MILLHOPPER VILLAGE
507 NW 39TH ROAD
GAINESVILLE, FLORIDA
MARKET VALUE -
FEE SIMPLE ESTATE
AS OF MAY 27, 2003
PREPARED FOR:
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(AIMCO)
C/O LINER YANKELEVITZ SUNSHINE & REGENSTREIF LLP
&
LIEFF CABRASER HEIMANN & BERNSTEIN
ON BEHALF OF NUANES, ET. AL.
[AMERICAN APPRAISAL ASSOCIATES(R) LOGO]
[AMERICAN APPRAISAL ASSOCIATES(R) LOGO]
[AMERICAN APPRAISAL ASSOCIATES(R) LETTERHEAD]
JULY 9, 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: MILLHOPPER VILLAGE
507 NW 39TH ROAD
GAINESVILLE, ALACHUA 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 136 units with a
total of 156,950 square feet of rentable area. The improvements were built in
1969. The improvements are situated on 8.35 acres. Overall, the improvements are
in average condition. As of the date of this appraisal, the subject property is
92% 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
MILLHOPPER VILLAGE, GAINESVILLE, 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 27, 2003 is:
($6,100,000)
Respectfully submitted,
AMERICAN APPRAISAL ASSOCIATES, INC.
-s- Alice MacQueen
July 9, 2003 Alice MacQueen
#053272 Vice President, Real Estate Group
Florida Certified General Real Estate Appraiser
#RZ0002202
Assisted By:
Michael L. Kersten
AMERICAN APPRAISAL ASSOCIATES, INC. TABLE OF CONTENTS PAGE 3
MILLHOPPER VILLAGE, GAINESVILLE, 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
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
EXECUTIVE SUMMARY
PART ONE - PROPERTY DESCRIPTION
PROPERTY NAME: Millhopper Village
LOCATION: 507 NW 39th Road
Gainesville, 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 27, 2003
DATE OF REPORT: July 9, 2003
PHYSICAL DESCRIPTION - SITE & IMPROVEMENTS:
SITE:
Size: 8.35 acres, or 363,726 square feet
Assessor Parcel No.: 06498-000-00
Floodplain: Community Panel No. 1251070004B (January 19, 1983)
Flood Zone X, an area outside the floodplain.
Zoning: RMF-7 (Multiple-family medium density residential
district)
BUILDING:
No. of Units: 136 Units
Total NRA: 156,950 Square Feet
Average Unit Size: 1,154 Square Feet
Apartment Density: 16.3 units per acre
Year Built: 1969
UNIT MIX AND MARKET RENT:
GROSS RENTAL INCOME PROJECTION
- ------------------------------------------------------------------------------------
Market Rent
Square ------------------- Monthly Annual
Unit Type Feet Per Unit Per SF Income Income
- ------------------------------------------------------------------------------------
1Br/1Ba - 1A10 750 $ 590 $ 0.79 $18,880 $ 226,560
2 Br/1.5 Ba - 2A15 1,400 $ 800 $ 0.57 $ 4,000 $ 48,000
2Br/2Ba - 2A20 1,000 $ 710 $ 0.71 $36,920 $ 443,040
3Br/2.5Ba - 3A25 1,550 $ 810 $ 0.52 $20,250 $ 243,000
3Br/2.5Ba - 3B25 1,600 $ 840 $ 0.53 $18,480 $ 221,760
Total $98,530 $1,182,360
OCCUPANCY: 92%
ECONOMIC LIFE: 45 Years
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 5
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
EFFECTIVE AGE: 20 Years
REMAINING ECONOMIC LIFE: 25 Years
SUBJECT PHOTOGRAPHS AND LOCATION MAP:
SUBJECT PHOTOGRAPHS
[EXTERIOR - OFFICE PICTURE] [EXTERIOR - PROJECT PICTURE]
AREA MAP
[MAP]
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 6
MILLHOPPER VILLAGE, GAINESVILLE, 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
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
PART TWO - ECONOMIC INDICATORS
INCOME CAPITALIZATION APPROACH
DIRECT CAPITALIZATION Amount $/Unit
--------------------- ------ ------
Potential Rental Income $ 1,182,360 $ 8,694
Effective Gross Income $ 1,166,124 $ 8,574
Operating Expenses $ 544,506 $ 4,004 46.7% of EGI
Net Operating Income: $ 587,618 $ 4,321
Capitalization Rate 10.00%
DIRECT CAPITALIZATION VALUE $ 5,900,000 * $ 43,382 / UNIT
DISCOUNTED CASH FLOW ANALYSIS:
Holding Period 10 years
2002 Economic Vacancy 10%
Stabilized Vacancy & Collection Loss: 10%
Lease-up / Stabilization Period N/A
Terminal Capitalization Rate 11.00%
Discount Rate 12.50%
Selling Costs 2.00%
Growth Rates:
Income 3.00%
Expenses: 3.00%
DISCOUNTED CASH FLOW VALUE $ 6,000,000 * $ 44,118 / UNIT
RECONCILED INCOME CAPITALIZATION VALUE $ 6,000,000 $ 44,118 / UNIT
SALES COMPARISON APPROACH
PRICE PER UNIT:
Range of Sales $/Unit (Unadjusted) $36,869 to $74,906
Range of Sales $/Unit (Adjusted) $44,242 to $49,375
VALUE INDICATION - PRICE PER UNIT $ 6,400,000 * $ 47,059 / UNIT
EGIM ANALYSIS
Range of EGIMs from Improved Sales 5.27 to 7.19
Selected EGIM for Subject 5.50
Subject's Projected EGI $ 1,166,124
EGIM ANALYSIS CONCLUSION $ 6,400,000 * $ 47,059 / UNIT
NOI PER UNIT ANALYSIS CONCLUSION $ 6,300,000 * $ 46,324 / UNIT
RECONCILED SALES COMPARISON VALUE $ 6,400,000 $ 47,059 / 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
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
PART THREE - SUMMARY OF VALUE CONCLUSIONS
SALES COMPARISON APPROACH:
Price Per Unit $ 6,400,000
NOI Per Unit $ 6,300,000
EGIM Multiplier $ 6,400,000
INDICATED VALUE BY SALES COMPARISON $ 6,400,000 $ 47,059 / UNIT
INCOME APPROACH:
Direct Capitalization Method: $ 5,900,000
Discounted Cash Flow Method: $ 6,000,000
INDICATED VALUE BY THE INCOME APPROACH $ 6,000,000 $ 44,853 / UNIT
RECONCILED OVERALL VALUE CONCLUSION: $ 6,100,000 $ 44,853 / UNIT
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 9
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
INTRODUCTION
IDENTIFICATION OF THE SUBJECT
The subject property is located at 507 NW 39th Road, Gainesville, Alachua
County, Florida. Gainesville identifies it as 06498-000-00.
SCOPE OF THE ASSIGNMENT
The property, neighborhood, and comparables were inspected by Michael L. Kersten
on May 27, 2003. Alice MacQueen has not made a personal inspection of the
subject property. Michael L. Kersten assisted Alice MacQueen with the research,
valuation analysis and writing the report. Alice MacQueen reviewed the report
and concurs with the value. Alice MacQueen and Michael L. Kersten have extensive
experience in appraising similar properties and meet the USPAP competency
provision.
The scope of this investigation comprises the inspection of the property and the
collection, verification, and analysis of general and specific data pertinent to
the subject property. We have researched current improved sales and leases of
similar properties, analyzing them as to their comparability, and adjusting them
accordingly. We completed the Sales Comparison and Income Capitalization
Approaches to value. From these approaches to value, a concluded overall value
was made.
DATE OF VALUE AND REPORT
This appraisal was made to express the opinion of value as of May 27, 2003. The
date of the report is July 9, 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
MILLHOPPER VILLAGE, GAINESVILLE, 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 SP V LP. 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
MILLHOPPER VILLAGE, GAINESVILLE, 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 Gainesville, 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 - NW 34th Street
West - Newberry Street (SR 26)
South - Newberry Street (SR 26)
North - NW 8th Avenue
MAJOR EMPLOYERS
Major employers in the subject's area include Shands Hospital (9,600),
Nationwide Insurance, Alachua County School Board, Energizer, and North Florida
Regional Hospital. The University of Florida is Gainesville's largest employer
(11,500 employees) and the State's second largest. 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
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
NEIGHBORHOOD DEMOGRAPHICS
AREA
-------------------------------------------------
CATEGORY 1-MI. RADIUS 3-MI. RADIUS 5-MI. RADIUS MSA
-------- ------------ ------------ ------------ ---
POPULATION TRENDS
Current Population 8,188 79,869 149,464 224,369
5-Year Population 8,378 83,813 160,961 241,244
% Change CY-5Y 2.3% 4.9% 7.7% 7.5%
Annual Change CY-5Y 0.5% 1.0% 1.5% 1.5%
HOUSEHOLDS
Current Households 3,639 33,212 62,844 90,722
5-Year Projected Households 3,796 35,725 68,743 99,112
% Change CY - 5Y 4.3% 7.6% 9.4% 9.2%
Annual Change CY-5Y 0.9% 1.5% 1.9% 1.8%
INCOME TRENDS
Median Household Income $ 34,450 $ 26,098 $ 26,952 $ 29,514
Per Capita Income $ 22,332 $ 18,407 $ 18,880 $ 18,899
Average Household Income $ 49,986 $ 44,769 $ 44,796 $ 46,739
Source: Demographics Now
The subject neighborhood's population is expected to show increases above that
of the region. The immediate market offers superior income levels as compared to
the broader market.
The following table illustrates the housing statistics in the subject's
immediate area, as well as the MSA region.
HOUSING TRENDS
AREA
-------------------------------------------------
CATEGORY 1-MI. RADIUS 3-MI. RADIUS 5-MI. RADIUS MSA
-------- ------------ ------------ ------------ ---
HOUSING TRENDS
% of Households Renting 42.93% 55.33% 51.40% 41.01%
5-Year Projected % Renting 43.72% 56.11% 51.74% 41.03%
% of Households Owning 51.81% 36.72% 40.29% 50.29%
5-Year Projected % Owning 51.19% 36.38% 40.58% 50.92%
Source: Demographics Now
AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 13
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
SURROUNDING IMPROVEMENTS
The following uses surround the subject property:
North - Single-Family Subdivision - Bartram Woods
South - Concordia Condominiums
East - Vacant Land
West - NW 39th Road, a retail project, and a small multi-family project
CONCLUSIONS
The subject is well located within the city of Gainesville. 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
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
MARKET ANALYSIS
The subject property is located in the city of Gainesville in Alachua County.
The overall pace of development in the subject's market is more or less
decreasing. There has not been any new apartment construction in proximity to
the subject property over the past several years. The following table
illustrates historical vacancy rates for the subject's market.
HISTORICAL VACANCY RATE
Period Region Submarket
- ------ ------ ---------
4Q01 5.0% 6.0%
1Q02 6.0% 7.0%
2Q02 4.6% 8.0%
3Q02 7.2% 5.3%
4Q02 8.0% 6.7%
1Q03 7.0% 7.3%
Occupancy trends in the subject's market are stable. Historically speaking, the
subject's submarket has equated the overall market. Market rents in the
subject's market have been following a decreasing trend. 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 The Oaks Apartments 152 97% 1972 1.5 miles west of subject
R-2 Brookwood Terrace 132 97% 1975 1.5 miles northeast of the subject
R-3 Covered Bridge 174 97% 1973 1.5 miles northeast of the subject
R-4 Madison Pointe 170 96% 1973 1.5 mile northeast of the subject
R-5 Creekwood 120 91% 1978 2 miles northeast of the subject
Subject Millhopper Village 136 92% 1969
Within Alachua County, there are reportedly more than 165 apartment communities.
Rental rates in the area range from $350 to $500 per month for Studio
apartments, $350 to $600 for 1 Bedroom units, $550 to $800 per month for 2
Bedroom apartments, $750 to $1,000 per month for 3 Bedroom apartments, and from
$900 to $2,000 for 4 Bedroom units.
AMERICAN APPRAISAL ASSOCIATES, INC. MARKET ANALYSIS PAGE 15
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
Gainesville is one of the few places that have 4-Bedroom, 4-Bathroom apartments.
The area has more than 21,000 apartment units. Gainesville is a strong apartment
due mainly to the University of Florida.
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 16
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
PROPERTY DESCRIPTION
SITE ANALYSIS
Site Area 8.35 acres, or 363,726 square feet
Shape Irregular
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 1251070004B, dated January 19, 1983
Flood Zone Zone X
Zoning RMF-7, the subject improvements represent a legal
conforming use of the site.
REAL ESTATE TAXES
ASSESSED VALUE - 2002
----------------------------------------- TAX RATE / PROPERTY
PARCEL NUMBER LAND BUILDING TOTAL MILL RATE TAXES
- ------------- ---- -------- ----- ---------- -----
06498-000-00 $292,300 $2,090,600 $2,382,900 0.02715 $64,699
IMPROVEMENT ANALYSIS
Year Built 1969
Number of Units 136
Net Rentable Area 156,950 Square Feet
Construction:
Foundation Reinforced concrete slab
Frame Heavy or light wood
Exterior Walls Wood or vinyl siding
Roof Composition shingle over a wood truss structure
Project Amenities Amenities at the subject include a swimming pool,
basketball court, tennis court, gym room, car
wash, barbeque equipment, meeting hall, laundry
room, and parking area.
Unit Amenities Individual unit amenities include a balcony, cable
TV connection, and washer dryer connection.
Appliances available in each unit include
refrigerator, stove, dishwasher, water heater,
garbage disposal, and oven.
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 17
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
Unit Mix:
Unit Area
Unit Type Number of Units (Sq. Ft.)
--------- --------------- ---------
1Br/1Ba - 1A10 32 750
2 Br/1.5 Ba - 2A15 5 1,400
2Br/2Ba - 2A20 52 1,000
3Br/2.5Ba - 3A25 25 1,550
3Br/2.5Ba - 3B25 22 1,600
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
1969 and consist of a 136-unit multifamily project. The highest and best use as
improved is for continued multifamily use. Overall, the highest and best use of
the subject property is the continued use of the existing apartment project.
AMERICAN APPRAISAL ASSOCIATES, INC. VALUATION PROCEDURE PAGE 18
MILLHOPPER VILLAGE, GAINESVILLE, 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
MILLHOPPER VILLAGE, GAINESVILLE, 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
MILLHOPPER VILLAGE, GAINESVILLE, 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
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
SUMMARY OF COMPARABLE SALES -IMPROVED
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
- -------------------------------------------------------------------------------------------------------------------
Property Name Millhopper Village Regency Oaks Country Garden
LOCATION:
Address 507 NW 39th Road 3230 SW Archer Road 2001 SW 16th Street
City, State Gainesville, Florida Gainesville, Florida Gainesville, Florida
County Alachua Alachua Alachua
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) 156,950 155,844 95,000
Year Built 1969 1972 1971
Number of Units 136 148 99
Unit Mix: Type Total Type Total Type Total
1Br/1Ba - 1A10 32 1Br/1Ba N/A 1Br/1Ba N/A
2Br/1.5 Ba - 2A15 5 2Br/2Ba N/A 2Br/2Ba N/A
2Br/2Ba - 2A20 52 3Br/2Ba N/A
3Br/2.5Ba - 3A25 25
3Br/2.5Ba - 3B25 22
Average Unit Size (SF) 1,154 1,053 960
Land Area (Acre) 8.3500 8.4600 4.0200
Density (Units/Acre) 16.3 17.5 24.6
Parking Ratio (Spaces/Unit) 1.90 1.90 1.90
Parking Type (Gr., Cov., etc.) Garage, Open Covered Open Open
CONDITION: Good Average Average
APPEAL: Good Fair Average
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 Yes Yes Yes
Washer/Dryer Connection Yes No Yes
Other
Other
OCCUPANCY: 92% 90% 92%
TRANSACTION DATA:
Sale Date January, 2003 January, 2003
Sale Price ($) $6,000,000 $3,650,000
Grantor Regency Oaks Apartments, Country Gardens
LLC Apartments, LLC
Grantee Saul and Netty Silber Saul and Netty Silber
Sale Documentation Book 2587, Page 267 Book 2587, Page 130
Verification Smith Equities Smith Equities
Telephone Number (407) 422-0704 (407) 422-0704
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF
-------------------------------------------------------
Potential Gross Income $1,185,000 $8,007 $7.60 $745,000 $7,525 $7.84
Vacancy/Credit Loss $ 82,950 $ 560 $0.53 $ 52,150 $ 527 $0.55
Effective Gross Income $1,102,050 $7,446 $7.07 $692,850 $6,998 $7.29
Operating Expenses $ 525,000 $3,547 $3.37 $332,500 $3,359 $3.50
Net Operating Income $ 577,050 $3,899 $3.70 $360,350 $3,640 $3.79
NOTES: None None
PRICE PER UNIT $ 40,541 $36,869
PRICE PER SQUARE FOOT $ 38.50 $ 38.42
EXPENSE RATIO 47.6% 48.0%
EGIM 5.44 5.27
OVERALL CAP RATE 9.62% 9.87%
- -------------------------------------------------------------------------------------------------------------------
Cap Rate based on Pro Forma or Actual Income? PRO FORMA PRO FORMA
- -------------------------------------------------------------------------------------------------------------------
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
- ----------------------------------------------------------------------------------------------------------------------------
Property Name Covered Bridge Oxford Manor Cobblestone
LOCATION:
Address 1810 NW 23rd Boulevard 2801 NW 23rd Boulevard 1810 NW 23rd Boulevard
City, State Gainesville, Florida Gainesville, Florida Gainesville, Florida
County Alachua Alachua Alachua
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) 169,276 376,885 225,120
Year Built 1973 1985 1994
Number of Units 176 366 168
Unit Mix: Type Total Type Total Type Total
1Br/1Ba 76 1Br/1Ba N/A
2Br/2Ba 66 2Br/2Ba N/A 2Br/2Ba 84
3Br/2Ba 32 3Br/2Ba N/A 3Br/3Ba 84
Average Unit Size (SF) 962 1,030 1,340
Land Area (Acre) 21.4400 28.8600 15.1200
Density (Units/Acre) 8.2 12.7 11.1
Parking Ratio (Spaces/Unit) 1.85 2.00 2.09
Parking Type (Gr., Cov., etc.) Open Open Open, Covered
CONDITION: Average Very Good Very Good
APPEAL: Average Very Good Very Good
AMENITIES:
Pool/Spa Yes/Yes Yes/Yes Yes/Yes
Gym Room Yes Yes Yes
Laundry Room Yes Yes Yes
Secured Parking No No Yes
Sport Courts No Yes Yes
Washer/Dryer Connection Yes Yes Yes
Other
Other
OCCUPANCY: 95% 92% 94%
TRANSACTION DATA:
Sale Date August, 2001 January, 2002 January, 2002
Sale Price ($) $7,900,000 $27,415,730 $12,584,270
Grantor NLP Covered Bridge National Oxford Manor Apartments of Cobblestone Apartments of
Associates Gainesville, Ltd. Gainesville, Ltd.
Grantee Covered Bridge Apartments, Paradigm Properties Paradigm Properties
LLC
Sale Documentation Book 2380, Page 198
Verification Smith Equities Smith Equities Smith Equities
Telephone Number (407) 422-0704 (407) 422-0704 (407) 422-0704
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF Total $ $/Unit $/SF
------------------------------------------------------------------------------------------
Potential Gross Income $1,382,500 $7,855 $8.17 $4,100,000 $11,202 $10.88 $2,065,000 $12,292 $9.17
Vacancy/Credit Loss $ 96,775 $ 550 $0.57 $ 287,000 $ 784 $ 0.76 $ 144,550 $ 860 $0.64
Effective Gross Income $1,285,725 $7,305 $7.60 $3,813,000 $10,418 $10.12 $1,920,450 $11,431 $8.53
Operating Expenses $ 600,000 $3,409 $3.54 $1,280,000 $ 3,497 $ 3.40 $ 737,500 $ 4,390 $3.28
Net Operating Income $ 685,725 $3,896 $4.05 $2,533,000 $ 6,921 $ 6.72 $1,182,950 $ 7,041 $5.25
NOTES: This property, at the time None None
of sale, had 176 units. It
now has 174.
PRICE PER UNIT $44,886 $74,906 $74,906
PRICE PER SQUARE FOOT $ 46.67 $ 72.74 $ 55.90
EXPENSE RATIO 46.7% 33.6% 38.4%
EGIM 6.14 7.19 6.55
OVERALL CAP RATE 8.68% 9.24% 9.40%
- ----------------------------------------------------------------------------------------------------------------------------
Cap Rate based on Pro Forma or PRO FORMA PRO FORMA PRO FORMA
Actual Income?
- ----------------------------------------------------------------------------------------------------------------------------
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 22
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
IMPROVED SALES MAP
[MAP]
IMPROVED SALES ANALYSIS
The improved sales indicate a sales price range from $36,869 to $74,906 per
unit. Adjustments have been made to the sales to reflect differences in
location, age/condition and quality/appeal. Generally speaking, larger
properties typically have a lower price per unit when compared to smaller
properties, all else being equal. Similarly, those projects with a higher
average unit size will generally have a higher price per unit. After appropriate
adjustments are made, the improved sales demonstrate an adjusted range for the
subject from $44,242 to $49,375 per unit with a mean or average adjusted price
of $46,774 per unit. The median adjusted price is $46,622 per unit. Based on the
following analysis, we have concluded to a value of $47,000 per unit, which
results in an "as is" value of $6,400,000 (rounded after necessary adjustment,
if any).
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 23
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
SALES ADJUSTMENT GRID
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
----------- ------- ---------- ----------
Property Name Millhopper Village Regency Oaks Country Garden
Address 507 NW 39th Road 3230 SW Archer Road 2001 SW 16th Street
City Gainesville, Florida Gainesville, Florida Gainesville, Florida
Sale Date January, 2003 January, 2003
Sale Price ($) $6,000,000 $3,650,000
Net Rentable Area (SF) 156,950 155,844 95,000
Number of Units 136 148 99
Price Per Unit $40,541 $36,869
Year Built 1969 1972 1971
Land Area (Acre) 8.3500 8.4600 4.0200
VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 01-2003 0% 01-2003 0%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $40,541 $36,869
Location Inferior 15% Comparable 0%
Number of Units 136 148 0% 99 0%
Quality / Appeal Good Comparable 0% Inferior 15%
Age / Condition 1969 1972 / Average 0% 1971 / Average 0%
Occupancy at Sale 92% 90% -10% 92% -10%
Amenities Good Inferior 10% Inferior 10%
Average Unit Size (SF) 1,154 1,053 0% 960 5%
PHYSICAL ADJUSTMENT 15% 20%
FINAL ADJUSTED VALUE ($/UNIT) $46,622 $44,242
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
----------- ---------- ---------- ----------
Property Name Covered Bridge Oxford Manor Cobblestone
Address 1810 NW 23rd Boulevard 2801 NW 23rd Boulevard 1810 NW 23rd Boulevard
City Gainesville, Florida Gainesville, Florida Gainesville, Florida
Sale Date August, 2001 January, 2002 January, 2002
Sale Price ($) $7,900,000 $27,415,730 $12,584,270
Net Rentable Area (SF) 169,276 376,885 225,120
Number of Units 176 366 168
Price Per Unit $44,886 $74,906 $74,906
Year Built 1973 1985 1994
Land Area (Acre) 21.4400 28.8600 15.1200
VALUE ADJUSTMENTS DESCRIPTION ADJ. DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate 0% Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 08-2001 0% 01-2002 0% 01-2002 0%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $44,886 $74,906 $74,906
Location Comparable 0% Comparable 0% Comparable 0%
Number of Units 176 0% 366 10% 168 0%
Quality / Appeal Inferior 15% Superior -10% Superior -5%
Age / Condition 1973 / Average 0% 1985 / Very Good -15% 1994 / Very Good -20%
Occupancy at Sale 95% -10% 92% -10% 94% -10%
Amenities Comparable 0% Superior -10% Comparable 0%
Average Unit Size (SF) 962 5% 1,030 0% 1,340 -5%
PHYSICAL ADJUSTMENT 10% -35% -40%
FINAL ADJUSTED VALUE ($/UNIT) $49,375 $48,689 $44,944
SUMMARY
VALUE RANGE (PER UNIT) $44,242 TO $49,375
MEAN (PER UNIT) $46,774
MEDIAN (PER UNIT) $46,622
VALUE CONCLUSION (PER UNIT) $47,000
VALUE INDICATED BY SALES COMPARISON APPROACH $6,392,000
ROUNDED $6,400,000
NET OPERATING INCOME (NOI) ANALYSIS
We have also conducted a net operating income (NOI) comparison analysis. The NOI
effectively takes into account the various physical, location, and operating
aspects of the sale. When the subject's NOI is compared to the sale NOI, a
percent adjustment can be arrived at. The following table illustrates this
analysis.
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 24
MILLHOPPER VILLAGE, GAINESVILLE, 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-1 148 $ 6,000,000 9.62% $ 577,050 $ 587,618 1.108 $ 44,926
$ 40,541 $ 3,899 $ 4,321
I-2 99 $ 3,650,000 9.87% $ 360,350 $ 587,618 1.187 $ 43,765
$ 36,869 $ 3,640 $ 4,321
I-3 176 $ 7,900,000 8.68% $ 685,725 $ 587,618 1.109 $ 49,778
$ 44,886 $ 3,896 $ 4,321
I-4 366 $27,415,730 9.24% $ 2,533,000 $ 587,618 0.624 $ 46,765
$ 74,906 $ 6,921 $ 4,321
I-5 168 $12,584,270 9.40% $ 1,182,950 $ 587,618 0.614 $ 45,964
$ 74,906 $ 7,041 $ 4,321
PRICE/UNIT
Low High Average Median
- ------- ------- ------- -------
$43,765 $49,778 $46,239 $45,964
VALUE ANALYSIS BASED ON COMPARABLES NOI PER UNIT
Estimated Price Per Unit $ 46,000
Number of Units 136
----------
Value Based on NOI Analysis $6,256,000
Rounded $6,300,000
The adjusted sales indicate a range of value between $43,765 and $49,778 per
unit, with an average of $46,239 per unit. Based on the subject's competitive
position within the improved sales, a value of $46,000 per unit is estimated.
This indicates an "as is" market value of $6,300,000 (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
MILLHOPPER VILLAGE, GAINESVILLE, 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-1 148 $ 6,000,000 $ 1,102,050 $ 525,000 47.64% 5.44
$ 40,541
I-2 99 $ 3,650,000 $ 692,850 $ 332,500 47.99% 5.27
$ 36,869
I-3 176 $ 7,900,000 $ 1,285,725 $ 600,000 46.67% 6.14
$ 44,886 46.69%
I-4 366 $27,415,730 $ 3,813,000 $1,280,000 33.57% 7.19
$ 74,906
I-5 168 $12,584,270 $ 1,920,450 $ 737,500 38.40% 6.55
$ 74,906
EGIM
Low High Average Median
- ---- ---- ------- ------
5.27 7.19 6.12 6.14
VALUE ANALYSIS BASED ON EGIM'S OF COMPARABLE SALES
Estimate EGIM 5.50
Subject EGI $1,166,124
----------
Value Based on EGIM Analysis $6,413,682
Rounded $6,400,000
Value Per Unit $ 47,059
There is an inverse relationship, which generally holds among EGIMs and
operating expenses. Properties, which have higher expense ratios, typically sell
for relatively less and therefore produce a lower EGIM. As will be illustrated
in the Income Capitalization Approach of this report, the subject's operating
expense ratio (OER) is estimated at 46.69% before reserves. The comparable sales
indicate a range of expense ratios from 33.57% to 47.99%, while their EGIMs
range from 5.27 to 7.19. Overall, we conclude to an EGIM of 5.50, which results
in an "as is" value estimate in the EGIM Analysis of $6,400,000.
SALES COMPARISON CONCLUSION
The three valuation methods in the Sales Comparison Approach are shown below.
The overall value via the Sales Comparison Approach is estimated at $6,400,000.
Price Per Unit $6,400,000
NOI Per Unit $6,300,000
EGIM Analysis $6,400,000
Sales Comparison Conclusion $6,400,000
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 26
MILLHOPPER VILLAGE, GAINESVILLE, 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
MILLHOPPER VILLAGE, GAINESVILLE, 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 - 1A10 750 $589 $ 0.79 93.8%
2 Br/1.5 Ba - 2A15 1400 $811 $ 0.58 60.0%
2Br/2Ba - 2A20 1000 $699 $ 0.70 86.5%
3Br/2.5Ba - 3A25 1550 $820 $ 0.53 100.0%
3Br/2.5Ba - 3B25 1600 $833 $ 0.52 100.0%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 28
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
RENT ANALYSIS
COMPARABLE RENTS
------------------------------------------------------
R-1 R-2 R-3 R-4 R-5
------------------------------------------------------
The Oaks Brookwood Covered Madison
Apartment Terrace Bridge Pointe Creekwood
------------------------------------------------------
COMPARISON TO SUBJECT
SUBJECT SUBJECT ------------------------------------------------------
SUBJECT UNIT ACTUAL ASKING Slightly Slightly
DESCRIPTION TYPE RENT RENT Inferior Superior Superior Superior Inferior
- --------------------------------------------------------------------------------------------------------------------------
Monthly Rent 1Br/1Ba - 1A10 $ 589 $ 823 $ 570 $ 525 $ 620 $ 610 $ 535
Unit Area (SF) 750 750 750 740 760 729 760
Monthly Rent Per Sq. Ft. $ 0.79 $ 1.10 $ 0.76 $ 0.71 $ 0.82 $ 0.84 $ 0.70
Monthly Rent 2 Br/1.5 Ba - $ 811 $ 838 $ 650
Unit Area (SF) 2A15 1,400 1,400 1,044
Monthly Rent Per Sq. Ft. $ 0.58 $ 0.60 $ 0.62
Monthly Rent 2Br/2Ba - 2A20 $ 699 $ 885 $ 682 $ 720 $ 799 $ 640
Unit Area (SF) 1,000 1,000 1,035 1,070 1,053 1,100
Monthly Rent Per Sq. Ft. $ 0.70 $ 0.89 $ 0.66 $ 0.67 $ 0.76 $ 0.58
Monthly Rent 3Br/2.5Ba - $ 820 $ 1,108 $ 810 $ 800 $ 899 $ 720
Unit Area (SF) 3A25 1,550 1,550 1,389 1,533 1,269 1,300
Monthly Rent Per Sq. Ft. $ 0.53 $ 0.71 $ 0.58 $ 0.52 $ 0.71 $ 0.55
Monthly Rent 3Br/2.5Ba - $ 833 $ 1,110 $ 810 $ 840
3B25
Unit Area (SF) 1,600 1,600 1,389 1,278
Monthly Rent Per Sq. Ft. $ 0.52 $ 0.69 $ 0.58 $ 0.66
DESCRIPTION MIN MAX MEDIAN AVERAGE
- --------------------------------------------------------------
Monthly Rent $ 525 $ 620 $ 570 $ 572
Unit Area (SF) 729 760 750 748
Monthly Rent Per Sq. Ft. $ 0.70 $ 0.84 $ 0.76 $ 0.77
Monthly Rent $ 650 $ 650 $ 650 $ 650
Unit Area (SF) 1,044 1,044 1,044 1,044
Monthly Rent Per Sq. Ft. $ 0.62 $ 0.62 $ 0.62 $ 0.62
Monthly Rent $ 640 $ 799 $ 701 $ 710
Unit Area (SF) 1,035 1,100 1,062 1,065
Monthly Rent Per Sq. Ft. $ 0.58 $ 0.76 $ 0.67 $ 0.67
Monthly Rent $ 720 $ 899 $ 805 $ 807
Unit Area (SF) 1,269 1,533 1,345 1,373
Monthly Rent Per Sq. Ft. $ 0.52 $ 0.71 $ 0.57 $ 0.59
Monthly Rent $ 810 $ 840 $ 825 $ 825
Unit Area (SF) 1,278 1,389 1,334 1,334
Monthly Rent Per Sq. Ft. $ 0.58 $ 0.66 $ 0.62 $ 0.62
CONCLUDED MARKET RENTAL RATES AND TERMS
Based on this analysis above, the subject's concluded market rental rates and
gross rental income is calculated as follows:
GROSS RENTAL INCOME PROJECTION
Market Rent
Unit Area ------------------ Monthly Annual
Unit Type Number of Units (Sq. Ft.) Per Unit Per SF Income Income
- -------------------------------------------------------------------------------------------
1Br/1Ba - 1A10 32 750 $590 $0.79 $18,880 $ 226,560
2 Br/1.5 Ba - 2A15 5 1,400 $800 $0.57 $ 4,000 $ 48,000
2Br/2Ba - 2A20 52 1,000 $710 $0.71 $36,920 $ 443,040
3Br/2.5Ba - 3A25 25 1,550 $810 $0.52 $20,250 $ 243,000
3Br/2.5Ba - 3B25 22 1,600 $840 $0.53 $18,480 $ 221,760
------- ----------
Total $98,530 $1,182,360
------- ----------
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
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
SUMMARY OF HISTORICAL INCOME & EXPENSES
FISCAL YEAR 2000 FISCAL YEAR 2001 FISCAL YEAR 2002 FISCAL YEAR 2003
--------------------- ---------------------- --------------------- ----------------------
ACTUAL ACTUAL ACTUAL MANAGEMENT BUDGET
--------------------- ---------------------- --------------------- ----------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT
- ------------------------------------------------------------------------------------------------------------------------
Revenues
Rental Income $1,197,529 $ 8,805 $1,243,953 $ 9,147 $1,172,115 $ 8,618 $1,183,588 $ 8,703
Vacancy $ 65,301 $ 480 $ 72,946 $ 536 $ 44,223 $ 325 $ 47,344 $ 348
Credit Loss/Concessions $ 49,455 $ 364 $ 63,406 $ 466 $ 72,984 $ 537 $ 60,536 $ 445
---------- -------- ---------- -------- ---------- -------- ---------- --------
Subtotal $ 114,756 $ 844 $ 136,352 $ 1,003 $ 117,207 $ 862 $ 107,880 $ 793
Laundry Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 55,303 $ 407 $ 55,184 $ 406 $ 110,618 $ 813 $ 122,400 $ 900
---------- -------- ---------- -------- ---------- -------- ---------- --------
Subtotal Other Income $ 55,303 $ 407 $ 55,184 $ 406 $ 110,618 $ 813 $ 122,400 $ 900
---------- -------- ---------- -------- ---------- -------- ---------- --------
Effective Gross Income $1,138,076 $ 8,368 $1,162,785 $ 8,550 $1,165,526 $ 8,570 $1,198,108 $ 8,810
Operating Expenses
Taxes $ 89,267 $ 656 $ 75,555 $ 556 $ 87,609 $ 644 $ 95,354 $ 701
Insurance $ 23,082 $ 170 $ 75,630 $ 556 $ 45,997 $ 338 $ 45,345 $ 333
Utilities $ 40,676 $ 299 $ 40,734 $ 300 $ 32,590 $ 240 $ 36,553 $ 269
Repair & Maintenance $ 70,064 $ 515 $ 101,231 $ 744 $ 87,929 $ 647 $ 101,039 $ 743
Cleaning $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Landscaping $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 33,769 $ 248 $ 30,011 $ 221 $ 33,827 $ 249 $ 39,300 $ 289
General Administrative $ 142,195 $ 1,046 $ 163,701 $ 1,204 $ 131,842 $ 969 $ 178,830 $ 1,315
Management $ 59,187 $ 435 $ 61,819 $ 455 $ 57,917 $ 426 $ 60,632 $ 446
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
---------- -------- ---------- -------- ---------- -------- ---------- --------
Total Operating Expenses $ 458,240 $ 3,369 $ 548,681 $ 4,034 $ 477,711 $ 3,513 $ 557,053 $ 4,096
Reserves $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
---------- -------- ---------- -------- ---------- -------- ---------- --------
Net Income $ 679,836 $ 4,999 $ 614,104 $ 4,515 $ 687,815 $ 5,057 $ 641,055 $ 4,714
ANNUALIZED 2003
---------------------
PROJECTION AAA PROJECTION
---------------------- ------------------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT %
- ---------------------------------------------------------------------------------
Revenues
Rental Income $1,163,952 $ 8,558 $1,182,360 $ 8,694 100.0%
Vacancy $ 43,052 $ 317 $ 82,765 $ 609 7.0%
Credit Loss/Concessions $ 46,932 $ 345 $ 35,471 $ 261 3.0%
---------- -------- ---------- -------- ---
Subtotal $ 89,984 $ 662 $ 118,236 $ 869 10.0%
Laundry Income $ 0 $ 0 $ 0 $ 0 0.0%
Garage Revenue $ 0 $ 0 $ 0 $ 0 0.0%
Other Misc. Revenue $ 72,428 $ 533 $ 102,000 $ 750 8.6%
---------- -------- ---------- -------- ---
Subtotal Other Income $ 72,428 $ 533 $ 102,000 $ 750 8.6%
---------- -------- ---------- -------- ---
Effective Gross Income $1,146,396 $ 8,429 $1,166,124 $ 8,574 100.0%
Operating Expenses
Taxes $ 94,808 $ 697 $ 119,000 $ 875 10.2%
Insurance $ 63,228 $ 465 $ 47,600 $ 350 4.1%
Utilities $ 57,700 $ 424 $ 40,800 $ 300 3.5%
Repair & Maintenance $ 79,324 $ 583 $ 95,200 $ 700 8.2%
Cleaning $ 0 $ 0 $ 0 $ 0 0.0%
Landscaping $ 0 $ 0 $ 0 $ 0 0.0%
Security $ 0 $ 0 $ 0 $ 0 0.0%
Marketing & Leasing $ 18,608 $ 137 $ 34,000 $ 250 2.9%
General Administrative $ 143,824 $ 1,058 $ 149,600 $ 1,100 12.8%
Management $ 57,768 $ 425 $ 58,306 $ 429 5.0%
Miscellaneous $ 0 $ 0 $ 0 $ 0 0.0%
---------- -------- ---------- -------- ---
Total Operating Expenses $ 515,260 $ 3,789 $ 544,506 $ 4,004 46.7%
Reserves $ 0 $ 0 $ 34,000 $ 250 6.2%
---------- -------- ---------- -------- ---
Net Income $ 631,136 $ 4,641 $ 587,618 $ 4,321 50.4%
REVENUES AND EXPENSES
The subject's revenue and expense projections are displayed on the previous
chart. Rental income is based on the market analysis previously discussed. Other
income consists of forfeited deposits, laundry income, late rent payments, month
to month fees, pet fees, vending machine revenue, etc.
We forecasted the property's annual operating expenses after reviewing its
historical performance at the subject property. We analyzed each item of expense
and attempted to forecast amounts a typical informed investor would consider
reasonable.
VACANCY AND COLLECTION LOSS
An investor is primarily interested in the annual revenue an income property is
likely to produce over a specified period of time, rather than the income it
could produce if it were always 100% occupied and all tenants were paying their
rent in full and on time. An investor normally expects some income loss as
tenants vacate, fail to pay rent, or pay their rent late.
We have projected a stabilized vacancy and collection loss rate of 10% based on
the subject's historical performance, as well as the anticipated future market
conditions.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 30
MILLHOPPER VILLAGE, GAINESVILLE, 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
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
SUMMARY OF OVERALL
CAPITALIZATION RATES
COMP. NO. SALE DATE OCCUP. PRICE/UNIT OAR
- ------------------------------------------------
I-1 Jan-03 90% $40,541 9.62%
I-2 Jan-03 92% $36,869 9.87%
I-3 Aug-01 95% $44,886 8.68%
I-4 Jan-02 92% $74,906 9.24%
I-5 Jan-02 94% $74,906 9.40%
High 9.87%
Low 8.68%
Average 9.36%
Based on this information, we have concluded the subject's overall
capitalization rate should be 10.00%. The terminal capitalization rate is
applied to the net operating income estimated for the year following the end of
the holding period. Based on the concluded overall capitalization rate, the age
of the property and the surveyed information, we have concluded the subject's
terminal capitalization rate to be 11.00%. Finally, the subject's discount rate
or yield rate is estimated based on the previous investor survey and an
examination of returns available on alternative investments in the market. Based
on this analysis, the subject's discount rate is estimated to be 12.50%.
HOLDING PERIOD
The survey of investors indicates that most investors are completing either
10-year cash flows or extending the analysis to the end of the lease if it is
more than 10-years. A 10-year period has been used in the analysis of the
subject with the eleventh year stabilized NOI used to determine the reversion.
SELLING COSTS
Sales of similar size properties are typically accomplished with the aid of a
broker and will also incur legal and other transaction related cost. Based on
our survey of brokers and a review of institutional investor projections, an
allowance of 2.00% of the sale amount is applied.
DISCOUNTED CASH FLOW CONCLUSION
Discounting the annual cash flows and the equity reversion at the selected rate
of 12.50% indicates a value of $6,000,000. In this instance, the reversion
figure contributes
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 32
MILLHOPPER VILLAGE, GAINESVILLE, 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 CAPITALIZATION APPROACH PAGE 33
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
DISCOUNTED CASH FLOW ANALYSIS
MILLHOPPER VILLAGE
YEAR APR-2004 APR-2005 APR-2006 APR-2007 APR-2008 APR-2009
FISCAL YEAR 1 2 3 4 5 6
- -----------------------------------------------------------------------------------------------------------------------
REVENUE
Base Rent $1,182,360 $1,217,831 $1,254,366 $1,291,997 $1,330,757 $1,370,679
Vacancy $ 82,765 $ 85,248 $ 87,806 $ 90,440 $ 93,153 $ 95,948
Credit Loss $ 35,471 $ 36,535 $ 37,631 $ 38,760 $ 39,923 $ 41,120
Concessions $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ---------- ---------- ----------
Subtotal $ 118,236 $ 121,783 $ 125,437 $ 129,200 $ 133,076 $ 137,068
Laundry Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 102,000 $ 105,060 $ 108,212 $ 111,458 $ 114,802 $ 118,246
---------- ---------- ---------- ---------- ---------- ----------
Subtotal Other Income $ 102,000 $ 105,060 $ 108,212 $ 111,458 $ 114,802 $ 118,246
EFFECTIVE GROSS INCOME $1,166,124 $1,201,108 $1,237,141 $1,274,255 $1,312,483 $1,351,857
OPERATING EXPENSES:
Taxes $ 119,000 $ 122,570 $ 126,247 $ 130,035 $ 133,936 $ 137,954
Insurance $ 47,600 $ 49,028 $ 50,499 $ 52,014 $ 53,574 $ 55,181
Utilities $ 40,800 $ 42,024 $ 43,285 $ 44,583 $ 45,921 $ 47,298
Repair & Maintenance $ 95,200 $ 98,056 $ 100,998 $ 104,028 $ 107,148 $ 110,363
Cleaning $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Landscaping $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 34,000 $ 35,020 $ 36,071 $ 37,153 $ 38,267 $ 39,415
General Administrative $ 149,600 $ 154,088 $ 158,711 $ 163,472 $ 168,376 $ 173,427
Management $ 58,306 $ 60,055 $ 61,857 $ 63,713 $ 65,624 $ 67,593
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES $ 544,506 $ 560,841 $ 577,667 $ 594,997 $ 612,847 $ 631,232
Reserves $ 34,000 $ 35,020 $ 36,071 $ 37,153 $ 38,267 $ 39,415
---------- ---------- ---------- ---------- ---------- ----------
NET OPERATING INCOME $ 587,618 $ 605,246 $ 623,404 $ 642,106 $ 661,369 $ 681,210
Operating Expense Ratio (% of EGI) 46.7% 46.7% 46.7% 46.7% 46.7% 46.7%
Operating Expense Per Unit $ 4,004 $ 4,124 $ 4,248 $ 4,375 $ 4,506 $ 4,641
YEAR APR-2010 APR-2011 APR-2012 APR-2013 APR-2014
FISCAL YEAR 7 8 9 10 11
- ---------------------------------------------------------------------------------------------------------
REVENUE
Base Rent $1,411,800 $1,454,154 $1,497,778 $1,542,712 $1,588,993
Vacancy $ 98,826 $ 101,791 $ 104,844 $ 107,990 $ 111,230
Credit Loss $ 42,354 $ 43,625 $ 44,933 $ 46,281 $ 47,670
Concessions $ 0 $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ---------- ----------
Subtotal $ 141,180 $ 145,415 $ 149,778 $ 154,271 $ 158,899
Laundry Income $ 0 $ 0 $ 0 $ 0 $ 0
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 121,793 $ 125,447 $ 129,211 $ 133,087 $ 137,079
---------- ---------- ---------- ---------- ----------
Subtotal Other Income $ 121,793 $ 125,447 $ 129,211 $ 133,087 $ 137,079
EFFECTIVE GROSS INCOME $1,392,413 $1,434,185 $1,477,211 $1,521,527 $1,567,173
OPERATING EXPENSES:
Taxes $ 142,092 $ 146,355 $ 150,746 $ 155,268 $ 159,926
Insurance $ 56,837 $ 58,542 $ 60,298 $ 62,107 $ 63,970
Utilities $ 48,717 $ 50,179 $ 51,684 $ 53,235 $ 54,832
Repair & Maintenance $ 113,674 $ 117,084 $ 120,597 $ 124,214 $ 127,941
Cleaning $ 0 $ 0 $ 0 $ 0 $ 0
Landscaping $ 0 $ 0 $ 0 $ 0 $ 0
Security $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 40,598 $ 41,816 $ 43,070 $ 44,362 $ 45,693
General Administrative $ 178,630 $ 183,989 $ 189,509 $ 195,194 $ 201,050
Management $ 69,621 $ 71,709 $ 73,861 $ 76,076 $ 78,359
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES $ 650,169 $ 669,674 $ 689,764 $ 710,457 $ 731,771
Reserves $ 40,598 $ 41,816 $ 43,070 $ 44,362 $ 45,693
---------- ---------- ---------- ---------- ----------
NET OPERATING INCOME $ 701,646 $ 722,696 $ 744,377 $ 766,708 $ 789,709
Operating Expense Ratio (% of EGI) 46.7% 46.7% 46.7% 46.7% 46.7%
Operating Expense Per Unit $ 4,781 $ 4,924 $ 5,072 $ 5,224 $ 5,381
Estimated Stabilized NOI $587,618 Sales Expense Rate 2.00%
Months to Stabilized 1 Discount Rate 12.50%
Stabilized Occupancy 93.0% Terminal Cap Rate 11.00%
Gross Residual Sale Price $7,179,174 Deferred Maintenance $ 0
Less: Sales Expense $ 143,583 Add: Excess Land $ 0
----------
Net Residual Sale Price $7,035,591 Other Adjustments $ 0
----------
PV of Reversion $2,166,583 Value Indicated By "DCF" $6,008,328
Add: NPV of NOI $3,841,745 Rounded $6,000,000
----------
PV Total $6,008,328
"DCF" VALUE SENSITIVITY TABLE
DISCOUNT RATE
--------------------------------------------------------------
TOTAL VALUE 12.00% 12.25% 12.50% 12.75% 13.00%
- ------------------------------------------------------------------------------------------
10.50% $6,304,082 $6,206,759 $6,111,499 $6,018,249 $5,926,961
10.75% $6,248,893 $6,152,787 $6,058,714 $5,966,623 $5,876,465
TERMINAL CAPRATE 11.00% $6,196,212 $6,101,268 $6,008,328 $5,917,343 $5,828,265
11.25% $6,145,873 $6,052,038 $5,960,182 $5,870,254 $5,782,207
11.50% $6,097,722 $6,004,949 $5,914,129 $5,825,212 $5,738,152
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 34
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
INCOME LOSS DURING LEASE-UP
The subject is currently near or at a stabilized condition. Therefore, there is
no income loss during lease-up at the subject property.
CONCESSIONS
Concessions have historically not been utilized at the subject property or in
the subject's market. Therefore, no adjustment was included for concessions.
DIRECT CAPITALIZATION METHOD
After having projected the income and expenses for the property, the next step
in the valuation process is to capitalize the net income into an estimate of
value. The selected overall capitalization rate ("OAR") covers both return on
and return of capital. It is the overall rate of return an investor expects.
After considering the market transactions and the investor surveys, we
previously conclude that an overall rate of 10.00% percent is applicable to the
subject. The results of our direct capitalization analysis are as follows:
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 35
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
MILLHOPPER VILLAGE
TOTAL PER SQ. FT. PER UNIT %OF EGI
- ----------------------------------------------------------------------------------------------
REVENUE
Base Rent $ 1,182,360 $ 7.53 $ 8,694
Less: Vacancy & Collection Loss 10.00% $ 118,236 $ 0.75 $ 869
Plus: Other Income
Laundry Income $ 0 $ 0.00 $ 0 0.00%
Garage Revenue $ 0 $ 0.00 $ 0 0.00%
Other Misc. Revenue $ 102,000 $ 0.65 $ 750 8.75%
---------------------------------------------
Subtotal Other Income $ 102,000 $ 0.65 $ 750 8.75%
EFFECTIVE GROSS INCOME $ 1,166,124 $ 7.43 $ 8,574
OPERATING EXPENSES:
Taxes $ 119,000 $ 0.76 $ 875 10.20%
Insurance $ 47,600 $ 0.30 $ 350 4.08%
Utilities $ 40,800 $ 0.26 $ 300 3.50%
Repair & Maintenance $ 95,200 $ 0.61 $ 700 8.16%
Cleaning $ 0 $ 0.00 $ 0 0.00%
Landscaping $ 0 $ 0.00 $ 0 0.00%
Security $ 0 $ 0.00 $ 0 0.00%
Marketing & Leasing $ 34,000 $ 0.22 $ 250 2.92%
General Administrative $ 149,600 $ 0.95 $ 1,100 12.83%
Management 5.00% $ 58,306 $ 0.37 $ 429 5.00%
Miscellaneous $ 0 $ 0.00 $ 0 0.00%
TOTAL OPERATING EXPENSES $ 544,506 $ 3.47 $ 4,004 46.69%
Reserves $ 34,000 $ 0.22 $ 250 2.92%
---------------------------------------------
NET OPERATING INCOME $ 587,618 $ 3.74 $ 4,321 50.39%
"GOING IN" CAPITALIZATION RATE 10.00%
VALUE INDICATION $ 5,876,178 $ 37.44 $ 43,207
DEFERRED MAINTENANCE
"AS IS" VALUE INDICATION
(DIRECT CAPITALIZATION APPROACH) $ 5,876,178
ROUNDED $ 5,900,000 $ 37.59 $ 43,382
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 36
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
DIRECT CAPITALIZATION VALUE SENSITIVITY TABLE
CAP RATE VALUE ROUNDED $/UNIT $/SF
- -------------------------------------------------
9.25% $6,352,625 $6,400,000 $47,059 $40.78
9.50% $6,185,451 $6,200,000 $45,588 $39.50
9.75% $6,026,849 $6,000,000 $44,118 $38.23
10.00% $5,876,178 $5,900,000 $43,382 $37.59
10.25% $5,732,857 $5,700,000 $41,912 $36.32
10.50% $5,596,360 $5,600,000 $41,176 $35.68
10.75% $5,466,212 $5,500,000 $40,441 $35.04
CONCLUSION BY THE DIRECT CAPITALIZATION METHOD
Applying the capitalization rate to our estimated NOI results in an estimated
value of $5,900,000.
CORRELATION AND CONCLUSION BY THE INCOME APPROACH
The two methods used to estimate the market value of the subject property by the
income approach resulted in the following indications of value:
Discounted Cash Flow Analysis $6,000,000
Direct Capitalization Method $5,900,000
Giving consideration to the indicated values provided by both techniques, we
have concluded the estimated value by the income capitalization approach to be
$6,000,000.
AMERICAN APPRAISAL ASSOCIATES, INC. RECONCILIATION AND CONCLUSION PAGE 37
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
RECONCILIATION AND CONCLUSION
This appraisal was made to express an opinion as of the Market Value of the fee
simple estate in the property.
AS IS MARKET VALUE OF THE FEE SIMPLE ESTATE
Cost Approach Not Utilized
Sales Comparison Approach $ 6,400,000
Income Approach $ 6,000,000
Reconciled Value $ 6,100,000
The Income Capitalization Method is considered a reliable indicator of value.
Income and expenses were estimated and projected based on historical operating
statements and market oriented expenses. This method is primarily used by
investors in their underwriting analysis. Furthermore, there was good support
for an overall rate in the Direct Capitalization Method.
The Sales Comparison Approach to value supported the value conclusion by the
Income Approach and was given secondary consideration. Investment-grade,
income-producing properties such as the subject are not typically traded based
on cost. Therefore, the Cost Approach has not been considered in our valuation.
FINAL VALUE - FEE SIMPLE ESTATE
Based on the investigation and premise outlined, it is our opinion that as of
May 27, 2003 the market value of the fee simple estate in the property is:
$6,100,000
AMERICAN APPRAISAL ASSOCIATES, INC. ADDENDA
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
ADDENDA
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
EXHIBIT A
SUBJECT PHOTOGRAPHS
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
SUBJECT PHOTOGRAPHS
[EXTERIOR - OFFICE PICTURE] [EXTERIOR - PROJECT PICTURE]
[EXTERIOR - TYPICAL APARTMENT BUILDING PICTURE] [INTERIOR - TYPICAL APARTMENT UNIT PICTURE]
[EXTERIOR - SWIMMING POOL PICTURE] [EXTERIOR - MAIN ENTRANCE PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
SUBJECT PHOTOGRAPHS
[INTERIOR - COMMUNITY CENTER PICTURE] [EXTERIOR - LANDSCAPE PICTURE]
[EXTERIOR - APARTMENT BUILDING PICTURE] [INTERIOR - APARTMENT UNIT PICTURE]
[INTERIOR - APARTMENT UNIT PICTURE] [LOOKING NORTHWEST ALONG NW 39TH ROAD PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
EXHIBIT B
SUMMARY OF RENT COMPARABLES
AND PHOTOGRAPH OF COMPARABLES
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
PHOTOGRAPHS OF COMPARABLE SALE PROPERTIES
COMPARABLE I-1 COMPARABLE I-2 COMPARABLE I-3
REGENCY OAKS COUNTRY GARDEN COVERED BRIDGE
3230 SW Archer Road 2001 SW 16th Street 1810 NW 23rd Boulevard
Gainesville, Florida Gainesville, Florida Gainesville, Florida
[PICTURE] [PICTURE] [PICTURE]
COMPARABLE I-4 COMPARABLE I-5
OXFORD MANOR COBBLESTONE
2801 NW 23rd Boulevard 1810 NW 23rd Boulevard
Gainesville, Florida Gainesville, Florida
[PICTURE] [PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
SUMMARY OF COMPARABLE RENTAL PROPERTIES
COMPARABLE
DESCRIPTION SUBJECT R - 1
- ------------------------------------------------------------------------------------------------------------------------------------
Property Name Millhopper Village The Oaks Apartments
Management Company AIMCO Silverwing Management
LOCATION:
Address 507 NW 39th Road 6519 Newberry Road
City, State Gainesville, Florida Gainesville, Florida
County Alachua Alachua
Proximity to Subject 1.5 miles west of subject
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) 156,950 157,399
Year Built 1969 1972
Effective Age 20 20
Building Structure Type Brick & wood siding walls; asphalt shingle roof Stucco exterior walls; asphalt shingle roof
Parking Type (Gr., Cov., etc.) Open Spaces, Covered Open
Number of Units 136 152
Unit Mix: Type Unit Qty. Mo. Rent Type Unit Qty. Mo.
1 1Br/1Ba - 1A10 750 32 $589 1 1Br/1Ba - 1B 750 42 $570
2 2Br/1.5 Ba - 2A15 1,400 5 $811 3 2Br/1Ba - 2A 984 27 $650
3 2Br/2Ba - 2A20 1,000 52 $699 3 2Br/1Ba - 2B 1,064 48 $700
4 3Br/2.5Ba - 3A25 1,550 25 $820 4 3Br/2Ba - 3A 1,389 31 $810
5 3Br/2.5Ba - 3B25 1,600 22 $833 5 3Br/2Ba - 3A 1,389 $810
Effeciency 650 8 $490
Average Unit Size (SF) 1,154 1,009
Unit Breakdown: Efficiency 0% 2-Bedroom 60% Efficiency 6% 2-Bedroom 49%
1-Bedroom 24% 3-Bedroom 16% 1-Bedroom 28% 3-Bedroom 20%
CONDITION: Good Good
APPEAL: Average Average
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage X Vaulted Ceiling
X Balcony W/D Connect. X Balcony X W/D Connect.
Fireplace Other Fireplace Other
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 Volleyball Court Theater Room
Sand Volley Ball X Meeting Hall X Sand Volley Ball X Meeting Hall
X Tennis Court Secured Parking X Tennis Court Secured Parking
Racquet Ball X Laundry Room Racquet Ball X Laundry Room
Jogging Track Business Office Jogging Track X Business Office
X Gym Room X Gym Room
OCCUPANCY: 92% 97%
LEASING DATA:
Available Leasing Terms 7, 9 and 12 Months 3 to 12 Months
Concessions None None
Pet Deposit 250 150
Utilities Paid by Tenant: X Electric Natural Gas X Electric Natural Gas
Water Trash Water Trash
Confirmation May 27, 2003; Property Manager May 27, 2003; Property Manager
Telephone Number (352) 373-2965 (352) 331-8836
NOTES: None
COMPARISON TO SUBJECT: Slightly Inferior
COMPARABLE COMPARABLE
DESCRIPTION R - 2 R - 3
- ------------------------------------------------------------------------------------------------------------------------------------
Property Name Brookwood Terrace CoveredBridge
Management Company Good Neighbor
LOCATION:
Address 2601 NW 23rd Boulevard 1810 NW 23rd Boulevard
City, State Gainesville, Florida Gainesville, Florida
County Alachua Alachua
Proximity to Subject 1.5 miles northeast of the subject 1.5 miles northeast of the subject
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) 156,526 169,276
Year Built 1975 1973
Effective Age 20 20
Building Structure Type Stucco & wood siding walls; asphalt shingle roof Stucco exterior walls; asphalt shingle roof
Parking Type (Gr., Cov., etc.) Open Open
Number of Units 132 174
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
1 1Br/1Ba 740 8 $525 1 1Br/1Ba 760 76 $620
2 2Br/1.5Ba 1,044 84 $650 3 2Br/2Ba 1,070 66 $720
4 3Br/2.5Ba 1,533 25 $800 5 3Br/2Ba 1,278 32 $840
4Br/2.5Ba 1,639 15 $875
Average Unit Size (SF) 1,186 973
Unit Breakdown: Efficiency 0% 2-Bedroom 64% Efficiency 0% 2-Bedroom 38%
1-Bedroom 6% 3-Bedroom 19% 1-Bedroom 44% 3-Bedroom 18%
CONDITION: Average Average
APPEAL: Average Good
AMENITIES:
Unit Amenities Attach. Garage X Vaulted Ceiling Attach. Garage X Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
Fireplace Other Fireplace Other
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
X Spa/Jacuzzi X Car Wash X Spa/Jacuzzi X Car Wash
X Basketball Court X BBQ Equipment Basketball Court X BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball X Meeting Hall Sand Volley Ball X Meeting Hall
X Tennis Court Secured Parking X Tennis Court Secured Parking
Racquet Ball X Laundry Room Racquet Ball X Laundry Room
Jogging Track X Business Office Jogging Track Business Office
X Gym Room X Gym Room
OCCUPANCY: 97% 97%
LEASING DATA:
Available Leasing Terms 7 to 12 Months 7 to 12 months
Concessions None None
Pet Deposit 200 200
Utilities Paid by Tenant: X Electric Natural Gas X Electric Natural Gas
Water Trash Water Trash
Confirmation May 27, 2003; Property Manager May 27, 2003; Property Manager
Telephone Number (352) 378-9052 (352) 372-2225
NOTES: None None
COMPARISON TO SUBJECT: Superior Slightly Superior
COMPARABLE COMPARABLE
DESCRIPTION R - 4 R - 5
- ------------------------------------------------------------------------------------------------------------------------------------
Property Name Madison Pointe Creekwood
Management Company Paradigm Properties Southern Development Management Company
LOCATION:
Address 2701 NW 23rd Boulevard 2056 NW 55th Boulevard
City, State Gainesville, Florida Gainesville, Florida
County Alachua Alachua
Proximity to Subject 1.5 mile northeast of the subject 2 miles northeast of the subject
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) 161,298 207,554
Year Built 1973 1978
Effective Age 20 15
Building Structure Type Stucco & wood siding walls; asphalt shingle roof Stucco & wood siding walls; asphalt shingle roof
Parking Type (Gr., Cov., etc.) Garage, Open Open
Number of Units 170 120
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
1 1Br/1Ba 729 84 $610 1 1Br/1Ba 760 32 $535
3 2Br/2Ba 1,053 42 $799 3 2Br/2Ba 1,100 72 $640
4 3Br/2Ba 1,269 44 $899 4 3Br/2Ba 1,300 16 $720
Average Unit Size (SF) 949 1,036
Unit Breakdown: Efficiency 0% 2-Bedroom 25% Efficiency 0% 2-Bedroom 60%
1-Bedroom 49% 3-Bedroom 26% 1-Bedroom 27% 3-Bedroom 13%
CONDITION: Average Average
APPEAL: Average Average
AMENITIES:
Unit Amenities X Attach. Garage X Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
Fireplace X Other Fireplace Other
X Cable TV Ready Access Gates X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
X Spa/Jacuzzi X Car Wash Spa/Jacuzzi X Car Wash
X Basketball Court X BBQ Equipment Basketball Court X BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball X Meeting Hall Sand Volley Ball X Meeting Hall
X Tennis Court Secured Parking X Tennis Court Secured Parking
X Racquet Ball X Laundry Room Racquet Ball X Laundry Room
Jogging Track X Business Office Jogging Track X Business Office
X Gym Room X Gym Room
OCCUPANCY: 96% 91%
LEASING DATA:
Available Leasing Terms 12 Months 7 to 12 Months
Concessions None None
Pet Deposit 100, plus $25 per month No Pets
Utilities Paid by Tenant: X Electric Natural Gas X Electric Natural Gas
X Water Trash Water Trash
Confirmation May 27, 2003; Property Manager May 27, 2003; Property Manager
Telephone Number (352) 372-0400 (352) 378-8379
NOTES: None None
COMPARISON TO SUBJECT: Superior Inferior
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
PHOTOGRAPHS OF COMPARABLE RENT PROPERTIES
COMPARABLE R-1 COMPARABLE R-2 COMPARABLE R-3
THE OAKS APARTMENTS BROOKWOOD TERRACE COVERED BRIDGE
6519 Newberry Road 2601 NW 23rd Boulevard 1810 NW 23rd Boulevard
Gainesville, Florida Gainesville, Florida Gainesville, Florida
[PICTURE] [PICTURE] [PICTURE]
COMPARABLE R-4 COMPARABLE R-5
MADISON POINTE CREEKWOOD
2701 NW 23rd Boulevard 2056 NW 55th Boulevard N.A
Gainesville, Florida Gainesville, Florida
[PICTURE] [PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
EXHIBIT C
ASSUMPTIONS AND LIMITING CONDITIONS
(3 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
MILLHOPPER VILLAGE, GAINESVILLE, 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
MILLHOPPER VILLAGE, GAINESVILLE, 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
MILLHOPPER VILLAGE, GAINESVILLE, 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
MILLHOPPER VILLAGE, GAINESVILLE, 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
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
EXHIBIT E
QUALIFICATIONS OF APPRAISER
(2 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
MILLHOPPER VILLAGE, GAINESVILLE, 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
MILLHOPPER VILLAGE, GAINESVILLE, 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
AFFILIATIONS American Society of Appraisers, Candidate
AMERICAN APPRAISAL ASSOCIATES, INC.
MILLHOPPER VILLAGE, GAINESVILLE, FLORIDA
GENERAL SERVICE CONDITIONS
AMERICAN APPRAISAL ASSOCIATES, INC.
MILLHOPPER VILLAGE, GAINESVILLE, 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.