GLENBRIDGE MANOR
11513 VILLAGE BROOK DRIVE
CINCINNATI, OHIO
MARKET VALUE -
FEE SIMPLE ESTATE
As of November 19, 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]
DECEMBER 1, 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: GLENBRIDGE MANOR
11513 VILLAGE BROOK DRIVE
CINCINNATI, HAMILTON COUNTY, OHIO
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 290 units with a
total of 327,120 square feet of rentable area. The improvements were rebuilt in
2003 as they were destroyed by a tornado previously. The improvements are
situated on 32.179 acres. Overall, the improvements are in excellent condition.
As of the date of this appraisal, the subject property is 80% 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.
AMERICAN APPRAISAL ASSOCIATES, INC. LETTER OF TRANSMITTAL PAGE 2
GLENBRIDGE MANOR, CINCINNATI, OHIO
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.
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 November 19, 2003 is:
($27,500,000)
Respectfully submitted,
AMERICAN APPRAISAL ASSOCIATES, INC.
/s/ Frank A. Fehribach
-------------------------------------------
December 1, 2003 Frank A. Fehribach, MAI
#053272 Managing Principal, Real Estate Group
Texas State Certified General Real Estate
Appraiser, TX-1323954-G
Report By:
Shayne G. Hatch
Texas Appraiser Trainee, TX-1330454
AMERICAN APPRAISAL ASSOCIATES, INC. TABLE OF CONTENTS PAGE 3
GLENBRIDGE MANOR, CINCINNATI, OHIO
TABLE OF CONTENTS
Cover
Letter of Transmittal
Table of Contents
APPRAISAL DATA
Executive Summary.......................................................... 4
Introduction............................................................... 10
Area Analysis.............................................................. 12
Market Analysis............................................................ 15
Site Analysis.............................................................. 17
Improvement Analysis....................................................... 17
Highest and Best Use ...................................................... 18
VALUATION
Valuation Procedure........................................................ 19
Sales Comparison Approach.................................................. 21
Income Capitalization Approach ............................................ 25
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
GLENBRIDGE MANOR, CINCINNATI, OHIO
EXECUTIVE SUMMARY
PART ONE - PROPERTY DESCRIPTION
PROPERTY NAME: Glenbridge Manor
LOCATION: 11513 Village Brook Drive
Cincinnati, Ohio
INTENDED USE OF ASSIGNMENT: Court Settlement
PURPOSE OF APPRAISAL: "As Is" Market Value of the Fee Simple Estate
INTEREST APPRAISED: Fee Simple
DATE OF VALUE: November 19, 2003
DATE OF REPORT: December 1, 2003
PHYSICAL DESCRIPTION - SITE & IMPROVEMENTS:
SITE:
Size: 32.179 acres, or 1,401,717 square feet
Assessor Parcel No.: 620-0210-0110-00
Floodplain: Community Panel No. 3902040025B (June 1,
1982) Flood Zone A and C, an area inside
the floodplain.
Zoning: D and DD (Residence, Multiple Dwellings,
Institutions)
BUILDING:
No. of Units: 290 Units
Total NRA: 327,120 Square Feet
Average Unit Size: 1,128 Square Feet
Apartment Density: 9.0 units per acre
Year Built: 2003
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 5
GLENBRIDGE MANOR, CINCINNATI, OHIO
UNIT MIX AND MARKET RENT:
GROSS RENTAL INCOME PROJECTION
Market Rent
Square --------------------- Monthly Annual
Unit Type Feet Per Unit Per SF Income Income
- ------------------- ----- ---------- -------- ---------- ----------
1Bdrm/1Ba-1A10/1B10 629 $ 680 $ 1.08 $ 27,200 $ 326,400
1Bdrm/1Ba-1C10 776 $ 725 $ 0.93 $ 7,250 $ 87,000
1Bdrm/1Ba-1D10 859 $ 800 $ 0.93 $ 36,800 $ 441,600
2Bdrm/2Ba-2A20 1,049 $ 950 $ 0.91 $ 9,500 $ 114,000
2Bdrm/2Ba-2F20 1,134 $ 970 $ 0.86 $ 22,310 $ 267,720
2Bdrm/2Ba-2B20 1,151 $ 900 $ 0.78 $ 4,500 $ 54,000
2Bdrm/2Ba-2D20 1,167 $ 980 $ 0.84 $ 25,480 $ 305,760
2Bdrm/2Ba-2E20 1,219 $ 1,075 $ 0.88 $ 19,350 $ 232,200
2Bdrm/2Ba-2G20 1,238 $ 1,000 $ 0.81 $ 5,000 $ 60,000
2Bdrm/2Ba-2H20 1,266 $ 1,130 $ 0.89 $ 20,340 $ 244,080
2Bdrm/2.5Ba-2A25 1,385 $ 1,180 $ 0.85 $ 12,980 $ 155,760
3Bdrm/2Ba-3B20 1,453 $ 1,400 $ 0.96 $ 43,400 $ 520,800
3Bdrm/2Ba-3A20 1,487 $ 1,300 $ 0.87 $ 22,100 $ 265,200
3Bdrm/2Ba-3C20 1,518 $ 1,350 $ 0.89 $ 40,500 $ 486,000
---------- ----------
Total $ 296,710 $3,560,520
========== ==========
OCCUPANCY: 80%
ECONOMIC LIFE: 45 Years
EFFECTIVE AGE: 1 Year
REMAINING ECONOMIC LIFE: 44 Years
SUBJECT PHOTOGRAPHS AND LOCATION MAP:
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
EXTERIOR - APARTMENT BUILDING EXTERIOR - APARTMENT BUILDING
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 6
GLENBRIDGE MANOR, CINCINNATI, OHIO
AREA MAP
[MAP]
NEIGHBORHOOD MAP
[MAP]
AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 7
GLENBRIDGE MANOR, CINCINNATI, OHIO
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 8
GLENBRIDGE MANOR, CINCINNATI, OHIO
PART TWO - ECONOMIC INDICATORS
INCOME CAPITALIZATION APPROACH
DIRECT CAPITALIZATION Amount $/Unit
- --------------------- ------------------ --------------
Potential Rental Income $3,560,520 $12,278
Effective Gross Income $3,354,784 $11,568
Operating Expenses $1,214,151 $ 4,187 36.2% of EGI
Net Operating Income: $2,068,133 $ 7,131
Capitalization Rate 7.50%
DIRECT CAPITALIZATION VALUE $27,300,000 * $94,138 / UNIT
DISCOUNTED CASH FLOW ANALYSIS:
Holding Period 10 years
Stabilized Vacancy & Collection Loss: 7%
Lease-up / Stabilization Period 12 months
Terminal Capitalization Rate 8.75%
Discount Rate 10.00%
Selling Costs 2.00%
Growth Rates:
Income 3.00%
Expenses: 3.00%
DISCOUNTED CASH FLOW VALUE $27,200,000 * $93,793 / UNIT
RECONCILED INCOME CAPITALIZATION VALUE $27,300,000 $94,138 / UNIT
SALES COMPARISON APPROACH
PRICE PER UNIT:
Range of Sales $/Unit (Unadjusted) $34,439 to $93,373
Range of Sales $/Unit (Adjusted) $64,808 to $98,042
VALUE INDICATION - PRICE PER UNIT $27,600,000 * $95,172 / UNIT
EGIM ANALYSIS
Range of EGIMs from Improved Sales N/A
Selected EGIM for Subject N/A
Subject's Projected EGI N/A
EGIM ANALYSIS CONCLUSION N/A
NOI PER UNIT ANALYSIS CONCLUSION N/A
RECONCILED SALES COMPARISON VALUE $27,600,000 $95,172 / 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 9
GLENBRIDGE MANOR, CINCINNATI, OHIO
PART THREE - SUMMARY OF VALUE CONCLUSIONS
SALES COMPARISON APPROACH:
Price Per Unit $27,600,000
NOI Per Unit N/A
EGIM Multiplier N/A
INDICATED VALUE BY SALES COMPARISON $27,600,000 $95,172 / UNIT
INCOME APPROACH:
Direct Capitalization Method: $27,300,000
Discounted Cash Flow Method: $27,200,000
INDICATED VALUE BY THE INCOME APPROACH $27,300,000 $94,138 / UNIT
RECONCILED OVERALL VALUE CONCLUSION: $27,500,000 $94,828 / UNIT
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 10
GLENBRIDGE MANOR, CINCINNATI, OHIO
INTRODUCTION
IDENTIFICATION OF THE SUBJECT
The subject property is located at 11513 Village Brook Drive, Cincinnati,
Hamilton County, Ohio. Cincinnati identifies it as 620-0210-0110-00.
SCOPE OF THE ASSIGNMENT
The property, neighborhood, and comparables were inspected by Shayne G. Hatch on
November 19, 2003. Frank A. Fehribach, MAI has not made a personal inspection of
the subject property. Shayne G. Hatch performed the research, valuation analysis
and wrote the report. Frank A. Fehribach, MAI reviewed the report and concurs
with the value. Both, Frank A. Fehribach, MAI and Shayne G. Hatch 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 November 19, 2003.
The date of the report is December 1, 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 11
GLENBRIDGE MANOR, CINCINNATI, OHIO
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 2 Village Brooke
LLC. 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 12
GLENBRIDGE MANOR, CINCINNATI, OHIO
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 Cincinnati, Ohio. Overall, the neighborhood is
characterized as a suburban setting with the predominant land use being
commercial retail. The subject's neighborhood is generally defined by the
following boundaries.
NEIGHBORHOOD BOUNDARIES
East - North Lebanon Road
West - Interstate 71 and East Kemper Road
South - East Kemper Road
North - Fields Ertel Road
MAJOR EMPLOYERS
Major employers in the subject's area include A&W Restaurants, Broadwing,
Champion International Corp. Cinergy Corp. Convergys, FACS Group, Inc. Federated
Department Store, Fifth Third Bank, General Cable, General Electric Aircraft,
Kroger Company, Mead Westvaco Corp. Proctor & Gamble Company. 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 13
GLENBRIDGE MANOR, CINCINNATI, OHIO
NEIGHBORHOOD DEMOGRAPHICS
AREA
-------------------------------------------
CATEGORY 1-Mi. RADIUS 3-Mi. RADIUS 5-Mi. RADIUS MSA
- --------------------------- ------------ ------------ ------------ ----------
POPULATION TRENDS
Current Population 6,758 48,564 158,731 1,664,158
5-Year Population 6,760 47,563 158,567 1,714,553
% Change CY-5Y 0.0% -2.1% -0.1% 3.0%
Annual Change CY-5Y 0.0% -0.4% 0.0% 0.6%
HOUSEHOLDS
Current Households 3,029 19,873 64,254 657,789
5-Year Projected Households 3,116 19,956 65,809 690,743
% Change CY - 5Y 2.9% 0.4% 2.4% 5.0%
Annual Change CY-5Y 0.6% 0.1% 0.5% 1.0%
INCOME TRENDS
Median Household Income $ 37,817 $ 48,885 $ 52,908 $ 44,599
Per Capita Income $ 23,662 $ 25,143 $ 25,855 $ 24,315
Average Household Income $ 52,145 $ 60,758 $ 63,830 $ 61,515
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 50.13% 35.31% 33.08% 31.34%
5-Year Projected % Renting 51.73% 35.61% 33.52% 30.41%
% of Households Owning 45.08% 59.25% 61.49% 62.66%
5-Year Projected % Owning 43.62% 58.95% 61.19% 63.89%
Source: Demographics Now
AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 14
GLENBRIDGE MANOR, CINCINNATI, OHIO
SURROUNDING IMPROVEMENTS
The following uses surround the subject property:
North - Residential
South - Commercial
East - Residential/Commercial
West - Residential/Commercial
CONCLUSIONS
The subject is well located within the city of Cincinnati. 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 15
GLENBRIDGE MANOR, CINCINNATI, OHIO
MARKET ANALYSIS
The subject property is located in the city of Cincinnati in Hamilton County.
The overall pace of development in the subject's market is more or less
decreasing. The subject represents the newest apartment complex within the
neighborhood. Five apartment developments have been constructed within the last
three years, including the subject, for a total of approximately 1,750 units.
The following table illustrates historical vacancy rates for the subject's
market.
HISTORICAL VACANCY RATE
Period Region Submarket
- ----------------- ------ ---------
1998 - 4.7%
1999 - 2.9%
2000 - 4.3%
2001 - 7.3%
2002 - 8.4%
1st Quarter 20003 9.2% 10.5%
2nd Quarter 20003 8.8% 9.2%
3rd Quarter 20003 9.5% 10.2%
Source: REIS
Occupancy trends in the subject's market are a decreasing. Historically
speaking, the subject's submarket has underperformed 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
- ----------------- ------ -------- --------- --------
1998 N/A N/A $ 712 -
1999 N/A N/A $ 727 2.1%
2000 N/A N/A $ 745 2.5%
2001 N/A N/A $ 780 4.7%
2002 N/A N/A $ 798 2.3%
1st Quarter 20003 N/A N/A $ 785 -1.6%
2nd Quarter 20003 N/A N/A $ 795 1.3%
3rd Quarter 20003 N/A N/A $ 777 -2.3%
Source: REIS
The following table illustrates a summary of the subject's competitive set.
AMERICAN APPRAISAL ASSOCIATES, INC. MARKET ANALYSIS PAGE 16
GLENBRIDGE MANOR, CINCINNATI, OHIO
COMPETITIVE PROPERTIES
No. Property Name Units Ocpy. Year Built Proximity to subject
- ------- ----------------------------- ----- ----- ---------- --------------------
R-1 Nantucket 394 88% 2002 0.5 Miles
R-2 Bishops Gate 248 85% 2000 0.5 Miles
R-3 Twin Fountains 320 75% 2000 1.5 Miles
R-4 The Conservatory at Deerfield 498 83% 2001 1 Mile
Subject Glenbridge Manor 290 80% 2003
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 17
GLENBRIDGE MANOR, CINCINNATI, OHIO
PROPERTY DESCRIPTION
SITE ANALYSIS
Site Area 32.179 acres, or 1,401,717 square feet
Shape Irregular
Topography Level to sloping
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 3902040025B, dated June 1, 1982
Flood Zone Zone A and C
Zoning D and DD, 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
- ---------------- ---------- ----------- ----------- ---------- --------
620-0210-0110-00 $2,699,600 $11,311,600 $14,011,200 0.00228 $ 31,956
IMPROVEMENT ANALYSIS
Year Built 2003
Number of Units 290
Net Rentable Area 327,120 Square Feet
Construction:
Foundation Reinforced concrete slab
Frame Reinforced brick or masonry
Exterior Walls Brick or masonry
Roof Composition shingle over a wood truss structure
Project Amenities Amenities at the subject include a swimming pool,
spa/jacuzzi, gym room, playground, meeting hall,
business office, and secured parking.
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 a refrigerator,
stove, microwave dishwasher, water heater,
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 18
GLENBRIDGE MANOR, CINCINNATI, OHIO
garbage disposal, and oven.
Unit Mix:
Unit Area
Unit Type Number of Units (Sq. Ft.)
- ------------------- --------------- ---------
1Bdrm/1Ba-1A10/1B10 40 629
1Bdrm/1Ba-1C10 10 776
1Bdrm/1Ba-1D10 46 859
2Bdrm/2Ba-2A20 10 1,049
2Bdrm/2Ba-2F20 23 1,134
2Bdrm/2Ba-2B20 5 1,151
2Bdrm/2Ba-2D20 26 1,167
2Bdrm/2Ba-2E20 18 1,219
2Bdrm/2Ba-2G20 5 1,238
2Bdrm/2Ba-2H20 18 1,266
2Bdrm/2.5Ba-2A25 11 1,385
3Bdrm/2Ba-3B20 31 1,453
3Bdrm/2Ba-3A20 17 1,487
3Bdrm/2Ba-3C20 30 1,518
Overall Condition Excellent
Effective Age 1 years
Economic Life 45 years
Remaining Economic Life 44 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
2003 and consist of a 290-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 19
GLENBRIDGE MANOR, CINCINNATI, OHIO
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 20
GLENBRIDGE MANOR, CINCINNATI, OHIO
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 21
GLENBRIDGE MANOR, CINCINNATI, OHIO
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 22
GLENBRIDGE MANOR, CINCINNATI, OHIO
SUMMARY OF COMPARABLE SALES -IMPROVED
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
----------- ------- ---------- ----------
Property Name Glenbridge Manor Cambridge Park Magnolia Pointe
LOCATION:
Address 11513 Village Brook Drive 1088 E Crescentville Road 484 Old State Route 74
City, State Cincinnati, Ohio West Chester, Ohio Cincinnati, Ohio
County Hamilton Butler County Clermont
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) 327,120 166,440 129,360
Year Built 2003 1973 1972
Number of Units 290 196 108
Unit Mix: Type Total Type Total Type Total
1Bdrm/1Ba -1A10/1B10 40 1 Bedroom 68 Studio 3
1Bdrm/1Ba -1C10 10 2 Bedroom 104 1 Bedroom 18
1Bdrm/1Ba -1D10 46 3 Bedroom 24 2 Bedroom 84
2Bdrm/2Ba -2A20 10 3 Bedroom 3
2Bdrm/2Ba -2F20 23
2Bdrm/2Ba -2B20 5
2Bdrm/2Ba -2D20 26
2Bdrm/2Ba -2E20 18
2Bdrm/2Ba -2G20 5
2Bdrm/2Ba -2H20 18
2Bdrm/2.5Ba-2A25 11
3Bdrm/2Ba-3B20 31
3Bdrm/2Ba-3A20 17
3Bdrm/2Ba-3C20 30
Average Unit Size (SF) 1,128 849 1,198
Land Area (Acre) 32.1790 13.8900 6.6800
Density (Units/Acre) 9.0 14.1 16.2
Parking Ratio (Spaces/Unit) 1.75 2.04 1.85
Parking Type (Gr., Cov., etc.) Garage, Open Covered None None
CONDITION: Good Average Average
APPEAL: Good Fair Fair
AMENITIES:
Pool/Spa Yes/Yes Yes/No Yes/No
Gym Room Yes No No
Laundry Room No Yes Yes
Secured Parking Yes No No
Sport Courts Yes No No
OCCUPANCY: 80% 95% 95%
TRANSACTION DATA:
Sale Date August, 2002 August, 2002
Sale Price ($) $6,750,000 $3,850,000
Grantor C-K Cambridge Park (LLC) RL Magnolia (Ltd)
Grantee Cambridge Park Apartments N/A
Associate (LLC)
Sale Documentation Bk 6899 Pg 1046 Bk 1497 Pg 2449
Verification No Contact Information Investment Property Advisors
Telephone Number 513-241-9800
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF
Potential Gross Income $1,421,664 $7,253 $8.54 $0 $0 $0.00
Vacancy/Credit Loss $ 71,083 $ 363 $0.43 $0 $0 $0.00
Effective Gross Income $1,350,581 $6,891 $8.11 $0 $0 $0.00
Operating Expenses $ 556,464 $2,839 $3.34 $0 $0 $0.00
Net Operating Income $ 794,117 $4,052 $4.77 $0 $0 $0.00
NOTES:
PRICE PER UNIT $34,439 $35,648
PRICE PER SQUARE FOOT $ 40.56 $ 29.76
EXPENSE RATIO 41.2% N/A
EGIM 5.00 N/A
OVERALL CAP RATE 11.76% N/A
Cap Rate based on Pro Forma or Actual Income? ACTUAL ACTUAL
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
----------- ---------- ---------- ----------
Property Name Grandview Summit Conservatory at Deerfield Mayfair of Montgomery
LOCATION:
Address 651 Napa Valley Lane 8502 Sugar Maple Drive 10555 Montgomery Road
City, State Crestview Hill, Kentucky Mason, Ohio Cincinnati, Ohio
County Kenton Warren Hamilton
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) N/A N/A 184,600
Year Built 1997 2001 1989
Number of Units 192 498 93
Unit Mix: Type Total Type Total Type Total
2 Bedroom N/A N/A
3 Bedroom N/A
Average Unit Size (SF) N/A N/A 1,985
Land Area (Acre) 27.6500 36.6272 14.9500
Density (Units/Acre) 6.9 13.6 6.2
Parking Ratio (Spaces/Unit) 0.00 0.00 1.72
Parking Type (Gr., Cov., etc.) 0 Garage, Uncovered Garage
CONDITION: Good Good Good
APPEAL: Good Good Good
AMENITIES:
Pool/Spa Yes/No Yes/No Yes/No
Gym Room Yes Yes Yes
Laundry Room No Yes No
Secured Parking Yes No Yes
Sport Courts No Yes No
OCCUPANCY: N/A N/A N/A
TRANSACTION DATA:
Sale Date June, 2001 October, 2001 March, 2001
Sale Price ($) $14,423,700 $46,500,000 $8,512,795
Grantor Summit Properties Partners Summit Properties Partners TIAA-CREF
Grantee Realty Associates Fund VL Metropolitan Life Insurance Wolf Investment Group II
(LLC)
Sale Documentation Bk 338 Pg 324 N/A
Verification Kenton County Warren County Wolf Investment Group
Telephone Number 5139850033
ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF Total $ $/Unit $/SF
Potential Gross Income $0 $0 $0 $0 $0 $0 $0.00
Vacancy/Credit Loss $0 $0 $0 $0 $0 $0 $0.00
Effective Gross Income $0 $0 $0 $0 $0 $0 $0.00
Operating Expenses $0 $0 $0 $0 $0 $0 $0.00
Net Operating Income $0 $0 $0 $0 $0 $0 $0.00
NOTES:
PRICE PER UNIT $75,123 $93,373 $91,535
PRICE PER SQUARE FOOT N/A N/A $ 46.11
EXPENSE RATIO N/A N/A N/A
EGIM N/A N/A N/A
OVERALL CAP RATE N/A N/A N/A
Cap Rate based on Pro Forma or Actual
Income? ACTUAL N/A N/A
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 23
GLENBRIDGE MANOR, CINCINNATI, OHIO
IMPROVED SALES MAP
[MAP]
IMPROVED SALES ANALYSIS
The improved sales indicate a sales price range from $34,439 to $93,373 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 $64,808 to $98,042 per unit with a mean or average adjusted price
of $83,758 per unit. The median adjusted price is $86,501 per unit. Sales 3 and
4 are considered the most comparable properties and given the most
consideration. Based on the following analysis, we have concluded to a value of
$96,000 per unit, which results in an "as is" value of $27,600,000 (rounded
after necessary adjustment, if any).
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 24
GLENBRIDGE MANOR, CINCINNATI, OHIO
SALES ADJUSTMENT GRID
COMPARABLE COMPARABLE
DESCRIPTION SUBJECT I - 1 I - 2
----------- ------- ---------- ----------
Property Name Glenbridge Manor Cambridge Park Magnolia Pointe
Address 11513 Village Brook Drive 1088 E Crescentville Road 484 Old State Route 74
City Cincinnati, Ohio West Chester, Ohio Cincinnati, Ohio
Sale Date August, 2002 August, 2002
Sale Price ($) $6,750,000 $3,850,000
Net Rentable Area (SF) 327,120 166,440 129,360
Number of Units 290 196 108
Price Per Unit $34,439 $35,648
Year Built 2003 1973 1972
Land Area (Acre) 32.1790 13.8900 6.6800
VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 11-2003 08-2002 1% 08-2002 1%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $34,783 $36,005
Location Suburban Inferior 30% Inferior 30%
Number of Units 290 196 0% 108 -5%
Quality / Appeal Very Good Inferior 15% Inferior 15%
Age / Condition 2003 1973 / Average 30% 1972 / Average 30%
Occupancy at Sale 80% 95% -5% 95% -5%
Amenities Good Inferior 15% Inferior 15%
Average Unit Size (SF) 1,128 849 30% 1,198 0%
PHYSICAL ADJUSTMENT 115% 80%
FINAL ADJUSTED VALUE ($/UNIT) $74,784 $64,808
COMPARABLE COMPARABLE COMPARABLE
DESCRIPTION I - 3 I - 4 I - 5
----------- ---------- ---------- ----------
Property Name Grandview Summit Conservatory at Deerfield Mayfair of Montgomery
Address 651 Napa Valley Lane 8502 Sugar Maple Drive 10555 Montgomery Road
City Crestview Hill, Kentucky Mason, Ohio Cincinnati, Ohio
Sale Date June, 2001 October, 2001 March, 2001
Sale Price ($) $14,423,700 $46,500,000 $8,512,795
Net Rentable Area (SF) 184,600
Number of Units 192 498 93
Price Per Unit $75,123 $93,373 $91,535
Year Built 1997 2001 1989
Land Area (Acre) 27.6500 36.6272 14.9500
VALUE ADJUSTMENTS DESCRIPTION ADJ. DESCRIPTION ADJ. DESCRIPTION ADJ.
Property Rights Conveyed Fee Simple Estate 0% Fee Simple Estate 0% Fee Simple Estate 0%
Financing Cash To Seller 0% Cash To Seller 0% Cash To Seller 0%
Conditions of Sale Arm's Length 0% Arm's Length 0% Arm's Length 0%
Date of Sale (Time) 06-2001 5% 10-2001 5% 03-2001 5%
VALUE AFTER TRANS. ADJUST. ($/UNIT) $78,880 $98,042 $96,112
Location Inferior 20% Comparable 0% Comparable 0%
Number of Units 192 0% 498 0% 93 0%
Quality / Appeal Comparable 0% Comparable 0% Comparable 0%
Age / Condition 1997 / Good 0% 2001 / Good 0% 1989 / Good 15%
Occupancy at Sale N/A 0% N/A 0% N/A 0%
Amenities Comparable 0% Comparable 0% Comparable 0%
Average Unit Size (SF) Comparable 0% Comparable 0% 1,985 -25%
PHYSICAL ADJUSTMENT 20% 0% -10%
FINAL ADJUSTED VALUE ($/UNIT) $94,656 $98,042 $86,501
SUMMARY
VALUE RANGE (PER UNIT) $64,808 TO $98,042
MEAN (PER UNIT) $83,758
MEDIAN (PER UNIT) $86,501
VALUE CONCLUSION (PER UNIT) $96,000
VALUE OF IMPROVEMENT & MAIN SITE $27,840,000
LESS: LEASE-UP COST -$ 244,000
VALUE INDICATED BY SALES COMPARISON APPROACH $27,596,000
ROUNDED $27,600,000
NET OPERATING INCOME (NOI) ANALYSIS
Because of a lack of detailed financial information on the sale comparable's
income and expenses an NOI analysis was not performed.
EFFECTIVE GROSS INCOME MULTIPLIER (EGIM) ANALYSIS
Because of a lack of detailed financial information on the sale comparable's
income and expenses an EGIM analysis was not performed.
SALES COMPARISON CONCLUSION
The valuation methods in the Sales Comparison Approach are shown below. The
overall value via the Sales Comparison Approach is estimated at $27,600,000.
Price Per Unit $27,600,000
NOI Per Unit N/A
EGIM Analysis N/A
Sales Comparison Conclusion $27,600,000
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 25
GLENBRIDGE MANOR, CINCINNATI, OHIO
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
GLENBRIDGE MANOR, CINCINNATI, OHIO
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
- ------------------- --------- -------- ------ ---------
1Bdrm/1Ba-1A10/1B10 629 $ 635 $ 1.01 100.0%
1Bdrm/1Ba-1C10 776 $ 708 $ 0.91 100.0%
1Bdrm/1Ba-1D10 859 $ 747 $ 0.87 89.1%
2Bdrm/2Ba-2A20 1049 $ 922 $ 0.88 70.0%
2Bdrm/2Ba-2F20 1134 $ 957 $ 0.84 73.9%
2Bdrm/2Ba-2B20 1151 $ 747 $ 0.65 60.0%
2Bdrm/2Ba-2D20 1167 $ 940 $ 0.81 88.5%
2Bdrm/2Ba-2E20 1219 $1,097 $ 0.90 94.4%
2Bdrm/2Ba-2G20 1238 $ 984 $ 0.79 40.0%
2Bdrm/2Ba-2H20 1266 $1,123 $ 0.89 66.7%
2Bdrm/2.5Ba-2A25 1385 $1,190 $ 0.86 45.5%
3Bdrm/2Ba-3B20 1453 $1,359 $ 0.94 83.9%
3Bdrm/2Ba-3A20 1487 $1,188 $ 0.80 41.2%
3Bdrm/2Ba-3C20 1518 $1,314 $ 0.87 70.0%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 27
GLENBRIDGE MANOR, CINCINNATI, OHIO
RENT ANALYSIS
COMPARABLE RENTS
-----------------------------------------
R-1 R-2 R-3 R-4
-----------------------------------------
The
Bishops Twin Conserv. at
Nantucket Gate Fountains Deerfield
-----------------------------------------
SUBJECT SUBJECT COMPARISION TO SUBJECT
SUBJECT UNIT ACTUAL ASKING -----------------------------------------
DESCRIPTION TYPE RENT RENT Similar Similar Similar Similar MIN MAX MEDIAN AVERAGE
- ----------------------- ------------ ------- ------- ------- ------- ------- ------- ------ ------ ------ -------
Monthly Rent 1Bdrm/1Ba- $ 635 $ 650 $ 653 $ 820 $ 830 $ 770 $ 653 $ 830 $ 795 $ 768
Unit Area (SF) 1A10/1B10 629 629 585 910 882 822 585 910 852 800
Monthly Rent Per Sq. Ft $ 1.01 $ 1.03 $ 1.12 $ 0.90 $ 0.94 $ 0.94 $ 0.90 $ 1.12 $ 0.94 $ 0.97
Monthly Rent 1Bdrm/1Ba- $ 708 $ 710 $ 723 $ 820 $ 830 $ 815 $ 723 $ 830 $ 818 $ 797
Unit Area (SF) 1C10 776 776 687 910 882 934 687 934 896 853
Monthly Rent Per Sq. Ft $ 0.91 $ 0.91 $ 1.05 $ 0.90 $ 0.94 $ 0.87 $ 0.87 $ 1.05 $ 0.92 $ 0.94
Monthly Rent 1Bdrm/1Ba- $ 747 $ 750 $ 768 $ 820 $ 995 $ 870 $ 768 $ 995 $ 845 $ 863
Unit Area (SF) 1D10 859 859 755 910 1,149 1,008 755 1,149 959 956
Monthly Rent Per Sq. Ft $ 0.87 $ 0.87 $ 1.02 $ 0.90 $ 0.87 $ 0.86 $ 0.86 $ 1.02 $ 0.88 $ 0.91
Monthly Rent 2Bdrm/2Ba- $ 922 $ 920 $ 948 $ 1,035 $ 1,090 $ 885 $ 885 $1,090 $ 992 $ 990
Unit Area (SF) 2A20 1,049 1,049 1,020 1,068 1,240 1,140 1,020 1,240 1,104 1,117
Monthly Rent Per Sq. Ft $ 0.88 $ 0.88 $ 0.93 $ 0.97 $ 0.88 $ 0.78 $ 0.78 $ 0.97 $ 0.90 $ 0.89
Monthly Rent 2Bdrm/2Ba- $ 957 $ 960 $ 948 $ 1,035 $ 1,090 $ 885 $ 885 $1,090 $ 992 $ 990
Unit Area (SF) 2F20 1,134 1,134 1,020 1,068 1,240 1,140 $1,020 1,240 $1,104 1,117
Monthly Rent Per Sq. Ft $ 0.84 $ 0.85 $ 0.93 $ 0.97 $ 0.88 $ 0.78 $ 0.78 $ 0.97 $ 0.90 $ 0.89
Monthly Rent 2Bdrm/2Ba- $ 747 $ 750 $ 948 $ 1,035 $ 1,090 $ 885 $ 885 $1,090 $ 992 $ 990
Unit Area (SF) 2B20 1,151 1,151 1,020 $ 1,068 1,240 1,140 1,020 $1,240 1,104 1,117
Monthly Rent Per Sq. Ft $ 0.65 $ 0.65 $ 0.93 $ 0.97 $ 0.88 $ 0.78 $ 0.78 $ 0.97 $ 0.90 $ 0.89
Monthly Rent 2Bdrm/2Ba- $ 940 $ 950 $ 1,118 $ 1,035 $ 1,090 $ 885 $ 885 $1,118 $1,063 $ 1,032
Unit Area (SF) 2D20 1,167 1,167 1,159 1,068 1,240 1,140 1,068 1,240 1,150 1,152
Monthly Rent Per Sq. Ft $ 0.81 $ 0.81 $ 0.96 $ 0.97 $ 0.88 $ 0.78 $ 0.78 $ 0.97 $ 0.92 $ 0.90
Monthly Rent 2Bdrm/2Ba- $ 1,097 $ 1,100 $ 1,118 $ 1,035 $ 1,090 $ 938 $ 938 $1,118 $1,063 $ 1,045
Unit Area (SF) 2E20 1,219 1,219 1,159 1,068 1,240 1,243 1,068 1,243 1,200 1,178
Monthly Rent Per Sq. Ft $ 0.90 $ 0.90 $ 0.96 $ 0.97 $ 0.88 $ 0.75 $ 0.75 $ 0.97 $ 0.92 $ 0.89
Monthly Rent 2Bdrm/2Ba- $ 984 $ 990 $ 1,550 $ 1,105 $ 1,126 $ 938 $ 938 $1,550 $1,116 $ 1,180
Unit Area (SF) 2G20 1,238 1,238 1,407 1,245 1,550 1,243 1,243 1,550 1,326 1,361
Monthly Rent Per Sq. Ft $ 0.79 $ 0.80 $ 1.10 $ 0.89 $ 0.73 $ 0.75 $ 0.73 $ 1.10 $ 0.82 $ 0.87
Monthly Rent 2Bdrm/2Ba- $ 1,123 $ 1,130 $ 1,550 $ 1,105 $ 1,126 $ 938 $ 938 $1,550 $1,116 $ 1,180
Unit Area (SF) 2H20 1,266 1,266 1,407 1,245 1,550 1,243 1,243 1,550 1,326 1,361
Monthly Rent Per Sq. Ft $ 0.89 $ 0.89 $ 1.10 $ 0.89 $ 0.73 $ 0.75 $ 0.73 $ 1.10 $ 0.82 $ 0.87
Monthly Rent 2Bdrm/2.5Ba- $ 1,190 $ 1,200 $ 1,550 $ 1,105 $ 1,126 $ 938 $ 938 $1,550 $1,116 $ 1,180
Unit Area (SF) 2A25 1,385 1,385 1,407 1,245 1,550 1,243 1,243 1,550 1,326 1,361
Monthly Rent Per Sq. Ft $ 0.86 $ 0.87 $ 1.10 $ 0.89 $ 0.73 $ 0.75 $ 0.73 $ 1.10 $ 0.82 $ 0.87
Monthly Rent 3Bdrm/2Ba- $ 1,359 $ 1,375 $ 1,665 $ 1,710 $ 1,294 $ 1,270 $1,270 $1,710 $1,480 $ 1,485
Unit Area (SF) 3B20 1,453 1,453 1,600 1,860 1,467 1,504 1,467 1,860 1,552 1,608
Monthly Rent Per Sq. Ft $ 0.94 $ 0.95 $ 1.04 $ 0.92 $ 0.88 $ 0.84 $ 0.84 $ 1.04 $ 0.90 $ 0.92
Monthly Rent 3Bdrm/2Ba- $ 1,188 $ 1,190 $ 1,665 $ 1,710 $ 1,294 $ 1,270 $1,270 $1,710 $1,480 $ 1,485
Unit Area (SF) 3A20 1,487 1,487 1,600 1,860 1,467 1,504 1,467 1,860 1,552 1,608
Monthly Rent Per Sq. Ft $ 0.80 $ 0.80 $ 1.04 $ 0.92 $ 0.88 $ 0.84 $ 0.84 $ 1.04 $ 0.90 $ 0.92
Monthly Rent 3Bdrm/2Ba- $ 1,314 $ 1,315 $ 1,665 $ 1,710 $ 1,294 $ 1,270 $1,270 $1,710 $1,480 $ 1,485
Unit Area (SF) 3C20 1,518 1,518 1,600 1,860 1,467 1,504 1,467 1,860 1,552 1,608
Monthly Rent Per Sq. Ft $ 0.87 $ 0.87 $ 1.04 $ 0.92 $ 0.88 $ 0.84 $ 0.84 $ 1.04 $ 0.90 $ 0.92
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:
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 28
GLENBRIDGE MANOR, CINCINNATI, OHIO
GROSS RENTAL INCOME PROJECTION
Market Rent
Unit Area ------------------- Monthly Annual
Unit Type Number of Units (Sq. Ft.) Per Unit Per SF Income Income
- ------------------- --------------- --------- -------- ------ -------- ----------
1Bdrm/1Ba-1A10/1B10 40 629 $ 680 $ 1.08 $ 27,200 $ 326,400
1Bdrm/1Ba-1C10 10 776 $ 725 $ 0.93 $ 7,250 $ 87,000
1Bdrm/1Ba-1D10 46 859 $ 800 $ 0.93 $ 36,800 $ 441,600
2Bdrm/2Ba-2A20 10 1,049 $ 950 $ 0.91 $ 9,500 $ 114,000
2Bdrm/2Ba-2F20 23 1,134 $ 970 $ 0.86 $ 22,310 $ 267,720
2Bdrm/2Ba-2B20 5 1,151 $ 900 $ 0.78 $ 4,500 $ 54,000
2Bdrm/2Ba-2D20 26 1,167 $ 980 $ 0.84 $ 25,480 $ 305,760
2Bdrm/2Ba-2E20 18 1,219 $1,075 $ 0.88 $ 19,350 $ 232,200
2Bdrm/2Ba-2G20 5 1,238 $1,000 $ 0.81 $ 5,000 $ 60,000
2Bdrm/2Ba-2H20 18 1,266 $1,130 $ 0.89 $ 20,340 $ 244,080
2Bdrm/2.5Ba-2A25 11 1,385 $1,180 $ 0.85 $ 12,980 $ 155,760
3Bdrm/2Ba-3B20 31 1,453 $1,400 $ 0.96 $ 43,400 $ 520,800
3Bdrm/2Ba-3A20 17 1,487 $1,300 $ 0.87 $ 22,100 $ 265,200
3Bdrm/2Ba-3C20 30 1,518 $1,350 $ 0.89 $ 40,500 $ 486,000
-------- ----------
Total $296,710 $3,560,520
======== ==========
We have placed most of our consideration on the rent comparables in deriving our
market rent estimates. The current actual rent rates and quoted rent rates
reflect a lease up situation since the subject just opened.
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
GLENBRIDGE MANOR, CINCINNATI, OHIO
SUMMARY OF HISTORICAL INCOME & EXPENSES
ANNUALIZED 2003
----------------------
ACTUAL AAA PROJECTION
---------------------- -------------------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT %
----------- ---------- -------- ---------- -------- ------
Revenues
Rental Income $ 904,260 $3,118 $3,560,520 $12,278 100.0%
Vacancy ($ 320,910) -$1,107 $ 213,631 $ 737 6.0%
Credit Loss/Concessions ($ 15,054) -$ 52 $ 35,605 $ 123 1.0%
---------- ------- ---------- ------- -----
Subtotal ($ 335,964) -$1,158 $ 249,236 $ 859 7.0%
Laundry Income $ 0 $ 0 $ 0 0.0%
Garage Revenue $ 0 $ 0 $ 0 0.0%
Other Misc. Revenue $ 19,965 $ 69 $ 43,500 $ 150 1.2%
---------- ------- ---------- ------- -----
Subtotal Other Income $ 19,965 $ 69 $ 43,500 $ 150 1.2%
---------- ------- ---------- ------- -----
Effective Gross Income $1,260,189 $4,345 $3,354,784 $11,568 100.0%
Operating Expenses
Taxes $ 18,381 $ 63 $ 628,337 $ 2,167 18.7%
Insurance $ 35,889 $ 124 $ 36,250 $ 125 1.1%
Utilities $ 14,085 $ 49 $ 174,000 $ 600 5.2%
Repair & Maintenance $ 1,593 $ 5 $ 49,300 $ 170 1.5%
Cleaning $ 78,033 $ 269 $ 14,500 $ 50 0.4%
Landscaping $ 11,571 $ 40 $ 11,600 $ 40 0.3%
Security $ 0 $ 0 $ 0 $ 0 0.0%
Marketing & Leasing $ 19,404 $ 67 $ 19,720 $ 68 0.6%
General Administrative $ 179,673 $ 620 $ 179,800 $ 620 5.4%
Management $ 29,757 $ 103 $ 100,644 $ 347 3.0%
Miscellaneous $ 0 $ 0 $ 0 $ 0 0.0%
---------- ------- ---------- ------- -----
Total Operating Expenses $ 388,386 $1,339 $1,214,151 $ 4,187 36.2%
Reserves $ 0 $ 0 $ 72,500 $ 250 2.2%
---------- ------- ---------- ------- -----
Net Income $ 871,803 $3,006 $2,068,133 $ 7,131 61.6%
---------- ------- ---------- ------- -----
Please note that because the subject began operations in mid 2003 very limited
income and expense data was available and this was during lease up.
Additionally, no 2004 budget was available.
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.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 30
GLENBRIDGE MANOR, CINCINNATI, OHIO
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. Rental rates in the first year of the cash flow are held flat to
reflect a lease up period. After that they are grown at 6% in year 2, 4% in year
3 and 3% thereafter. Expenses are generally grown at 3% per year.
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 7% based on
the subject's historical performance, as well as the anticipated future market
conditions.
RESERVES FOR REPLACEMENT
"Reserves for replacements" is a contingency account allocated to the expenses
of the property to provide for replacement of short-lived items and for
unforeseen necessary capital expenditures. We have utilized the Korpacz Real
Estate Investor Survey of the national apartment market, which reports a range
of replacement reserves between $150 and $400 per unit. For purposes of this
analysis, we have included an allowance of $250 per unit for reserves for
replacement.
CAPITAL EXPENDITURES
Capital expenditures represent expenses for immediate repair or replacement of
items that have average to long lives. Based on our inspection of the property
as well as discussions with property management personnel, there are no major
items remaining in need of repair or replacement that would require an expense
beyond our reserves for replacement. Therefore an allowance of $250 per unit
should be satisfactory in our reserves for replacement to cover future capital
expenditures.
DISCOUNTED CASH FLOW ANALYSIS
As the subject is a multi-tenant income property, the Discounted Cash Flow
Method is considered appropriate. This method is especially meaningful in that
it isolates the timing of
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 31
GLENBRIDGE MANOR, CINCINNATI, OHIO
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. Because of
the limited financial data available only one overall rate from a sale
comparable could be derived. As this was an older property this capitalization
rate was not considered reliable. 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%
Based on this information, we have concluded the subject's overall
capitalization rate should be 7.50%. The terminal capitalization rate is applied
to the net operating income estimated for the year following the end of the
holding period. Based on the concluded overall capitalization rate, the age of
the property and the surveyed information, we have concluded the subject's
terminal capitalization rate to be 8.75%. 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 10.00%.
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
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 32
GLENBRIDGE MANOR, CINCINNATI, OHIO
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 10.00% indicates a value of $27,200,000. In this instance, the reversion
figure contributes approximately 45% of the total value. Investors surveyed for
this assignment indicated they would prefer to have the cash flow contribute
anywhere from 50% to 60%. Overall, the blend seems reasonable. The cash flow and
pricing matrix are located on the following pages.
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 33
GLENBRIDGE MANOR, CINCINNATI, OHIO
DISCOUNTED CASH FLOW ANALYSIS
GLENBRIDGE MANOR
YEAR OCT-2004 OCT-2005 OCT-2006 OCT-2007 OCT-2008 OCT-2009 OCT-2010
FISCAL YEAR 1 2 3 4 5 6 7
----------- -------- -------- -------- -------- -------- -------- --------
REVENUE
Base Rent $3,560,520 $3,560,520 $3,774,151 $3,925,117 $4,042,871 $4,164,157 $ 4,289,082
Vacancy $ 490,288 $ 213,631 $ 226,449 $ 235,507 $ 242,572 $ 249,849 $ 257,345
Credit Loss $ 35,605 $ 35,605 $ 37,742 $ 39,251 $ 40,429 $ 41,642 $ 42,891
Concessions $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------
Subtotal $ 525,893 $ 249,236 $ 264,191 $ 274,758 $ 283,001 $ 291,491 $ 300,236
Laundry Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 43,500 $ 43,500 $ 46,110 $ 47,954 $ 49,393 $ 50,875 $ 52,401
-----------------------------------------------------------------------------------
Subtotal Other Income $ 43,500 $ 43,500 $ 46,110 $ 47,954 $ 49,393 $ 50,875 $ 52,401
-----------------------------------------------------------------------------------
EFFECTIVE GROSS INCOME $3,078,127 $3,354,784 $3,556,071 $3,698,313 $3,809,263 $3,923,541 $ 4,041,247
OPERATING EXPENSES:
Taxes $ 628,337 $ 647,187 $ 666,603 $ 686,601 $ 707,199 $ 728,415 $ 750,267
Insurance $ 36,250 $ 37,338 $ 38,458 $ 39,611 $ 40,800 $ 42,024 $ 43,284
Utilities $ 174,000 $ 179,220 $ 184,597 $ 190,134 $ 195,839 $ 201,714 $ 207,765
Repair & Maintenance $ 49,300 $ 50,779 $ 52,302 $ 53,871 $ 55,488 $ 57,152 $ 58,867
Cleaning $ 14,500 $ 14,935 $ 15,383 $ 15,845 $ 16,320 $ 16,809 $ 17,314
Landscaping $ 11,600 $ 11,948 $ 12,306 $ 12,676 $ 13,056 $ 13,448 $ 13,851
Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 19,720 $ 20,312 $ 20,921 $ 21,549 $ 22,195 $ 22,861 $ 23,547
General Administrative $ 179,800 $ 185,194 $ 190,750 $ 196,472 $ 202,366 $ 208,437 $ 214,691
Management $ 92,344 $ 100,644 $ 106,682 $ 110,949 $ 114,278 $ 117,706 $ 121,237
Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES $1,205,851 $1,247,556 $1,288,002 $1,327,709 $1,367,540 $1,408,566 $ 1,450,823
Reserves $ 72,500 $ 74,675 $ 76,915 $ 79,223 $ 81,599 $ 84,047 $ 86,569
-----------------------------------------------------------------------------------
NET OPERATING INCOME $1,799,776 $2,032,553 $2,191,154 $2,291,382 $2,360,124 $2,430,927 $2,503 ,855
Operating Expense Ratio (% of EGI) 39.2% 37.2% 36.2% 35.9% 35.9% 35.9% 35.9%
Operating Expense Per Unit $ 4,158 $ 4,302 $ 4,441 $ 4,578 $ 4,716 $ 4,857 $ 5,003
YEAR OCT-2011 OCT-2012 OCT-2013 OCT-2014
FISCAL YEAR 8 9 10 11
----------- -------- -------- -------- --------
REVENUE
Base Rent $4,417,754 $4,550,287 $4,686,795 $4,827,399
Vacancy $ 265,065 $ 273,017 $ 281,208 $ 289,644
Credit Loss $ 44,178 $ 45,503 $ 46,868 $ 48,274
Concessions $ 0 $ 0 $ 0 $ 0
----------------------------------------------
Subtotal $ 309,243 $ 318,520 $ 328,076 $ 337,918
Laundry Income $ 0 $ 0 $ 0 $ 0
Garage Revenue $ 0 $ 0 $ 0 $ 0
Other Misc. Revenue $ 53,973 $ 55,592 $ 57,260 $ 58,978
----------------------------------------------
Subtotal Other Income $ 53,973 $ 55,592 $ 57,260 $ 58,978
----------------------------------------------
EFFECTIVE GROSS INCOME $4,162,484 $4,287,359 $4,415,980 $4,548,459
OPERATING EXPENSES:
Taxes $ 772,775 $ 795,959 $ 819,837 $ 844,432
Insurance $ 44,583 $ 45,920 $ 47,298 $ 48,717
Utilities $ 213,998 $ 220,418 $ 227,031 $ 233,841
Repair & Maintenance $ 60,633 $ 62,452 $ 64,325 $ 66,255
Cleaning $ 17,833 $ 18,368 $ 18,919 $ 19,487
Landscaping $ 14,267 $ 14,695 $ 15,135 $ 15,589
Security $ 0 $ 0 $ 0 $ 0
Marketing & Leasing $ 24,253 $ 24,981 $ 25,730 $ 26,502
General Administrative $ 221,131 $ 227,765 $ 234,598 $ 241,636
Management $ 124,875 $ 128,621 $ 132,479 $ 136,454
Miscellaneous $ 0 $ 0 $ 0 $ 0
----------------------------------------------
TOTAL OPERATING EXPENSES $1,494,348 $1,539,178 $1,585,353 $1,632,914
Reserves $ 89,166 $ 91,841 $ 94,596 $ 97,434
----------------------------------------------
NET OPERATING INCOME $2,578,971 $2,656,340 $2,736,030 $2,818,111
Operating Expense Ratio (% of EGI) 35.9% 35.9% 35.9% 35.9%
Operating Expense Per Unit $ 5,153 $ 5,308 $ 5,467 $ 5,631
Estimated Stabilized NOI $2,068,133 Sales Expense Rate 2.00%
Months to Stabilized 12 Discount Rate 10.00%
Stabilized Occupancy 94.0% Terminal Cap Rate 8.75%
"DCF" VALUE ANALYSIS
Gross Residual Sale Price $32,206,983 Deferred Maintenance $ 0
Less: Sales Expense $ 644,140 Add: Excess Land $ 0
-----------
Net Residual Sale Price $31,562,844 Other Adjustments $ 0
-----------
PV of Reversion $12,168,843 Value Indicated By "DCF" $27,190,855
Add: NPV of NOI $15,022,012 Rounded $27,200,000
-----------
PV Total $27,190,855
"DCF" VALUE SENSITIVITY TABLE
DISCOUNT RATE
--------------------------------------------------------------------------
TOTAL VALUE 9.50% 9.75% 10.00% 10.25% 10.50%
- -------------------------------------------------------------------------------------------------------
8.25% $28,909,397 $28,413,333 $27,928,360 $27,454,194 $26,990,559
8.50% $28,512,105 $28,024,999 $27,548,762 $27,083,116 $26,627,791
TERMINAL CAP RATE 8.75% $28,137,515 $27,658,855 $27,190,855 $26,733,242 $26,285,753
9.00% $27,783,736 $27,313,052 $26,852,831 $26,402,806 $25,962,717
9.25% $27,449,080 $26,985,941 $26,533,079 $26,090,231 $25,657,142
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 34
GLENBRIDGE MANOR, CINCINNATI, OHIO
INCOME LOSS DURING LEASE-UP
The subject is currently 80% occupied, below our stabilized occupancy
projection. We have estimated a 12-month lease-up period. An adjustment must be
made to bring the subject to a stabilized operating level. To account for this
income loss during lease-up, we have compared the current DCF analysis to an "as
stabilized" DCF analysis assuming the subject's occupancy were stabilized. The
difference in net operating income during the lease-up period is discounted to a
present value figure of $244,000 as shown in the following table.
DESCRIPTION YEAR 1
----------- ------
"As Is" Net Operating Income $1,799,776
Stabilized Net Operating Income $2,068,133
----------
Difference $ 268,357
PV of Income Loss During Lease-Up $ 243,961
----------
Rounded $ 244,000
----------
CONCESSIONS
Concessions have historically not been utilized a 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 7.50% 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
GLENBRIDGE MANOR, CINCINNATI, OHIO
GLENBRIDGE MANOR
TOTAL PER SQ. FT. PER UNIT %OF EGI
----- ----------- -------- -------
REVENUE
Base Rent $ 3,560,520 $10.88 $12,278
Less: Vacancy & Collection Loss 7.00% $ 249,236 $ 0.76 $ 859
Plus: Other Income
Laundry Income $ 0 $ 0.00 $ 0 0.00%
Garage Revenue $ 0 $ 0.00 $ 0 0.00%
Other Misc. Revenue $ 43,500 $ 0.13 $ 150 1.30%
----------- ------ ------- -----
Subtotal Other Income $ 43,500 $ 0.13 $ 150 1.30%
EFFECTIVE GROSS INCOME $ 3,354,784 $10.26 $11,568
OPERATING EXPENSES:
Taxes $ 628,337 $ 1.92 $ 2,167 18.73%
Insurance $ 36,250 $ 0.11 $ 125 1.08%
Utilities $ 174,000 $ 0.53 $ 600 5.19%
Repair & Maintenance $ 49,300 $ 0.15 $ 170 1.47%
Cleaning $ 14,500 $ 0.04 $ 50 0.43%
Landscaping $ 11,600 $ 0.04 $ 40 0.35%
Security $ 0 $ 0.00 $ 0 0.00%
Marketing & Leasing $ 19,720 $ 0.06 $ 68 0.59%
General Administrative $ 179,800 $ 0.55 $ 620 5.36%
Management 3.00% $ 100,644 $ 0.31 $ 347 3.00%
Miscellaneous $ 0 $ 0.00 $ 0 0.00%
TOTAL OPERATING EXPENSES $ 1,214,151 $ 3.71 $ 4,187 36.19%
Reserves $ 72,500 $ 0.22 $ 250 2.16%
----------- ------ ------- -----
NET OPERATING INCOME $ 2,068,133 $ 6.32 $ 7,131 61.65%
----------- ------ ------- -----
"GOING IN" CAPITALIZATION RATE 7.50%
VALUE INDICATION $27,575,108 $84.30 $95,087
LESS: LEASE-UP COST ($ 244,000)
"AS IS" VALUE INDICATION
(DIRECT CAPITALIZATION APPROACH) $27,331,108
ROUNDED $27,300,000 $83.46 $94,138
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 36
GLENBRIDGE MANOR, CINCINNATI, OHIO
DIRECT CAPITALIZATION VALUE SENSITIVITY TABLE
CAP RATE VALUE ROUNDED $/UNIT $/SF
- -------- ----- ------- ------ ----
6.75% $30,395,009 $30,400,000 $104,828 $92.93
7.00% $29,300,758 $29,300,000 $101,034 $89.57
7.25% $28,281,974 $28,300,000 $ 97,586 $86.51
7.50% $27,331,108 $27,300,000 $ 94,138 $83.46
7.75% $26,441,588 $26,400,000 $ 91,034 $80.70
8.00% $25,607,664 $25,600,000 $ 88,276 $78.26
8.25% $24,824,280 $24,800,000 $ 85,517 $75.81
CONCLUSION BY THE DIRECT CAPITALIZATION METHOD
Applying the capitalization rate to our estimated NOI results in an estimated
value of $27,300,000.
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 $27,200,000
Direct Capitalization Method $27,300,000
Giving consideration to the indicated values provided by both techniques, we
have concluded the estimated value by the income capitalization approach to be
$27,300,000.
AMERICAN APPRAISAL ASSOCIATES, INC. RECONCILIATION AND CONCLUSION PAGE 37
GLENBRIDGE MANOR, CINCINNATI, OHIO
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 $ 27,600,000
Income Approach $ 27,300,000
Reconciled Value $ 27,500,000
The Income Capitalization Method is considered a reliable indicator of value.
Income and expenses were estimated and projected based on historical operating
statements and market oriented expenses. This method is primarily used by
investors in their underwriting analysis. Furthermore, there was good support
for an overall rate in the Direct Capitalization Method.
The Sales Comparison Approach to value supported the value conclusion by the
Income Approach and was given secondary consideration. Investment-grade,
income-producing properties such as the subject are not typically traded based
on cost. Therefore, the Cost Approach has not been considered in our valuation.
FINAL VALUE - FEE SIMPLE ESTATE
Based on the investigation and premise outlined, it is our opinion that as of
November 19, 2003 the market value of the fee simple estate in the property is:
$27,500,000
AMERICAN APPRAISAL ASSOCIATES, INC. ADDENDA
GLENBRIDGE MANOR, CINCINNATI, OHIO
ADDENDA
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
GLENBRIDGE MANOR, CINCINNATI, OHIO
EXHIBIT A
SUBJECT PHOTOGRAPHS
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
GLENBRIDGE MANOR, CINCINNATI, OHIO
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
[EXTERIOR - APARTMENT BUILDING] [EXTERIOR - APARTMENT BUILDING]
[PICTURE] [PICTURE]
[EXTERIOR - APARTMENT BUILDING] [EXTERIOR - APARTMENT BUILDING]
[PICTURE] [PICTURE]
[INTERIOR - LIVING AREA] [INTERIOR - KITCHEN]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A
GLENBRIDGE MANOR, CINCINNATI, OHIO
SUBJECT PHOTOGRAPHS
[PICTURE] [PICTURE]
[INTERIOR - GARAGE] [INTERIOR - UTILITY ROOM]
[PICTURE] [PICTURE]
[EXTERIOR - POOL] [INTERIOR - LEASING OFFICE]
[PICTURE] [PICTURE]
[INTERIOR - LIVING AREA] [INTERIOR - HALF BATH]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
GLENBRIDGE MANOR, CINCINNATI, OHIO
EXHIBIT B
SUMMARY OF RENT COMPARABLES
AND PHOTOGRAPH OF COMPARABLES
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
GLENBRIDGE MANOR, CINCINNATI, OHIO
PHOTOGRAPHS OF COMPARABLE SALE PROPERTIES
COMPARABLE I-1 COMPARABLE I-2 COMPARABLE I-3
CAMBRIDGE PARK MAGNOLIA POINTE GRANDVIEW SUMMIT
1088 E Crescentville Road 484 Old State Route 74 651 Napa Valley Lane
West Chester, Ohio Cincinnati, Ohio Crestview Hill, Kentucky
N/A [PICTURE] [PICTURE]
COMPARABLE I-4 COMPARABLE I-5
CONSERVATORY AT DEERFIELD MAYFAIR OF MONTGOMERY
8502 Sugar Maple Drive 10555 Montgomery Road
Mason, Ohio Cincinnati, Ohio
[PICTURE] [PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
GLENBRIDGE MANOR, CINCINNATI, OHIO
SUMMARY OF COMPARABLE RENTAL PROPERTIES
COMPARABLE
DESCRIPTION SUBJECT R - 1
- -------------------------------- --------------------------------------------- ---------------------------------------
Property Name Glenbridge Manor Nantucket
Management Company AIMCO
LOCATION:
Address 11513 Village Brook Drive 3569 Nantucket Circle
City, State Cincinnati, Ohio Loveland, OH
County Hamilton Hamilton
Proximity to Subject 0.5 Miles
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) 327,120 N/A
Year Built 2003 2002
Effective Age 1 1
Building Structure Type Siding/Shingle/Stone
Parking Type (Gr., Cov., etc.) Garage/Uncovered
Number of Units 290 394
Unit Mix: Type Unit Qty. Mo. Rent Type Unit Qty. Mo.
1 1Bdrm/1Ba-1A10/1B10 629 40 $ 635 1 1Bdrm/1Ba 585 $ 653
2 1Bdrm/1Ba-1C10 776 10 $ 708 2 1Bdrm/1Ba 687 $ 723
3 1Bdrm/1Ba-1D10 859 46 $ 747 3 1Bdrm/1Ba 755 $ 768
4 2Bdrm/2Ba-2A20 1,049 10 $ 922 4 2Bdrm/2Ba 1,020 $ 948
5 2Bdrm/2Ba-2F20 1,134 23 $ 957 5 2Bdrm/2Ba 1,020 $ 948
6 2Bdrm/2Ba-2B20 1,151 5 $ 747 6 2Bdrm/2Ba 1,020 $ 948
7 2Bdrm/2Ba-2D20 1,167 26 $ 940 7 2Bdrm/2Ba 1,159 $1,118
8 2Bdrm/2Ba-2E20 1,219 18 $1,097 8 2Bdrm/2Ba 1,159 $1,118
9 2Bdrm/2Ba-2G20 1,238 5 $ 984 9 2Bdrm/2Ba Twnhse 1,407 $1,550
10 2Bdrm/2Ba-2H20 1,266 18 $1,123 10 2Bdrm/2Ba Twnhse 1,407 $1,550
11 2Bdrm/2.5Ba-2A25 1,385 11 $1,190 11 2Bdrm/2Ba Twnhse 1,407 $1,550
12 3Bdrm/2Ba-3B20 1,453 31 $1,359 12 3Bdrm/2Ba 1,600 $1,665
13 3Bdrm/2Ba-3A20 1,487 17 $1,188 13 3Bdrm/2Ba 1,600 $1,665
14 3Bdrm/2Ba-3C20 1,518 30 $1,314 14 3Bdrm/2Ba 1,600 $1,665
Average Unit Size (SF) 1,128
Unit Breakdown: Efficiency 2-Bedroom Efficiency 2-Bedroom
1-Bedroom 3-Bedroom 1-Bedroom 3-Bedroom
CONDITION: Very Good Very Good
APPEAL: Very Good Very Good
AMENITIES:
Unit Amenities X Attach. Garage X Vaulted Ceiling Attach. Garage X Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
X Fireplace Other X Fireplace Other
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 Meeting Hall
Tennis Court X Secured Parking Tennis Court X Secured Parking
Racquet Ball Laundry Room Racquet Ball X Laundry Room
Jogging Track X Business Office Jogging Track X Business Office
X Gym Room X Gym Room
X Play Ground Play Ground
OCCUPANCY: 80% 88%
LEASING DATA:
Available Leasing Terms 15 to 24 mo.
Concessions 2 months
Pet Deposit 400
Utilities Paid by Tenant: Electric Natural Gas X Electric X Natural Gas
Water Trash X Water Trash
Confirmation Julie
Telephone Number 513 -697 -0100
NOTES:
COMPARISON TO SUBJECT: Similar
COMPARABLE COMPARABLE
DESCRIPTION R - 2 R - 3
- -------------------------------- ------------------------------------- ------------------------------------------------
Property Name Bishops Gate Twin Fountains
Management Company
LOCATION:
Address 8075 Somerset Chase 7402 Twin Fountains Boulevard
City, State Cincinnati, OH Mason, OH
County Hamilton Hamilton
Proximity to Subject 0.5 Miles 1.5 Miles
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) N/A N/A
Year Built 2000 2000
Effective Age 3 3
Building Structure Type Siding/Brick Siding/Brick/Stone
Parking Type (Gr., Cov., etc.) Attached garage/Uncovered/Covered Attached garage/Uncovered
Number of Units 248 320
Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo.
1 1Bdrm/1Ba 910 $ 820 1 1Bdrm/1Ba 882 $ 830
2 1Bdrm/1Ba 910 $ 820 2 1Bdrm/1Ba 882 $ 830
3 1Bdrm/1Ba 910 $ 820 3 1Bdrm/1Ba 1,149 $ 995
4 2Bdrm/2Ba 1,068 $1,035 4 2Bdrm/2Ba 1,240 $1,090
5 2Bdrm/2Ba 1,068 $1,035 5 2Bdrm/2Ba 1,240 $1,090
6 2Bdrm/2Ba 1,068 $1,035 6 2Bdrm/2Ba 1,240 $1,090
7 2Bdrm/2Ba 1,068 $1,035 7 2Bdrm/2Ba 1,240 $1,090
8 2Bdrm/2Ba 1,068 $1,035 8 2Bdrm/2Ba 1,240 $1,090
9 2Bdrm/2Ba 1,245 $1,105 9 2Bdrm/2Ba 1,550 $1,126
10 2Bdrm/2Ba 1,245 $1,105 10 2Bdrm/2Ba 1,550 $1,126
11 2Bdrm/2Ba 1,245 $1,105 11 2Bdrm/2Ba 1,550 $1,126
12 3Bdrm/2.5Ba 1,860 $1,710 12 3Bdrm/2Ba 1,467 $1,294
13 3Bdrm/2.5Ba 1,860 $1,710 13 3Bdrm/2Ba 1,467 $1,294
14 3Bdrm/2.5Ba 1,860 $1,710 14 3Bdrm/2Ba 1,467 $1,294
Average Unit Size (SF)
Unit Breakdown: Efficiency 2-Bedroom Efficiency 2-Bedroom
1-Bedroom 3-Bedroom 1-Bedroom 3-Bedroom
CONDITION: Very Good Very Good
APPEAL: Very Good Very Good
AMENITIES:
Unit Amenities X Attach. Garage X Vaulted Ceiling X Attach. Garage X Vaulted Ceiling
X Balcony X W/D Connect. X Balcony X W/D Connect.
X Fireplace Other X Fireplace Other
X Cable TV Ready X 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 X Theater Room
Sand Volley Ball X Meeting Hall X Sand Volley Ball X Meeting Hall
X Tennis Court X Secured Parking Tennis Court X Secured Parking
Racquet Ball Laundry Room Racquet Ball Laundry Room
Jogging Track X Business Office Jogging Track X Business Office
X Gym Room X Gym Room
Play Ground Play Ground
OCCUPANCY: 85% 75%
LEASING DATA:
Available Leasing Terms 6 or 13 mo. 6 to 13 mo.
Concessions 1 months 2 months
Pet Deposit None N/A
Utilities Paid by Tenant: X Electric X Natural Gas X Electric X Natural Gas
X Water Trash X Water Trash
Confirmation Trista Vicki
Telephone Number 513-489-3575 513-754-0366
NOTES:
COMPARISON TO SUBJECT: Similar Similar
COMPARABLE
DESCRIPTION R - 4
- ------------------------------- --------------------------------------
Property Name The Conservatory at Deerfield
Management Company Lincoln Property
LOCATION:
Address 8502 Sugar Maple Drive
City, State Mason, OH
County Hamilton
Proximity to Subject 1 Mile
PHYSICAL CHARATERISTICS:
Net Rentable Area (SF) N/A
Year Built 2001
Effective Age 2
Building Structure Type Wood/Stone
Parking Type (Gr., Cov., etc.) Attached garage/Detached garage/
Number of Units 498
Unit Mix: Type Unit Qty. Mo.
1 1Bdrm/1Ba 822 $ 770
2 1Bdrm/1Ba 934 $ 815
3 1Bdrm/Den/1Ba 1,008 $ 870
4 2Bdrm/2Ba 1,140 $ 885
5 2Bdrm/2Ba 1,140 $ 885
6 2Bdrm/2Ba 1,140 $ 885
7 2Bdrm/2Ba 1,140 $ 885
8 2Bdrm/2Ba 1,243 $ 938
9 2Bdrm/2Ba 1,243 $ 938
10 2Bdrm/2Ba 1,243 $ 938
11 2Bdrm/2Ba 1,243 $ 938
12 3Bdrm/2Ba 1,504 $1,270
13 3Bdrm/2Ba 1,504 $1,270
14 3Bdrm/2Ba 1,504 $1,270
Average Unit Size (SF)
Unit Breakdown: Efficiency 2-Bedroom
1-Bedroom 3-Bedroom
CONDITION: Very Good
APPEAL: Very Good
AMENITIES:
Unit Amenities X Attach. Garage X Vaulted Ceiling
X Balcony X W/D Connect.
X Fireplace Other
X Cable TV Ready
Project Amenities X Swimming Pool
Spa/Jacuzzi Car Wash
Basketball Court BBQ Equipment
Volleyball Court Theater Room
Sand Volley Ball X Meeting Hall
X Tennis Court Secured
Racquet Ball X Laundry Room
Jogging Track X Business Office
X Gym Room
X Play Ground
OCCUPANCY: 83%
LEASING DATA:
Available Leasing Terms 6 to 12 mo.
Concessions 2 months
Pet Deposit N/A
Utilities Paid by Tenant: X Electric X Natural Gas
X Water Trash
Confirmation Maria
Telephone Number 513 -754-8781
NOTES:
COMPARISON TO SUBJECT: Similar
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B
GLENBRIDGE MANOR, CINCINNATI, OHIO
PHOTOGRAPHS OF COMPARABLE RENT PROPERTIES
COMPARABLE R-1 COMPARABLE R-2 COMPARABLE R-3
NANTUCKET BISHOPS GATE TWIN FOUNTAINS
3569 Nantucket Circle 8075 Somerset Chase 7402 Twin Fountains Boulevard
Loveland, OH Cincinnati, OH Mason, OH
[PICTURE] [PICTURE] [PICTURE]
COMPARABLE R-4
THE CONSERVATORY AT DEERFIELD N/A
8502 Sugar Maple Drive
Mason, OH
[PICTURE]
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
GLENBRIDGE MANOR, CINCINNATI, OHIO
EXHIBIT C
ASSUMPTIONS AND LIMITING CONDITIONS
(3 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C
GLENBRIDGE MANOR, CINCINNATI, OHIO
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
GLENBRIDGE MANOR, CINCINNATI, OHIO
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
GLENBRIDGE MANOR, CINCINNATI, OHIO
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
GLENBRIDGE MANOR, CINCINNATI, OHIO
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. Shayne G. Hatch
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 A. Fehribach
----------------------
Frank A. Fehribach, MAI
Managing Principal, Real Estate Group
Texas State Certified General Real Estate
Appraiser, TX-1323954-G
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
GLENBRIDGE MANOR, CINCINNATI, OHIO
EXHIBIT E
QUALIFICATIONS OF APPRAISER
(2 PAGES)
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E
GLENBRIDGE MANOR, CINCINNATI, OHIO
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
GLENBRIDGE MANOR, CINCINNATI, OHIO
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.
GLENBRIDGE MANOR, CINCINNATI, OHIO
GENERAL SERVICE CONDITIONS
AMERICAN APPRAISAL ASSOCIATES, INC.
GLENBRIDGE MANOR, CINCINNATI, OHIO
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.