A Self-Contained Real Estate
Appraisal Report of
A Proposed 21 Unit Assisted Care Facility, Resident Manager's
Apartment and 4 Efficiency Assisted Care Units all
Located on the South Side of Cooper Lake Road
Just East of the Intersection with Orion Drive
Within the Corporate Limits of
Bastrop, Morehouse Parish, Louisiana
For
MMR Investment Bank
Post Office Box 781440
Witchita, Kansas 67278-1440
As Of
September 20, 1998
Prepared by
Robert M. McSherry, MAI
Louisiana State Certified General Real Estate Appraiser No. G0891
3760 Chelsea Drive
Baton Rouge, Louisiana 70809
A Self-Contained Real Estate
Appraisal Report of
A Proposed 21 Unit Assisted Care Facility, Resident Manager's
Apartment and 4 Efficiency Assisted Care Units all
Located on the South Side of Cooper Lake Road
Just East of the Intersection with Orion Drive
Within the Corporate Limits of
Bastrop, Morehouse Parish, Louisiana
For
Colonial Trust Company
5336 North 19th Avenue
Phoenix, Arizona 85015
As Of
September 20, 1998
Prepared by
Robert M. McSherry, MAI
Louisiana State Certified General Real Estate Appraiser No. G0891
3760 Chelsea Drive
Baton Rouge, Louisiana 70809
Robert M. McSherry, MAI
A Self-Contained Real Estate
Appraisal Report of
A Proposed 21 Unit Assisted Care Facility, Resident Manager's
Apartment and 4 Efficiency Assisted Care Units all
Located on the South Side of Cooper Lake Road
Just East of the Intersection with Orion Drive
Within the Corporate Limits of
Bastrop, Morehouse Parish, Louisiana
For
Church Loans and Investments
5305 I-40 West
Post Office Box 8203
Amarillo, Texas 79114-8203
As Of
September 20, 1998
Prepared by
Robert M. McSherry, MAI
Louisiana State Certified General Real Estate Appraiser No. G0891
3760 Chelsea Drive
Baton Rouge, Louisiana 70809
Robert M. McSherry, MAI
ROBERT M. MC SHERRY, MAI
3760 Chelsea Drive
Baton Rouge, Louisiana 70809
Phone (504)924-8093
September 20, 1998
MMR Investment Bank
Post Office Box 781440
Witchita, Kansas 67278-1440
RE: A proposed 21 unit assisted care facility, resident manager's apartment
and 4 efficiency assisted care units all located on the south side of
Cooper Lake Road just east of the Intersection with Orion Drive within
the corporate limits of Bastrop, Morehouse Parish, Louisiana.
Dear Sir:
In accordance with your request to provide an estimate of the Estimated
Market Value of Fee Simple Interest of the Going Concern of the property
identified as a proposed 21 unit Assisted Care Facility, Resident Manager's
Apartment and 4 Efficiency Assisted Care Units all located within the
corporate limits of Bastrop, Morehouse Parish, Louisiana, we have personally
inspected the subject site and reviewed the submitted plans and specifications
for the proposed improvements and conducted a thorough review and analysis
of all matters pertinent for the Estimate of Market Value herein contained.
Market Value as defined by the Department of the Treasury, Office of
the Comptroller of the Currency, August 24, 1990, is, "The most probable
price which a property should bring in a competitive and open market under
all conditions requisite to a fair sale, the buyer and seller, each acting
prudently, knowledgeably and assuming the price is not affected by undue
stimulus. Implicit in this definition is the consummation of a sale as
of a specified date and the passing of title from seller to buyer under
conditions whereby:
a. buyer and seller are typically motivated;
b. both parties are well informed or well advised, and each acting in
what he considers his own best interest;
c. a reasonable time is allowed for exposure in the open market;
Robert M. McSherry, MAI
ROBERT M. MC SHERRY, MAI
3760 Chelsea Drive
Baton Rouge, Louisiana 70809
Phone (504)924-8093
September 20, 1998
Colonial Trust Company
5336 North 19th Avenue
Phoenix, Arizona 85015
RE: A proposed 21 unit assisted care facility, resident manager's apartment
and 4 efficiency assisted care units all located on the south side of
Cooper Lake Road just east of the Intersection with Orion Drive within
the corporate limits of Bastrop, Morehouse Parish, Louisiana.
Dear Sir:
In accordance with your request to provide an estimate of the Estimated
Market Value of Fee Simple Interest of the Going Concern of the property
identified as a proposed 21 unit Assisted Care Facility, Resident Manager's
Apartment and 4 Efficiency Assisted Care Units all located within the
corporate limits of Bastrop, Morehouse Parish, Louisiana, we have personally
inspected the subject site and reviewed the submitted plans and specifications
for the proposed improvements and conducted a thorough review and analysis
of all matters pertinent for the Estimate of Market Value herein contained.
Market Value as defined by the Department of the Treasury, Office of
the Comptroller of the Currency, August 24, 1990, is, "The most probable
price which a property should bring in a competitive and open market under
all conditions requisite to a fair sale, the buyer and seller, each acting
prudently, knowledgeably and assuming the price is not affected by undue
stimulus. Implicit in this definition is the consummation of a sale as
of a specified date and the passing of title from seller to buyer under
conditions whereby:
a. buyer and seller are typically motivated;
b. both parties are well informed or well advised, and each acting in
what he considers his own best interest;
c. a reasonable time is allowed for exposure in the open market;
Robert M. McSherry, MAI
ROBERT M. MC SHERRY, MAI
3760 Chelsea Drive
Baton Rouge, Louisiana 70809
Phone (504)924-8093
September 20, 1998
Church Loans and Investments
5305 I-40 West
Post Office Box 8203
Amarillo, Texas 79114-8203
RE: A proposed 21 unit assisted care facility, resident manager's apartment
and 4 efficiency assisted care units all located on the south side of
Cooper Lake Road just east of the Intersection with Orion Drive within
the corporate limits of Bastrop, Morehouse Parish, Louisiana.
Dear Sir:
In accordance with your request to provide an estimate of the Estimated
Market Value of Fee Simple Interest of the Going Concern of the property
identified as a proposed 21 unit Assisted Care Facility, Resident Manager's
Apartment and 4 Efficiency Assisted Care Units all located within the
corporate limits of Bastrop, Morehouse Parish, Louisiana, we have personally
inspected the subject site and reviewed the submitted plans and specifications
for the proposed improvements and conducted a thorough review and analysis
of all matters pertinent for the Estimate of Market Value herein contained
Market Value as defined by the Department of the Treasury, Office of
the Comptroller of the Currency, August 24, 1990, is, "The most probable
price which a property should bring in 2 competitive and open market under
all conditions requisite to a fair sale, the buyer and seller, each acting
prudently, knowledgeably and assuming the price is not affected by undue
stimulus. Implicit in this definition is the consummation of a sale as
of a specified date and the passing of title from seller to buyer under
conditions whereby:
a. buyer and seller are typically motivated;
b. both parties are well informed or well advised, and each acting in
what he considers his own best interest;
c. a reasonable time is allowed for exposure in the open market;
d. payment is made in terms of cash in U.S. dollars or in terms of financial
arrangements comparable thereto; and
Robert M. McSherry, MAI
Page Two
e. the price represents the normal consideration for the property sold
unaffected by special or creative financing or sales concessions granted
by anyone associated with the sale.
Fee Simple Interest is defined by the Appraisal Institute as being, "a
fee without limitations to any particular class of heirs or restrictions
but subject to the limitations of eminent domain, escheat, police power
and taxation. An inheritable estate"
Going Concern Value is "the value created by a proven property operation."
It includes the incremental value associated with the business concern,
which is distinct from the value of the real estate only. Going concern
value includes an intangible enhancement of the value of an operating
business enterprise which is produced by the assemblage of the land, building,
labor, equipment, and marketing operation. This process creates an
economically viable business that is expected to continue. Going concern
value refers to the total value of a property, including both real property
and intangible personal property attributed to business value. Special
purpose properties such as the subject are appropriate for only one use or
for a very limited number of uses. The highest and best use of a special
purpose property as improved, is probably the continuation of its current use,
if that use remains viable. Therefore, in the case of special purpose
properties a going concern value is considered appropriate.
In this instance the subject property has an excellent location within
a viable market. As long as quality management is maintained, it's Market
Value would be the same as it's Going Concern Value.
Included is our appraisal report which contains the various exhibits
and data utilized in arriving at the herein contained estimate of Market
Value for the subject property.
It is our opinion that the property herein identified as the proposed
21 Unit Assisted Care Facility, Resident Manager's Apartment and 4 Efficiency
Assisted Care Units all located on the south side of Cooper Lake Road
within the corporate limits of Bastrop, Morehouse Parish, Louisiana, was
estimated to have a Market Value based on Stabilized Net Operating Income,
as of September 20, 1998, of:
TWO MILLION ONE HUNDRED THOUSAND DOLLARS
($2,100,000.00)
Robert M. McSherry, MAI
Page Three
Allocated:
LAND: $ 50,000.00
IMPROVEMENTS: $1,975,000.00
FURNITURE, FIXTURES & EQUIPMENT: $ 75,000.00
GOODWILL OF GOING CONCERN -0-
The "As Is" Value of the property, derived by the utilization of the
Discounted Cash Flow Methodology, is estimated to be, as of September
20, 1998, but subject to completion of the property in accordance with
submitted plans and specifications within a reasonable period of time,
of:
TWO MILLION FORTY THOUSAND DOLLARS
($2,040,000.00)
The subject property is proposed at the present time and this appraiser
has been provided plans and specifications for the property. The herein
contained Estimate of Market Value is conditioned upon the completion
of the improvements in accordance with the plans and specifications utilizing
quality materials and workmanship within a reasonable period of time.
A final inspection by this appraiser will be required to ascertain the
assumptions utilized in preparing this appraisal report have been fulfilled.
This appraisal report was prepared in accordance with and compliance
of the Uniform Standards of Professional Appraisal Practice promulgated
by the Appraisal Foundation and the Guide Notes to the Standards of
Professional Practice adopted by the Appraisal Institute. These standards
contain binding requirements and specific guidelines that deal with the
procedures to be followed in developing an appraisal, analysis, or opinion.
These uniform standards also set the requirements to communicate the
appraiser's analysis, opinions, and conclusions in a manner that will be
meaningful and not misleading in the marketplace, accordingly, the Departure
Provision does not apply.
Robert M. McSherry, MAI
Page Four
If we may be of further service to you in regard to this property or
in any other manner, please do not hesitate to contact us at your earliest
convenience.
Respectfully submitted,
/S/ROBERT M MCSHERRY
Robert M. Mc Sherry, MAI
Louisiana State Certified General
Real Estate Appraiser No. G0891
Robert M. McSherry, MAI
EXECUTIVE SUMMARY
Location: South side of Cooper Lake Road just east of
Orion Drive within the Corporate Limits
of Bastrop, Morehouse Parish, Louisiana
Interest Appraised: Fee Simple Interest
Site: 3.35 Acres or 145,926 Square Feet, more or
less
Building Description: The property will include twenty-one (21)
assisted care living units, a resident
manager's apartment and 4 efficiency assisted
care units all located within a single,
T-shaped building. The common area amenities
including a full service kitchen, a dining
area, activities area, office/reception area,
adequate bathrooms which would be fully
equipped to satisfy the needs of the residents
of the assisted care facilities as well as
storage areas and other required additions to
render the subject property a functional
assisted care facility catering to those
requiring assisted care.
Construction characteristics include a
reinforced poured concrete foundation, wood
framing, with a combination of brick veneer
and vinyl siding exterior walls with the roof
being of composition shingles. Although the
property is proposed at the present time, this
appraiser is aware of a similar property which
has been constructed by the owners of the
subject and our physical inspection of this
existing complex has been utilized in
conjunction with the submitted plans and
specifications.
The property is considered to be a most
functional assisted living facility and is
considered a most attractive property and
should be well accepted by the local market.
Robert M. McSherry, MAI
Highest and Best Use: Assisted care facility
including all required amenities.
Cost Approach to Value $2,140,000.00
Market Approach to Value $2,150,000.00
Income Approach to Value:
Stabilized Net Income: $2,100,000.00
Discounted Cash Flow Value: $2,040,000.00
Final Value Estimate:
Stabilized Net Income: $2,100,000.00
"As Is" Value: $2,040,000.00
Allocated:
Land $ 50,000.00
Improvements $1,975,000.00
Furniture, Fixtures
and Equipment $ 75,000.00
Goodwill of Going
Concern -0-
Robert M. McSherry, MAI
IDENTIFICATION OF THE PROPERTY
The property being inspected, analyzed and for which the Market Value
Estimate of the Fee Simple Interest of the Going Concern is applicable
is a 3.35 acre tract of land which will be basically rectangular in shape
and having approximately 475 feet of frontage along the south side of
Cooper Lake Road, a depth of 307 feet and is located within the corporate
limits of Bastrop, Morehouse Parish, Louisiana. The subject site is a
portion of a larger tract of land which is to be purchased from Woodrow
Wilson by Bittmore, LLC for a verified consideration of $100,000.00 for
this total 6.70 acre tract of land. The total tract of land of which
the subject property will constitute one-half is as follows:
"All of that portion of Section 19, 20, 29 and 30, Township 21 North,
Range 6 East, Morehouse Parish, Louisiana beginning at Cooper Lake Road
and the back of Lots 1-3, 6-13 and 15-18 of the Space Estates Number 5
per plat found in Plat Book 6, Page 13 of the Records of Morehouse
Parish, Louisiana.
The total property contains 6.7 acres of gross land area, more or less.
As noted, the subject property will constitute one-half of the above
described tract of land with a complete metes and bounds survey and complete
legal description to be provided this appraiser as a condition of this
appraisal report.
Robert M. McSherry, MAI
PURPOSE OF THE APPRAISAL
The purpose of this report is to communicate, in a narrative format,
the data and reasoning that the appraisers have utilized to form the herein
contained estimate of Market Value of the Fee Simple Interest of the Going
Concern for the property identified as a proposed 21 assisted care facility
and 4 efficiency assisted care units all located on the south side of
Cooper Lake Road, Bastrop, Louisiana.
OBJECTIVE OF THE APPRAISAL
The objective and function of this appraisal report is to provide an
estimate of the Market Value of the Fee Simple Interest of the Going Concern
of the property for use by MMR Investment Bank in order to provide long
term financing of the subject property for the Biltmore Group, L.L.C.
The Subject property was personally inspected by this appraiser both
before and after the date of this appraisal and the submitted plans and
specifications reviewed. As the property is proposed construction, a
final inspection of the property will be required by the appraiser to
ascertain the assumptions utilized within this appraisal report have been
fulfilled and this appraisal is also conditioned upon being completed
in accordance with the plans and specifications utilizing quality materials
and workmanship throughout. Other additional conditions are contained
in an additional section of this report.
Robert M. McSherry, MAI
PURPOSE OF THE APPRAISAL
The purpose of this report is to communicate, in a narrative format,
the data and reasoning that the appraisers have utilized to form the herein
contained estimate of Market Value of the Fee Simple Interest of the Going
Concern for the property identified as a proposed 21 assisted care facility
and 4 efficiency assisted care units all located on the south side of
Cooper Lake Road, Bastrop, Louisiana.
OBJECTIVE OF THE APPRAISAL
The objective and function of this appraisal report is to provide an
estimate of the Market Value of the Fee Simple Interest of the Going Concern
of the property for use by Colonial Trust Company in order to provide
long term financing of the subject property for the Biltmore Group, L.L.C.
The Subject property was personally inspected by this appraiser both
before and after the date of this appraisal and the submitted plans and
specifications reviewed. As the property is proposed construction, a
final inspection of the property will be required by the appraiser to
ascertain the assumptions utilized within this appraisal report have been
fulfilled and this appraisal is also conditioned upon being completed
in accordance with the plans and specifications utilizing quality materials
and workmanship throughout. Other additional conditions are contained
in an additional section of this report.
Robert M. McSherry, MAI
PURPOSE OF THE APPRAISAL
The purpose of this report is to communicate, in a narrative format,
the data and reasoning that the appraisers have utilized to form the herein
contained estimate of Market Value of the Fee Simple Interest of the Going
Concern for the property identified as a proposed 21 assisted care facility
and 4 efficiency assisted care units all located on the south side of
Cooper Lake Road, Bastrop, Louisiana.
OBJECTIVE OF THE APPRAISAL
The objective and function of this appraisal report is to provide an
estimate of the Market Value of the Fee Simple Interest of the Going Concern
of the property for use by Church Loans and Investments in order to provide
long term financing of the subject property for the Biltmore Group, L.L.C.
The Subject property was personally inspected by this appraiser both
before and after the date of this appraisal and the submitted plans and
specifications reviewed. As the property is proposed construction, a
final inspection of the property will be required by the appraiser to
ascertain the assumptions utilized within this appraisal report have been
fulfilled and this appraisal is also conditioned upon being completed
in accordance with the plans and specifications utilizing quality materials
and workmanship throughout. Other additional conditions are contained
in an additional section of this report.
Robert M. McSherry, MAI
DATE OF THE APPRAISAL
The effective date of this appraisal is September 20, 1998. The subject
site was personally inspected by this appraiser both before and after
this date and the submitted plans and specifications for the proposed
improvements were also reviewed by the appraiser prior to the date of
the appraisal.
Robert M. McSherry, MAI
DEFINITION OF SIGNIFICANT TERMS
Market Value, as defined by the Department of the Treasury, Office of
the Comptroller of the Currency, August 24, 1990, is, "The most probable
price which a property should bring in a competitive and open market under
all conditions requisite to a fair sale, the buyer and seller, each acting
prudently, knowledgeably and assuming the price is not affected by undue
stimulus. Implicit in this definition, is the consummation of a sale
as of a specified data and the passing of title from seller to buyer under
conditions whereby:
a. buyer and seller are typically motivated;
b. both parties are well informed or well advised, and each acting in
what he considers his own best interest;
c. a reasonable time is allowed for exposure in the open market;
d. payment is made in terms of cash in U.S. dollars or in terms of financial
arrangements comparable thereto; and
e. the price represents the normal consideration for the property sold
unaffected by special or creative financing or sales concessions granted
by anyone associated with the sale.
Fee Simple Interest is defined by the Appraisal Institute as being, "a
fee without limitations to any particular class of heirs or restrictions
but subject to the limitations of eminent domain, escheat, police power
and taxation. An inheritable estate".
Going Concern Value is "the value created by a proven property operation."
It includes the incremental value associated with the business concern,
which is distinct from the value of the real estate only. Going concern
value includes an
Robert M. McSherry, MAI
intangible enhancement of the value of an operating business enterprise
which is produced by the assemblage of the land, building, labor, equipment,
and marketing operation. This process creates an economically viable
business that is expected to continue. Going concern value refers to
the total value of a property, including both real property and intangible
personal property attributed to business value, Special purpose properties
such as the subject are appropriate for only one use or for a very limited
number of uses. The highest and best use of a special purpose property
as improved, is probably the continuation of its current use, if that
use remains viable. Therefore, in the case of special purpose properties
a going concern value is considered appropriate.
Robert M. McSherry, MAI
PROPERTY RIGHTS APPRAISED
This assignment concerns the appraisal of the Fee Simple Interest with
Fee Simple Interest defined in Real Estate Appraisal Terminology as being,
"a fee without limitations to any particular class of heirs or restrictions
but subject to the limitations of eminent domain, escheat, police power
and taxation. An inheritable estate".
STATEMENT OF OWNERSHIP AND RECENT HISTORY
The larger tract from which the subject property will be partitioned
is under the ownership of Woodrow Wilson and has been under this ownership
for a period in excess of five (5) years. The property will be purchased
by Biltmore, LLC for a total consideration of $100,000.00 for the 6.70
acre tract which indicates a purchase price of $14,925.00 per acre or
$.34 per square foot.
The property has been owned by the current owner, Woodrow Wilson, for
a period in excess of five (5) years and no there are no speculative
transactions affecting the subject property according to the records found
in the Morehouse Parish Clerk of Court's Office.
Robert M. McSherry, MAI
ASSUMPTIONS AND LIMITING CONDITIONS
This appraisal report has been made with the following assumptions and
limiting conditions:
1. No responsibility is assumed for the legal description or for matters
including legal or title consideration. Title to the property is
assumed to be good and marketable unless otherwise stated.
2. The property is appraised free and clear of any and all liens or
encumbrances unless otherwise stated.
3. Responsible ownership and competent property management are assumed.
4. The information furnished by others is believed to be reliable. No
warranty, however, is given for its accuracy.
5. All engineering is assumed to be correct. The plot plans and
illustrative material in this report are included only to assist the
reader in visualizing the property.
6. It is assumed that there are no hidden or apparent conditions of the
property, subsoil, or structures that render it more or less valuable.
No responsibility is assumed for such conditions or for arranging for
engineering studies that may be required to discover them.
7. It is assumed that there is full compliance with all applicable
federal, state, and local environmental regulations and laws unless
noncompliance is stated, defined, and considered in the appraisal
report.
8. 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.
9. It is assumed that all required licenses, certificates of occupancy,
consents, or other legislative or administrative authority from any
local, state or national government or private entity or organization
have been, or can be obtained or renewed for any use on which the
value estimate contained in this report is based.
Robert M. McSherry, MAI
10. It is assumed that the utilization of the land and improvements is
within the boundaries or property lines of the property described and
that there is no encroachment or trespass unless noted in the report.
11. The distribution, if any, of the total valuation in this report between
land and improvements applies only under the stated program of
utilization. The separate allocations for land and buildings must not
be used in conjunction with any other appraisal and are invalid if so
used.
12. The appraisers herein, by reason of this appraisal, are not required
to give further consultation, testimony, or be in attendance in court
with reference to the property in question unless arrangements have
been previously made.
13. Possession of this report, or a copy thereof, does not carry with
it the right of publication. It may not be used for any purpose by any
person other than the party to whom it is addressed without the written
consent of the appraisers, and in any event only with proper written
qualification and only in its entirety.
14. Neither all nor any part of the contents of this report (especially
any conclusions as to value, the identity of the appraisers, or the
firm with which the appraisers are connected) shall be disseminated
to the public through advertising, public relations, new, sales, or
other media without the prior written consent and approval of the
appraisers.
15. The existence of hazardous materials, which may or may not be present
on the subject property, was not observed by the appraisers. The
appraisers have the knowledge of the existence of such materials
on or in the subject property. However, the appraisers are not
qualified to detect such substances and the presence of potential
hazardous materials may affect the value of the property. This value
estimate contained within this report is predicated on the assumption
that no such hazardous materials are present on or in the property.
No responsibility is assumed for any such conditions or for any
expertise or any knowledge required to discover these items. This
should be accomplished by an expert in the field and is a condition of
this appraisal report.
16. That the appraiser has personally inspected the subject property
and finds no obvious evidence of structural deficiencies, except as
stated in this report; however, no responsibility for hidden defects
or conformity to specific governmental requirements, such as the
Americans with Disabilities (ADA) or fire, building and safety,
earthquake, or occupancy codes, etc., can be assumed without provision
of specific professional or governmental inspections.
Robert M. McSherry, MAI
17. This property is proposed at the present time and the appraisal is
conditioned upon the completion of the subject property in accordance
with the submitted plans and specifications utilizing quality
materials and workmanship throughout. A final inspection by the
appraiser would be required in order to ascertain the assumptions
utilized in arriving at the herein contained Estimate of Market Value
have been fulfilled.
18. This appraisal is not based on a requested minimum valuation, a
specific valuation or the approval of the loan.
Robert M. McSherry, MAI
MOREHOUSE PARISH AND BASTROP CITY DATA
Bastrop is located in the extreme northeastern corner of Louisiana
approximately 124 miles northeast of Shreveport, Louisiana and 129 miles
northwest of Jackson, Mississippi. The population as of 1993 for the City
of Bastrop was 14,019 while the population of Morehouse Parish was 31,818.
There are 19 local public and private schools that service Bastrop while
Northeast Louisiana University lies within 24 miles of the City.
The local utilities and services include Louisiana Power and Light, natural
gas is supplied by Louisiana Gas Service and water is supplied by Peoples
Water Company. There is a local Police Department and Fire Department
for personal protection. Local telephone service is provided by South
Central Bell.
The community enjoys 64 local churches which are either Protestant, Catholic
or Other Denomination. There are 26 doctors servicing one local hospital.
Highways serving the area are US Highway 165, LA Highway 139 and LA Highway
2.; local railroads are UP-MP and AL&M, the Bastrop Municipal Local is
the area airport, the bus service, Trailways and the local waterway is
the Oauchita River.
There are 3 daily newspapers, 2 local radio stations, one television
station and cable television is available.
Robert M. McSherry, MAI
The major employer in the area is International Paper with approximately
1,100 union employees with Ditto of California-Apparel (800 employees),
Morehouse Parish School Board (784 employees), Morehouse General Hospital
(350 employees) with Wal-Mart and the City of Bastrop following with 225
employees and 180 employees respectively.
Robert M. McSherry, MAI
OVERVIEW OF ASSISTED LIVING INDUSTRY
In anticipation that more elderly Americans will live in assisted living
homes than nursing homes in the near future, consumer industry groups
are saying it is time to put some minimum standards into law. One of
the most important things for the industry is to try not to admit residents
it cannot provide quality care for. Many assisted living homes charge
additional fees for personal services residents may come to need as they
grow older. Some will help residents if they get sick by permitting periodic
visits from nurses, for example, or providing supervision for people with
Alzheimer's Disease.
In order to minimize residents need to move, the consumer or trade groups
say assisted living facilities should be required to offer at least some
help with the dozen daily activities including meals, using the bathroom,
taking medication and shopping. Those facilities which accept people
with Alzheimer's or other types of dementia would also be required to
provide 24 hour awake staff and special training for those workers.
Assisted living has become the hottest new housing option for older people
by promising to provide a happy medium between their homes and a full
nursing home facility. Industry estimates show that the number of elderly
Americans living in settings that could be described as assisted living
has probably doubled from 560,000 in 1990 to as many as 1,000,000 in 1997.
By early next century, experts predict assisted living homes will care
for more elderly Americans than nursing homes.
Robert M. McSherry, MAI
Although numbers are inexact, assisted living facilities ranging from
luxury apartment buildings to modest group homes provide housing along
with personal services and some health care. Residents may be too frail
to live alone but too healthy to need the 24 hour medical attention of
nursing homes. Assisted living can be less expensive than nursing homes.
A 1997 survey by the National Center for Assisted Living found that 52%
costs $1,001.00 to $2,000.00 per month and 24% cost less than $1,000.00
per month. In contrast, monthly nursing home fees average above $3,000.00.
Assisted living's affordability has attracted the attention of law makers
worried about how the nation will ensure elderly care for the huge baby
boom generation now middle aged.
Medicaid programs for the poor in 28 states have begun to cover some
assisted living services and the Department of Health and Human Services
is conducting a fact finding survey.
Unlike nursing homes, assisted living homes are not regulated by the
Federal Government. Fewer than half of the states require licensing before
it opens. That allows for flexibility and partly explains assisted living's
popularity.
In summary, the assisted living facilities currently expanding throughout
the United States are the most popular and desirable alternative living
situation for those elderly which require some minimal level of care but
not the extensive level required by nursing home patients. As the population
continues to grow
Robert M. McSherry, MAI
older but maintain better health, the appeal thus desirability of assisted
living facilities will continue to be enhanced.
Robert M. McSherry, MAI
SCOPE OF THE APPRAISAL
The appraiser has personally inspected the subject site and conducted
an in-depth inspection of the neighborhood in which the subject property
is located observing it's trends of development and characteristics.
Vacant land sales utilized in conjunction with the Cost Approach to Value
and in determining the estimated Market Value of the subject site, as
if vacant, and owned in Fee Simple have been inspected by this appraiser
and a combination of data provided by the Marshall Valuation Service Cost
Manual and other available in-file data has been utilized in the process
of estimating the replacement cost new of the subject improvements.
In the final analysis, the appraiser has utilized and relied upon the
experience of judgment based on the opinion of the quality and quantity
of the data in arriving at the final value estimate of the Fee Simple
Interest in the subject property.
The Income Approach to Value has been completed utilizing a stabilized
net income capitalized into value and a discounted cash flow method.
Economic rents were determined by rent comparables and current data utilized
with respect to expense projections. Information provided by the publication
"Trends in the Health Care Industry" as well as information provided by
other actual ongoing facilities similar to the subject have been utilized
in the process of estimating the projected expenses which were included
in the Income Approach to Value. Although the subject property is proposed
at the present time and has no income or expense history, it is considered
to be a functional facility and a facility which is demand with respect
to providing long term assisted living care.
Robert M. McSherry, MAI
DESCRIPTION OF THE PROPERTY
Site Data
Size, Shape and Topography
The subject site will be a 3.35 acre rectangular shaped parcel of land
having approximately 475 feet of frontage along the south side of Cooper
Lake Road, a depth of 307 feet thus encompassing 3.35 acres or 145,926
square feet, more or less. The property is located, as noted, along the
south side of Cooper Lake Road which is a dual-land, asphalt, municipally
maintained traffic artery serving local vehicular traffic. The topography
of the property is rolling to gently rolling and will require limited
site preparation prior to construction. Inspection of the site did not
reveal any detrimental physical characteristics which would adversely
affect the development of the subject property to it's highest and Best
Use as an assisted living facility.
Utilities
The subject property is located inside the corporate limits of Bastrop,
Morehouse Parish, Louisiana and is provided with all city utilities and
services available to properties within the corporate limits of Bastrop
including electrical service, police and fire protection, public water,
sewerage disposal, and refuge disposal. Telephone service and natural
gas service is provided by the local utility companies servicing the area.
Access
Access to the subject development will be provided as the result of the
location of Cooper Lake Road along the northern boundary of the site.
Cooper Lake Road is a dual laned, asphalt, municipally maintained traffic
artery servicing
Robert M. McSherry, MAI
primarily local vehicular traffic and provides access into the downtown
area of Bastrop as well as to the outlying areas of Bastrop and Morehouse
Parish. There exists an intersection with US Hwy 165 in the immediate
proximity of the subject site with US Hwy 165 being the major traffic
artery through Bastrop and Morehouse Parish.
Overall, access to the subject site from all areas of both the City of
Bastrop or the outlying areas of Morehouse Parish is adequately provided.
Zoning
Conversations with representatives in the Bastrop City Hall indicated
that no zoning currently affects the City of Bastrop. Land uses are
controlled by deed restrictions or other restrictive covenants which run
with the land and, although this appraiser has not conducted an in-depth
review of the abstract to the subject site, no deed restrictions or other
restrictive covenants are assumed to exist which would affect the utilization
of the subject site as a site of an assisted living facility.
This appraiser has not conducted an in-depth review with respect to the
abstract to the subject site but no deed restrictions or other restrictive
covenants are assumed to exist which would affect the development of the
subject property to its highest and best use. However, this should be
ascertained by competent legal authority and is a condition of this appraisal
report.
Robert M. McSherry, MAI
Drainage
Review of Flood Hazard Maps found in the Morehouse Parish Community Office
indicated the subject property to be located in a Flood Zone "C" according
to Flood Map No. 220127-002-B having an effective date of December 16,
1980. This indicates no flood insurance is required for the subject property.
Tax Data
The subject property is proposed construction property and the taxes
on the vacant land only are minimal. The subject property will be placed
on the Morehouse Parish tax rolls the year after it is completed and at
that time will be assessed and the tax liability can be assigned. For
the purposes of this appraisal report and for the utilization in the Income
Approach, taxes have been projected but are subject to change once the
property is completed and placed on the tax rolls.
The 1997 millage rates applicable to the subject property are as follows:
City 40.70 Mills
Parish 65.15 Mills
Total 105.85 Mills
Assisted living facilities such as the subject are assessed at 10% of
Market Value and conversations with representatives of the Morehouse Parish
Tax Assessor's Office indicate an estimated Market Value for tax purposes
will be approximately 30% less than actual Market Value. Thus:
Robert M. McSherry, MAI
Estimated Value of Subject $2,100,000.00
Estimated Assessed Value $1,470,000.00
10% - Assessed Value $ 147,000.00
$147,000.00 X 105.85 Mills = Estimated Tax Liability $ 15,559.95
Robert M. McSherry, MAI
[Subject Site Location Map Indicating Subject Property]
DESCRIPTION OF THE IMPROVEMENTS
Assisted Living Facility
The proposed facility containing the assisted living units will be constructed
within a single T-shaped building but a building comprised of different
component sections housing the assisted living units in two wings with
the public areas located in the center or core of the building. The building
is a modified T-shape and encompasses a total of 22,217 square feet of
heated area. The assisted living units contained within this facility
will contain approximately 485 square feet of living area and feature
a bedroom, living room, kitchenette and full bath with shower while the
efficiency units will contain approximately 200 square feet of area.
The gross building area was calculated by Mr. Mike Wallace, the preparer
of the plans and specifications for the property.
Construction characteristics for this building include reinforced poured
concrete foundation with adequate grade beams and both interior and perimeter
footings with the exterior being wood framing utilizing a combination
of brick veneer vinyl with the roof being a composition shingle roof over
wood decking. Windows will be insulated, horizontal slide aluminum windows
with each unit of the assisted care units having their own central HVAC
unit with the common areas utilizing central, zoned units.
Interior construction will include a combination of vinyl and carpet
or ceramic tile flooring, painted or vinyl covered sheetrock walls with
acoustical ceilings. Lighting will be both standard and fluorescent fixtures.
Robert M. McSherry, MAI
Amenities to be contained within the assisted care portion of the building
include a full service kitchen, dining room, activities area, whirlpool
area, staff laundry, TV rooms, offices and other required amenities as
well as an apartment for the resident managing couple.
As previously noted, the total gross area contained within this portion
of the subject property is 22,217 square feet. Within this total, 21
assisted living units, 4 efficiency assisted units, the manager's apartment
and remaining common areas will be contained. Parking will be poured
concrete and located at strategic locations around the site and will be
adequate to fulfill the requirements of both the tenants and staff.
Landscaping will be extensive and utilized in conjunction with the natural
topography of the area should be most pleasing.
Each assisted living unit will include a toilet, lavatory and tub/shower
unit, through wall air conditioning unit with heat strip, drop-in over/range
unit with vent hood as well as adequate closet and cabinet space.
A complete set of working drawings will be provided the appraiser as
a condition of this appraisal to ascertain the assumptions utilized within
this report have been fulfilled. A final inspection by the appraiser
will be required.
As noted, the subject is proposed construction and this appraisal is
conditioned upon the completion utilizing quality materials and workmanship
with a final inspection by the appraiser required to ascertain the preliminary
plans and specifications provided this appraiser were correct.
Robert M. McSherry, MAI
HIGHEST AND BEST USE
Introduction
The Appraisal Institute defined highest and best use as follows, "that
legal use, at the time of the appraisal, which is the most profitable
likely use to which a property can be put."
There are several basic factors which must be considered in order to
make a proper determination of Highest and Best Use:
1. The use must be legal, that is, legally adaptable regarding zoning
and other restrictions;
2. The use must be probable, not conjectural or speculative;
3. The property must be physically adaptable to use contemplated;
4. There must be a demand for such use;
5. The use must be profitable, the highest return to the land over the
longest period of time.
Highest and best use of the land (or site) if vacant and available for
use may be different from the highest and best use of the improved property.
This is true if the improvement is not an appropriate use, but it makes
a contribution to the total property value in excess of the value of the
site.
The above five tests have been applied to the subject property's vacant
site. In arriving at the estimate of highest and best use, the subject
site has been carefully analyzed.
Robert M. McSherry, MAI
HIGHEST AND BEST USE ASSUMING A VACANT SITE
Permissible Use
An investigation has been conducted in order to determine the zoning
classification that encumbers the subject property. The results of this
investigation has revealed that the subject site is not affected by City
or Parish zoning with land uses controlled by deed restrictions or other
restrictive covenants. The lack of zoning allows a large number of
permissible uses to be considered for the subject property but it's location
within a primarily residential area, the access provided by a dual-laned
municipal traffic artery and other factors indicate the proposed utilization
as an assisted care facility to be one of the better if not the best
permissible uses of the site and would be a legal, conforming, permissible
use.
Possible Use
Inspection of the subject property's neighborhood has been made to determine
any physical limitations that might be present. The result of this inspection
has revealed the neighborhood is developed with mix of property types.
The lack of zoning which is currently applicable to the subject property
does allow for an assisted care facility to be constructed on the site
as well as other types of multi-family construction. This lack of zoning
classification will allow the property to be developed as proposed within
this appraisal report and this is considered the most likely probable
use to which the subject property could be put.
In the final analysis, the proposed utilization of the subject property
is considered to constitute one of it's Highest and Best Uses.
Robert M. McSherry, MAI
THE APPRAISAL PROCESS
The real estate appraisal profession typically utilizes three basic approaches
in the process of estimating the value of a parcel of real property.
These approaches include the Cost Approach, the Income Approach and the
Market Data Approach. The Cost Approach utilizes an estimate of reproduction
or replacement costs new of the building and other on-site improvements
to be contained within the subject property less accrued depreciation
from all sources including physical curable and incurable deterioration,
functional obsolescence and economic obsolescence to arrive at an estimate
of depreciated reproduction or replacement costs for the improvements.
The estimated value of the site, as if vacant, and determined by the
comparison of the subject site with other similar parcels in either the
immediate proximity of the subject or in other comparable areas is added
to the depreciated reproduction or replacement cost estimate of the
improvements to provide an indication of value of the property being
appraised from the Cost Approach.
The Cost Approach is generally accorded the greatest credence in instances
where the property being appraised is either a proposed property or a
new property having little or no accrued depreciation or instances where
the property being appraised represents a special purpose type property.
In these instances, the Cost Approach is an accurate indication of value
for the property and is accorded considerable credence in the reconciliation
process.
The Income Approach to Value utilizes an estimate of gross annual income
to be generated by the property being appraised as determined to be
representative of
Robert M. McSherry, MAI
economic rentals for this type property within the area less an allowance
considered typical for vacancy and collection losses to arrive at an estimate
of effective gross annual income which is to be generated by the property.
Expenses typically associated with the operation of this type property
in accordance with prevailing lease terms and conditions in the area as
well as data provided by analysis of the operating history of other similar
type properties are projected and deducted from the effective gross annual
income to arrive at an estimate of net operating income before recapture
attributable to the subject. This net operating income is then capitalized
by the most appropriate method available with respect to the subject property
in particular and the appraisal problem in general into an indication
of value for the property being appraised from the Income Approach. Another
method of utilizing the Income Approach is the Gross Income Multiplier
technique. This technique identifies the relationship between the sales
price (value) of a property and its gross annual income earning potential.
The Gross Income Multiplier is derived by dividing the sales price of
a property by its gross potential income and, thus, is an excellent indicator
of buyer, seller and investor attitudes toward the property being analyzed.
An effective gross income multiplier is also excellent as it utilizes
the actual gross income after vacancy to derive the multiplier. use depends
upon available data.
The Market Data or Direct Sales Comparison Approach utilize sales of
comparable improved properties in either the immediate proximity of the
subject or in other comparable areas to derive a unit of comparison.
Each of the various comparable sales are carefully reviewed and analyzed
by the appraiser, adjusted for any dissimilarities between the subject
property and the comparable
Robert M. McSherry, MAI
sale in such areas as date of sale, location, design, condition, and
other physical characteristics to result in an adjusted unit of comparison
to be utilized in the Market Data or Direct Sales Comparison Approach
to provide an indication of value for the property being appraised.
The reconciliation is the method whereby all data provided by the various
approaches utilized in the appraisal report are carefully analyzed and
accorded weight in varying degrees. The approach which is considered
to be the most representative of current buyer, seller and investor attitudes
towards the subject property is accorded the greatest credence in the
final analysis but all the approaches are interrelated and all data gathered
and utilized in the various approaches must be carefully analyzed in the
reconciliation process and to ignore any available data would be improper.
Robert M. McSherry, MAI
COST APPROACH TO VALUE
The Cost Approach to Value, like the Sales Comparison and Income Approaches,
is based on comparison. in the Cost Approach, the cost to construct a
building and the value of any existing building are compared. The Cost
Approach to Value reflects market thinking in the recognition that market
participants relate value to cost. Buyers tend to judge the value of
an existing structure by comparing it to the value of a newly constructed
building with optimal functional utility. Moreover, buyers adjust the
prices they are willing to buy by estimating the cost to bring an existing
structure to desired levels of functional utility.
Thus, by applying the Cost Approach, an appraiser attempts to estimate
the difference in worth to a buyer between the property being appraised
and a newly constructed building with optimal utility. An appraiser makes
a sound value estimate by estimating the cost to construct a reproduction
of or a replacement of the existing structure and then deducts all evidence
of accrued depreciation in the property being appraised from the cost
of the reproduction or replacement structure and the resulting figure,
plus the value of the land, plus any entrepreneurial profit provides a
value indication through the application of the Cost Approach.
The decision to utilize reproduction or replacement costs is most pertinent
and the selection plays and important part in contributing to the validity
of the Cost Approach. Replacement cost is defined in Real Estate Appraisal
Terminology as being, "the cost of construction at current prices of a
building having utility
Robert M. McSherry, MAI
equivalent to the building being appraised but built with modern materials
and according to the current standards, design and layout. The use of
the replacement cost concept presumably eliminates all functional
obsolescence and the only depreciation to be measured is physical
deterioration and economic obsolescence." The appraisers will utilize the
replacement cost method supported by Marshall Valuation Service in
conjunction with the construction cost estimate provided by knowledgeable
contractors/engineers or architects
DEPRECIATION
All types of accrued depreciation affecting the subject improvements
were considered Accrued depreciation is defined as, "the difference between
reproduction cost new as of the date of the appraisal and the present
contributory value of the improvements." Accrued depreciation is divided
into three basic categories: physical deterioration (which includes curable
and incurable), functional obsolescence (including curable and incurable),
and economic obsolescence(which is always incurable). The following is a
discussion of each type of depreciation and the observed depreciation
applicable to the subject property.
Physical Deterioration, Curable
This type of depreciation is defined as, "the loss in value from cost
new which can be recovered or offset through correction, repair, or
replacement of the defective items causing the loss, providing the resultant
value approximates the cost of the work." The property is proposed thus no
deferred maintenance is present.
Robert M. McSherry, MAI
Physical Deterioration, Incurable
This type of depreciation is defined as, "the loss from cost new which
is impossible to offset or which would involve an expenditure substantially
in excess of the value increase resulting therefrom." The property is
proposed and has an effective are of 0 years and a total economic life
of 30 years.
Functional Obsolescence
Functional obsolescence is defined as, "the loss from cost new as of
the date of the appraisal which is caused by a superadequacy, inadequacy,
unattractive style, poor or inefficient layout or design." Items causing
functional obsolescence can be either curable or incurable; it is curable
only when it is profitable to cure the item. Incurable, functional
obsolescence involves items of initiate which would not be economical to
correct because the value would not increase so much as the cost of
correction. Based on my inspection of the subject improvements, it is my
opinion that they are totally adequate and comparable to similar properties
in the same general price range, therefore, no loss of value from functional
obsolescence exists.
Economic Obsolescence
This type of depreciation is defined as, "the loss from cost new as of
the date of the appraisal due to causes external to the property boundaries."
To measure this type of obsolescence the appraiser capitalizes the rent
lost due to the external factor for the prorata share applicable to the
building. As indicated in
Robert M. McSherry, MAI
the site date, there are no undesirable external influences and, thus,
there is no loss to the subject improvements due to economic obsolescence.
Entrepreneurial Profit
For the Cost Approach to provide a sound indication of value, a market
derived entrepreneurial profit must be added to the direct and indirect
costs. The profit figure is typically expressed as a percentage of total
direct and indirect costs. Entrepreneurial profit is a necessary element
in the motivation to construct the improvements. However, part or all
of the profit may be lost as functional or external obsolescence if the
market indicates that the improvements have a Market Value less than the
current reproduction or replacement cost less physical deterioration.
The results of the investigation and analysis of this market data will
appear as follows:
Robert M. McSherry, MAI
COMPARABLE LAND SALE 1
Date of Sale: September 4, 1998
Vendor: John Kaffenberger
Vendee: Sibley Century Development, LLC
Size: 9.1 Acres
Consideration: $80,000.00
Location: East side of Holt Street, Bastrop,
Louisiana
Indicated Price/Acre: $8,791.00 per Acre
Brief Legal Description: Tract or parcel of land located in the
southeast quarter of the northeast
quarter of Section 30, T21N-R6E,
Morehouse Parish, Louisiana.
Financing: Cash
Condition of Sale: Market
Site Utilities: Public
Terrain: Gently Sloping
Access: Public Asphalt Road
Highest and Best Use: Commercial or Multi-Family
Comments: Of this total acreage only approximately
7 acres are considered useable land.
Comfirmation: John Sibley
Robert M. McSherry, MAI
COMPARABLE LAND SALE 2
Date of Sale: June 21, 1995
Recordation: Conveyance Book 487, Page 713,
Morehouse Parish, Louisiana
Vendor: John S. Cereen, et al
Vendee: Douglas Jones
Size: 9.37 Acres
Consideration: $55,000.00
Location: 6197 Mer Rouge Road, Bastrop,
Louisiana
Indicated Price/Acre: $5,870.00 per Acre
Brief Legal Description: A certain 9.37 acre tract of land in the
southwest quarter of Section 28,
T21N-R6E, Morehouse Parish,
Louisiana.
Financing: Cash
Condition of Sale: Market
Site Utilities: Public
Terrain: Level
Access: Public Road
Highest and Best Use: Commercial
Confirmation: John Sibley
Robert M. McSherry, MAI
COMPARABLE LAND SALE 3
Date of Sale: March 17, 1997
Vendor: Sandra Lockwood
Vendee: Northwood Apartment, LLC
Size: 4.688 Acres
Consideration: $60,000.00
Location: 1801 North Washington Street, Bastrop,
Louisiana
Indicated Price/Acre: $12,799.00 per Acre
Brief Legal Description: Tract or parcel of land located in the
southeast quarter of the northwest
quarter of Section 24, T21N-R5E,
Morehouse Parish, Louisiana.
Financing: Cash
Condition of Sale: Market
Site Utilities: Public
Terrain: Slightly Rolling
Access: Public Road
Highest and Best Use: Commercial
Confirmation: John Sibley
Robert M. McSherry, MAI
COMPARABLE LAND SALE 4
Date of Sale: June 19, 1996
Recordation: Document No. 140922
Vendor: Woodrow Wilson, et al
Vendee: Benny Evans, et al
Size: 6.484 Acres
Consideration: $100,000.00
Location: Southeast corner of US Hwy 425
(Crossett Road) and McCreight Street,
Bastrop, Louisiana
Indicated Price/Acre: $15,422.58 per Acre
Brief Legal Description: Tract situated in the southwest quarter
of the southwest quarter of Section 18,
T21N-R6E, Morehouse Parish,
Louisiana.
Financing: Cash
Condition of Sale: Market
Site Utilities: Public
Terrain: Slightly Sloping
Access: Public Highway
Highest and Best Use: Commercial or Light Industrial
Confirmation: John Sibley
Robert M. McSherry, MAI
COMPARABLE LAND SALE 5
Date of Sale: July 6, 1994
Recordation: Conveyance Book 479, Page 667,
Morehosue Parish, Louisiana
Vendor: Kathrine Buford, et al
Vendee: Larry Greenwood, et al
Size: 3.3 Acres
Consideration: $50,000.00
Location: McCreight Street at Todd Street,
Bastrop, Louisiana
Indicated Price/Acre: $15,052.00 per Acre
Brief Legal Description: Tract on the northeast quarter of the
northeast quarter of Section 25,
T21N-R6E, Morehouse Parish,
Louisiana.
Financing: Cash
Condition of Sale: Market
Type Utilities: Public
Terrain: Level to Gently Rolling
Access: Public Road
Highest and Best Use: Multi-Family
Confirmation: John Sibley
Robert M. McSherry, MAI
[Comparable Sales Location Map Indicating Comparable Property Locations]
COMPARABLE LAND SALES SUMMARY CHART
Date Size/Usable Price/Acre Location
Sale 1 9/98 7.00 Acres $11,428.00 Holt Street
Sale 2 6/95 9.37 Acres $ 5,870.00 Mer Rouge Road
Sale 3 3/97 4.68 Acres $12,799.00 North Washington
Sale 4 6/96 6.48 Acres $15,422.00 Crossett Road
Sale 5 7/94 3.30 Acres $15,152.00 McCreight Street
Robert M. McSherry, MAI
ANALYSIS OF COMPARABLE LAND SALES
The five vacant comparable land sales contained within this appraisal
report and utilized for analysis purposes are sales of sites located either
within the corporate limits of Bastrop, Louisiana. All sites are considered
current with respect to the date of sale with the exception of Comparable
Sale 5 which occurred in July of 1994 with all sales requiring an upward
adjustment for the time differential for all sales occurring prior to
1998. The size of these sales are similar to the subject property with
the size of Sales 3 and 5 being the closest to that of the subject and
analysis of compared sales does indicate an adjustment required for the
size differential. However, location is considered important and the
locational dissimilarities between the comparable properties and the subject
site has been considered and adjusted accordingly.
Physical characteristics are also important factors in the desirability
of the vacant developmental site and the physical characteristics associated
with each of these comparable sales have been analyzed, compared to the
subject property and the proper adjustments made.
The following land sales adjustment grid has been utilized to reflect
the appraiser's opinion of the required adjustment of these comparable
sales which results in an indicated value of the subject site, as if vacant,
and in it's current condition.
Robert M. McSherry, MAI
After this adjustment grid has been carefully completed, it is our opinion
that the subject site is estimated to have a Market Value, As If Vacant
and prior to site preparation, of $15,000.00 per acre.
Therefore, the Estimated Value of the Subject Site, As If Vacant, is
thus derrived:
3.35 Acres @ $15,000.00/ Acre = $50,250.00
INDICATED VALUE OF THE SUBJECT SITE,
AS IF VACANT (R/T) $50,000.00
Robert M. McSherry, MAI
VACANT LAND SALES ADJUSTMENT CHART
Sale Number Subject 1 2
Property Rights Appraised Leased Fee Leased Fee Leased Fee
Financing Terms Cash Equivalent Cash Equivalent Cash Equivalent
Condition of Sale Arms Length Arms Length Arms Length
Sale Date Current September, 1998 June, 1995
Size-Gross Area/Acres 3.35 9.1 9.37
Effective Price/Square Foot N/A $8,791.00 $5,870.00
Market Time Current -0- +10%
Zoning -0- -0-
Size +20% +20%
Physical +25% +25%
Adjusted Price/Square Foot $12,746.00 $9,098.00
VACANT LAND SALES ADJUSTMENT CHART
Sale Number 3 4 5
Property Rights Appraised Leased Fee Leased Fee Leased Fee
Financing Terms Cash Equivalent Cash Equivalent Cash Equivalent
Condition of Sale Arms Length Arms Length Arms Length
Sale Date March, 1997 June, 1996 June, 1994
Size-Gross Area/Acres 4.6 6.4 3.3
Effective Price/Square Foot $12,799.00 $15,522.00 $15,052.00
Market Time +5% +10% +20%
Zoning -0- -0- -0-
Size -0- -0- -0-
Physical +10% -10% -20%
Adjusted Price/Square Foot $14,718.00 $15,422.00 $15,052.00
DISCUSSION OF COST APPROACH
In the construction of any project, the total cost of development can
be divided into basic categories: direct or hard cost, and indirect or
soft costs. As defined in Real Estate Appraisal Terminology, the definition
of Direct Costs is, "the cost of direct labor and materials devoted
specifically to a unit of work. In construction, these costs are directly
related to site acquisition and construction of the improvements..." Defined
in this same text, Indirect Cost is, "that cost in the development of a
property which would not be included in a general contract for construction
or for land acquisition..."
Direct costs include the cost of items such as land acquisition, construction
of the buildings, equipment and fixtures, the builder's profit and overhead,
any temporary buildings for on-the-job usage, power line installation,
and the electrical power used in the construction. As indicated in the
Cost Approach Schedule which follows, direct or hard costs have been broken
down into categories of building area, elevators and other primary building
costs.
Indirect, or soft costs, generally include fees, financing costs, and
overhead. As the Cost Approach Schedule indicates, the indirect costs fall
into 8 categories. The permits and fees sections include the estimated
costs of a building permit, an appraisal, a survey and accounting and
inspection charges. Architectural engineering estimates have been based
on typical market charges. The legal expenses includes work done on both
interim and permanent loan packages. The insurance costs indicated are
limited to construction-period coverage including the builder's risk.
Robert M. McSherry, MAI
The closing cost estimate includes costs of closing both the interim
and permanent loans. The interest expense is based on typical current
market conditions and covers the period of time required to complete the
construction of the project. The loan commitment fees are also based
on current typical market conditions.
The appraiser's have relied upon the Marshall Valuation Service, a
publication of Marshall & Swift, 1617 Beverly Boulevard, Post Office Box
26307, Los Angeles, California, in estimating the replacement costs new of
the subject property improvements.
The Cost Approach to Value, as it applies to the property being appraised,
is as follows:
Robert M. McSherry, MAI
COST APPROACH TO VALUE
Cost Source: Marshall-Swift Cost Manual and
Actual Costs Provided by Fred Bayles
Direct Costs:
Primary Structure
22,217 sq. ft. @ $59.70/sq. ft. $1,326,354.00
Total Direct Costs: Improvements $1,326,354.00
Indirect Costs:
Plans, Specifications, Inspection Included in Direct Costs
Contractor's Overhead/Profit $170,000.00
Interim Interest $ 65,250.00
Legal, Audit, Appraisal $ 60,400.00
Financing Fees - Construction $ 30,000.00
Misc. Expenses $ 50,000.00
Financing Fees - Long Term $162,500.00
Total Indirect Costs $ 538,150.00
Total Replacement Costs New: Improvements $1,864,504.00
Less: Accrued Depreciation
Physical Curable -0-
Physical Incurable -0-
Functional Obsolescence -0-
Economic Obsolescence -0-
Total Accrued Depreciation -0-
Depreciated Replacement Costs: Improvements $1,864,504.00
Add: Land Value
3.35 acres @ $15,000.00/acre $ 50,000.00
Add: Site Preparation $ 30,000.00
Add: Furniture, Fixtures and Equipment $ 75,000.00
Robert M. McSherry, MAI
Add: Parking, Walks, Landscaping, Porches $ 25,000.00
Add: Entrepreneurial Profit @ 5% $ 93,200.00
Total All Costs and Value Components $2,137,704.00
INDICATED VALUE OF SUBJECT FROM
COST APPROACH (R/T) $2,140,000.00
Note: Cost of Furniture, Fixture and Equipment based on costs association
with actual costs experienced by Southside Garden Assisted Care
Facility and Arbor House of West Monroe, Louisiana.
Robert M. McSherry, MAI
MARKET DATA APPROACH TO VALUE
Market data is discussed in all the approaches to value. Data analysis
is needed in the Cost Approach to develop a land value indication and
to support costs and depreciation indicators; in the Income Approach to
establish rent levels, vacancy indications, expenses, and capitalization
rates; and in the Direct Sales Comparison Approach to establish comparability.
The appraiser has carefully perused the Louisiana market with respect
to sales of properties considered similar to the subject property and
none were found. However, available data from other appraisers has revealed
the sale of three similar type properties in other areas of the United
States and these are included merely for analysis purposes as follows:
Robert M. McSherry, MAI
IMPROVED PROPERTY SALE 1
VENDOR: American Retirement, Inc.
VENDOR: Horizon Retirement, Inc.
LOCATION: 2601 Chimney Rock Road,
Hendersonville, North Carolina
RECORDATION: N/A
DATE: February, 1993
CONSIDERATION: $6,480,000.00
TERMS: $2,224,000.00 cash, assumption of a
mortgage balance of $4,316,000.00.
terms are considered to be cash
equivalent.
SITE SIZE: N/A
IMPROVEMENTS: This is a 110 unit senior living
community constructed in 1988. The
units are housed in a three-story
building of wood frame construction.
Construction quality is considered to be
average; condition at the time of sale
was good. The gross building area is
approximately 96,058 square feet with
an average unit size of 873 square feet.
ESTIMATED GROSS INCOME: $1,706,255.00
ESTIMATED EXPENSE RATIO: Approximately 56 percent
NET OPERATING INCOME: Approximately $751,844.00
UNIT INDICATORS: SP/Unit = $58,909.00
SP/SF = $67.46
SP/GI = 3.80 GIM
NOI/SP = 0.1160 OAR
Robert M. McSherry, MAI
IMPROVED PROPERTY SALE 2
VENDOR: American Retirement, Inc.
VENDOR: Emeritus Corporation
LOCATION: 2601 Chimney Rock Road,
Hendersonville, North Carolina
RECORDATION: N/A
DATE: September, 1995
CONSIDERATION: $9,483,523.00
TERMS: Cash
SITE SIZE: N/A
IMPROVEMENTS: This is a 110 unit senior living
community constructed in 1988. The
units are housed in a three-story
building of wood frame construction.
Construction quality is considered to be
average; condition at the time of sale
was good. The gross building area is
approximately 96,058 square feet with
an average unit size of 873 square feet.
ESTIMATED GROSS INCOME: Approximately $2,175,000.00
ESTIMATED EXPENSE RATIO: Approximately 56 percent
NET OPERATING INCOME: Approximately $957,000.00
UNIT INDICATORS: SP/Unit = $86,214.00
SP/SF = $98.73
SP/GI = 4.36 GIM
NOI/SP = 0.1009 OAR
Robert M. McSherry, MAI
SUMMARY
Sale One Sale Two Sale Three
Indicated OAR 11.6% 10.09% 9.96%
Price/Unit $58,909.00 $86,214.00 $56,757.00
Gross Income Multiplier 3.80 4.36 3.01
Estimated Expense Ratio 56% 56% 70%
The three Improved Property Sales included within this report have been
provided this appraiser by knowledgeable sources and other appraisers
and are deemed accurate as they were verified by knowledgeable and ethical
persons. The appraiser has conducted an in-depth review of conveyances
of similar type assisted living or congregate care facilities in the State
of Louisiana and none were found which were considered to be reflective
of true arms-length transactions between willing buyers and willing sellers
with no undue duress being experienced. These three Improved Property
Sales have been included for the purpose of deriving an indicated Overall
Capitalization Rate, an indicated price per unit and an indicated Gross
Income Multiplier for utilization in the analysis process with respect
primarily to the Income Approach to Value. The level of services provided
by these facilities are similar to those to be provided by the subject
property which would include three (3) meals per day, utilities, maid
service one (1) day a week, flat linen service one (1) day a week, various
assistance with respect to bathing, exercise, and transportation to various
off-site functions as well as on-site recreational functions, counseling,
with other services provided on a more extensive basis for additional
expense paid by the guest or resident of the facility. It is acknowledged
that a large number of the
Robert M. McSherry, MAI
residents residing in the assisted care facilities are requiring increased
levels of care and these additional expenses are being passed directly
to the tenant as they upset the economies of an assisted care facility
having to provide this extraordinary level of care without additional
remuneration.
The price per unit indicated by Improved Property Sale 2 is considered
the best available and has been accorded the greatest credence. Accordingly:
25 Units @ $86,000.00/Unit $2,150,000.00
INDICATED VALUE OF SUBJECT FROM
THE MARKET DATA OR DIRECT SALES
COMPARISON APPROACH (R/T) $2,150,000.00
Robert M. McSherry, MAI
INCOME APPROACH TO VALUE
Introduction
The Income Approach reflects the subject's income-producing capabilities
and requires an analysis of the project's probable market rent. In the
comparative analysis, we have considered factors that would probably influence
market acceptance of properties in the area. The factors include proximity
to major traffic arteries; location; design; amenities; and the quality
of management.
To develop a supportable estimate of value using the Income Capitalization
Approach, realistic projections of income and expenses must be made.
congregate care facilities are unique forms of real estate with many unusual
characteristics, such as an intensive use of labor, costs of goods sold,
expenses categories, and product identity. Therefore, special care in data
gathering and analysis are required to create an estimate of the future
income for the subject. The appraiser will utilize data provided by the
publication, Trends in the Health Care Industry for supporting data.
The subject property is proposed at the present time and, therefore,
has no historical income and expense data associated with the property.
The subject will contain 21 assisted care units and 4 efficiency assisted
care units all located in a single T-shaped building which will also contain
a resident manager's apartment and common areas for the operation of the
facility. The services provided the assisted living units include all
utilities, maid service, three meals a day, transportation, activities
with additional laundry and maid service
Robert M. McSherry, MAI
available at additional expense. Normal day to day medical treatments
are also available for the various tenants with any extraordinary medical
expense passed directly to the tenant.
This appraiser has had the opportunity to appraise a number of assisted
care facilities in both Louisiana and Mississippi over the last several
years and has relied on data provided by these facilities, various industry
publications and data provided by various health care consulting groups
and experts in arriving at the estimated monthly rental rates and expenses
including fixed expenses, operating expenses, staffing, dietary, reserves
and other appropriate expenses.
This appraiser has conducted rental surveys of a number of assisted care,
private pay facilities located in the Baton Rouge, Louisiana area as well
as a single facility located in West Monroe, Louisiana in order to arrive
at an estimated economic rental rate for the subject property based on
the level of services provided. The assisted care market is still a relatively
new market and the majority of the facilities have been constructed in
larger metropolitan areas such as Baton Rouge. The rental rates commanded
in these larger areas are above those which can be commanded in smaller
or more rural communities in North Louisiana and appropriate adjustments
have been made. The most comparable property is the Arbor House of West
Monroe, which was completed in December of 1997 and has experienced stabilized
occupancy with respect to the assisted care units within a six (6) month
period. These units lease for $1,725.00 per month for the basic rate
with expenses including utilities, three (3) meals a day, maid service
once a week, laundry service once a week,
Robert M. McSherry, MAI
assistance in bathing, transportation to shopping, church and other functions
as well as in-house recreational activities.
This appraiser has also recently completed an appraisal of a 33 unit
assisted care facility located in Baton Rouge, Louisiana which is very
typical with respect to the subject property. However, the monthly rate
provided by this facility is slightly higher than those in rural areas
with the base monthly rate being $1,850.00 per month. The same services
are provided including utilities, three (3) meals per day, assistance
with daily living activities including bathing, grooming, weekly bed linen
and towel service, weekly house keeping, transportation to medical and
dental appointments, worship service, planned activities as well as other
assistance required.
Based on this appraiser's personal inspection of these two facilities
and adjustment, it is our opinion that a $1,775.00 per month with services
including electricity, three (3) meals per day, maid service, transportation,
activities, assistance in the normal living activities as well as normal
day to day medical treatment being provided.
The actual income and expense data of various facilities is closely held
information and these individuals have requested confidentiality with
respect to this actual data. Accordingly, this data has been retained
in our various files.
The results of our survey and analysis indicates an economic rental rate
for the assisted care units, based on the herein listed services being
provided, of $1,775.00 per month and $1,100.00 per month for the efficiency
units with the
Robert M. McSherry, MAI
rates remaining stable over the two year projection period. The projected
rate includes the herein listed services being provided.
Inflation will impact expense projections as well as increased occupancy
and these anticipated increases have also been utilized in the Income
Approach to Value.
In order to accurately project appropriate expenses for the subject property,
the appraiser has reviewed the current publication Trends in the Health
Care Industry with respect to historical operating expenses for assisted
care facilities. In addition, this appraiser has been provided itemized
comparable expense data with respect to three separate properties located
in the State of Louisiana but, due to confidentiality requirements, the
names of these properties are retained in the appraiser's file at the
request of the property owners. However, the following summary chart
is included for the benefit of the reader of this appraisal report and
it also provides support for the expense projections for the subject property.
The Income Approach to Value as it applies to the property being appraised
based on economic rental rates herein quoted and utilizing a two year
period in order to achieve a stabilized net occupancy and thus a stabilized
net operating income is reproduced as follows:
Robert M. McSherry, MAI
ITEMIZED COMPARABLE EXPENSE DATA
Property 1 Property 2 Property 3
Administrative $249,610.00 $417,960.00 $461,530.00
Dietary $186,938.00 $251,184.00 $204,983.00
Maintenance $156,914.00 $275,424.00 $193,530.00
Housekeeping/Janitorial $ 51,340.00 $ 55,512.00 $ 52,322.00
Taxes/insurance $ 82,000.00 $110,560.00 $ 66,738.00
Utilities $ 91,328.00 $ 24,360.00 $ 65,678.00
Nursing/Other -0- $ 9,458.00 $ 10,664.00
Per Unit Expenses $ 9,522.00 $ 9,458.00 $ 10,664.00
Robert M. McSherry, MAI
INCOME APPROACH TO VALUE
Year One
Gross Annual Potential Income:
21 - Assisted Living Units @ $1,775.00/month $ 447,300.00
4 - Efficiency Units @ $1,100.00/month $ 52,800.00
Total Gross Annual Potential Income $ 500,100.00
Less: Vacancy and Collection Losses
Assisted Living Units (25%) $ 111,825.00
Total Vacancy and Collection Loss $ 111,825.00
Effective Gross Annual Potential Income $ 388,275.00
Expenses:
Administrative $53,500.00
Plant Operations $37,400.00
Dietary $45,625.00
Housekeeping $12,500.00
Aides $41,000.00
Activities $15,000.00
Reserves for Replacement $ 7,500.00
Total Expenses $ 212,525.00
Net Operating Income $ 175,750.00
Note: Management Fee included in Administrative Expense.
Robert M. McSherry, MAI
INCOME APPROACH TO VALUE
Year Two
Gross Annual Potential Income:
21 - Assisted Living Units @ $1,775.00/month $ 447,300.00
4 - Efficiency Units @ $1,100.00/month $ 52,800.00
Total Gross Annual Potential Income $ 500,100.00
Less: Vacancy and Collection Losses
Assisted Living Units (10%) $ 44,730.00
Total Vacancy and Collection Loss $ 44,730.00
Effective Gross Annual Potential Income $ 455,370.00
Expenses:
Administrative $53,500.00
Plant Operations $44,550.00
Dietary $54,200.00
Housekeeping $13,750.00
Aides $45,100.00
Activities $16,500.00
Reserves for Replacement $ 7,500.00
Total Expenses $ 235,100.00
Net Operating Income $ 220,270.00
Note: Management Fee included in Administrative Expense.
Robert M. McSherry, MAI
JUSTIFICATION OF CAPITALIZATION RATE
Direct Capitalization is a method used to convert a single year's income
estimate into a value indication in the Income Capitalization Approach.
The direct capitalization formula using an overall property capitalization
rate is:
Value / Net Operating Income = Overall Capitalization Rate
In this appraisal, the appraisers will employ two different methods to
obtain an overall capitalization rate:
1) Band of Investment - mortgage and equity components
2) Underwriter's Method (derivation from debt coverage ratio)
Band of Investment
The appraisers contacted local lenders regarding rates and terms of alternate
investments as well as current market rates applicable for this market.
Annual Constant - In developing the mortgage components for the Band
of Investment Method, the appraisers reviewed the National Mortgage Commitment
Survey conducted by the Appraisal Institute Research Department which
surveyed sample lenders in various geographical regions throughout the
United States. The data quoted is based on national averages and do not
reflect conditions inherent in all markets. Therefore, the appraisers
contacted local lenders regarding rates and terms applicable for this
market area. Lenders in the local market are quoting rates at prime plus
1%, terms of 20 years. 75% and a loan-to-value ratio. The local market
closely approximates the national averages for the subject property type.
Robert M. McSherry, MAI
The appraisers reviewed available data concerning current national and
local quoted mortgage rates and talked to various lenders in the Louisiana
area which confirm that market rates and terms for loans of the quality
of the subject property are available at 9% interest rate with monthly
payments amortized for a 20 year term, a 75% loan-to-value ratio. Therefore,
the mortgage constant is derived to be .1079671.
Equity Dividend - Current rates of return available from alternative
investment vehicles are reviewed. These alternative investments are more
liquid than an investment in real estate; therefore any potential investor
would expect a higher rate of return. Based on this, we have been able
to conclude that a 9% equity dividend rate is required to attract investment
capital to the subject property's type which is considered to be slightly
more risky than other types of real estate investments.
In order to ascertain the appropriate equity dividend or "cash-on-cash"
rate, the appraiser has reviewed money rates for other alternate investments
as of September 8, 1998. The results of this analysis of comparable and
alternative money rates are as follows:
Certificates of Deposit 30 Day 4.68%
90 Day 4.96%
180 Day 5.04%
Treasury Bill Rates 3 Months 4.79%
6 Months 4.79%
52 Weeks 5.00%
30 Year Treasury Bond Rate 5.36%
Merrill-Lynch Ready Assets 30 Day 5.03% (Average Yield)
Robert M. McSherry, MAI
As can be reflected by the above alternate investment vehicles. Current
rates for both short and long term yields is between the high 4.00% to
the low 5.00% range. The projected 9.00% equity yield or "cash-on-cash"
return projected for the subject property provides an excellent return
on the investor's cash, approximately 3.00% in excess of other alternate
investment vehicles. Accordingly, the 9.00% equity dividend rate is
considered appropriate when the overall risk and competitive rates are
considered.
Derivation of Capitalization Rate - The band of investment (or weighted
average) formula for deriving an overall rate when the mortgage constant
and equity dividend rates is known as:
Mortgage Percent x Mortgage Constant
Plus
Equity Percent x Equity Dividend Rate
Equals
Overall Capitalization Rate
.75 x .1079671 = .0809
.25 x .09 = .0225
Total = .10340
Rounded to .103
Underwriter's Method
In making loan decisions, institutional lenders use a debt coverage ratio
(DCR), which is the ratio of net operating income to annual debt service.
This measure of constraint is frequently used by institutional lenders,
who are general fiduciaries. They manage and lend the money of others,
including depositors and policy holders. Because of the fiduciary
responsibility, institutional lenders
Robert M. McSherry, MAI
are particularly sensitive to the safety and profit and are anxious to
avoid default and possible foreclosure. Consequently, when they underwrite
income property loans, institutional lenders try to provide a cushion
so that the borrower will be able to meet the debt service obligations
on the loan even if the building income declines.
The debt coverage ratio may also be used to estimate the overall
capitalization rate by multiplying the ratio by the mortgage loan constant
(RM) and the loan-to-value ratio (M). The debt coverage ratio, mortgage loan
constant, and loan-to-value ratio have already been determined to be 1.20,
.1079671 and .75, respectfully. The formula for derivation of an overall
capitalization rate from debt coverage ratio is as follows:
RO = DCR x RM x M
RO = 1.20 X .1079671 X .75
RO = .0971
R/T = .097
Review of the three (3) improved property sales contained within this
report have indicated an Overall Capitalization Rate from a low of 9.96%
to a high of 11.6%. These indicated Overall Capitalization Rates which
have been derived from available market data indicates the rate chosen
for the capitalization of the net income into an indication of value based
upon stabilized income of 10.5% is reflective of current industry attitudes
and is considered appropriate with respect to this particular appraisal
assignment.
Robert M. McSherry, MAI
Conclusion
Based on the available information we have concluded that a 10.5% is
the most appropriate capitalization rate which is derived from the actual
band of investments method and supported by the Underwriter's Method and
available market data. The location of the subject has also been considered.
Thus:
NET OPERATING INCOME
-------------------- = VALUE
OVERALL CAPITALIZATION RATE
$220,270.00
-------------------- = $2,097,809.00
.105
INDICATED VALUE OF SUBJECT FROM
INCOME APPROACH (R/T) $2,100,000.00
Robert M. McSherry, MAI
DISCOUNTED CASH FLOW ANALYSIS
The subject property will require a period in excess of one year to achieve
stabilized net income. In order to provide an estimate of the present
value of the improvements upon completion but prior to achieving stabilized
net operating income, the discounting process is utilized.
The income stream generated by the subject until stabilized income is
reached is discounted into an estimate of present value and the reversionary
value of the improvements as estimated upon achieving a stabilized net
income is also discounted to present worth. The market indicates a discount
rate of 11 % to be appropriate to be utilized in discounting the income
and reversion and this is based on current rates of return on alternate
investments and the risk associated with the subject.
Robert M. McSherry, MAI
Present Worth of Income Stream
Year One: $175,750.00 x .900901 = $ 158,333.00
Year Two: $220,270.00 x .811622 = $ 178,775.00
Total Present Value of Income Stream $ 337,108.00
Present Worth of Reversion
$2,100,000.00 x .811622 $1,704,406.00
Summation:
Present Worth of Income Stream $ 337,108.00
Present Worth/Reversion $1,704,406.00
Total $2,041,514.00
INDICATED VALUE OF SUBJECT FROM
INCOME APPROACH/DISCOUNTED
CASH FLOW $2,040,000.00
Robert M. McSherry, MAI
RECONCILIATION AND FINAL VALUE
The three approaches to value have indicated the following value estimates
of the property being appraised:
COST APPROACH TO VALUE $2,140,000.00
MARKET APPROACH TO VALUE $2,150,000.00
INCOME APPROACH TO VALUE
OVERALL CAPITALIZATION RATE $2,100,000.00
DISCOUNTED CASH FLOW
ANALYSIS $2,040,000.00
The subject property is proposed construction and only preliminary plans
and specifications have been provided this appraiser in order to complete
the Cost Approach to Value. Costs are extremely difficult to estimate
and no two competent contractors will ever agree on the actual cost to
construct a property. However, this appraiser has utilized reliable sources
including the Marshall Valuation Service Cost Manual as well as actual
construction costs affecting a similar type property in order to complete
the Cost Approach to Value and this approach is considered reflective
of the cost new of the subject property.
The subject property is considered an income producing and has been valued
based on it being a Going Concern. The property is under competent ownership
and will have excellent management in place and the utilization of the
Going Concern concept is considered appropriate with respect to this
particular appraisal problem. Accordingly, the Indicated Value of the
Property based on stabilized net income being generated at the end of the
second year is
Robert M. McSherry, MAI
considered the best available indicator of it's current Market Value
and has been accorded the greatest credence in the final analysis.
Based on the data contained within this report, other in-file data, and
this appraiser's review and analysis of said data, it is our opinion that
the proposed property identified as the 21 Unit Assisted Care and 4 Unit
Efficiency Assisted Care Facility all located on Germantown Road within
the corporate limits of Minden, Webster Parish, Louisiana was estimated
to have a Market Value, as of September 8, 1998, but subject to completion
according to plans and specifications utilizing quality materials and
workmanship throughout and also subject to the other conditions contained
within this report, and based upon Stabilized Net Operating Income, of:
TWO MILLION ONE HUNDRED THOUSAND DOLLARS
($2,100,000.00)
Allocated:
Land $ 50,000.00
Improvements: $1,975,000.00
Furniture, Fixtures and Equipment $ 75,000.00
Goodwill of Going Concern -0-
The estimated "as is" value is estimated to be, as of September 20, 1998
and subject to completion within a reasonable period of time, is:
TWO MILLION FORTY THOUSAND DOLLARS
($2,040,000.00)
Robert M. McSherry, MAI
ADDENDA
Robert M. McSherry, MAI
APPRAISER'S CERTIFICATION
I certify that, to the best of my knowledge and belief....
(1) The statements of fact contained in this report are true and correct.
(2) The reported analyses, opinions, and conclusions are limited only
by the report assumptions and limiting conditions, and are my personal,
unbiased professional analyses, opinion and conclusions.
(3) I have no present or prospective interest in the property that is
the subject of this report, and I have no personal interest or bias with
respect to the parties involved.
(4) My compensation is not contingent upon the reporting of a predetermined
value or direction in value that favors the cause of the client, the
amount of the value estimate, the attainment of a stipulated result, or
the occurrence of a subsequent event.
(5) My analyses, opinions, and conclusions were developed, and this report
has been prepared, in conformity with the Uniform Standards of
Professional Appraisal Practice.
(6) I have made a personal inspection of the property that is the subject
of this report and all rent comparables.
(7) No one provided significant professional assistance to the person
signing this report.
(8) The reported analyses, opinions, and conclusions were developed,
and this report has been prepared, in conformity with the requirements
of the Code of Professional Ethics and the Standards of Professional
Practice of the American Institute of Real Estate Appraisers.
(9) The use of this report is subject to the requirements of the Appraisal
Institute relating to review by its duly authorized representatives.
(10) I am not currently certified under the voluntary continuing education
program of the American Institute of Real Estate Appraisers.
Robert M. McSherry, MAI
(11) I certify that the use of this report is subject to the requirements
of the Appraisal Institute relating to review by its duly authorized
representatives.
Estimated Market Value: /S/ROBERT M MCSHERRY
$2,100,000.00 ------------------------
Robert M, McSherry, MAI
LA State Certified General Real Estate
Appraiser No. G0891
Allocated:
Land $ 50,000.00
Improvements $1,975,000.00
Furniture, Fixtures and
Equipment $ 75,000.00
Goodwill of Going
Concern -0-
As Of: September 2O, l998
Robert M. McSherry, MAI
QUALIFICATIONS OF ROBERT M. MC SHERRY, MAI
EDUCATIONAL BACKGROUND AND TRAINING:
Graduate of Louisiana State University, Baton Rouge, Louisiana, Bachelor
of Science Degree in Business Administration with a Major in Finance.
Real Estate Appraisal Course 1-A, Basic Fundamentals, Methods and
Techniques, 1974, AIREA
Real Estate Appraisal Course 1-B, Capitalization, 1975, AIREA
Real Estate Appraisal Course VIII, Single-Family Residential Appraisal,
1974, AIREA
Real Estate Appraisal Course II, Techniques and Application, 1976 and
1980, AIREA
Real Estate Appraisal Course III, Rural Properties, 1979
Real Estate Appraisal "Industrial Valuation" Course, 1984
Seminar: R-41C - New Orleans, Louisiana, AIREA, 1978
"Standards of Professional Practice" Course, AIREA, 1987
"Capitalization Theory and Techniques, Part A" Course, AIREA, 1987
"Standards of Professional Practice" Course, Appraisal Institute, 1992
"Advanced Level Finance I & II", 1997
"Risk Management/Ethics/Fair Housing", 1997
"How to Value Louisiana Timberland", 1997
"Uniform Standards of Professional Appraisal Practice" Seminar, 1997
PROFESSIONAL EXPERIENCE
Real Estate Broker, State of Louisiana (1971)
Monroe Redevelopment Agency, Monroe, Louisiana (1971)
Robert M. McSherry, MAI
Ford, Bacon & Drive Construction and Engineering Company, Monroe,
Louisiana (1972)
Mississippi power and Light Company, Jackson, Mississippi (1973-1976)
Cameron-Brown South, Inc., Mortgage Bankers, Baton Rouge, Louisiana
(1976-1977)
Real Estate Appraiser, Monroe, Louisiana (1978-1985)
Real Estate Appraiser, Baton Rouge, Louisiana and Jackson, Mississippi
(1985-Present)
PROFESSIONAL MEMBERSHIPS:
Residential Member, American Institute of Real Estate Appraisers,
Certification Number 1040
Licensed Real Estate Broker, State of Louisiana
Fee Inspector for the Louisiana Homeowners Warranty Corporation
FNMA Approved Level III Appraiser, Number 1027135
Member, American Institute of Real Estate Appraisers - MAI Designation
(1981), Number 6291
Certified Licensed General Appraiser, State of Louisiana, Number 0891
Robert M. McSherry, MAI
PHOTOGRAPHS
Robert M. McSherry, MAI
[PHOTOGRAPH VIEW LOOKING EAST DOWN COOPER LAKE ROAD]
[PHOTOGRAPH VIEW LOOKING WEST DOWN COOPER LAKE ROAD]
[PHOTOGRAPH OF SUBJECT PROPERTY]
[PHOTOGRAPH OF SUBJECT PROPERTY]
[PHOTOGRAPH OF SUBJECT PROPERTY]
Floor Plans
[FLOOR PLAN OF THE BASTROP FACILTY]