LAKE FOREST
11402 EVANS STREET
OMAHA, NEBRASKA
MARKET VALUE -
FEE SIMPLE ESTATE
AS OF MAY 12, 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: LAKE FOREST
11402 EVANS STREET
OMAHA, DOUGLAS COUNTY, NEBRASKA
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 312 units with a
total of 300,300 square feet of rentable area. The improvements were built in
1973. The improvements are situated on 21.17775482 acres. Overall, the
improvements are in average condition. As of the date of this appraisal, the
subject property is 96% 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
LAKE FOREST, OMAHA, NEBRASKA
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 12, 2003 is:
($12,200,000)
Respectfully submitted,
AMERICAN APPRAISAL ASSOCIATES, INC.
June 27, 2003 -s- Jeff W. Briggs
#053272 ----------------------
Jeff W. Briggs, MAI
Engagement Director, Real Estate Group
Nebraska Certified General Real Estate Appraiser
#CG230072R
Report By:
Jeff W. Briggs
AMERICAN APPRAISAL ASSOCIATES, INC. TABLE OF CONTENTS PAGE 3
LAKE FOREST, OMAHA, NEBRASKA
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
LAKE FOREST, OMAHA, NEBRASKA
EXECUTIVE SUMMARY
PART ONE - PROPERTY DESCRIPTION
PROPERTY NAME: Lake Forest
LOCATION: 11402 Evans Street
Omaha, Nebraska
INTENDED USE OF ASSIGNMENT: Court Settlement
PURPOSE OF APPRAISAL: "As Is" Market Value of the Fee Simple Estate
INTEREST APPRAISED: fee simple
DATE OF VALUE: May 12, 2003
DATE OF REPORT: June 27, 2003
PHYSICAL DESCRIPTION - SITE & IMPROVEMENTS:
SITE:
Size: 21.1777548209366 acres, or 922,503 square feet
Assessor Parcel No.: 0139 1538 16; 0139 1598 16
Floodplain: Community Panel No. 315274 0025 F (February 6,
1991)
Flood Zone AE, an area inside the floodplain.
Zoning: R2, R6, DR, DR-FP (Single Family Residential
District (R2), Low Density Multiple Family
Residential District (R6 & R6 PUD), Drainage
(DR & DR-FP))
BUILDING:
No. of Units: 312 Units
Total NRA: 300,300 Square Feet
Average Unit Size: 963 Square Feet
Apartment Density: 14.7 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
- -----------------------------------------------------------------------
1 Bd/1 Bath (1A10) 850 $520 $0.61 $ 81,120 $ 973,440
2 Bd/1.5 Ba (2A20) 1,075 $640 $0.60 $ 99,840 $1,198,080
---------------------
Total $180,960 $2,171,520
=====================
OCCUPANCY: 96%
ECONOMIC LIFE: 45 Years
EFFECTIVE AGE: 25 Years
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 5
LAKE FOREST, OMAHA, NEBRASKA
REMAINING ECONOMIC LIFE: 20 Years
SUBJECT PHOTOGRAPHS AND LOCATION MAP:
SUBJECT PHOTOGRAPHS
[PICTURE]
EXTERIOR - SIGNAGE AND VIEW FROM WEST MAPLE AVENUE
[PICTURE]
EXTERIOR - APARTMENT BUILDING
AREA MAP
[MAP]
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 6
LAKE FOREST, OMAHA, NEBRASKA
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
LAKE FOREST, OMAHA, NEBRASKA
PART TWO - ECONOMIC INDICATORS
Amount $/Unit
------------- ----------
INCOME CAPITALIZATION APPROACH
DIRECT CAPITALIZATION
Potential Rental Income $2,171,520 $6,960
Effective Gross Income $2,284,838 $7,323
Operating Expenses $1,109,522 $3,556 48.6% of EGI
Net Operating Income: $1,112,916 $3,567
Capitalization Rate 9.25%
DIRECT CAPITALIZATION VALUE $11,900,000 * $38,141 / UNIT
DISCOUNTED CASH FLOW ANALYSIS:
Holding Period 10 years
2002 Economic Vacancy 9%
Stabilized Vacancy & Collection Loss: 8%
Lease-up / Stabilization Period N/A
Terminal Capitalization Rate 10.00%
Discount Rate 11.50%
Selling Costs 2.00%
Growth Rates:
Income 3.00%
Expenses: 3.00%
DISCOUNTED CASH FLOW VALUE $12,400,000 * $39,744 / UNIT
RECONCILED INCOME CAPITALIZATION VALUE $12,200,000 $39,103 / UNIT
SALES COMPARISON APPROACH
PRICE PER UNIT:
Range of Sales $/Unit (Unadjusted) $29,545 to $48,817
Range of Sales $/Unit (Adjusted) $37,444 to $40,615
VALUE INDICATION - PRICE PER UNIT $12,100,000 * $38,782 / UNIT
EGIM ANALYSIS
Range of EGIMs from Improved Sales 5.27 to 6.08
Selected EGIM for Subject 5.40
Subject's Projected EGI $2,284,838
EGIM ANALYSIS CONCLUSION $12,200,000 * $39,103 / UNIT
NOI PER UNIT ANALYSIS CONCLUSION $11,900,000 * $38,141 / UNIT
RECONCILED SALES COMPARISON VALUE $12,000,000 $38,462 / 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
LAKE FOREST, OMAHA, NEBRASKA
PART THREE - SUMMARY OF VALUE CONCLUSIONS
SALES COMPARISON APPROACH:
Price Per Unit $12,100,000
NOI Per Unit $11,900,000
EGIM Multiplier $12,200,000
INDICATED VALUE BY SALES COMPARISON $12,000,000 $38,462 / UNIT
INCOME APPROACH:
Direct Capitalization Method: $11,900,000
Discounted Cash Flow Method: $12,400,000
INDICATED VALUE BY THE INCOME APPROACH $12,200,000 $39,103 / UNIT
RECONCILED OVERALL VALUE CONCLUSION: $12,200,000 $39,103 / UNIT
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 9
LAKE FOREST, OMAHA, NEBRASKA
INTRODUCTION
IDENTIFICATION OF THE SUBJECT
The subject property is located at 11402 Evans Street, Omaha, Douglas County,
Nebraska. Omaha identifies it as 0139 1538 16; 0139 1598 16.
SCOPE OF THE ASSIGNMENT
The property, neighborhood, and comparables were inspected by Jeff Briggs, MAI
on May 12, 2003. Jeff W. Briggs, MAI made a personal inspection of the subject
property, performed the research, valuation analysis and wrote the report. Jeff
Briggs, MAI has extensive experience in appraising similar properties and meets
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 12, 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 defined in The Dictionary of Real Estate Appraisal, 3rd ed.
(Chicago: Appraisal Institute, 1993), as:
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 10
LAKE FOREST, OMAHA, NEBRASKA
"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 4. 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
LAKE FOREST, OMAHA, NEBRASKA
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 Omaha, Nebraska. 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 - North 90th Street
West - North 120th Street
South - Blondo Street
North - Fort Street
MAJOR EMPLOYERS
Major employers in the subject's area include Offutt Air Force Base, Alergent
Health, Omaha Public Schools, First Data Corporation Methodist Health System,
Mutual of Omaha Companies, ConAgra Foods Inc., and Union Pacific Railroad. 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
LAKE FOREST, OMAHA, NEBRASKA
NEIGHBORHOOD DEMOGRAPHICS
AREA
----------------------------------------
CATEGORY 1-Mi. RADIUS 3-Mi. RADIUS 5-Mi. RADIUS MSA
- ---------------------------------------------------------------------------------
POPULATION TRENDS
Current Population 11,579 82,147 186,606 729,638
5-Year Population 12,714 89,535 198,042 763,780
% Change CY-5Y 9.8% 9.0% 6.1% 4.7%
Annual Change CY-5Y 2.0% 1.8% 1.2% 0.9%
HOUSEHOLDS
Current Households 5,347 35,155 76,296 282,018
5-Year Projected Households 6,057 38,880 82,269 298,876
% Change CY - 5Y 13.3% 10.6% 7.8% 6.0%
Annual Change CY-5Y 2.7% 2.1% 1.6% 1.2%
INCOME TRENDS
Median Household Income $ 50,314 $ 57,569 $ 58,160 $ 45,791
Per Capita Income $ 25,130 $ 30,381 $ 29,064 $ 23,281
Average Household Income $ 54,711 $ 71,004 $ 71,221 $ 60,232
Source: Demographics Now
The subject neighborhood's population is expected to show increases above 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 55.37% 39.28% 32.16% 31.64%
5-Year Projected % Renting 48.74% 38.39% 32.08% 31.18%
% of Households Owning 40.73% 57.17% 64.38% 62.25%
5-Year Projected % Owning 47.78% 58.38% 64.72% 63.04%
Source: Demographics Now
AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 13
LAKE FOREST, OMAHA, NEBRASKA
SURROUNDING IMPROVEMENTS
The following uses surround the subject property:
North - single family residential
South - single family residential
East - commercial uses
West - single family residential
CONCLUSIONS
The subject is well located within the city of Omaha. 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
LAKE FOREST, OMAHA, NEBRASKA
MARKET ANALYSIS
The subject property is located in the city of Omaha in Douglas County. The
overall pace of development in the subject's market is more or less decreasing.
There are no new units under construction in the subject's neighborhood as the
area is effectively built out. The following table illustrates historical
occupancy rates for the subject's market.
HISTORICAL OCCUPANCY
Period Region Submarket
- ---------------------------------
Fall 1998 95.0% 88.0%
Spring 1999 98.0% N/A
Fall 1999 94.0% 94.0%
Spring 2000 94.0% N/A
Fall 2000 94.0% 92.0%
Spring 2001 94.0% N/A
Fall 2001 94.0% 93.0%
Spring 2002 93.0% N/A
Fall 2002 93.0% 92.0%
Spring 2003 93.0% 92.0%
Source: Fall 2002 IREM, & Christopher Mustoe with C. Mustoe Appraisals
Occupancy trends in the subject's market are decreasing. Historically speaking,
the subject's submarket has equated the overall market. Concessions in the
market are not widespread but are showing up in some projects. Population growth
in the area is still occurring, however, the current high unemployment rate
probably promotes some doubling up or shared apartments. The economic
uncertainty may also be forcing younger people to delay moving out on their own.
As this market segment is historically one of the larger segments of apartment
dwellers, future "pent-up" demand may be building up, hopefully to surface when
the economy recovers.
Market rents in the subject's market have been following an increasing trend.
The following table illustrates historical rental rates for the subject's
market.
HISTORICAL AVERAGE RENT
Period Region % Change Submarket % Change
- --------------------------------------------------------------------
Fall 2001 - 1 Bedroom $536 - $558 -
Fall 2002 - 1 Bedroom $540 0.7% $556 -0.4%
Fall 2001 - 2 Bedroom $669 23.9% $695 25.0%
Fall 2002 - 2 Bedroom $681 1.8% $704 1.3%
AMERICAN APPRAISAL ASSOCIATES, INC. MARKET ANALYSIS PAGE 15
LAKE FOREST, OMAHA, NEBRASKA
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 Maple Manor 259 90% 1968 1.8 miles east of the subject
R-2 Laurelwood Apartment Homes & Townhomes 480 94% 1969 3.0 miles northeast of the subject
R-3 Tudor Heights Apartments 418 96% 1970s 1.3-miles northeast of the subject
R-4 Hidden Valley Apartments Townhomes 246 96% 1978 1.2-miles northeast of the subject
R-5 Picadilly Square Apartments N/A 95% Early 1980s 1 block south of the subject
Subject Lake Forest 312 96% 1973
While rents have declined or remained stable over the last two years, there has
been a steady progression upward in rents going back to 1991. The data going
back 10 years indicates rental rates that are growing in-line with inflation.
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 16
LAKE FOREST, OMAHA, NEBRASKA
PROPERTY DESCRIPTION
SITE ANALYSIS
Site Area 21.1777548209366 acres, or 922,503 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 315274 0025 F, dated February 6, 1991
Flood Zone Zone AE
Zoning R2, R6, DR, DR-FP, the subject improvements
represent a legal conforming use of the site.
REAL ESTATE TAXES
ASSESSED VALUE -
---------------------------------- TAX RATE / PROPERTY
PARCEL NUMBER LAND BUILDING TOTAL MILL RATE TAXES
- --------------------------------------------------------------------------------
0139 1538 16; NA $10,020,100 $10,020,100 $0.02043 $204,685
0139 1598 16
IMPROVEMENT ANALYSIS
Year Built 1973
Number of Units 312
Net Rentable Area 300,300 Square Feet
Construction:
Foundation Reinforced concrete slab
Frame Heavy or light wood
Exterior Walls Brick or masonry
Roof Composition shingle over a wood truss structure
Project Amenities Amenities at the subject include a swimming pool,
spa/jacuzzi, tennis court, gym room, tanning bed,
playground, detached garages, meeting hall,
laundry room, business office, and parking area.
Unit Amenities Individual unit amenities include a balcony,
fireplace, cable TV connection, and washer dryer
connection. Appliances available in each unit
include a refrigerator, stove,
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 17
LAKE FOREST, OMAHA, NEBRASKA
dishwasher, and oven.
Unit Mix:
Unit Area
Unit Type Number of Units (Sq. Ft.)
- ------------------------------------------------
1 Bd/1 Bath (1A10) 156 850
2 Bd/1.5 Ba (2A20) 156 1,075
Overall Condition Average
Effective Age 25 years
Economic Life 45 years
Remaining Economic Life 20 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 312-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
LAKE FOREST, OMAHA, NEBRASKA
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
LAKE FOREST, OMAHA, NEBRASKA
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
LAKE FOREST, OMAHA, NEBRASKA
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
LAKE FOREST, OMAHA, NEBRASKA
SUMMARY OF COMPARABLE SALES -IMPROVED
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
- ------------------------------------------------------------------------------------------------------------------------
Property Name Lake Forest Chalet Apartments & Townhomes Orchard Park Apartments
LOCATION:
Address 11402 Evans Street 3810 North 108th Street 7805-7809 Harney Street
City, State Omaha, Nebraska Omaha, Nebraska Omaha, Nebraska
County Douglas Douglas Douglas
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) 300,300 236,510 33,910
Year Built 1973 1978 1980
Number of Units 312 246 44
Unit Mix: Type Total Type Total Type Total
1 Bd/1 Bath (1A10) 156 1 Br/1 Ba - apts. 80 N/A
2 Bd/1.5 Ba (2A20) 156 2 Br/1 Ba - apts. 16
1 Br/1 Ba - twnhm. 24
1 Br/1 Ba - twnhm. 20
1 Br/1.5Ba -twnhm. 52
2 Br/1.5Ba -twnhm. 17
2 Br/1.5Ba -twnhm. 8
2 Br/1.5Ba -twnhm. 12
2 Br/2.5 Ba-twnhm. 5
2 Br/2.5 Ba-twnhm. 12
Average Unit Size (SF) 963 961 771
Land Area (Acre) 21.1778 23.2247 1.7677
Density (Units/Acre) 14.7 10.6 24.9
Parking Ratio (Spaces/Unit) 0.00 N/A 1.64
Parking Type (Gr., Cov., etc.) Garage and open Garage and open Garage and open
CONDITION: Average Average Average
APPEAL: Average Average Average
AMENITIES:
Pool/Spa Yes/Yes Yes/Yes No/No
Gym Room Yes Yes No
Laundry Room Yes Yes No
Secured Parking No No No
Sport Courts Yes No No
Washer/Dryer Connection No Yes Yes
OCCUPANCY: 96% 94% 93%
TRANSACTION DATA:
Sale Date January, 2003 July, 2002
Sale Price ($) $9,600,000 $1,300,000
Grantor Chalet Investments, LLP LK Company LLC
Grantee Hidden Valley Investments, LLC J B Conway, Trustee
Sale Documentation Book 2231, Page 258 Book 2217, Page 325
Verification Confidential Confidential
Telephone Number
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF
------- ------ ---- ------- ------ ----
Potential Gross Income $1,979,362 $8,046 $8.37 $253,982 $5,772 $7.49
Vacancy/Credit Loss $ 158,349 $ 644 $0.67 $ 22,858 $ 520 $0.67
---------- ------ ----- -------- ------ -----
Effective Gross Income $1,821,013 $7,402 $7.70 $231,124 $5,253 $6.82
Operating Expenses $ 905,772 $3,682 $3.83 $112,806 $2,564 $3.33
---------- ------ ----- -------- ------ -----
Net Operating Income $ 915,241 $3,720 $3.87 $118,318 $2,689 $3.49
---------- ------ ----- -------- ------ -----
NOTES: Property contains 96 apt. Expenses include $200/unit
units, 150 townhome units, reserve. Exposure time was
& 15,494 SF comm. bldg. Expenses less than 6 months.
include $200/u reserves
PRICE PER UNIT $39,024 $29,545
PRICE PER SQUARE FOOT $ 40.59 $38.34
EXPENSE RATIO 49.7% 48.8%
EGIM 5.27 5.62
OVERALL CAP RATE 9.53% 9.10%
Cap Rate based on Pro Forma or Actual Income?
PRO FORMA PRO FORMA
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
- -----------------------------------------------------------------------------------------------------------------------------
Property Name Brent Village Apartments Fontenelle Hills Apartments 1001 Apartments
LOCATION:
Address 1402-1510 Buck Drive 200 Martin Drive 1001 North 90th Street
City, State Bellevue, Nebraska Bellevue, Nebraska Omaha, Nebraska
County Sarpy Sarpy Doughas
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) 147,320 379,819 111,805
Year Built 1971 1974 1969
Number of Units 180 338 110
Unit Mix: Type Total Type Total Type Total
N/A N/A 1 Br/1Ba 55
2Br/2Ba 55
3Br/2Ba 110
Average Unit Size (SF) 818 1,124 1,016
Land Area (Acre) 9.2800 35.0700 4.5400
Density (Units/Acre) 19.4 9.6 24.2
Parking Ratio (Spaces/Unit) N/A N/A N/A
Parking Type (Gr., Cov., etc.) Garage and open Garage and open Open, Covered
CONDITION: Fair Good Average
APPEAL: Average Average Average
AMENITIES:
Pool/Spa Yes/No Yes/No Yes/No
Gym Room No Yes No
Laundry Room Yes Yes Yes
Secured Parking No No No
Sport Courts No No No
Washer/Dryer Connection Yes Yes Yes
OCCUPANCY: 95% 97% 95%
TRANSACTION DATA:
Sale Date July, 2002 May, 2001 April, 2000
Sale Price ($) $5,970,000 $16,500,000 $4,315,000
Grantor Brent Village Associates, LLC Continental Fontenelle Inc. 90th Street Associates
Grantee BV Associates LLC Haley Fontenelle Hills, LP Keystone Properties III, L.L.C.
Sale Documentation Book 2002, Page 24483 Book 2002, Page 15007 Book 2150, Page 188
Verification Confidential Confidential Confidential
Telephone Number
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF Total $ $/Unit $/SF
---------- ------ ----- ---------- ------ ----- -------- ------ -----
Potential Gross Income $1,155,097 $6,417 $7.84 $2,969,923 $8,787 $7.82 $763,441 $6,940 $6.83
Vacancy/Credit Loss $ 80,857 $ 449 $0.55 $ 207,895 $ 615 $0.55 $ 53,441 $ 486 $0.48
---------- ------ ----- ---------- ------ ----- -------- ------ -----
Effective Gross Income $1,074,240 $5,968 $7.29 $2,762,028 $8,172 $7.27 $710,000 $6,455 $6.35
Operating Expenses $ 519,408 $2,886 $3.53 $1,196,293 $3,539 $3.15 $304,200 $2,765 $2.72
---------- ------ ----- ---------- ------ ----- -------- ------ -----
Net Operating Income $ 554,832 $3,082 $3.77 $1,565,735 $4,632 $4.12 $405,800 $3,689 $3.63
---------- ------ ----- ---------- ------ ----- -------- ------ -----
NOTES: Expenses include $200/unit Expenses include $200/unit Expenses include $200/unit
reserve. Exposure time was reserve. Exposure time was reserve. Exposure time is not
less than 6 months. Property approx. 12 months. available.
underwent moderate rehab. Property was renovated.
PRICE PER UNIT $33,167 $48,817 $39,227
PRICE PER SQUARE FOOT $ 40.52 $ 43.44 $ 38.59
EXPENSE RATIO 48.4% 43.3% 42.8%
EGIM 5.56 5.97 6.08
OVERALL CAP RATE 9.29% 9.49% 9.40%
Cap Rate based on Pro Forma or
Actual Income? PRO FORMA PRO FORMA PRO FORMA
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 22
LAKE FOREST, OMAHA, NEBRASKA
IMPROVED SALES MAP
[MAP]
IMPROVED SALES ANALYSIS
The improved sales indicate a sales price range from $29,545 to $48,817 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 $37,444 to $40,615 per unit with a mean or average adjusted price
of $38,977 per unit. The median adjusted price is $39,286 per unit. Based on the
following analysis, we have concluded to a value of $39,000 per unit, which
results in an "as is" value of $12,100,000 (rounded after necessary adjustment,
if any).
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 23
LAKE FOREST, OMAHA, NEBRASKA
SALES ADJUSTMENT GRID
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
- ------------------------------------------------------------------------------------------------------------------
Property Name Lake Forest Chalet Apartments & Townhomes Orchard Park Apartments
Address 11402 Evans Street 3810 North 108th Street 7805-7809 Harney Street
City Omaha, Nebraska Omaha, Nebraska Omaha, Nebraska
Sale Date January, 2003 July, 2002
Sale Price ($) $9,600,000 $1,300,000
Net Rentable Area (SF) 300,300 236,510 33,910
Number of Units 312 246 44
Price Per Unit $39,024 $29,545
Year Built 1973 1978 1980
Land Area (Acre) 21.1778 23.2247 1.7677
VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 01-2003 1% 07-2002 3%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $39,415 $30,432
Location Comparable 0% Comparable 0%
Number of Units 312 246 0% 44 0%
Quality / Appeal Average Superior -5% Comparable 0%
Age / Condition 1973 1978 / Average 0% 1980 / Average 0%
Occupancy at Sale 96% 94% 0% 93% 0%
Amenities Pool, tennis, garages Comparable 0% Comparable 0%
Average Unit Size (SF) 963 961 0% 771 25%
PHYSICAL ADJUSTMENT -5% 25%
FINAL ADJUSTED VALUE ($/UNIT) $37,444 $38,040
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
- --------------------------------------------------------------------------------------------------------------------
Property Name Brent Village Apartments Fontenelle Hills Apartments 1001 Apartments
Address 1402-1510 Buck Drive 200 Martin Drive 1001 North 90th Street
City Bellevue, Nebraska Bellevue, Nebraska Omaha, Nebraska
Sale Date July, 2002 May, 2001 April, 2000
Sale Price ($) $5,970,000 $16,500,000 $4,315,000
Net Rentable Area (SF) 147,320 379,819 111,805
Number of Units 180 338 110
Price Per Unit $33,167 $48,817 $39,227
Year Built 1971 1974 1969
Land Area (Acre) 9.2800 35.0700 4.5400
VALUE ADJUSTMENTS DESCRIPTION ADJ. DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate 0% Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 07-2002 3% 05-2001 4% 04-2000 6%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $34,162 $50,769 $41,581
Location Comparable 0% Comparable 0% Comparable 0%
Number of Units 180 0% 338 0% 110 0%
Quality / Appeal Comparable 0% Superior -5% Superior -5%
Age / Condition 1971 / Fair 0% 1974 / Good 0% 1969 / Average 0%
Occupancy at Sale 95% 0% 97% 0% 95% 0%
Amenities Comparable 0% Comparable 0% Comparable 0%
Average Unit Size (SF) 818 15% 1,124 -15% 1,016 0%
PHYSICAL ADJUSTMENT 15% -20% -5%
FINAL ADJUSTED VALUE ($/UNIT) $39,286 $40,615 $39,502
SUMMARY
VALUE RANGE (PER UNIT) $37,444 TO $40,615
MEAN (PER UNIT) $38,977
MEDIAN (PER UNIT) $39,286
VALUE CONCLUSION (PER UNIT) $39,000
VALUE OF IMPROVEMENT & MAIN SITE $12,168,000
PV OF CONCESSIONS -$ 114,000
VALUE INDICATED BY SALES COMPARISON APPROACH $12,054,000
ROUNDED $12,100,000
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
LAKE FOREST, OMAHA, NEBRASKA
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-1 246 $ 9,600,000 9.53% $ 915,241 $1,112,916 0.959 $37,415
$ 39,024 $ 3,720 $ 3,567
I-2 44 $ 1,300,000 9.10% $ 118,318 $1,112,916 1.327 $39,192
$ 29,545 $ 2,689 $ 3,567
I-3 180 $ 5,970,000 9.29% $ 554,832 $1,112,916 1.157 $38,381
$ 33,167 $ 3,082 $ 3,567
I-4 338 $16,500,000 9.49% $1,565,735 $1,112,916 0.770 $37,590
$ 48,817 $ 4,632 $ 3,567
I-5 110 $ 4,315,000 9.40% $ 405,800 $1,112,916 0.967 $37,929
$ 39,227 $ 3,689 $ 3,567
PRICE/UNIT
Low High Average Median
$37,415 $39,192 $38,102 $37,929
VALUE ANALYSIS BASED ON COMPARABLES NOI PER UNIT
Estimated Price Per Unit $ 38,500
Number of Units 312
Value $12,012,000
PV of Concessions -$ 114,000
-----------
Value Based on NOI Analysis $11,898,000
Rounded $11,900,000
The adjusted sales indicate a range of value between $37,415 and $39,192 per
unit, with an average of $38,102 per unit. Based on the subject's competitive
position within the improved sales, a value of $38,500 per unit is estimated.
This indicates an "as is" market value of $11,900,000 (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
LAKE FOREST, OMAHA, NEBRASKA
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-1 246 $ 9,600,000 $1,821,013 $ 905,772 49.74% 5.27
$ 39,024
I-2 44 $ 1,300,000 $ 231,124 $ 112,806 48.81% 5.62
$ 29,545
I-3 180 $ 5,970,000 $1,074,240 $ 519,408 48.35% 48.56% 5.56
$ 33,167
I-4 338 $16,500,000 $2,762,028 $1,196,293 43.31% 5.97
$ 48,817
I-5 110 $ 4,315,000 $ 710,000 $ 304,200 42.85% 6.08
$ 39,227
EGIM
Low High Average Median
- --- ---- ------- ------
5.27 6.08 5.70 5.62
VALUE ANALYSIS BASED ON EGIM'S OF COMPARABLE SALES
Estimate EGIM 5.40
Subject EGI $ 2,284,838
Value $12,338,127
PV of Concessions -$ 114,000
-----------
Value Based on EGIM Analysis $12,224,127
Rounded $12,200,000
Value Per Unit $ 39,103
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 48.56% before reserves. The comparable sales
indicate a range of expense ratios from 42.85% to 49.74%, while their EGIMs
range from 5.27 to 6.08. Overall, we conclude to an EGIM of 5.40, which results
in an "as is" value estimate in the EGIM Analysis of $12,200,000.
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 $12,000,000.
Price Per Unit $12,100,000
NOI Per Unit $11,900,000
EGIM Analysis $12,200,000
Sales Comparison Conclusion $12,000,000
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 26
LAKE FOREST, OMAHA, NEBRASKA
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
LAKE FOREST, OMAHA, NEBRASKA
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
- ----------------------------------------------------------
1 Bd/1 Bath (1A10) 850 $534 $0.63 94.9%
2 Bd/1.5 Ba (2A20) 1075 $644 $0.60 96.2%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 28
LAKE FOREST, OMAHA, NEBRASKA
RENT ANALYSIS
COMPARABLE RENTS
----------------------------------------------------
R-1 R-2 R-3 R-4 R-5
----------------------------------------------------
Laurelwood Hidden
Apartments Tudor Valley Picadilly
Maple Homes & Heights Apartments Square
Manor Townhomes Apartments Townhomes Apartments
----------------------------------------------------
COMPARISON TO SUBJECT
SUBJECT SUBJECT ---------------------------------------------------
SUBJECT UNIT ACTUAL ASKING Slightly Slightly Slightly
DESCRIPTION TYPE RENT RENT Inferior Inferior Similar Similar Superior MIN MAX MEDIAN AVERAGE
- ---------------------------------------------------------------------------------------------------------------------------
Monthly Rent 1 Bd/1 BATH $ 534 $ 517 $ 535 $ 490 $ 465 $ 500 $ 525 $ 465 $ 535 $ 500 $ 503
Unit Area (SF) (1A10) 850 850 830 850 750 780 750 750 850 780 792
Monthly Rent
Per Sq. Ft. $ 0.63 $ 0.61 $ 0.64 $ 0.58 $ 0.62 $0.64 $ 0.70 $0.58 $ 0.70 $ 0.64 $ 0.64
Monthly Rent 2 Bd/1.5 Ba $ 644 $ 635 $ 595 $ 587 $ 610 $ 580 $ 650 $ 580 $ 650 $ 595 $ 604
Unit Area (SF) (2A20) 1,075 1,075 1,000 1,025 1,050 850 1,100 850 1,100 1,025 1,005
Monthly Rent
Per Sq. Ft. $ 0.60 $ 0.59 $ 0.60 $ 0.57 $ 0.58 $0.68 $ 0.59 $0.57 $ 0.68 $ 0.59 $ 0.60
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
- --------------------------------------------------------------------------------------
1 Bd/1 Bath (1A10) 156 850 $520 $0.61 $ 81,120 $ 973,440
2 Bd/1.5 Ba (2A20) 156 1,075 $640 $0.60 $ 99,840 $1,198,080
----------------------------
Total $180,960 $2,171,520
============================
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
LAKE FOREST, OMAHA, NEBRASKA
SUMMARY OF HISTORICAL INCOME & EXPENSES
FISCAL YEAR 2000 FISCAL YEAR 2001 FISCAL YEAR 2002 FISCAL YEAR 2003
-----------------------------------------------------------------------------------------
ACTUAL ACTUAL ACTUAL MANAGEMENT BUDGET
-----------------------------------------------------------------------------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT
- ---------------------------------------------------------------------------------------------------------------------
Revenues
Rental Income $2,357,163 $7,555 $2,320,936 $7,439 $2,276,168 $7,295 $2,373,354 $7,607
Vacancy $ 263,182 $ 844 $ 199,296 $ 639 $ 157,997 $ 506 $ 129,800 $ 416
Credit Loss/Concessions $ 269,272 $ 863 $ 104,836 $ 336 $ 55,004 $ 176 $ 52,400 $ 168
----------------------------------------------------------------------------------------
Subtotal $ 532,454 $1,707 $ 304,132 $ 975 $ 213,001 $ 683 $ 182,200 $ 584
Laundry Income $ 26,294 $ 84 $ 24,455 $ 78 $ 27,174 $ 87 $ 39,931 $ 128
Garage Revenue $ 49,282 $ 158 $ 49,465 $ 159 $ 53,139 $ 170 $ 0 $ 0
Other Misc. Revenue $ 155,339 $ 498 $ 146,828 $ 471 $ 201,324 $ 645 $ 223,274 $ 716
----------------------------------------------------------------------------------------
Subtotal Other Income $ 230,915 $ 740 $ 220,748 $ 708 $ 281,637 $ 903 $ 263,205 $ 844
----------------------------------------------------------------------------------------
Effective Gross Income $2,055,624 $6,589 $2,237,552 $7,172 $2,344,804 $7,515 $2,454,359 $7,867
Operating Expenses
Taxes $ 177,510 $ 569 $ 169,019 $ 542 $ 216,407 $ 694 $ 176,389 $ 565
Insurance $ 28,234 $ 90 $ 40,885 $ 131 $ 42,453 $ 136 $ 47,032 $ 151
Utilities $ 193,224 $ 619 $ 217,386 $ 697 $ 181,411 $ 581 $ 151,832 $ 487
Repair & Maintenance $ 159,874 $ 512 $ 163,454 $ 524 $ 135,036 $ 433 $ 149,355 $ 479
Cleaning $ 36,198 $ 116 $ 43,965 $ 141 $ 33,788 $ 108 $ 0 $ 0
Landscaping $ 35,905 $ 115 $ 31,035 $ 99 $ 31,913 $ 102 $ 79,040 $ 253
Security $ 5,878 $ 19 $ 6,958 $ 22 $ 1,290 $ 4 $ 0 $ 0
Marketing & Leasing $ 66,314 $ 213 $ 44,948 $ 144 $ 41,133 $ 132 $ 41,960 $ 134
General Administrative $ 283,210 $ 908 $ 368,338 $1,181 $ 284,674 $ 912 $ 318,387 $1,020
Management $ 109,833 $ 352 $ 128,878 $ 413 $ 117,208 $ 376 $ 120,707 $ 387
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
----------------------------------------------------------------------------------------
Total Operating Expenses $1,096,180 $3,513 $1,214,866 $3,894 $1,085,313 $3,479 $1,084,702 $3,477
Reserves $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
----------------------------------------------------------------------------------------
Net Income $ 959,444 $3,075 $1,022,686 $3,278 $1,259,491 $4,037 $1,369,657 $4,390
ANNUALIZED YEAR 2003
----------------------
PROJECTION AAA PROJECTION
---------------------------------------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT %
- -------------------------------------------------------------------------------
Revenues
Rental Income $2,231,648 $7,153 $2,171,520 $6,960 100.0%
Vacancy $ 141,068 $ 452 $ 130,291 $ 418 6.0%
Credit Loss/Concessions $ 176,568 $ 566 $ 43,430 $ 139 2.0%
--------------------------------------------------
Subtotal $ 317,636 $1,018 $ 173,722 $ 557 8.0%
Laundry Income $ 31,536 $ 101 $ 29,640 $ 95 1.4%
Garage Revenue $ 56,264 $ 180 $ 54,600 $ 175 2.5%
Other Misc. Revenue $ 215,336 $ 690 $ 202,800 $ 650 9.3%
--------------------------------------------------
Subtotal Other Income $ 303,136 $ 972 $ 287,040 $ 920 13.2%
--------------------------------------------------
Effective Gross Income $2,217,148 $7,106 $2,284,838 $7,323 100.0%
Operating Expenses
Taxes $ 176,604 $ 566 $ 210,600 $ 675 9.2%
Insurance $ 49,328 $ 158 $ 45,240 $ 145 2.0%
Utilities $ 304,132 $ 975 $ 202,800 $ 650 8.9%
Repair & Maintenance $ 95,884 $ 307 $ 137,280 $ 440 6.0%
Cleaning $ 35,932 $ 115 $ 34,320 $ 110 1.5%
Landscaping $ 4,500 $ 14 $ 32,760 $ 105 1.4%
Security $ 0 $ 0 $ 0 $ 0 0.0%
Marketing & Leasing $ 43,500 $ 139 $ 43,680 $ 140 1.9%
General Administrative $ 278,996 $ 894 $ 288,600 $ 925 12.6%
Management $ 112,368 $ 360 $ 114,242 $ 366 5.0%
Miscellaneous $ 0 $ 0 $ 0 $ 0 0.0%
--------------------------------------------------
Total Operating Expenses $1,101,244 $3,530 $1,109,522 $3,556 48.6%
Reserves $ 0 $ 0 $ 62,400 $ 200 5.6%
--------------------------------------------------
Net Income $1,115,904 $3,577 $1,112,916 $3,567 48.7%
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 8% based on
the subject's historical performance, as well as the anticipated future market
conditions.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 30
LAKE FOREST, OMAHA, NEBRASKA
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 $200 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 $200 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
LAKE FOREST, OMAHA, NEBRASKA
SUMMARY OF OVERALL
CAPITALIZATION RATES
COMP. NO. SALE DATE OCCUP. PRICE/UNIT OAR
- -------------------------------------------------------
I-1 Jan-03 94% $39,024 9.53%
I-2 Jul-02 93% $29,545 9.10%
I-3 Jul-02 95% $33,167 9.29%
I-4 May-01 97% $48,817 9.49%
I-5 Apr-00 95% $39,227 9.40%
High 9.53%
Low 9.10%
Average 9.36%
Based on this information, we have concluded the subject's overall
capitalization rate should be 9.25%. The terminal capitalization rate is applied
to the net operating income estimated for the year following the end of the
holding period. Based on the concluded overall capitalization rate, the age of
the property and the surveyed information, we have concluded the subject's
terminal capitalization rate to be 10.00%. Finally, the subject's discount rate
or yield rate is estimated based on the previous investor survey and an
examination of returns available on alternative investments in the market. Based
on this analysis, the subject's discount rate is estimated to be 11.50%.
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 11.50% indicates a value of $12,400,000. In this instance, the reversion
figure contributes
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 32
LAKE FOREST, OMAHA, NEBRASKA
approximately 40% of the total value. Investors surveyed for this assignment
indicated they would prefer to have the cash flow contribute anywhere from 50%
to 60%. Overall, the blend seems reasonable. The cash flow and pricing matrix
are located on the following pages.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME APPROACH PAGE 33
LAKE FOREST, OMAHA, NEBRASKA
DISCOUNTED CASH FLOW ANALYSIS
LAKE FOREST
YEAR APR-2004 APR-2005 APR-2006 APR-2007 APR-2008 APR-2009 APR-2010
FISCAL YEAR 1 2 3 4 5 6 7
- -------------------------------------------------------------------------------------------------------------------------------
REVENUE
Base Rent $2,171,520 $2,236,666 $2,303,766 $2,372,879 $2,444,065 $2,517,387 $2,592,908
Vacancy $ 130,291 $ 134,200 $ 138,226 $ 142,373 $ 146,644 $ 151,043 $ 155,575
Credit Loss $ 43,430 $ 44,733 $ 46,075 $ 47,458 $ 48,881 $ 50,348 $ 51,858
Concessions $ 86,861 $ 44,733 $ 0 $ 0 $ 0 $ 0 $ 0
----------------------------------------------------------------------------------------
Subtotal $ 260,582 $ 223,667 $ 184,301 $ 189,830 $ 195,525 $ 201,391 $ 207,433
Laundry Income $ 29,640 $ 30,529 $ 31,445 $ 32,388 $ 33,360 $ 34,361 $ 35,392
Garage Revenue $ 54,600 $ 56,238 $ 57,925 $ 59,663 $ 61,453 $ 63,296 $ 65,195
Other Misc. Revenue $ 202,800 $ 208,884 $ 215,151 $ 221,605 $ 228,253 $ 235,101 $ 242,154
----------------------------------------------------------------------------------------
Subtotal Other Income $ 287,040 $ 295,651 $ 304,521 $ 313,656 $ 323,066 $ 332,758 $ 342,741
----------------------------------------------------------------------------------------
EFFECTIVE GROSS INCOME $2,197,978 $2,308,650 $2,423,985 $2,496,705 $2,571,606 $2,648,754 $2,728,217
OPERATING EXPENSES:
Taxes $ 210,600 $ 216,918 $ 223,426 $ 230,128 $ 237,032 $ 244,143 $ 251,467
Insurance $ 45,240 $ 46,597 $ 47,995 $ 49,435 $ 50,918 $ 52,446 $ 54,019
Utilities $ 202,800 $ 208,884 $ 215,151 $ 221,605 $ 228,253 $ 235,101 $ 242,154
Repair & Maintenance $ 137,280 $ 141,398 $ 145,640 $ 150,010 $ 154,510 $ 159,145 $ 163,919
Cleaning $ 34,320 $ 35,350 $ 36,410 $ 37,502 $ 38,627 $ 39,786 $ 40,980
Landscaping $ 32,760 $ 33,743 $ 34,755 $ 35,798 $ 36,872 $ 37,978 $ 39,117
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 43,680 $ 44,990 $ 46,340 $ 47,730 $ 49,162 $ 50,637 $ 52,156
General Administrative $ 288,600 $ 297,258 $ 306,176 $ 315,361 $ 324,822 $ 334,566 $ 344,603
Management $ 109,899 $ 115,433 $ 121,199 $ 124,835 $ 128,580 $ 132,438 $ 136,411
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
----------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES $1,105,179 $1,140,571 $1,177,092 $1,212,405 $1,248,777 $1,286,240 $1,324,827
Reserves $ 62,400 $ 64,272 $ 66,200 $ 68,186 $ 70,232 $ 72,339 $ 74,509
----------------------------------------------------------------------------------------
NET OPERATING INCOME $1,030,399 $1,103,807 $1,180,693 $1,216,114 $1,252,597 $1,290,175 $1,328,880
Operating Expense Ratio (% of EGI) 50.3% 49.4% 48.6% 48.6% 48.6% 48.6% 48.6%
Operating Expense Per Unit $ 3,542 $ 3,656 $ 3,773 $ 3,886 $ 4,002 $ 4,123 $ 4,246
YEAR APR-2011 APR-2012 APR-2013 APR-2014
FISCAL YEAR 8 9 10 11
- ----------------------------------------------------------------------------------------
REVENUE
Base Rent $2,670,696 $2,750,817 $2,833,341 $2,918,341
Vacancy $ 160,242 $ 165,049 $ 170,000 $ 175,100
Credit Loss $ 53,414 $ 55,016 $ 56,667 $ 58,367
Concessions $ 0 $ 0 $ 0 $ 0
-------------------------------------------------
Subtotal $ 213,656 $ 220,065 $ 226,667 $ 233,467
Laundry Income $ 36,453 $ 37,547 $ 38,673 $ 39,834
Garage Revenue $ 67,151 $ 69,166 $ 71,241 $ 73,378
Other Misc. Revenue $ 249,418 $ 256,901 $ 264,608 $ 272,546
-------------------------------------------------
Subtotal Other Income $ 353,023 $ 363,614 $ 374,522 $ 385,758
-------------------------------------------------
EFFECTIVE GROSS INCOME $2,810,063 $2,894,365 $2,981,196 $3,070,632
OPERATING EXPENSES:
Taxes $ 259,011 $ 266,782 $ 274,785 $ 283,029
Insurance $ 55,639 $ 57,309 $ 59,028 $ 60,799
Utilities $ 249,418 $ 256,901 $ 264,608 $ 272,546
Repair & Maintenance $ 168,837 $ 173,902 $ 179,119 $ 184,493
Cleaning $ 42,209 $ 43,476 $ 44,780 $ 46,123
Landscaping $ 40,291 $ 41,499 $ 42,744 $ 44,027
Security $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 53,721 $ 55,333 $ 56,992 $ 58,702
General Administrative $ 354,942 $ 365,590 $ 376,558 $ 387,854
Management $ 140,503 $ 144,718 $ 149,060 $ 153,532
Miscellaneous $ 0 $ 0 $ 0 $ 0
-------------------------------------------------
TOTAL OPERATING EXPENSES $1,364,572 $1,405,509 $1,447,674 $1,491,105
Reserves $ 76,744 $ 79,046 $ 81,418 $ 83,860
-------------------------------------------------
NET OPERATING INCOME $1,368,747 $1,409,809 $1,452,104 $1,495,667
Operating Expense Ratio (% of EGI) 48.6% 48.6% 48.6% 48.6%
Operating Expense Per Unit $ 4,374 $ 4,505 $ 4,640 $ 4,779
Estimated Stabilized
NOI $1,112,916 Sales Expense Rate 2.00%
Months to Stabilized 1 Discount Rate 11.50%
Stabilized Occupancy 94.0% Terminal Cap Rate 10.00%
Gross Residual Sale Price $14,956,667 Deferred Maintenance $ 0
Less: Sales Expense $ 299,133 Add: Excess Land $ 0
----------- Other Adjustments $ 0
Net Residual Sale Price $14,657,534 -----------
PV of Reversion $ 4,935,285 Value Indicated By $12,447,178
Add: NPV of NOI $ 7,511,893 "DCF"
Rounded $12,400,000
-----------
PV Total $12,447,178
"DCF" VALUE SENSITIVITY TABLE
DISCOUNT RATE
- ------------------------------------------------------------------------------------------
TOTAL VALUE 11.00% 11.25% 11.50% 11.75% 12.00%
- ------------------------------------------------------------------------------------------
TERMINAL CAP RATE 9.50% $13,126,640 $12,914,486 $12,706,930 $12,503,857 $12,305,154
9.75% $12,987,311 $12,778,256 $12,573,724 $12,373,601 $12,177,776
10.00% $12,854,948 $12,648,838 $12,447,178 $12,249,858 $12,056,768
10.25% $12,729,042 $12,525,733 $12,326,805 $12,132,151 $11,941,662
10.50% $12,609,131 $12,408,489 $12,212,165 $12,020,049 $11,832,038
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME APPROACH PAGE 34
LAKE FOREST, OMAHA, NEBRASKA
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
$114,000 (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 9.25% percent is applicable to the
subject. The results of our direct capitalization analysis are as follows:
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME APPROACH PAGE 35
LAKE FOREST, OMAHA, NEBRASKA
LAKE FOREST
TOTAL PER SQ. FT. PER UNIT %OF EGI
- ---------------------------------------------------------------------------------------------
REVENUE
Base Rent $ 2,171,520 $ 7.23 $ 6,960
Less: Vacancy & Collection Loss 8.00% $ 173,722 $ 0.58 $ 557
Plus: Other Income
Laundry Income $ 29,640 $ 0.10 $ 95 1.30%
Garage Revenue $ 54,600 $ 0.18 $ 175 2.39%
Other Misc. Revenue $ 202,800 $ 0.68 $ 650 8.88%
---------------------------------------------
Subtotal Other Income $ 287,040 $ 0.96 $ 920 12.56%
EFFECTIVE GROSS INCOME $ 2,284,838 $ 7.61 $ 7,323
OPERATING EXPENSES:
Taxes $ 210,600 $ 0.70 $ 675 9.22%
Insurance $ 45,240 $ 0.15 $ 145 1.98%
Utilities $ 202,800 $ 0.68 $ 650 8.88%
Repair & Maintenance $ 137,280 $ 0.46 $ 440 6.01%
Cleaning $ 34,320 $ 0.11 $ 110 1.50%
Landscaping $ 32,760 $ 0.11 $ 105 1.43%
Security $ 0 $ 0.00 $ 0 0.00%
Marketing & Leasing $ 43,680 $ 0.15 $ 140 1.91%
General Administrative $ 288,600 $ 0.96 $ 925 12.63%
Management 5.00% $ 114,242 $ 0.38 $ 366 5.00%
Miscellaneous $ 0 $ 0.00 $ 0 0.00%
TOTAL OPERATING EXPENSES $ 1,109,522 $ 3.69 $ 3,556 48.56%
Reserves $ 62,400 $ 0.21 $ 200 2.73%
---------------------------------------------
NET OPERATING INCOME $ 1,112,916 $ 3.71 $ 3,567 48.71%
"GOING IN" CAPITALIZATION RATE 9.25%
VALUE INDICATION $12,031,530 $40.07 $38,563
PV OF CONCESSIONS ($ 114,000)
"AS IS" VALUE INDICATION
(DIRECT CAPITALIZATION APPROACH) $11,917,530
ROUNDED $11,900,000 $39.63 $38,141
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME APPROACH PAGE 36
LAKE FOREST, OMAHA, NEBRASKA
DIRECT CAPITALIZATION VALUE SENSITIVITY TABLE
CAP RATE VALUE ROUNDED $/UNIT $/SF
- -----------------------------------------------------------
8.50% $12,979,135 $13,000,000 $41,667 $43.29
8.75% $12,605,045 $12,600,000 $40,385 $41.96
9.00% $12,251,739 $12,300,000 $39,423 $40.96
9.25% $11,917,530 $11,900,000 $38,141 $39.63
9.50% $11,600,910 $11,600,000 $37,179 $38.63
9.75% $11,300,528 $11,300,000 $36,218 $37.63
10.00% $11,015,165 $11,000,000 $35,256 $36.63
CONCLUSION BY THE DIRECT CAPITALIZATION METHOD
Applying the capitalization rate to our estimated NOI results in an estimated
value of $11,900,000.
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 $12,400,000
Direct Capitalization Method $11,900,000
Giving consideration to the indicated values provided by both techniques, we
have concluded the estimated value by the income capitalization approach to be
$12,200,000.
AMERICAN APPRAISAL ASSOCIATES, INC. RECONCILIATION AND CONCLUSION PAGE 37
LAKE FOREST, OMAHA, NEBRASKA
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 $12,000,000
Income Approach $12,200,000
Reconciled Value $12,200,000
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 12, 2003 the market value of the fee simple estate in the property is:
$12,200,000
AMERICAN APPRAISAL ASSOCIATES, INC. ADDENDA
LAKE FOREST, OMAHA, NEBRASKA
ADDENDA
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
LAKE FOREST, OMAHA, NEBRASKA
EXHIBIT A
SUBJECT PHOTOGRAPHS
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
LAKE FOREST, OMAHA, NEBRASKA
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
EXTERIOR - SIGNAGE AND VIEW FROM WEST
MAPLE AVENUE EXTERIOR - APARTMENT BUILDING
[PICTURE] [PICTURE]
EXTERIOR - APARTMENTS AND GARAGES EXTERIOR - CLOSEUP OF APARTMENT ENTRANCE
[PICTURE] [PICTURE]
EXTERIOR - OFFICE EXTERIOR - SWIMMING POOL
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
LAKE FOREST, OMAHA, NEBRASKA
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
INTERIOR - OFFICE AND MEETING ROOM SPACE INTERIOR - 1 BEDROOM MODEL UNIT
LIVING ROOM
[PICTURE] [PICTURE]
INTERIOR - 1 BEDROOM MODEL UNIT KITCHEN INTERIOR - 1 BEDROOM MODEL UNIT
BATHROOM
[PICTURE] [PICTURE]
INTERIOR - 2 BEDROOM MODEL UNIT LIVING ROOM INTERIOR - 2 BEDROOM MODEL UNIT
BEDROOM
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
LAKE FOREST, OMAHA, NEBRASKA
EXHIBIT B
SUMMARY OF RENT COMPARABLES
AND PHOTOGRAPH OF COMPARABLES
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
LAKE FOREST, OMAHA, NEBRASKA
PHOTOGRAPHS OF COMPARABLE SALE PROPERTIES
COMPARABLE I-1 COMPARABLE I-2 COMPARABLE I-3
CHALET APARTMENTS & TOWNHOMES ORCHARD PARK APARTMENTS BRENT VILLAGE APARTMENTS
3810 North 108th Street 7805-7809 Harney Street 1402-1510 Buck Drive
Omaha, Nebraska Omaha, Nebraska Bellevue, Nebraska
[PICTURE] [PICTURE] N/A
COMPARABLE I-4 COMPARABLE I-5
FONTENELLE HILLS APARTMENTS 1001 APARTMENTS
200 Martin Drive 1001 North 90th Street
Bellevue, Nebraska Omaha, Nebraska
N/A [PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
LAKE FOREST, OMAHA, NEBRASKA
SUMMARY OF COMPARABLE RENTAL PROPERTIES
COMPARABLE
DESCRIPTION SUBJECT R - 1
- ----------------------------------------------------------------------------------------------------------------------------------
Property Name Lake Forest Maple Manor
Management Company AIMCO The Goodman Group
LOCATION:
Address 11402 Evans Street 3022 1/2 North 97th Street
City, State Omaha, Nebraska Omaha, Nebraska
County Douglas Douglas
Proximity to Subject 1.8 miles east of the subject
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) 300,300 N/A
Year Built 1973 1968
Effective Age 25 35
Building Structure Type Brick & vinyl siding walls; asphalt shingle Brick veneer, wood frame, asphalt shingle roof
roof
Parking Type (Gr., Cov., etc.) Garage and open Garage and open
Number of Units 312 259
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
1 1 Bd/1 Bath (1A10) 850 156 $534 0 1Bd / 1Ba-Studio #1 520 $460
2 2 Bd/1.5 Ba (2A20) 1,075 156 $644 0 1Bd / 1Ba-Studio #2 540 $485
1 1 Bd / 1 Bath 830 $535
2 2 Bd / 2 Bath 1,000 $595
0 3 Bd / 1.5 Bath 1,250 $815
0 3 Bd / 2 Bath 1,250 $850
Average Unit Size (SF) 963
Unit Breakdown: Efficiency 0% 2-Bedroom 50% Efficiency N/A 2-Bedroom N/A
1-Bedroom 50% 3-Bedroom 0% 1-Bedroom N/A 3-Bedroom N/A
CONDITION: Average
APPEAL: Average Average
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony X Ceiling Fans X Balcony X Ceiling Fans
X Fireplace Fireplace
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Detached Garages X Swimming Pool X Detached Garages
X Spa/Jacuzzi Car Wash Spa/Jacuzzi Car Wash
Basketball Court BBQ Equipment Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball X Meeting Hall Sand Volley Ball X Meeting Hall
X 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 Putting Green X Gym Room Putting Green
X Tanning Bed Washer-Dryer Tanning Bed Washer-Dryer
X Playground W/D Hookup X Playground X W/D Hookup
OCCUPANCY: 96% 90%
LEASING DATA:
Available Leasing Terms 6 to 12 Months 6 to 12 Months
Concessions 1/2 month free 1 month free with 12 month lease
Pet Deposit $300 non-refundable fee/pet + $20/m pet rent $250 deposit ($150 refundable) + $15/m pet rnt.
Utilities Paid by Tenant: X Electric Natural Gas X Electric Natural Gas
X Water Trash Water Trash
Confirmation May 12, 2003; Ms. Michelle Jackson (Property May 14, 2003; Ms. Lisa Hamernick (Community
Telephone Number (402) 493-4131 (402) 572-1414
NOTES: All utility bills are paid by the landlord for
the two Studio unit types. Natural gas heat is
paid by the landlord for all unit types.
Application fee is $25 and the security deposit
is $250 for the studio, 1 and 2 bedroom units,
and $300 for the 3 bedroom units. Garages rent
for $35 per month.
COMPARISON TO SUBJECT: Slightly Inferior
COMPARABLE COMPARABLE
DESCRIPTION R - 2 R - 3
- ----------------------------------------------------------------------------------------------------------------------------------
Property Name Laurelwood Apartment Homes & Townhomes Tudor Heights Apartments
Management Company N/A Providence Management Company, LLC
LOCATION:
Address 5439 North 100th Plaza 10505 Evans Plaza
City, State Omaha, Nebraska Omaha, Nebraska
County Douglas Douglas
Proximity to Subject 3.0 miles northeast of the subject 1.3-miles northeast of the subject
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) N/A N/A
Year Built 1969 1970s
Effective Age 34 30+
Building Structure Type Brick veneer, wood frame; asphalt shingle roof Brick & stucco sidings; asphalt shingle roof
Parking Type (Gr., Cov., etc.) Garage & open Garage, open and covered
Number of Units 480 418
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
1 1 Bd / 1 Ba - apt. 850 $490 1 1 Bd / 1Bath 750 $465
2 2 Bd / 2 Ba - apt. 1,000 $575 0 2 Bd / 1 Ba - Type 1 1,000 $565
2 2 Bd / 2 Ba - apt. 1,050 $599 2 2 Bd / 1.5Ba-Type 2 1,050 $610
0 1 Bd / 1 Ba-townhm. 825 $550
0 2 Bd / 2 Ba-townhm. 1,200 $805
Average Unit Size (SF)
Unit Breakdown: Efficiency N/A 2-Bedroom N/A Efficiency N/A 2-Bedroom N/A
1-Bedroom N/A 3-Bedroom N/A 1-Bedroom N/A 3-Bedroom N/A
CONDITION: Average Average
APPEAL: Average Average
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony Ceiling Fans X Balcony Ceiling Fans
X Fireplace Fireplace
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Detached Garages X Swimming Pool X Detached Garages
X Spa/Jacuzzi Car Wash X Spa/Jacuzzi Car Wash
Basketball Court BBQ Equipment Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
X Sand Volley Ball X Meeting Hall X 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 Putting Green Gym Room X Putting Green
Tanning Bed Washer-Dryer Tanning Bed Washer-Dryer
X Playground W/D Hookup Playground W/D Hookup
OCCUPANCY: 94% 96%
LEASING DATA:
Available Leasing Terms 6 to 12 Months 6 to 12 Months
Concessions $200 off 1st months rent on certain apt. $200 off 1st months rent
units
Pet Deposit None, no pets allowed $200 non-refundable deposit/cat + $10/cat rent
Utilities Paid by Tenant: X Electric Natural Gas X Electric Natural Gas
Water Trash Water Trash
Confirmation May 14, 2003; Mr. Eric Henderson (Leasing May 14, 2003; Matt (Leasing Consultant)
Telephone Number (402) 572-1000 (402) 493-3777
NOTES: Property has an indoor pool as part of the Select units have been newly remodeled.
fitness center. Application fee is $20 and Residents qualify for a membership discount at a
security deposits range from $200 to $500 nearby fitness center, no onsite fitness center.
depending upon the unit type. Garages rent Laundry facilities in each building. Security
for $40 per month. The unit rents above deposit is $250, no application fee and garages
reflect units that have had updated rent for $45 per month. Units have electric
appliances. Rental rates are approx. $25 less heat, thus tenants pay heating expense.
for units where the appliances have not been
updated.
COMPARISON TO SUBJECT: Slightly Inferior Similar
COMPARABLE COMPARABLE
DESCRIPTION R - 4 R - 5
- ----------------------------------------------------------------------------------------------------------------------------------
Property Name Hidden Valley Apartments Townhomes Picadilly Square Apartments
Management Company Goldmark Property Management Inc. AMO The Philmoore Company
LOCATION:
Address 3816 North 109th Plaza 114th & West Maple Avenue
City, State Omaha, Nebraska Omaha, Nebraska
County Douglas Douglas
Proximity to Subject 1.2-miles northeast of the subject 1 block south of the subject
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) 221,016 N/A
Year Built 1978 Early 1980s
Effective Age 25 15
Building Structure Type Brick & wood siding walls; asphalt shingle roof Brick & wood siding walls; asphalt shingle roof
Parking Type (Gr., Cov., etc.) Garage, Open, Covered Open surface only
Number of Units 246 N/A
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
0 Apt-1Bd/1Ba - #1 670 36 $450 0 1 Bd / 1Ba - Type 1 650 N/A
0 Apt-1Bd/1Ba - #2 680 8 $480 1 1 Bd / 1Ba - Type 2 750 $525
1 Apt-1Bd/1Ba - #3 780 36 $500 2 2 Bd / 1.5 Ba 1,100 $650
2 Apt-2Bd/1Ba 850 16 $580
0 TH-1Bd/1ba - #1 760 24 $580
0 TH-1Bd/1ba - #2 850 20 $610
0 TH-1Bd/1ba - #3 870 52 $630
0 TH-2Bd/1.5ba - #1 1,030 17 $710
0 TH-2Bd/1.5ba - #2 1,050 8 $730
0 TH-2Bd/1.5ba - #3 1,575 12 $775
0 TH-2Bd/2.5ba - #1 1,085 5 $800
0 TH-2Bd/2.5ba - #2 1,630 12 $750
Average Unit Size (SF) 900
Unit Breakdown: Efficiency 0% 2-Bedroom 28% Efficiency N/A 2-Bedroom N/A
1-Bedroom 72% 3-Bedroom 0% 1-Bedroom N/A 3-Bedroom N/A
CONDITION: Average Average
APPEAL: Average Average
AMENITIES:
Unit Amenities X Attach. Garage X Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony Ceiling Fans X Balcony Ceiling Fans
X Fireplace Fireplace
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Detached Garages Swimming Pool X Detached Garages
Spa/Jacuzzi Car Wash Spa/Jacuzzi Car Wash
Basketball Court BBQ Equipment Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball X Meeting Hall Sand Volley Ball Meeting Hall
Tennis Court Secured Parking Tennis Court Secured Parking
Racquet Ball X Laundry Room Racquet Ball Laundry Room
Jogging Track X Business Office Jogging Track X Business Office
X Gym Room Putting Green Gym Room Putting Green
Tanning Bed Washer-Dryer Tanning Bed X Washer-Dryer
Playground W/D Hookup Playground W/D Hookup
OCCUPANCY: 96% 95%
LEASING DATA:
Available Leasing Terms 6 to 12 Months 6 to 12 Months
Concessions Security deposit is lowered to $99 $350 off 1st month on 12 month lease
Pet Deposit $250/animal +$10/cat rent; $50/dog (TH only) None, no pets allowed
Utilities Paid by Tenant: X Electric Natural Gas X Electric Natural Gas
Water Trash X Water Trash
Confirmation May 14, 2003; Ms. Christine Carlson (Community Subject's leasing summary as property
management
Telephone Number (402) 493-1491 (402) 496-1376
NOTES: Fireplaces are available in 21 of the 670 SF, Units include washer / dryers. Security deposit
1- bedroom units. The two largest 2 bedroom is $250. The property was built in two phases,
town-home units have basement space included in 1968 and 1987, although the external
as part of the living area. The basement areas inspection shows both phases to be fairly
also have washer / dryer hookups. On-site 24 similar in to each other in design and appeal.
hour laundry facility. Certain townhome units Also, the complex offers detached garages but
include attached garage as part of rent. Apt. no rental information is available on them.
garages rent for $40 per month. Tenants pay
heat.
COMPARISON TO SUBJECT: Similar Slightly Superior
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
LAKE FOREST, OMAHA, NEBRASKA
PHOTOGRAPHS OF COMPARABLE RENT PROPERTIES
COMPARABLE R-1 COMPARABLE R-2
MAPLE MANOR LAURELWOOD APARTMENT HOMES & TOWNHOMES
3022 1/2 North 97th Street 5439 North 100th Plaza
Omaha, Nebraska Omaha, Nebraska
[PICTURE] [PICTURE]
COMPARABLE R-3 COMPARABLE R-4
TUDOR HEIGHTS APARTMENTS HIDDEN VALLEY APARTMENTS TOWNHOMES
10505 Evans Plaza 3816 North 109th Plaza
Omaha, Nebraska Omaha, Nebraska
[PICTURE] [PICTURE]
COMPARABLE R-5
PICADILLY SQUARE APARTMENTS
114th & West Maple Avenue
Omaha, Nebraska
[PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
LAKE FOREST, OMAHA, NEBRASKA
EXHIBIT C
ASSUMPTIONS AND LIMITING CONDITIONS
(3 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
LAKE FOREST, OMAHA, NEBRASKA
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
LAKE FOREST, OMAHA, NEBRASKA
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
LAKE FOREST, OMAHA, NEBRASKA
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
LAKE FOREST, OMAHA, NEBRASKA
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 inspect the subject property that is the subject of
this report.
I am currently in compliance with the Appraisal Institutes continuing
education requirements.
/s/ Jeff W. Briggs
-----------------------
Jeff W. Briggs, MAI
Engagement Director, Real Estate Group
Nebraska Certified General Real Estate
Appraiser #CG230072R
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
LAKE FOREST, OMAHA, NEBRASKA
EXHIBIT E
QUALIFICATIONS OF APPRAISER
(2 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
LAKE FOREST, OMAHA, NEBRASKA
JEFF W. BRIGGS, MAI
ENGAGEMENT DIRECTOR, REAL ESTATE GROUP
POSITION Jeff W. Briggs is an engagement director for the Dallas
Real Estate Group of American Appraisal Associates, Inc.
("AAA").
EXPERIENCE
Valuation Mr. Briggs' valuation experience includes all types of
industrial property, Class A office buildings, regional
malls, neighborhood and community shopping centers,
apartments, hotels, and both daily fee and private golf
facilities. He has appraised the vacant land of farms and
ranches, single-family residential subdivisions,
commercial subdivisions, commercial urban properties, and
conservation easements. Special-purpose property
valuations he has performed include a large pork
production facility, cemeteries, nursing homes, and
outpatient surgical clinics. Purchase price allocation
assignments included valuation of the land components of a
professional sports stadium and a pork production
facility. Mr. Briggs has completed assignments in over 30
states throughout the country.
Court Mr. Briggs has testified as an expert witness in federal
bankruptcy court and assisted in condemnation assignments
for the Texas Highway Department.
Business Mr. Briggs joined AAA in 2000. Prior to joining AAA, he
was a manager in the Dallas office of Arthur Andersen LLP
from 1996 to 1999. Previously, Mr. Briggs had served as a
senior appraiser for Wilson K. Mason Company and
Integrated Evaluation, both Dallas real estate appraisal
companies, and had been employed by Harvey Cornwell and
Associates, also a Dallas-based real estate valuation
firm.
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
LAKE FOREST, OMAHA, NEBRASKA
EDUCATION University of North Texas
Bachelor of Business Administration - Real Estate
PROFESSIONAL Appraisal Institute, MAI Designated Member
AFFILIATIONS
STATE CERTIFICATIONS State of Arizona, Certified General Real Estate Appraiser,
#31114
State of Arkansas, State Certified General Appraiser,
#CG1588N
State of Indiana, Certified General Appraiser, #CG40200493
Commonwealth of Kentucky, Certified General Real Property
Appraiser, #002611
State of Michigan, Certified General Appraiser,
#1201068301
State of Minnesota, Certified General Real Property Appraiser,
#AP-20280553
State of Mississippi, State Certified General Real Estate
Appraiser, #GA-625
State of Oregon, State Certified General Appraiser, #C000713
Commonwealth of Pennsylvania, Certified General Appraiser,
#GA001870
State of Texas, State Certified General Real Estate
Appraiser,
#TX-1321403-G
State of Washington, Certified General Real Estate
Appraiser,
#1101000
AMERICAN APPRAISAL ASSOCIATES, INC.
LAKE FOREST, OMAHA, NEBRASKA
GENERAL SERVICE CONDITIONS
AMERICAN APPRAISAL ASSOCIATES, INC.
LAKE FOREST, OMAHA, NEBRASKA
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.