INDIAN CREEK VILLAGE
10382 CONSER STREET
OVERLAND PARK, KANSAS
MARKET VALUE -
FEE SIMPLE ESTATE
AS OF MAY 8, 2003
PREPARED FOR:
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(AIMCO)
C/O LINER YANKELEVITZ SUNSHINE & REGENSTREIF LLP
&
LIEFF CABRASER HEIMANN & BERNSTEIN
ON BEHALF OF NUANES, ET. AL.
[AMERICAN APPRAISAL ASSOCIATES(R) LOGO]
[AMERICAN APPRAISAL ASSOCIATES(R) LOGO]
[AMERICAN APPRAISAL ASSOCIATES(R) LETTERHEAD]
JULY 9, 2003
Apartment Investment and Management
Company ("AIMCO") c/o
Mr. Steven A. Velkei, Esq.
Liner Yankelevitz Sunshine & Regenstreif LLP
1100 Glendon Avenue, 14th Floor
Los Angeles, California 90024-3503
Nuanes, et al. ("Plaintiffs") c/o
Ms. Joy Kruse
Lieff Cabraser Heimann & Bernstein
Embarcadero Center West
275 Battery Street, 30th Floor
San Francisco, California 94111
RE: INDIAN CREEK VILLAGE
10382 CONSER STREET
OVERLAND PARK, JOHNSON COUNTY, KANSAS
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 273 units with a
total of 271,830 square feet of rentable area. The improvements were built in
1972. The improvements are situated on 20.64 acres. Overall, the improvements
are in average condition. As of the date of this appraisal, the subject property
is 88% 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
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
The opinions expressed in this appraisal cover letter can only be completely
understood by reading the narrative report, addenda, and other data, which is
attached. The appraisal is subject to the attached general assumptions and
limiting conditions and general service conditions.
As a result of our investigation, it is our opinion that the fee simple market
value of the subject, effective May 8, 2003 is:
($13,600,000)
Respectfully submitted,
AMERICAN APPRAISAL ASSOCIATES, INC.
-s- Frank Fehribach
July 9, 2003 Frank Fehribach, MAI
#053272 Managing Principal, Real Estate Group
Texas State Certified General Real Estate Appraiser
#TX-1323954-G
Report By:
Kim Cook
AMERICAN APPRAISAL ASSOCIATES, INC. TABLE OF CONTENTS PAGE 3
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
TABLE OF CONTENTS
Cover
Letter of Transmittal
Table of Contents
APPRAISAL DATA
Executive Summary ....................................................... 4
Introduction ............................................................ 9
Area Analysis ........................................................... 11
Market Analysis ......................................................... 14
Site Analysis ........................................................... 16
Improvement Analysis .................................................... 16
Highest and Best Use .................................................... 17
VALUATION
Valuation Procedure ..................................................... 18
Sales Comparison Approach ............................................... 20
Income Capitalization Approach .......................................... 26
Reconciliation and Conclusion ........................................... 37
ADDENDA
Exhibit A - Photographs of Subject Property
Exhibit B - Summary of Rent Comparables and Photograph of Comparables
Exhibit C - Assumptions and Limiting Conditions
Exhibit D - Certificate of Appraiser
Exhibit E - Qualifications
General Service Conditions
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 4
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
EXECUTIVE SUMMARY
PART ONE - PROPERTY DESCRIPTION
PROPERTY NAME: Indian Creek Village
LOCATION: 10382 Conser Street
Overland Park, Kansas
INTENDED USE OF ASSIGNMENT: Court Settlement
PURPOSE OF APPRAISAL: "As Is" Market Value of the Fee Simple Estate
INTEREST APPRAISED: Fee simple estate
DATE OF VALUE: May 8, 2003
DATE OF REPORT: July 9, 2003
PHYSICAL DESCRIPTION - SITE & IMPROVEMENTS:
SITE:
Size: 20.64 acres, or 899,078 square feet
Assessor Parcel No.: NP34000000 000A; (Assessed Value)
Floodplain: Community Panel No. 2001740208F (June 17, 2002)
Flood Zone AE, an area inside the floodplain.
Zoning: RP-3 (Residential Planned Development District)
BUILDING:
No. of Units: 273 Units
Total NRA: 271,830 Square Feet
Average Unit Size: 996 Square Feet
Apartment Density: 13.2 units per acre
Year Built: 1972
UNIT MIX AND MARKET RENT:
GROSS RENTAL INCOME PROJECTION
Market Rent
Square ------------------------ Monthly Annual
Unit Type Feet Per Unit Per SF Income Income
- --------------------------------------------------------------------------------------------
1Br/1Ba 617 $ 560 $0.91 $ 20,160 $ 241,920
1Br/1Ba 878 $ 590 $0.67 $ 82,600 $ 991,200
2Br/1Ba 1,165 $ 860 $0.74 $ 3,440 $ 41,280
2Br/2Ba 1,274 $ 870 $0.68 $ 66,990 $ 803,880
3Br/2Ba 1,287 $ 890 $0.69 $ 8,900 $ 106,800
3Br/2Ba, TH 1,845 $1,000 $0.54 $ 6,000 $ 72,000
Total $188,090 $2,257,080
OCCUPANCY: 88%
ECONOMIC LIFE: 45 Years
EFFECTIVE AGE: 25 Years
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 5
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
REMAINING ECONOMIC LIFE: 20 Years
SUBJECT PHOTOGRAPHS AND LOCATION MAP:
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
ENTRANCE TO SUBJECT VIEW OF LEASING OFFICE
AREA MAP
[MAP]
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 6
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
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
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
PART TWO - ECONOMIC INDICATORS
Amount $/Unit
------ ------
INCOME CAPITALIZATION APPROACH
DIRECT CAPITALIZATION
Potential Rental Income $2,257,080 $8,268
Effective Gross Income $2,222,472 $8,141
Operating Expenses $949,234 $3,477 42.7% of EGI
Net Operating Income: $1,204,988 $4,414
Capitalization Rate 9.00%
DIRECT CAPITALIZATION VALUE $13,400,000 * $49,084 / UNIT
DISCOUNTED CASH FLOW ANALYSIS:
Holding Period 10 years
2002 Economic Vacancy 15%
Stabilized Vacancy & Collection Loss: 10%
Lease-up / Stabilization Period N/A
Terminal Capitalization Rate 10.00%
Discount Rate 11.00%
Selling Costs 2.00%
Growth Rates:
Income 3.00%
Expenses: 3.00%
DISCOUNTED CASH FLOW VALUE $13,800,000 * $50,549 / UNIT
RECONCILED INCOME CAPITALIZATION VALUE $13,600,000 $49,817 / UNIT
SALES COMPARISON APPROACH
PRICE PER UNIT:
Range of Sales $/Unit (Unadjusted) $51,121 to $69,324
Range of Sales $/Unit (Adjusted) $46,678 to $57,678
VALUE INDICATION - PRICE PER UNIT $13,600,000 * $49,817 / UNIT
EGIM ANALYSIS
Range of EGIMs from Improved Sales 6.49 to 7.33
Selected EGIM for Subject 6.25
Subject's Projected EGI $2,222,472
EGIM ANALYSIS CONCLUSION $13,900,000 * $50,916 / UNIT
NOI PER UNIT ANALYSIS CONCLUSION $13,600,000 * $49,817 / UNIT
RECONCILED SALES COMPARISON VALUE $13,700,000 $50,183 / 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
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
PART THREE - SUMMARY OF VALUE CONCLUSIONS
SALES COMPARISON APPROACH:
Price Per Unit $13,600,000
NOI Per Unit $13,600,000
EGIM Multiplier $13,900,000
INDICATED VALUE BY SALES COMPARISON $13,700,000 $50,183 / UNIT
INCOME APPROACH:
Direct Capitalization Method: $13,400,000
Discounted Cash Flow Method: $13,800,000
INDICATED VALUE BY THE INCOME APPROACH $13,600,000 $49,817 / UNIT
RECONCILED OVERALL VALUE CONCLUSION: $13,600,000 $49,817 / UNIT
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 9
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
INTRODUCTION
IDENTIFICATION OF THE SUBJECT
The subject property is located at 10382 Conser Street, Overland Park, Johnson
County, Kansas. Overland Park identifies it as NP34000000 000A.
SCOPE OF THE ASSIGNMENT
The property, neighborhood, and comparables were inspected by Kim Cook on May 8,
2003. Frank Fehribach, MAI has not made a personal inspection of the subject
property. Kim Cook performed the research, valuation analysis and wrote the
report. Frank Fehribach, MAI reviewed the report and concurs with the value.
Frank Fehribach, MAI and Kim Cook have extensive experience in appraising
similar properties and meet the USPAP competency provision.
The scope of this investigation comprises the inspection of the property and the
collection, verification, and analysis of general and specific data pertinent to
the subject property. We have researched current improved sales and leases of
similar properties, analyzing them as to their comparability, and adjusting them
accordingly. We completed the Sales Comparison and Income Capitalization
Approaches to value. From these approaches to value, a concluded overall value
was made.
DATE OF VALUE AND REPORT
This appraisal was made to express the opinion of value as of May 8, 2003. The
date of the report is July 9, 2003.
PURPOSE AND USE OF APPRAISAL
The purpose of the appraisal is to estimate the market value of the fee simple
interest in the subject property. It is understood that the appraisal is
intended to assist the clients in litigation settlement proceedings. The
appraisal was not based on a requested minimum valuation, a specific valuation,
or the approval of a loan.
PROPERTY RIGHTS APPRAISED
We have appraised the Fee Simple Estate in the subject property (as applied in
the Sales & Income Approaches), subject to the existing short-term leases. A Fee
Simple Estate is
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 10
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
defined in The Dictionary of Real Estate Appraisal, 3rd ed. (Chicago: Appraisal
Institute, 1993), as:
"Absolute ownership unencumbered by any other interest or estate,
subject only to the limitations imposed by the governmental powers of
taxation, eminent domain, police power, and escheat."
MARKETING/EXPOSURE PERIOD
MARKETING PERIOD: 6 to 12 months
EXPOSURE PERIOD: 6 to 12 months
HISTORY OF THE PROPERTY
Ownership in the subject property is currently vested in CCIP. 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
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
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 Overland Park, Kansas. Overall, the
neighborhood is characterized as a suburban setting with the predominant land
use being residential. The subject's neighborhood is generally defined by the
following boundaries.
NEIGHBORHOOD BOUNDARIES
East - US 169/Metcalf Avenue
West - US 69/Overland Parkway
South - West 119th Street
North - West 95th Street
MAJOR EMPLOYERS
Major employers in the subject's area include Sprint Corporation (21,173
employees), Applebees International (2,200 employees), Yellow Corporation (1,500
employees), and JC Penney Catalog Logistics Center (1,500 employees). 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
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
NEIGHBORHOOD DEMOGRAPHICS
AREA
--------------------------------------------
CATEGORY 1-MI. RADIUS 3-MI. RADIUS 5-MI. RADIUS MSA
- -------------------------------------------------------------------------------------------
POPULATION TRENDS
Current Population 10,407 91,615 239,527 1,807,569
5-Year Population 10,335 92,956 253,829 1,892,507
% Change CY-5Y -0.7% 1.5% 6.0% 4.7%
Annual Change CY-5Y -0.1% 0.3% 1.2% 0.9%
HOUSEHOLDS
Current Households 4,774 39,543 100,527 709,949
5-Year Projected Households 4,851 41,077 107,505 750,540
% Change CY - 5Y 1.6% 3.9% 6.9% 5.7%
Annual Change CY-5Y 0.3% 0.8% 1.4% 1.1%
INCOME TRENDS
Median Household Income $ 65,759 $ 71,000 $ 71,321 $ 49,518
Per Capita Income $ 33,970 $ 33,515 $ 34,403 $ 24,363
Average Household Income $ 76,648 $ 78,619 $ 81,920 $ 62,029
Source: Demographics Now
The subject neighborhood's population is expected to show increases above that
of the region. The immediate market offers superior income levels as compared to
the broader market.
The following table illustrates the housing statistics in the subject's
immediate area, as well as the MSA region.
HOUSING TRENDS
AREA
-----------------------------------------------
CATEGORY 1-MI. RADIUS 3-MI. RADIUS 5-MI. RADIUS MSA
- -------------------------------------------------------------------------------------------
HOUSING TRENDS
% of Households Renting 37.80% 33.10% 30.57% 29.10%
5-Year Projected % Renting 37.87% 32.22% 30.07% 28.33%
% of Households Owning 56.02% 61.03% 64.45% 62.84%
5-Year Projected % Owning 55.89% 61.96% 65.12% 64.03%
Source: Demographics Now
AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 13
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
SURROUNDING IMPROVEMENTS
The following uses surround the subject property:
North - Condominium
South - Sunny Oak Apartments, Indian Creek
East - Open green area, Wycliff West Shopping Center
West - Brookridge Country Club and golf course
CONCLUSIONS
The subject is well located within the city of Overland 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
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
MARKET ANALYSIS
The subject property is located in the city of Overland Park in Johnson County.
The overall pace of development in the subject's market is more or less stable.
No new construction was noted for 2003. The following table illustrates
historical vacancy rates for the subject's market.
HISTORICAL VACANCY RATE
Period Region Submarket
- ------------------------------------------------------
1st Quarter 2003 8.0% 8.1%
4th Quarter 2002 7.1% 6.8%
Average Per Ending 12/31/02 6.2% 5.8%
Source: REIS, Subtrend Futures, Kansas City Apartment, Overland Park North, 1st
Quarter 2003
Occupancy trends in the subject's market are stable. Historically speaking, the
subject's submarket has outperformed the overall market.
Market rents in the subject's market have been following a stable trend. The
following table illustrates historical rental rates for the subject's market.
HISTORICAL AVERAGE RENT
Period Region % Change Submarket % Change
- --------------------------------------------------------------------------------
1st Q 2003 N/A N/A $644 -
1st Q 2002 N/A N/A $676 5.0%
1st Q 2001 N/A N/A $652 -3.6%
1st Q 2002 N/A N/A $671 2.9%
Source: REIS, Subtrend Futures, Kansas City Apartment, Overland Park North, 1st
Quarter 2003
The following table illustrates a summary of the subject's competitive set.
AMERICAN APPRAISAL ASSOCIATES, INC. MARKET ANALYSIS PAGE 15
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
COMPETITIVE PROPERTIES
No. Property Name Units Ocpy. Year Built Proximity to subject
- ---------------------------------------------------------------------------------------------------------------------
R-1 Sunny Oak Village 548 99% 1983 Located just SE of subject
R-2 Essex Place 352 92% 1971 1 miles NW of subject
R-3 Pebblebrook 267 94% 1985 1.5 miles N of the subject
R-4 Highland Ridge Apartments 370 85% 1987 4.5 miles SW of subject
R-5 Skyler Ridge 448 92% 1986 2 miles SE of subject
Subject Indian Creek Village 273 88% 1972
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 16
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
PROPERTY DESCRIPTION
SITE ANALYSIS
Site Area 20.64 acres, or 899,078 square feet
Shape Irregular
Topography Level
Utilities All necessary utilities are available to the
site.
Soil Conditions Stable
Easements Affecting Site None other than typical utility easements
Overall Site Appeal Good
Flood Zone:
Community Panel 2001740208F, dated June 17, 2002
Flood Zone Zone AE
Zoning RP-3, the subject improvements represent a legal
conforming use of the site.
REAL ESTATE TAXES
ASSESSED VALUE - 2002
--------------------------------------------- TAX RATE / PROPERTY
PARCEL NUMBER LAND BUILDING TOTAL MILL RATE TAXES
- -----------------------------------------------------------------------------------------------------------
NP34000000
000A; (Assessed $94,530 $1,142,985 $1,237,515 0.08175 $101,163
Value)
IMPROVEMENT ANALYSIS
Year Built 1972
Number of Units 273
Net Rentable Area 271,830 Square Feet
Construction:
Foundation Reinforced concrete slab
Frame Heavy or light wood
Exterior Walls Stucco wall
Roof Composition shingle over a wood truss structure
Project Amenities Amenities at the subject include a swimming
pool, spa/jacuzzi, tennis court, meeting hall,
laundry room, business office, and parking area.
Unit Amenities Individual unit amenities include a garage,
balcony, fireplace, cable TV connection, vaulted
ceiling, and washer dryer connection. Appliances
available in each unit include
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 17
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
a refrigerator, stove, dishwasher, water heater,
garbage disposal, and oven.
Unit Mix:
Unit Area
Unit Type Number of Units (Sq. Ft.)
- -------------------------------------------------------------
1Br/1Ba 36 617
1Br/1Ba 140 878
2Br/1Ba 4 1,165
2Br/2Ba 77 1,274
3Br/2Ba 10 1,287
3Br/2Ba, TH 6 1,845
Overall Condition Average
Effective Age 25 years
Economic Life 45 years
Remaining Economic Life 20 years
Deferred Maintenance The deferred maintenance at the subject property
was estimated for a total amount of $34,000.
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
1972 and consist of a 273-unit multifamily project. The highest and best use as
improved is for a continued multifamily use. Overall, the highest and best use
of the subject property is the continued use of the existing apartment project.
AMERICAN APPRAISAL ASSOCIATES, INC. VALUATION PROCEDURE PAGE 18
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
THE VALUATION PROCEDURE
There are three traditional approaches, which can be employed in establishing
the market value of the subject property. These approaches and their
applicability to the valuation of the subject are summarized as follows:
THE COST APPROACH
The application of the Cost Approach is based on the principle of substitution.
This principle may be stated as follows: no one is justified in paying more for
a property than that amount by which he or she can obtain, by purchase of a site
and construction of a building, without undue delay, a property of equal
desirability and utility. In the case of a new building, no deficiencies in the
building should exist.
In the case of income-producing real estate, the cost of construction plays a
minor and relatively insignificant role in determining market value. The Cost
Approach is typically only a reliable indicator of value for: (a) new
properties; (b) special use properties; and (c) where the cost of reproducing
the improvements is easily and accurately quantified and there is no economic
obsolescence. In all instances, the issue of an appropriate entrepreneurial
profit - the reward for undertaking the risk of construction, remains a highly
subjective factor especially in a market lacking significant speculative
development.
THE SALES COMPARISON APPROACH
The Sales Comparison Approach is an estimate of value based upon a process of
comparing recent sales of similar properties in the surrounding or competing
areas to the subject property. Inherent in this approach is the principle of
substitution.
The application of this approach consists of comparing the subject property with
similar properties of the same general type, which have been sold recently or
currently are available for sale in competing areas. This comparative process
involves judgment as to the similarity of the subject property and the
comparable sale with respect to many value factors such as location, contract
rent levels, quality of construction, reputation and prestige, age and
condition, among others. The estimated value through this approach represents
the probable price at which a willing seller would sell the subject property to
a willing and knowledgeable buyer as of the date of value.
AMERICAN APPRAISAL ASSOCIATES, INC. VALUATION PROCEDURE PAGE 19
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
THE INCOME CAPITALIZATION APPROACH
The theory of the Income Capitalization Approach is based on the premise that
present value is the value of the cash flow and reversionary value the property
will produce over a reasonable holding (ownership) period.
The Discounted Cash Flow Analysis will convert equity cash flows (including cash
flows and equity reversion) into a present value utilizing an internal rate of
return (or discount rate). The Internal Rate of Return (IRR) will be derived
from a comparison of alternate investments, a comparative analysis of IRR's used
by recent buyers of similar properties, and a review of published industry
surveys.
The Direct Capitalization Analysis converts one year of income into an overall
value using overall capitalization rates from similar sales. The overall rates
take into consideration buyers assumptions of the market over the long-term.
The results of the Income Capitalization Analysis are usually the primary value
indicator for income producing properties. Investors expect a reasonable rate of
return on their equity investment based on the ownership risks involved; this
approach closely parallels the investment decision process.
RECONCILIATION
In this instance, we have completed the Sales Comparison and Income
Capitalization Approaches to value. As an income producing property, the income
approach is a primary approach to value. The Sales Comparison Approach is also
considered reliable as investors are buying similar buildings in the market.
Our research indicates that market participants are generally not buying,
selling, investing, or lending with reliance placed on the methodology of the
Cost Approach to establish the value. Therefore, we have decided that the Cost
Approach is not a reliable indicator of value for the subject, and this approach
has not been utilized.
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 20
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
SALES COMPARISON APPROACH
Use of market or comparable sales requires the collection and analysis of
comparable sales data. Similar properties recently sold are compared to the
subject and adjusted based on any perceived differences. This method is based on
the premise that the costs of acquiring a substitute property would tend to
establish a value for the subject property. The premise suggests that if a
substitute is unavailable in the market, the reliability of the approach may be
subordinate to the other approaches.
The reliance on substitute properties produces shortcomings in the validity of
this approach. Geographic and demographic characteristics from each submarket
restrict which sales may be selected. Recent sales with a similar physical
characteristics, income levels, and location are usually limited. The sales we
have identified, however, do establish general valuation parameters as well as
provide support to our conclusion derived through the income approach method.
The standard unit of comparison among similar properties is the sales price per
unit and price per square foot of net rentable area. To accurately adjust prices
to satisfy the requirements of the sales comparison approach, numerous
calculations and highly subjective judgments would be required including
consideration of numerous income and expense details for which information may
be unreliable or unknown. The sales price per unit and square foot are
considered relevant to the investment decision, but primarily as a parameter
against which value estimates derived through the income approach can be judged
and compared.
In examining the comparable sales, we have applied a subjective adjustment
analysis, which includes specific adjustments derived from our experience and
consulting with the market participants.
SALES COMPARISON ANALYSIS
Detailed on the following pages are sales transactions involving properties
located in the subject's competitive investment market.
Photographs of the sale transactions are located in the Addenda. Following the
summary of sales is an adjustment grid that is used to arrive at a value.
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 21
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
SUMMARY OF COMPARABLE SALES -IMPROVED
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
- ------------------------------------------------------------------------------------------------------------------
Property Name Indian Creek Village Nieman Square Casa de Fuentes
LOCATION:
Address 10382 Conser Street 11115 West 64th Terrace 11700 Stearns
City, State Overland Park, Kansas Shawnee, KS Overland Park, KS
County Johnson Johnson County Johnson County
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 271,830 114,359 241,384
Year Built 1972 1986 1986
Number of Units 273 152 288
Unit Mix: Type Total Type Total Type Total
1Br/1Ba 36 1Br/1Ba 98 1Br/1Ba NA
1Br/1Ba 140 2Br/1Ba 27 2Br/2Ba NA
2Br/1Ba 4 2Br/2Ba 27
2Br/2Ba 77
3Br/2Ba 10
3Br/2Ba, TH 6
Average Unit Size (SF) 996 752 838
Land Area (Acre) 20.6400 8.5500 30.1400
Density (Units/Acre) 13.2 17.8 9.6
Parking Ratio (Spaces/Unit) 1.83 1.99 1.99
Parking Type (Gr., Cov., etc.) Open 177 Open, 126 Covered 500 Open, 72 Covered
CONDITION: Average Average Good
APPEAL: Average Average Good
AMENITIES:
Pool/Spa Yes/Yes Yes/Yes Yes/Yes
Gym Room No Yes Yes
Laundry Room Yes Yes Yes
Secured Parking No No No
Sport Courts Yes Yes Yes
Washer/Dryer Connection Yes (in 2&3 Br units) Yes Yes
OCCUPANCY: 88% 91% 89%
TRANSACTION DATA:
Sale Date August, 2002 July, 2002
Sale Price ($) $7,770,350 $14,900,000
Grantor Five States Associates, LP WXI/SPN Real Estate LP
Grantee Cashill, Spalding Coolidge-CLK Casa de
Fuentes, LLC
Sale Documentation Document 216225 Document 212107
Verification Broker Broker
Telephone Number
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF
---------- ------ ------ ---------- ------ ------
Potential Gross Income $1,249,988 $8,224 $10.93 $2,438,255 $8,466 $10.10
Vacancy/Credit Loss $ 131,014 $ 862 $ 1.15 $ 260,414 $ 904 $ 1.08
Effective Gross Income $1,118,974 $7,362 $ 9.78 $2,177,841 $7,562 $ 9.02
Operating Expenses $ 480,364 $3,160 $ 4.20 $1,031,690 $3,582 $ 4.27
Net Operating Income $ 638,610 $4,201 $ 5.58 $1,146,151 $3,980 $ 4.75
NOTES: Sale price includes $170,350 The grantee also purchased
for repair of siding and Aspen Lodge, Improved
paving Comparable I-3.
PRICE PER UNIT $51,121 $51,736
PRICE PER SQUARE FOOT $ 67.95 $ 61.73
EXPENSE RATIO 42.9% 47.4%
EGIM 6.94 6.84
OVERALL CAP RATE 8.22% 7.69%
Cap Rate based on Pro Forma or
Actual Income? ACTUAL ACTUAL
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
- ----------------------------------------------------------------------------------------------------------------------
Property Name Aspen Lodge Corinth Place Apartments Concorde Bridge Townhomes
(now Sheridan Bridge)
LOCATION:
Address 8100 Perry Road 3815 Somerset Drive 8403 Carter Street
City, State Overland Park, KS Prairie Village, KS Overland Park, KS
County Johnson County Johnson County Johnson County
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 277,054 75,280 403,196
Year Built 1987 1986 1971
Number of Units 307 76 248
Unit Mix: Type Total Type Total Type Total
1Br/1Ba NA 1Br/Ba NA 1Br/Ba NA
1Br/1Ba NA 2Br/2Ba NA 2Br/2Ba NA
2Br/1Ba NA
2Br/2Ba NA
3Br/2Ba NA
Average Unit Size (SF) 902 991 1,626
Land Area (Acre) 33.5000 6.9000 25.8900
Density (Units/Acre) 9.2 11.0 9.6
Parking Ratio (Spaces/Unit) 1.49 NA 1.99
Parking Type (Gr., Cov., etc.) 304 Open, 154 Covered Open 375 Open, 119 Covered
CONDITION: Average Average Average
APPEAL: Average Average Average
AMENITIES:
Pool/Spa Yes/Yes Yes/No Yes/Yes
Gym Room Yes Yes Yes
Laundry Room Yes Yes Yes
Secured Parking No No No
Sport Courts Yes Yes No
Washer/Dryer Connection Yes Yes Yes
OCCUPANCY: 90% 97% 94%
TRANSACTION DATA:
Sale Date July, 2002 May, 2001 January, 2001
Sale Price ($) $16,850,000 $5,268,658 $16,801,300
Grantor WXI/SPN Real Estate LP Highwoods Realty Limited Capreit Concorde Bridge
Partnership Limited Partnership
Grantee Coolidge-CLK Aspen, LLC TVO Corinth Place, LLC Sheridan Ridge LLC
Sale Documentation Document 212108 Document 190389 Document 184907
Verification Broker Broker Confidential
Telephone Number
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF Total $ $/Unit $/SF
---------- ------ ----- -------- ------ ----- ---------- ------- ----
Potential Gross Income $2,713,792 $8,840 $9.80 $737,573 $9,705 $9.80 $ 0 $ 0 $0.00
Vacancy/Credit Loss $ 218,105 $ 710 $0.79 $ 18,520 $ 244 $0.25 $ 0 $ 0 $0.00
Effective Gross Income $2,495,687 $8,129 $9.01 $719,053 $9,461 $9.55 $2,589,305 $10,441 $6.42
Operating Expenses $1,122,740 $3,657 $4.05 $240,912 $3,170 $3.20 $ 829,237 $ 3,344 $2.06
Net Operating Income $1,372,947 $4,472 $4.96 $478,141 $6,291 $6.35 $1,760,068 $ 7,097 $4.37
NOTES: The grantee also purchased This property was purchased The sale price includes
Casa de Fuentes, Improved as part of a bulk sale. The $1,201,300 in deferred
Comparable I-2. sale price was allocated maintenance and renovation.
based on appraisals
PRICE PER UNIT $54,886 $69,324 $67,747
PRICE PER SQUARE FOOT $ 60.82 $ 69.99 $ 41.67
EXPENSE RATIO 45.0% 33.5% 32.0%
EGIM 6.75 7.33 6.49
OVERALL CAP RATE 8.15% 9.08% 10.48%
Cap Rate based on Pro Forma or
Actual Income? ACTUAL ACTUAL PRO FORMA
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 22
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
IMPROVED SALES MAP
[MAP]
IMPROVED SALES ANALYSIS
The improved sales indicate a sales price range from $51,121 to $69,324 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 $46,678 to $57,678 per unit with a mean or average adjusted price
of $50,882 per unit. The median adjusted price is $50,132 per unit. Based on the
following analysis, we have concluded to a value of $50,000 per unit, which
results in an "as is" value of $13,600,000 (rounded after necessary adjustment,
if any).
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 23
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
SALES ADJUSTMENT GRID
COMPARABLE
DESCRIPTION SUBJECT I - 1
- ----------------------------------- --------------------- -------------------------------
Property Name Indian Creek Village Nieman Square
Address 10382 Conser Street 11115 West 64th Terrace
City Overland Park, Kansas Shawnee, KS
Sale Date August, 2002
Sale Price ($) $7,770,350
Net Rentable Area (SF) 271,830 114,359
Number of Units 273 152
Price Per Unit $51,121
Year Built 1972 1986
Land Area (Acre) 20.6400 8.5500
VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate Fee Simple Estate 0%
Financing Cash To Seller 0%
Conditions of Sale Arm's Length 0%
Date of Sale (Time) 08-2002 2%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $52,143
Location Comparable 0%
Number of Units 273 152 -5%
Quality / Appeal Average Comparable 0%
Age / Condition 1972 1986 / Average -5%
Occupancy at Sale 88% 91% 0%
Amenities Average Comparable 0%
Average Unit Size (SF) 996 752 5%
PHYSICAL ADJUSTMENT -5%
FINAL ADJUSTED VALUE ($/UNIT) $49,536
COMPARABLE COMPARABLE
DESCRIPTION I - 2 I - 3
- ----------------------------------- ------------------------------ ------------------------------
Property Name Casa de Fuentes Aspen Lodge
Address 11700 Stearns 8100 Perry Road
City Overland Park, KS Overland Park, KS
Sale Date July, 2002 July, 2002
Sale Price ($) $14,900,000 $16,850,000
Net Rentable Area (SF) 241,384 277,054
Number of Units 288 307
Price Per Unit $51,736 $54,886
Year Built 1986 1987
Land Area (Acre) 30.1400 33.5000
VALUE ADJUSTMENTS DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 07-2002 2% 07-2002 2%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $52,771 $55,984
Location Comparable 0% Comparable 0%
Number of Units 288 0% 307 0%
Quality / Appeal Comparable 0% Comparable 0%
Age / Condition 1986 / Good -5% 1987 / Average -5%
Occupancy at Sale 89% 0% 90% 0%
Amenities Comparable 0% Superior -5%
Average Unit Size (SF) 838 0% 902 0%
PHYSICAL ADJUSTMENT -5% -10%
FINAL ADJUSTED VALUE ($/UNIT) $50,132 $50,385
COMPARABLE COMPARABLE
DESCRIPTION I - 4 I - 5
- ----------------------------------- ------------------------------ ----------------------------------------
Property Name Corinth Place Apartments Concorde Bridge Townhomes
(now Sheridan Bridge)
Address 3815 Somerset Drive 8403 Carter Street
City Prairie Village, KS Overland Park, KS
Sale Date May, 2001 January, 2001
Sale Price ($) $5,268,658 $16,801,300
Net Rentable Area (SF) 75,280 403,196
Number of Units 76 248
Price Per Unit $69,324 $67,747
Year Built 1986 1971
Land Area (Acre) 6.9000 25.8900
VALUE ADJUSTMENTS DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 05-2001 4% 01-2001 6%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $72,097 $71,812
Location Comparable 0% Comparable 0%
Number of Units 76 -15% 248 0%
Quality / Appeal Comparable 0% Comparable 0%
Age / Condition 1986 / Average -5% 1971 / Average 0%
Occupancy at Sale 97% 0% 94% 0%
Amenities Comparable 0% Comparable 0%
Average Unit Size (SF) 991 0% 1,626 -35%
PHYSICAL ADJUSTMENT -20% -35%
FINAL ADJUSTED VALUE ($/UNIT) $57,678 $46,678
SUMMARY
VALUE RANGE (PER UNIT) $46,678 TO $57,678
MEAN (PER UNIT) $50,882
MEDIAN (PER UNIT) $50,132
VALUE CONCLUSION (PER UNIT) $50,000
VALUE OF IMPROVEMENT & MAIN SITE $13,650,000
DEFERRED MAINTENANCE -$ 34,000
VALUE INDICATED BY SALES COMPARISON APPROACH $13,616,000
ROUNDED $13,600,000
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 24
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
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-1 152 $ 7,770,350 8.22% $ 638,610 $ 1,204,988 1.051 $53,706
$ 51,121 $ 4,201 $ 4,414
I-2 288 $ 14,900,000 7.69% $ 1,146,151 $ 1,204,988 1.109 $57,381
$ 51,736 $ 3,980 $ 4,414
I-3 307 $ 16,850,000 8.15% $ 1,372,947 $ 1,204,988 0.987 $54,171
$ 54,886 $ 4,472 $ 4,414
I-4 76 $ 5,268,658 9.08% $ 478,141 $ 1,204,988 0.702 $48,637
$ 69,324 $ 6,291 $ 4,414
I-5 248 $ 16,801,300 10.48% $ 1,760,068 $ 1,204,988 0.622 $42,134
$ 67,747 $ 7,097 $ 4,414
PRICE/UNIT
Low High Average Median
$42,134 $57,381 $ 51,206 $ 53,706
VALUE ANALYSIS BASED ON COMPARABLES NOI PER UNIT
Estimated Price Per Unit $ 50,000
Number of Units 273
------------
Value $13,650,000
Deferred Maintenance -$ 34,000
------------
Value Based on NOI Analysis $13,616,000
Rounded $13,600,000
The adjusted sales indicate a range of value between $42,134 and $57,381 per
unit, with an average of $51,206 per unit. Based on the subject's competitive
position within the improved sales, a value of $50,000 per unit is estimated.
This indicates an "as is" market value of $13,600,000 (rounded after necessary
adjustment, if any) for the NOI Per Unit Analysis.
EFFECTIVE GROSS INCOME MULTIPLIER (EGIM) ANALYSIS
The effective gross income multiplier (EGIM) is derived by dividing the sales
price by the total effective gross income. The following table illustrates the
EGIMs for the comparable improved sales.
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 25
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
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-1 152 $ 7,770,350 $ 1,118,974 $ 480,364 42.93% 6.94
$ 51,121
I-2 288 $14,900,000 $ 2,177,841 $1,031,690 47.37% 6.84
$ 51,736
I-3 307 $16,850,000 $ 2,495,687 $1,122,740 44.99% 6.75
$ 54,886 42.71%
I-4 76 $ 5,268,658 $ 719,053 $ 240,912 33.50% 7.33
$ 69,324
I-5 248 $16,801,300 $ 2,589,305 $ 829,237 32.03% 6.49
$ 67,747
EGIM
Low High Average Median
- ----- ------ ------- ------
6.49 7.33 6.87 6.84
VALUE ANALYSIS BASED ON EGIM'S OF COMPARABLE SALES
Estimate EGIM 6.25
------------
Subject EGI $ 2,222,472
Value $13,890,450
Deferred Maintenance -$ 34,000
------------
Value Based on EGIM Analysis $13,856,450
Rounded $13,900,000
Value Per Unit $ 50,916
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 42.71% before reserves. The comparable sales
indicate a range of expense ratios from 32.03% to 47.37%, while their EGIMs
range from 6.49 to 7.33. Overall, we conclude to an EGIM of 6.25, which results
in an "as is" value estimate in the EGIM Analysis of $13,900,000.
SALES COMPARISON CONCLUSION
The three valuation methods in the Sales Comparison Approach are shown below.
The overall value via the Sales Comparison Approach is estimated at $13,700,000.
Price Per Unit $13,600,000
NOI Per Unit $13,600,000
EGIM Analysis $13,900,000
Sales Comparison Conclusion $13,700,000
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 26
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
INCOME CAPITALIZATION APPROACH
The income capitalization approach is based on the premise that value is created
by the expectation of future benefits. We estimated the present value of those
benefits to derive an indication of the amount that a prudent, informed
purchaser-investor would pay for the right to receive them as of the date of
value.
This approach requires an estimate of the NOI of a property. The estimated NOI
is then converted to a value indication by use of either the direct
capitalization or the discounted cash flow analysis (yield capitalization).
Direct capitalization uses a single year's stabilized NOI as a basis for a value
indication by dividing the income by a capitalization rate. The rate chosen
accounts for a recapture of the investment by the investor and should reflect
all factors that influence the value of the property, such as tenant quality,
property condition, neighborhood change, market trends, interest rates, and
inflation. The rate may be extracted from local market transactions or, when
transaction evidence is lacking, obtained from trade sources.
A discounted cash flow analysis focuses on the operating cash flows expected
from the property and the proceeds of a hypothetical sale at the end of a
holding period (the reversion). The cash flows and reversion are discounted to
their present values using a market-derived discount rate and are added together
to obtain a value indication. Because benefits to be received in the future are
worth less than the same benefits received in the present, this method weights
income in the early years more heavily than the income and the sale proceeds to
be received later. The strength of the discounted cash flow method is its
ability to recognize variations in projected net income, such as those caused by
inflation, stepped leases, neighborhood change, or tenant turnover. Its weakness
is that it requires many judgments regarding the actions of likely buyers and
sellers of the property in the future.
In some situations, both methods yield a similar result. The discounted cash
flow method is typically more appropriate for the analysis of investment
properties with multiple or long-term leases, particularly leases with
cancellation clauses or renewal options. It is especially useful for
multi-tenant properties in volatile markets. The direct capitalization
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 27
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
method is normally more appropriate for properties with relatively stable
operating histories and expectations.
A pro forma analysis for the first year of the investment is made to estimate a
reasonable potential net operating income for the Subject Property. Such an
analysis entails an estimate of the gross income the property should command in
the marketplace. From this total gross income must be deducted an allowance for
vacancy/collection loss and operating expenses as dictated by general market
conditions and the overall character of the subject's tenancy and leased income
to arrive at a projected estimate of net operating income. Conversion of the net
operating income to an indication of value is accomplished by the process of
capitalization, as derived primarily from market data.
MARKET RENT ANALYSIS
In order to determine a market rental rate for the subject, a survey of
competing apartment communities was performed. This survey was displayed
previously in the market analysis section of the report. Detailed information
pertaining to each of the comparable rental communities, along with photographs,
is presented in the Addenda of this report.
The following charts display the subject's current asking and actual rent rates
as well as a comparison with the previous referenced comparable rental
properties.
SUMMARY OF ACTUAL AVERAGE RENTS
Average
Unit Area -----------------
Unit Type (Sq. Ft.) Per Unit Per SF % Occupied
- --------------------------------------------------------
1Br/1Ba 617 $530 $ 0.86 90.0%
1Br/1Ba 878 $570 $ 0.65 80.0%
2Br/1Ba 1165 $790 $ 0.68 93.0%
2Br/2Ba 1274 $800 $ 0.63 100.0%
3Br/2Ba 1287 $900 $ 0.70 91.0%
3Br/2Ba, TH 1845 $840 $ 0.46 97.0%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 28
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
RENT ANALYSIS
COMPARABLE RENTS
-------------------------------------------------------------
R-1 R-2 R-3 R-4 R-5
-------------------------------------------------------------
Highland
Sunny Oak Ridge Skyler
Village Essex Place Pebblebrook Apartments Ridge
-------------------------------------------------------------
COMPARISON TO SUBJECT
SUBJECT SUBJECT -------------------------------------------------------------
SUBJECT UNIT ACTUAL ASKING Slightly Slightly Slightly Slightly
DESCRIPTION TYPE RENT RENT Superior Similar Superior Superior Superior
- ----------------------------------------------------------------------------------------------------------------------------
Monthly Rent 1Br/1Ba $ 530 $ 559 $ 529 $ 605 $ 500 $ 638
Unit Area (SF) 617 617 720 700 578 681
Monthly Rent Per Sq. Ft. $ 0.86 $ 0.91 $ 0.73 $ 0.86 $ 0.87 $ 0.94
Monthly Rent 1Br/1Ba $ 570 $ 589 $ 700 $ 625 $ 637 $ 690
Unit Area (SF) 878 878 934 600 637 821
Monthly Rent Per Sq. Ft. $ 0.65 $ 0.67 $ 0.75 $ 1.04 $ 1.00 $ 0.84
Monthly Rent 2Br/1Ba $ 790 $ 859 $ 629 $ 740 $ 750 $ 750
Unit Area (SF) 1,165 1,165 840 925 840 972
Monthly Rent Per Sq. Ft. $ 0.68 $ 0.74 $ 0.75 $ 0.80 $ 0.89 $ 0.77
Monthly Rent 2Br/2Ba $ 800 $ 869 $ 654 $ 898 $ 805 $ 923 $ 699
Unit Area (SF) 1,274 1,274 1,017 1,256 900 1,125 1,018
Monthly Rent Per Sq. Ft. $ 0.63 $ 0.68 $ 0.64 $ 0.71 $ 0.89 $ 0.82 $ 0.69
Monthly Rent 3Br/2Ba $ 900 $ 889 $ 799 $ 895
Unit Area (SF) 1,287 1,287 1,225 1,157
Monthly Rent Per Sq. Ft. $ 0.70 $ 0.69 $ 0.65 $ 0.77
Monthly Rent 3Br/2Ba, TH $ 840 $ 1,299 $ 899 $ 1,210
Unit Area (SF) 1,845 1,845 1,500 1,945
Monthly Rent Per Sq. Ft. $ 0.46 $ 0.70 $ 0.60 $ 0.62
DESCRIPTION MIN MAX MEDIAN AVERAGE
- ----------------------------------------------------------------
Monthly Rent $ 500 $ 638 $ 567 $ 568
Unit Area (SF) 578 720 691 670
Monthly Rent Per Sq. Ft. $ 0.73 $ 0.94 $ 0.86 $ 0.85
Monthly Rent $ 625 $ 700 $ 664 $ 663
Unit Area (SF) 600 934 729 748
Monthly Rent Per Sq. Ft. $ 0.75 $ 1.04 $ 0.92 $ 0.91
Monthly Rent $ 629 $ 750 $ 745 $ 717
Unit Area (SF) 840 972 883 894
Monthly Rent Per Sq. Ft. $ 0.75 $ 0.89 $ 0.79 $ 0.80
Monthly Rent $ 654 $ 923 $ 805 $ 796
Unit Area (SF) 900 1,256 1,018 1,063
Monthly Rent Per Sq. Ft. $ 0.64 $ 0.89 $ 0.71 $ 0.75
Monthly Rent $ 799 $ 895 $ 847 $ 847
Unit Area (SF) 1,157 1,225 1,191 1,191
Monthly Rent Per Sq. Ft. $ 0.65 $ 0.77 $ 0.71 $ 0.71
Monthly Rent $ 899 $ 1,210 $1,055 $ 1,055
Unit Area (SF) 1,500 1,945 1,723 1,723
Monthly Rent Per Sq. Ft. $ 0.60 $ 0.62 $ 0.61 $ 0.61
CONCLUDED MARKET RENTAL RATES AND TERMS
Based on this analysis above, the subject's concluded market rental rates and
gross rental income is calculated as follows:
GROSS RENTAL INCOME PROJECTION
Market Rent
Unit Area ----------------- Monthly Annual
Unit Type Number of Units (Sq. Ft.) Per Unit Per SF Income Income
- ---------------------------------------------------------------------------------------
1Br/1Ba 36 617 $ 560 $ 0.91 $ 20,160 $ 241,920
1Br/1Ba 140 878 $ 590 $ 0.67 $ 82,600 $ 991,200
2Br/1Ba 4 1,165 $ 860 $ 0.74 $ 3,440 $ 41,280
2Br/2Ba 77 1,274 $ 870 $ 0.68 $ 66,990 $ 803,880
3Br/2Ba 10 1,287 $ 890 $ 0.69 $ 8,900 $ 106,800
3Br/2Ba, TH 6 1,845 $1,000 $ 0.54 $ 6,000 $ 72,000
Total $188,090 $2,257,080
PRO FORMA ANALYSIS
For purposes of this appraisal, we were provided with income and expense data
for the subject property. A summary of this data is presented on the following
page.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 29
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
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 $ 2,343,886 $ 8,586 $ 2,393,324 $ 8,767 $ 1,418,895 $ 5,197 $ 2,271,600 $ 8,321
Vacancy $ 145,705 $ 534 $ 155,115 $ 568 $ 151,344 $ 554 $ 189,260 $ 693
Credit Loss/Concessions $ 36,929 $ 135 $ 90,771 $ 332 $ 55,335 $ 203 $ 70,080 $ 257
-------------------------------------------------------------------------------------------------
Subtotal $ 182,634 $ 669 $ 245,886 $ 901 $ 206,679 $ 757 $ 259,340 $ 950
Laundry Income $ 19,958 $ 73 $ 19,047 $ 70 $ 11,280 $ 41 $ 24,240 $ 89
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 93,003 $ 341 $ 146,711 $ 537 $ 101,256 $ 371 $ 168,504 $ 617
-------------------------------------------------------------------------------------------------
Subtotal Other Income $ 112,961 $ 414 $ 165,758 $ 607 $ 112,536 $ 412 $ 192,744 $ 706
-------------------------------------------------------------------------------------------------
Effective Gross Income $ 2,274,213 $ 8,330 $ 2,313,196 $ 8,473 $ 1,324,752 $ 4,853 $ 2,205,004 $ 8,077
Operating Expenses
Taxes $ 113,303 $ 415 $ 112,288 $ 411 $ 74,049 $ 271 $ 124,176 $ 455
Insurance $ 59,557 $ 218 $ 71,586 $ 262 $ 56,071 $ 205 $ 52,408 $ 192
Utilities $ 153,876 $ 564 $ 174,057 $ 638 $ 102,160 $ 374 $ 139,984 $ 513
Repair & Maintenance $ 32,444 $ 119 $ 55,393 $ 203 $ 48,189 $ 177 $ 60,764 $ 223
Cleaning $ 25,580 $ 94 $ 25,601 $ 94 $ 15,698 $ 58 $ 0 $ 0
Landscaping $ 47,560 $ 174 $ 33,143 $ 121 $ 10,196 $ 37 $ 65,500 $ 240
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 51,309 $ 188 $ 43,245 $ 158 $ 27,914 $ 102 $ 46,040 $ 169
General Administrative $ 295,033 $ 1,081 $ 305,091 $ 1,118 $ 158,914 $ 582 $ 250,044 $ 916
Management $ 115,313 $ 422 $ 119,995 $ 440 $ 61,945 $ 227 $ 110,004 $ 403
Miscellaneous $ 69,367 $ 254 $ 63,312 $ 232 $ 40,220 $ 147 $ 62,592 $ 229
-------------------------------------------------------------------------------------------------
Total Operating Expenses $ 963,342 $ 3,529 $ 1,003,711 $ 3,677 $ 595,356 $ 2,181 $ 911,512 $ 3,339
Reserves $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-------------------------------------------------------------------------------------------------
Net Income $ 1,310,871 $ 4,802 $ 1,309,485 $ 4,797 $ 729,396 $ 2,672 $ 1,293,492 $ 4,738
ANNUALIZED 2003
----------------------
PROJECTION AAA PROJECTION
-------------------------------------------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT %
- -------------------------------------------------------------------------------------
Revenues
Rental Income $ 2,269,436 $ 8,313 $ 2,257,080 $ 8,268 100.0%
Vacancy $ 208,736 $ 765 $ 157,996 $ 579 7.0%
Credit Loss/Concessions $ 280,504 $ 1,027 $ 67,712 $ 248 3.0%
-------------------------------------------------------
Subtotal $ 489,240 $ 1,792 $ 225,708 $ 827 10.0%
Laundry Income $ 21,160 $ 78 $ 13,650 $ 50 0.6%
Garage Revenue $ 0 $ 0 $ 0 $ 0 0.0%
Other Misc. Revenue $ 246,720 $ 904 $ 177,450 $ 650 7.9%
-------------------------------------------------------
Subtotal Other Income $ 267,880 $ 981 $ 191,100 $ 700 8.5%
-------------------------------------------------------
Effective Gross Income $ 2,048,076 $ 7,502 $ 2,222,472 $ 8,141 100.0%
Operating Expenses
Taxes ($ 104,664) -$ 383 $ 81,900 $ 300 3.7%
Insurance $ 82,700 $ 303 $ 68,250 $ 250 3.1%
Utilities $ 185,676 $ 680 $ 150,150 $ 550 6.8%
Repair & Maintenance $ 37,000 $ 136 $ 54,600 $ 200 2.5%
Cleaning $ 22,776 $ 83 $ 25,935 $ 95 1.2%
Landscaping $ 8,016 $ 29 $ 40,950 $ 150 1.8%
Security $ 0 $ 0 $ 0 $ 0 0.0%
Marketing & Leasing $ 45,060 $ 165 $ 47,775 $ 175 2.1%
General Administrative $ 235,984 $ 864 $ 300,300 $ 1,100 13.5%
Management $ 107,296 $ 393 $ 111,124 $ 407 5.0%
Miscellaneous $ 100,576 $ 368 $ 68,250 $ 250 3.1%
-------------------------------------------------------
Total Operating Expenses $ 720,420 $ 2,639 $ 949,234 $ 3,477 42.7%
Reserves $ 0 $ 0 $ 68,250 $ 250 7.2%
-------------------------------------------------------
Net Income $ 1,327,656 $ 4,863 $ 1,204,988 $ 4,414 54.2%
REVENUES AND EXPENSES
The subject's revenue and expense projections are displayed on the previous
chart. Rental income is based on the market analysis previously discussed. Other
income consists of forfeited deposits, laundry income, late rent payments, month
to month fees, pet fees, vending machine revenue, etc.
We forecasted the property's annual operating expenses after reviewing its
historical performance at the subject property. We analyzed each item of expense
and attempted to forecast amounts a typical informed investor would consider
reasonable.
VACANCY AND COLLECTION LOSS
An investor is primarily interested in the annual revenue an income property is
likely to produce over a specified period of time, rather than the income it
could produce if it were always 100% occupied and all tenants were paying their
rent in full and on time. An investor normally expects some income loss as
tenants vacate, fail to pay rent, or pay their rent late.
We have projected a stabilized vacancy and collection loss rate of 10% based on
the subject's historical performance, as well as the anticipated future market
conditions.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 30
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
RESERVES FOR REPLACEMENT
"Reserves for replacements" is a contingency account allocated to the expenses
of the property to provide for replacement of short-lived items and for
unforeseen necessary capital expenditures. We have utilized the Korpacz Real
Estate Investor Survey of the national apartment market, which reports a range
of replacement reserves between $150 and $400 per unit. For purposes of this
analysis, we have included an allowance of $250 per unit for reserves for
replacement.
CAPITAL EXPENDITURES
Capital expenditures represent expenses for immediate repair or replacement of
items that have average to long lives. Based on our inspection of the property
as well as discussions with property management personnel, there are some major
items remaining in need of repair or replacement that would require an expense
beyond our reserves for replacement. Therefore an additional $34,000 has been
deducted.
DISCOUNTED CASH FLOW ANALYSIS
As the subject is a multi-tenant income property, the Discounted Cash Flow
Method is considered appropriate. This method is especially meaningful in that
it isolates the timing of the annual cash flows and discounts them, along with
the expected equity reversion, to a present value. The present value of the cash
flow is added to the present value of the reversion, resulting in a total
property value.
INVESTMENT CRITERIA
Appropriate investment criteria will be derived for the subject based upon
analysis of comparable sales and a survey of real estate investors. The
following table summarizes the findings of Korpacz National Investor Survey for
the most recent period.
KORPACZ NATIONAL INVESTOR SURVEY
1ST QUARTER 2003
NATIONAL APARTMENT MARKET
CAPITALIZATION RATES
-----------------------------------------------
GOING-IN TERMINAL
-----------------------------------------------
LOW HIGH LOW HIGH
-----------------------------------------------
RANGE 6.00% 10.00% 7.00% 10.00%
AVERAGE 8.14% 8.47%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 31
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
SUMMARY OF OVERALL
CAPITALIZATION RATES
COMP. NO. SALE DATE OCCUP. PRICE/UNIT OAR
- ----------------------------------------------------
I-1 Aug-02 91% $ 51,121 8.22%
I-2 Jul-02 89% $ 51,736 7.69%
I-3 Jul-02 90% $ 54,886 8.15%
I-4 May-01 97% $ 69,324 9.08%
I-5 Jan-01 94% $ 67,747 10.48%
High 10.48%
Low 7.69%
Average 8.72%
Based on this information, we have concluded the subject's overall
capitalization rate should be 9.00%. The terminal capitalization rate is applied
to the net operating income estimated for the year following the end of the
holding period. Based on the concluded overall capitalization rate, the age of
the property and the surveyed information, we have concluded the subject's
terminal capitalization rate to be 10.00%. Finally, the subject's discount rate
or yield rate is estimated based on the previous investor survey and an
examination of returns available on alternative investments in the market. Based
on this analysis, the subject's discount rate is estimated to be 11.00%.
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 11.00% indicates a value of $13,800,000. In this instance, the reversion
figure contributes approximately 40% of the total value. Investors surveyed for
this assignment indicated they
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 32
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
would prefer to have the cash flow contribute anywhere from 50% to 60%. Overall,
the blend seems reasonable. The cash flow and pricing matrix are located on the
following pages.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 33
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
DISCOUNTED CASH FLOW ANALYSIS
INDIAN CREEK VILLAGE
YEAR APR-2004 APR-2005 APR-2006 APR-2007 APR-2008 APR-2009
FISCAL YEAR 1 2 3 4 5 6
- -------------------------------------------------------------------------------------------------------------------------
REVENUE
Base Rent $2,257,080 $2,302,222 $2,371,288 $2,442,427 $2,515,700 $2,591,171
Vacancy $ 157,996 $ 161,156 $ 165,990 $ 170,970 $ 176,099 $ 181,382
Credit Loss $ 67,712 $ 69,067 $ 71,139 $ 73,273 $ 75,471 $ 77,735
Concessions $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
--------------------------------------------------------------------------------
Subtotal $ 225,708 $ 230,222 $ 237,129 $ 244,243 $ 251,570 $ 259,117
Laundry Income $ 13,650 $ 13,923 $ 14,341 $ 14,771 $ 15,214 $ 15,670
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 177,450 $ 180,999 $ 186,429 $ 192,022 $ 197,782 $ 203,716
--------------------------------------------------------------------------------
Subtotal Other Income $ 191,100 $ 194,922 $ 200,770 $ 206,793 $ 212,997 $ 219,386
--------------------------------------------------------------------------------
EFFECTIVE GROSS INCOME $2,222,472 $2,266,921 $2,334,929 $2,404,977 $2,477,126 $2,551,440
OPERATING EXPENSES:
Taxes $ 81,900 $ 84,357 $ 86,888 $ 89,494 $ 92,179 $ 94,945
Insurance $ 68,250 $ 70,298 $ 72,406 $ 74,579 $ 76,816 $ 79,120
Utilities $ 150,150 $ 154,655 $ 159,294 $ 164,073 $ 168,995 $ 174,065
Repair & Maintenance $ 54,600 $ 56,238 $ 57,925 $ 59,663 $ 61,453 $ 63,296
Cleaning $ 25,935 $ 26,713 $ 27,514 $ 28,340 $ 29,190 $ 30,066
Landscaping $ 40,950 $ 42,179 $ 43,444 $ 44,747 $ 46,090 $ 47,472
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 47,775 $ 49,208 $ 50,684 $ 52,205 $ 53,771 $ 55,384
General Administrative $ 300,300 $ 309,309 $ 318,588 $ 328,146 $ 337,990 $ 348,130
Management $ 111,124 $ 113,346 $ 116,746 $ 120,249 $ 123,856 $ 127,572
Miscellaneous $ 68,250 $ 70,298 $ 72,406 $ 74,579 $ 76,816 $ 79,120
--------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES $ 949,234 $ 976,599 $1,005,897 $1,036,074 $1,067,157 $1,099,171
Reserves $ 68,250 $ 70,298 $ 72,406 $ 74,579 $ 76,816 $ 79,120
--------------------------------------------------------------------------------
NET OPERATING INCOME $1,204,988 $1,220,025 $1,256,625 $1,294,324 $1,333,154 $1,373,148
Operating Expense Ratio (% of EGI) 42.7% 43.1% 43.1% 43.1% 43.1% 43.1%
Operating Expense Per Unit $ 3,477 $ 3,577 $ 3,685 $ 3,795 $ 3,909 $ 4,026
YEAR APR-2010 APR-2011 APR-2012 APR-2013 APR-2014
FISCAL YEAR 7 8 9 10 11
- -----------------------------------------------------------------------------------------------------------
REVENUE
Base Rent $2,668,906 $2,748,973 $2,831,442 $2,916,385 $3,003,877
Vacancy $ 186,823 $ 192,428 $ 198,201 $ 204,147 $ 210,271
Credit Loss $ 80,067 $ 82,469 $ 84,943 $ 87,492 $ 90,116
Concessions $ 0 $ 0 $ 0 $ 0 $ 0
------------------------------------------------------------------
Subtotal $ 266,891 $ 274,897 $ 283,144 $ 291,639 $ 300,388
Laundry Income $ 16,141 $ 16,625 $ 17,124 $ 17,637 $ 18,166
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 209,827 $ 216,122 $ 222,606 $ 229,284 $ 236,163
------------------------------------------------------------------
Subtotal Other Income $ 225,968 $ 232,747 $ 239,729 $ 246,921 $ 254,329
------------------------------------------------------------------
EFFECTIVE GROSS INCOME $2,627,983 $2,706,823 $2,788,027 $2,871,668 $2,957,818
OPERATING EXPENSES:
Taxes $ 97,793 $ 100,727 $ 103,748 $ 106,861 $ 110,067
Insurance $ 81,494 $ 83,939 $ 86,457 $ 89,051 $ 91,722
Utilities $ 179,287 $ 184,666 $ 190,206 $ 195,912 $ 201,789
Repair & Maintenance $ 65,195 $ 67,151 $ 69,166 $ 71,241 $ 73,378
Cleaning $ 30,968 $ 31,897 $ 32,854 $ 33,839 $ 34,854
Landscaping $ 48,896 $ 50,363 $ 51,874 $ 53,430 $ 55,033
Security $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 57,046 $ 58,757 $ 60,520 $ 62,336 $ 64,206
General Administrative $ 358,574 $ 369,331 $ 380,411 $ 391,823 $ 403,578
Management $ 131,399 $ 135,341 $ 139,401 $ 143,583 $ 147,891
Miscellaneous $ 81,494 $ 83,939 $ 86,457 $ 89,051 $ 91,722
------------------------------------------------------------------
TOTAL OPERATING EXPENSES $1,132,146 $1,166,111 $1,201,094 $1,237,127 $1,274,241
Reserves $ 81,494 $ 83,939 $ 86,457 $ 89,051 $ 91,722
------------------------------------------------------------------
NET OPERATING INCOME $1,414,343 $1,456,773 $1,500,476 $1,545,491 $1,591,855
Operating Expense Ratio (% of EGI) 43.1% 43.1% 43.1% 43.1% 43.1%
Operating Expense Per Unit $ 4,147 $ 4,271 $ 4,400 $ 4,532 $ 4,668
Estimated Stabilized NOI $1,204,988 Sales Expense Rate 2.00%
Months to Stabilized 1 Discount Rate 11.00%
Stabilized Occupancy 93.0% Terminal Cap Rate 10.00%
Gross Residual Sale Price $15,918,553 Deferred
Maintenance -$ 34,000
Less: Sales Expense $ 318,371 Add: Excess Land $ 0
-----------
Net Residual Sale Price $15,600,182 Other Adjustments $ 0
------------
PV of Reversion $ 5,494,142 Value Indicated By
"DCF" $13,781,967
Add: NPV of NOI $ 8,321,825 Rounded $13,800,000
-----------
PV Total $13,815,967
"DCF" VALUE SENSITIVITY TABLE
DISCOUNT RATE
- ------------------------------------------------------------------------------------------
TOTAL VALUE 10.50% 10.75% 11.00% 11.25% 11.50%
- ------------------------------------------------------------------------------------------
9.50% $14,572,692 $14,336,337 $14,105,133 $13,878,951 $13,657,664
9.75% $14,417,554 $14,184,665 $13,956,843 $13,733,960 $13,515,892
TERMINAL CAP RATE 10.00% $14,270,173 $14,040,577 $13,815,967 $13,596,218 $13,381,207
10.25% $14,129,981 $13,903,518 $13,681,964 $13,465,196 $13,253,093
10.50% $13,996,465 $13,772,985 $13,554,342 $13,340,412 $13,131,080
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 34
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
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 9.00% percent is applicable to the
subject. The results of our direct capitalization analysis are as follows:
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 35
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
INDIAN CREEK VILLAGE
TOTAL PER SQ. FT. PER UNIT % OF EGI
- -------------------------------------------------------------------------------------------------------------------
REVENUE
Base Rent $ 2,257,080 $ 8.30 $ 8,268
Less: Vacancy & Collection Loss 10.00% $ 225,708 $ 0.83 $ 827
Plus: Other Income
Laundry Income $ 13,650 $ 0.05 $ 50 0.61%
Garage Revenue $ 0 $ 0.00 $ 0 0.00%
Other Misc. Revenue $ 177,450 $ 0.65 $ 650 7.98%
------------------------------------------------------
Subtotal Other Income $ 191,100 $ 0.70 $ 700 8.60%
EFFECTIVE GROSS INCOME $ 2,222,472 $ 8.18 $ 8,141
OPERATING EXPENSES:
Taxes $ 81,900 $ 0.30 $ 300 3.69%
Insurance $ 68,250 $ 0.25 $ 250 3.07%
Utilities $ 150,150 $ 0.55 $ 550 6.76%
Repair & Maintenance $ 54,600 $ 0.20 $ 200 2.46%
Cleaning $ 25,935 $ 0.10 $ 95 1.17%
Landscaping $ 40,950 $ 0.15 $ 150 1.84%
Security $ 0 $ 0.00 $ 0 0.00%
Marketing & Leasing $ 47,775 $ 0.18 $ 175 2.15%
General Administrative $ 300,300 $ 1.10 $ 1,100 13.51%
Management 5.00% $ 111,124 $ 0.41 $ 407 5.00%
Miscellaneous $ 68,250 $ 0.25 $ 250 3.07%
TOTAL OPERATING EXPENSES $ 949,234 $ 3.49 $ 3,477 42.71%
Reserves $ 68,250 $ 0.25 $ 250 3.07%
------------------------------------------------------
NET OPERATING INCOME $ 1,204,988 $ 4.43 $ 4,414 54.22%
======================================================
"GOING IN" CAPITALIZATION RATE 9.00%
VALUE INDICATION $ 13,388,760 $ 49.25 $ 49,043
DEFERRED MAINTENANCE ($ 34,000)
LESS: LEASE-UP COST
(OTHER VALUE ADJUSTMENTS)
"AS IS" VALUE INDICATION
(DIRECT CAPITALIZATION APPROACH) $ 13,354,760
ROUNDED $ 13,400,000 $ 49.30 $ 49,084
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 36
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
DIRECT CAPITALIZATION VALUE SENSITIVITY TABLE
CAP RATE VALUE ROUNDED $/UNIT $/SF
- ----------------------------------------------------------------------------------
8.25% $14,571,920 $14,600,000 $53,480 $53.71
8.50% $14,142,334 $14,100,000 $51,648 $51.87
8.75% $13,737,296 $13,700,000 $50,183 $50.40
9.00% $13,354,760 $13,400,000 $49,084 $49.30
9.25% $12,992,902 $13,000,000 $47,619 $47.82
9.50% $12,650,088 $12,700,000 $46,520 $46.72
9.75% $12,324,855 $12,300,000 $45,055 $45.25
CONCLUSION BY THE DIRECT CAPITALIZATION METHOD
Applying the capitalization rate to our estimated NOI results in an estimated
value of $13,400,000.
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 $13,800,000
Direct Capitalization Method $13,400,000
Giving consideration to the indicated values provided by both techniques, we
have concluded the estimated value by the income capitalization approach to be
$13,600,000.
AMERICAN APPRAISAL ASSOCIATES, INC. RECONCILIATION AND CONCLUSION PAGE 37
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
RECONCILIATION AND CONCLUSION
This appraisal was made to express an opinion as of the Market Value of the fee
simple estate in the property.
AS IS MARKET VALUE OF THE FEE SIMPLE ESTATE
Cost Approach Not Utilized
Sales Comparison Approach $13,700,000
Income Approach $13,600,000
Reconciled Value $13,600,000
The Income Capitalization Method is considered a reliable indicator of value.
Income and expenses were estimated and projected based on historical operating
statements and market oriented expenses. This method is primarily used by
investors in their underwriting analysis. Furthermore, there was good support
for an overall rate in the Direct Capitalization Method.
The Sales Comparison Approach to value supported the value conclusion by the
Income Approach and was given secondary consideration. Investment-grade,
income-producing properties such as the subject are not typically traded based
on cost. Therefore, the Cost Approach has not been considered in our valuation.
FINAL VALUE - FEE SIMPLE ESTATE
Based on the investigation and premise outlined, it is our opinion that as of
May 8, 2003 the market value of the fee simple estate in the property is:
$13,600,000
AMERICAN APPRAISAL ASSOCIATES, INC. ADDENDA
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
ADDENDA
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
EXHIBIT A
SUBJECT PHOTOGRAPHS
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
ENTRANCE TO SUBJECT VIEW OF LEASING OFFICE
[PICTURE] [PICTURE]
VIEW OF TYPICAL BUILDING AND PARKING LOT TYPICAL CARPORT
[PICTURE] [PICTURE]
TYPICAL GARAGE VIEW OF POOL
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
INTERIOR VIEW - VACANT APARTMENT UNIT INTERIOR VIEW - VACANT APARTMENT UNIT
[PICTURE] [PICTURE]
INTERIOR - VACANT APARTMENT UNIT INTERIOR -VACANT APARTMENT UNIT
[PICTURE] [PICTURE]
INTERIOR VIEW - VACANT STUDIO UNIT KITCHEN VIEW OF TYPICAL VAULTED CEILING AND
WOOD
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
EXHIBIT B
SUMMARY OF RENT COMPARABLES
AND PHOTOGRAPH OF COMPARABLES
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
PHOTOGRAPHS OF COMPARABLE SALE PROPERTIES
COMPARABLE I-1 COMPARABLE I-2 COMPARABLE I-3
NIEMAN SQUARE CASA DE FUENTES ASPEN LODGE
11115 West 64th Terrace 11700 Stearns 8100 Perry Road
Shawnee, KS Overland Park, KS Overland Park, KS
[PICTURE] [PICTURE] [PICTURE]
COMPARABLE I-4 COMPARABLE I-5
CORINTH PLACE APARTMENTS CONCORDE BRIDGE TOWNHOMES (NOW SHERIDAN BRIDGE)
3815 Somerset Drive 8403 Carter Street
Prairie Village, KS Overland Park, KS
[PICTURE] [PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
SUMMARY OF COMPARABLE RENTAL PROPERTIES
COMPARABLE
DESCRIPTION SUBJECT R - 1
- -------------------------------- ------------------------------------------------ -----------------------------------------
Property Name Indian Creek Village Sunny Oak Village
Management Company AIMCO Equity Apartments
LOCATION:
Address 10382 Conser Street 7575 West 106th Street
City, State Overland Park, Kansas Overland Park, KS
County Johnson Johnson
Proximity to Subject Located just SE of subject
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 271,830 505,417
Year Built 1972 1983
Effective Age 25 20
Building Structure Type Stucco, flat and pitched roofs Brick, wood siding, composition shingle
roofs
Parking Type (Gr., Cov., etc.) Open, carports, garages Open, carports
Number of Units 273 548
Unit Mix: Type Unit Qty. Mo. Rent Type Unit Qty. Mo.
1 1Br/1Ba 617 36 $530 1 1Br/1Ba 720 NA $529
2 1Br/1Ba 878 140 $570 3 2Br/1Ba 840 NA $629
3 2Br/1Ba 1,165 4 $790 4 2Br/2Ba 1,017 NA $654
4 2Br/2Ba 1,274 77 $800 5 3Br/2Ba 1,225 NA $799
5 3Br/2Ba 1,287 10 $900 6 3Br/2Ba 1,500 NA $899
6 3Br/2Ba, TH 1,845 6 $840
Average Unit Size (SF) 996 922
Unit Breakdown: Efficiency 0% 2-Bedroom 30% Efficiency 0% 2-Bedroom NA
1-Bedroom 64% 3-Bedroom 6% 1-Bedroom NA 3-Bedroom NA
CONDITION: Average Average
APPEAL: Average Good
AMENITIES:
Unit Amenities X Attach. Garage X Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
X Fireplace X Fireplace
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
X Spa/Jacuzzi Car Wash X Spa/Jacuzzi Car Wash
Basketball Court BBQ Equipment X Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball X Meeting Hall Sand Volley Ball X Meeting Hall
X Tennis Court Secured Parking X Tennis Court Secured Parking
Racquet Ball X Laundry Room Racquet Ball X Laundry Room
Jogging Track X Business Office Jogging Track X Business Office
Gym Room X Gym Room
OCCUPANCY: 88% 99%
LEASING DATA:
Available Leasing Terms 6 to 12 Months 6 or 12 months
Concessions Discount on select units ($50-100/Mo) Discount on selected units - varies
Pet Deposit $300 $200
Utilities Paid by Tenant: X Electric Natural Gas X Electric Natural Gas
Water Trash Water Trash
Confirmation May 8, 2003; Roxane Tevis (Property Manager) May 28, 2003; (Leasing Agent)
Telephone Number (913)648-5093 (877)566-3701
NOTES:
COMPARISON TO SUBJECT: Slightly Superior
DESCRIPTION COMPARABLE COMPARABLE
R - 2 R - 3
- -------------------------------- --------------------------------------------- ---------------------------------------------
Property Name Essex Place Pebblebrook
Management Company Equity Apartments Price Management
LOCATION:
Address 8900 West 102nd Street 7700 West 95th Street
City, State Overland Park, KS Overland Park, KS
County Johnson County Johnson County
Proximity to Subject 1 miles NW of subject 1.5 miles N of the subject
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) 430,222 NA
Year Built 1971 1985
Effective Age 20 18
Building Structure Type Brick, wood siding, composition shingle roofs Brick, wood siding, composition shingle roofs
Parking Type (Gr., Cov., etc.) Open, carports, garages Open, carports
Number of Units 352 267
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
1 1Br/1Ba 700 NA $ 605 2 1Br/1Ba 500 NA $575
2 1Br/1Ba 934 NA $ 700 2 1Br/1Ba 700 NA $675
4 2Br/2Ba 1,256 NA $ 898 4 2Br/2Ba 900 NA $805
3 2Br/2Ba 925 NA $ 740
6 3Br/2.5Ba 1,945 NA $1,210
Average Unit Size (SF) 1,222 NA
Unit Breakdown: Efficiency 0% 2-Bedroom 0% Efficiency 0% 2-Bedroom 0%
1-Bedroom 0% 3-Bedroom 0% 1-Bedroom 0% 3-Bedroom 0%
CONDITION: Average Average
APPEAL: Average Good
AMENITIES:
Unit Amenities X Attach. Garage X Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
X Fireplace X Fireplace
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
Spa/Jacuzzi Car Wash X Spa/Jacuzzi Car Wash
X Basketball Court BBQ Equipment Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
Sand Volley Ball X Meeting Hall Sand Volley Ball X Meeting Hall
X Tennis Court Secured Parking X Tennis Court Secured Parking
Racquet Ball X Laundry Room Racquet Ball X Laundry Room
Jogging Track X Business Office Jogging Track X Business Office
X Gym Room X Gym Room
OCCUPANCY: 92% 94%
LEASING DATA:
Available Leasing Terms 6 or 12 months 7 to 13 months
Concessions Discounts on selected $250 off a 7-month lease; $500 off
units 12-month
Pet Deposit $300 $300
Utilities Paid by Tenant: Electric Natural Gas X Electric Natural Gas
Water Trash Water Trash
Confirmation May 28, 2003; (Leasing Agent) May 28, 2003; (Leasing Agent)
Telephone Number (877)457-8251 (913)648-8081
NOTES:
COMPARISON TO SUBJECT: Similar Slightly Superior
COMPARABLE COMPARABLE
DESCRIPTION R - 4 R - 5
- -------------------------------- -------------------------------------------- --------------------------------------------
Property Name Highland Ridge Apartments Skyler Ridge
Management Company Lincoln Property Company Sentinel Property Management
LOCATION:
Address 11846 Perry Road 7171 West 115th Street
City, State Overland Park, KS Overland Park, KS
County Johnson County Johnson County
Proximity to Subject 4.5 miles SW of subject 2 miles SE of subject
PHYSICAL CHARACTERISTICS:
Net Rentable Area (SF) NA NA
Year Built 1987 1986
Effective Age 16 17
Building Structure Type Wood siding, composition shingle roofs Brick, wood siding, composition shingle roofs
Parking Type (Gr., Cov., etc.) Open, carports Open, carports
Number of Units 370 448
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
1 1Br/1Ba 578 NA $500 1 1Br/1Ba 602 NA $615
2 1Br/1Ba 637 NA $637 1 1Br/1Ba 760 NA $660
3 2Br/1Ba 840 NA $750 2 1Br/1Ba 821 NA $690
4 2Br/2Ba 1,017 NA $900 3 2Br/2Ba 972 NA $750
4 2Br/2Ba 1,232 NA $945 4 2Br/2Ba 1,018 NA $699
5 3Br/2Ba 1,157 NA $895
Average Unit Size (SF) NA
Unit Breakdown: Efficiency 0% 2-Bedroom 0% Efficiency 0% 2-Bedroom 0%
1-Bedroom 0% 3-Bedroom 0% 1-Bedroom 0% 3-Bedroom 0%
CONDITION: Average Average
APPEAL: Good Good
AMENITIES:
Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
X Fireplace X Fireplace
X Cable TV Ready X Cable TV Ready
Project Amenities X Swimming Pool X Swimming Pool
X Spa/Jacuzzi Car Wash X Spa/Jacuzzi Car Wash
Basketball Court BBQ Equipment Basketball Court BBQ Equipment
Volleyball Court Theater Room Volleyball Court Theater Room
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 X Business Office
X Gym Room X Gym Room
OCCUPANCY: 85% 92%
LEASING DATA:
Available Leasing Terms 12 Months 6 or 12 months
Concessions One month free Discounts on selected units
Pet Deposit $300 $300
Utilities Paid by Tenant: X Electric Natural Gas X Electric Natural Gas
Water Trash Water Trash
Confirmation May 28, 2003; (Leasing Agent) May 28, 2003; (Leasing Agent)
Telephone Number (800)396-9600 (877)892-7574
NOTES:
COMPARISON TO SUBJECT: Slightly Superior Slightly Superior
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
PHOTOGRAPHS OF COMPARABLE RENT PROPERTIES
COMPARABLE R-1 COMPARABLE R-2 COMPARABLE R-3
SUNNY OAK VILLAGE ESSEX PLACE PEBBLEBROOK
7575 West 106th Street 8900 West 102nd Street 7700 West 95th Street
Overland Park, KS Overland Park, KS Overland Park, KS
[PICTURE] [PICTURE] [PICTURE]
COMPARABLE R-4 COMPARABLE R-5
HIGHLAND RIDGE APARTMENTS SKYLER RIDGE
11846 Perry Road 7171 West 115th Street
Overland Park, KS Overland Park, KS
[PICTURE] [PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
EXHIBIT C
ASSUMPTIONS AND LIMITING CONDITIONS
(3 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
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
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
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
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
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
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
EXHIBIT D
CERTIFICATE OF APPRAISER
(1 PAGE)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT D
CERTIFICATE OF APPRAISER
I certify that, to the best of my knowledge and belief:
The statements of fact contained in this report are true and correct.
The reported analyses, opinions, and conclusions are limited only by
the reported assumptions and limiting conditions, and represent the
unbiased professional analyses, opinions, and conclusions of American
Appraisal Associates, Inc.
American Appraisal Associates, Inc. and I personally, have no present
or prospective interest in the property that is the subject of this
report and have no personal interest or bias with respect to the
parties involved.
Compensation for American Appraisal Associates, Inc. is not contingent
on an action or event resulting from the analyses, opinions, or
conclusions in, or the use of, this report.
The analyses, opinions, and conclusions were developed, and this report
has been prepared, in conformity with the requirements of the Uniform
Standards of Professional Appraisal Practice and the Code of
Professional Ethics and the Standards of Professional Practice of the
Appraisal Institute.
The use of this report is subject to the requirements of the Appraisal
Institute relating to review by its duly authorized representatives.
I personally did not inspect the subject property. Kim Cook 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 E
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
EXHIBIT E
QUALIFICATIONS OF APPRAISER
(2 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
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
STATE State of Arizona
CERTIFICATIONS 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
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
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.
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
GENERAL SERVICE CONDITIONS
AMERICAN APPRAISAL ASSOCIATES, INC.
INDIAN CREEK VILLAGE, OVERLAND PARK, KANSAS
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.