REGENCY OAKS
200 MALTESE CIRCLE
FERN PARK, FLORIDA
MARKET VALUE -
FEE SIMPLE ESTATE
AS OF DECEMBER 9, 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]
UNITED STATES INTERNATIONAL
Atlanta Milwaukee Brazil Mexico
Boston Minneapolis [AMERICAN APPRAISAL ASSOCIATES(R) LOGO] Canada Morocco
Buffalo New Orleans China Peru
Charlotte New York 9441 LBJ Freeway Suite 114 Croatia Philippines
Chicago Oak Lawn Dallas, Texas 75243 Czech Republic Poland
Cincinnati Philadelphia England Portugal
Dallas Pittsburg Telephone: (972) 994-9100 Germany Russia
Denver Princeton Fax: (972) 994-0516 Greece Spain
Detroit Schaumburg Hong Kong Taiwan
Houston St. Louis Hungary Thailand
Irvine San Francisco Italy Turkey
Jacksonville Seattle Japan Venezuela
Los Angeles
DECEMBER 22, 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: REGENCY OAKS
200 MALTESE CIRCLE
FERN PARK, SEMINOLE 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 343 units with a
total of 342,080 square feet of rentable area. The improvements were built in
1969. The improvements are situated on 20 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
REGENCY OAKS, FERN 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 December 9, 2003 is:
($8,800,000)
Respectfully submitted,
AMERICAN APPRAISAL ASSOCIATES, INC.
-s- Frank A. Fehribach
-----------------------------
December 22, 2003 Frank A. Fehribach, MAI
#053272 Managing Principal, Real Estate Group
Texas State Certified General Real Estate
Appraiser, TX-1323954-G
Report By:
Alice MacQueen
Florida Certified General Real Estate Appraiser, #RZ0002202
AMERICAN APPRAISAL ASSOCIATES, INC. TABLE OF CONTENTS PAGE 3
REGENCY OAKS, FERN 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 ............................................................. 15
Improvement Analysis ...................................................... 15
Highest and Best Use ...................................................... 16
VALUATION
Valuation Procedure ....................................................... 17
Sales Comparison Approach ................................................. 19
Income Capitalization Approach ............................................ 25
Reconciliation and Conclusion ............................................. 35
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
REGENCY OAKS, FERN PARK, FLORIDA
EXECUTIVE SUMMARY
PART ONE - PROPERTY DESCRIPTION
PROPERTY NAME: Regency Oaks
LOCATION: 200 Maltese Circle
Fern 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: December 9, 2003
DATE OF REPORT: December 22, 2003
PHYSICAL DESCRIPTION - SITE & IMPROVEMENTS:
SITE:
Size: 20 acres, or 871,200 square feet
Assessor Parcel No.: 20-21-30-300-001J-0000; 20-21-30-300-001K-0000
Floodplain: Community Panel No. 12117C 0140 E (April 17, 1995)
Flood Zone X, an area outside the floodplain.
Zoning: R-3 (Residential Multifamily)
BUILDING:
No. of Units: 343 Units
Total NRA: 342,080 Square Feet
Average Unit Size: 997 Square Feet
Apartment Density: 17.2 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
- ----------------------------------------------------------------
Studio 589 $480 $0.81 $ 15,360 $ 184,320
1Br/1Ba 719 $500 $0.70 $ 46,500 $ 558,000
2Br/1.5Ba 984 $620 $0.63 $ 69,440 $ 833,280
2Br/2Ba 1,061 $630 $0.59 $ 35,910 $ 430,920
2Br/2.5Ba 1,800 $930 $0.52 $ 23,250 $ 279,000
3Br/2Ba 1,320 $840 $0.64 $ 10,080 $ 120,960
3Br/2.5Ba 2,070 $950 $0.46 $ 11,400 $ 136,800
-------- ----------
Total $211,940 $2,543,280
======== ==========
OCCUPANCY: 92%
ECONOMIC LIFE: 45 Years
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 5
REGENCY OAKS, FERN PARK, FLORIDA
EFFECTIVE AGE: 25 Years
REMAINING ECONOMIC LIFE: 20 Years
SUBJECT PHOTOGRAPHS AND LOCATION MAP:
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
APARTMENT BUILDING - FRONT VIEW APARTMENT BUILDING - SIDE VIEW
AREA MAP
[MAP]
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 6
REGENCY OAKS, FERN 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
REGENCY OAKS, FERN PARK, FLORIDA
PART TWO - ECONOMIC INDICATORS
INCOME CAPITALIZATION APPROACH
DIRECT CAPITALIZATION Amount $/Unit
- --------------------- ------ ------
Potential Rental Income $2,543,280 $7,415
Effective Gross Income $2,380,470 $6,940
Operating Expenses $1,338,491 $3,902 56.2% of EGI
Net Operating Income: $ 870,478 $2,538
Capitalization Rate 9.75%
DIRECT CAPITALIZATION VALUE $8,900,000 * $25,948 / UNIT
DISCOUNTED CASH FLOW ANALYSIS:
Holding Period 10 years
2002 Economic Vacancy 23%
Stabilized Vacancy & Collection Loss: 18%
Lease-up / Stabilization Period N/A
Terminal Capitalization Rate 10.25%
Discount Rate 12.00%
Selling Costs 2.00%
Growth Rates:
Income 2.50%
Expenses: 3.00%
DISCOUNTED CASH FLOW VALUE $8,700,000 * $25,364 / UNIT
RECONCILED INCOME CAPITALIZATION VALUE $8,800,000 $25,656 / UNIT
SALES COMPARISON APPROACH
PRICE PER UNIT:
Range of Sales $/Unit (Unadjusted) $34,797 to $43,000
Range of Sales $/Unit (Adjusted) $26,268 to $29,861
VALUE INDICATION - PRICE PER UNIT $9,600,000 * $27,988 / UNIT
EGIM ANALYSIS
Range of EGIMs from Improved Sales 5.30 to 5.84
Selected EGIM for Subject 4.00
Subject's Projected EGI $2,380,470
EGIM ANALYSIS CONCLUSION $9,500,000 * $27,697 / UNIT
NOI PER UNIT ANALYSIS CONCLUSION $8,900,000 * $25,948 / UNIT
RECONCILED SALES COMPARISON VALUE $9,200,000 $26,822 / 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
REGENCY OAKS, FERN PARK, FLORIDA
PART THREE - SUMMARY OF VALUE CONCLUSIONS
SALES COMPARISON APPROACH:
Price Per Unit $9,600,000
NOI Per Unit $8,900,000
EGIM Multiplier $9,500,000
INDICATED VALUE BY SALES COMPARISON $9,200,000 $26,822 / UNIT
INCOME APPROACH:
Direct Capitalization Method: $8,900,000
Discounted Cash Flow Method: $8,700,000
INDICATED VALUE BY THE INCOME APPROACH $8,800,000 $25,656 / UNIT
RECONCILED OVERALL VALUE CONCLUSION: $8,800,000 $25,656 / UNIT
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 9
REGENCY OAKS, FERN PARK, FLORIDA
INTRODUCTION
IDENTIFICATION OF THE SUBJECT
The subject property is located at 200 Maltese Circle, Fern Park, Seminole
County, Florida. Fern Park identifies it as 20-21-30-300-001J-0000;
20-21-30-300-001K-0000.
SCOPE OF THE ASSIGNMENT
The property, neighborhood, and comparables were inspected by Alice MacQueen on
December 9, 2003. Alice MacQueen made a personal inspection of the subject
property, performed the research, valuation analysis and wrote the report. Frank
A. Fehribach, MAI reviewed the report and concurs with the value. Alice MacQueen
has extensive experience in appraising similar properties and meets the USPAP
competency provision.
The scope of this investigation comprises the inspection of the property and the
collection, verification, and analysis of general and specific data pertinent to
the subject property. We have researched current improved sales and leases of
similar properties, analyzing them as to their comparability, and adjusting them
accordingly. We completed the Sales Comparison and Income Capitalization
Approaches to value. From these approaches to value, a concluded overall value
was made.
DATE OF VALUE AND REPORT
This appraisal was made to express the opinion of value as of December 9, 2003.
The date of the report is December 22, 2003.
PURPOSE AND USE OF APPRAISAL
The purpose of the appraisal is to estimate the market value of the fee simple
interest in the subject property. It is understood that the appraisal is
intended to assist the clients in litigation settlement proceedings. The
appraisal was not based on a requested minimum valuation, a specific valuation,
or the approval of a loan.
PROPERTY RIGHTS APPRAISED
We have appraised the Fee Simple Estate in the subject property (as applied in
the Sales & Income Approaches), subject to the existing short-term leases. A Fee
Simple Estate is defined in The Dictionary of Real Estate Appraisal, 3rd ed.
(Chicago: Appraisal Institute,
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 10
REGENCY OAKS, FERN PARK, FLORIDA
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 Consolidated Capital
Equity. 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
REGENCY OAKS, FERN 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 Fern Park, Florida. Overall, the neighborhood
is characterized as a suburban setting with the predominant land use being
institutional. The subject's neighborhood is generally defined by the following
boundaries.
NEIGHBORHOOD BOUNDARIES
East - Highway 417
West - Interstate 4
South - East-West Expressway
North - Red Bug Lake Road
MAJOR EMPLOYERS
Major employers in the subject's area include The Walt Disney World Company
Universal Orlando, Florida Hospital and Orlando Regional Healthcare, Lockheed
Martin, Central Florida Investments and the University of Central Florida. 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
REGENCY OAKS, FERN PARK, FLORIDA
NEIGHBORHOOD DEMOGRAPHICS
AREA
------------------------------------------
CATEGORY 1-MI. RADIUS 3-MI. RADIUS 5-MI. RADIUS MSA
- ---------------------------------------------------------------------------------------
POPULATION TRENDS
Current Population 24,426 121,187 230,503 1,721,904
5-Year Population 26,001 129,066 245,725 1,921,950
% Change CY-5Y 6.4% 6.5% 6.6% 11.6%
Annual Change CY-5Y 1.3% 1.3% 1.3% 2.3%
HOUSEHOLDS
Current Households 10,125 48,206 94,791 655,258
5-Year Projected Households 10,754 51,041 100,505 731,362
% Change CY - 5Y 6.2% 5.9% 6.0% 11.6%
Annual Change CY-5Y 1.2% 1.2% 1.2% 2.3%
INCOME TRENDS
Median Household Income $ 32,016 $ 35,441 $ 37,406 $ 40,114
Per Capita Income $ 17,041 $ 18,768 $ 21,478 $ 21,799
Average Household Income $ 41,464 $ 47,148 $ 52,290 $ 57,283
Source: Demographics Now
The subject neighborhood's population is expected to show increases below that
of the region. The immediate market offers inferior income levels as compared to
the broader market.
The following table illustrates the housing statistics in the subject's
immediate area, as well as the MSA region.
HOUSING TRENDS
AREA
------------------------------------------
CATEGORY 1-MI. RADIUS 3-MI. RADIUS 5-MI. RADIUS MSA
- --------------------------------------------------------------------------------
HOUSING TRENDS
% of Households Renting 48.44% 39.16% 39.13% 30.55%
5-Year Projected % Renting 47.20% 38.67% 38.65% 30.11%
% of Households Owning 39.21% 52.00% 53.05% 60.90%
5-Year Projected % Owning 40.51% 52.59% 53.74% 61.87%
Source: Demographics Now
AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 13
REGENCY OAKS, FERN PARK, FLORIDA
SURROUNDING IMPROVEMENTS
The following uses surround the subject property:
North - Retail/Commercial
South - Single/Multifamily
East - Bowling Alley and retail uses
West - Single/multifamily development
CONCLUSIONS
The subject is well located within the city of Fern 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
REGENCY OAKS, FERN PARK, FLORIDA
MARKET ANALYSIS
The subject property is located in the city of Fern Park in Seminole County. The
overall pace of development in the subject's market is more or less stable.
Recent construction in this submarket includes 220 units completed at Centergate
at Baldwin Park near downtown Orlando. The following table illustrates
historical vacancy rates for the subject's market.
HISTORICAL VACANCY RATE
Period Region Submarket
- -------------------------
Aug-01 5.8% 5.0%
Feb-02 9.2% 6.5%
Aug-02 8.3% 6.2%
Feb-03 9.5% 8.4%
Aug-03 7.8% 6.7%
Source: Apartment Index Report, August 2003, by Carolinas Real Data
Occupancy trends in the subject's market are increasing. Historically speaking,
the subject's submarket has outperformed the overall market.
Market rents in the subject's market have been following an increasing trend.
The following table illustrates historical rental rates for the subject's
market.
HISTORICAL AVERAGE RENT
Period Region % Change Submarket % Change
- ------ ------ -------- --------- --------
Aug-01 $729 - $725 -
Feb-02 $737 1.1% $746 2.9%
Aug-02 $745 1.1% $732 -1.9%
Feb-03 $749 0.5% $739 1.0%
Aug-03 $775 3.5% $747 1.1%
Source: Apartment Index Report, August 2003, by Carolinas Real Data
The following table illustrates a summary of the subject's competitive set.
COMPETITIVE PROPERTIES
No. Property Name Units Ocpy. Year Built Proximity to subject
- --------------------------------------------------------------------------------------
R-1 Howel Branch Station 366 86% 1969 Same neighborhood
R-2 Sandpiper 196 90% 1974 Same neighborhood
R-3 Semoran North 348 N/A 1964 Same neighborhood
R-4 Empiriam (Former Emerald Bay) 432 N/A 1972 Same neighborhood
R-5 Birchwood Landing 184 N/A 1975 Same neighborhood
Subject Regency Oaks 343 92% 1969
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 15
REGENCY OAKS, FERN PARK, FLORIDA
PROPERTY DESCRIPTION
SITE ANALYSIS
Site Area 20 acres, or 871,200 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 Average
Flood Zone:
Community Panel 12117C 0140 E, dated April 17, 1995
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
- --------------------------------------------------------------------------
20-21-30-300-
001J-0000; 20- $1,742,400 $7,151,040 $8,893,440 0.01714 $152,470
21-30-300-001K-
0000
IMPROVEMENT ANALYSIS
Year Built 1969
Number of Units 343
Net Rentable Area 342,080 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,
tennis court, basketball court, picnic area, car
wash, barbeque equipment, meeting hall, laundry
room, business office, freshwater lake, and
parking area.
Unit Amenities Individual unit amenities include a balcony, and
washer
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 16
REGENCY OAKS, FERN PARK, FLORIDA
dryer connection. Appliances available in each
unit include a refrigerator, stove, dishwasher,
water heater, garbage disposal, and oven.
Unit Mix:
Unit Area
Unit Type Number of Units (Sq. Ft.)
- -------------------------------------
Studio 32 589
1Br/1Ba 93 719
2Br/1.5Ba 112 984
2Br/2Ba 57 1,061
2Br/2.5Ba 25 1,800
3Br/2Ba 12 1,320
3Br/2.5Ba 12 2,070
Overall Condition Average
Effective Age 25 years
Economic Life 45 years
Remaining Economic Life 20 years
Deferred Maintenance None
HIGHEST AND BEST USE ANALYSIS
In accordance with the definition of highest and best use, an analysis of the
site relating to its legal uses, physical possibilities, and financial
feasibility is appropriate. The highest and best use as vacant is to hold for
future multi-family development. The subject improvements were constructed in
1969 and consist of a 343-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 17
REGENCY OAKS, FERN 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 18
REGENCY OAKS, FERN 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 19
REGENCY OAKS, FERN 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 20
REGENCY OAKS, FERN PARK, FLORIDA
SUMMARY OF COMPARABLE SALES -IMPROVED
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
- -------------------------------------------------------------------------------------------------------------------
Property Name Regency Oaks Empirian (formerly known as Sedgefield Apartments
Emerald Bay)
LOCATION:
Address 200 Maltese Circle 5 Autumn Breeze Way 110 Sedgefield Circle
City, State Fern Park, Florida Winter Park, FL Winter Park, FL
County Seminole Seminole Seminole
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 342,080 427,680 98,346
Year Built 1969 1972 1973
Number of Units 343 432 111
Unit Mix: Type Total Type Total Type Total
Studio 32 1Br/1BA 149 1Br/1BA 31
1Br/1Ba 93 2Br/2BA 132 2Br/2BA 75
2Br/1.5Ba 112 3Br/2BA 151 3Br/2BA 5
2Br/2Ba 57
2Br/2.5Ba 25
3Br/2Ba 12
3Br/2.5Ba 12
Average Unit Size (SF) 997 990 886
Land Area (Acre) 20.0000 23.0790 8.7000
Density (Units/Acre) 17.2 18.7 12.8
Parking Ratio (Spaces/Unit) 0.00 Adequate Adequate
Parking Type (Gr., Cov., etc.) Garage, Open Covered Open + Carports Open
CONDITION: Fair to Average Good Good
APPEAL: Average Good Good
AMENITIES:
Pool/Spa Yes/No Yes/No Yes/No
Gym Room No Yes Yes
Laundry Room Yes Yes Yes
Secured Parking No No No
Sport Courts Yes No No
Washer/Dryer Connection Some No No
Other
Other
OCCUPANCY: 92% 94% 95%
TRANSACTION DATA:
Sale Date May, 2003 November, 2002
Sale Price ($) $17,200,000 $3,862,500
Grantor ERP Operating LP Sedgefield Associates
Grantee Empirian Bay, LLC S&L Enterprises Ltd
Sale Documentation Doc# 6912-3261 Doc# 4611-1975
Verification CoStar Realty CoStar Realty
Telephone Number
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF
Potential Gross Income $3,541,190 $8,197 $8.28 $806,460 $7,265 $8.20
Vacancy/Credit Loss $ 354,119 $ 820 $0.83 $ 80,646 $ 727 $0.82
Effective Gross Income $3,187,071 $7,377 $7.45 $725,814 $6,539 $7.38
Operating Expenses $1,434,182 $3,320 $3.35 $355,200 $3,200 $3.61
Net Operating Income $1,752,889 $4,058 $4.10 $370,614 $3,339 $3.77
NOTES: Located just off Rt 436 in Located near the subject in
subject's neighborhood. the same neighborhood.
Units have been renovated All brick, good condition,
and are superior to subject. overall superior to subject.
PRICE PER UNIT $39,815 $34,797
PRICE PER SQUARE FOOT $ 40.22 $ 39.27
EXPENSE RATIO 45.0% 48.9%
EGIM 5.40 5.32
OVERALL CAP RATE 10.19% 9.60%
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 La Aloma Courtyard at Winter Park The Ashley of Spring Valley
LOCATION:
Address 3040 Aloma Avenue 1695 Lee Road 693 S Wymore Road
City, State Winter Park, FL Winter Park, FL Altamonte Springs, FL
County Seminole Seminole Seminole
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 176,824 177,349 238,424
Year Built 1967 1966 1974
Number of Units 184 160 260
Unit Mix: Type Total Type Total Type Total
1Br/1BA 40 1Br/1BA 40 1Br/1BA 112
2Br/2BA 124 2Br/2BA 80 2Br/2BA 100
3Br/2BA 20 3Br/2BA 40 3Br/2BA 48
Average Unit Size (SF) 961 1,108 917
Land Area (Acre) 9.1000 9.5530 16.0000
Density (Units/Acre) 20.2 16.7 16.3
Parking Ratio (Spaces/Unit) Adequate Adequate Adequate
Parking Type (Gr., Cov., etc.) Open Open Open
CONDITION: Good Good Good
APPEAL: Good Good Good
AMENITIES:
Pool/Spa Yes/No Yes/No Yes/No
Gym Room Yes Yes Yes
Laundry Room Yes Yes Yes
Secured Parking No No No
Sport Courts No No No
Washer/Dryer Connection No No No
Other
Other
OCCUPANCY: 95% 90% 95%
TRANSACTION DATA:
Sale Date September, 2002 May, 2001 August, 2001
Sale Price ($) $6,750,000 $6,100,000 $11,180,000
Grantor Veard-Winter Park Ltd Miles-Courtyard-WP LLC Gray Lumber Co, LP
Grantee Florida Investment Properties, PRG/Winter Park LP Atlamonte Ashley LLC
LLC
Sale Documentation Doc# 6629-8177 Doc#6258-4812 Doc#4160-0027
Verification Carolinas Real Data Carolinas Real Data Carolinas Real Data
Telephone Number
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF Total $ $/Unit $/SF
Potential Gross Income $1,385,280 $7,529 $7.83 $1,286,400 $8,040 $7.25 $2,126,640 $8,179 $8.92
Vacancy/Credit Loss $ 207,792 $1,129 $1.18 $ 136,320 $ 852 $0.77 $ 212,664 $ 818 $0.89
Effective Gross Income $1,177,488 $6,399 $6.66 $1,150,080 $7,188 $6.48 $1,913,976 $7,361 $8.03
Operating Expenses $ 533,600 $2,900 $3.02 $ 480,000 $3,000 $2.71 $ 910,000 $3,500 $3.82
Net Operating Income $ 643,888 $3,499 $3.64 $ 670,080 $4,188 $3.78 $1,003,976 $3,861 $4.21
NOTES: Situated in same submarket Located in same submarket Located near the subject in
but superior overall. Well- but with inferior location. the same neighborhood.
maintained, superior curb Similar to superior condition Overall, superior to the
appeal and condition. compared to the subject. subject property.
PRICE PER UNIT $36,685 $38,125 $43,000
PRICE PER SQUARE FOOT $ 38.17 $ 34.40 $ 46.89
EXPENSE RATIO 45.3% 41.7% 47.5%
EGIM 5.73 5.30 5.84
OVERALL CAP RATE 9.54% 10.98% 8.98%
Cap Rate based on Pro Forma or
Actual Income? PRO FORMA PRO FORMA PRO FORMA
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 21
REGENCY OAKS, FERN PARK, FLORIDA
IMPROVED SALES MAP
[MAP]
IMPROVED SALES ANALYSIS
The improved sales indicate a sales price range from $34,797 to $43,000 per
unit. Adjustments have been made to the sales to reflect differences in
location, age/condition and quality/appeal. Generally speaking, larger
properties typically have a lower price per unit when compared to smaller
properties, all else being equal. Similarly, those projects with a higher
average unit size will generally have a higher price per unit. After appropriate
adjustments are made, the improved sales demonstrate an adjusted range for the
subject from $26,268 to $29,861 per unit with a mean or average adjusted price
of $28,195 per unit. The median adjusted price is $28,339 per unit. Based on the
following analysis, we have concluded to a value of $28,000 per unit, which
results in an "as is" value of $9,600,000 (rounded after necessary adjustment,
if any).
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 22
REGENCY OAKS, FERN PARK, FLORIDA
SALES ADJUSTMENT GRID
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
- -------------------------------------------------------------------------------------------------------------------
Property Name Regency Oaks Empirian (formerly Sedgefield Apartments
known as Emerald Bay)
Address 200 Maltese Circle 5 Autumn Breeze Way 110 Sedgefield Circle
City Fern Park, Florida Winter Park, FL Winter Park, FL
Sale Date May, 2003 November, 2002
Sale Price ($) $17,200,000 $3,862,500
Net Rentable Area (SF) 342,080 427,680 98,346
Number of Units 343 432 111
Price Per Unit $39,815 $34,797
Year Built 1969 1972 1973
Land Area (Acre) 20.0000 23.0790 8.7000
VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 05-2003 0% 11-2002 3%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $39,815 $35,841
Location Superior -5% Superior -5%
Number of Units 343 432 0% 111 -5%
Quality / Appeal Average Superior -15% Superior -10%
Age / Condition 1969 1972 / Good -5% 1973 / Good -5%
Occupancy at Sale 92% 94% 0% 95% 0%
Amenities Average Comparable 0% Comparable 0%
Average Unit Size (SF) 997 990 0% 886 0%
PHYSICAL ADJUSTMENT -25% -25%
FINAL ADJUSTED VALUE ($/UNIT) $29,861 $26,881
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
- ------------------------------------------------------------------------------------------------------------------------------
Property Name La Aloma Courtyard at Winter Park The Ashley of Spring Valley
Address 3040 Aloma Avenue 1695 Lee Road 693 S Wymore Road
City Winter Park, FL Winter Park, FL Altamonte Springs, FL
Sale Date September, 2002 May, 2001 August, 2001
Sale Price ($) $6,750,000 $6,100,000 $11,180,000
Net Rentable Area (SF) 176,824 177,349 238,424
Number of Units 184 160 260
Price Per Unit $36,685 $38,125 $43,000
Year Built 1967 1966 1974
Land Area (Acre) 9.1000 9.5530 16.0000
VALUE ADJUSTMENTS DESCRIPTION ADJ. DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate 0% Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 09-2002 3% 05-2001 6% 08-2001 6%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $37,785 $40,413 $45,580
Location Superior -5% Superior -5% Superior -15%
Number of Units 184 -5% 160 -5% 260 0%
Quality / Appeal Superior -15% Superior -15% Superior -15%
Age / Condition 1967 / Good 0% 1966 / Good 0% 1974 / Good -5%
Occupancy at Sale 95% 0% 90% 0% 95% 0%
Amenities Comparable 0% Comparable 0% Comparable 0%
Average Unit Size (SF) 961 0% 1,108 -10% 917 0%
PHYSICAL ADJUSTMENT -25% -35% -35%
FINAL ADJUSTED VALUE ($/UNIT) $28,339 $26,268 $29,627
SUMMARY
VALUE RANGE (PER UNIT) $26,268 TO $29,861
MEAN (PER UNIT) $28,195
MEDIAN (PER UNIT) $28,339
VALUE CONCLUSION (PER UNIT) $28,000
VALUE INDICATED BY SALES COMPARISON APPROACH $9,604,000
ROUNDED $9,600,000
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 23
REGENCY OAKS, FERN 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-1 432 $17,200,000 10.19% $1,752,889 $870,478 0.625 $24,902
$ 39,815 $ 4,058 $ 2,538
I-2 111 $ 3,862,500 9.60% $ 370,614 $870,478 0.760 $26,449
$ 34,797 $ 3,339 $ 2,538
I-3 184 $ 6,750,000 9.54% $ 643,888 $870,478 0.725 $26,605
$ 36,685 $ 3,499 $ 2,538
I-4 160 $ 6,100,000 10.98% $ 670,080 $870,478 0.606 $23,103
$ 38,125 $ 4,188 $ 2,538
I-5 260 $11,180,000 8.98% $1,003,976 $870,478 0.657 $28,261
$ 43,000 $ 3,861 $ 2,538
PRICE/UNIT
Low High Average Median
$23,103 $28,261 $25,864 $26,449
VALUE ANALYSIS BASED ON COMPARABLES NOI PER UNIT
Estimated Price Per Unit $ 26,000
Number of Units 343
----------
Value Based on NOI Analysis $8,918,000
Rounded $8,900,000
The adjusted sales indicate a range of value between $23,103 and $28,261 per
unit, with an average of $25,864 per unit. Based on the subject's competitive
position within the improved sales, a value of $26,000 per unit is estimated.
This indicates an "as is" market value of $8,900,000 (rounded after necessary
adjustment, if any) for the NOI Per Unit Analysis.
EFFECTIVE GROSS INCOME MULTIPLIER (EGIM) ANALYSIS
The effective gross income multiplier (EGIM) is derived by dividing the sales
price by the total effective gross income. The following table illustrates the
EGIMs for the comparable improved sales.
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-1 432 $17,200,000 $3,187,071 $1,434,182 45.00% 5.40
$ 39,815
I-2 111 $ 3,862,500 $ 725,814 $ 355,200 48.94% 5.32
$ 34,797
I-3 184 $ 6,750,000 $1,177,488 $ 533,600 45.32% 56.23% 5.73
$ 36,685
I-4 160 $ 6,100,000 $1,150,080 $ 480,000 41.74% 5.30
$ 38,125
I-5 260 $11,180,000 $1,913,976 $ 910,000 47.55% 5.84
$ 43,000
EGIM
Low High Average Median
5.30 5.84 5.52 5.40
VALUE ANALYSIS BASED ON EGIM'S OF COMPARABLE SALES
Estimate EGIM 4.00
Subject EGI $2,380,470
----------
Value Based on EGIM Analysis $9,521,878
Rounded $9,500,000
Value Per Unit $ 27,697
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 24
REGENCY OAKS, FERN PARK, FLORIDA
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 56.23% before reserves. The comparable sales
indicate a range of expense ratios from 41.74% to 48.94%, while their EGIMs
range from 5.30 to 5.84. Overall, we conclude to an EGIM of 4.00, which results
in an "as is" value estimate in the EGIM Analysis of $9,500,000.
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 $9,200,000.
Price Per Unit $9,600,000
NOI Per Unit $8,900,000
EGIM Analysis $9,500,000
Sales Comparison Conclusion $9,200,000
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 25
REGENCY OAKS, FERN 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 26
REGENCY OAKS, FERN 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
- -----------------------------------------------------------------------
Studio 589 $ 642 $1.09 100.0%
1Br/1Ba 719 $ 641 $0.89 95.8%
2Br/1.5Ba 984 $ 638 $0.65 93.5%
2Br/2Ba 1061 $ 955 $0.90 100.0%
2Br/2.5Ba 1800 $ 920 $0.51 91.0%
3Br/2Ba 1320 $ 900 $0.68 97.0%
3Br/2.5Ba 2070 $1,002 $0.48 100.0%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 27
REGENCY OAKS, FERN PARK, FLORIDA
RENT ANALYSIS
COMPARABLE RENTS
-------------------------------------------------
R-1 R-2 R-3 R-4 R-5
-------------------------------------------------
EMPRIAM
HOWEL (FORMER
BRANCH SEMORAN EMERALD BIRCHWOOD
STATION SANDPIPER NORTH BAY) LANDING
SUBJECT SUBJECT SUBJECT ------- --------- ------- --------- ---------
UNIT ACTUAL ASKING COMPARISON TO SUBJECT
DESCRIPTION TYPE RENT RENT Superior Superior Superior Superior Similar
- ------------------------ --------- ------- ------- -------- -------- -------- -------- -------
Monthly Rent Studio $ 642 $ ??? $ 520 $ 495 $ 590 $ 535
Unit Area (SF) 589 589 538 560 782 ???
Monthly Rent per Sq. Ft. $ ??? $ ??? $ ??? $ 0.88 $ 0.75 $ 0.97
Monthly Rent 1Br/1Ba $ 641 $ 519 $ 558 $ 495 $ 590 $ 579 $ 535
Unit Area (SF) 719 719 ??? ??? 782 720 550
Monthly Rent per Sq. Ft. $ 0.89 $ 0.72 $ 0.76 $ 0.88 $ 0.75 $ ??? $ 0.97
Monthly Rent 2Br/1.5Ba $ 638 $ 629 $ 655 $ 685 $ 685 $ 660
Unit Area (SF) ??? 964 1,037 1,024 ??? 950
Monthly Rent per Sq. Ft. ??? $ ??? $ 0.63 $ 0.66 $ 0.62 $ 0.69
Monthly Rent 2Br/2Ba $ 955 $ 649 $ 785 $ 705 $ 750 $ 610
Unit Area (SF) 1,061 ??? 1,102 1,076 1,280 976
Monthly Rent per Sq. Ft. $ ??? $ 0.61 $ ??? $ ??? $ 0.59 $ 0.63
Monthly Rent 2Br/2.5Ba $ 920 $ ??? $ 785 $ 745 ???
Unit Area (SF) ??? 1,800 1,102 1,146 ???
Monthly Rent per Sq. Ft. $ 0.51 $ 0.55 $ 0.65 $ 0.65 $ 0.59
Monthly Rent 3Br/2Ba $ ??? $ 874 $ 824 $ 805 $ 815 $ 815
Unit Area (SF) 1,320 1,320 1,417 ??? 1,357 1,270
Monthly Rent per Sq. Ft. $ 0.68 $ 0.66 $ 0.58 $ 0.63 $ ??? $ ???
Monthly Rent 3Br/2.5Ba $ 1,014 $ ??? $ 815
Unit Area (SF) 2,070 2,070 1,315 ???
Monthly Rent per Sq. Ft. $ ??? $ 0.64 $ ???
SUBJECT
UNIT
DESCRIPTION TYPE MIN MAX MEDIAN AVERAGE
- ------------------------ --------- ------- ------ -------- -------
Monthly Rent Studio $ 495 $ 590 $ 529 $ 535
Unit Area (SF) 534 782 555 648
Monthly Rent per Sq. Ft. $ 0.75 $ 1.09 $ 0.93 ???
Monthly Rent 1Br/1Ba $ 495 $ 590 $ 558 $ 561
Unit Area (SF) 550 782 720 669
Monthly Rent per Sq. Ft. $ 0.75 $ 0.97 $ 0.80 $ 0.84
Monthly Rent 2Br/1.5Ba $ 655 $ 685 $ 670 $ 670
Unit Area (SF) ??? ??? 1,051 1,031
Monthly Rent per Sq. Ft. $ 0.62 $ 0.69 $ 0.65 $ 0.65
Monthly Rent 2Br/2Ba $ 610 $ 715 $ ??? $ 695
Unit Area (SF) 976 1,200 ??? ???
Monthly Rent per Sq. Ft. $ 0.59 $ 0.90 $ 0.64 $ 0.63
Monthly Rent 2Br/2.5Ba $ 750 $ 745 $ 715 $ 723
Unit Area (SF) 1,102 1,200 1,146 ???
Monthly Rent per Sq. Ft. $ 0.59 $ 0.63 $ 0.65 ???
Monthly Rent 3Br/2Ba $ ??? $ 824 $ 815 $ 815
Unit Area (SF) 1,270 1,417 1,319 1,331
Monthly Rent per Sq. Ft. $ 0.58 $ ??? $ 0.41 $ ???
Monthly Rent 3Br/2.5Ba $ 815 $ 845 $ 830 $ ???
Unit Area (SF) 1,315 1,357 ??? 1,335
Monthly Rent per Sq. Ft. $ 0.60 $ 0.64 $ 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
- --------- --------------- ---------- -------- ------ -------- -----------
Studio 32 589 $480 $0.81 $ 15,360 $ 184,320
1Br/1Ba 93 719 $500 $0.70 $ 46,500 $ 558,000
2Br/1.5Ba 112 984 $620 $0.63 $ 69,440 $ 833,280
2Br/2Ba 57 1,061 $630 $0.59 $ 35,910 $ 430,920
2Br/2.5Ba 25 1,800 $930 $0.52 $ 23,250 $ 279,000
3Br/2Ba 12 1,320 $840 $0.64 $ 10,080 $ 120,960
3Br/2.5Ba 12 2,070 $950 $0.46 $ 11,400 $ 136,800
-------- -----------
Total $211,940 $ 2,543,280
======== ===========
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 as follows.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 28
REGENCY OAKS, FERN PARK, FLORIDA
SUMMARY OF HISTORICAL INCOME & EXPENSES
FISCAL YEAR 2000 FISCAL YEAR 2001 FISCAL YEAR 2002 FISCAL YEAR 2003
----------------------- ----------------------- ----------------------- -----------------------
ACTUAL ACTUAL ACTUAL MANAGEMENT BUDGET
----------------------- ----------------------- ----------------------- -----------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT
- ------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Revenues
Rental Income $2,458,328 $ 7,167 $2,581,032 $ 7,525 $2,537,636 $ 7,398 $2,544,220 $ 7,418
Vacancy $ 233,457 $ 681 $ 324,527 $ 946 $ 469,222 $ 1,368 $ 380,764 $ 1,110
Credit Loss/Concessions $ 22,874 $ 67 $ 88,769 $ 259 $ 114,711 $ 334 $ 78,600 $ 229
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Subtotal $ 256,331 $ 747 $ 413,296 $ 1,205 $ 583,933 $ 1,702 $ 459,364 $ 1,339
Laundry Income $ 39,854 $ 116 $ 25,363 $ 74 $ 20,645 $ 60 $ 33,096 $ 96
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 107,229 $ 313 $ 166,672 $ 486 $ 269,713 $ 786 $ 225,600 $ 658
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Subtotal Other Income $ 147,083 $ 429 $ 192,035 $ 560 $ 290,358 $ 847 $ 258,696 $ 754
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Effective Gross Income $2,349,080 $ 6,849 $2,359,771 $ 6,880 $2,244,061 $ 6,542 $2,343,552 $ 6,833
Operating Expenses
Taxes $ 139,820 $ 408 $ 153,351 $ 447 $ 147,646 $ 430 $ 158,671 $ 463
Insurance $ 39,177 $ 114 $ 113,414 $ 331 $ 105,487 $ 308 $ 108,455 $ 316
Utilities $ 208,232 $ 607 $ 238,895 $ 696 $ 217,636 $ 635 $ 225,000 $ 656
Repair & Maintenance $ 118,108 $ 344 $ 108,380 $ 316 $ 74,832 $ 218 $ 73,440 $ 214
Cleaning $ 138,525 $ 404 $ 125,153 $ 365 $ 140,296 $ 409 $ 131,280 $ 383
Landscaping $ 116,333 $ 339 $ 90,443 $ 264 $ 150,006 $ 437 $ 125,640 $ 366
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 41,987 $ 122 $ 53,048 $ 155 $ 58,386 $ 170 $ 52,200 $ 152
General Administrative $ 413,804 $ 1,206 $ 387,469 $ 1,130 $ 298,082 $ 869 $ 319,752 $ 932
Management $ 119,727 $ 349 $ 128,930 $ 376 $ 112,330 $ 327 $ 129,038 $ 376
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Operating Expenses $1,335,713 $ 3,894 $1,399,083 $ 4,079 $1,304,701 $ 3,804 $1,323,476 $ 3,859
Reserves $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Income $1,013,367 $ 2,954 $ 960,688 $ 2,801 $ 939,360 $ 2,739 $1,020,076 $ 2,974
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
ANNUALIZED 2003
-----------------------
PROJECTION AAA PROJECTION
----------------------- ----------------------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT %
- ------------------------ ---------- ---------- ---------- ---------- ------
Revenues
Rental Income $2,491,631 $ 7,264 $2,543,280 $ 7,415 100.0%
Vacancy $ 304,817 $ 889 $ 305,194 $ 890 12.0%
Credit Loss/Concessions $ 175,739 $ 512 $ 152,597 $ 445 6.0%
---------- ---------- ---------- ---------- ------
Subtotal $ 480,556 $ 1,401 $ 457,790 $ 1,335 18.0%
Laundry Income $ 19,521 $ 57 $ 20,580 $ 60 0.8%
Garage Revenue $ 0 $ 0 $ 0 $ 0 0.0%
Other Misc. Revenue $ 310,952 $ 907 $ 274,400 $ 800 10.8%
---------- ---------- ---------- ---------- ------
Subtotal Other Income $ 330,473 $ 963 $ 294,980 $ 860 11.6%
---------- ---------- ---------- ---------- ------
Effective Gross Income $2,341,548 $ 6,827 $2,380,470 $ 6,940 100.0%
Operating Expenses
Taxes $ 155,319 $ 453 $ 157,780 $ 460 6.6%
Insurance $ 109,663 $ 320 $ 109,760 $ 320 4.6%
Utilities $ 200,704 $ 585 $ 205,800 $ 600 8.6%
Repair & Maintenance $ 60,981 $ 178 $ 68,600 $ 200 2.9%
Cleaning $ 178,503 $ 520 $ 137,200 $ 400 5.8%
Landscaping $ 209,927 $ 612 $ 154,350 $ 450 6.5%
Security $ 0 $ 0 $ 0 $ 0 0.0%
Marketing & Leasing $ 56,332 $ 164 $ 54,880 $ 160 2.3%
General Administrative $ 270,219 $ 788 $ 343,000 $ 1,000 14.4%
Management $ 89,527 $ 261 $ 107,121 $ 312 4.5%
Miscellaneous $ 0 $ 0 $ 0 $ 0 0.0%
---------- ---------- ---------- ---------- ------
Total Operating Expenses $1,331,173 $ 3,881 $1,338,491 $ 3,902 56.2%
Reserves $ 0 $ 0 $ 171,500 $ 500 12.8%
---------- ---------- ---------- ---------- ------
Net Income $1,010,375 $ 2,946 $ 870,478 $ 2,538 36.6%
---------- ---------- ---------- ---------- ------
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 18% based on the subject's
historical performance, as well as the anticipated future market conditions.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 29
REGENCY OAKS, FERN 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 $500 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 $500 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
3RD QUARTER 2003
NATIONAL APARTMENT MARKET
CAPITALIZATION RATES
---------------------------------
GOING-IN TERMINAL
-------------- ---------------
Low High Low High
----- ----- ----- ------
Range 5.50% 9.50% 6.00% 10.00%
Average 7.61% 8.14%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 30
REGENCY OAKS, FERN PARK, FLORIDA
SUMMARY OF OVERALL
CAPITALIZATION RATES
COMP. NO. SALE DATE OCCUP. PRICE/UNIT OAR
- --------- --------- ------ ---------- ------
I-1 May-03 94% $ 39,815 10.19%
I-2 Nov-02 95% $ 34,797 9.60%
I-3 Sep-02 95% $ 36,685 9.54%
I-4 May-01 90% $ 38,125 10.98%
I-5 Aug-01 95% $ 43,000 8.98%
High 10.98%
Low 8.98%
Average 9.86%
Based on this information, we have concluded the subject's overall
capitalization rate should be 9.75%. The terminal capitalization rate is applied
to the net operating income estimated for the year following the end of the
holding period. Based on the concluded overall capitalization rate, the age of
the property and the surveyed information, we have concluded the subject's
terminal capitalization rate to be 10.25%. 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 12.00%.
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 12.00% indicates a value of $8,700,000. In this instance, the reversion
figure contributes approximately 36% of the total value. Investors surveyed for
this assignment indicated they
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 31
REGENCY OAKS, FERN PARK, FLORIDA
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 as
follow.
DISCOUNTED CASH FLOW ANALYSIS
REGENCY OAKS
YEAR APR-2004 APR-2005 APR-2006 APR-2007 APR-2008 APR-2009
FISCAL YEAR 1 2 3 4 5 6
- ----------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
REVENUE
Base Rent $2,543,280 $2,606,862 $2,672,034 $2,738,834 $2,807,305 $2,877,488
Vacancy $ 305,194 $ 312,823 $ 320,644 $ 328,660 $ 336,877 $ 345,299
Credit Loss $ 152,597 $ 156,412 $ 160,324 $ 164,330 $ 168,438 $ 172,649
Concessions $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ---------- ---------- ----------
Subtotal $ 457,790 $ 469,235 $ 480,966 $ 492,990 $ 505,315 $ 517,948
Laundry Income $ 20,580 $ 21,095 $ 21,622 $ 22,162 $ 22,716 $ 23,284
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 274,400 $ 281,260 $ 288,292 $ 295,499 $ 302,886 $ 310,458
---------- ---------- ---------- ---------- ---------- ----------
Subtotal Other Income $ 294,980 $ 302,355 $ 309,913 $ 317,661 $ 325,603 $ 333,743
---------- ---------- ---------- ---------- ---------- ----------
EFFECTIVE GROSS INCOME $2,380,470 $2,439,981 $2,500,981 $2,563,505 $2,627,593 $2,693,283
OPERATING EXPENSES:
Taxes $ 157,780 $ 162,513 $ 167,389 $ 172,410 $ 177,583 $ 182,910
Insurance $ 109,760 $ 113,053 $ 116,444 $ 119,938 $ 123,536 $ 127,242
Utilities $ 205,800 $ 211,974 $ 218,333 $ 224,883 $ 231,630 $ 238,579
Repair & Maintenance $ 68,600 $ 70,658 $ 72,778 $ 74,961 $ 77,210 $ 79,526
Cleaning $ 137,200 $ 141,316 $ 145,555 $ 149,922 $ 154,420 $ 159,052
Landscaping $ 154,350 $ 158,981 $ 163,750 $ 168,662 $ 173,722 $ 178,934
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 54,880 $ 56,526 $ 58,222 $ 59,969 $ 61,768 $ 63,621
General Administrative $ 343,000 $ 353,290 $ 363,889 $ 374,805 $ 386,050 $ 397,631
Management $ 107,121 $ 109,799 $ 112,544 $ 115,358 $ 118,242 $ 121,198
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES $1,338,491 $1,378,110 $1,418,905 $1,460,909 $1,504,159 $1,548,693
Reserves $ 171,500 $ 176,645 $ 181,944 $ 187,403 $ 193,025 $ 198,816
---------- ---------- ---------- ---------- ---------- ----------
NET OPERATING INCOME $ 870,478 $ 885,226 $ 900,132 $ 915,194 $ 930,409 $ 945,774
========== ========== ========== ========== ========== ==========
Operating Expense Ratio (% of EGI) 56.2% 56.5% 56.7% 57.0% 57.2% 57.5%
Operating Expense Per Unit $ 3,902 $ 4,018 $ 4,137 $ 4,259 $ 4,385 $ 4,515
YEAR APR-2010 APR-2011 APR-2012 APR-2013 APR-2014
FISCAL YEAR 7 8 9 10 11
- ----------------------------------- ---------- ---------- ---------- ---------- ----------
REVENUE
Base Rent $2,949,425 $3,023,161 $3,098,740 $3,176,208 $3,255,613
Vacancy $ 353,931 $ 362,779 $ 371,849 $ 381,145 $ 390,674
Credit Loss $ 176,966 $ 181,390 $ 185,924 $ 190,572 $ 195,337
Concessions $ 0 $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ---------- ----------
Subtotal $ 530,897 $ 544,169 $ 557,779 $ 571,717 $ 586,010
Laundry Income $ 23,866 $ 24,463 $ 25,075 $ 25,702 $ 26,344
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 318,220 $ 326,175 $ 334,330 $ 342,688 $ 351,255
---------- ---------- ---------- ---------- ----------
Subtotal Other Income $ 342,086 $ 350,639 $ 359,404 $ 368,390 $ 377,599
---------- ---------- ---------- ---------- ----------
EFFECTIVE GROSS INCOME $2,760,615 $2,829,630 $2,900,371 $2,972,880 $3,047,202
OPERATING EXPENSES:
Taxes $ 188,398 $ 194,049 $ 199,871 $ 205,867 $ 212,043
Insurance $ 131,059 $ 134,991 $ 139,041 $ 143,212 $ 147,508
Utilities $ 245,736 $ 253,108 $ 260,701 $ 268,522 $ 276,578
Repair & Maintenance $ 81,912 $ 84,369 $ 86,900 $ 89,507 $ 92,193
Cleaning $ 163,824 $ 168,739 $ 173,801 $ 179,015 $ 184,385
Landscaping $ 184,302 $ 189,831 $ 195,526 $ 201,392 $ 207,433
Security $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 65,530 $ 67,495 $ 69,520 $ 71,606 $ 73,754
General Administrative $ 409,560 $ 421,847 $ 434,502 $ 447,537 $ 460,963
Management $ 124,228 $ 127,333 $ 130,517 $ 133,780 $ 137,124
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES $1,594,548 $1,641,763 $1,690,379 $1,740,438 $1,791,982
Reserves $ 204,780 $ 210,923 $ 217,251 $ 223,769 $ 230,482
NET OPERATING INCOME $ 961,287 $ 976,944 $ 992,741 $1,008,674 $1,024,738
---------- ---------- ---------- ---------- ----------
Operating Expense Ratio (% of EGI) 57.8% 58.0% 58.3% 58.5% 58.8%
Operating Expense Per Unit $ 4,649 $ 4,786 $ 4,928 $ 5,074 $ 5,224
Estimated Stabilized NOI $870,478 Sales Expense Rate 2.00%
Months to Stabilized 1 Discount Rate 12.00%
Stabilized Occupancy 88.0% Terminal Cap Rate 10.25%
"DCF" VALUE ANALYSIS
Gross Residual Sale Price $9,997,447 Deferred Maintenance $ 0
Less: Sales Expense $ 199,949 Add: Excess Land $ 0
---------- Other Adjustments $ 0
Net Residual Sale Price $9,797,498 ----------
PV of Reversion $3,154,532 Value Indicated By "DCF" $8,673,612
Add: NPV of NOI $5,519,080 Rounded $8,700,000
----------
PV Total $8,673,612
"DCF" VALUE SENSITIVITY TABLE
DISCOUNT RATE
--------------------------------------------------------------
TOTAL VALUE 11.50% 11.75% 12.00% 12.25% 12.50%
- -------------------- ---------- ---------- ---------- ---------- ----------
9.75% $9,113,751 $8,973,071 $8,835,383 $8,700,612 $8,568,686
10.00% $9,027,049 $8,888,290 $8,752,476 $8,619,533 $8,489,391
TERMINAL CAP 10.25% $8,944,577 $8,807,645 $8,673,612 $8,542,408 $8,413,963
RATE 10.50% $8,866,032 $8,730,839 $8,598,504 $8,468,957 $8,342,128
10.75% $8,791,141 $8,657,607 $8,526,890 $8,398,921 $8,273,633
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 32
REGENCY OAKS, FERN PARK, 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 9.75% percent is applicable to the
subject. The results of our direct capitalization analysis are as follows:
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 33
REGENCY OAKS, FERN PARK, FLORIDA
REGENCY OAKS
TOTAL PER SQ. FT. PER UNIT %OF EGI
- -------------------------------------------------------------------------------------------
REVENUE
Base Rent $2,543,280 $ 7.43 $ 7,415
Less: Vacancy & Collection Loss 18.00% $ 457,790 $ 1.34 $ 1,335
Plus: Other Income
Laundry Income $ 20,580 $ 0.06 $ 60 0.86%
Garage Revenue $ 0 $ 0.00 $ 0 0.00%
Other Misc. Revenue $ 274,400 $ 0.80 $ 800 11.53%
---------------------------------------------
Subtotal Other Income $ 294,980 $ 0.86 $ 860 12.39%
EFFECTIVE GROSS INCOME $2,380,470 $ 6.96 $ 6,940
OPERATING EXPENSES:
Taxes $ 157,780 $ 0.46 $ 460 6.63%
Insurance $ 109,760 $ 0.32 $ 320 4.61%
Utilities $ 205,800 $ 0.60 $ 600 8.65%
Repair & Maintenance $ 68,600 $ 0.20 $ 200 2.88%
Cleaning $ 137,200 $ 0.40 $ 400 5.76%
Landscaping $ 154,350 $ 0.45 $ 450 6.48%
Security $ 0 $ 0.00 $ 0 0.00%
Marketing & Leasing $ 54,880 $ 0.16 $ 160 2.31%
General Administrative $ 343,000 $ 1.00 $ 1,000 14.41%
Management 4.50% $ 107,121 $ 0.31 $ 312 4.50%
Miscellaneous $ 0 $ 0.00 $ 0 0.00%
TOTAL OPERATING EXPENSES $1,338,491 $ 3.91 $ 3,902 56.23%
Reserves $ 171,500 $ 0.50 $ 500 7.20%
---------------------------------------------
NET OPERATING INCOME $ 870,478 $ 2.54 $ 2,538 36.57%
"GOING IN" CAPITALIZATION RATE 9.75%
VALUE INDICATION $8,927,984 $26.10 $ 26,029
"AS IS" VALUE INDICATION
(DIRECT CAPITALIZATION APPROACH) $8,927,984
ROUNDED $8,900,000 $26.02 $ 25,948
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 34
REGENCY OAKS, FERN PARK, FLORIDA
DIRECT CAPITALIZATION VALUE SENSITIVITY TABLE
CAP RATE VALUE ROUNDED $/UNIT $/SF
- -----------------------------------------------------------
9.00% $9,671,983 $9,700,000 $28,280 $28.36
9.25% $9,410,578 $9,400,000 $27,405 $27.48
9.50% $9,162,931 $9,200,000 $26,822 $26.89
9.75% $8,927,984 $8,900,000 $25,948 $26.02
10.00% $8,704,785 $8,700,000 $25,364 $25.43
10.25% $8,492,473 $8,500,000 $24,781 $24.85
10.50% $8,290,271 $8,300,000 $24,198 $24.26
CONCLUSION BY THE DIRECT CAPITALIZATION METHOD
Applying the capitalization rate to our estimated NOI results in an estimated
value of $8,900,000.
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 $8,700,000
Direct Capitalization Method $8,900,000
Giving consideration to the indicated values provided by both techniques, we
have concluded the estimated value by the income capitalization approach to be
$8,800,000.
AMERICAN APPRAISAL ASSOCIATES, INC. RECONCILIATION AND CONCLUSION PAGE 35
REGENCY OAKS, FERN 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 $9,200,000
Income Approach $8,800,000
Reconciled Value $8,800,000
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
December 9, 2003 the market value of the fee simple estate in the property is:
$8,800,000
AMERICAN APPRAISAL ASSOCIATES, INC. ADDENDA
REGENCY OAKS, FERN PARK, FLORIDA
ADDENDA
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
REGENCY OAKS, FERN PARK, FLORIDA
EXHIBIT A
SUBJECT PHOTOGRAPHS
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
REGENCY OAKS, FERN PARK, FLORIDA
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
APARTMENT BUILDING - FRONT VIEW APARTMENT BUILDING - SIDE VIEW
[PICTURE] [PICTURE]
COURTYARD VIEW APARTMENT BUILDING - PARKING VIEW
[PICTURE] [PICTURE]
CLUBHOUSE EXTERIOR VIEW - COVERED PARKING
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
REGENCY OAKS, FERN PARK, FLORIDA
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
SPORT COURTS SWIMMING POOL
[PICTURE] [PICTURE]
PICNIC AREA INTERIOR VACANT UNIT - LIVING ROOM
[PICTURE] [PICTURE]
INTERIOR VACANT UNIT - KITCHEN INTERIOR VACANT UNIT - BATHROOM
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
REGENCY OAKS, FERN PARK, FLORIDA
EXHIBIT B
SUMMARY OF RENT COMPARABLES
AND PHOTOGRAPH OF COMPARABLES
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
REGENCY OAKS, FERN PARK, FLORIDA
PHOTOGRAPHS OF COMPARABLE SALE PROPERTIES
COMPARABLE I-1 COMPARABLE I-2 COMPARABLE I-3
EMPIRIAN (FORMERLY KNOWN AS EMERALD BAY) SEDGEFIELD APARTMENTS LA ALOMA
5 Autumn Breeze Way 110 Sedgefield Circle 3040 Aloma Avenue
Winter Park, FL Winter Park, FL Winter Park, FL
[PICTURE] [PICTURE] [PICTURE]
COMPARABLE I-4 COMPARABLE I-5
COURTYARD AT WINTER PARK THE ASHLEY OF SPRING VALLEY
1695 Lee Road 693 S Wymore Road
Winter Park, FL Altamonte Springs, FL
[PICTURE] [PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
REGENCY OAKS, FERN PARK, FLORIDA
SUMMARY OF COMPARABLE RENTAL PROPERTIES
COMPARABLE
DESCRIPTION SUBJECT R - 1
- ------------------------------------------------------------------------------------------------------------------------------------
Property Name Regency Oaks Howel Branch Station
Management Company AIMCO Brighton Residential
LOCATION:
Address 200 Maltese Circle 416 Banyon Tree Circle
City, State Fern Park, Florida Maitland, FL
County Seminole Seminole
Proximity to Subject Same neighborhood
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 342,080 349,530
Year Built 1969 1969
Effective Age 25 34
Building Structure Type Brick and Stucco Brick
Parking Type (Gr., Cov., etc.) Open, Plus some carports Open
Number of Units 343 366
Unit Mix: Type Unit Qty. Mo. Rent Type Unit Qty. Mo.
1 Studio 589 32 $ 642 1 Studio 538 76 $520
2 1Br/1Ba 719 93 $ 641 2 1Br/1Ba 667 18 $550
3 2Br/1.5Ba 984 112 $ 638 2 1Br/1Ba 750 64 $560
4 2Br/2Ba 1,061 57 $ 955 3 2Br/1Ba 1,037 62 $655
5 2Br/2.5Ba 1,800 25 $ 920 4 2Br/2Ba 1,102 56 $715
6 3Br/2Ba 1,320 12 $ 900 5 2Br/2Ba 1,102 56 $715
7 3Br/2.5Ba 2,070 12 $1,002 6 3Br/2Ba 1,328 32 $810
6 3Br/2Ba 1,481 44 $835
Average Unit Size (SF) 997 971
Unit Breakdown: Efficiency 2-Bedroom Efficiency 2-Bedroom
1-Bedroom 3-Bedroom 1-Bedroom 3-Bedroom
CONDITION: Average
APPEAL: Average
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony X Balcony X
Fireplace Fireplace
Cable TV Ready Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
Spa/Jacuzzi X Car Wash Spa/Jacuzzi X Car Wash
Basketball Court X BBQ Equipment Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball X Meeting Hall Sand Volley Ball Meeting Hall
X Tennis Court Secured Parking Tennis Court Secured Parking
Racquet Ball X Laundry Room Racquet Ball X Laundry Room
Jogging Track X Business Office Jogging Track Business Office
Gym Room X Freshwater Lake Gym Room X Freshwater Lake
X Basketball Court Basketball Court
X Picnic Area Picnic Area
OCCUPANCY: 92% 86%
LEASING DATA:
Available Leasing Terms 6 to 12 months 6 to 12 months
Concessions On specified units only
Pet Deposit No Pets Allowed
Utilities Paid by Tenant: X Electric X Natural Gas X Electric X Natural Gas
X Water X Trash X Water X Trash
Confirmation Manager Leasing Agent
Telephone Number 813-933-2449 407-671-7200
NOTES: Attractive apartment community located
in subject's neighborhood. All brick, good
condition, good curb appeal. Overall, superior
to the subject property.
COMPARISON TO SUBJECT: Superior
COMPARABLE COMPARABLE
DESCRIPTION R - 2 R - 3
- ------------------------------------------------------------------------------------------------------------------------------------
Property Name Sandpiper Semoran North
Management Company Community Management Calex Realty Group
LOCATION:
Address 709 Sandpiper Lane 1743 Semoran North Circle
City, State Casselberry, FL Winter Park, FL
County Seminole Seminole
Proximity to Subject Same neighborhood Same neighborhood
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 178,752 381,408
Year Built 1974 1964
Effective Age 29 30
Building Structure Type Stucco Stucco
Parking Type (Gr., Cov., etc.) Open Open, plus some carports
Number of Units 196 348
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
1 1Br/1Ba 560 80 $495 1 1Br/1Ba 782 $590
2 1Br/1Ba 560 80 $495 2 1Br/1Ba 782 $590
3 2Br/1.5Ba 1,024 18 $680 3 2Br/1Ba 1,112 $685
4 2Br/2Ba 1,076 36 $705 4 2Br/2Ba 1,200 $710
5 2Br/2Ba 1,146 24 $745 5 2Br/2Ba 1,200 $710
6 3Br/2Ba 1,281 20 $805 6 3Br/2Ba 1,357 $815
7 3Br/2Ba 1,315 18 $845 7 3Br/2Ba 1,357 $815
Average Unit Size (SF) 810
Unit Breakdown: Efficiency 2-Bedroom Efficiency 2-Bedroom
1-Bedroom 3-Bedroom 1-Bedroom 3-Bedroom
CONDITION: Slightly Superior Slightly Superior
APPEAL: Good Slightly Superior
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony X Balcony X
Fireplace Fireplace
Cable TV Ready Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
Spa/Jacuzzi Car Wash Spa/Jacuzzi Car Wash
Basketball Court BBQ Equipment Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball Meeting Hall Sand Volley Ball Meeting Hall
Tennis Court Secured Parking Tennis Court Secured Parking
Racquet Ball X Laundry Room Racquet Ball X Laundry Room
Jogging Track Business Office Jogging Track Business Office
X Gym Room Freshwater Lake X Gym Room Freshwater Lake
Basketball Court Basketball Court
Picnic Area Picnic Area
OCCUPANCY: 90% N/A
LEASING DATA:
Available Leasing Terms 6 to 13 months 6 to 12 months
Concessions On specified units only One Month Free Rent
Pet Deposit Yes Yes
Utilities Paid by Tenant: X Electric X Natural Gas X Electric X Natural Gas
X Water X Trash X Water X Trash
Confirmation Leasing Agent Leasing Agent
Telephone Number 407-831-6866 407-671-5957
NOTES: Nearby apartment community, but generally Nearby apartment community located in same
inferior location along secondary street neighborhood in a similar retail/commercial
with limited curb appear and in similar to area just off Rt 436. Superior to subject in
inferior condition compared to the subject terms of overall curb appeal and condition.
property. Overall, considered to be an Also slightly superior location.
inferior apartment community.
COMPARISON TO SUBJECT: Superior Superior
COMPARABLE COMPARABLE
DESCRIPTION R - 4 R - 5
- ------------------------------------------------------------------------------------------------------------------------------------
Property Name Empiriam (Former Emerald Bay) Birchwood Landing
Management Company Empire Equity Group Casselberry Equity
LOCATION:
Address 5 Autumn Breeze Way 1485 Ash Circle
City, State Winter Park, FL Casselberry, FL
County Seminole Seminole
Proximity to Subject Same neighborhood Same neighborhood
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 427,680 114,080
Year Built 1972 1975
Effective Age 25 28
Building Structure Type Stucco Stucco
Parking Type (Gr., Cov., etc.) Open, plus some carports Open
Number of Units 432 184
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
2 1Br/1Ba 720 149 $579 1 1Br/1Ba 550 $535
4 2Br/2Ba 976 132 $610 2 1Br/1Ba 550 $535
6 3Br/2Ba 1,270 151 $815 3 2Br/1Ba 950 $660
Average Unit Size (SF) 990
Unit Breakdown: Efficiency 2-Bedroom Efficiency 2-Bedroom
1-Bedroom 3-Bedroom 1-Bedroom 3-Bedroom
CONDITION: Average Average
APPEAL: Average Average
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony X Balcony
Fireplace Fireplace
Cable TV Ready Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
Spa/Jacuzzi X Car Wash Spa/Jacuzzi Car Wash
Basketball Court BBQ Equipment Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball Meeting Hall Sand Volley Ball Meeting Hall
X Tennis Court Secured Parking Tennis Court Secured Parking
Racquet Ball X Laundry Room Racquet Ball X Laundry Room
Jogging Track X Business Office Jogging Track Business Office
X Gym Room Freshwater Lake Gym Room Freshwater Lake
X Basketball Court Basketball Court
X Picnic Area Picnic Area
OCCUPANCY: N/A N/A
LEASING DATA:
Available Leasing Terms 6 to 12 months 6 to 12 months
Concessions No $299 Move-in special
Pet Deposit Yes Yes
Utilities Paid by Tenant: X Electric X Natural Gas X Electric X Natural Gas
X Water X Trash X Water X Trash
Confirmation Leasing Agent Leasing Agent
Telephone Number 407-671-7722 407-657-6716
NOTES: Nearby apartment community located in same Located along Rt 436 very near the subject
neighborhood in a similar retail/commercial property. Most similar in terms of location.
area just off Rt 436. Superior to subject in Also very similar in terms of overall curb
terms of overall curb appeal and condition. appeal and condition.
Also slightly superior location.
COMPARISON TO SUBJECT: Superior Similar
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
REGENCY OAKS, FERN PARK, FLORIDA
PHOTOGRAPHS OF COMPARABLE RENT PROPERTIES
COMPARABLE R-1 COMPARABLE R-2 COMPARABLE R-3
HOWEL BRANCH STATION SANDPIPER SEMORAN NORTH
416 Banyon Tree Circle 709 Sandpiper Lane 1743 Semoran North Circle
Maitland, FL Casselberry, FL Winter Park, FL
N/A [PICTURE] N/A
COMPARABLE R-4 COMPARABLE R-5
EMPIRIAM (FORMER EMERALD BAY) BIRCHWOOD LANDING
5 Autumn Breeze Way 1485 Ash Circle
Winter Park, FL Casselberry, FL
[PICTURE] [PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
REGENCY OAKS, FERN PARK, FLORIDA
EXHIBIT C
ASSUMPTIONS AND LIMITING CONDITIONS
(3 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
REGENCY OAKS, FERN 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
REGENCY OAKS, FERN 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
REGENCY OAKS, FERN 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 Appraisal Institute 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
REGENCY OAKS, FERN PARK, FLORIDA
EXHIBIT D
CERTIFICATE OF APPRAISER
(1 PAGE)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT D
REGENCY OAKS, FERN PARK, FLORIDA
CERTIFICATE OF APPRAISER
I certify that, to the best of my knowledge and belief:
The statements of fact contained in this report are true and correct.
The reported analyses, opinions, and conclusions are limited only by
the reported assumptions and limiting conditions, and represent the
unbiased professional analyses, opinions, and conclusions of American
Appraisal Associates, Inc.
American Appraisal Associates, Inc. and I personally, have no present
or prospective interest in the property that is the subject of this
report and have no personal interest or bias with respect to the
parties involved.
Compensation for American Appraisal Associates, Inc. is not contingent
on an action or event resulting from the analyses, opinions, or
conclusions in, or the use of, this report.
The analyses, opinions, and conclusions were developed, and this report
has been prepared, in conformity with the requirements of the Uniform
Standards of Professional Appraisal Practice and the Code of
Professional Ethics and the Standards of Professional Practice of the
Appraisal Institute.
The use of this report is subject to the requirements of the Appraisal
Institute relating to review by its duly authorized representatives.
I personally did not inspect the subject property. Alice MacQueen
provided significant real property appraisal assistance in the
preparation of this report.
I am currently in compliance with the Appraisal Institute's continuing
education requirements.
-s- Frank Fehribach
------------------------------
Frank Fehribach, MAI
Managing Principal, Real Estate Group
Texas State Certified General Real Estate
Appraiser #TX-1323954-G
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT D
REGENCY OAKS, FERN PARK, FLORIDA
CERTIFICATE OF APPRAISER
I certify that, to the best of my knowledge and belief:
The statements of fact contained in this report are true and correct.
The reported analyses, opinions, and conclusions are limited only by
the reported assumptions and limiting conditions, and represent the
unbiased professional analyses, opinions, and conclusions of American
Appraisal Associates, Inc.
American Appraisal Associates, Inc. and I personally, have no present
or prospective interest in the property that is the subject of this
report and have no personal interest or bias with respect to the
parties involved.
Compensation for American Appraisal Associates, Inc. is not contingent
on an action or event resulting from the analyses, opinions, or
conclusions in, or the use of, this report.
The analyses, opinions, and conclusions were developed, and this report
has been prepared, in conformity with the requirements of the Uniform
Standards of Professional Appraisal Practice and the Code of
Professional Ethics and the Standards of Professional Practice of the
Appraisal Institute.
The use of this report is subject to the requirements of the Appraisal
Institute relating to review by its duly authorized representatives.
I personally inspected the subject property and provided significant
real property appraisal assistance in the preparation of this report.
-s- Alice MacQueen
---------------------------
Alice MacQueen
Florida Certified General Real Estate Appraiser
#RZ0002202
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
REGENCY OAKS, FERN PARK, FLORIDA
EXHIBIT E
QUALIFICATIONS OF APPRAISER
(4 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
REGENCY OAKS, FERN PARK, FLORIDA
FRANK A. FEHRIBACH, MAI
MANAGING PRINCIPAL, REAL ESTATE GROUP
POSITION Frank A. Fehribach is a Managing Principal for the
Dallas Real Estate Group of American Appraisal
Associates, Inc. ("AAA").
EXPERIENCE
Valuation Mr. Fehribach has experience in valuations for resort
hotels; Class A office buildings; Class A multifamily
complexes; industrial buildings and distribution
warehousing; multitract mixed-use vacant land; regional
malls; residential subdivision development; and
special-purpose properties such as athletic clubs, golf
courses, manufacturing facilities, nursing homes, and
medical buildings. Consulting assignments include
development and feasibility studies, economic model
creation and maintenance, and market studies.
Mr. Fehribach also has been involved in overseeing
appraisal and consulting assignments in Mexico and
South America.
Business Mr. Fehribach joined AAA as an engagement director in
1998. He was promoted to his current position in 1999.
Prior to that, he was a manager at Arthur Andersen LLP.
Mr. Fehribach has been in the business of real estate
appraisal for over ten years.
EDUCATION University of Texas - Arlington
Master of Science - Real Estate
University of Dallas
Master of Business Administration - Industrial
Management
Bachelor of Arts - Economics
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
REGENCY OAKS, FERN PARK, FLORIDA
STATE CERTIFICATIONS State of Arizona, Certified General Real Estate
Appraiser, #30828
State of Arkansas, State Certified General Appraiser,
#CG1387N
State of Colorado, Certified General Appraiser,
#CG40000445
State of Georgia, Certified General Real Property
Appraiser, #218487
State of Michigan, Certified General Appraiser,
#1201008081
State of Texas, Real Estate Salesman License, #407158
(Inactive)
State of Texas, State Certified General Real Estate
Appraiser, #TX-1323954-G
PROFESSIONAL Appraisal Institute, MAI Designated Member
AFFILIATIONS Candidate Member of the CCIM Institute pursuing
Certified Commercial Investment Member (CCIM)
designation
PUBLICATIONS "An Analysis of the Determinants of Industrial Property
Valuation," Co-authored with Dr. Ronald C. Rutherford
and Dr. Mark Eakin, The Journal of Real Estate
Research, Vol. 8, No. 3, Summer 1993, p. 365.
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
REGENCY OAKS, FERN PARK, FLORIDA
ALICE MACQUEEN
STATE CERTIFIED GENERAL REAL ESTATE
APPRAISER
POSITION Alice MacQueen is a State Certified General Real Estate
Appraiser and principal member of 3P, Inc., a
consulting firm with offices in Georgia and Utah.
EXPERIENCE
BUSINESS Mrs. MacQueen was employed by American Appraisal
Associates, Inc., from 1983 until 2003 when she formed
3P, Inc.
During her 20 year tenure with AAA, Ms. MacQueen held
numerous positions within the firm, advancing from the
professional staff levels to serve as Regional Director
for the Southeastern United States (1987 to 1992) and
as National Director of the Real Estate Valuation Group
(1992 to 1995). During her later years with the firm,
Ms. MacQueen continued to serve as an officer in the
company, working as Principal/Vice President actively
involved in the valuation of a wide variety of property
types, including numerous types of special purpose
properties.
Prior to joining American Appraisal, Ms. MacQueen was
involved in property management for five years and
spent an additional five years as an appraiser,
consultant and research analyst.
VALUATION Ms. MacQueen has extensive experience in the appraisal
of residential, commercial, industrial and special
purpose properties and is annually involved in the
valuation of several billion dollars of real property.
She has also been involved in land planning analysis
for major mixed use developments. Special purpose
properties appraised include campgrounds, churches,
country clubs and golf courses, data centers, historic
landmarks, proprietary cemeteries and schools.
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
REGENCY OAKS, FERN PARK, FLORIDA
More recently, she has had extensive experience in
appraising residential and industrial properties on
Indian reservations as was instrumental in developing a
major housing study for the Navajo reservation.
The purposes of these valuations have included
allocation of purchase price, charitable donation,
financing, purchase and sale, syndication, and
financial reporting.
Ms. MacQueen has completed appraisals of commercial and
residential real estate. He has also generated
discounted cash flow and sensitivity analyses for
investment-grade real estate, securitization, and
pension funds/insurance industries. Analyses he has
performed involve various types of investment- grade
real estate throughout the continental United States
including apartments, cooperatives, hotels, industrial
and research and development parks, office buildings,
regional shopping centers, and undeveloped acreage.
To date, she has provided appraisal and consulting
services in 48 states, Mexico and Puerto Rico.
EDUCATION Greenbrier College for Women, Liberal Arts
Realtors Institute of Virginia
VALUATION AND SPECIAL Ms. MacQueen completes several courses annually as part
COURSES of the continuing education requirements of the various
states in which she is certified. She also attends real
estate and financial industry-related conferences and
seminars. In recent years, she prepared background
information for HUD pertaining to valuation
requirements for Indian lands and presented findings
related to housing needs and financing issues on
reservations.
STATE-CERTIFICATED
GENERAL APPRAISER Florida, No. RZ0002202, expires 11/30/04
Georgia, No. 239776, expires 7/31/04
New Mexico, No. 001626, expires 4/30/05
North Carolina, No. A5096, expires 6/30/04
Utah, No. CG 00057001, expires 7/1/05
AMERICAN APPRAISAL ASSOCIATES, INC.
REGENCY OAKS, FERN PARK, FLORIDA
GENERAL SERVICE CONDITIONS
AMERICAN APPRAISAL ASSOCIATES, INC.
REGENCY OAKS, FERN 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.