SANDPIPER
10501 3RD STREET
ST. PETERSBURG, FLORIDA
MARKET VALUE -
FEE SIMPLE ESTATE
AS OF MAY 14, 2003
PREPARED FOR:
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(AIMCO)
C/O LINER YANKELEVITZ SUNSHINE & REGENSTREIF LLP
&
LIEFF CABRASER HEIMANN & BERNSTEIN
ON BEHALF OF NUANES, ET. AL.
[AMERICAN APPRAISAL ASSOCIATES(R) LOGO]
[AMERICAN APPRAISAL ASSOCIATES(R) LOGO]
[AMERICAN APPRAISAL ASSOCIATES(R) LETTERHEAD]
July 7, 2003
Apartment Investment and Management
Company ("AIMCO") c/o
Mr. Steven A. Velkei, Esq.
Liner Yankelevitz Sunshine & Regenstreif LLP
1100 Glendon Avenue, 14th Floor
Los Angeles, California 90024-3503
Nuanes, et al.("Plaintiffs ") c/o
Ms. Joy Kruse
Lieff Cabraser Heimann & Bernstein
Embarcadero Center West
275 Battery Street, 30th Floor
San Francisco, California 94111
RE: SANDPIPER
10501 3RD STREET
ST. PETERSBURG, PINELLAS COUNTY, FLORIDA
In accordance with your authorization, we have completed the appraisal of the
above-referenced property. This complete appraisal is intended to report our
analysis and conclusions in a summary format.
The subject property consists of an apartment project having 275 units with a
total of 259,982 square feet of rentable area. The improvements were built in
1977. The improvements are situated on 18.2 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
SANDPIPER, ST. PETERSBURG, FLORIDA
The opinions expressed in this appraisal cover letter can only be completely
understood by reading the narrative report, addenda, and other data, which is
attached. The appraisal is subject to the attached general assumptions and
limiting conditions and general service conditions.
As a result of our investigation, it is our opinion that the fee simple market
value of the subject, effective May 14, 2003 is:
($10,500,000)
Respectfully submitted,
AMERICAN APPRAISAL ASSOCIATES, INC.
-s- Alice MacQueen
July 7, 2003 Alice MacQueen
#053272 Vice President, Real Estate Group
Florida Certified General Real Estate Appraiser
#RZ0002202
Report By:
Alice MacQueen
AMERICAN APPRAISAL ASSOCIATES, INC. TABLE OF CONTENTS PAGE 3
SANDPIPER, ST. PETERSBURG, FLORIDA
TABLE OF CONTENTS
Cover
Letter of Transmittal
Table of Contents
APPRAISAL DATA
Executive Summary........................................................ 4
Introduction............................................................. 9
Area Analysis............................................................ 11
Market Analysis.......................................................... 14
Site Analysis............................................................ 16
Improvement Analysis..................................................... 16
Highest and Best Use..................................................... 17
VALUATION
Valuation Procedure...................................................... 18
Sales Comparison Approach................................................ 20
Income Capitalization Approach........................................... 26
Reconciliation and Conclusion............................................ 38
ADDENDA
Exhibit A - Photographs of Subject Property
Exhibit B - Summary of Rent Comparables and Photograph of Comparables
Exhibit C - Assumptions and Limiting Conditions
Exhibit D - Certificate of Appraiser
Exhibit E - Qualifications
General Service Conditions
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 4
SANDPIPER, ST. PETERSBURG, FLORIDA
EXECUTIVE SUMMARY
PART ONE - PROPERTY DESCRIPTION
PROPERTY NAME: Sandpiper
LOCATION: 10501 3rd Street
St. Petersburg, Florida
INTENDED USE OF ASSIGNMENT: Court Settlement
PURPOSE OF APPRAISAL: "As Is" Market Value of the Fee Simple Estate
INTEREST APPRAISED: Fee simple estate
DATE OF VALUE: May 14, 2003
DATE OF REPORT: July 7, 2003
PHYSICAL DESCRIPTION - SITE & IMPROVEMENTS:
SITE:
Size: 18.2 acres, or 792,792 square feet
Assessor Parcel No.: 183017113420020000
Floodplain: Community Panel No. 125148 0002B (Not
Available)
Flood Zone Not Available, an area inside
the floodplain.
Zoning: RO-P (Residential Office Parkway District)
BUILDING:
No. of Units: 275 Units
Total NRA: 259,982 Square Feet
Average Unit Size: 945 Square Feet
Apartment Density: 15.1 units per acre
Year Built: 1977
UNIT MIX AND MARKET RENT:
GROSS RENTAL INCOME PROJECTION
Market Rent
Square ------------------ Monthly Annual
Unit Type Feet Per Unit Per SF Income Income
- -----------------------------------------------------------------------------
1A10 - 1Br/1Ba 683 $ 530 $ 0.78 $ 14,840 $ 178,080
1B10 - 1Br/IBa 694 $ 530 $ 0.76 $ 21,200 $ 254,400
2A10 - 2Br/1Ba 874 $ 580 $ 0.66 $ 23,200 $ 278,400
2A20 - 2Br/2Ba 962 $ 690 $ 0.72 $ 38,640 $ 463,680
2B20 - 2Br/2Ba 1,006 $ 705 $ 0.70 $ 33,135 $ 397,620
3A20 - 3Br/2Ba 1,160 $ 780 $ 0.67 $ 28,080 $ 336,960
3B20 - 3Br/2Ba 1,258 $ 810 $ 0.64 $ 22,680 $ 272,160
------ -------- ----------
Total $181,775 $2,181,300
======== ===========
OCCUPANCY: 96%
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 5
SANDPIPER, ST. PETERSBURG, FLORIDA
ECONOMIC LIFE: 45 Years
EFFECTIVE AGE: 26 Years
REMAINING ECONOMIC LIFE: 19 Years
SUBJECT PHOTOGRAPHS AND LOCATION MAP:
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
ENTRANCE REAR OF CLUBHOUSE AND POOL
AREA MAP
[MAP]
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 6
SANDPIPER, ST. PETERSBURG, FLORIDA
NEIGHBORHOOD MAP
[MAP]
HIGHEST AND BEST USE:
As Vacant: Hold for future multi-family development
As Improved: Continuation as its current use
METHOD OF VALUATION: In this instance, the Sales Comparison and
Income Approaches to value were utilized.
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 7
SANDPIPER, ST. PETERSBURG, FLORIDA
PART TWO - ECONOMIC INDICATORS
INCOME CAPITALIZATION APPROACH
Amount $/Unit
------ ------
DIRECT CAPITALIZATION
Potential Rental Income $ 2,181,300 $ 7,932
Effective Gross Income $ 2,185,920 $ 7,949
Operating Expenses $ 996,171 $ 3,622 45.6% of EGI
Net Operating Income: $ 1,120,999 $ 4,076
Capitalization Rate 10.00%
DIRECT CAPITALIZATION VALUE $11,200,000 * $40,727 / UNIT
DISCOUNTED CASH FLOW ANALYSIS:
Holding Period 10 years
2002 Economic Vacancy 9%
Stabilized Vacancy & Collection Loss: 10%
Lease-up / Stabilization Period N/A
Terminal Capitalization Rate 11.00%
Discount Rate 13.00%
Selling Costs 2.00%
Growth Rates:
Income 2.50%
Expenses: 3.00%
DISCOUNTED CASH FLOW VALUE $10,500,000 * $38,182 / UNIT
RECONCILED INCOME CAPITALIZATION VALUE $10,500,000 $38,182 / UNIT
SALES COMPARISON APPROACH
PRICE PER UNIT:
Range of Sales $/Unit (Unadjusted) $25,000 to $34,583
Range of Sales $/Unit (Adjusted) $32,813 to $38,042
VALUE INDICATION - PRICE PER UNIT $10,200,000 * $37,091 / UNIT
EGIM ANALYSIS
Range of EGIMs from Improved Sales 4.02 to 5.69
Selected EGIM for Subject 4.50
Subject's Projected EGI $ 2,185,920
EGIM ANALYSIS CONCLUSION $ 9,800,000 * $35,636 / UNIT
NOI PER UNIT ANALYSIS CONCLUSION $10,700,000 * $38,909 / UNIT
RECONCILED SALES COMPARISON VALUE $10,200,000 $37,091 / 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
SANDPIPER, ST. PETERSBURG, FLORIDA
PART THREE - SUMMARY OF VALUE CONCLUSIONS
SALES COMPARISON APPROACH:
Price Per Unit $10,200,000
NOI Per Unit $10,700,000
EGIM Multiplier $ 9,800,000
INDICATED VALUE BY SALES COMPARISON $10,200,000 $37,091 / UNIT
INCOME APPROACH:
Direct Capitalization Method: $11,200,000
Discounted Cash Flow Method: $10,500,000
INDICATED VALUE BY THE INCOME APPROACH $10,500,000 $38,182 / UNIT
RECONCILED OVERALL VALUE CONCLUSION: $10,500,000 $38,182 / UNIT
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 9
SANDPIPER, ST. PETERSBURG, FLORIDA
INTRODUCTION
IDENTIFICATION OF THE SUBJECT
The subject property is located at 10501 3rd Street, St. Petersburg, Pinellas
County, Florida. St. Petersburg identifies it as 183017113420020000.
SCOPE OF THE ASSIGNMENT
The property, neighborhood, and comparables were inspected by Alice MacQueen on
May 14, 2003. Alice MacQueen performed the research, valuation analysis and
wrote the report. Alice MacQueen 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 14, 2003. The
date of the report is July 7, 2003.
PURPOSE AND USE OF APPRAISAL
The purpose of the appraisal is to estimate the market value of the fee simple
interest in the subject property. It is understood that the appraisal is
intended to assist the clients in litigation settlement proceedings. The
appraisal was not based on a requested minimum valuation, a specific valuation,
or the approval of a loan.
PROPERTY RIGHTS APPRAISED
We have appraised the Fee Simple Estate in the subject property (as applied in
the Sales & Income Approaches), subject to the existing short-term leases. A Fee
Simple Estate is defined in The Dictionary of Real Estate Appraisal, 3rd ed.
(Chicago: Appraisal Institute, 1993), as:
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 10
SANDPIPER, ST. PETERSBURG, FLORIDA
"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 Consolidated Capital
Properties 3. To the best of our knowledge, no transfers of ownership or offers
to purchase the subject are known to have occurred during the past three years.
AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 11
SANDPIPER, ST. PETERSBURG, FLORIDA
AREA / NEIGHBORHOOD ANALYSIS
NEIGHBORHOOD ANALYSIS
A neighborhood is a group of complementary land uses. The function of the
neighborhood analysis is to describe the immediate surrounding environs. The
subject is located in the city of St. Petersburg, Florida. Overall, the
neighborhood is characterized as a suburban setting with the predominant land
use being residential. The subject's neighborhood is generally defined by the
following boundaries.
NEIGHBORHOOD BOUNDARIES
East - Tampa Bay
West - 9th Street
South - 38th Avenue
North - I-275/Howard Franklin Bridge
MAJOR EMPLOYERS
Major employers in the subject's area include Hillsborough County School System,
GTE Florida, Tampa International Airport, University of South Florida, City of
Tampa, Publix, Tampa General Hospital, AT&T, Paradyne and Kash n' Karry Food
Stores, Inc. As Florida's wealthiest market, Tampa Bay ranks 1st in effective
buying income and 1st in retail sales. Housing is very affordable and household
incomes are increasing. The cost of living is about 5% below the national
average. Employment throughout the Bay Area is very diverse. 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
SANDPIPER, ST. PETERSBURG, FLORIDA
NEIGHBORHOOD DEMOGRAPHICS
AREA
------------------------------------------
CATEGORY 1-Mi. RADIUS 3-Mi. RADIUS 5-Mi. RADIUS MSA
- ---------------------------------------------------------------------------------------
POPULATION TRENDS
Current Population 12,723 44,809 129,826 2,442,120
5-Year Population 13,591 46,451 132,847 2,591,303
% Change CY-5Y 6.8% 3.7% 2.3% 6.1%
Annual Change CY-5Y 1.4% 0.7% 0.5% 1.2%
HOUSEHOLDS
Current Households 6,968 22,608 58,817 1,029,700
5-Year Projected Households 7,510 23,685 60,374 1,095,882
% Change CY - 5Y 7.8% 4.8% 2.6% 6.4%
Annual Change CY-5Y 1.6% 1.0% 0.5% 1.3%
INCOME TRENDS
Median Household Income $ 38,886 $ 36,482 $ 34,231 $ 35,241
Per Capita Income $ 29,231 $ 26,177 $ 23,015 $ 22,508
Average Household Income $ 54,347 $ 52,520 $ 50,613 $ 53,389
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 62.76% 40.28% 28.67% 24.86%
5-Year Projected % Renting 62.56% 41.19% 29.02% 24.59%
% of Households Owning 23.13% 45.85% 56.74% 60.90%
5-Year Projected % Owning 23.58% 45.30% 56.73% 61.88%
Source: Demographics Now
AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 13
SANDPIPER, ST. PETERSBURG, FLORIDA
SURROUNDING IMPROVEMENTS
The following uses surround the subject property:
North - Vacant land
South - Gandy Boulevard
East - Mobile homes
West - 4th Street with a nursing home, vacant land and apartment community
located across the street
CONCLUSIONS
The subject is well located within the city of St. Petersburg. 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
SANDPIPER, ST. PETERSBURG, FLORIDA
MARKET ANALYSIS
The subject property is located in the city of St. Petersburg in Pinellas
County. The overall pace of development in the subject's market is more or less
stable. There are currently 427 new units in three separate communities under
construction the subject's Peninsula-South submarket. Of these, 76 units remain
to be completed in the subject's immediate neighborhood. According to
information supplied by on-site management, the new units added to the
neighborhood in recent years have had little, if any, impact on rentals at the
subject property due to the much higher asking rents at the newer properties.
The following table illustrates historical vacancy rates for the subject's
market.
HISTORICAL VACANCY RATE
Period Region Submarket
- --------------------------------------------------------
3Q00 5.7% 3.9%
1Q01 6.4% 4.4%
3Q01 7.7% 6.4%
1Q02 9.1% 6.2%
3Q02 9.2% 8.7%
Source: Apartment Index Report, December 2002, by Carolinas Real Data
Occupancy trends in the subject's market are decreasing. Historically speaking,
the subject's submarket has outperformed the overall market. The downward trend
in occupancy rates in the subject's submarket is considered the result of the
number of new units added over the period. This trend can be expected to
continue over the near term as additional new units are added. Based on a review
of the subject's occupancy levels during this period, it outperformed the market
and thus supports the comments of on-site management that the subject is less
affected by new development due to the large disparity in asking rents. Rather,
the most significant impact on occupancy rates is attributed to low interest
rates and the increasing trend toward homeownership.
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.
AMERICAN APPRAISAL ASSOCIATES, INC. MARKET ANALYSIS PAGE 15
SANDPIPER, ST. PETERSBURG, FLORIDA
HISTORICAL AVERAGE RENT
Period Region % Change Submarket % Change
- ---------------------------------------------------------------------------
3Q00 $ 675 - $ 650 -
1Q01 $ 689 2.1% $ 669 2.9%
3Q01 $ 703 2.0% $ 678 1.3%
1Q02 $ 725 3.1% $ 688 1.5%
3Q02 $ 726 0.1% $ 691 0.4%
Source: Apartment Index Report, December 2002, by Carolinas Real Data
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 Sunrunner 2,000 98% 1981 0.5-mile north of subject
R-2 Lincoln Shores 631 90% 1984 Across the street
R-3 Camden Lakes 688 92% 1983 Adjacent
R-4 Lakeside Village 304 94% 1972 Across the street
R-5 Crosswinds 208 95% 1987 Less than one mile
Subject Sandpiper 275 96% 1977
Average rent in the subject's submarket stands at $691 with rents increasing
only $2.09 for existing units between May and November 2002. This is down
considerably from the increases seen during previous quarters of $7.06 (1st/02),
$8.72 (3rd/01), and $16.39 (1st/01). There has been a recent surge of new
construction of units throughout the Tampa Bay area. This, coupled with low
interest rates and an increased desire in homeownership, has resulted in slower
absorption, higher vacancies, and minimal rent increases. This trend will likely
continue until such time as supply and demand equalizes and the market
stabilizes.
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 16
SANDPIPER, ST. PETERSBURG, FLORIDA
PROPERTY DESCRIPTION
SITE ANALYSIS
Site Area 18.2 acres, or 792,792 square feet
Shape Generally rectangular
Topography Level
Utilities All necessary utilities are available to the site.
Soil Conditions Stable
Easements Affecting Site None other than typical utility easements
Overall Site Appeal Good
Flood Zone:
Community Panel 125148 0002B, dated Not Available
Flood Zone Zone Not Available
Zoning RO-P, the subject improvements represent a legal
conforming use of the site.
REAL ESTATE TAXES
ASSESSED VALUE - 2002
----------------------------------------- TAX RATE / PROPERTY
PARCEL NUMBER LAND BUILDING TOTAL MILL RATE TAXES
- -------------------------------------------------------------------------------------------------
183017113420020000 $2,208,000 $7,292,000 $9,500,000 0.02468 $234,442
IMPROVEMENT ANALYSIS
Year Built 1977
Number of Units 275
Net Rentable Area 259,982 Square Feet
Construction:
Foundation Reinforced concrete slab
Frame Heavy or light wood
Exterior Walls Wood or vinyl siding
Roof Composition shingle over a wood truss structure
Project Amenities Amenities at the subject include a swimming pool,
spa/jacuzzi, basketball court, volleyball court,
sand volleyball, tennis court, racquetball court,
gym room, car wash, laundry room, freshwater lake,
and parking area.
Unit Amenities Individual unit amenities include a balcony, and
washer dryer connection. Appliances available in
each unit include a refrigerator, stove,
dishwasher, water heater, garbage disposal, and
oven.
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 17
SANDPIPER, ST. PETERSBURG, FLORIDA
Unit Mix:
Unit Area
Unit Type Number of Units (Sq. Ft.)
- ------------------------------------------------------------------
1A10 - 1Br/1Ba 28 683
1B10 - 1Br/1Ba 40 694
2A10 - 2Br/1Ba 40 874
2A20 - 2Br/2Ba 56 962
2B20 - 2Br/2Ba 47 1,006
3A20 - 3Br/2Ba 36 1,160
3B20 - 3Br/2Ba 28 1,258
Overall Condition Average
Effective Age 26 years
Economic Life 45 years
Remaining Economic Life 19 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
1977 and consist of a 275-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
SANDPIPER, ST. PETERSBURG, FLORIDA
THE VALUATION PROCEDURE
There are three traditional approaches, which can be employed in establishing
the market value of the subject property. These approaches and their
applicability to the valuation of the subject are summarized as follows:
THE COST APPROACH
The application of the Cost Approach is based on the principle of substitution.
This principle may be stated as follows: no one is justified in paying more for
a property than that amount by which he or she can obtain, by purchase of a site
and construction of a building, without undue delay, a property of equal
desirability and utility. In the case of a new building, no deficiencies in the
building should exist.
In the case of income-producing real estate, the cost of construction plays a
minor and relatively insignificant role in determining market value. The Cost
Approach is typically only a reliable indicator of value for: (a) new
properties; (b) special use properties; and (c) where the cost of reproducing
the improvements is easily and accurately quantified and there is no economic
obsolescence. In all instances, the issue of an appropriate entrepreneurial
profit - the reward for undertaking the risk of construction, remains a highly
subjective factor especially in a market lacking significant speculative
development.
THE SALES COMPARISON APPROACH
The Sales Comparison Approach is an estimate of value based upon a process of
comparing recent sales of similar properties in the surrounding or competing
areas to the subject property. Inherent in this approach is the principle of
substitution.
The application of this approach consists of comparing the subject property with
similar properties of the same general type, which have been sold recently or
currently are available for sale in competing areas. This comparative process
involves judgment as to the similarity of the subject property and the
comparable sale with respect to many value factors such as location, contract
rent levels, quality of construction, reputation and prestige, age and
condition, among others. The estimated value through this approach represents
the probable price at which a willing seller would sell the subject property to
a willing and knowledgeable buyer as of the date of value.
AMERICAN APPRAISAL ASSOCIATES, INC. VALUATION PROCEDURE PAGE 19
SANDPIPER, ST. PETERSBURG, FLORIDA
THE INCOME CAPITALIZATION APPROACH
The theory of the Income Capitalization Approach is based on the premise that
present value is the value of the cash flow and reversionary value the property
will produce over a reasonable holding (ownership) period.
The Discounted Cash Flow Analysis will convert equity cash flows (including cash
flows and equity reversion) into a present value utilizing an internal rate of
return (or discount rate). The Internal Rate of Return (IRR) will be derived
from a comparison of alternate investments, a comparative analysis of IRR's used
by recent buyers of similar properties, and a review of published industry
surveys.
The Direct Capitalization Analysis converts one year of income into an overall
value using overall capitalization rates from similar sales. The overall rates
take into consideration buyers assumptions of the market over the long-term.
The results of the Income Capitalization Analysis are usually the primary value
indicator for income producing properties. Investors expect a reasonable rate of
return on their equity investment based on the ownership risks involved; this
approach closely parallels the investment decision process.
RECONCILIATION
In this instance, we have completed the Sales Comparison and Income
Capitalization Approaches to value. As an income producing property, the income
approach is a primary approach to value. The Sales Comparison Approach is also
considered reliable as investors are buying similar buildings in the market.
Our research indicates that market participants are generally not buying,
selling, investing, or lending with reliance placed on the methodology of the
Cost Approach to establish the value. Therefore, we have decided that the Cost
Approach is not a reliable indicator of value for the subject, and this approach
has not been utilized.
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 20
SANDPIPER, ST. PETERSBURG, FLORIDA
SALES COMPARISON APPROACH
Use of market or comparable sales requires the collection and analysis of
comparable sales data. Similar properties recently sold are compared to the
subject and adjusted based on any perceived differences. This method is based on
the premise that the costs of acquiring a substitute property would tend to
establish a value for the subject property. The premise suggests that if a
substitute is unavailable in the market, the reliability of the approach may be
subordinate to the other approaches.
The reliance on substitute properties produces shortcomings in the validity of
this approach. Geographic and demographic characteristics from each submarket
restrict which sales may be selected. Recent sales with a similar physical
characteristics, income levels, and location are usually limited. The sales we
have identified, however, do establish general valuation parameters as well as
provide support to our conclusion derived through the income approach method.
The standard unit of comparison among similar properties is the sales price per
unit and price per square foot of net rentable area. To accurately adjust prices
to satisfy the requirements of the sales comparison approach, numerous
calculations and highly subjective judgments would be required including
consideration of numerous income and expense details for which information may
be unreliable or unknown. The sales price per unit and square foot are
considered relevant to the investment decision, but primarily as a parameter
against which value estimates derived through the income approach can be judged
and compared.
In examining the comparable sales, we have applied a subjective adjustment
analysis, which includes specific adjustments derived from our experience and
consulting with the market participants.
SALES COMPARISON ANALYSIS
Detailed on the following pages are sales transactions involving properties
located in the subject's competitive investment market.
Photographs of the sale transactions are located in the Addenda. Following the
summary of sales is an adjustment grid that is used to arrive at a value.
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 21
SANDPIPER, ST. PETERSBURG, FLORIDA
SUMMARY OF COMPARABLE SALES -IMPROVED
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
- ------------------------------------------------------------------------------------------------------------------------
Property Name Sandpiper Country Crossing Ashley Square
LOCATION:
Address 10501 3rd Street 7903 Holly Lea Court 5606 Josephine Court
City, State St. Petersburg, Florida Tampa, FL Tampa, FL
County Pinellas Hillsborough Hillsborough
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 259,982 204,335 198,528
Year Built 1977 1974 1970
Number of Units 275 232 188
Unit Mix: Type Total Type Total Type Total
1A10 - 1Br/1Ba 28 1Br/1BA 128 1Br/1BA 77
1B10 - 1Br/1Ba 40 2Br/2BA 74 2Br/2BA 88
2A10 - 2Br/1Ba 40 3Br/2BA 30 3Br/2BA 23
2A20 - 2Br/2Ba 56
2B20 - 2Br/2Ba 47
3A20 - 3Br/2Ba 36
3B20 - 3Br/2Ba 28
Average Unit Size (SF) 945 881 1,056
Land Area (Acre) 18.2000 11.8800 9.4100
Density (Units/Acre) 15.1 19.5 20.0
Parking Ratio (Spaces/Unit) 1.09 Adequate Adequate
Parking Type (Gr., Cov., etc.) Garage, Open Covered Open Open
CONDITION: Good Fair Average
APPEAL: Good Fair Average
AMENITIES:
Pool/Spa Yes/Yes Yes/No Yes/No
Gym Room Yes Yes Yes
Laundry Room Yes Yes Yes
Secured Parking No No No
Sport Courts No No No
Washer/Dryer Connection Yes No No
OCCUPANCY: 96% 90% 80%
TRANSACTION DATA:
Sale Date July, 2002 February, 2002
Sale Price ($) $5,800,000 $5,600,000
Grantor TCI Country Crossing, Inc. Davna Investments, Ltd
Grantee Centurion Partners II, LLC Ashley Square Realty Corp
Sale Documentation Doc# 11829-0478 Doc# 11405-0982
Verification CoStar Realty CoStar Realty
Telephone Number
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF
Potential Gross Income $1,604,832 $6,917 $7.85 $1,558,560 $8,290 $7.85
Vacancy/Credit Loss $ 160,483 $ 692 $0.79 $ 311,712 $1,658 $1.57
Effective Gross Income $1,444,349 $6,226 $7.07 $1,246,848 $6,632 $6.28
Operating Expenses $ 893,200 $3,850 $4.37 $ 718,724 $3,823 $3.62
Net Operating Income $ 551,149 $2,376 $2.70 $ 528,124 $2,809 $2.66
NOTES: Similar neighborhood. Located off Dale Mabry,
Overall fair to avg condition very near subject. Small
but overall inferior to the community w/limited land-
subject scaping/curb appeal
PRICE PER UNIT $25,000 $29,787
PRICE PER SQUARE FOOT $28.38 $28.21
EXPENSE RATIO 61.8% 57.6%
EGIM 4.02 4.49
OVERALL CAP RATE 9.50% 9.43%
Cap Rate based on Pro Forma or Actual Income? ACTUAL ACTUAL
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
- --------------------------------------------------------------------------------------------------------------------
Property Name Falls of Tampa Bay Horizon Park Swan Lake
LOCATION:
Address 4610 North Armenia Avenue 4900 N MacDill Avenue 3401 N. Lakeview Drive
City, State Tampa, FL Tampa, FL Tampa, FL
County Hillsborough Hillsborough Hillsborough
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 165,600 96,200 165,000
Year Built 1984 1976 1982
Number of Units 240 128 244
Unit Mix: Type Total Type Total Type Total
1Br/1BA 132 1Br/1BA 84 1Br/1BA
2Br/2BA 108 2Br/2BA 44 2Br/2BA
3Br/2BA 3Br/2BA
Average Unit Size (SF) 690 752 676
Land Area (Acre) 5.0290 5.1300 14.0000
Density (Units/Acre) 47.7 25.0 17.4
Parking Ratio (Spaces/Unit) Adequate Adequate Adequate
Parking Type (Gr., Cov., etc.) Open Open Open
CONDITION: Average Average Average
APPEAL: Average Average Average
AMENITIES:
Pool/Spa Yes/No Yes/No Yes/No
Gym Room Yes Yes Yes
Laundry Room Yes Yes Yes
Secured Parking No No No
Sport Courts No No No
Washer/Dryer Connection No No No
OCCUPANCY: 95% 93% Unknown
TRANSACTION DATA:
Sale Date December, 2001 June, 2000 December, 2000
Sale Price ($) $8,300,000 $3,550,000 $6,360,000
Grantor ERP Operating, LP Merecorp, Inc UNUM Life Insurance
Company
Grantee ADHI mantrha, LLC Horizon Pointe Realty Corp Swan Lake Investors, LLC
Sale Documentation Doc# 11261-1133 Doc#10245-1621 Doc#10534-0403
Verification CoStar Realty CoStar Realty CoStar Realty/AAA
Telephone Number
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF Total $ $/Unit $/SF
Potential Gross Income $1,781,856 $7,424 $10.76 $670,560 $5,239 $6.97 $0 $0 $0.00
Vacancy/Credit Loss $ 89,093 $ 371 $ 0.54 $ 46,939 $ 367 $0.49 $0 $0 $0.00
Effective Gross Income $1,692,763 $7,053 $10.22 $623,621 $4,872 $6.48 $0 $0 $0.00
Operating Expenses $ 840,000 $3,500 $ 5.07 $280,000 $2,188 $2.91 $0 $0 $0.00
Net Operating Income $ 852,763 $3,553 $ 5.15 $343,621 $2,685 $3.57 $0 $0 $0.00
NOTES: Good location/curb appeal. Similar neighborhood. Good location. Well-kept
Higher density development Property is being totally property in superior
with some covered parking. renovated. Now a gated condition
Fair condition community
PRICE PER UNIT $34,583 $27,734 $26,066
PRICE PER SQUARE FOOT $50.12 $36.90 $38.55
EXPENSE RATIO 49.6% 44.9% N/A
EGIM 4.90 5.69 N/A
OVERALL CAP RATE 10.27% 9.68% N/A
Cap Rate based on Pro Forma
or Actual Income? PRO FORMA ACTUAL
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 22
SANDPIPER, ST. PETERSBURG, FLORIDA
IMPROVED SALES MAP
[MAP]
IMPROVED SALES ANALYSIS
The improved sales indicate a sales price range from $25,000 to $34,583 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 $32,813 to $38,042 per unit with a mean or average adjusted price
of $35,289 per unit. The median adjusted price is $35,084 per unit. Based on the
following analysis, we have concluded to a value of $37,000 per unit, which
results in an "as is" value of $10,200,000 (rounded after necessary adjustment,
if any).
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 23
SANDPIPER, ST. PETERSBURG, FLORIDA
SALES ADJUSTMENT GRID
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
- ---------------------------------------------------------------------------------------------------------------
Property Name Sandpiper Country Crossing Ashley Square
Address 10501 3rd Street 7903 Holly Lea Court 5606 Josephine Court
City St. Petersburg, Florida Tampa, FL Tampa, FL
Sale Date July, 2002 February, 2002
Sale Price ($) $5,800,000 $5,600,000
Net Rentable Area (SF) 259,982 204,335 198,528
Number of Units 275 232 188
Price Per Unit $25,000 $29,787
Year Built 1977 1974 1970
Land Area (Acre) 18.2000 11.8800 9.4100
VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 07-2002 5% 02-2002 5%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $26,250 $31,277
Location Inferior 10% Inferior 10%
Number of Units 275 232 0% 188 0%
Quality / Appeal Average Comparable 0% Comparable 0%
Age / Condition 1977 1974 / Fair 5% 1970 / Average 5%
Occupancy at Sale 96% 90% 5% 80% 10%
Amenities Good Comparable 0% Comparable 0%
Average Unit Size (SF) 945 881 5% 1,056 -5%
PHYSICAL ADJUSTMENT 25% 20%
FINAL ADJUSTED VALUE ($/UNIT) $32,813 $37,532
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
- ----------------------------------------------------------------------------------------------------------------
Property Name Falls of Tampa Bay Horizon Park Swan Lake
Address 4610 North Armenia Avenue 4900 N MacDill Avenue 3401 N. Lakeview Drive
City Tampa, FL Tampa, FL Tampa, FL
Sale Date December, 2001 June, 2000 December, 2000
Sale Price ($) $8,300,000 $3,550,000 $6,360,000
Net Rentable Area (SF) 165,600 96,200 165,000
Number of Units 240 128 244
Price Per Unit $34,583 $27,734 $26,066
Year Built 1984 1976 1982
Land Area (Acre) 5.0290 5.1300 14.0000
VALUE ADJUSTMENTS DESCRIPTION ADJ. DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate 0% Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 12-2001 10% 06-2000 10% 12-2000 10%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $38,042 $30,508 $28,672
Location Inferior 10% Inferior 10% Inferior 10%
Number of Units 240 0% 128 0% 244 0%
Quality / Appeal Comparable 0% Comparable 0% Comparable 0%
Age / Condition 1984 / Average -20% 1976 / Average 0% 1982 / Average -5%
Occupancy at Sale 95% 0% 93% 0% Unknown 0%
Amenities Comparable 0% Comparable 0% Comparable 0%
Average Unit Size (SF) 690 10% 752 5% 676 10%
PHYSICAL ADJUSTMENT 0% 15% 15%
FINAL ADJUSTED VALUE ($/UNIT) $38,042 $35,084 $32,973
SUMMARY
VALUE RANGE (PER UNIT) $32,813 TO $ 38,042
MEAN (PER UNIT) $35,289
MEDIAN (PER UNIT) $35,084
VALUE CONCLUSION (PER UNIT) $37,000
VALUE INDICATED BY SALES COMPARISON APPROACH $10,175,000
ROUNDED $10,200,000
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
SANDPIPER, ST. PETERSBURG, FLORIDA
NOI PER UNIT COMPARISON
SALE PRICE NOI/ SUBJECT NOI
COMPARABLE NO. OF ---------- -------- -------------- ADJUSTMENT INDICATED
NO. UNITS PRICE/UNIT OAR NOI/UNIT SUBJ. NOI/UNIT FACTOR VALUE/UNIT
- ---------------------------------------------------------------------------------------------------------------------------
I-1 232 $5,800,000 9.50% $551,149 $1,120,999 1.716 $42,897
$ 25,000 $ 2,376 $ 4,076
I-2 188 $5,600,000 9.43% $528,124 $1,120,999 1.451 $43,224
$ 29,787 $ 2,809 $ 4,076
I-3 240 $8,300,000 10.27% $852,763 $1,120,999 1.147 $39,675
$ 34,583 $ 3,553 $ 4,076
I-4 128 $3,550,000 9.68% $343,621 $1,120,999 1.518 $42,113
$ 27,734 $ 2,685 $ 4,076
I-5 244 $6,360,000 0.00% $1,120,999
$ 26,066 $ 4,076
PRICE/UNIT
Low High Average Median
$39,675 $43,224 $41,978 $42,505
VALUE ANALYSIS BASED ON COMPARABLES NOI PER UNIT
Estimated Price Per Unit $ 39,000
Number of Units 275
-----------
Value Based on NOI Analysis $10,725,000
Rounded $10,700,000
The adjusted sales indicate a range of value between $39,675 and $43,224 per
unit, with an average of $41,978 per unit. Based on the subject's competitive
position within the improved sales, a value of $39,000 per unit is estimated.
This indicates an "as is" market value of $10,700,000 (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
SANDPIPER, ST. PETERSBURG, FLORIDA
EFFECTIVE GROSS INCOME MULTIPLIER COMPARISON
SALE PRICE
COMPARABLE NO. OF ---------- EFFECTIVE OPERATING SUBJECT
NO. UNITS PRICE/UNIT GROSS INCOME EXPENSE OER PROJECTED OER EGIM
- ----------------------------------------------------------------------------------------------------------------------------
I-1 232 $5,800,000 $ 1,444,349 $893,200 61.84% 4.02
$ 25,000
I-2 188 $5,600,000 $ 1,246,848 $718,724 57.64% 4.49
$ 29,787
I-3 240 $8,300,000 $ 1,692,763 $840,000 49.62% 4.90
$ 34,583 45.57%
I-4 128 $3,550,000 $ 623,621 $280,000 44.90% 5.69
$ 27,734
I-5 244 $6,360,000
$ 26,066
EGIM
Low High Average Median
4.02 5.69 4.78 4.70
VALUE ANALYSIS BASED ON EGIM'S OF COMPARABLE SALES
Estimate EGIM 4.50
Subject EGI $2,185,920
----------
Value Based on EGIM Analysis $9,836,640
Rounded $9,800,000
Value Per Unit $ 35,636
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 45.57% before reserves. The comparable sales
indicate a range of expense ratios from 44.90% to 61.84%, while their EGIMs
range from 4.02 to 5.69. Overall, we conclude to an EGIM of 4.50, which results
in an "as is" value estimate in the EGIM Analysis of $9,800,000.
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 $10,200,000.
Price Per Unit $10,200,000
NOI Per Unit $10,700,000
EGIM Analysis $ 9,800,000
Sales Comparison Conclusion $10,200,000
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 26
SANDPIPER, ST. PETERSBURG, FLORIDA
INCOME CAPITALIZATION APPROACH
The income capitalization approach is based on the premise that value is created
by the expectation of future benefits. We estimated the present value of those
benefits to derive an indication of the amount that a prudent, informed
purchaser-investor would pay for the right to receive them as of the date of
value.
This approach requires an estimate of the NOI of a property. The estimated NOI
is then converted to a value indication by use of either the direct
capitalization or the discounted cash flow analysis (yield capitalization).
Direct capitalization uses a single year's stabilized NOI as a basis for a value
indication by dividing the income by a capitalization rate. The rate chosen
accounts for a recapture of the investment by the investor and should reflect
all factors that influence the value of the property, such as tenant quality,
property condition, neighborhood change, market trends, interest rates, and
inflation. The rate may be extracted from local market transactions or, when
transaction evidence is lacking, obtained from trade sources.
A discounted cash flow analysis focuses on the operating cash flows expected
from the property and the proceeds of a hypothetical sale at the end of a
holding period (the reversion). The cash flows and reversion are discounted to
their present values using a market-derived discount rate and are added together
to obtain a value indication. Because benefits to be received in the future are
worth less than the same benefits received in the present, this method weights
income in the early years more heavily than the income and the sale proceeds to
be received later. The strength of the discounted cash flow method is its
ability to recognize variations in projected net income, such as those caused by
inflation, stepped leases, neighborhood change, or tenant turnover. Its weakness
is that it requires many judgments regarding the actions of likely buyers and
sellers of the property in the future.
In some situations, both methods yield a similar result. The discounted cash
flow method is typically more appropriate for the analysis of investment
properties with multiple or long-term leases, particularly leases with
cancellation clauses or renewal options. It is especially useful for
multi-tenant properties in volatile markets. The direct capitalization
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 27
SANDPIPER, ST. PETERSBURG, FLORIDA
method is normally more appropriate for properties with relatively stable
operating histories and expectations.
A pro forma analysis for the first year of the investment is made to estimate a
reasonable potential net operating income for the Subject Property. Such an
analysis entails an estimate of the gross income the property should command in
the marketplace. From this total gross income must be deducted an allowance for
vacancy/collection loss and operating expenses as dictated by general market
conditions and the overall character of the subject's tenancy and leased income
to arrive at a projected estimate of net operating income. Conversion of the net
operating income to an indication of value is accomplished by the process of
capitalization, as derived primarily from market data.
MARKET RENT ANALYSIS
In order to determine a market rental rate for the subject, a survey of
competing apartment communities was performed. This survey was displayed
previously in the market analysis section of the report. Detailed information
pertaining to each of the comparable rental communities, along with photographs,
is presented in the Addenda of this report.
The following charts display the subject's current asking and actual rent rates
as well as a comparison with the previous referenced comparable rental
properties.
SUMMARY OF ACTUAL AVERAGE RENTS
Average
Unit Area --------------------
Unit Type (Sq. Ft.) Per Unit Per SF % Occupied
- --------------------------------------------------------------------------------
1A10 - 1Br/1Ba 683 $530 $0.78 100.0%
1B10 - 1Br/1Ba 694 $487 $0.70 95.0%
2A10 - 2Br/1Ba 874 $579 $0.66 95.0%
2A20 - 2Br/2Ba 962 $696 $0.72 98.2%
2B20 - 2Br/2Ba 1006 $666 $0.66 93.8%
3A20 - 3Br/2Ba 1160 $760 $0.66 94.4%
3B20 - 3Br/2Ba 1258 $710 $0.56 92.9%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 28
SANDPIPER, ST. PETERSBURG, FLORIDA
RENT ANALYSIS
COMPARABLE RENTS
-------------------------------------------------
R-1 R-2 R-3 R-4 R-5
-------------------------------------------------
Lincoln Camden Lakeside
Sunrunner Shores Lakes Village Crosswinds
-------------------------------------------------
COMPARISON TO SUBJECT
SUBJECT SUBJECT -------------------------------------------------
SUBJECT UNIT ACTUAL ASKING Slightly Slightly Slightly
DESCRIPTION TYPE RENT RENT Superior Superior Superior Inferior Superior MIN MAX MEDIAN AVERAGE
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Rent 1A10 - 1Br/1Ba $ 530 $ 560 $ 532 $ 585 $ 600 $ 525 $ 620 $ 525 $ 620 $ 585 $ 572
Unit Area (SF) 683 683 600 550 600 618 600 550 618 600 594
Monthly Rent Per Sq. Ft. $ 0.78 $ 0.82 $ 0.89 $ 1.06 $ 1.00 $ 0.85 $ 1.03 $0.85 $ 1.06 $ 1.00 $ 0.97
Monthly Rent 1B10 - 1Br/1Ba $ 487 $ 549 $ 543 $ 608 $ 618 $ 525 $ 629 $ 525 $ 629 $ 608 $ 585
Unit Area (SF) 694 694 615 650 615 618 615 615 650 615 623
Monthly Rent Per Sq. Ft. $ 0.70 $ 0.79 $ 0.88 $ 0.94 $ 1.00 $ 0.85 $ 1.02 $0.85 $ 1.02 $ 0.94 $ 0.94
Monthly Rent 2A10 - 2Br/1Ba $ 579 $ 659 $ 613 $ 608 $ 665 $ 525 $ 682 $ 525 $ 682 $ 613 $ 619
Unit Area (SF) 874 874 703 650 726 618 726 618 726 703 685
Monthly Rent Per Sq. Ft. $ 0.66 $ 0.75 $ 0.87 $ 0.94 $ 0.92 $ 0.85 $ 0.94 $0.85 $ 0.94 $ 0.92 $ 0.90
Monthly Rent 2A20 - 2Br/2Ba $ 696 $ 772 $ 651 $ 880 $ 730 $ 625 $ 775 $ 625 $ 880 $ 730 $ 732
Unit Area (SF) 962 962 810 1,000 810 790 810 790 1,000 810 844
Monthly Rent Per Sq. Ft. $ 0.72 $ 0.80 $ 0.80 $ 0.88 $ 0.90 $ 0.79 $ 0.96 $0.79 $ 0.96 $ 0.88 $ 0.87
Monthly Rent 2B20 - 2Br/2Ba $ 666 $ 759 $ 731 $ 775 $ 833 $ 645 $ 840 $ 645 $ 840 $ 775 $ 765
Unit Area (SF) 1,006 1,006 860 920 885 855 903 855 920 885 885
Monthly Rent Per Sq. Ft. $ 0.66 $ 0.75 $ 0.85 $ 0.84 $ 0.94 $ 0.75 $ 0.93 $0.75 $ 0.94 $ 0.85 $ 0.86
Monthly Rent 3A20 - 3Br/2Ba $ 760 $ 829 $ 702 $ 880 $ 770 $ 865 $ 840 $ 702 $ 880 $ 840 $ 811
Unit Area (SF) 1,160 1,160 903 1,000 903 1,188 903 903 1,188 903 979
Monthly Rent Per Sq. Ft. $ 0.66 $ 0.71 $ 0.78 $ 0.88 $ 0.85 $ 0.73 $ 0.93 $0.73 $ 0.93 $ 0.85 $ 0.83
Monthly Rent 3B20 - 3Br/2Ba $ 710 $ 859 $ 880 $ 770 $ 865 $ 840 $ 770 $ 880 $ 853 $ 839
Unit Area (SF) 1,258 1,258 1,000 903 1,188 903 903 1,188 952 999
Monthly Rent Per Sq. Ft. $ 0.56 $ 0.68 $ 0.88 $ 0.85 $ 0.73 $ 0.93 $0.73 $ 0.93 $ 0.87 $ 0.85
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
- -----------------------------------------------------------------------------------------------------------
1A10 - 1Br/1Ba 28 683 $530 $ 0.78 $ 14,840 $ 178,080
1B10 - 1Br/1Ba 40 694 $530 $ 0.76 $ 21,200 $ 254,400
2A10 - 2Br/1Ba 40 874 $580 $ 0.66 $ 23,200 $ 278,400
2A20 - 2Br/2Ba 56 962 $690 $ 0.72 $ 38,640 $ 463,680
2B20 - 2Br/2Ba 47 1,006 $705 $ 0.70 $ 33,135 $ 397,620
3A20 - 3Br/2Ba 36 1,160 $780 $ 0.67 $ 28,080 $ 336,960
3B20 - 3Br/2Ba 28 1,258 $810 $ 0.64 $ 22,680 $ 272,160
-----------------------
Total $181,775 $2,181,300
=======================
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 29
SANDPIPER, ST. PETERSBURG, FLORIDA
PRO FORMA ANALYSIS
For purposes of this appraisal, we were provided with income and expense data
for the subject property. A summary of this data is presented on the following
page.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 30
SANDPIPER, ST. PETERSBURG, FLORIDA
SUMMARY OF HISTORICAL INCOME & EXPENSES
FISCAL YEAR 2000 FISCAL YEAR 2001 FISCAL YEAR 2002 FISCAL YEAR 2003
---------------------- ---------------------- ---------------------- ----------------------
ACTUAL ACTUAL ACTUAL MANAGEMENT BUDGET
---------------------- ---------------------- ---------------------- ----------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT
- -----------------------------------------------------------------------------------------------------------------------------------
Revenues
Rental Income $2,154,635 $ 7,835 $2,260,319 $ 8,219 $2,227,972 $ 8,102 $2,278,000 $ 8,284
Vacancy $ 76,864 $ 280 $ 88,622 $ 322 $ 146,854 $ 534 $ 74,687 $ 272
Credit Loss/Concessions $ 45,485 $ 165 $ 48,529 $ 176 $ 52,216 $ 190 $ 79,600 $ 289
-------------------------------------------------------------------------------------------------------
Subtotal $ 122,349 $ 445 $ 137,151 $ 499 $ 199,070 $ 724 $ 154,287 $ 561
Laundry Income $ 12,501 $ 45 $ 10,225 $ 37 $ 6,349 $ 23 $ 16,400 $ 60
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 106,283 $ 386 $ 150,434 $ 547 $ 201,635 $ 733 $ 188,400 $ 685
-------------------------------------------------------------------------------------------------------
Subtotal Other Income $ 118,784 $ 432 $ 160,659 $ 584 $ 207,984 $ 756 $ 204,800 $ 745
-------------------------------------------------------------------------------------------------------
Effective Gross Income $2,151,070 $ 7,822 $2,283,827 $ 8,305 $2,236,886 $ 8,134 $2,328,513 $ 8,467
Operating Expenses
Taxes $ 205,579 $ 748 $ 213,008 $ 775 $ 231,560 $ 842 $ 249,059 $ 906
Insurance $ 31,928 $ 116 $ 92,993 $ 338 $ 79,195 $ 288 $ 80,349 $ 292
Utilities $ 123,103 $ 448 $ 114,523 $ 416 $ 128,314 $ 467 $ 118,000 $ 429
Repair & Maintenance $ 48,632 $ 177 $ 36,187 $ 132 $ 49,472 $ 180 $ 36,000 $ 131
Cleaning $ 66,490 $ 242 $ 61,936 $ 225 $ 78,231 $ 284 $ 83,000 $ 302
Landscaping $ 103,619 $ 377 $ 88,472 $ 322 $ 127,323 $ 463 $ 110,400 $ 401
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 24,759 $ 90 $ 26,946 $ 98 $ 16,157 $ 59 $ 16,800 $ 61
General Administrative $ 215,680 $ 784 $ 232,200 $ 844 $ 176,318 $ 641 $ 191,556 $ 697
Management $ 111,657 $ 406 $ 121,276 $ 441 $ 113,038 $ 411 $ 117,386 $ 427
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-------------------------------------------------------------------------------------------------------
Total Operating Expenses $ 931,447 $ 3,387 $ 987,541 $ 3,591 $ 999,608 $ 3,635 $1,002,550 $ 3,646
Reserves $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-------------------------------------------------------------------------------------------------------
Net Income $1,219,623 $ 4,435 $1,296,286 $ 4,714 $1,237,278 $ 4,499 $1,325,963 $ 4,822
ANNUALIZED 2003
----------------------
PROJECTION AAA PROJECTION
---------------------- ----------------------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT %
- ------------------------------------------------------------------------------------------
Revenues
Rental Income $2,215,876 $ 8,058 $2,181,300 $ 7,932 100.0%
Vacancy $ 144,112 $ 524 $ 152,691 $ 555 7.0%
Credit Loss/Concessions $ 81,480 $ 296 $ 65,439 $ 238 3.0%
--------------------------------------------------------------
Subtotal $ 225,592 $ 820 $ 218,130 $ 793 10.0%
Laundry Income $ 26,856 $ 98 $ 20,625 $ 75 0.9%
Garage Revenue $ 0 $ 0 $ 0 $ 0 0.0%
Other Misc. Revenue $ 202,068 $ 735 $ 202,125 $ 735 9.3%
--------------------------------------------------------------
Subtotal Other Income $ 228,924 $ 832 $ 222,750 $ 810 10.2%
--------------------------------------------------------------
Effective Gross Income $2,219,208 $ 8,070 $2,185,920 $ 7,949 100.0%
Operating Expenses
Taxes $ 249,344 $ 907 $ 247,500 $ 900 11.3%
Insurance $ 78,044 $ 284 $ 81,125 $ 295 3.7%
Utilities $ 137,808 $ 501 $ 123,750 $ 450 5.7%
Repair & Maintenance $ 10,356 $ 38 $ 35,750 $ 130 1.6%
Cleaning $ 80,932 $ 294 $ 82,500 $ 300 3.8%
Landscaping $ 163,896 $ 596 $ 110,000 $ 400 5.0%
Security $ 0 $ 0 $ 0 $ 0 0.0%
Marketing & Leasing $ 30,724 $ 112 $ 20,625 $ 75 0.9%
General Administrative $ 197,352 $ 718 $ 185,625 $ 675 8.5%
Management $ 109,084 $ 397 $ 109,296 $ 397 5.0%
Miscellaneous $ 0 $ 0 $ 0 $ 0 0.0%
--------------------------------------------------------------
Total Operating Expenses $1,057,540 $ 3,846 $ 996,171 $ 3,622 45.6%
Reserves $ 0 $ 0 $ 68,750 $ 250 6.9%
--------------------------------------------------------------
Net Income $1,161,668 $ 4,224 $1,120,999 $ 4,076 51.3%
REVENUES AND EXPENSES
The subject's revenue and expense projections are displayed on the previous
chart. Rental income is based on the market analysis previously discussed. Other
income consists of forfeited deposits, laundry income, late rent payments, month
to month fees, pet fees, vending machine revenue, etc.
We forecasted the property's annual operating expenses after reviewing its
historical performance at the subject property. We analyzed each item of expense
and attempted to forecast amounts a typical informed investor would consider
reasonable.
VACANCY AND COLLECTION LOSS
An investor is primarily interested in the annual revenue an income property is
likely to produce over a specified period of time, rather than the income it
could produce if it were always 100% occupied and all tenants were paying their
rent in full and on time. An investor normally expects some income loss as
tenants vacate, fail to pay rent, or pay their rent late.
We have projected a stabilized vacancy and collection loss rate of 10% based on
the subject's historical performance, as well as the anticipated future market
conditions.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 31
SANDPIPER, ST. PETERSBURG, FLORIDA
RESERVES FOR REPLACEMENT
"Reserves for replacements" is a contingency account allocated to the expenses
of the property to provide for replacement of short-lived items and for
unforeseen necessary capital expenditures. We have utilized the Korpacz Real
Estate Investor Survey of the national apartment market, which reports a range
of replacement reserves between $150 and $400 per unit. For purposes of this
analysis, we have included an allowance of $250 per unit for reserves for
replacement.
CAPITAL EXPENDITURES
Capital expenditures represent expenses for immediate repair or replacement of
items that have average to long lives. Based on our inspection of the property
as well as discussions with property management personnel, there are no major
items remaining in need of repair or replacement that would require an expense
beyond our reserves for replacement. Therefore an allowance of $250 per unit
should be satisfactory in our reserves for replacement to cover future capital
expenditures.
DISCOUNTED CASH FLOW ANALYSIS
As the subject is a multi-tenant income property, the Discounted Cash Flow
Method is considered appropriate. This method is especially meaningful in that
it isolates the timing of the annual cash flows and discounts them, along with
the expected equity reversion, to a present value. The present value of the cash
flow is added to the present value of the reversion, resulting in a total
property value.
INVESTMENT CRITERIA
Appropriate investment criteria will be derived for the subject based upon
analysis of comparable sales and a survey of real estate investors. The
following table summarizes the findings of Korpacz National Investor Survey for
the most recent period.
KORPACZ NATIONAL INVESTOR SURVEY
1ST QUARTER 2003
NATIONAL APARTMENT MARKET
CAPITALIZATION RATES
---------------------------------------------
GOING-IN TERMINAL
-------------------- --------------------
LOW HIGH LOW HIGH
----- ------ ----- ------
RANGE 6.00% 10.00% 7.00% 10.00%
AVERAGE 8.14% 8.47%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 32
SANDPIPER, ST. PETERSBURG, FLORIDA
SUMMARY OF OVERALL
CAPITALIZATION RATES
COMP. NO. SALE DATE OCCUP. PRICE/UNIT OAR
- ---------------------------------------------------------------------------
I-1 Jul-02 90% $25,000 9.50%
I-2 Feb-02 80% $29,787 9.43%
I-3 Dec-01 95% $34,583 10.27%
I-4 Jun-00 93% $27,734 9.68%
I-5 Dec-00 Unknown $26,066 N/A
High 10.27%
Low 9.43%
Average 9.72%
Based on this information, we have concluded the subject's overall
capitalization rate should be 10.00%. The terminal capitalization rate is
applied to the net operating income estimated for the year following the end of
the holding period. Based on the concluded overall capitalization rate, the age
of the property and the surveyed information, we have concluded the subject's
terminal capitalization rate to be 11.00%. Finally, the subject's discount rate
or yield rate is estimated based on the previous investor survey and an
examination of returns available on alternative investments in the market. Based
on this analysis, the subject's discount rate is estimated to be 13.00%.
HOLDING PERIOD
The survey of investors indicates that most investors are completing either
10-year cash flows or extending the analysis to the end of the lease if it is
more than 10-years. A 10-year period has been used in the analysis of the
subject with the eleventh year stabilized NOI used to determine the reversion.
SELLING COSTS
Sales of similar size properties are typically accomplished with the aid of a
broker and will also incur legal and other transaction related cost. Based on
our survey of brokers and a review of institutional investor projections, an
allowance of 2.00% of the sale amount is applied.
DISCOUNTED CASH FLOW CONCLUSION
Discounting the annual cash flows and the equity reversion at the selected rate
of 13.00% indicates a value of $10,500,000. In this instance, the reversion
figure contributes
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 33
SANDPIPER, ST. PETERSBURG, FLORIDA
approximately 34% of the total value. Investors surveyed for this assignment
indicated they would prefer to have the cash flow contribute anywhere from 50%
to 60%. Overall, the blend seems reasonable. The cash flow and pricing matrix
are located on the following pages.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 34
SANDPIPER, ST. PETERSBURG, FLORIDA
DISCOUNTED CASH FLOW ANALYSIS
SANDPIPER
YEAR APR-2004 APR-2005 APR-2006 APR-2007 APR-2008 APR-2009
FISCAL YEAR 1 2 3 4 5 6
- -------------------------------------------------------------------------------------------------------------
REVENUE
Base Rent $2,181,300 $2,235,833 $2,291,728 $2,349,022 $2,407,747 $2,467,941
Vacancy $ 152,691 $ 156,508 $ 160,421 $ 164,432 $ 168,542 $ 172,756
Credit Loss $ 65,439 $ 67,075 $ 68,752 $ 70,471 $ 72,232 $ 74,038
Concessions $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
----------------------------------------------------------------------
Subtotal $ 218,130 $ 223,583 $ 229,173 $ 234,902 $ 240,775 $ 246,794
Laundry Income $ 20,625 $ 21,141 $ 21,669 $ 22,211 $ 22,766 $ 23,335
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 202,125 $ 207,178 $ 212,358 $ 217,667 $ 223,108 $ 228,686
----------------------------------------------------------------------
Subtotal Other Income $ 222,750 $ 228,319 $ 234,027 $ 239,877 $ 245,874 $ 252,021
----------------------------------------------------------------------
EFFECTIVE GROSS INCOME $2,185,920 $2,240,568 $2,296,582 $2,353,997 $2,412,847 $2,473,168
OPERATING EXPENSES:
Taxes $ 247,500 $ 254,925 $ 262,573 $ 270,450 $ 278,563 $ 286,920
Insurance $ 81,125 $ 83,559 $ 86,066 $ 88,647 $ 91,307 $ 94,046
Utilities $ 123,750 $ 127,463 $ 131,286 $ 135,225 $ 139,282 $ 143,460
Repair & Maintenance $ 35,750 $ 36,823 $ 37,927 $ 39,065 $ 40,237 $ 41,444
Cleaning $ 82,500 $ 84,975 $ 87,524 $ 90,150 $ 92,854 $ 95,640
Landscaping $ 110,000 $ 113,300 $ 116,699 $ 120,200 $ 123,806 $ 127,520
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 20,625 $ 21,244 $ 21,881 $ 22,537 $ 23,214 $ 23,910
General Administrative $ 185,625 $ 191,194 $ 196,930 $ 202,837 $ 208,923 $ 215,190
Management $ 109,296 $ 112,028 $ 114,829 $ 117,700 $ 120,642 $ 123,658
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
----------------------------------------------------------------------
TOTAL OPERATING EXPENSES $ 996,171 $1,025,510 $1,055,715 $1,086,812 $1,118,828 $1,151,790
Reserves $ 68,750 $ 70,813 $ 72,937 $ 75,125 $ 77,379 $ 79,700
----------------------------------------------------------------------
NET OPERATING INCOME $1,120,999 $1,144,246 $1,167,931 $1,192,060 $1,216,640 $1,241,678
Operating Expense Ratio (% of EGI) 45.6% 45.8% 46.0% 46.2% 46.4% 46.6%
Operating Expense Per Unit $ 3,622 $ 3,729 $ 3,839 $ 3,952 $ 4,068 $ 4,188
YEAR APR-2010 APR-2011 APR-2012 APR-2013 APR-2014
FISCAL YEAR 7 8 9 10 11
- ------------------------------------------------------------------------------------------------
REVENUE
Base Rent $2,529,639 $2,592,880 $2,657,702 $2,724,145 $2,792,248
Vacancy $ 177,075 $ 181,502 $ 186,039 $ 190,690 $ 195,457
Credit Loss $ 75,889 $ 77,786 $ 79,731 $ 81,724 $ 83,767
Concessions $ 0 $ 0 $ 0 $ 0 $ 0
----------------------------------------------------------
Subtotal $ 252,964 $ 259,288 $ 265,770 $ 272,414 $ 279,225
Laundry Income $ 23,919 $ 24,517 $ 25,130 $ 25,758 $ 26,402
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 234,403 $ 240,263 $ 246,270 $ 252,426 $ 258,737
----------------------------------------------------------
Subtotal Other Income $ 258,322 $ 264,780 $ 271,399 $ 278,184 $ 285,139
----------------------------------------------------------
EFFECTIVE GROSS INCOME $2,534,997 $2,598,372 $2,663,331 $2,729,915 $2,798,162
OPERATING EXPENSES:
Taxes $ 295,528 $ 304,394 $ 313,526 $ 322,931 $ 332,619
Insurance $ 96,867 $ 99,774 $ 102,767 $ 105,850 $ 109,025
Utilities $ 147,764 $ 152,197 $ 156,763 $ 161,466 $ 166,310
Repair & Maintenance $ 42,687 $ 43,968 $ 45,287 $ 46,646 $ 48,045
Cleaning $ 98,509 $ 101,465 $ 104,509 $ 107,644 $ 110,873
Landscaping $ 131,346 $ 135,286 $ 139,345 $ 143,525 $ 147,831
Security $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 24,627 $ 25,366 $ 26,127 $ 26,911 $ 27,718
General Administrative $ 221,646 $ 228,295 $ 235,144 $ 242,199 $ 249,464
Management $ 126,750 $ 129,919 $ 133,167 $ 136,496 $ 139,908
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0
----------------------------------------------------------
TOTAL OPERATING EXPENSES $1,185,725 $1,220,663 $1,256,633 $1,293,666 $1,331,794
Reserves $ 82,091 $ 84,554 $ 87,090 $ 89,703 $ 92,394
----------------------------------------------------------
NET OPERATING INCOME $1,267,181 $1,293,155 $1,319,608 $1,346,545 $1,373,974
Operating Expense Ratio (% of EGI) 46.8% 47.0% 47.2% 47.4% 47.6%
Operating Expense Per Unit $ 4,312 $ 4,439 $ 4,570 $ 4,704 $ 4,843
Estimated Stabilized NOI $1,120,999 Sales Expense Rate 2.00%
Months to Stabilized 1 Discount Rate 13.00%
Stabilized Occupancy 93.0% Terminal Cap Rate 11.00%
Gross Residual Sale Price $12,490,675 Deferred Maintenance $ 0
Less: Sales Expense $ 249,813 Add: Excess Land $ 0
-----------
Net Residual Sale Price $12,240,861 Other Adjustments $ 0
-----------
PV of Reversion $ 3,606,015 Value Indicated By "DCF" $10,510,661
Add: NPV of NOI $ 6,904,646 Rounded $10,500,000
-----------
PV Total $10,510,661
"DCF" VALUE SENSITIVITY TABLE
DISCOUNT RATE
----------------------------------------------------------------------------------------
TOTAL VALUE 12.50% 12.75% 13.00% 13.25% 13.50%
- ------------------------------------------------------------------------------------------------------------------------------
TERMINAL CAP RATE 10.50% $11,009,206 $10,844,066 $10,682,376 $10,524,052 $10,369,014
10.75% $10,917,368 $10,754,244 $10,594,522 $10,438,119 $10,284,954
11.00% $10,829,705 $10,668,505 $10,510,661 $10,356,091 $10,204,715
11.25% $10,745,938 $10,586,577 $10,430,527 $10,277,708 $10,128,042
11.50% $10,665,812 $10,508,210 $10,353,878 $10,202,734 $10,054,703
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 35
SANDPIPER, ST. PETERSBURG, FLORIDA
INCOME LOSS DURING LEASE-UP
The subject is currently near or at a stabilized condition. Therefore, there is
no income loss during lease-up at the subject property.
CONCESSIONS
Concessions have historically not been utilized at the subject property or in
the subject's market. Therefore, no adjustment was included for concessions.
DIRECT CAPITALIZATION METHOD
After having projected the income and expenses for the property, the next step
in the valuation process is to capitalize the net income into an estimate of
value. The selected overall capitalization rate ("OAR") covers both return on
and return of capital. It is the overall rate of return an investor expects.
After considering the market transactions and the investor surveys, we
previously conclude that an overall rate of 10.00% percent is applicable to the
subject. The results of our direct capitalization analysis are as follows:
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 36
SANDPIPER, ST. PETERSBURG, FLORIDA
SANDPIPER
TOTAL PER Sq. Ft. PER UNIT % OF EGI
- ----------------------------------------------------------------------------------------------------
REVENUE
Base Rent $ 2,181,300 $ 8.39 $ 7,932
Less: Vacancy & Collection Loss 10.00% $ 218,130 $ 0.84 $ 793
Plus: Other Income
Laundry Income $ 20,625 $ 0.08 $ 75 0.94%
Garage Revenue $ 0 $ 0.00 $ 0 0.00%
Other Misc. Revenue $ 202,125 $ 0.78 $ 735 9.25%
------------------------------------------
Subtotal Other Income $ 222,750 $ 0.86 $ 810 10.19%
EFFECTIVE GROSS INCOME $ 2,185,920 $ 8.41 $ 7,949
OPERATING EXPENSES:
Taxes $ 247,500 $ 0.95 $ 900 11.32%
Insurance $ 81,125 $ 0.31 $ 295 3.71%
Utilities $ 123,750 $ 0.48 $ 450 5.66%
Repair & Maintenance $ 35,750 $ 0.14 $ 130 1.64%
Cleaning $ 82,500 $ 0.32 $ 300 3.77%
Landscaping $ 110,000 $ 0.42 $ 400 5.03%
Security $ 0 $ 0.00 $ 0 0.00%
Marketing & Leasing $ 20,625 $ 0.08 $ 75 0.94%
General Administrative $ 185,625 $ 0.71 $ 675 8.49%
Management 5.00% $ 109,296 $ 0.42 $ 397 5.00%
Miscellaneous $ 0 $ 0.00 $ 0 0.00%
TOTAL OPERATING EXPENSES $ 996,171 $ 3.83 $ 3,622 45.57%
Reserves $ 68,750 $ 0.26 $ 250 3.15%
------------------------------------------
NET OPERATING INCOME $ 1,120,999 $ 4.31 $ 4,076 51.28%
"GOING IN" CAPITALIZATION RATE 10.00%
VALUE INDICATION $11,209,990 $43.12 $40,764
"AS IS" VALUE INDICATION
(DIRECT CAPITALIZATION APPROACH) $11,209,990
ROUNDED $11,200,000 $43.08 $40,727
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 37
SANDPIPER, ST. PETERSBURG, FLORIDA
DIRECT CAPITALIZATION VALUE SENSITIVITY TABLE
CAP RATE VALUE ROUNDED $/UNIT $/SF
- -----------------------------------------------------------------------------
9.25% $12,118,908 $12,100,000 $44,000 $46.54
9.50% $11,799,989 $11,800,000 $42,909 $45.39
9.75% $11,497,426 $11,500,000 $41,818 $44.23
10.00% $11,209,990 $11,200,000 $40,727 $43.08
10.25% $10,936,576 $10,900,000 $39,636 $41.93
10.50% $10,676,181 $10,700,000 $38,909 $41.16
10.75% $10,427,898 $10,400,000 $37,818 $40.00
CONCLUSION BY THE DIRECT CAPITALIZATION METHOD
Applying the capitalization rate to our estimated NOI results in an estimated
value of $11,200,000.
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 $10,500,000
Direct Capitalization Method $11,200,000
Giving consideration to the indicated values provided by both techniques, we
have concluded the estimated value by the income capitalization approach to be
$10,500,000.
AMERICAN APPRAISAL ASSOCIATES, INC. RECONCILIATION AND CONCLUSION PAGE 38
SANDPIPER, ST. PETERSBURG, FLORIDA
RECONCILIATION AND CONCLUSION
This appraisal was made to express an opinion as of the Market Value of the fee
simple estate in the property.
AS IS MARKET VALUE OF THE FEE SIMPLE ESTATE
Cost Approach Not Utilized
Sales Comparison Approach $10,200,000
Income Approach $10,500,000
Reconciled Value $10,500,000
The Income Capitalization Method is considered a reliable indicator of value.
Income and expenses were estimated and projected based on historical operating
statements and market oriented expenses. This method is primarily used by
investors in their underwriting analysis. Furthermore, there was good support
for an overall rate in the Direct Capitalization Method.
The Sales Comparison Approach to value supported the value conclusion by the
Income Approach and was given secondary consideration. Investment-grade,
income-producing properties such as the subject are not typically traded based
on cost. Therefore, the Cost Approach has not been considered in our valuation.
FINAL VALUE - FEE SIMPLE ESTATE
Based on the investigation and premise outlined, it is our opinion that as of
May 14, 2003 the market value of the fee simple estate in the property is:
$10,500,000
AMERICAN APPRAISAL ASSOCIATES, INC. ADDENDA
SANDPIPER, ST. PETERSBURG, FLORIDA
ADDENDA
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
SANDPIPER, ST. PETERSBURG, FLORIDA
EXHIBIT A
SUBJECT PHOTOGRAPHS
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
SANDPIPER, ST. PETERSBURG, FLORIDA
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
ENTRANCE REAR OF CLUBHOUSE AND POOL
[PICTURE] [PICTURE]
TYPICAL APARTMENT BUILDING TYPICAL APARTMENT BUILDING
[PICTURE] [PICTURE]
POOL/LAKE VIEW PICNIC AREA BY THE POOL
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
SANDPIPER, ST. PETERSBURG, FLORIDA
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
INTERIOR VIEW - CLUBHOUSE INTERIOR VIEW - LAUNDRY
[PICTURE] [PICTURE]
INTERIOR VIEW - MODEL APARTMENT INTERIOR VIEW - MODEL APARTMENT
[PICTURE] [PICTURE]
INTERIOR VIEW - MODEL APARTMENT INTERIOR VIEW - MODEL APARTMENT
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
SANDPIPER, ST. PETERSBURG, FLORIDA
EXHIBIT B
SUMMARY OF RENT COMPARABLES
AND PHOTOGRAPH OF COMPARABLES
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
SANDPIPER, ST. PETERSBURG, FLORIDA
PHOTOGRAPHS OF COMPARABLE SALE PROPERTIES
COMPARABLE I-1 COMPARABLE I-2 COMPARABLE I-3
COUNTRY CROSSING ASHLEY SQUARE FALLS OF TAMPA BAY
7903 Holly Lea Court 5606 Josephine Court 4610 North Armenia Avenue
Tampa, FL Tampa, FL Tampa, FL
[PICTURE] [PICTURE] [PICTURE]
COMPARABLE I-4 COMPARABLE I-5
HORIZON PARK SWAN LAKE
4900 N MacDill Avenue 3401 N. Lakeview Drive
Tampa, FL Tampa, FL
[PICTURE] [PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
SANDPIPER, ST. PETERSBURG, FLORIDA
SUMMARY OF COMPARABLE RENTAL PROPERTIES
COMPARABLE
DESCRIPTION SUBJECT R - 1
- ----------------------------------------------------------------------------------------------------------------------------------
Property Name Sandpiper Sunrunner
Management Company Aimco Aimco
LOCATION:
Address 10501 3rd Street 11400 4th Street
City, State St. Petersburg, Florida St. Petersburg, FL
County Pinellas Pinellas
Proximity to Subject 0.5-mile north of subject
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 259,982 145,272
Year Built 1977 1981
Effective Age 26 22
Building Structure Type Wood/Stucco Wood/Stucco
Parking Type (Gr., Cov., etc.) Open Open
Number of Units 275 2,000
Unit Mix: Type Unit Qty. Mo. Rent Type Unit Qty. Mo.
1 1A10 - 1Br/1Ba 683 28 $530 1 1A10 - 1Br/1Ba 600 72 $532
2 1B10 - 1Br/IBa 694 40 $487 2 1B10 - 1Br/1Ba 615 8 $543
3 2A10 - 2Br/1Ba 874 40 $579 3 1C10 - 1Br/1Ba 703 32 $613
4 2A20 - 2Br/2Ba 962 56 $696 4 2A20 - 2Br/2Ba 810 48 $651
5 2B20 - 2Br/2Ba 1,006 47 $666 5 2B20 - 2Br/2Ba 860 8 $731
6 3A20 - 3Br/2Ba 1,160 36 $760 6 2C20 - 2Br/2Ba 903 32 $702
7 3B20 - 3Br/2Ba 1,258 28 $710
Average Unit Size (SF) 945
Unit Breakdown: Efficiency 2-Bedroom 32% Efficiency 2-Bedroom 44%
1-Bedroom 56% 3-Bedroom 1-Bedroom 56% 3-Bedroom
CONDITION: Average Average
APPEAL: Average Average
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony X W/D Connect. X Balcony W/D Connect.
Fireplace Fireplace
Cable TV Ready Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
X Spa/Jacuzzi X Car Wash Spa/Jacuzzi X Car Wash
X Basketball Court BBQ Equipment X Basketball Court BBQ Equipment
X Volleyball Court Theater Room Volleyball Court Theater Room
X Sand Volley Ball Meeting Hall X Sand Volley Ball Meeting Hall
X Tennis Court Secured Parking X Tennis Court Secured Parking
X Racquet Ball X Laundry Room X Racquet Ball X Laundry Room
Jogging Track Business Office Jogging Track Business Office
X Gym Room X Freshwater Lake X Gym Room X Freshwater Lake
OCCUPANCY: 96% 98%
LEASING DATA:
Available Leasing Terms 6 to 12 months 6 to 12 months
Concessions Limited, based on unit availability
Pet Deposit Yes Yes
Utilities Paid by Tenant: X Electric X Natural Gas X Electric X Natural Gas
Water Trash Water Trash
Confirmation Manager and AIMCO Manager
Telephone Number 727-576-1289 727-577-1888
NOTES:
COMPARISON TO SUBJECT: Slightly Superior
COMPARABLE COMPARABLE
DESCRIPTION R - 2 R - 3
- -----------------------------------------------------------------------------------------------------------------------------------
Property Name Lincoln Shores Camden Lakes
Management Company Lincoln Property Management Camden
LOCATION:
Address 11601 4th Street 11401 N 9th Street
City, State St. Petersburg, FL St. Petersburg, FL
County Pinellas Pinellas
Proximity to Subject Across the street Adjacent
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 473,881 503,616
Year Built 1984 1983
Effective Age 19 20
Building Structure Type Brick/stucco Wood/stucco
Parking Type (Gr., Cov., etc.) Open, plus some garages Open
Number of Units 631 688
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
1 1Br/1BA 550 144 $585 1 1Br/1BA 600 202 $600
2 1Br/1BA 650 160 $608 2 1Br/1BA 615 54 $618
3 1Br/1BA 650 160 $608 3 1Br/1BA 726 128 $665
4 2Br/2Ba 1,000 176 $880 4 2Br/2Ba 810 192 $730
5 2Br/2Ba,Loft 920 7 $775 5 2Br/2Ba,Loft 885 16 $833
6 2Br/2Ba 1,000 176 $880 6 2Br/2Ba 903 96 $770
7 2Br/2Ba 1,000 176 $880 7 2Br/2Ba 903 96 $770
Average Unit Size (SF) 822 753
Unit Breakdown: Efficiency 2-Bedroom 29% Efficiency 2-Bedroom 44%
1-Bedroom 71% 3-Bedroom 1-Bedroom 56% 3-Bedroom
CONDITION: Slightly Superior Average
APPEAL: Good Average
AMENITIES:
Unit Amenities X Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony W/D Connect. X Balcony W/D Connect.
X Fireplace Fireplace
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
Spa/Jacuzzi X Car Wash Spa/Jacuzzi X Car Wash
X Basketball Court BBQ Equipment X Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
X Sand Volley Ball Meeting Hall X Sand Volley Ball Meeting Hall
X Tennis Court Secured Parking X Tennis Court Secured Parking
X Racquet Ball X Laundry Room X Racquet Ball X Laundry Room
Jogging Track X Business Office Jogging Track X Business Office
X Gym Room X Freshwater Lake X Gym Room X Freshwater Lake
OCCUPANCY: 90% 92%
LEASING DATA:
Available Leasing Terms 6 to 13 months 6 to 12 months
Concessions $99 move-in special, free rent select units Free rent on selected units
Pet Deposit Yes Yes
Utilities Paid by Tenant: X Electric X Natural Gas X Electric X Natural Gas
Water Trash Water Trash
Confirmation Leasing Agent Leasing Agent
Telephone Number 727-577-5553 727-577-7557
NOTES: Nearby property. Large but well-maintained and Nearby property. Large but well-maintained and
attractive. Gated community. attractive. Slightly better curb appeal.
Floor plans are the same as those offered at the
subject property. Slightly better curb appeal.
Rents shown are avg rate of the range for each Rents shown are avg rate of the range for each
unit type unit type
COMPARISON TO SUBJECT: Superior Slightly Superior
COMPARABLE COMPARABLE
DESCRIPTION R - 4 R - 5
- ----------------------------------------------------------------------------------------------------------------------------------
Property Name Lakeside Village Crosswinds
Management Company Consolidated Management Equity Residential
LOCATION:
Address 502 N 116th Avenue 500 110th Avenue North
City, State St. Petersburg, FL St. Petersburg, FL
County Pinellas Pinellas
Proximity to Subject Across the street Less than one mile
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 239,552 154,128
Year Built 1972 1987
Effective Age 31 16
Building Structure Type Wood/stucco Wood/stucco
Parking Type (Gr., Cov., etc.) Open Open
Number of Units 304 208
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
1 1Br/1BA 618 64 $525 1 1Br/1BA 600 48 $620
2 1Br/1BA 618 64 $525 2 1Br/1BA 615 16 $629
3 1Br/1BA 618 64 $525 3 1Br/1BA 726 48 $682
4 2Br/2Ba 790 72 $625 4 2Br/2Ba 810 64 $775
5 2Br/2Ba, Loft 855 44 $645 5 2Br/2Ba 903 32 $840
6 2Br/2Ba 1,188 20 $865 6 2Br/2Ba 903 32 $840
7 2Br/2Ba 1,188 20 $865 7 2Br/2Ba 903 32 $840
Average Unit Size (SF) 749 779
Unit Breakdown: Efficiency 2-Bedroom 50% Efficiency 2-Bedroom 46%
1-Bedroom 50% 3-Bedroom 1-Bedroom 54% 3-Bedroom
CONDITION: Average Average
APPEAL: Average Average
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony X W/D Connect. X Balcony W/D Connect.
Fireplace Fireplace
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
Spa/Jacuzzi X Car Wash Spa/Jacuzzi X Car Wash
Basketball Court BBQ Equipment Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
X Sand Volley Ball Meeting Hall Sand Volley Ball Meeting Hall
X Tennis Court Secured Parking X Tennis Court Secured Parking
Racquet Ball X Laundry Room Racquet Ball X Laundry Room
Jogging Track Business Office Jogging Track Business Office
X Gym Room X Freshwater Lake X Gym Room X Freshwater Lake
OCCUPANCY: 94% 95%
LEASING DATA:
Available Leasing Terms 6 to 12 months 6 to 12 months
Concessions One month free rent None currently
Pet Deposit Yes Yes
Utilities Paid by Tenant: X Electric X Natural Gas X Electric X Natural Gas
Water Trash Water Trash
Confirmation Leasing Agent Leasing Agent
Telephone Number 727-576-5296
NOTES: Nearby property. Well maintained. Nearby property offering the same floor plans
This property does offer washer/dryer as those at the subject property
connections. Very comparable but slightly better curb appeal
and appears to be in better overall condition.
Rents shown are avg rate of the range for each Rents shown are avg rate of the range for each
unit type unit type
COMPARISON TO SUBJECT: Slightly Inferior Superior
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
SANDPIPER, ST. PETERSBURG, FLORIDA
PHOTOGRAPHS OF COMPARABLE RENT PROPERTIES
COMPARABLE R-1 COMPARABLE R-2 COMPARABLE R-3
SUNRUNNER LINCOLN SHORES CAMDEN LAKES
11400 4th Street 11601 4th Street 11401 N 9th Street
St. Petersburg, FL St. Petersburg, FL St. Petersburg, FL
[PICTURE] [PICTURE] [PICTURE]
COMPARABLE R-4 COMPARABLE R-5
LAKESIDE VILLAGE CROSSWINDS
502 N 116th Avenue 500 110th Avenue North
St. Petersburg, FL St. Petersburg, FL
[PICTURE] [PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
SANDPIPER, ST. PETERSBURG, FLORIDA
EXHIBIT C
ASSUMPTIONS AND LIMITING CONDITIONS
(3 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
SANDPIPER, ST. PETERSBURG, FLORIDA
No responsibility is assumed for matters legal in nature. No investigation has
been made of the title to or any liabilities against the property appraised. In
this appraisal, it is presumed that, unless otherwise noted, the owner's claim
is valid, the property rights are good and marketable, and there are no
encumbrances which cannot be cleared through normal processes.
To the best of our knowledge, all data set forth in this report are true and
accurate. Although gathered from reliable sources, no guarantee is made nor
liability assumed for the accuracy of any data, opinions, or estimates
identified as being furnished by others which have been used in formulating this
analysis.
Land areas and descriptions used in this appraisal were obtained from public
records and have not been verified by legal counsel or a licensed surveyor.
No soil analysis or geological studies were ordered or made in conjunction with
this report, nor were any water, oil, gas, or other subsurface mineral and use
rights or conditions investigated.
Substances such as asbestos, urea-formaldehyde foam insulation, other chemicals,
toxic wastes, or other potentially hazardous materials could, if present,
adversely affect the value of the property. Unless otherwise stated in this
report, the existence of hazardous substance, which may or may not be present on
or in the property, was not considered by the appraiser in the development of
the conclusion of value. The stated value estimate is predicated on the
assumption that there is no material on or in the property that would cause such
a loss in value. No responsibility is assumed for any such conditions, and the
client has been advised that the appraiser is not qualified to detect such
substances, quantify the impact on values, or develop the remedial cost.
No environmental impact study has been ordered or made. Full compliance with
applicable federal, state, and local environmental regulations and laws is
assumed unless otherwise stated, defined, and considered in the report. It is
also assumed that all required licenses, consents, or other legislative or
administrative authority from any local, state, or national government or
private entity organization either have been or can be obtained or renewed for
any use which the report covers.
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
SANDPIPER, ST. PETERSBURG, FLORIDA
It is assumed that all applicable zoning and use regulations and restrictions
have been complied with unless a nonconformity has been stated, defined, and
considered in the appraisal report. Further, it is assumed that the utilization
of the land and improvements is within the boundaries of the property described
and that no encroachment or trespass exists unless noted in the report.
The Americans with Disabilities Act ("ADA") became effective January 26, 1992.
We have not made a specific compliance survey and analysis of this property to
determine whether or not it is in conformity with the various detailed
requirements of the ADA. It is possible that a compliance survey of the property
together with a detailed analysis of the requirements of the ADA could reveal
that the property is not in compliance with one or more of the requirements of
the act. If so, this fact could have a negative effect on the value of the
property. Since we have no direct evidence relating to this issue, we did not
consider the possible noncompliance with the requirements of ADA in estimating
the value of the property.
We have made a physical inspection of the property and noted visible physical
defects, if any, in our report. This inspection was made by individuals
generally familiar with real estate and building construction. However, these
individuals are not architectural or structural engineers who would have
detailed knowledge of building design and structural integrity. Accordingly, we
do not opine on, nor are we responsible for, the structural integrity of the
property including its conformity to specific governmental code requirements,
such as fire, building and safety, earthquake, and occupancy, or any physical
defects which were not readily apparent to the appraiser during the inspection.
The value or values presented in this report are based upon the premises
outlined herein and are valid only for the purpose or purposes stated.
The date of value to which the conclusions and opinions expressed apply is set
forth in this report. The value opinion herein rendered is based on the status
of the national business economy and the purchasing power of the U.S. dollar as
of that date.
Testimony or attendance in court or at any other hearing is not required by
reason of this appraisal unless arrangements are previously made within a
reasonable time in advance for
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
SANDPIPER, ST. PETERSBURG, FLORIDA
such testimony, and then such testimony shall be at American Appraisal
Associates, Inc.'s, prevailing per diem for the individuals involved.
Possession of this report or any copy thereof does not carry with it the right
of publication. No portion of this report (especially any conclusion to use, the
identity of the appraiser or the firm with which the appraiser is connected, or
any reference to the American Society of Appraisers or the designations awarded
by this organization) shall be disseminated to the public through prospectus,
advertising, public relations, news, or any other means of communication without
the written consent and approval of American Appraisal Associates, Inc.
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT D
SANDPIPER, ST. PETERSBURG, FLORIDA
EXHIBIT D
CERTIFICATE OF APPRAISER
(1 PAGE)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT D
CERTIFICATE OF APPRAISER
I certify that, to the best of my knowledge and belief
The statements of fact contained in this report are true and correct.
The report analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and represent the
impartial and unbiased professional analyses, opinions, and conclusions
of American Appraisal Associates, Inc.
American Appraisal Associates, Inc., and I personally have no present
or prospective interest in or bias with respect to the property that is
the subject of this report and have no personal interest or bias with
respect to the parties involved.
The engagement of American Appraisal Associates, Inc., and myself
personally in this assignment and compensation for American Appraisal
Associates, Inc., are not contingent on the development or reporting of
a predetermined value or direction in value that favors the cause of
the client, the amount of the value opinion, the attainment of a
stipulated result, or the occurrence of a subsequent event directly
related to the intended use of this appraisal.
The analyses, opinions, and conclusions were developed, and this report
has been prepared, in conformity with the Uniform Standards of
Professional Appraisal Practice and the Principles of Appraisal
Practice and Code of Ethics of the American Society of Appraisers.
I personally inspected the property that is the subject of this report.
No one provided me with significant real property appraisal.
-s- Alice MacQueen
------------------
Alice MacQueen
Vice President, Real Estate Group
Florida Certified General Real Estate Appraiser
#RZ0002202
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
SANDPIPER, ST. PETERSBURG, FLORIDA
EXHIBIT E
QUALIFICATIONS OF APPRAISER
(2 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
SANDPIPER, ST. PETERSBURG, FLORIDA
ALICE MacQUEEN
VICE PRESIDENT AND PRINCIPAL, REAL ESTATE GROUP
POSITION Alice MacQueen serves as a Vice President and Principal
for the Dallas Real Estate Group of American Appraisal
Associates, Inc. ("AAA").
EXPERIENCE
Valuation Ms. MacQueen specializes in the appraisal of investment
real estate and is annually involved in the valuation of
several billion dollars of real property. The purposes of
these valuations include allocation of purchase price,
charitable donation, financing, purchase, sale, and
syndication. She has also been involved in land planning
analyses for major mixed-use developments.
She has appraised various types of real estate including
congregate care facilities, industrial properties,
manufacturing facilities, office buildings, recreational
subdivisions and planned unit developments, single- and
multifamily residential properties, and shopping centers.
Special-purpose properties she has appraised include
campgrounds, churches, country clubs, golf courses,
historic landmarks, proprietary cemeteries, and schools.
In addition to market value opinions, Ms. MacQueen has
provided feasibility and highest and best use studies.
She has also been involved in several research projects,
providing background studies involving major property tax
appeal cases. These studies included the impact of
inflation, rate of return considerations,
sales-assessment ratio analyses, and the applicability of
income capitalization to commercial and industrial
properties.
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
SANDPIPER, ST. PETERSBURG, FLORIDA
Ms. MacQueen has appraised real estate in 46 U.S. states,
Mexico, and Puerto Rico.
Business Ms. MacQueen joined AAA in 1983. She served as Regional
Real Estate Director for the southeastern United States
from 1987 to 1992 and as National Director of the Real
Estate Valuation Group from 1992 through 1995, when she
assumed her current position. Before joining the firm,
she was involved in property management for five years
and spent an additional five years as an appraiser,
consultant, and research analyst.
EDUCATION Realtors Institute of Virginia
Greenbrier College for Women - Liberal Arts
STATE CERTIFICATIONS State of Arizona, Certified General Real Estate
Appraiser, #30987
State of Florida, Certified General Appraiser, #RZ0002202
State of Georgia, Certified General Real Property
Appraiser, #239776
State of Minnesota, Certified General Real Property
Appraiser, #AP-20144872
State of New Mexico, General Certified Appraiser,
#001626-G
State of Utah, State Certified General Appraiser,
#CG00057001
PROFESSIONAL American Society of Appraisers, Candidate
AFFILIATIONS
AMERICAN APPRAISAL ASSOCIATES, INC.
SANDPIPER, ST. PETERSBURG, FLORIDA
GENERAL SERVICE CONDITIONS
AMERICAN APPRAISAL ASSOCIATES, INC.
SANDPIPER, ST. PETERSBURG, FLORIDA
GENERAL SERVICE CONDITIONS
The services(s) provided by AAA will be performed in accordance with
professional appraisal standards. Our compensation is not contingent in any way
upon our conclusions of value. We assume, without independent verification, the
accuracy of all data provided to us. We will act as an independent contractor
and reserve the right to use subcontractors. All files, workpapers or documents
developed by us during the course of the engagement will be our property. We
will retain this data for at least five years.
Our report is to be used only for the specific purpose stated herein; and any
other use is invalid. No reliance may be made by any third party without our
prior written consent. You may show our report in its entirety to those third
parties who need to review the information contained herein. No one should rely
on our report as a substitute for their own due diligence. We understand that
our reports will be described in public tender offer documents distributed to
limited partners. We reserve the right to review the public tender offer
documents prior to their issuance to confirm that disclosures of facts from the
current appraisals are accurate. No reference to our name or our report, in
whole or in part, in any other SEC filing or private placement memorandum you
prepare and/or distribute to third parties may be made without our prior written
consent.
The Tender Offer Partnerships, as that term is defined in the Settlement
Agreement, agree to indemnify and hold us harmless against and from any and all
losses, claims, actions, damages, expenses or liabilities, including reasonable
attorneys' fees, to which we may become subject in connection with this
engagement except where such losses, claims, actions, damages, expenses or
liabilities, including reasonable attorney's fees, arise or result from AAA's
misconduct, bad faith or negligence. Co-Clients will not be liable for any of
our acts or omissions.
AAA is an equal opportunity employer.