SUMMERWALK ON UNIVERSITY
7000 UNIVERSITY BOULEVARD
WINTER PARK, FLORIDA
MARKET VALUE -
FEE SIMPLE ESTATE
AS OF MAY 28, 2003
PREPARED FOR:
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(AIMCO)
C/O LINER YANKELEVITZ SUNSHINE & REGENSTREIF LLP
&
LIEFF CABRASER HEIMANN & BERNSTEIN
ON BEHALF OF NUANES, ET. AL.
[American Appraisal Associates(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: SUMMERWALK ON UNIVERSITY
7000 UNIVERSITY BOULEVARD
WINTER PARK, ORANGE COUNTY, FLORIDA
In accordance with your authorization, we have completed the appraisal of the
above-referenced property. This complete appraisal is intended to report our
analysis and conclusions in a summary format.
The subject property consists of an apartment project having 306 units with a
total of 253,025 square feet of rentable area. The improvements were built in
1974. The improvements are situated on 13.0931359 acres. Overall, the
improvements are in average condition. As of the date of this appraisal, the
subject property is 97% 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
SUMMERWALK ON UNIVERSITY, WINTER PARK, 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 28, 2003 is:
($12,600,000)
Respectfully submitted,
AMERICAN APPRAISAL ASSOCIATES, INC.
June 27, 2003 -s- Alice MacQueen
#053272 Alice MacQueen
Vice President, Real Estate Group
Florida Certified General Real Estate Appraiser
#RZ0002202
Assisted By:
Michael L. Kersten
AMERICAN APPRAISAL ASSOCIATES, INC. TABLE OF CONTENTS PAGE 3
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
TABLE OF CONTENTS
Cover
Letter of Transmittal
Table of Contents
APPRAISAL DATA
Executive Summary 4
Introduction 9
Area Analysis 11
Market Analysis 14
Site Analysis 16
Improvement Analysis 16
Highest and Best Use 17
VALUATION
Valuation Procedure 18
Sales Comparison Approach 20
Income Capitalization Approach 26
Reconciliation and Conclusion 37
ADDENDA
Exhibit A - Photographs of Subject Property
Exhibit B - Summary of Rent Comparables and Photograph of Comparables
Exhibit C - Assumptions and Limiting Conditions
Exhibit D - Certificate of Appraiser
Exhibit E - Qualifications
General Service Conditions
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 4
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
EXECUTIVE SUMMARY
PART ONE - PROPERTY DESCRIPTION
PROPERTY NAME: Summerwalk on University
LOCATION: 7000 University Boulevard
Winter Park, 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 28, 2003
DATE OF REPORT: June 27, 2003
PHYSICAL DESCRIPTION - SITE & IMPROVEMENTS:
SITE:
Size: 13.0931359044995 acres, or 570,337 square feet
Assessor Parcel No.: 11-22-30-0000-00-030
Floodplain: Community Panel No. 12095C0260E (December 6,
2000)
Flood Zone X, an area outside the floodplain.
Zoning: R-3 (Medium Density Multiple-Family Residential
District)
BUILDING:
No. of Units: 306 Units
Total NRA: 253,025 Square Feet
Average Unit Size: 827 Square Feet
Apartment Density: 23.4 units per acre
Year Built: 1974
UNIT MIX AND MARKET RENT:
GROSS RENTAL INCOME PROJECTION
Market Rent
Square ------------------ Monthly Annual
Unit Type Feet Per Unit Per SF Income Income
- ------------------ ------ -------- ------ -------- ----------
1Br/1Ba - Taos 550 $ 600 $ 1.09 $ 29,400 $ 352,800
1Br/1Ba - Durango 712 $ 625 $ 0.88 $ 60,000 $ 720,000
2Br/1Ba - Tahoe 911 $ 730 $ 0.80 $ 70,080 $ 840,960
2Br/2Ba - Santa Fe 987 $ 765 $ 0.78 $ 25,245 $ 302,940
3Br/2Ba - Phoenix 1,178 $ 875 $ 0.74 $ 28,000 $ 336,000
-------- ----------
Total $212,725 $2,552,700
OCCUPANCY: 97%
ECONOMIC LIFE: 45 Years
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 5
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
EFFECTIVE AGE: 20 Years
REMAINING ECONOMIC LIFE: 25 Years
SUBJECT PHOTOGRAPHS AND LOCATION MAP:
SUBJECT PHOTOGRAPHS
[EXTERIOR PICTURE] [EXTERIOR - TYPICAL APARTMENT BUILDINGS PICTURE]
AREA MAP
[MAP]
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 6
SUMMERWALK ON UNIVERSITY, WINTER PARK, 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
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
PART TWO - ECONOMIC INDICATORS
Amount $/Unit
------ ------
INCOME CAPITALIZATION APPROACH
DIRECT CAPITALIZATION
Potential Rental Income $ 2,552,700 $8,342
Effective Gross Income $ 2,465,166 $8,056
Operating Expenses $ 1,117,758 $3,653 45.3% of EGI
Net Operating Income: $ 1,270,908 $4,153
Capitalization Rate 10.50%
DIRECT CAPITALIZATION VALUE $12,100,000 * $39,542 / UNIT
DISCOUNTED CASH FLOW ANALYSIS:
Holding Period 10 years
2002 Economic Vacancy 8%
Stabilized Vacancy & Collection Loss: 12%
Lease-up / Stabilization Period N/A
Terminal Capitalization Rate 11.00%
Discount Rate 13.00%
Selling Costs 2.00%
Growth Rates:
Income 3.00%
Expenses: 3.00%
DISCOUNTED CASH FLOW VALUE $12,600,000 * $41,176 / UNIT
RECONCILED INCOME CAPITALIZATION VALUE $12,600,000 $41,176 / UNIT
SALES COMPARISON APPROACH
PRICE PER UNIT:
Range of Sales $/Unit (Unadjusted) $34,797 to $62,500
Range of Sales $/Unit (Adjusted) $40,850 to $45,274
VALUE INDICATION - PRICE PER UNIT $13,100,000 * $42,810 / UNIT
EGIM ANALYSIS
Range of EGIMs from Improved Sales 5.27 to 7.05
Selected EGIM for Subject 5.50
Subject's Projected EGI $ 2,465,166
EGIM ANALYSIS CONCLUSION $ 13,500,000 * $44,118 / UNIT
NOI PER UNIT ANALYSIS CONCLUSION $ 12,800,000 * $41,830 / UNIT
RECONCILED SALES COMPARISON VALUE $ 13,000,000 $42,484 / 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
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
PART THREE - SUMMARY OF VALUE CONCLUSIONS
SALES COMPARISON APPROACH:
Price Per Unit $13,100,000
NOI Per Unit $12,800,000
EGIM Multiplier $13,500,000
INDICATED VALUE BY SALES COMPARISON $13,000,000 $42,484 / UNIT
INCOME APPROACH:
Direct Capitalization Method: $12,100,000
Discounted Cash Flow Method: $12,600,000
INDICATED VALUE BY THE INCOME APPROACH $12,600,000 $41,176 / UNIT
RECONCILED OVERALL VALUE CONCLUSION: $12,600,000 $41,176 / UNIT
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 9
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
INTRODUCTION
IDENTIFICATION OF THE SUBJECT
The subject property is located at 7000 University Boulevard, Winter Park,
Orange County, Florida. Winter Park identifies it as 11-22-30-0000-00-030.
SCOPE OF THE ASSIGNMENT
The property, neighborhood, and comparables were inspected by Michael L. Kersten
on May 28, 2003. Alice MacQueen has not made a personal inspection of the
subject property. Michael L. Kersten assisted in the research, valuation
analysis and report writing. Alice MacQueen reviewed the valuation analysis and
report. Both, Alice MacQueen and Michael L. Kersten have extensive experience in
appraising similar properties and meet the USPAP competency provision.
The scope of this investigation comprises the inspection of the property and the
collection, verification, and analysis of general and specific data pertinent to
the subject property. We have researched current improved sales and leases of
similar properties, analyzing them as to their comparability, and adjusting them
accordingly. We completed the Sales Comparison and Income Capitalization
Approaches to value. From these approaches to value, a concluded overall value
was made.
DATE OF VALUE AND REPORT
This appraisal was made to express the opinion of value as of May 28, 2003. The
date of the report is June 27, 2003.
PURPOSE AND USE OF APPRAISAL
The purpose of the appraisal is to estimate the market value of the fee simple
interest in the subject property. It is understood that the appraisal is
intended to assist the clients in litigation settlement proceedings. The
appraisal was not based on a requested minimum valuation, a specific valuation,
or the approval of a loan.
PROPERTY RIGHTS APPRAISED
We have appraised the Fee Simple Estate in the subject property (as applied in
the Sales & Income Approaches), subject to the existing short-term leases. A Fee
Simple Estate is
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 10
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
defined in The Dictionary of Real Estate Appraisal, 3rd ed. (Chicago: Appraisal
Institute, 1993), as:
"Absolute ownership unencumbered by any other interest or estate,
subject only to the limitations imposed by the governmental powers of
taxation, eminent domain, police power, and escheat."
MARKETING/EXPOSURE PERIOD
MARKETING PERIOD: 6 to 12 months
EXPOSURE PERIOD: 6 to 12 months
HISTORY OF THE PROPERTY
Ownership in the subject property is currently vested in NPI III. 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
SUMMERWALK ON UNIVERSITY, WINTER PARK, 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 Winter Park, 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 - Semoran Boulevard
West - Goldenrod Road
South - East Colonial Drive
North - Aloma Avenue
MAJOR EMPLOYERS
Major employers in the subject's area include Walt Disney Company (55,000),
Florida Hospital (12,808), Universal Orlando (12,000), Orlando Regional
Healthcare (12,000), Lockheed Martin (5,053), Central Florida Investments
(5,000), University of Central Florida (4,808), Darden Restaurants (4,675),
Sprint (4,295), SeaWorld (4,000). The overall economic outlook for the area is
considered favorable.
DEMOGRAPHICS
We have reviewed demographic data within the neighborhood. The following table
summarizes the key data points.
AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 12
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
NEIGHBORHOOD DEMOGRAPHICS
AREA
---------------------------------------------
CATEGORY 1-MI. RADIUS 3-MI. RADIUS 5-MI. RADIUS MSA
- -----------------------------------------------------------------------------------------------
POPULATION TRENDS
Current Population 14,089 88,299 235,674 1,721,904
5-Year Population 14,645 92,589 252,156 1,921,950
% Change CY-5Y 3.9% 4.9% 7.0% 11.6%
Annual Change CY-5Y 0.8% 1.0% 1.4% 2.3%
HOUSEHOLDS
Current Households 6,393 36,747 94,056 655,258
5-Year Projected Households 6,664 38,852 101,234 731,362
% Change CY - 5Y 4.2% 5.7% 7.6% 11.6%
Annual Change CY-5Y 0.8% 1.1% 1.5% 2.3%
INCOME TRENDS
Median Household Income $ 33,158 $ 39,473 $ 41,690 $ 40,114
Per Capita Income $ 18,612 $ 22,928 $ 23,687 $ 21,799
Average Household Income $ 41,019 $ 54,995 $ 59,273 $ 57,283
Source: Demographics Now
The subject neighborhood's population is expected to show increases below that
of the region. The immediate market offers inferior income levels as compared to
the broader market.
The following table illustrates the housing statistics in the subject's
immediate area, as well as the MSA region.
HOUSING TRENDS
AREA
---------------------------------------------
CATEGORY 1-MI. RADIUS 3-MI. RADIUS 5-MI. RADIUS MSA
- -----------------------------------------------------------------------------------------------
HOUSING TRENDS
% of Households Renting 64.24% 43.58% 37.40% 30.55%
5-Year Projected % Renting 64.26% 43.50% 37.54% 30.11%
% of Households Owning 25.89% 49.46% 56.29% 60.90%
5-Year Projected % Owning 26.00% 49.77% 56.45% 61.87%
Source: Demographics Now
AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 13
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
SURROUNDING IMPROVEMENTS
The following uses surround the subject property:
North - University Boulevard; across which is an office/tech center
South - Sutton Place apartment complex
East - Sutton Place apartment complex
West - A small retail center, then Full Sail technical and media arts school
CONCLUSIONS
The subject is well located within the city of Winter Park. 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
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
MARKET ANALYSIS
The subject property is located in the city of Winter Park in Orange County. The
overall pace of development in the subject's market is more or less stable. New
construction in the immediate area has been limited to several smaller retail
projects. None of the apartment complexes in the area appear to be newer than 15
years old. With the exception of several 4- to 8-unit condominium complexes,
there appears to have been no recent multiple-family residential construction in
the subject neighborhood. The following table illustrates historical vacancy
rates for the subject's market.
HISTORICAL VACANCY RATE
Period Region Submarket
- ------ ------ ---------
1Q03 9.3% 5.9%
4Q02 8.9% 4.8%
2002 7.6% 4.2%
3Q02 N/A 4.8%
2Q02 N/A 5.0%
1Q02 N/A 6.1%
4Q01 N/A 3.6%
3Q01 N/A 3.4%
2Q01 N/A 2.9%
Source: REIS
Occupancy trends in the subject's market are decreasing. Historically speaking,
the subject's submarket has outperformed the overall market. As illustrated on
the table, vacancy rates for region and submarket are increasing.
Market rents in the subject's market have been following stable trend. The
following table illustrates historical rental rates for the subject's market.
HISTORICAL AVERAGE RENT
Period Region % Change Submarket % Change
- ------ ------ -------- --------- --------
2Q01 N/A - $ 666 -
3Q01 N/A N/A $ 681 2.3%
4Q01 N/A N/A $ 669 -1.8%
1Q02 N/A N/A $ 668 -0.1%
2Q02 N/A N/A $ 667 -0.1%
3Q02 N/A N/A $ 665 -0.3%
4Q02 N/A N/A $ 665 0.0%
1Q03 N/A N/A $ 661 -0.6%
Source: REIS
AMERICAN APPRAISAL ASSOCIATES, INC. MARKET ANALYSIS PAGE 15
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
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 Summer Chase at Winter Park 304 90% 1973 I mile southwest of the subject
R-2 Sutton Place 288 95% 1988 Right next to the subject
R-3 Emerald Bay at Winter Park 432 89% 1972 0.5 mile northwest of the subject
R-4 La Aloma Apartments 164 96% 1972 0.5 mile northwest of the subject
R-5 Sun Key 592 94% 1986 0.5 mile northeast of the subject
Subject Summerwalk on University 306 97% 1974
There appears to be a dearth of three bedroom units. Many complexes are offering
concessions on one- bedroom units.
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 16
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
PROPERTY DESCRIPTION
SITE ANALYSIS
Site Area 13.0931359044995 acres, or 570,337 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 12095C0260E, dated December 6, 2000
Flood Zone Zone X
Zoning R-3, the subject improvements represent a legal
conforming use of the site.
REAL ESTATE TAXES
ASSESSED VALUE - 2003
------------------------------------------- TAX RATE / PROPERTY
PARCEL NUMBER LAND BUILDING TOTAL MILL RATE TAXES
- --------------------------------------------------------------------------------------------------
11-22-30-0000- $1,824,000 $5,447,156 $7,271,156 $ 0.01865 $135,611
00-030
IMPROVEMENT ANALYSIS
Year Built 1974
Number of Units 306
Net Rentable Area 253,025 Square Feet
Construction:
Foundation Reinforced concrete slab
Frame Heavy or light wood
Exterior Walls Stucco wall
Roof Composition shingle over a wood truss structure
Project Amenities Amenities at the subject include a swimming
pool, basketball court, tennis court, gym room,
car wash, barbeque equipment, laundry room, and
parking area.
Unit Amenities Individual unit amenities include a balcony,
cable TV connection, vaulted ceiling, 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
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
Unit Mix:
Unit Area
Unit Type Number of Units (Sq. Ft.)
- ---------------------------------------------------
1Br/1Ba - Taos 49 550
1Br/1Ba - Durango 96 712
2Br/1Ba - Tahoe 96 911
2Br/2Ba - Santa Fe 33 987
3Br/2Ba - Phoenix 32 1,178
Overall Condition Average
Effective Age 20 years
Economic Life 45 years
Remaining Economic Life 25 years
Deferred Maintenance None
HIGHEST AND BEST USE ANALYSIS
In accordance with the definition of highest and best use, an analysis of the
site relating to its legal uses, physical possibilities, and financial
feasibility is appropriate. The highest and best use as vacant is to hold for
future multi-family development. The subject improvements were constructed in
1974 and consist of a 306-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
SUMMERWALK ON UNIVERSITY, WINTER PARK, 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
SUMMERWALK ON UNIVERSITY, WINTER PARK, 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
SUMMERWALK ON UNIVERSITY, WINTER PARK, 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
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
SUMMARY OF COMPARABLE SALES - IMPROVED
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
- ---------------------------------------------------------------------------------------------------------------------------
Property Name Summerwalk on University Courtyard at Winter Park La Aloma Apartments
LOCATION:
Address 7000 University Boulevard 1695 Lee Road 3040 Aloma Avenue
City, State Winter Park, Florida Winter Park, Florida Winter Park, Florida
County Orange Orange Orange
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 253,025 143,360 176,800
Year Built 1974 1966 1967
Number of Units 306 160 164
Unit Mix: Type Total Type Total Type Total
1Br/1Ba - Taos 49 1Br/1Ba 40 1Br/1Ba N/A
1Br/1Ba - Durango 96 2Br/2Ba 80 2Br/2Ba N/A
2Br/1Ba - Tahoe 96 3Br/2Ba 40 3Br/2Ba N/A
2Br/2Ba - Santa Fe 33
3Br/2Ba - Phoenix 32
Average Unit Size (SF) 827 896 1,078
Land Area (Acre) 13.0931 9.5528 9.1000
Density (Units/Acre) 23.4 16.7 18.0
Parking Ratio (Spaces/Unit) 1.44 1.33 1.77
Parking Type (Gr., Cov., etc.) Garage, Open Covered Open Open
CONDITION: Good Average Average
APPEAL: Average Average Fair
AMENITIES:
Pool/Spa Yes/No Yes/No Yes/No
Gym Room Yes Yes Yes
Laundry Room Yes Yes No
Secured Parking No No No
Sport Courts No No Yes
Washer/Dryer Connection Yes No No
Other
Other
OCCUPANCY: 97% 90% 85%
TRANSACTION DATA:
Sale Date May, 2001 September, 2002
Sale Price ($) $6,100,000 $6,750,000
Grantor Miles-Courtyard-WP, LLC Veard-Winter Park, Ltd.
Grantee PRG/Winter Park, LP Florida Investment Properties, LLC
Sale Documentation Book 6258, Page 4812 Book 6629, Page 8177
Verification Comps, Inc. Comps, Inc.
Telephone Number
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF
Potential Gross Income $ 1,286,400 $8,040 $ 8.97 $1,385,280 $8,447 $7.84
Vacancy/Credit Loss $ 128,640 $ 804 $ 0.90 $ 207,792 $1,267 $1.18
Effective Gross Income $ 1,157,760 $7,236 $ 8.08 $1,177,488 $7,180 $6.66
Operating Expenses $ 500,000 $3,125 $ 3.49 $ 533,600 $3,254 $3.02
Net Operating Income $ 657,760 $4,111 $ 4.59 $ 643,888 $3,926 $3.64
NOTES: This project is now known as Since, the sale, occupancy
Legacy of Winter Park. has risen to 96%.
PRICE PER UNIT $38,125 $41,159
PRICE PER SQUARE FOOT $ 42.55 $ 38.18
EXPENSE RATIO 43.2% 45.3%
EGIM 5.27 5.73
OVERALL CAP RATE 10.78% 9.54%
Cap Rate based on Pro Forma or
Actual Income? ACTUAL ACTUAL
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
- --------------------------------------------------------------------------------------------------------------------------------
Property Name Sedgefield Apartments Kingston Village The Ashley of Spring Valley
LOCATION:
Address 110 Sedgefield Circle 940 Douglas Avenue 693 South Wymore Road
City, State Winter Park, Florida Altamonte Springs, FL Altamonte Springs, FL
County Seminole Seminole Seminole
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 93,800 129,468 280,000
Year Built 1973 1982 1974
Number of Units 111 120 260
Unit Mix: Type Total Total Type Total Type
Efficiency 21 1Br/1Ba 36 1Br/1Ba N/A
1 Bedroom 10 2Br/2Ba 72 2Br/2Ba N/A
2 Bedroom 75 2Br/2Ba Twn 12 3Br/2Ba N/A
Average Unit Size (SF) 845 1,079 1,077
Land Area (Acre) 8.7000 15.0000 15.8713
Density (Units/Acre) 12.8 8.0 16.4
Parking Ratio (Spaces/Unit) 1.98 2.00 4.80
Parking Type (Gr., Cov., etc.) Open Garage, Open Open
CONDITION: Average Very Good Good
APPEAL: Average Good Good
AMENITIES:
Pool/Spa Yes/No Yes/Yes Yes/Yes
Gym Room No Yes Yes
Laundry Room Yes Yes No
Secured Parking No Yes Yes
Sport Courts No Yes Yes
Washer/Dryer Connection No Yes Yes
Other
Other
OCCUPANCY: 90% 90% 92%
TRANSACTION DATA:
Sale Date November, 2002 October, 2001 August, 2001
Sale Price ($) $3,862,500 $7,500,000 $11,180,000
Grantor Sedgefield Associates, Archstone Communities
Ltd.
Grantee S&L Enterprises, LLC Kingston Village, LLC Altamonte Ashley, LLC
Sale Documentation Book 4611, Page 1975 Book 4198, Page 0924 Book 4160, Page 0027
Verification Comps, Inc. Comps, Inc. & Seminole Seminole County Prop.
Telephone Number County Property Appr Tax Appraiser's Off
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF Total$ $/Unit $/SF
Potential Gross Income $ 806,460 $7,265 $8.60 $1,181,520 $9,846 $9.13 $2,100,000 $8,077 $7.50
Vacancy/Credit Loss $ 80,646 $ 727 $0.86 $ 118,152 $ 985 $0.91 $ 105,000 $ 404 $0.38
Effective Gross Income $ 725,814 $6,539 $7.74 $1,063,368 $8,861 $8.21 $1,995,000 $7,673 $7.13
Operating Expenses $ 355,200 $3,200 $3.79 $ 360,000 $3,000 $2.78 $ 900,000 $3,462 $3.21
Net Operating Income $ 370,614 $3,339 $3.95 $ 703,368 $5,861 $5.43 $1,095,000 $4,212 $3.91
NOTES: This projects comprises None None
12 one-story buildings.
PRICE PER UNIT $34,797 $62,500 $43,000
PRICE PER SQUARE FOOT $ 41.18 $ 57.93 $ 39.93
EXPENSE RATIO 48.9% 33.9% 45.1%
EGIM 5.32 7.05 5.60
OVERALL CAP RATE 9.60% 9.38% 9.79%
Cap Rate based on Pro Forma or ACTUAL ACTUAL PRO FORMA
Actual Income?
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 22
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
IMPROVED SALES MAP
[MAP]
IMPROVED SALES ANALYSIS
The improved sales indicate a sales price range from $34,797 to $62,500 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 $40,850 to $45,274 per unit with a mean or average adjusted price
of $43,443 per unit. The median adjusted price is $43,750 per unit. Based on the
following analysis, we have concluded to a value of $43,000 per unit, which
results in an "as is" value of $13,100,000 (rounded after necessary adjustment,
if any).
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 23
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
SALES ADJUSTMENT GRID
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
- --------------------------------------------------------------------------------------------------------------
Property Name Summerwalk on University Courtyard at Winter Park La Aloma Apartments
Address 7000 University Boulevard 1695 Lee Road 3040 Aloma Avenue
City Winter Park, Florida Winter Park, Florida Winter Park, Florida
Sale Date May, 2001 September, 2002
Sale Price ($) $6,100,000 $6,750,000
Net Rentable Area (SF) 253,025 143,360 176,800
Number of Units 306 160 164
Price Per Unit $38,125 $41,159
Year Built 1974 1966 1967
Land Area (Acre) 13.0931 9.5528 9.1000
VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 05-2001 0% 09-2002 0%
VALUE AFTER TRANS. ADJUST.
($/UNIT) $38,125 $41,159
Location Comparable 0% Comparable 0%
Number of Units 306 160 5% 164 5%
Quality / Appeal Good Comparable 0% Inferior 10%
Age / Condition 1974 1966/Average 10% 1967/Average 10%
Occupancy at Sale 97% 90% -10% 85% -10%
Amenities Good Inferior 10% Comparable 0%
Average Unit Size (SF) 827 896 0% 1,078 -5%
PHYSICAL ADJUSTMENT 15% 10%
FINAL ADJUSTED VALUE ($/UNIT) $43,844 $45,274
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
- -------------------------------------------------------------------------------------------------------------
Property Name Sedgefield Apartments Kingston Village The Ashley of Spring Valley
Address 110 Sedgefield Circle 940 Douglas Avenue 693 South Wymore Road
City Winter Park, Florida Altamonte Springs, FL Altamonte Springs, FL
Sale Date November, 2002 October, 2001 August, 2001
Sale Price ($) $3,862,500 $7,500,000 $11,180,000
Net Rentable Area (SF) 93,800 129,468 280,000
Number of Units 111 120 260
Price Per Unit $34,797 $62,500 $43,000
Year Built 1973 1982 1974
Land Area (Acre) 8.7000 15.0000 15.8713
VALUE ADJUSTMENTS DESCRIPTION ADJ. DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate 0% Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 11-2002 0% 10-2001 0% 08-2001 0%
VALUE AFTER TRANS. ADJUST.
($/UNIT) $34,797 $62,500 $43,000
Location Comparable 0% Superior -10% Superior -10%
Number of Units 111 5% 120 5% 260 0%
Quality / Appeal Inferior 20% Inferior 15% Inferior 20%
Age / Condition 1973/Average 10% 1982/Very Good -15% 1974/Good 0%
Occupancy at Sale 90% -10% 90% -10% 92% -10%
Amenities Comparable 0% Superior -10% Comparable 0%
Average Unit Size (SF) 845 0% 1,079 -5% 1,077 -5%
PHYSICAL ADJUSTMENT 25% -30% -5%
FINAL ADJUSTED VALUE ($/UNIT) $43,497 $43,750 $40,850
SUMMARY
VALUE RANGE (PER UNIT) $40,850 TO $ 45,274
MEAN (PER UNIT) $43,443
MEDIAN (PER UNIT) $43,750
VALUE CONCLUSION (PER UNIT) $43,000
VALUE OF IMPROVEMENT & MAIN SITE $13,158,000
PV OF CONCESSIONS -$ 47,000
VALUE INDICATED BY SALES COMPARISON APPROACH $13,111,000
ROUNDED $13,100,000
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
SUMMERWALK ON UNIVERSITY, WINTER PARK, 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-1 160 $ 6,100,000 10.78% $ 657,760 $ 1,270,908 1.010 $ 38,517
$ 38,125 $ 4,111 $ 4,153
I-2 164 $ 6,750,000 9.54% $ 643,888 $ 1,270,908 1.058 $ 43,540
$ 41,159 $ 3,926 $ 4,153
I-3 111 $ 3,862,500 9.60% $ 370,614 $ 1,270,908 1.244 $ 43,285
$ 34,797 $ 3,339 $ 4,153
I-4 120 $ 7,500,000 9.38% $ 703,368 $ 1,270,908 0.709 $ 44,286
$ 62,500 $ 5,861 $ 4,153
I-5 260 $11,180,000 9.79% $1,095,000 $ 1,270,908 0.986 $ 42,405
$ 43,000 $ 4,212 $ 4,153
- ----------------------------------------------------------------------------------------------
PRICE/UNIT VALUE ANALYSIS BASED ON COMPARABLES NOI PER UNIT
- ----------------------------------------------------------------------------------------------
Low High Average Median Estimated Price Per Unit $ 42,000
Number of Units 306
$38,517 $44,286 $42,407 $43,285
Value $ 12,852,000
PV of Concessions -$ 47,000
------------
Value Based on NOI $ 12,805,000
Analysis
Rounded $ 12,800,000
The adjusted sales indicate a range of value between $38,517 and $44,286 per
unit, with an average of $42,407 per unit. Based on the subject's competitive
position within the improved sales, a value of $42,000 per unit is estimated.
This indicates an "as is" market value of $12,800,000 (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
SUMMERWALK ON UNIVERSITY, WINTER PARK, 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-1 160 $ 6,100,000 $ 1,157,760 $ 500,000 43.19% 5.27
$ 38,125
I-2 164 $ 6,750,000 $ 1,177,488 $ 533,600 45.32% 5.73
$ 41,159
I-3 111 $ 3,862,500 $ 725,814 $ 355,200 48.94% 5.32
45.34%
$ 34,797
I-4 120 $ 7,500,000 $ 1,063,368 $ 360,000 33.85% 7.05
$ 62,500
I-5 260 $11,180,000 $ 1,995,000 $ 900,000 45.11% 5.60
$ 43,000
- -----------------------------------------------------------------------------------------------------------
EGIM VALUE ANALYSIS BASED ON EGIM'S OF COMPARABLE SALES
- -----------------------------------------------------------------------------------------------------------
Low High Average Median Estimate EGIM 5.50
Subject EGI $ 2,465,166
5.27 7.05 5.80 5.60
Value $13,558,413
PV of concessions -$ 47,000
-----------
Value Based on EGIM Analysis $13,511,413
Rounded $13,500,000
Value Per Unit $ 44,118
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 45.34% before reserves. The comparable sales
indicate a range of expense ratios from 33.85% to 48.94%, while their EGIMs
range from 5.27 to 7.05. Overall, we conclude to an EGIM of 5.50, which results
in an "as is" value estimate in the EGIM Analysis of $13,500,000.
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 $13,000,000.
Price Per Unit $13,100,000
NOI Per Unit $12,800,000
EGIM Analysis $13,500,000
Sales Comparison Conclusion $13,000,000
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 26
SUMMERWALK ON UNIVERSITY, WINTER PARK, 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
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
method is normally more appropriate for properties with relatively stable
operating histories and expectations.
A pro forma analysis for the first year of the investment is made to estimate a
reasonable potential net operating income for the Subject Property. Such an
analysis entails an estimate of the gross income the property should command in
the marketplace. From this total gross income must be deducted an allowance for
vacancy/collection loss and operating expenses as dictated by general market
conditions and the overall character of the subject's tenancy and leased income
to arrive at a projected estimate of net operating income. Conversion of the net
operating income to an indication of value is accomplished by the process of
capitalization, as derived primarily from market data.
MARKET RENT ANALYSIS
In order to determine a market rental rate for the subject, a survey of
competing apartment communities was performed. This survey was displayed
previously in the market analysis section of the report. Detailed information
pertaining to each of the comparable rental communities, along with photographs,
is presented in the Addenda of this report.
The following charts display the subject's current asking and actual rent rates
as well as a comparison with the previous referenced comparable rental
properties.
SUMMARY OF ACTUAL AVERAGE RENTS
- ---------------------------------------------------------------------------
Average
Unit Area -----------------
Unit Type (Sq. Ft.) Per Unit Per SF %Occupied
- ---------------------------------------------------------------------------
1Br/1Ba - Taos 550 $ 597 $ 1.09 98.0%
1Br/1Ba - Durango 712 $ 619 $ 0.87 99.0%
2Br/1Ba - Tahoe 911 $ 727 $ 0.80 95.8%
2Br/2Ba - Santa Fe 987 $ 765 $ 0.78 100.0%
3Br/2Ba - Phoenix 1178 $ 875 $ 0.74 93.8%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 28
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
RENT ANALYSIS
COMPARABLE RENTS
-------------------------------------------------
R-1 R-2 R-3 R-4 R-5
-------------------------------------------------
Summer
Chase Emerald
at Bay at La
Winter Sutton Winter Aloma
Park Place Park Apartments Sun Key
-------------------------------------------------
COMPARISON TO SUBJECT
SUBJECT SUBJECT -------------------------------------------------
SUBJECT UNIT ACTUAL ASKING Slightly Slightly Slightly
DESCRIPTION TYPE RENT RENT Similar Inferior Inferior Inferior Inferior
- ----------------------------------------------------------------------------------------------------------------
Monthly Rent 1Br/1Ba - Taos $ 597 $ 823 $ 595 $ 667 $ 640
Unit Area (SF) 550 550 538 675 600
Monthly Rent Per Sq. Ft. $ 1.09 $ 1.50 $ 1.11 $ 0.99 $ 1.07
Monthly Rent 1Br/1Ba - $ 619 $ 838 $ 665 $ 715 $ 665 $ 555 $ 695
Unit Area (SF) Durango 712 712 792 837 765 730 750
Monthly Rent Per Sq. Ft. $ 0.87 $ 1.18 $ 0.84 $ 0.85 $ 0.87 $ 0.76 $ 0.93
Monthly Rent 2Br/1Ba - Tahoe $ 727 $ 885 $ 785 $ 610
Unit Area (SF) 911 911 1,052 930
Monthly Rent Per Sq. Ft. $ 0.80 $ 0.97 $ 0.75 $ 0.66
Monthly Rent 2Br/2Ba - Santa $ 765 $1,108 $ 795 $ 805 $ 890 $ 650 $ 770
Unit Area (SF) Fe 987 987 1,049 940 881 1,073 900
Monthly Rent Per Sq. Ft. $ 0.78 $ 1.12 $ 0.76 $ 0.86 $ 1.01 $ 0.61 $ 0.86
Monthly Rent 3Br/2Ba - $ 875 $1,110 $ 995 $ 870 $ 745 $ 765 $ 835
Unit Area (SF) Phoenix 1,178 1,178 1,086 1,042 944 1,200 1,030
Monthly Rent Per Sq. Ft. $ 0.74 $ 0.94 $ 0.92 $ 0.83 $ 0.79 $ 0.64 $ 0.81
DESCRIPTION MIN MAX MEDIAN AVERAGE
- --------------------------------------------------------------
Monthly Rent $ 595 $ 667 $ 640 $ 634
Unit Area (SF) 538 675 600 604
Monthly Rent Per Sq. Ft. $0.99 $ 1.11 $ 1.07 $ 1.05
Monthly Rent $ 555 $ 715 $ 665 $ 659
Unit Area (SF) 730 837 765 775
Monthly Rent Per Sq. Ft. $0.76 $ 0.93 $ 0.85 $ 0.85
Monthly Rent $ 610 $ 785 $ 698 $ 698
Unit Area (SF) 930 1,052 991 991
Monthly Rent Per Sq. Ft. $0.66 $ 0.75 $ 0.70 $ 0.70
Monthly Rent $ 650 $ 890 $ 795 $ 782
Unit Area (SF) 881 1,073 940 969
Monthly Rent Per Sq. Ft. $0.61 $ 1.01 $ 0.86 $ 0.82
Monthly Rent $ 745 $ 995 $ 835 $ 842
Unit Area (SF) 944 1,200 1,042 1,060
Monthly Rent Per Sq. Ft. $0.64 $ 0.92 $ 0.81 $ 0.80
CONCLUDED MARKET RENTAL RATES AND TERMS
Based on this analysis above, the subject's concluded market rental rates and
gross rental income is calculated as follows:
GROSS RENTAL INCOME PROJECTION
- ------------------------------------------------------------------------------------------------
Market Rent
Unit Area ----------------- Monthly Annual
Unit Type Number of Units (Sq. Ft.) Per Unit Per SF Income Income
- ------------------------------------------------------------------------------------------------
1Br/1Ba - Taos 49 550 $ 600 $ 1.09 $ 29,400 $ 352,800
1Br/1Ba - Durango 96 712 $ 625 $ 0.88 $ 60,000 $ 720,000
2Br/1Ba - Tahoe 96 911 $ 730 $ 0.80 $ 70,080 $ 840,960
2Br/2Ba - Santa Fe 33 987 $ 765 $ 0.78 $ 25,245 $ 302,940
3Br/2Ba - Phoenix 32 1,178 $ 875 $ 0.74 $ 28,000 $ 336,000
-------------------------------
Total $212,725 $2,552,700
===============================
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
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
SUMMARY OF HISTORICAL INCOME & EXPENSES
FISCAL YEAR 2000 FISCAL YEAR 2001 FISCAL YEAR 2002 FISCAL YEAR 2003 ANNUALIZED 2003
-------------------- ------------------ ------------------ ------------------ ------------------
ACTUAL ACTUAL ACTUAL MANAGEMENT BUDGET PROJECTION
-------------------- ------------------ ------------------ ------------------ ------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT
- ----------------------------------------------------------------------------------------------------------------------------
Revenues
Rental Income $2,218,404 $7,250 $2,372,236 $7,752 $2,439,689 $7,973 $2,464,524 $8,054 $2,464,876 $ 8,055
Vacancy $ 192,939 $ 631 $ 160,479 $ 524 $ 178,436 $ 583 $ 159,840 $ 522 $ 212,372 $ 694
Credit Loss/Concessions $ 83,232 $ 272 $ 49,880 $ 163 $ 28,147 $ 92 $ 41,160 $ 135 $ 226,340 $ 740
--------------------------------------------------------------------------------------------------
Subtotal $ 276,171 $ 903 $ 210,359 $ 687 $ 206,583 $ 675 $ 201,000 $ 657 $ 438,712 $ 1,434
Laundry Income $ 16,166 $ 53 $ 17,314 $ 57 $ 21,121 $ 69 $ 22,704 $ 74 $ 19,648 $ 64
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 130,315 $ 426 $ 177,329 $ 580 $ 200,190 $ 654 $ 189,000 $ 618 $ 245,408 $ 802
--------------------------------------------------------------------------------------------------
Subtotal Other Income $ 146,481 $ 479 $ 194,643 $ 636 $ 221,311 $ 723 $ 211,704 $ 692 $ 265,056 $ 866
--------------------------------------------------------------------------------------------------
Effective Gross Income $2,088,714 $6,826 $2,356,520 $7,701 $2,454,417 $8,021 $2,475,228 $8,089 $2,291,220 $ 7,488
Operating Expenses
Taxes $ 129,307 $ 423 $ 136,197 $ 445 $ 132,703 $ 434 $ 146,922 $ 480 $ 144,740 $ 473
Insurance $ 35,559 $ 116 $ 90,344 $ 295 $ 109,362 $ 357 $ 88,503 $ 289 $ 95,520 $ 312
Utilities $ 153,696 $ 502 $ 135,873 $ 444 $ 139,218 $ 455 $ 150,360 $ 491 $ 125,456 $ 410
Repair & Maintenance $ 181,139 $ 592 $ 180,458 $ 590 $ 250,846 $ 820 $ 213,120 $ 696 $ 228,936 $ 748
Cleaning $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Landscaping $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 38,781 $ 127 $ 59,717 $ 195 $ 104,680 $ 342 $ 153,145 $ 500 $ 40,660 $ 133
General Administrative $ 297,584 $ 972 $ 293,824 $ 960 $ 230,623 $ 754 $ 321,910 $1,052 $ 236,320 $ 772
Management $ 107,439 $ 351 $ 122,688 $ 401 $ 123,031 $ 402 $ 127,957 $ 418 $ 115,904 $ 379
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
--------------------------------------------------------------------------------------------------
Total Operating Expenses $ 943,505 $3,083 $1,019,101 $3,330 $1,090,463 $3,564 $1,201,917 $3,928 $ 987,536 $ 3,227
Reserves $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
--------------------------------------------------------------------------------------------------
Net Income $1,145,209 $3,743 $1,337,419 $4,371 $1,363,954 $4,457 $1,273,311 $4,161 $1,303,684 $ 4,260
AAA PROJECTION
----------------------------
DESCRIPTION TOTAL PER UNIT %
- ------------------------------------------------------
Revenues
Rental Income $2,552,700 $ 8,342 100.0%
Vacancy $ 255,270 $ 834 10.0%
Credit Loss/Concessions $ 51,054 $ 167 2.0%
-------------------------
Subtotal $ 306,324 $ 1,001 12.0%
Laundry Income $ 19,890 $ 65 0.8%
Garage Revenue $ 0 $ 0 0.0%
Other Misc. Revenue $ 198,900 $ 650 7.8%
-------------------------
Subtotal Other Income $ 218,790 $ 715 8.6%
-------------------------
Effective Gross Income $2,465,166 $ 8,056 100.0%
Operating Expenses
Taxes $ 168,300 $ 550 6.8%
Insurance $ 91,800 $ 300 3.7%
Utilities $ 153,000 $ 500 6.2%
Repair & Maintenance $ 198,900 $ 650 8.1%
Cleaning $ 0 $ 0 0.0%
Landscaping $ 0 $ 0 0.0%
Security $ 0 $ 0 0.0%
Marketing & Leasing $ 76,500 $ 250 3.1%
General Administrative $ 306,000 $ 1,000 12.4%
Management $ 123,258 $ 403 5.0%
Miscellaneous $ 0 $ 0 0.0%
-------------------------
Total Operating Expenses $1,117,758 $ 3,653 45.3%
Reserves $ 76,500 $ 250 6.8%
-------------------------
Net Income $1,270,908 $ 4,153 51.6%
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 12% based on
the subject's historical performance, as well as the anticipated future market
conditions.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 30
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
RESERVES FOR REPLACEMENT
"Reserves for replacements" is a contingency account allocated to the expenses
of the property to provide for replacement of short-lived items and for
unforeseen necessary capital expenditures. We have utilized the Korpacz Real
Estate Investor Survey of the national apartment market, which reports a range
of replacement reserves between $150 and $400 per unit. For purposes of this
analysis, we have included an allowance of $250 per unit for reserves for
replacement.
CAPITAL EXPENDITURES
Capital expenditures represent expenses for immediate repair or replacement of
items that have average to long lives. Based on our inspection of the property
as well as discussions with property management personnel, there are no major
items remaining in need of repair or replacement that would require an expense
beyond our reserves for replacement. Therefore an allowance of $250 per unit
should be satisfactory in our reserves for replacement to cover future capital
expenditures.
DISCOUNTED CASH FLOW ANALYSIS
As the subject is a multi-tenant income property, the Discounted Cash Flow
Method is considered appropriate. This method is especially meaningful in that
it isolates the timing of the annual cash flows and discounts them, along with
the expected equity reversion, to a present value. The present value of the cash
flow is added to the present value of the reversion, resulting in a total
property value.
INVESTMENT CRITERIA
Appropriate investment criteria will be derived for the subject based upon
analysis of comparable sales and a survey of real estate investors. The
following table summarizes the findings of Korpacz National Investor Survey for
the most recent period.
KORPACZ NATIONAL INVESTOR SURVEY
1ST QUARTER 2003
NATIONAL APARTMENT MARKET
CAPITALIZATION RATES
----------------------------------
GOING-IN TERMINAL
--------------- ---------------
LOW HIGH LOW HIGH
----------------------------------
RANGE 6.00% 10.00% 7.00% 10.00%
AVERAGE 8.14% 8.47%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 31
SUMMERWALK ON UNIVERSITY, WINTER PARK,
FLORIDA
SUMMARY OF OVERALL
CAPITALIZATION RATES
- --------------------------------------------------------
COMP. NO. SALE DATE OCCUP. PRICE/UNIT OAR
- --------------------------------------------------------
I-1 May-01 90% $ 38,125 10.78%
I-2 Sep-02 85% $ 41,159 9.54%
I-3 Nov-02 90% $ 34,797 9.60%
I-4 Oct-01 90% $ 62,500 9.38%
I-5 Aug-01 92% $ 43,000 9.79%
High 10.78%
Low 9.38%
Average 9.82%
Based on this information, we have concluded the subject's overall
capitalization rate should be 10.50%. The terminal capitalization rate is
applied to the net operating income estimated for the year following the end of
the holding period. Based on the concluded overall capitalization rate, the age
of the property and the surveyed information, we have concluded the subject's
terminal capitalization rate to be 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 $12,600,000. In this instance, the reversion
figure contributes
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 32
SUMMERWALK ON UNIVERSITY, WINTER PARK,
FLORIDA
approximately 36% 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
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
DISCOUNTED CASH FLOW ANALYSIS
SUMMERWALK ON UNIVERSITY
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 $ 2,552,700 $ 2,629,281 $2,708,159 $ 2,789,404 $ 2,873,086 $ 2,959,279 $ 3,048,057
Vacancy $ 255,270 $ 262,928 $ 270,816 $ 278,940 $ 287,309 $ 295,928 $ 304,806
Credit Loss $ 51,054 $ 52,586 $ 54,163 $ 55,788 $ 57,462 $ 59,186 $ 60,961
Concessions $ 25,704 $ 18,360 $ 11,016 $ 3,672 $ 0 $ 0 $ 0
---------------------------------------------------------------------------------------------
Subtotal $ 332,028 $ 333,874 $ 335,995 $ 338,401 $ 344,770 $ 355,113 $ 365,767
Laundry Income $ 19,890 $ 20,487 $ 21,101 $ 21,734 $ 22,386 $ 23,058 $ 23,750
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 198,900 $ 204,867 $ 211,013 $ 217,343 $ 223,864 $ 230,580 $ 237,497
---------------------------------------------------------------------------------------------
Subtotal Other Income $ 218,790 $ 225,354 $ 232,114 $ 239,078 $ 246,250 $ 253,638 $ 261,247
---------------------------------------------------------------------------------------------
EFFECTIVE GROSS INCOME $ 2,439,462 $ 2,520,761 $2,604,279 $ 2,690,081 $ 2,774,556 $ 2,857,803 $ 2,943,537
OPERATING EXPENSES:
Taxes $ 168,300 $ 173,349 $ 178,549 $ 183,906 $ 189,423 $ 195,106 $ 200,959
Insurance $ 91,800 $ 94,554 $ 97,391 $ 100,312 $ 103,322 $ 106,421 $ 109,614
Utilities $ 153,000 $ 157,590 $ 162,318 $ 167,187 $ 172,203 $ 177,369 $ 182,690
Repair & Maintenance $ 198,900 $ 204,867 $ 211,013 $ 217,343 $ 223,864 $ 230,580 $ 237,497
Cleaning $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Landscaping $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 76,500 $ 78,795 $ 81,159 $ 83,594 $ 86,101 $ 88,684 $ 91,345
General Administrative $ 306,000 $ 315,180 $ 324,635 $ 334,374 $ 344,406 $ 354,738 $ 365,380
Management $ 121,973 $ 126,038 $ 130,214 $ 134,504 $ 138,728 $ 142,890 $ 147,177
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
---------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES $ 1,116,473 $ 1,150,373 $1,185,279 $ 1,221,221 $ 1,258,047 $ 1,295,788 $ 1,334,662
Reserves $ 76,500 $ 78,795 $ 81,159 $ 83,594 $ 86,101 $ 88,684 $ 91,345
---------------------------------------------------------------------------------------------
NET OPERATING INCOME $ 1,246,489 $ 1,291,593 $1,337,841 $ 1,385,267 $ 1,430,418 $ 1,473,330 $ 1,517,530
==========================================================================================================================
Operating Expense Ratio
(% of EGI) 45.8% 45.6% 45.5% 45.4% 45.3% 45.3% 45.3%
Operating Expense Per
Unit $ 3,649 $ 3,759 $ 3,873 $ 3,991 $ 4,111 $ 4,235 $ 4,362
==========================================================================================================================
YEAR APR-2011 APR-2012 APR-2013 APR-2014
FISCAL YEAR 8 9 10 11
- --------------------------------------------------------------------------------
REVENUE
Base Rent $3,139,499 $3,233,684 $3,330,695 $3,430,615
Vacancy $ 313,950 $ 323,368 $ 333,069 $ 343,062
Credit Loss $ 62,790 $ 64,674 $ 66,614 $ 68,612
Concessions $ 0 $ 0 $ 0 $ 0
-------------------------------------------------
Subtotal $ 376,740 $ 388,042 $ 399,683 $ 411,674
Laundry Income $ 24,462 $ 25,196 $ 25,952 $ 26,730
Garage Revenue $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 244,622 $ 251,961 $ 259,519 $ 267,305
-------------------------------------------------
Subtotal Other Income $ 269,084 $ 277,157 $ 285,471 $ 294,035
-------------------------------------------------
EFFECTIVE GROSS INCOME $3,031,843 $3,122,799 $3,216,482 $3,312,977
OPERATING EXPENSES:
Taxes $ 206,988 $ 213,197 $ 219,593 $ 226,181
Insurance $ 112,902 $ 116,289 $ 119,778 $ 123,372
Utilities $ 188,171 $ 193,816 $ 199,630 $ 205,619
Repair & Maintenance $ 244,622 $ 251,961 $ 259,519 $ 267,305
Cleaning $ 0 $ 0 $ 0 $ 0
Landscaping $ 0 $ 0 $ 0 $ 0
Security $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 94,085 $ 96,908 $ 99,815 $ 102,810
General Administrative $ 376,341 $ 387,632 $ 399,261 $ 411,238
Management $ 151,592 $ 156,140 $ 160,824 $ 165,649
Miscellaneous $ 0 $ 0 $ 0 $ 0
-------------------------------------------------
TOTAL OPERATING EXPENSES $1,374,702 $1,415,943 $1,458,421 $1,502,174
Reserves $ 94,085 $ 96,908 $ 99,815 $ 102,810
-------------------------------------------------
NET OPERATING INCOME $1,563,056 $1,609,948 $1,658,246 $1,707,994
=================================================================================
Operating Expense Ratio
(% of EGI) 45.3% 45.3% 45.3% 45.3%
Operating Expense Per
Unit $ 4,492 $ 4,627 $ 4,766 $ 4,909
=================================================================================
Estimated Stabilized NOI $1,270,908 Sales Expense Rate 2.00%
Months to Stabilized 1 Discount Rate 13.00%
Stabilized Occupancy 90.0% Terminal Cap 11.00%
Gross Residual Sale Price $15,527,215 Deferred Maintenance $ 0
Less: Sales Expense $ 310,544 Add: Excess Land $ 0
-----------
Net Residual Sale Price $15,216,671 Other Adjustments $ 0
PV of Reversion $ 4,482,654 -----------
Add: NPV of NOI $ 8,078,135 Value Indicated By "DCF" $12,560,789
-----------
PV Total $12,560,789 Rounded $12,600,000
"DCF" VALUE SENSITIVITY TABLE
TOTAL VALUE DISCOUNT RATE
12.50% 12.75% 13.00% 13.25% 13.50%
- -------------------------------------------------------------------------------------------------------------
10.50% $13,173,017 $12,971,512 $12,774,249 $12,581,122 $12,392,032
10.75% $13,058,853 $12,859,854 $12,665,037 $12,474,297 $12,287,537
TERMINAL CAP RATE 11.00% $12,949,878 $12,753,272 $12,560,789 $12,372,328 $12,187,791
11.25% $12,845,747 $12,651,426 $12,461,174 $12,274,891 $12,092,479
11.50% $12,746,143 $12,554,009 $12,365,891 $12,181,690 $12,001,311
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME APPROACH PAGE 34
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
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
$47,000 (rounded). This amount has been deducted from the Direct Capitalization
analysis, as well as the Sales Comparison Approach value.
DIRECT CAPITALIZATION METHOD
After having projected the income and expenses for the property, the next step
in the valuation process is to capitalize the net income into an estimate of
value. The selected overall capitalization rate ("OAR") covers both return on
and return of capital. It is the overall rate of return an investor expects.
After considering the market transactions and the investor surveys, we
previously conclude that an overall rate of 10.50% percent is applicable to the
subject. The results of our direct capitalization analysis are as follows:
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME APPROACH PAGE 35
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
SUMMERWALK ON UNIVERSITY
TOTAL PER SQ. FT. PER UNIT %OF EGI
- ------------------------------------------------------------------------------------------------------------------
REVENUE
Base Rent $ 2,552,700 $ 10.09 $ 8,342
Less: Vacancy & Collection Loss 12.00% $ 306,324 $ 1.21 $ 1,001
Plus: Other Income
Laundry Income $ 19,890 $ 0.08 $ 65 0.81%
Garage Revenue $ 0 $ 0.00 $ 0 0.00%
Other Misc. Revenue $ 198,900 $ 0.79 $ 650 8.07%
---------------------------------------------------------------
Subtotal Other Income $ 218,790 $ 0.86 $ 715 8.88%
EFFECTIVE GROSS INCOME $ 2,465,166 $ 9.74 $ 8,056
OPERATING EXPENSES:
Taxes $ 168,300 $ 0.67 $ 550 6.83%
Insurance $ 91,800 $ 0.36 $ 300 3.72%
Utilities $ 153,000 $ 0.60 $ 500 6.21%
Repair & Maintenance $ 198,900 $ 0.79 $ 650 8.07%
Cleaning $ 0 $ 0.00 $ 0 0.00%
Landscaping $ 0 $ 0.00 $ 0 0.00%
Security $ 0 $ 0.00 $ 0 0.00%
Marketing & Leasing $ 76,500 $ 0.30 $ 250 3.10%
General Administrative $ 306,000 $ 1.21 $ 1,000 12.41%
Management 5.00% $ 123,258 $ 0.49 $ 403 5.00%
Miscellaneous $ 0 $ 0.00 $ 0 0.00%
TOTAL OPERATING EXPENSES $ 1,117,758 $ 4.42 $ 3,653 45.34%
Reserves $ 76,500 $ 0.30 $ 250 3.10%
---------------------------------------------------------------
NET OPERATING INCOME $ 1,270,908 $ 5.02 $ 4,153 51.55%
---------------------------------------------------------------
"GOING IN" CAPITALIZATION RATE 10.50%
VALUE INDICATION $ 12,103,883 $ 47.84 $ 39,555
PV OF CONCESSIONS ($ 47,000)
"AS IS" VALUE INDICATION
(DIRECT CAPITALIZATION APPROACH) $ 12,056,883
ROUNDED $ 12,100,000 $ 47.82 $ 39,542
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME APPROACH PAGE 36
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
DIRECT CAPITALIZATION VALUE SENSITIVITY TABLE
CAP RATE VALUE ROUNDED $/UNIT $/SF
- ------------------------------------------------------------------
9.75% $12,987,951 $13,000,000 $42,484 $51.38
10.00% $12,662,077 $12,700,000 $41,503 $50.19
10.25% $12,352,100 $12,400,000 $40,523 $49.01
10.50% $12,056,883 $12,100,000 $39,542 $47.82
10.75% $11,775,397 $11,800,000 $38,562 $46.64
11.00% $11,506,706 $11,500,000 $37,582 $45.45
11.25% $11,249,957 $11,200,000 $36,601 $44.26
CONCLUSION BY THE DIRECT CAPITALIZATION METHOD
Applying the capitalization rate to our estimated NOI results in an estimated
value of $12,100,000.
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 $12,600,000
Direct Capitalization Method $12,100,000
Giving consideration to the indicated values provided by both techniques, we
have concluded the estimated value by the income capitalization approach to be
$12,600,000.
AMERICAN APPRAISAL ASSOCIATES, INC. RECONCILIATION AND CONCLUSION PAGE 37
SUMMERWALK ON UNIVERSITY, WINTER PARK, 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 $13,000,000
Income Approach $12,600,000
Reconciled Value $12,600,000
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 28, 2003 the market value of the fee simple estate in the property is:
$12,600,000
AMERICAN APPRAISAL ASSOCIATES, INC. ADDENDA
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
ADDENDA
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
EXHIBIT A
SUBJECT PHOTOGRAPHS
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
SUBJECT PHOTOGRAPHS
[EXTERIOR PICTURE] [EXTERIOR - TYPICAL APARTMENT BUILDINGS PICTURE]
[EXTERIOR - APARTMENT BUILDING PICTURE] [EXTERIOR - APARTMENT BUILDING PICTURE]
[EXTERIOR - TENNIS COURT PICTURE] [EXTERIOR - SWIMMING POOL PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
SUBJECT PHOTOGRAPHS
[INTERIOR - TAHOE MODEL PICTURE] [INTERIOR - TAHOE MODEL PICTURE]
[INTERIOR - TAHOE MODEL PICTURE] [INTERIOR - TAOS APARTMENT UNIT PICTURE]
[INTERIOR - LAUNDRY FACILITY PICTURE] [EXTERIOR - APARTMENT BUILDING PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
EXHIBIT B
SUMMARY OF RENT COMPARABLES
AND PHOTOGRAPH OF COMPARABLES
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
PHOTOGRAPHS OF COMPARABLE SALE PROPERTIES
COMPARABLE I-1 COMPARABLE I-2 COMPARABLE I-3
COURTYARD AT WINTER PARK LA ALOMA APARTMENTS SEDGEFIELD APARTMENTS
1695 Lee Road 3040 Aloma Avenue 110 Sedgefield Circle
Winter Park, Florida Winter Park, Florida Winter Park, Florida
[PICTURE] [PICTURE] [PICTURE]
COMPARABLE I-4 COMPARABLE I-5
KINGSTON VILLAGE THE ASHLEY OF SPRING VALLEY
940 Douglas Avenue 693 South Wymore Road
Altamonte Springs, FL Altamonte Springs, FL
[PICTURE] [PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
SUMMARY OF COMPARABLE RENTAL PROPERTIES
COMPARABLE
DESCRIPTION SUBJECT R - 1
- -------------------------------------------------------------------------------------------------------------------------------
Property Name Summerwalk on University Summer Chase at Winter
Management Company AIMCO Con-Am Management
- -------------------------------------------------------------------------------------------------------------------------------
LOCATION:
- -------------------------------------------------------------------------------------------------------------------------------
Address 7000 University Boulevard 3650 Summer Wind Drive
City, State Winter Park, Florida Winter Park, Florida
County Orange Orange
Proximity to Subject I mile southwest of the subject
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 253,025 278,556
Year Built 1974 1973
Effective Age 20 20
Building Structure Type Stucco exterior walls; asphalt shingle roof Stucco exterior walls; asphalt shingle roof
- -------------------------------------------------------------------------------------------------------------------------------
Parking Type (Gr., Cov., etc.) Open Open
- -------------------------------------------------------------------------------------------------------------------------------
Number of Units 306 304
Unit Mix: Type Unit Qty Mo Type Unit Qty Mo
1 1Br/1Ba - Taos 550 49 $ 597 1 1Br/1Ba - Anchor 538 40 $ 595
2 1Br/1Ba - Durango 712 96 $ 619 2 1Br/1Ba - Bay 792 84 $ 665
3 2Br/1Ba - Tahoe 911 96 $ 727 3 1Br/1.5Ba - Den 1,052 20 $ 785
4 2Br/2Ba - Santa Fe 987 33 $ 765 4 2Br/2Ba - Dune 1,049 116 $ 795
5 3Br/2Ba - Phoenix 1,178 32 $ 875 5 3Br/2Ba - Reef 1,086 44 $ 995
Average Unit Size (SF) 827 916
Unit Breakdown: Efficiency 16% 2-Bedroom 42% Efficiency 13% 2-Bedroom 38%
1-Bedroom 31% 3-Bedroom 10% 1-Bedroom 34% 3-Bedroom 14%
- -------------------------------------------------------------------------------------------------------------------------------
CONDITION: Good Good
- -------------------------------------------------------------------------------------------------------------------------------
APPEAL: Average Average
AMENITIES:
Unit Amenities Attach. Garage X Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
Fireplace Fireplace
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
Spa/Jacuzzi X Car Wash Spa/Jacuzzi X Car Wash
X Basketball Court X BBQ Equipment Basketball Court X BBQ Equipment
-------------------------------------------------------------------------------------------
Volleyball Court Theater Room X Volleyball Court Theater Room
-------------------------------------------------------------------------------------------
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 X Jogging Track Business Office
X Gym Room X Gym Room
OCCUPANCY: 97% 90%
LEASING DATA:
Available Leasing Terms 7 to 12 Months 7 to 14 Months
- -------------------------------------------------------------------------------------------------------------------------------
Concessions 1 Month Free on Select Units 2 Months Free on Select Units
- -------------------------------------------------------------------------------------------------------------------------------
Pet Deposit $350 $150
Utilities Paid by Tenant: X Electric Natural Gas X Electric Natural Gas
Water Trash Water Trash
Confirmation May 27, 2003; Michelle Chapman (Community May 27, 2003; Leasing Agent
Telephone Number (407) 678-2662 (407) 671-2400
NOTES: None
COMPARISON TO SUBJECT: Similar
- -------------------------------------------------------------------------------------------------------------------------------
COMPARABLE COMPARABLE
DESCRIPTION R - 2 R - 3
- -------------------------------------------------------------------------------------------------------------------------------
Property Name Sutton Place Emerald Bay at Winter Park
Management Company CAPREIT Equity Residential
- -------------------------------------------------------------------------------------------------------------------------------
LOCATION:
- -------------------------------------------------------------------------------------------------------------------------------
Address 3935 Sutton Place Boulevard 5 Autumn Breeze Way
City, State Winter Park, Florida Winter Park, Florida
County Orange Orange
Proximity to Subject Right next to the subject 0.5 mile northwest of the subject
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 515,236 373,000
Year Built 1988 1972
Effective Age 10 20
Building Structure Type Stucco exterior walls; asphalt shingle roof Block & Stucco walls; asphalt shingle roof
- -------------------------------------------------------------------------------------------------------------------------------
Parking Type (Gr., Cov., etc.) Open Open, Covered
- -------------------------------------------------------------------------------------------------------------------------------
Number of Units 288 432
Unit Mix: Type Unit Qty Mo Type Unit Qty Mo
1 1Br/1Ba - Essex 675 N/A $ 667 2 1Br/1Ba 765 148 $ 665
2 1Br/1Ba - Concord 837 N/A $ 715 4 2Br/2Ba 881 132 $ 890
4 2Br/2Ba - Cambridge 940 N/A $ 805 5 3Br/2Ba 944 152 $ 745
5 3Br/2Ba - 1,042 N/A $ 870
Average Unit Size (SF) 863
Unit Breakdown: Efficiency 0% 2-Bedroom 0% Efficiency 0% 2-Bedroom 31%
1-Bedroom 0% 3-Bedroom 0% 1-Bedroom 34% 3-Bedroom 35%
- -------------------------------------------------------------------------------------------------------------------------------
CONDITION: Good Good
- -------------------------------------------------------------------------------------------------------------------------------
APPEAL: Good Good
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
Fireplace Fireplace
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
X Spa/Jacuzzi X Car Wash X Spa/Jacuzzi X Car Wash
X Basketball Court X BBQ Equipment X Basketball Court X 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
Racquet Ball X Laundry Room Racquet Ball X Laundry Room
X Jogging Track X Business Office Jogging Track Business Office
X Gym Room X Gym Room
OCCUPANCY: 95% 89%
LEASING DATA:
Available Leasing Terms 7 to 12 Months 7 to 13 Months
- -------------------------------------------------------------------------------------------------------------------------------
Concessions $100 Off Select Units $80 off 1Br $96 off 2Br $116 off 3Br
- -------------------------------------------------------------------------------------------------------------------------------
Pet Deposit $300-$500 plus $10 per month $200
Utilities Paid by Tenant: X Electric Natural Gas X Electric Natural Gas
Water Trash Water Trash
Confirmation May 27, 2003; Leasing Agent May 27, 2003; Leasing Agent
Telephone Number (407) 657-2299 (407) 671-7722
NOTES: None None.
COMPARISON TO SUBJECT: Slightly Inferior Slightly Inferior
- -------------------------------------------------------------------------------------------------------------------------------
COMPARABLE COMPARABLE
DESCRIPTION R - 4 R - 5
- -------------------------------------------------------------------------------------------------------------------------------
Property Name La Aloma Apartments Sun Key
Management Company Florida Investment Properties LLC Picerne Management Company
- -------------------------------------------------------------------------------------------------------------------------------
LOCATION:
- -------------------------------------------------------------------------------------------------------------------------------
Address 3040 Aloma Avenue 7502 Sun Key Boulevard
City, State Winter Park, Florida Winter Park, Florida
County Orange Orange
Proximity to Subject 0.5 mile northwest of the subject 0.5 mile northwest of the subject
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 176,800 207,554
Year Built 1972 1986
Effective Age 20 10
Building Structure Type Stucco exterior walls; asphalt shingle roof Stucco exterior walls; asphalt shingle roof
- -------------------------------------------------------------------------------------------------------------------------------
Parking Type (Gr., Cov., etc.) Open Open
- -------------------------------------------------------------------------------------------------------------------------------
Number of Units 164 592
Unit Mix: Type Unit Qty Mo Type Unit Qty Mo
2 1Br/1Ba 730 N/A $ 555 1 1Br/1Ba 600 60 $ 640
3 2Br/1Ba 930 N/A $ 610 2 1Br/1Ba 750 236 $ 695
4 2Br/1.5Ba 1,005 N/A $ 625 4 2Br/2Ba 900 60 $ 770
4 2Br/2Ba 1,140 N/A $ 675 5 3Br/2Ba 1,030 236 $ 835
5 3Br/2Ba 1,200 N/A $ 765
Average Unit Size (SF) 730 862
Unit Breakdown: Efficiency 0% 2-Bedroom Efficiency 0% 2-Bedroom 10%
1-Bedroom 24% 3-Bedroom 1-Bedroom 50% 3-Bedroom 40%
- -------------------------------------------------------------------------------------------------------------------------------
CONDITION: Average Average
- -------------------------------------------------------------------------------------------------------------------------------
APPEAL: Good Good
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage X Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
Fireplace 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 X BBQ Equipment Basketball Court X BBQ Equipment
-------------------------------------------------------------------------------------------
Volleyball Court Theater Room X 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
X Jogging Track Business Office Jogging Track Business Office
X Gym Room X Gym Room
OCCUPANCY: 96% 94%
LEASING DATA:
Available Leasing Terms 9 to 13 Months 6 to 15 Months
- -------------------------------------------------------------------------------------------------------------------------------
Concessions $99 off First Months 1 Month Free
- -------------------------------------------------------------------------------------------------------------------------------
Pet Deposit $300 $250
Utilities Paid by Tenant: X Electric Natural Gas X Electric Natural Gas
Water Trash Water Trash
Confirmation May 28, 2003; Property Manager May 28, 2003; Leasing Agent
Telephone Number (407) 677-7722 (407) 677-8884
NOTES: None None
COMPARISON TO SUBJECT: Inferior Slightly Inferior
- -------------------------------------------------------------------------------------------------------------------------------
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
PHOTOGRAPHS OF COMPARABLE RENT PROPERTIES
COMPARABLE R-1
SUMMER CHASE AT WINTER PARK
3650 Summer Wind Drive
Winter Park, Florida
[PICTURE]
COMPARABLE R-2
SUTTON PLACE
3935 Sutton Place Boulevard
Winter Park, Florida
[PICTURE]
COMPARABLE R-3
EMERALD BAY AT WINTER PARK
5 Autumn Breeze Way
Winter Park, Florida
[PICTURE]
COMPARABLE R-4
LA ALOMA APARTMENTS
3040 Aloma Avenue
Winter Park, Florida
[PICTURE]
COMPARABLE R-5
SUN KEY
7502 Sun Key Boulevard
Winter Park, Florida
[PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
EXHIBIT C
ASSUMPTIONS AND LIMITING CONDITIONS
(3 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
SUMMERWALK ON UNIVERSITY, WINTER PARK, 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
SUMMERWALK ON UNIVERSITY, WINTER PARK, 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
SUMMERWALK ON UNIVERSITY, WINTER PARK, 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
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
EXHIBIT D
CERTIFICATE OF APPRAISER
(1 PAGE)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT D
CERTIFICATE OF APPRAISER
I certify that, to the best of my knowledge and belief
The statements of fact contained in this report are true and correct.
The report analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and represent the
impartial and unbiased professional analyses, opinions, and conclusions
of American Appraisal Associates, Inc.
American Appraisal Associates, Inc., and I personally have no present
or prospective interest in or bias with respect to the property that is
the subject of this report and have no personal interest or bias with
respect to the parties involved.
The engagement of American Appraisal Associates, Inc., and myself
personally in this assignment and compensation for American Appraisal
Associates, Inc., are not contingent on the development or reporting of
a predetermined value or direction in value that favors the cause of
the client, the amount of the value opinion, the attainment of a
stipulated result, or the occurrence of a subsequent event directly
related to the intended use of this appraisal.
The analyses, opinions, and conclusions were developed, and this report
has been prepared, in conformity with the Uniform Standards of
Professional Appraisal Practice and the Principles of Appraisal
Practice and Code of Ethics of the American Society of Appraisers.
I personally did not inspect the subject property. Michael L. Kersten
provided significant real property appraisal assistance in the
preparation of this report.
-s- Alice MacQueen
----------------------------
Alice MacQueen
Vice President, Real Estate Group
Florida Certified General Real Estate Appraiser
#RZ0002202
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
EXHIBIT E
QUALIFICATIONS OF APPRAISER
(2 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
SUMMERWALK ON UNIVERSITY, WINTER PARK, 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
SUMMERWALK ON UNIVERSITY, WINTER PARK, 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.
SUMMERWALK ON UNIVERSITY, WINTER PARK, FLORIDA
GENERAL SERVICE CONDITIONS
AMERICAN APPRAISAL ASSOCIATES, INC.
SUMMERWALK ON UNIVERSITY, WINTER PARK, 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.