COMPARABLE I-3
HOLLOWBROOK APARTMENTS WINDSCAPE APARTMENTS STONE MILL RUN
5465 Curry Ford Road 5300 Cinderline Parkway 5101-5125 Curry Ford Road
Orlando, Florida Orlando, Florida Orlando, Florida
[PICTURE] [PICTURE] [PICTURE]
COMPARABLE I-4 COMPARABLE I-5
TARA OAKS APARTMENTS THE ASHLEY OF SPRING VALLEY
523-525 East Michigan St. 693 South Wymore Road
Orlando, Florida Altamonte Springs, Florida
[PICTURE] [PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
VENTURA LANDING, ORLANDO, FLORIDA
SUMMARY OF COMPARABLE RENTAL PROPERTIES
COMPARABLE
DESCRIPTION SUBJECT R - 1
- -------------------------------------------------------------------------------------------------------------------------------
Property Name Ventura Landing Cypress Run
Management Company AIMCO Drucker & Falk
LOCATION:
Address 6203 Curry Ford Road 7100 Gateshead Circle
City, State Orlando, Florida Orlando
County Orange Florida
Proximity to Subject 1 mile southeast of the subject
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 166,760 222,720
Year Built 1973 1990
Effective Age 20 10
Building Structure Type Stucco exterior walls; asphalt shingle roof Stucco exterior walls; asphalt roof
Parking Type (Gr., Cov., etc.) Open Open
Number of Units 184 248
Unit Mix: Type Unit Qty. Mo. Rent Type Unit Qty. Mo.
1 1Br/1Ba - The Mart 725 64 $569 1X1 The Pine 600 40 $550
2 2Br/1.5Ba - The Osp 930 96 $659 1 1X1 The Willow 780 104 $650
3 3Br/2Ba - The Falcon 1,295 24 $819 2 2X2 The Oak 1,050 48 $750
3 3X2 The Cypress 1,200 56 $900
Average Unit Size (SF) 906 898
Unit Breakdown: Efficiency 0% 2-Bedroom 52% Efficiency 0% 2-Bedroom 19%
1-Bedroom 35% 3-Bedroom 13% 1-Bedroom 58% 3-Bedroom 23%
CONDITION: Good Good
APPEAL: Average 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 Fireplace
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
X Spa/Jacuzzi X Car Wash X Spa/Jacuzzi X Car Wash
X Basketball Court X BBQ Equipment Basketball Court X BBQ Equipment
X Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball X Meeting Hall Sand Volley Ball X Meeting Hall
X Tennis Court Secured Parking Tennis Court Secured Parking
Racquet Ball Laundry Room X Racquet Ball X Laundry Room
Jogging Track Business Office Jogging Track X Business Office
X Gym Room X Community Room X Gym Room X Community Room
X Picnic Area X Picnic Area
OCCUPANCY: 95% 89%
LEASING DATA:
Available Leasing Terms 6 to 13 Months 6 to 12 Months
Concessions 1 1/2 Months Free for 1 and 2 BR None
Pet Deposit $150 - $300 $200 - $300
Utilities Paid by Tenant: X Electric Natural Gas X Electric Natural Gas
Water Trash Water Trash
Confirmation May 26, 2003; Property Manager May 26, 2003; Leasing Agent
Telephone Number (407) 275-7810 (407) 658-4704
NOTES: None
COMPARISON TO SUBJECT: Slightly Superior
COMPARABLE COMPARABLE
DESCRIPTION R - 2 R - 3
- --------------------------------------------------------------------------------------------------------------------------------
Property Name Grove Park Hollowbrook Apartments
Management Company LEDIC Brencor Management
LOCATION:
Address 5325 Curry Ford Road 5465 Curry Ford Road
City, State Orlando, Florida Orlando, Florida
County Orange Orange
Proximity to Subject 1 mile west of the subject 1 mile west of the subject
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 163,904 148,220
Year Built 1968 1969
Effective Age 25 25
Building Structure Type Brick & wood siding walls; asphalt shingle roof Stucco exterior walls; asphalt shingle roof
Parking Type (Gr., Cov., etc.) Open Open
Number of Units 184 144
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
1 1X1 Valencia 728 88 $550 1 1Br/1Ba 745 28 $555
1 1X1 Temple 777 0 $560 2 2Br/2Ba 1,060 48 $675
1X1 Hamlin 546 0 $495 2 2Br/1.5Ba Townhm 1,100 56 $645
2 2X1 Glen Summer 896 0 $625 3 3Br/2Ba 1,240 12 $785
2 2X2 Belladona 1,040 96 $670
Average Unit Size (SF) 891 1,029
Unit Breakdown: Efficiency 0% 2-Bedroom 43% Efficiency 0% 2-Bedroom 72%
1-Bedroom 49% 3-Bedroom 8% 1-Bedroom 19% 3-Bedroom 8%
CONDITION: Good Average
APPEAL: Good Average
AMENITIES:
Unit Amenities Attach. Garage X Vaulted Ceiling Attach. Garage X Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
Fireplace X Fireplace
X Cable TV Ready Shuffleboard X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
Spa/Jacuzzi X Car Wash Spa/Jacuzzi X Car Wash
X Basketball Court X BBQ Equipment X Basketball Court X BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball X Meeting Hall Sand Volley Ball X 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 Community Room X Gym Room Community Room
X Picnic Area X Picnic Area
OCCUPANCY: 90% 90%
LEASING DATA:
Available Leasing Terms 6 to 12 Months 9 to 12 Months
Concessions 1 month free 1 - Month Free
Pet Deposit $250 non-refundable pet fee Varies
Utilities Paid by Tenant: X Electric X Natural Gas X Electric Natural Gas
Water Trash Water Trash
Confirmation May 26, 2003; Leasing Agent May 26, 2003; Leasing Agent
Telephone Number (407) 273-5320 (407) 275-9476
NOTES: This property has 88 1-BR units and 96 2-BR
units. An exact division of the units was
not available.
COMPARISON TO SUBJECT: Slightly Inferior Similar
COMPARABLE COMPARABLE
DESCRIPTION R - 4 R - 5
- -----------------------------------------------------------------------------------------------------------------------------------
Property Name Dovetail Villas Ph I Highland Pointe
Management Company Property Asset Management CAMEO
LOCATION:
Address 5916 Mausser Drive 7721 Silverpointe Boulevard
City, State Orlando, Florida Orlando, Florida
County Orange Orange
Proximity to Subject Across Curry Ford Road 1mile northeast of the subject
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 283,010 277,600
Year Built 1981 1985
Effective Age 15 15
Building Structure Type Brick & wood siding walls; asphalt shingle roof Stucco exterior walls; asphalt shingle roof
Parking Type (Gr., Cov., etc.) Garage, Open, Covered Open
Number of Units 232 272
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
1 1Br/1Ba - Finch 875 32 $645 1 1Br/1Ba 900 124 $610
2 2Br/2Ba - Dove 1,150 90 $745 2 2Br/2Ba 1,100 132 $735
2 2Br/2Ba - Peacock 1,385 26 $765 3 3Br/2Ba 1,300 16 $815
3 3Br/2Ba - Eagle 1,375 84 $840
Average Unit Size (SF) 1,220 1,021
Unit Breakdown: Efficiency 0% 2-Bedroom 55% Efficiency 0% 2-Bedroom 49%
1-Bedroom 29% 3-Bedroom 16% 1-Bedroom 46% 3-Bedroom 6%
CONDITION: Good Good
APPEAL: Good Good
AMENITIES:
Unit Amenities Attach. Garage X Vaulted Ceiling Attach. Garage X Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
Fireplace Fireplace
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
Spa/Jacuzzi X Car Wash X Spa/Jacuzzi X Car Wash
X Basketball Court X BBQ Equipment Basketball Court X BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball X Meeting Hall Sand Volley Ball X Meeting Hall
X Tennis Court Secured Parking X Tennis Court Secured Parking
Racquet Ball X Laundry Room Racquet Ball X Laundry Room
Jogging Track X Business Office X Jogging Track X Business Office
X Gym Room X Community Room X Gym Room Community Room
X Picnic Area Picnic Area
OCCUPANCY: 89% 91%
LEASING DATA:
Available Leasing Terms 7 to 12 Months 7 to 12 Months
Concessions 1 month free for 1 BR & 2 BR 1 month free for 1 BR & 2 months free for 2 BR
Pet Deposit $300 - $500, plus $15 per month $300
Utilities Paid by Tenant: X Electric Natural Gas X Electric Natural Gas
Water Trash Water Trash
Confirmation May 26, 2003; Leasing Agent May 26, 2003; Leasing Agent
Telephone Number (407) 275-3790 (407) 281-4566
NOTES: None None
COMPARISON TO SUBJECT: Superior Slightly Superior
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
VENTURA LANDING, ORLANDO, FLORIDA
PHOTOGRAPHS OF COMPARABLE RENT PROPERTIES
COMPARABLE R-1 COMPARABLE R-2 COMPARABLE R-3
CYPRESS RUN GROVE PARK HOLLOWBROOK APARTMENTS
7100 Gateshead Circle 5325 Curry Ford Road 5465 Curry Ford Road
Orlando Orlando, Florida Orlando, Florida
[PICTURE] [PICTURE] [PICTURE]
COMPARABLE R-4 COMPARABLE R-5
DOVETAIL VILLAS PH I HIGHLAND POINTE
5916 Mausser Drive 7721 Silverpointe Boulevard
Orlando, Florida Orlando, Florida
[PICTURE] [PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
VENTURA LANDING, ORLANDO, FLORIDA
EXHIBIT C
ASSUMPTIONS AND LIMITING CONDITIONS
(3 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
VENTURA LANDING, ORLANDO, FLORIDA
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
VENTURA LANDING, ORLANDO, FLORIDA
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
VENTURA LANDING, ORLANDO, FLORIDA
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
VENTURA LANDING, ORLANDO, FLORIDA
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 report analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and represent the
impartial and 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 or bias with respect to the property that is
the subject of this report and have no personal interest or bias with
respect to the parties involved.
The engagement of American Appraisal Associates, Inc., and myself
personally in this assignment and compensation for American Appraisal
Associates, Inc., are not contingent on the development or reporting of
a predetermined value or direction in value that favors the cause of
the client, the amount of the value opinion, the attainment of a
stipulated result, or the occurrence of a subsequent event directly
related to the intended use of this appraisal.
The analyses, opinions, and conclusions were developed, and this report
has been prepared, in conformity with the Uniform Standards of
Professional Appraisal Practice and the Principles of Appraisal
Practice and Code of Ethics of the American Society of Appraisers.
I personally did not inspect the subject property. Michael L. Kersten
provided significant real property appraisal assistance in the
preparation of this report.
-s- Alice MacQueen
----------------------------
Alice MacQueen
Vice President, Real Estate Group
Florida Certified General Real Estate Appraiser
#RZ0002202
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
VENTURA LANDING, ORLANDO, FLORIDA
EXHIBIT E
QUALIFICATIONS OF APPRAISER
(2 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
VENTURA LANDING, ORLANDO, FLORIDA
ALICE MACQUEEN
VICE PRESIDENT AND PRINCIPAL, REAL ESTATE GROUP
POSITION Alice MacQueen serves as a Vice President and
Principal for the Dallas Real Estate Group of
American Appraisal Associates, Inc. ("AAA").
EXPERIENCE
Valuation Ms. MacQueen specializes in the appraisal of
investment real estate and is annually involved in
the valuation of several billion dollars of real
property. The purposes of these valuations include
allocation of purchase price, charitable donation,
financing, purchase, sale, and syndication. She has
also been involved in land planning analyses for
major mixed-use developments.
She has appraised various types of real estate
including congregate care facilities, industrial
properties, manufacturing facilities, office
buildings, recreational subdivisions and planned unit
developments, single- and multifamily residential
properties, and shopping centers. Special-purpose
properties she has appraised include campgrounds,
churches, country clubs, golf courses, historic
landmarks, proprietary cemeteries, and schools.
In addition to market value opinions, Ms. MacQueen
has provided feasibility and highest and best use
studies. She has also been involved in several
research projects, providing background studies
involving major property tax appeal cases. These
studies included the impact of inflation, rate of
return considerations, sales-assessment ratio
analyses, and the applicability of income
capitalization to commercial and industrial
properties.
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
VENTURA LANDING, ORLANDO, FLORIDA
Ms. MacQueen has appraised real estate in 46 U.S.
states, Mexico, and Puerto Rico.
Business Ms. MacQueen joined AAA in 1983. She served as
Regional Real Estate Director for the southeastern
United States from 1987 to 1992 and as National
Director of the Real Estate Valuation Group from 1992
through 1995, when she assumed her current position.
Before joining the firm, she was involved in property
management for five years and spent an additional
five years as an appraiser, consultant, and research
analyst.
EDUCATION Realtors Institute of Virginia
Greenbrier College for Women - Liberal Arts
STATE CERTIFICATIONS State of Arizona, Certified General Real Estate
Appraiser,
#30987
State of Florida, Certified General Appraiser,
#RZ0002202
State of Georgia, Certified General Real Property
Appraiser,
#239776
State of Minnesota, Certified General Real Property
Appraiser,
#AP-20144872
State of New Mexico, General Certified Appraiser,
#001626-G
State of Utah, State Certified General Appraiser,
#CG00057001
PROFESSIONAL American Society of Appraisers, Candidate
AFFILIATIONS
AMERICAN APPRAISAL ASSOCIATES, INC.
VENTURA LANDING, ORLANDO, FLORIDA
GENERAL SERVICE CONDITIONS
AMERICAN APPRAISAL ASSOCIATES, INC.
VENTURA LANDING, ORLANDO, FLORIDA
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.