-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OuByu6oBt7LjteMjtrqW5ZtzReM1yCWOJaISvGAZQEy/2t9KGCVffRL4Y5Yf/pZM RXoXrD1JXKoZccT/nZfMow== 0000950134-05-013057.txt : 20060919 0000950134-05-013057.hdr.sgml : 20060919 20050708151105 ACCESSION NUMBER: 0000950134-05-013057 CONFORMED SUBMISSION TYPE: SC TO-T/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20050708 DATE AS OF CHANGE: 20060123 GROUP MEMBERS: AIMCO-GP INC GROUP MEMBERS: APARTMENT INVESTMENT AND MANAGEMENT CO GROUP MEMBERS: FOX CAPITAL MANAGEMENT CORP GROUP MEMBERS: FOX PARTNERS II SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY PROPERTIES FUND XIX CENTRAL INDEX KEY: 0000705752 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942887133 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-T/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-43357 FILM NUMBER: 05945677 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8642391000 MAIL ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY PROPERTIES FUND XIX CENTRAL INDEX KEY: 0000705752 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942887133 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E3/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-43357 FILM NUMBER: 05945676 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8642391000 MAIL ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: AIMCO PROPERTIES LP CENTRAL INDEX KEY: 0000926660 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 841275621 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-T/A BUSINESS ADDRESS: STREET 1: 4582 S ULSTER ST PARKWAY STREET 2: SUITE 1100 CITY: DENVER STATE: CO ZIP: 80237 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: 4582 S ULSTER ST PARKWAY STREET 2: SUITE 1100 CITY: DENVER STATE: CO ZIP: 80237 SC TO-T/A 1 d18178a7sctovtza.txt AMENDMENT NO. 7 TO SC TO-TENDER OFFER SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 SCHEDULE TO/A (AMENDMENT NO. 7) TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 Century Properties Fund XIX - -------------------------------------------------------------------------------- (Name of Subject Company (Issuer)) AIMCO Properties, L.P. Apartment Investment and Management Company AIMCO-GP, Inc. Fox Partners II Fox Capital Management Corporation - -------------------------------------------------------------------------------- (Names of Filing Persons (Offerors)) Limited Partnership Units - -------------------------------------------------------------------------------- (Title of Class of Securities) None - -------------------------------------------------------------------------------- (CUSIP Number of Class of Securities) Martha L. Long Apartment Investment and Management Company 55 Beattie Place PO Box 1089 Greenville, South Carolina 29602 (864) 239-1000 - -------------------------------------------------------------------------------- (Name, address, and telephone numbers of person authorized to receive notices and communications on behalf of filing persons) Copy to: Joseph A. Coco Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 (212) 735-3000 and Jonathan L. Friedman Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue Los Angeles, California 90071 (213) 687-5000 Calculation of Filing Fee TRANSACTION VALUATION* AMOUNT OF FILING FEE ---------------------- -------------------- $10,668,102 $1,255.64 * For purposes of calculating the fee only. This amount assumes the purchase of 35,560.34 units of limited partnership interest of the subject partnership for $300.00 per unit. The amount of the filing fee, calculated in accordance with Section 14(g)(1)(B)(3) and Rule 0-11(d) under the Securities Exchange Act of 1934, as amended, equals $117.70 per million of the aggregate amount of cash offered by the bidder. [X] Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: $1,255.64 Filing Party: AIMCO Properties, L.P. Form or Registration No.: Schedule TO/13E-3 Date Filed: February 16, 2005 [ ] Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. Check the appropriate boxes below to designate any transactions to which the statement relates: [X] third-party tender offer subject to Rule 14d-1 [ ] issuer tender offer subject to Rule 13e-4 [X] going-private transaction subject to Rule 13e-3 [ ] amendment to Schedule 13D under Rule 13d-2 Check the following box if the filing is a final amendment reporting the results of the tender offer: [ ] 2 AMENDMENT NO. 7 TO SCHEDULE TO This Amendment No. 7 amends and supplements the Tender Offer Statement and Rule 13e-3 Transaction Statement on Schedule TO initially filed on February 16, 2005, as amended by Amendment No. 1 thereto filed on March 15, 2005, Amendment No. 2 filed on March 28, 2005, Amendment No. 3 filed on April 27, 2005, Amendment No. 4 filed on May 31, 2005, Amendment No. 5 filed on June 7, 2005, and Amendment No. 6 filed on June 28, 2005 (as amended, the "Schedule TO"). This Amendment No. 7 relates to the offer by AIMCO Properties, L.P., a Delaware limited partnership, to purchase units of limited partnership interest ("Units") of Century Properties Fund XIX, a California limited partnership (the "Partnership"), at a price of $300.00 per unit in cash, subject to the conditions set forth in the Amended and Restated Offer to Purchase dated June 6, 2005 (as amended or supplemented from time to time, the "Offer to Purchase") and in the related Amended and Restated Letter of Transmittal (as amended or supplemented from time to time, the "Letter of Transmittal" and, together with the Offer to Purchase, the "Offer"). The item numbers and responses thereto below are in accordance with the requirements of Schedule TO. Unless defined herein, capitalized terms used and not otherwise defined herein have the respective meanings ascribed to such terms in the Offer to Purchase. On July 8, 2005, AIMCO Properties, L.P. mailed a supplement (the "Supplement") to the holders of Units of the Partnership to supplement and amend the Offer and issued a press release announcing the extension of the expiration date of the Offer from midnight, New York City time, on July 12, 2005, to midnight, New York City time, on July 15, 2005. Copies of the Supplement and press release have been filed as Exhibits (a)(21) and (a)(22), respectively, to this Amendment No. 7. ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS. (c)(2)-(3) The information set forth in the Supplement under "Valuation of Units - Misty Woods Apartments," "-- Greenspoint Apartments," "-- Sands Point Apartments" and "Balloon Payments on Mortgage Debt" is incorporated herein by reference. ITEM 11. ADDITIONAL INFORMATION. (b) The information set forth in the Supplement is incorporated herein by reference. ITEM 12. EXHIBITS. Item 12 of the Schedule TO is amended and supplemented as follows: (a)(21) Supplement to Amended and Restated Offer to Purchase, dated July 8, 2005. (a)(22) Press Release, dated July 8, 2005. (c)(11) Appraisal of Greenspoint Apartments by CB Richard Ellis (c)(12) Appraisal of Sands Point Apartments by CB Richard Ellis ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3. ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS. (c) The information set forth in the Supplement under "Valuation of Units - Misty Woods Apartments" is incorporated herein by reference. ITEM 8. FAIRNESS OF THE TRANSACTION. (a)-(b) The information set forth in the Supplement under "Valuation of Units" and "Position of the General Partner of Your Partnership With Respect to the Offer" is incorporated herein by reference. ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS. (a)-(c) The information set forth in the Supplement under "Position of the General Partner of Your Partnership With Respect to the Offer" and "Third-Party Appraisals" is incorporated herein by reference. ITEM 12. THE SOLICITATION OR RECOMMENDATION. (e) The information set forth in the Supplement under "Position of the General Partner of Your Partnership With Respect to the Offer" is incorporated herein by reference. ITEM 15. ADDITIONAL INFORMATION. (b) The information set forth in the Supplement is incorporated herein by reference. 3 SIGNATURE After due inquiry and to the best of its knowledge and belief, the undersigned hereby certify that the information set forth in this statement is true, complete and correct. Date: July 8, 2005 AIMCO PROPERTIES, L.P. By: AIMCO-GP, INC. Its General Partner By: /s/ Martha L. Long ------------------------------ Martha L. Long Senior Vice President APARTMENT INVESTMENT AND MANAGEMENT COMPANY By: /s/ Martha L. Long ------------------------------ Martha L. Long Senior Vice President AIMCO-GP, INC. By: /s/ Martha L. Long ------------------------------ Martha L. Long Senior Vice President FOX PARTNERS II By: FOX CAPITAL MANAGEMENT CORPORATION Its General Partner By: /s/ Martha L. Long ------------------------------ Martha L. Long Senior Vice President FOX CAPITAL MANAGEMENT CORPORATION By: /s/ Martha L. Long ------------------------------ Martha L. Long Senior Vice President 4 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION ----------- ----------- (a)(21) Supplement to Amended and Restated Offer to Purchase dated July 8, 2005. (a)(22) Press Release, dated July 8, 2005. (c)(11) Appraisal of Greenspoint Apartments by CB Richard Ellis. (c)(12) Appraisal of Sands Point Apartments by CB Richard Ellis.
EX-99.(A)(21) 2 d18178a7exv99wxayx21y.txt SUPPLEMENT TO AMENDED/RESTATED OFFER TO PURCHASE SUPPLEMENT TO AMENDED AND RESTATED OFFER TO PURCHASE (AIMCO LOGO) AIMCO PROPERTIES, L.P. is offering to purchase any and all limited partnership units in CENTURY PROPERTIES FUND XIX FOR $300.00 PER UNIT IN CASH On February 16, 2005, we commenced an offer to purchase the limited partnership units of Century Properties Fund XIX upon the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal dated as of that date, which have been subsequently amended and restated by the Amended and Restated Offer to Purchase and the Amended and Restated Letter of Transmittal, each dated as of June 6, 2005 (which, together with any supplements or amendments, including this Supplement and the Amended and Restated Offer to Purchase and the related Amended and Restated Letter of Transmittal, collectively constitute the "Offer"). THE PURPOSE OF THIS SUPPLEMENT IS TO SUPPLEMENT AND AMEND THE INFORMATION CONTAINED IN THE AMENDED AND RESTATED OFFER TO PURCHASE PREVIOUSLY MAILED TO YOU. WE URGE YOU TO READ THE INFORMATION IN THIS SUPPLEMENT AND THE OFFER CAREFULLY FOR A DESCRIPTION OF OUR OFFER. SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THE AMENDED AND RESTATED OFFER TO PURCHASE PREVIOUSLY MAILED TO YOU FOR A DESCRIPTION OF RISK FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH OUR OFFER. Upon the terms and subject to the conditions set forth in the Offer, we will accept any and all units validly tendered in response to our offer. You will not pay any partnership transfer fees if you tender units pursuant to this offer. You will pay any other fees or costs, including any transfer taxes. Our offer price will be reduced for any distributions subsequently made or declared by your partnership prior to the expiration of our offer. OUR OFFER HAS BEEN EXTENDED. OUR OFFER AND YOUR WITHDRAWAL RIGHTS WILL NOW EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON JULY 15, 2005, UNLESS WE EXTEND THE DEADLINE. If you desire to tender any of your units in response to our offer, you should complete and sign the Amended and Restated Letter of Transmittal that was previously mailed to you in accordance with its instructions and mail and deliver it and any other required documents to the Altman Group, Inc., which is acting as the Information Agent in connection with our offer. If you have already tendered your units, you need not take any further action to continue to tender your units. If you have already tendered your units and would like to withdraw any of your tendered units, you must comply with the requirements for exercising your withdrawal rights as set forth in the Amended and Restated Offer to Purchase. THE GENERAL PARTNER DOES NOT MAKE ANY RECOMMENDATION REGARDING WHETHER YOU SHOULD ACCEPT OUR OFFER. YOU ARE ENCOURAGED TO CAREFULLY REVIEW THIS SUPPLEMENT, THE AMENDED AND RESTATED OFFER TO PURCHASE, THE AMENDED AND RESTATED LETTER OF TRANSMITTAL, AND ANY OTHER INFORMATION AVAILABLE TO YOU AND TO SEEK THE ADVICE OF YOUR INDEPENDENT LAWYER, TAX ADVISOR AND/OR FINANCIAL ADVISOR WITH RESPECT TO YOUR PARTICULAR CIRCUMSTANCES BEFORE DECIDING WHETHER OR NOT TO ACCEPT OUR OFFER. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION, PASSED UPON THE MERITS OF THIS TRANSACTION, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. July 8, 2005 VALUATION OF UNITS General. As disclosed in the Amended and Restated Offer to Purchase, under the section entitled "SPECIAL FACTORS -- Valuation of Units," we initially determined our offer price by calculating a net equity value per unit, which is equal to the amount that would be distributed to limited partners in the event of a hypothetical winding up of the partnership, assuming that all of the partnership's properties are sold at prices equal to our estimate of their gross property values. The gross property value is directly comparable to the gross sale price if a property were sold. Ordinarily, when a property is sold, the terms of the mortgage on the property require that the outstanding balance be repaid, together with a prepayment penalty. As a result, in calculating net equity value, we deduct our estimate of such prepayment penalties from the gross property value to arrive at a net property value. After calculating a net property value for each property owned by the partnership, we add the net property values of all properties to arrive at an aggregate net property value for the partnership. We then (i) add our estimate of the value of all other assets of the partnership, and (ii) deduct the amount of all liabilities of the partnership, including the mortgage debt (but not the prepayment penalty which was deducted from the gross property value to produce the net property value). The result is what we refer to as the net equity value of the partnership. We then allocate a portion of the net equity value of the entire partnership to the limited partners, which represents the portion allocable to the limited partners under the partnership agreement, and divide this by the number of outstanding limited partnership units to determine a net equity value per unit. In our Amended and Restated Offer to Purchase, dated June 6, 2005, we calculated a net equity value for your partnership of $261.28 per unit, which was our original offer price. We subsequently increased our offer price to $300.00 per unit to match the price being paid in a competing offer. Misty Woods Apartments. As disclosed in the Amended and Restated Offer to Purchase, on May 19, 2005, your general partner entered into a purchase agreement with an unrelated third party to sell Misty Woods Apartments as part of a sale of a portfolio of nine properties. The total sales price for the portfolio is $62,300,000, of which $6,550,000 represents the sales price for Misty Woods Apartments. This amount compares with our estimate of the gross property value of Misty Woods Apartments of $6,573,093. In determining our offer price, we had deducted from this gross property value a prepayment penalty for the Misty Woods mortgage equal to $183,093. However, the mortgage for Misty Woods Apartments may be repaid at any time during the six month period immediately preceding its maturity date of January 1, 2006, without incurring any prepayment penalty. The property sale is expected to close on August 4, 2005. Accordingly, no prepayment penalty will be due if the mortgage is repaid at that time. Under the purchase agreement, the buyer will pay for all title costs, but the partnership is responsible for one-half of the escrow fees, and all of its other closing costs associated with the sale of Misty Woods Apartments, including but not limited to a broker's commission and transfer taxes. We estimate that our share of the closing costs will be 3% of the contract sale price ($196,500), and transfer taxes will be 0.4% of the contract sale price ($26,200), all of which will be paid to unrelated third parties. The closing costs may include, but are not limited to, broker's commissions, escrow fees and recording fees. No fees or transaction costs will be paid to AIMCO or its affiliates. Greenspoint Apartments. On May 17, 2005, the partnership refinanced the mortgage encumbering Greenspoint Apartments. The new mortgage, in the principal amount of $11,000,000, replaced the existing mortgage, which had an outstanding balance of approximately $7,981,000. Proceeds from the new mortgage were used to repay the prior mortgage and pay approximately $114,000 of closing costs associated with the transaction. The remaining proceeds of approximately $2,905,000 were used as follows: (i) approximately $1,368,000 to pay loans due to an affiliate of the general partner, (ii) approximately $21,000 to pay accrued reimbursements of accountable administrative expenses due to an affiliate of the general partner, and (iii) approximately $1,516,000 retained by the partnership will be used to fund the proposed redevelopment of Sunrunner Apartments. In connection with the refinancing of Greenspoint Apartments, the lender obtained an appraisal from CB Richard Ellis, Inc. ("CBRE"), an independent appraiser. In a report dated April 25, 2005, CBRE concluded that the "as is" market value of Greenspoint Apartments was $17,600,000 as of April 18, 2005. This compares with $14,500,000, which was the "as-is" market value as of May 6, 2003, determined by 2 American Appraisal Associates, Inc. ("AAA") in its report, dated July 14, 2003. More information with respect to CBRE's appraisal is included in this Supplement under "Third Party Appraisals." Sands Point Apartments. On May 27, 2005, the partnership refinanced the mortgage encumbering Sands Point Apartments. The new mortgage, in the principal amount of $11,000,000, replaced the existing mortgage, which had an outstanding balance of approximately $8,859,000 and accrued and unpaid interest of approximately $25,000. Proceeds from the new mortgage were used to repay the prior mortgage, pay approximately $132,000 of closing costs associated with the transaction and establish approximately $482,000 of reserves for repairs, real estate taxes and insurance with the lender. The remaining net proceeds of approximately $1,502,000 will be retained by the partnership and used to fund the proposed redevelopment of Sunrunner Apartments. In connection with the refinancing of Sands Point Apartments, the lender also obtained an appraisal from CBRE. In a report dated May 9, 2005, CBRE concluded that the "as is" market value of Sands Point Apartments was $18,000,000 and the "as stabilized" market value of Sands Point Apartments was $18,150,000, each as of April 21, 2005. This compares with $14,600,000, which was the "as-is" market value as of May 6, 2003, determined by AAA in its report, dated July 3, 2003. More information with respect to CBRE's appraisal is included in this Supplement under "Third Party Appraisals." Revised Calculation of Net Equity Value per Unit. Based on the foregoing, we have recalculated net equity value per unit, using the same methodology and amounts as described under "SPECIAL FACTORS -- Valuation of Units" in the Amended and Restated Offer to Purchase, except that: - we did not deduct any prepayment penalty for Misty Woods Apartments; - we included a prepayment penalty of $1,481,639 applicable to Greenspoint Apartments to reflect the terms of the new mortgage; as with the prior mortgage, the terms of the new mortgage for Sands Point Apartments do not include a prepayment penalty; - we used the new mortgage amounts for Greenspoint Apartments and Sands Point Apartments ($11,000,000 each), and made other adjustments to reflect the application of the proceeds from these mortgages as described in this Supplement under "Greenspoint Apartments" and "Sands Point Apartments," including the retention of net cash proceeds of approximately $1,516,000 for Greenspoint Apartments and approximately $1,502,000 for Sands Point Apartments; and - we adjusted the amount for deficit restoration obligation, which changes when the other amounts in the table below change. The revised calculation is as follows: Aggregate net property value of partnership properties...... $ 67,389,489 Plus: Cash and cash equivalents............................. 3,460,482 Plus: Other partnership assets.............................. 1,909,512 Less: Mortgage debt, including accrued interest............. (50,780,743) Less: Accounts payable and accrued expenses................. (290,807) Less: Other liabilities..................................... (750,597) Plus: Deficit restoration obligation........................ 837,515 ------------ Net equity value of your partnership........................ $ 21,774,852 ------------ Net equity value allocated to holders of units.............. $ 21,356,852 Total number of units..................................... 89,292.00 ------------ Net equity value per unit................................... $ 239.17 ============
If we had used the contract sale price for Misty Woods Apartments ($6,550,000) instead of our estimated gross property value ($6,573,093), all other items would have remained the same, except that the net equity value of the partnership would be $21,751,297, and the net equity value per unit would be $238.91, as all other items added and deducted would have remained unchanged. 3 In our calculation of the net equity value per unit, we have not made any deduction for customary transaction costs that would ordinarily be incurred in connection with a sale of a property such as broker's commissions, title and escrow fees and transfer taxes. In our experience, the seller's closing costs are approximately 3% of the sale price, and transfer taxes vary based on the jurisdiction in which the property is located. If we had deducted an amount equal to the estimated transaction costs, the net equity value of the partnership and the net equity value per unit would be correspondingly reduced. Revised Calculation of Net Liquidation Proceeds per Unit. We have also recalculated our estimate of the net liquidation value per unit, using the same methodology and amounts described under "Revised Calculation of Net Equity Value per Unit" in this Supplement, except that instead of our estimate of gross property values for each property, we used the most recent appraised values for the properties -- the 2005 CBRE appraised values for Greenspoint Apartments and Sands Point Apartments, and the 2003 AAA appraised values for all other properties. The revised calculation is as follows: Net appraised value of partnership properties............... $ 85,403,809 Plus: Cash and cash equivalents............................. 3,460,482 Plus: Other partnership assets.............................. 1,909,512 Less: Mortgage debt, including accrued interest............. (50,780,743) Less: Accounts payable and accrued expenses................. (290,807) Less: Other liabilities..................................... (750,597) Plus: Deficit restoration obligation........................ 1,197,802 ------------ Estimated net liquidation proceeds of your partnership...... $ 40,149,459 ------------ Estimated net liquidation proceeds allocated to holders of units..................................................... $ 39,370,426 Total number of units..................................... 89,292.00 ------------ Estimated net liquidation proceeds per unit................. $ 440.92 ============
If we had used the contract sale price for Misty Woods Apartments ($6,550,000) instead of the appraised value ($8,200,000), all other items would have remained the same, except that the estimated net liquidation proceeds would be $38,466,459, and the estimated net liquidation proceeds per unit would be $422.44, as all other items added and deducted would have remained unchanged. If we had deducted an amount equal to the estimated transaction costs (broker's commissions, title and escrow fees and transfer taxes), our estimate of the net liquidation proceeds of the partnership and the net liquidation proceeds per unit would be correspondingly reduced. POSITION OF THE GENERAL PARTNER OF YOUR PARTNERSHIP WITH RESPECT TO THE OFFER In addition to those factors described in the Amended and Restated Offer under "SPECIAL FACTORS -- Position of the General Partner of Your Partnership With Respect to the Offer -- Factors in Favor of Fairness Determination," the general partner also considered the following factors: - our offer price of $300.00 per unit is higher than our revised calculation of net equity value per unit ($239.17); and - our estimate of net equity value per unit and the net liquidation proceeds per unit do not take into account any transaction costs associated with a sale of a property. 4 In addition to those factors described in the Amended and Restated Offer to Purchase under "SPECIAL FACTORS -- Position of the General Partner of Your Partnership With Respect to the Offer -- Factors Not in Favor of Fairness Determination," the general partner also considered the following factors: - our estimate of the gross property values for Greenspoint Apartments and Sands Point Apartments is approximately 70% and 69%, respectively, of their April 2005 appraised values, as determined by CBRE; and - our offer price of $300.00 per unit is less than our estimate of the net liquidation proceeds that would be payable to you if your partnership's properties were sold at prices equal to their most recent appraised values, which we estimate to be $440.92 per unit. The general partner believes the offer price is fair despite the fact that the liquidation value implied by the most recent appraisals of your partnership's properties ($440.92 per unit) is higher than our offer price, and despite the fact that these appraised values are higher than our estimate of the gross property values for these properties. With respect to CBRE's April 2005 appraisals of Greenspoint Apartments and Sands Point Apartments, the general partner believes that CBRE's assumptions underlying its appraised values for these properties are inconsistent with the historical operating performance of the properties. For example, the appraiser assumed higher annual rental rates, lower capital replacement reserves, lower vacancy rates and lower collection loss rates than those historically experienced at the properties. Also, the liquidation value does not take into account transaction costs likely to be incurred if the properties were sold, such as broker's commissions, title and escrow fees and transfer taxes. The general partner believes that our valuation method provides a reasonably fair method to determine the offer price despite the fact that it is significantly lower than the amount we estimate that you would receive if we liquidated the partnership using the revised net liquidation proceeds per unit described above. In reaching this determination, the general partner considered the fact that an actual liquidation might result in sale prices for the properties that are higher or lower than the appraised values used to determine the net liquidation proceeds per unit (and a correspondingly higher or lower distribution to you). The general partner believes that it is not uncommon for real estate appraisals to overstate property values. For example, AAA, which was retained to provide an appraisal in 2003, determined a final "as is" market value for Misty Woods Apartments of $8,200,000 in 2003. However, in marketing the property for sale recently, the general partner found that the highest price a prospective purchaser was willing to pay was only $6,550,000. The general partner believes that an appraisal obtained by a lender in connection with a financing transaction is more likely to overstate property values because of the conflict of interest inherent in the appraiser's role in these situations. On one hand, it is asked to value the property fairly so that the lender can be comfortable that the loan does not exceed a specified percentage of the property value. On the other hand, the appraiser often feels pressured to overstate property values so that its client, the lender, can complete the transaction and earn fees and income from the loan. BALLOON PAYMENTS ON MORTGAGE DEBT As described in the Amended and Restated Offer to Purchase under "RISK FACTORS -- Your partnership has balloon payments on its mortgage debt," your partnership has the following balloon payments on its mortgages: $4,777,000 due in January 2006; $11,000,000 due in June 2007; and $12,521,000 due in July 2013. In addition, the new mortgage encumbering Greenspoint Apartments is subject to a call option exercisable by the lender on May 1, 2012 and every fifth anniversary thereafter. In the event that the lender exercises its call option, approximately $11,000,000 would be due as soon as May 1, 2012 or every fifth anniversary thereafter. If your partnership is unable to refinance these mortgages or the mortgages encumbering your partnership's other properties prior to their maturity dates, or is otherwise unable to obtain funds to make these payments when due, it will be in default and could lose the properties to foreclosure. THIRD-PARTY APPRAISALS CBRE was hired by the lenders to perform real estate appraisals in connection with our refinancing of indebtedness encumbering Greenspoint Apartments and Sands Point Apartments in 2005. We paid CBRE a fee of $10,500 in 2005 for the appraisals. CBRE was retained by lenders to conduct appraisals of properties owned 5 by other partnerships in which we own interests, in connection with refinancing transactions. During the prior two years, no material relationship has existed between CBRE and your partnership or any of its affiliates, including AIMCO Properties, L.P. In performing its appraisals for Greenspoint Apartments and Sands Point Apartments in 2005, CBRE considered the same factors and used the same methodology as it did in performing its 2003 appraisals for Plantation Crossing Apartments, Vinings Peak Apartments and Wood Lake Apartments, except for the following: - CBRE reviewed historical operating statements for the years 2002 through 2004 and a 2005 budget for Greenspoint Apartments, and historical operating statements for the years 2003 and 2004 and a 2005 budget for Sands Point Apartments. - In preparing the appraisal for Sands Point Apartments, CBRE principally relied on (1) the sales approach and (2) the income capitalization approach. CBRE considered the cost approach not to be applicable to estimating the value of Sands Point due to the lack of use of this approach by market participants and the amount of depreciation impacting the property. CBRE noted that the exclusion of the cost approach does not diminish the reliability of the value conclusion and does not represent a limitation on the scope of the appraisal that requires departure from Uniform Standards of Professional Appraisal Practice. CBRE's appraisals only speak as of their respective effective dates in April 2005. You may obtain a full copy of CBRE's appraisals upon request, without charge, by contacting the Information Agent at one of the addresses or the telephone number on the last page of this Supplement. Copies of the appraisals for the properties are also available for inspection and copying at the principal executive offices of the partnership during regular business hours by any interested unitholder or his or her designated representative at his or her cost. In addition, a copy of the appraisals has been filed with the SEC as an exhibit to the Tender Offer Statement and Rule 13e-3 Transaction Statement on Schedule TO and is available on the SEC's site on the World Wide Web at http://www.sec.gov. The summary set forth below describes the material conclusions reached by CBRE based on the values determined under the valuation approaches and subject to the assumptions and limitations described below. GREENSPOINT Valuation Under Cost Approach. CBRE began its analysis under the cost approach by valuing the property's land. CBRE compared three land sales between July 2004 and February 2005. The appraiser noted that the pool of recent land sales was somewhat limited due to a slowdown in multi-family development over the 24 months preceding the appraisal. The appraiser made an adjustment for changes in market conditions due to increasing average land prices since the date of the earliest comparable land sales in addition to making adjustments based on the location and density of the comparable properties. As a result of its analysis, the appraiser arrived at a value range of $10,535 to $11,900 per unit. CBRE considered a price per unit indication near the middle of the range indicated by the comparables to be most appropriate for the land at Greenspoint. Thus, the estimated land value based on a $11,200 sales price per unit for the 250 units was approximately $2,800,000. After determining a value for the land, CBRE next estimated the cost of replacing the property's improvements. CBRE first estimated a base building cost, based on the Marshall Valuation Service cost guide, adjusting such cost to reflect the physical characteristics of the subject property. CBRE then added estimated indirect costs, such as developer overhead, property taxes, legal and insurance costs, local development fees and contingencies, and lease-up and marketing costs. CBRE also added estimated entrepreneurial profit, representing the return to the developer, to arrive at an estimate of the subject property's replacement cost. CBRE then reduced this value by estimating accrued depreciation from three sources: physical deterioration, functional obsolescence and external obsolescence, resulting in an estimate of the subject property's depreciated replacement cost of $15,245,533. CBRE added to this value its estimate of the land value to produce an indication of value for Greenspoint of $18,000,000 (after rounding). 6 Valuation Under Sales Comparison Approach. CBRE compared Greenspoint with six apartment complexes that were sold between February 2004 and March 2005 and located in Greenspoint's real estate market area. Based on its qualitative analysis, CBRE rated one comparable property as superior to, four comparable properties as comparable to, and one comparable property as inferior to, Greenspoint with respect to location. CBRE rated the age and condition of all six comparable properties as comparable to the age and condition of Greenspoint. CBRE rated the average unit size of one comparable property as larger than, four comparable properties as comparable to, and one comparable property as smaller than, the average unit size of Greenspoint. CBRE rated the project size of four comparable properties as comparable to, and two comparable properties as smaller than, the project size of Greenspoint. CBRE rated the density of five comparable properties as lower than, and one comparable property as comparable to, the density of Greenspoint. CBRE rated all six comparable properties as comparable to Greenspoint with respect to economic factors. CBRE made adjustments to the sales price per unit of each comparable property to reflect differences from Greenspoint in location, age and condition, average unit size, project size, density and economic factors. In addition, although all of the comparable sales were recent sales, based on the trend in the prices of the comparable sales, CBRE made upward adjustments in the sales price per unit of the three comparable sales completed in 2004. Based on the available data, CBRE concluded a value range of $50,039 to $54,231 per unit. CBRE considered a price per unit indication near the midpoint of the range indicated by the comparables to be most appropriate for Greenspoint. Thus, the estimated value based on a $50,000 sales price per unit for the 336 units was approximately $16,800,000, and the estimated value based on a $53,000 sales price per unit for the 336 units was approximately $17,808,000. CBRE also performed an effective gross income multiplier ("EGIM") analysis. The EGIM reflects the relationship between effective gross annual income and sales price. CBRE estimated the operating expense ratio ("OER") of Greenspoint to be 54.87%, with the expense ratios of the comparable properties ranging from 46.13% to 63.54%, resulting in EGIMs ranging from 7.60 to 8.77. CBRE reconciled Greenspoint's EGIM toward the middle part of the range, concluding an EGIM of 7.75 for Greenspoint. CBRE applied the EGIM to the stabilized effective gross income for the property (see Income Approach section below), resulting in a value conclusion of approximately $18,848,942. CBRE estimated the value using the price per unit analysis between $16,800,000 and $17,808,000 and the value using the EGIM analysis at $18,848,942. Based on these two valuation methods, CBRE concluded a value indication for Greenspoint under the sales comparison approach of $17,500,000 (after rounding). CBRE assumed a marketing and exposure period of six to twelve months. Valuation Under Income Capitalization Approach. Under the income capitalization approach, CBRE performed (1) a direct capitalization analysis and (2) a discounted cash flow analysis to derive a value for Greenspoint. CBRE first employed a direct capitalization analysis by dividing a forecast of net operating income ("NOI") by an appropriate capitalization rate. CBRE performed a market rent analysis for the property to derive a projected rental income. The analysis included both a review of the subject's current asking and actual rent rates as well as a comparison with comparable apartment properties. CBRE calculated Greenspoint's effective gross income ("EGI") by adding apartment rental collections to other income and then making adjustments, including adjustments based on an estimated stabilized physical vacancy of 13.0% and a 3.0% collection loss. Under this analysis, CBRE arrived at an EGI of $2,432,122. Once the EGI was established, operating expenses were deducted from the EGI in order to arrive at an NOI for Greenspoint of approximately $1,097,602. CBRE performed a pro forma analysis of revenue and expenses for the property to derive the subject's stabilized NOI. CBRE relied on the subject's historical operating statements for this estimate. CBRE derived an overall capitalization rate of 6.25% based upon analysis of comparable sales, published investor surveys, and the band of investment technique, a method of capitalization rate derivation based on debt rates and terms common to the market along with common investor dividend requirements. Using an overall capitalization rate of 6.25%, CBRE determined that the direct capitalization method indicated a value of $17,600,000 (after rounding) for Greenspoint. 7 CBRE also utilized a discounted cash flow method to analyze the value of the property. Under this method, anticipated future cash flow and a reversionary value are discounted at an appropriate rate of return to arrive at an estimate of present value. The assumptions employed by CBRE to determine the value of Greenspoint under the discounted cash flow method included: (1) stabilized occupancy rate of 87.00%; (2) credit loss rate of 3.00%; (3) concession rate of 8.0%; (4) terminal capitalization rate of 7.00%; (5) discount rate of 9.00%; (6) 2.00% cost of sale at reversion; and (7) holding period of 10 years. Based on these assumptions, CBRE's estimate of cash flows for a ten-year period resulted in an "as is" value indication of $17,600,000 (after rounding) for Greenspoint. CBRE placed primary emphasis on the direct capitalization method because it considered this method to best reflect the actions of buyers and sellers currently active in the relevant market. Under the income capitalization approach, reconciling the direct capitalization method values and the discounted cash flow analysis values, CBRE concluded a value of $17,600,000 for Greenspoint. Reconciliation of Values and Conclusions of Appraisal. The final step in the appraisal process was to reconcile the cost approach, the sales comparison approach and the income capitalization approach values to arrive at a final value conclusion. The reconciliation of the three approaches involved weighing the valuation techniques in relation to their substantiation by market and other sources of data, the relativity and applicability of the approaches to the property type, and the purpose of the valuation. CBRE concluded an estimated market value of $18,000,000 under the cost approach, an estimated market value of $17,500,000 under the sales comparison approach and an estimated market value of $17,600,000 under the income capitalization approach. After reconciling the various factors, CBRE determined a final "as is" market value of $17,600,000 for Greenspoint as of April 18, 2005 in its appraisal report dated April 25, 2005. SANDS POINT Valuation Under Sales Comparison Approach. CBRE compared Sands Point with six apartment complexes that were sold between August 2003 and March 2005 and located in Sands Point's real estate market area. Based on its qualitative analysis, CBRE rated one comparable property as superior to, and five comparable properties as comparable to, Sands Point with respect to location. CBRE rated the age and condition of two comparable properties as superior to, two comparable properties as comparable to, and two comparable properties as inferior to, the age and condition of Sands Point. CBRE rated the average unit size of three comparable properties as larger than, one comparable property as comparable to, and two comparable properties as smaller than, the average unit size of Sands Point. CBRE rated all six comparable properties as comparable to Sands Point with respect to project size, density and economic factors. CBRE made adjustments to the sales price per unit of each comparable property to reflect differences from Sands Point in location, age and condition, average unit size, project size, density and economic factors. Based on the available data, CBRE concluded a value range of $41,018 to $48,830 per unit. CBRE considered a price per unit indication near the midpoint of the range indicated by the comparables to be most appropriate for Sands Point. Thus, the estimated value based on a $41,000 sales price per unit for the 432 units was approximately $17,712,000, and the estimated value based on a $45,000 sales price per unit for the 432 units was approximately $19,440,000. CBRE also performed an effective gross income multiplier analysis. The EGIM reflects the relationship between effective gross annual income and sales price. CBRE estimated the operating expense ratio of Sands 8 Point to be 58.73%, with the expense ratios of the comparable properties ranging from 46.13% to 65.62%, resulting in EGIMs ranging from 6.26 to 8.09. CBRE reconciled Sands Point's EGIM toward the middle part of the range, concluding an EGIM of 7.0 for Sands Point. CBRE applied the EGIM to the stabilized effective gross income for the property (see Income Approach section below), resulting in a value conclusion of approximately $19,207,334. CBRE estimated the value using the price per unit analysis between $17,712,000 and $19,440,000 and the value using the EGIM analysis at $19,207,334. Based on these two valuation methods, CBRE concluded a value indication of $18,360,000 (after rounding) and a stabilized value indication of $18,500,000 for Sands Point under the sales comparison approach. CBRE assumed a marketing and exposure period of six to twelve months. Valuation Under Income Capitalization Approach. Under the income capitalization approach, CBRE performed (1) a direct capitalization analysis and (2) a discounted cash flow analysis to derive a value for Sands Point. CBRE first employed a direct capitalization analysis by dividing a forecast of net operating income by an appropriate capitalization rate. CBRE performed a market rent analysis for the property to derive a projected rental income. The analysis included both a review of the subject's current asking and actual rent rates as well as a comparison with comparable apartment properties. CBRE calculated Sands Point's effective gross income by adding apartment rental collections to other income and then making adjustments, including adjustments based on an estimated stabilized physical vacancy of 12.0% and a 4.0% collection loss. Under this analysis, CBRE arrived at an EGI of $2,743,905. Once the EGI was established, operating expenses were deducted from the EGI in order to arrive at an NOI for Sands Point of approximately $1,132,424. CBRE performed a pro forma analysis of revenue and expenses for the property to derive the subject's stabilized NOI. CBRE relied on the subject's historical operating statements for this estimate. CBRE derived an overall capitalization rate of 6.25% based upon analysis of comparable sales, published investor surveys, and the band of investment technique, a method of capitalization rate derivation based on debt rates and terms common to the market along with common investor dividend requirements. Using an overall capitalization rate of 6.25%, CBRE determined that the direct capitalization method indicated an "as is" value of $18,000,000 (after rounding) and an "as stabilized" value of $18,140,000 (after rounding) for Sands Point. CBRE also utilized a discounted cash flow method to analyze the value of the property. Under this method, anticipated future cash flow and a reversionary value are discounted at an appropriate rate of return to arrive at an estimate of present value. The assumptions employed by CBRE to determine the value of Sands Point under the discounted cash flow method included: (1) stabilized occupancy rate of 88.00%; (2) credit loss rate of 4.00%; (3) concession rate of 8.0%; (4) terminal capitalization rate of 7.00%; (5) discount rate of 8.75%; (6) 2.00% cost of sale at reversion; and (7) holding period of 10 years. An adjustment was made for lease-up costs because Sands Point's occupancy level was below a stabilized occupancy projection. CBRE assumed a lease-up period of six months. Based on these assumptions, CBRE's estimate of cash flows for a ten-year period resulted in an "as is" value indication of $18,040,000 (after rounding) and an "as stabilized" value of $18,180,000 (after rounding) for Sands Point. CBRE placed primary emphasis on the direct capitalization method because it considered this method to best reflect the actions of buyers and sellers currently active in the relevant market. Under the income capitalization approach, reconciling the direct capitalization method values and the discounted cash flow analysis 9 values, CBRE concluded an "as is" value of $18,000,000 and an "as stabilized" value of $18,150,000 for Sands Point. Reconciliation of Values and Conclusions of Appraisal. The final step in the appraisal process was to reconcile the sales comparison approach and the income capitalization approach values to arrive at a final value conclusion. The reconciliation of the two approaches involved weighing the valuation techniques in relation to their substantiation by market and other sources of data, the relativity and applicability of the approaches to the property type, and the purpose of the valuation. CBRE concluded an estimated "as is" market value of $18,360,000 and an estimated "as stabilized" market value of $18,500,000 under the sales comparison approach and an estimated "as is" market value of $18,000,000 and an estimated "as stabilized" market value of $18,140,000 under the income capitalization approach. After reconciling the various factors, CBRE determined a final "as is" market value of $18,000,000 and a final "as stabilized" market value of $18,150,000 for Sands Point as of April 21, 2005 in its appraisal report dated May 9, 2005. THE SETTLEMENT OF THE NUANES AND HELLER COMPLAINTS As disclosed in the Amended and Restated Offer to Purchase, under the section entitled "THE OFFER -- Section 6. The Lawsuit and the Settlement -- The Settlement of the Nuanes and Heller Complaints," on April 28, 2005, an objector filed a petition for review with the California Supreme Court in connection with the opinion vacating the order approving the settlement of the Nuanes and Heller complaints and remanding for further findings. On May 18, 2005, AIMCO filed an answer to the objector's petition. On June 10, 2005, the California Supreme Court denied the objector's petition for review, and on June 21, 2005, the Court of Appeals sent the matter back to the trial court. The parties intend to ask the trial court to make further findings in connection with the settlement consistent with the Court of Appeals' remand order. The Court of Appeals is also scheduled to hear oral argument in the Heller appeal on July 27, 2005. * * * QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THIS SUPPLEMENT, THE AMENDED AND RESTATED OFFER TO PURCHASE OR THE AMENDED AND RESTATED LETTER OF TRANSMITTAL, OR FOR A COMPLETE COPY OF AN APPRAISAL OF ANY OF YOUR PARTNERSHIP'S PROPERTIES, MAY BE DIRECTED TO THE INFORMATION AGENT AT (800) 467-0821. THE INFORMATION AGENT FOR THE OFFER IS: THE ALTMAN GROUP, INC. By Mail: By Overnight Courier: By Hand: 1275 Valley Brook Avenue 1275 Valley Brook Avenue 1275 Valley Brook Avenue Lyndhurst, NJ 07071 Lyndhurst, NJ 07071 Lyndhurst, NJ 07071
For information, please call: TOLL FREE: (800) 467-0821 10 EX-99.(A)(22) 3 d18178a7exv99wxayx22y.txt PRESS RELEASE CONTACT: The Altman Group, Inc. (800) 467-0821 (toll free) FOR IMMEDIATE RELEASE AIMCO PROPERTIES, L.P. ANNOUNCES EXTENSION OF TENDER OFFERS DENVER, COLORADO, July 8, 2005 - As previously announced, AIMCO Properties, L.P. is offering to purchase units of limited partnership interest in the partnerships set forth below, subject to the terms of their respective Offers to Purchase and related Letters of Transmittal (as amended and supplemented, the "Offers"). AIMCO Properties, L.P. has now extended the expiration date of each of the Offers to midnight, New York City time, on July 15, 2005. The Offers were previously scheduled to expire at midnight, New York City time, on July 12, 2005. AIMCO Properties, L.P. has reported, based on information provided by the Information Agent for the Offers, that as of the close of business on July 7, 2005, the approximate number of units set forth below had been tendered pursuant to each of the Offers.
Name of Partnership Number of Units Tendered - ------------------- ------------------------ Century Properties Fund XIX 4,395 National Property Investors III 855
For further information, please contact The Altman Group, Inc. at (800) 467-0821 (toll free), which is acting as the Information Agent for the Offers. EX-99.(C)(11) 4 d18178a7exv99wxcyx11y.txt APPRAISIAL OF GREENSPOINT BY C.B. RICHARD ELLIS EXHIBIT (c)(11) GREENSPOINT APARTMENTS 4202 East Cactus Road Phoenix, Maricopa County, Arizona CBRE File No. 05-271PH-0651 COMPLETE APPRAISAL [PICTURE] SELF CONTAINED REPORT PREPARED FOR: Mr. Jason Tessler ING LIFE INSURANCE AND ANNUITY COMPANY 5780 Powers Ferry Road, NW, Suite 300 Atlanta, GA 30327-4349 VALUATION & ADVISORY SERVICES CBRE CB RICHARD ELLIS CBRE CB RICHARD ELLIS 2415 East Camelback Road Phoenix, AZ 85016 T(602) 735-5649 F(602) 735-5613 www.cbre.com April 25, 2005 Mr. Jason Tessler ING LIFE INSURANCE AND ANNUITY COMPANY 5780 Powers Ferry Road, NW, Suite 300 Atlanta, GA 30327-4349 RE: Appraisal of Greenspoint Apartments 4202 East Cactus Road Phoenix, Maricopa County, Arizona CBRE File No 05-271PH-0651 Dear Mr. Tessler: At the request of Renee Heslep of Johnson Capital, CBRE has prepared a Complete Appraisal of the market value of the referenced property and presented our analysis in the following Self Contained Appraisal Report. The subject is a 336 -unit garden-style apartment property built in 1985 and situated on a 9.256-acre site in Phoenix, Maricopa County, Arizona. Currently the facility is 95.8% occupied and in average condition. The subject is more fully described, legally and physically within the enclosed report. Data, information, and calculations leading to the value conclusion are incorporated in the report following this letter. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter. Based on the analysis contained in the following report, the market value of the subject is concluded as follows: MARKET VALUE CONCLUSION
APPRAISAL PREMISE INTEREST APPRAISED EXPOSURE DATE OF VALUE VALUE CONCLUSION - ----------------- ------------------ -------------- -------------- ---------------- As is Fee Simple Estate 6 to 12 months April 18, 2005 $17,600,000
Compiled by CBRE The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, our interpretation of the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Title XI Regulations and ING Life Insurance and Annuity Company's appraisal standards. Mr.Jason Tesser April 25, 2005 Page 2 The report is for the sole use of the client; however, client may provide only complete, final copies of the appraisal report in its entirety (but not component parts) to third parties who shall review such reports in connection with loan underwriting or securitization efforts. Appraiser is not required to explain or testify as to appraisal results other than to respond to the client for routine and customary questions. Please note that our consent to allow an appraisal report prepared by CBRE or portions of such report, to become part of or be referenced in any public offering, the granting of such consent will be at our sole discretion and, if given, will be on condition that we will be provided with an Indemnification Agreement and/or Non-Reliance letter, in a form and content satisfactory to us, by a party satisfactory to us. We do consent to your submission of the reports to rating agencies, loan participants or your auditors in its entirety (but not component parts) without the need to provide us with an Indemnification Agreement and/or Non-Reliance letter. It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us. Respectfully submitted, CBRE - VALUATION & ADVISORY SERVICES William J. Davis J. Scott Prosch, MAI Vice President Senior Managing Director Intermountain Arizona Certified General Real Estate Region Appraiser No. 30784 Arizona Certified General Real Estate Appraiser No. 30880 Phone: 602-735-5649 Fax: 602-735-5613 Phone: 602-735-5681 Email: jim.davis@cbre.com Fax: 602-735-5613 Email: scott.prosch@cbre.com GREENSPOINT APARTMENTS CERTIFICATION OF THE APPRAISAL CERTIFICATION OF THE APPRAISAL We certify to the best of our 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 reported assumptions and limiting conditions and are our personal, impartial and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in or bias with respect to the property that is the subject of this report and have no personal interest in or bias with respect to the parties involved with this assignment. 4. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 5. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 6. This appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan. 7. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice of The Appraisal Foundation and the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute, as well as the requirements of the State of Arizona relating to review by its duly authorized representatives. This report also conforms to the requirements of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). 8. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 9. William J. Davis has not and J. Scott Prosch, MAI has completed the requirements of the continuing education program of the Appraisal Institute. 10. William J. Davis has and J. Scott Prosch, MAI has not made a personal inspection of the property that is the subject of this report. 11. Todd Lamb provided significant real property appraisal assistance to the persons signing this report. Mr. Fournier prepared the draft appraisal. 12. William J. Davis and J. Scott Prosch, MAI have extensive experience in the appraisal/review of similar property types. 13. William J. Davis and J. Scott Prosch, MAI are currently certified in the state where the subject is located. 14. Valuation & Advisory Services operates as an independent economic entity within CBRE. Although employees of other CBRE divisions may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy are maintained at all times with regard to this assignment without conflict of interest. - ------------------------------- ---------------------------------------------- William J. Davis J. Scott Prosch, MAI Vice President Senior Managing Director Intermountain Region Arizona Certified General Real Arizona Certified General Real Estate Estate Appraiser No. 30784 Appraiser No. 30880 i GREENSPOINT APARTMENTS SUBJECT PHOTOGRAPHS SUBJECT PHOTOGRAPHS [PICTURE] STREET VIEW OF THE SUBJECT [PICTURE] POOL VIEW OF SUBJECT ii GREENSPOINT APARTMENTS SUMMARY OF SALIENT FACTS SUMMARY OF SALIENT FACTS PROPERTY NAME Greenspoint Apartments LOCATION 4202 East Cactus Road, Phoenix, Arizona ASSESSOR'S PARCEL NUMBER 167-27-001W HIGHEST AND BEST USE As Though Vacant Multi-family residential development As Improved Continued multi-family use PROPERTY RIGHTS APPRAISED Fee Simple Estate LAND AREA 9.26 AC 403,191 SF IMPROVEMENTS Property Type Apartment Number of Buildings 14 Number of Stories 3 Gross Building Area 280,559 SF Net Rentable Area 278,064 SF Number of Units 336 Average Unit Size 828 SF Year Built 1985 Condition Average ESTIMATED EXPOSURE TIME 6 to 12 months FINANCIAL INDICATORS Current Occupancy 95.8% Stabilized Occupancy 87.0% Overall Capitalization Rate 6.25% Discount Rate 9.00% Terminal Capitalization Rate 7.00%
TOTAL PER UNIT ----------- -------- PRO FORMA OPERATING DATA Effective Gross Income $ 2,432,122 $ 7,238 Operating Expenses $ 1,334,519 $ 3,972 Expense Ratio 54.87% Net Operating Income $ 1,097,602 $ 3,267
iii GREENSPOINT APARTMENTS SUMMARY OF SALIENT FACTS
TOTAL PER UNIT ----------- -------- VALUATION Land Value $ 2,800,000 $ 8,333 Cost Approach $18,000,000 $ 53,571 Sales Comparison Approach $17,500,000 $ 52,083 Income Capitalization Approach $17,600,000 $ 52,381
CONCLUDED MARKET VALUE
APPRAISAL PREMISE INTEREST APPRAISED DATE OF VALUE VALUE - ----------------- ------------------ -------------- ------------ As Is Fee Simple Estate April 18, 2005 $ 17,600,000
Compiled by CBRE SPECIAL ASSUMPTIONS None noted. iv GREENSPOINT APARTMENTS TABLE OF CONTENTS TABLE OF CONTENTS CERTIFICATION OF THE APPRAISAL.................................................. i SUBJECT PHOTOGRAPHS............................................................. ii SUMMARY OF SALIENT FACTS........................................................ iii TABLE OF CONTENTS............................................................... V INTRODUCTION.................................................................... 1 AREA ANALYSIS................................................................... 5 NEIGHBORHOOD ANALYSIS........................................................... 19 MARKET ANALYSIS................................................................. 25 SITE ANALYSIS................................................................... 40 IMPROVEMENT ANALYSIS............................................................ 44 ZONING.......................................................................... 50 TAX AND ASSESSMENT DATA......................................................... 52 HIGHEST AND BEST USE............................................................ 54 APPRAISAL METHODOLOGY........................................................... 57 SALES COMPARISON APPROACH....................................................... 67 INCOME CAPITALIZATION APPROACH.................................................. 75 RECONCILIATION OF VALUE......................................................... 103 ASSUMPTIONS AND LIMITING CONDITIONS............................................. 105
ADDENDA A Glossary of Terms B Additional Photographs C Comparable Land Sales D Improved Comparable Sales E Rent Comparables F Operating Data G Legal Description H Engagement Letter I Miscellaneous Exhibits J Qualifications v GREENSPOINT APARTMENTS INTRODUCTION INTRODUCTION PROPERTY IDENTIFICATION The subject is a 336 -unit garden-style apartment property built in 1985 and situated on a 9.256-acre site in Phoenix, Maricopa County, Arizona. Currently the facility is 95.8% occupied. Known as Greenspoint, the subject is located in north-Phoenix near Paradise Valley Mall. The unit mix includes one and two-bedroom units and there are 10 three-story apartment buildings. Common amenities include a pool, clubhouse, fitness center, men's and women's saunas, security access gate, covered parking, and open green areas. Units have patios and balconies, full size washers and dryers, and microwaves. Select units have raised ceilings and wood burning fireplaces (168 total). The subject is more fully described, legally and physically within the enclosed report. OWNERSHIP AND PROPERTY HISTORY Title to the property is currently vested in the name of Century Properties Fund XIX, who acquired title to the property in 1995. There have been no other ownership transfer of the property since then. The subject is not currently listed for sale. RELEVANT DATES The following table illustrates the various dates associated with the valuation of the subject property: RELEVANT DATES Date of Report: April 25, 2005 Date of Inspection: April 18, 2005 Date of Value As Is: April 18, 2005
Compiled by CBRE PURPOSE OF THE APPRAISAL The purpose of this appraisal is to estimate the market value of the subject property. The current economic definition agreed upon by agencies that regulate federal financial institutions in the U.S. (and used herein) is as follows: 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 and 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: 1. buyer and seller are typically motivated; 1 GREENSPOINT APARTMENTS INTRODUCTION 2. both parties are well informed or well advised, and acting in what they consider their own best interests; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. 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. (1) PREMISE OF THE APPRAISAL The premise of this appraisal valuation is "as is" on the date of value. TERMS AND DEFINITIONS The Glossary of Terms in the Addenda provides definitions for terms that are, and may be used in this appraisal. INTENDED USE AND USER OF REPORT This appraisal is to be used for mortgage underwriting decisions by the client, ING Life Insurance and Annuity Company. PROPERTY RIGHTS APPRAISED The interest appraised represents the fee simple estate. SCOPE OF WORK The scope of the assignment relates to the extent and manner in which research is conducted, data is gathered and analysis is applied, all based upon the purpose of the appraisal and its intended use, as previously outlined. CBRE completed the following steps for this assignment: 1. physically identified and inspected both the interior and exterior of the subject property, as well as its surrounding environs; identified and considered those characteristics that may have a legal, economic or physical impact on the subject; 2. physically inspected the micro and/or macro market environments with respect to physical and economic factors relevant to the valuation process; expanded this knowledge through interviews with regional and/or local market participants, available published data and other various resources; - ---------- (1) Appraisal Standards Board of The Appraisal Foundation, Uniform Standards of Professional Appraisal Practice, 2003 ed. (Washington, DC: The Appraisal Foundation, 2003), 219; Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002), 177-178. This definition is also compatible with the OTS, OCC, RTC, FDIC, FRS and NCUA definitions of market value. 2 GREENSPOINT APARTMENTS INTRODUCTION 3. conducted regional and/or local research with respect to applicable tax data, zoning requirements, flood zone status, demographics, income and expense data, and comparable listing, sale and rental information; 4. analyzed the data gathered through the use of appropriate and accepted appraisal methodology to arrive at a probable value indication via each applicable approach to value; 5. correlated and reconciled the results into a reasonable and defensible value conclusion, as defined herein; and 6. estimated a reasonable exposure time and marketing time associated with the value estimate presented. To develop the opinion of value, CBRE performed a Complete Appraisal as defined by the Uniform Standards of Professional Appraisal Practice (USPAP). This means that no departures from Standard 1 were invoked. In this Complete Appraisal, CBRE used all appropriate approaches to value. Furthermore, the value conclusion reflects all known information about the subject, market conditions, and available data. This appraisal of the subject has been presented in the form of a Self-Contained Appraisal Report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of the USPAP. That is, this report incorporates, to the fullest extent possible, practical explanation of the data, reasoning and analysis that were used to develop the opinion of value. This report also includes thorough descriptions of the subject and the market for the property type. SPECIAL APPRAISAL INSTRUCTIONS There have been no special appraisal instructions for this assignment. EXPOSURE/MARKETING TIME Current appraisal guidelines require an estimate of a reasonable time period in which the subject property could be brought to market and sold. This reasonable time frame can either be examined historically or prospectively. In a historic analysis, this is referred to as exposure time. Exposure time always precedes the date of value, with the underlying premise being the time a property would have been on the market prior to the date of value, such that it would sell at its appraised value as of the date of value. On a prospective basis, the term marketing time is most often used. The exposure/marketing time is a function of price, time, and use. It is not an isolated estimate of time alone. It is different for various types of real estate and under various market conditions. A discussion of an appropriate exposure/marketing time estimate for the subject property is presented in the following sections. In consideration of these factors, we have analyzed the following: - exposure periods for comparable sales used in this appraisal; - marketing time information from the CB Richard Ellis, Inc. National Investor Survey; and 3 GREENSPOINT APARTMENTS INTRODUCTION - the opinions of market participants. The following table presents the information derived from these sources. EXPOSURE TIME INFORMATION
Exposure Time (Months) Investment Type Range Average - --------------- ------------- -------- Comparable Sales Data 1.0 - 6.0 3.0 Apartments Class A 1.0 - 9.0 4.1 Class B 1.0 - 6.0 3.7 Class C 3.0 - 12.0 7.2 CBRE ESTIMATE 6 to 12 MONTHS
Source: CBRE National Investor Survey In general, the improved sales indicate exposure times in the lower to middle portion of the range indicated by the investor survey. In addition to the sales and survey data, we have also reviewed the assumptions and conclusions reached in the Valuation section of this report, particularly the income estimates and rates of return. Based on these analyses, we have concluded an exposure/marketing time of 6 to 12 months would be considered reasonable for the subject property. This exposure/marketing time reflects current economic conditions, current real estate investment market conditions, the terms and availability of financing for real estate acquisitions, and property and market-specific factors. It assumes that the subject property is (or has been) actively and professionally marketed. The marketing/exposure time would apply to all valuation premises included in this report. 4 GREENSPOINT APARTMENTS AREA ANALYSIS AREA ANALYSIS [MAP] LOCATION The subject is located in Phoenix, within the Phoenix-Mesa metropolitan statistical area (MSA). The MSA, located entirely within two counties, Maricopa and Pinal, includes the state capital and the state's largest city, Phoenix. POPULATION The following table shows changes in population from the 1990 and 2000 censuses, estimates for the current year, and forward projections for the MSA. As these data demonstrate, there has been a significant increase in the area population during the last two decades and that growth is projected to continue into the foreseeable future. 5 GREENSPOINT APARTMENTS AREA ANALYSIS POPULATION OF PHOENIX-MESA MSA BY CITY/TOWN
1990-2000 2000-2004 2004-2009 2004 1990 2000 2004 2009 Compound Compound Compound Percentage City/Town Census Census Estimate Projection Annual Growth Annual Growth Annual Growth of MSA --------- --------- --------- --------- ---------- ------------- ------------- ------------- ---------- Apache Junction ** 18,981 31,851 34,017 37,053 5.3% 1.7% 1.7% 0.9% Avondale 18,393 35,897 59,379 83,809 6.9% 13.4% 7.1% 1.6% Buckeye 4,939 6,537 6,572 6,649 2.8% 0.1% 0.2% 0.2% Carefree 1,514 2,927 3,493 4,229 6.8% 4.5% 3.9% 0.1% Cave Creek 2,060 3,728 4,056 4,498 6.1% 2.1% 2.1% 0.1% Chandler 91,281 176,502 217,693 266,771 6.8% 5.4% 4.1% 6.0% El Mirage 5,050 7,609 19,426 29,761 4.2% 26.4% 8.9% 0.5% Fountain Hills 10,016 20,235 22,862 26,365 7.3% 3.1% 2.9% 0.6% Gila Bend 1,800 1,980 1,886 1,834 1.0% -1.2% -0.6% 0.1% Gilbert 33,357 109,750 152,082 201,934 12.6% 8.5% 5.8% 4.2% Glendale 151,698 218,973 234,410 256,766 3.7% 1.7% 1.8% 6.4% Gold Camp * 2,107 6,028 8,086 10,566 11.1% 7.6% 5.5% 0.2% Goodyear 6,298 18,875 32,516 46,345 11.6% 14.6% 7.3% 0.9% Guadalupe 5,458 5,228 5,172 5,205 -0.4% -0.3% 0.1% 0.1% Litchfield Park 3,303 3,810 3,909 4,076 1.4% 0.6% 0.8% 0.1% Maricopa * 665 1,040 1,401 1,822 4.6% 7.7% 5.4% 0.0% Mesa 294,715 396,330 439,842 495,541 3.0% 2.6% 2.4% 12.0% New River 4,056 10,740 16,454 22,508 10.2% 11.3% 6.5% 0.5% Paradise Valley 11,931 13,663 14,176 15,075 1.4% 0.9% 1.2% 0.4% Peoria 51,991 108,357 131,149 159,055 7.6% 4.9% 3.9% 3.6% Phoenix 989,709 1,320,896 1,398,726 1,515,160 2.9% 1.4% 1.6% 38.3% Queen Creek ** 2,414 4,314 6,171 8,417 6.0% 9.4% 6.4% 0.2% Rio Verde 454 1,419 1,638 1,908 12.1% 3.7% 3.1% 0.0% Scottsdale 131,271 202,705 223,458 251,715 4.4% 2.5% 2.4% 6.1% Sun City 36,844 38,289 35,254 32,629 0.4% -2.0% -1.5% 1.0% Sun City West 16,519 26,343 25,137 24,197 4.8% -1.2% -0.8% 0.7% Sun Lakes 7,361 11,943 11,985 12,218 5.0% 0.1% 0.4% 0.3% Surprise 7,954 30,868 54,170 77,066 14.5% 15.1% 7.3% 1.5% Tempe 142,495 158,625 159,817 164,099 1.1% 0.2% 0.5% 4.4% Tolleson 4,437 4,974 5,122 5,400 1.1% 0.7% 1.1% 0.1% Wickenburg 4,573 5,082 5,064 5,202 1.1% -0.1% 0.5% 0.1% Youngtown 2,557 3,010 3,007 3,063 1.6% 0.0% 0.4% 0.1% Other 172,263 263,334 315,861 376,787 4.3% 4.7% 3.6% 8.6% --------- --------- --------- --------- ---- ---- ---- ----- Total MSA 2,238,464 3,251,862 3,653,991 4,157,723 3.8% 3.0% 2.6% 100.0% --------- --------- --------- --------- ---- ---- ---- -----
* Pinal County, ** partially Pinal County, otherwise Maricopa County Source: Claritas, Inc. Compiled by: CB Richard Ellis The State of Arizona is projected to gain over 690,000 new residents over the next five years, or more than 135,000 residents per year. Of this amount, 73% (500,000 total) of the forecast growth is projected to occur in the Phoenix-Mesa MSA. Water availability and employment issues are driving this growth in the Phoenix area, where approximately 65% of the state's inhabitants reside. The following list provides comparative population gain for the top 10 MSAs. Phoenix-Mesa has consistently ranked among the top 10. 6 GREENSPOINT APARTMENTS AREA ANALYSIS POPULATION GROWTH IN SELECTED METROPOLITAN AREAS
Rank Metropolitan Statistical Area 1990 Census 2000 Census Change % Gain - ---- ----------------------------------- ----------- ----------- --------- ------ 1 Las Vegas-Paradise, NV 741,459 1,375,765 634,306 85.5% 2 Austin-Round Rock, TX 846,227 1,249,763 403,536 47.7% 3 Raleigh -Cary, NC 541,100 797,071 255,971 47.3% 4 Phoenix-Mesa-Scottsdale, AZ 2,238,480 3,251,876 1,013,396 45.3% 5 Atlanta-Sandy Springs-Marietta, GA 3,069,425 4,247,981 1,178,556 38.4% 6 Orlando, FL 1,224,852 1,644,561 419,709 34.3% 7 Denver-Aurora, CO 1,666,883 2,179,240 512,357 30.7% 8 Charlotte-Gastonia-Concord, NC-SC 1,024,643 1,330,448 305,805 29.8% 9 Dallas-Fort Worth-Arlington, TX 3,989,294 5,161,544 1,172,250 29.4% 10 Portland-Vancouver-Beaverton, OR-WA 1,523,741 1,927,881 404,140 26.5%
Population growth for 81 metroplitan areas with total population exceeding 500,000, ranked by percent change, based on total population estimates for 1990 to 2000. Source: US Census Bureau Compiled by: CB Richard Ellis Although Phoenix-Mesa ranks below its close neighbor Las Vegas-Paradise in percentage gain, Phoenix-Mesa surpasses Las Vegas-Paradise by a large margin in net population gain. The overall percentage gain for all metropolitan markets is 14.0%, representing the addition of approximately 28.6 million people in metropolitan areas. HOUSEHOLDS The following table shows changes in demographic statistics by household based on the 2000 Census. 7 GREENSPOINT APARTMENTS AREA ANALYSIS MSA HOUSEHOLD PROFILES BY CITY/TOWN
Households Housing Income ------------------------------------ ------------------- --------------------------------- 2000 2004 2009 Owner Persons Median Average Per City/Town Census Estimate Projection Occupied per HH Household Household Capita - ------------------ --------- --------- ---------- -------- ------- --------- --------- ------- Apache Junction ** 13,795 14,782 16,153 81.9% 2.28 $ 34,712 $ 41,300 $18,231 Avondale 10,642 17,569 24,430 81.6% 3.36 $ 58,191 $ 67,994 $20,214 Buckeye 2,158 2,144 2,134 64.3% 3.08 $ 39,667 $ 50,171 $16,110 Carefree 1,388 1,638 1,949 87.9% 2.11 $ 90,008 $ 147,690 $69,540 Cave Creek 1,571 1,683 1,828 84.9% 2.46 $ 85,734 $ 114,321 $46,878 Chandler 62,353 76,983 94,359 74.3% 2.81 $ 64,561 $ 76,855 $27,310 El Mirage 2,121 5,425 8,441 71.4% 3.62 $ 41,141 $ 45,703 $12,604 Fountain Hills 8,653 9,961 11,726 83.6% 2.29 $ 65,899 $ 85,041 $37,071 Gila Bend 659 623 598 61.0% 3.09 $ 28,638 $ 35,404 $11,466 Gilbert 35,416 49,021 65,018 85.4% 3.11 $ 78,610 $ 90,502 $29,114 Glendale 75,776 80,766 87,803 65.3% 2.87 $ 48,488 $ 60,238 $21,010 Gold Camp * 2,785 3,796 5,072 65.0% 2.27 $ 70,815 $ 87,152 $38,206 Goodyear 6,169 10,812 15,909 86.4% 2.69 $ 63,947 $ 78,106 $26,354 Guadalupe 1,110 1,092 1,092 69.0% 4.73 $ 32,622 $ 41,774 $ 8,868 Litchfield Park 1,508 1,566 1,650 87.2% 2.48 $ 77,108 $ 103,184 $41,440 Maricopa * 292 396 523 75.3% 3.11 $ 40,971 $ 46,675 $14,861 Mesa 146,637 162,513 182,271 67.9% 2.68 $ 46,780 $ 59,070 $22,010 New River 3,921 5,899 7,879 92.6% 2.78 $ 78,281 $ 87,517 $31,655 Paradise Valley 5,034 5,178 5,440 96.6% 2.71 $ 159,358 $ 221,212 $81,456 Peoria 39,181 47,147 56,877 85.9% 2.74 $ 60,229 $ 70,953 $25,849 Phoenix 465,762 491,643 528,687 60.8% 2.79 $ 44,429 $ 61,770 $21,991 Queen Creek ** 1,217 1,730 2,332 89.4% 3.56 $ 70,335 $ 83,605 $23,449 Rio Verde 761 860 976 96.2% 2.09 $ 83,735 $ 118,141 $56,601 Scottsdale 90,669 100,626 113,803 70.2% 2.21 $ 62,847 $ 94,952 $42,936 Sun City 23,478 21,742 20,071 87.6% 1.60 $ 33,710 $ 43,479 $26,964 Sun City West 14,996 14,534 14,183 95.3% 1.74 $ 44,980 $ 59,092 $33,735 Sun Lakes 6,688 6,836 7,106 96.1% 1.79 $ 48,417 $ 66,642 $37,123 Surprise 12,495 22,438 32,462 90.1% 2.39 $ 53,200 $ 63,063 $26,342 Tempe 63,602 64,931 67,194 50.7% 2.38 $ 45,205 $ 59,869 $24,591 Tolleson 1,432 1,494 1,597 65.7% 3.43 $ 42,687 $ 50,891 $14,838 Wickenburg 2,341 2,340 2,406 63.6% 2.22 $ 33,742 $ 45,406 $20,625 Youngtown 1,641 1,633 1,637 63.6% 1.77 $ 23,674 $ 31,222 $17,712 Other 87,994 104,407 123,894 95.5% 2.52 N/A $ 56,924 $19,570 --------- --------- --------- ---- ---- --------- --------- ------- Total MSA 1,194,245 1,334,208 1,507,500 69.2% 2.66 $ 49,478 $ 66,405 $24,499 --------- --------- --------- ---- ---- --------- --------- -------
* Pinal County, ** partially Pinal County, otherwise Maricopa County Source: Claritas, Inc. Compiled by: CB Richard Ellis ECONOMIC BASE Maricopa County's economy is built on a base of activities including manufacturing, government, regional hub activities, travel and tourism, services and construction. Each of these five components of the economic base react differently to economic cycles. Mining and agriculture are also significant economic contributors, although they no longer hold their historically dominant positions. Maricopa County is the largest producer of crops and livestock in the state and places high among all counties in the nation in terms of the cash value of its agricultural products. 8 GREENSPOINT APARTMENTS AREA ANALYSIS EMPLOYMENT The following chart represents the diversity of Phoenix-Mesa's economic base. 2004 PHOENIX-MESA NON-FARM EMPLOYMENT BY SECTOR Other Service Providing 24% Good Producing 16% Government 13% Trade, Transportation & Utilities 21% Leisure & Hospitality 10% Professional & Business Services 16%
Source: University of Arizona 2005/2006 Economic Outlook Compiled by: CB Richard Ellis Historically, employment has grown by 174% over the last 20 years in Phoenix, compared with 50% nationally. Arizona was one of the first states to recover all of the jobs that were lost during the 2001 recession. Non-farm employment grew approximately 2.0% in 2004. This is due in part to the fact that Arizona has not experienced the same slowdown in hiring in the retail, education and health and social services sectors that the country has seen as a whole. Retail employment is merely growing at a slower pace than previously, and some of the largest skill shortages in Arizona are for teachers, nurses, medical technologists, and pharmacists. However, telecommunications and manufacturing have continued to struggle. Strong productivity gains, outsourcing, off shoring, and commoditization are blamed for the manufacturing segment's fall of 20% over the last five years. The following table shows the history and projections for employment in the Phoenix-Mesa MSA, broken down by sector. 9 GREENSPOINT APARTMENTS AREA ANALYSIS PHOENIX-MESA NON-FARM EMPLOYMENT HISTORY AND PROJECTIONS
Sector 2002 2003 2004 2005 2006 2007 2008 2009 2010 ------ --------- --------- --------- --------- --------- --------- --------- --------- --------- Good Producing 270,500 270,400 271,900 289,100 300,600 302,700 300,700 304,100 310,400 Trade, Transportation & Utilities 326,700 334,300 342,900 342,900 358,000 380,300 389,700 399,800 412,000 Professional & Business Services 254,000 262,000 273,800 291,100 304,500 314,500 322,100 329,200 339,200 Leisure & Hospitality 152,400 155,700 163,300 169,700 173,700 178,100 182,800 188,300 194,300 Government 211,600 214,700 219,700 224,700 229,500 233,700 237,500 242,200 248,700 Other Service Providing 384,000 401,400 400,100 434,000 446,700 450,000 465,300 479,800 494,600 --------- --------- --------- --------- --------- --------- --------- --------- --------- Total 1,599,200 1,638,500 1,671,700 1,751,500 1,813,000 1,859,300 1,898,100 1,943,400 1,999,200 --------- --------- --------- --------- --------- --------- --------- --------- ---------
Source; University of Arizona 2005/2006 Economic Outlook Compiled by: CB Richard Ellis Note that both the manufacturing and information sectors (of which telecommunications is a part) are expected to grow in 2005. The general forecast is for much stronger growth of 79,800 jobs, or 4.8% in 2005. Professional and business services are expect to post the most new jobs, however the fastest growing major sectors are expected to be construction, professional and business services, and financial activities. All of the major employment categories are projected to post increases over the next year within the Phoenix-Mesa MSA with exception to Trade, Transportation and Utilities, which is expected to remain stagnant. However, that sector too is expected to increase from 2006 onward. There are several large projects that will contribute significantly to future job growth, which include the T-Gen project in Downtown Phoenix, and a possible expansion of Intel in Chandler. The Translational Genomics Research Institute (T-Gen) includes three major Arizona Universities as partners and has a mission of discovering genetic markers of disease and identifying new treatments. Intel Corp., the world's largest semiconductor company, is considering an expansion that could mean up to $5 billion in revenue for the city of Chandler. The company may upgrade one of two existing chip-manufacturing plants and is considering adding another. Corporate officials are eyeing the Ocotillo campus in Chandler as the site for a new manufacturing facility, which would be the third in the complex. Intel already owns more than 700 acres at the Ocotillo complex. About half of the area is still available for construction. A decision on the project could be made by the middle of 2005. If the company decides to go ahead with the expansion, it would take 18 months to two years to complete. The following chart depicts employment growth history and projections for the Phoenix-Mesa MSA and the State of Arizona through 2010: 10 GREENSPOINT APARTMENTS AREA ANALYSIS PHOENIX-MESA JOB GROWTH
2003 2004 2005 2006 2007 2008 2009 2010 ------ ------ ------ ------ ------ ------ ------ ------ [ ] Phoenix-Mesa 39,300 33,200 79,800 61,500 46,300 38,800 45,300 55,800 [ ] Arizona 51,200 41,900 114,20 75,600 52,800 48,000 56,700 70,900
Source: University of Arizona Economic Outlook 2005/2006 Compiled by: CB Richard Ellis University of Arizona forecasters are projecting average annual growth of nearly 330,000 new jobs in the Phoenix MSA during the 2004 through 2010 forecast period, or 2.6% annually. The following table summarizes trends in unemployment across the MSA, State, and Nation: ANNUAL UNEMPLOYMENT RATES
MSA State USA --- ----- --- 1995 3.8% 5.1% 5.6% 1996 3.5% 5.5% 5.4% 1997 3.0% 4.6% 5.0% 1998 2.9% 4.1% 4.5% 1999 2.7% 4.4% 4.2% 2000 2.7% 4.0% 4.0% 2001 4.0% 4.7% 4.8% 2002 5.7% 6.2% 5.8% 2003 5.0% 5.6% 6.0% 2004 4.0% 4.8% 5.5%
Source: Arizona Department of Economic Security Compiled by: CB Richard Ellis As can be seen from the last 10 years of unemployment data, Phoenix-Mesa consistently outperforms the state of Arizona and the United States in employment rates, despite its fast-paced population growth. 11 GREENSPOINT APARTMENTS AREA ANALYSIS 2005 TOP 10 PRIVATE EMPLOYERS
Company Headquarters No. of Employees ------- ------------ ---------------- Wal-Mart No 19,510 Banner Health Systems Yes 14,447 Honeywell International No 12,000 Wells Fargo & Co. No 11,000 Raytheon Missile Systems No 10,530 Basha's Inc. Yes 9,646 Albertson's-Osco No 9,500 Intel Corp. No 9,500 Safeway Stores No 9,500 JPMorganChase & Co. No 9,200
Source: The Business Journal, Book of Lists 2005 The greater Phoenix area is a $50 billion marketplace driven by technology. World-leading companies such as Intel, Avnet, Motorola, AlliedSignal, Honeywell and Boeing Company have chosen Phoenix for their corporate or regional headquarters. Industry giants such as American Express, Phelps Dodge, Sumitomo Sitix, Prudential, Charles Schwab and Mayo Clinic have major operations in Phoenix. REAL ESTATE TRENDS The following table presents 10-year trends in rental rates and vacancy within the major non-residential real estate categories across the MSA: HISTORICAL RENTAL AND VACANCY RATES
Period Office Industrial Retail Apartment (4Q) Rent/SF Vacancy Rent/SF Vacancy Rent/SF Vacancy Rent/Unit Vacancy - ------ ------- ------- ------- ------- ------- ------- --------- ------- 1995 $ 14.64 11.71% $ 0.52 6.64% $ 10.27 8.70% $ 545 4% 1996 $ 15.61 9.51% $ 0.65 5.69% $ 11.18 7.94% $ 572 5% 1997 $ 18.33 9.22% $ 0.70 7.01% $ 11.64 7.53% $ 602 5% 1998 $ 19.20 9.46% $ 0.75 7.08% $ 12.65 6.28% $ 628 5% 1999 $ 20.49 9.97% $ 0.68 8.06% $ 14.01 5.52% $ 651 6% 2000 $ 18.79 9.87% $ 0.60 7.38% $ 14.98 5.25% $ 677 7% 2001 $ 19.66 16.02% $ 0.71 9.84% $ 15.81 6.59% $ 688 8% 2002 $ 19.25 18.82% $ 0.73 10.34% $ 16.55 7.30% $ 692 9% 2003 $ 18.86 18.38% $ 0.72 9.70% $ 16.86 7.38% $ 698 10% 2004 $ 19.50 16.40% $ 0.77 8.53% $ 17.64 6.05% $ 705 8%
Sources: CB Richard Ellis, Real Data, Phoenix Metropolitan Housing Study Vacancy in all categories increased beginning in the mid-1990s. The commercial real estate market in general is moving through an overbuilt phase. However, aggressive pricing on behalf of investors and favorable mortgage interest rates have had a favorable influence on overall values during this downturn. 12 GREENSPOINT APARTMENTS AREA ANALYSIS The following table presented trends in new and resale home prices across the MSA: SINGLE FAMILY MEDIAN HOME PRICES GRAPH
RESALE NEW HOME $ 90,500 $127,600 $ 97,000 $130,750 $105,000 $136,130 $113,585 $139,070 $120,000 $146,710 $128,900 $150,770 $136,000 $156,560 $144,900 $159,990 $155,000 $173,240 $174,815 $195,000
Source: Arizona Real Estate Center Average new homes have increased in price 4.3% compounded annually over the last 10 years, and resales have increased nearly 6.8% annually over the same time period. The price increases over the latter years were achieved during an economic downturn and are attributable primarily to the favorable mortgage rate environment. According to the University of Arizona 2005/2006 Economic Outlook, the ratio of average home prices to average household income is the highest it has been for nearly 30 years. New housing prices are now 3 -1/2 times household incomes. Existing housing is now priced at three times household income. Further, as a long-term average, the Arizona homebuilding industry supplies roughly 400 housing units for each 1,000-person increase in new residents. Today, 550 housing units are supplied for each 1,000-person increase in population. However, an unbelievable amount of money is flowing into Arizona real estate from out-of-state buyers who consider local prices to be cheap. Factors that could adversely affect housing price increases are disruptions in the mortgage lending environment or more than modest increases in interest rates. Population growth, on the other hand, will continue to apply upward pressure to housing prices. RETAIL SALES The following chart depicts trends in retail sales across the MSA: 13 GREENSPOINT APARTMENTS AREA ANALYSIS [PHOENIX-MESA RETAIL SALES GRAPH] 2002 $38.1 2003 $41.1 2004 $44.9 2005 $47.7 2006 $49.6 2007 $52.0 2008 $54.7 2009 $57.7 2010 $61.2
The University of Arizona's 2005/2006 Economic Outlook is predicting a 6.4% increase in retail sales in 2005 and a 4.5% average annual increase over the next 7 years. GOVERNMENTAL INFLUENCES Planning and zoning within Maricopa County is administered by the individual municipalities, and all of the incorporated areas within the county have adopted comprehensive zoning policies and long term general plans. The state legislature mandates assessment ratios and basic property tax policy, while Maricopa County determines assessed values. Local municipalities determine tax rates. Arizona has a 5% sales tax and Maricopa County has a 7.0% sales tax. Most of the municipalities within Maricopa County also have a sales tax. The State of Arizona employs a dual (Primary, Secondary) structure for real estate taxation. The assessed value derived from "full cash value" is the basis for computing taxes for budget overrides, bond and sanitary, fire and other special districts (Secondary taxes), while the assessed value derived from "limited value" is the basis for computing taxes for the maintenance and operation of school districts, community college districts, cities, county and the state (Primary taxes). 14 MASS TRANSIT The Regional Public Transportation authority coordinates mass transit throughout the metropolitan area under the title of Valley Metro. Valley Metro includes six private carriers that are contracted to the various municipalities. Additionally, voters gave initial approval to a light rail system in 2001. The starter segment will run from Spectrum Mall in northwest Phoenix, through central Phoenix to the downtown area, and then east through Tempe and into Mesa. Most recently, the construction phase was scheduled to begin in late 2004 and the rail system is planned to be operational by late 2008. This starter segment is expected to cost $1.3 million. The following presents the construction schedule for the 20-mile starter segment: 15 GREENSPOINT APARTMENTS AREA ANALYSIS PROJECT SCHEDULE [METRO LOGO] METRO 20-MILE INITIAL LINE
'01 2002 2003 2004 2005 2006 2007 2008 Right of Way Acquisition Construction Testing and Start-up Revenue Operations Date CONSTRUCTION ACTIVITIES Maintenance Facility Line Section 1 Line Section 2 Line Section 3 Line Section 4 Line Section 5 Town Lake Bridge
[MAINTENANCE FACILITY MAP] In November of 2004, residents of the Phoenix metropolitan area approved Proposition 400, which continues a half-cent sales tax for 20 years, generating an estimated $15 billion for the valley's transportation plan. Proposition 400 partially funds the starter segment and six extensions: - - 2 miles south along Rural Road in Tempe, from the main line on Apache Boulevard (Phase II: 2011-2015) 16 GREENSPOINT APARTMENTS AREA ANALYSIS - - 2.7 miles on Main Street in Mesa from the former Tri-City Mall to downtown (Phase II: 2011-2015) - - 12 miles from central Phoenix to Paradise Valley Mall along state Route 51 (Phase IV: 2021-2026) - - 5 miles from 19th Avenue in Phoenix to downtown Glendale (Phase III: 2016-2020) - - 5 miles from 19th Avenue in Phoenix to Metro Center mall (Phase II: 2011-2015) - - 11 miles along I-10 in the West Valley to 79th Avenue (Phase III: 2016-2020) The plan includes park and-ride lots along the line. Approximately $2.3 million of the Proposition 400 funding is allocated toward the extension routes. The light rail system relies in part on federal funding. The federal government formally committed to its portion of the Valley's light rail system on January 24th in a funding grant that will pay nearly half of the construction costs of the 20-mile starter line. The government is funding $587.2 million of the $1.3 billion cost of the project, which has started construction. Phoenix, Mesa, and Tempe pay the remainder for the line that will run through the three municipalities. The agreement will provide annual funding through 2011. There is also a separate $60 million that will be available from federal Congestion Mitigation and Air Quality funds. According to Valley Metro, there are additional possible extensions to the light rail system in Scottsdale and Glendale. Scottsdale and Tempe completed a Major Investment Study in 2002 that recommended a high capacity transit route on Scottsdale Road. In early 2003, the Scottsdale City Council officially approved Scottsdale Road as a high-capacity transit corridor. While no technology has yet been approved for this corridor, the identification of Scottsdale Road as a high-capacity transit corridor leaves the option open for light rail or other high capacity modes here. SKY HARBOR INTERNATIONAL AIRPORT The airport was established in 1929, and the first air traffic control tower and Terminal 1 were completed in 1952. Terminal 2 was added in 1962, and in 1979, Terminal 3 and the new control tower were completed at a cost of approximately $48 million. In 1990, Terminal 4 (the Barry M. Goldwater Terminal) was completed. Sky Harbor is now ranked as the fifth busiest airport in the world (just ahead of Paris and behind Los Angeles) with about 560,000 take offs and landings annually. The airport now has three terminals and runways (the original terminal was razed) with over 100 gates, and serves over 35.0 million passengers each year. The City of Phoenix recently embarked on a $1.2 billion dollar expansion of the airport that added a third runway in 2000. With the planned expansion of Terminal Four, the capacity will be raised in the next 15 years to 110 gates and 60 million passengers. A state of the art $35.0 million people mover system is planned to be operational in 2009, and this will provide an underground connection to a new, seven-story 18,000-car parking 17 GREENSPOINT APARTMENTS AREA ANALYSIS garage. Also, the new Sky Harbor Rental Car Center is under construction west of the airport. The new rental car center will consolidate all of the eight car rental agencies and their maintenance facilities into one location. The scheduled occupancy is November 2005. The project is 2.5 million square feet of space. The project can accommodate 5,600 rental cars. However, Sky Harbor already supports 40,000 rental cars in the immediate area of the airport. RAIL SERVICE Two transcontinental rail lines, the Southern Pacific and the Santa Fe Railroad, and two Amtrak lines serve Phoenix. Most major southwest cities are readily accessible by rail at very competitive rates. Proximity to rail service in the northwest and southwest regions combined with a plentiful supply of industrially zoned properties has been an important factor in growth of these two regions in the 1980s. While many industrial park developers would like rail access to provide flexibility in attracting new users, few valley manufacturers are required to locate near rail lines. Instead, they employ the numerous common carrier trucking firms to move raw materials and finished goods. Consequently, rail access has had only a small impact on the location of manufacturing in the country in recent years. CONCLUSION The Phoenix-Mesa MSA is emerging from an economic downturn that began in 2000. Claritas is projecting population growth to average 100,000 new residents per year through 2009 and the University of Arizona is projecting an average of 124,000 new residents per year, and an average employment growth of 55,000 new non-farm jobs per year through 2010, with 79,800 new non-farm jobs project for 2005. Major infrastructure projects within the freeway, rail and airport systems are underway to facilitate this growth. The near term outlook is for the local economy to continue its move back into a growth and development phase across all of the major economic sectors. Over the long term, the Phoenix MSA will strengthen is position as the dominant social and economic hub of the southwestern US. 18 GREENSPOINT APARTMENTS NEIGHBORHOOD ANALYSIS [NEIGHBORHOOD ANALYSIS MAP] LOCATION The neighborhood is located in the city of Phoenix and is considered a suburban location. The subject is located approximately 11 miles north and 4.5 miles east of the Phoenix Central Business District. BOUNDARIES The neighborhood boundaries are detailed as follows: North: Bell Road South: Shea Boulevard East: Scottsdale Road West: SR-51 (Piestewa Freeway) LAND USE The neighborhood is characterized by a mixture of residential and commercial uses plus a limited supply of undeveloped land. The area appears to be almost entirely built-out at the present time and there is virtually no residential development currently taking place. The predominant use within the neighborhood is single-family residential development, approximately 50% of which ranges in value from $100K to $200K, with another 25% in the $200-$300K range, within a 3-mile radius of the 19 GREENSPOINT APARTMENTS NEIGHBORHOOD ANALYSIS subject. However, there also 22 existing apartment complexes of at least 100 units with a total of almost 6,451 units. These projects are summarized in the table below: NEIGHBORHOOD APARTMENT PROJECTS, 100+ UNITS
NAME BUILT ADDRESS CITY UNITS ---- ----- ------- ---- ----- Paragon at Kierland, The 2000 15440 N 71st St Scottsdale 276 Tradition at Kierland 1998 6633 E Greenway Parkway Scottsdale 364 Pillar at Desert View 1996 17030 N 49th St Scottsdale 412 Legend at Kierland, The 1996 6735 E Greenway Parkway Scottsdale 360 Tuscany Villas 1995 4925 E Desert Cove Ave Scottsdale 180 Bellagio 1995 5635 E Bell Rd Scottsdale 202 San Mateo 1994 7009 E Acoma Dr Scottsdale 348 Cityplace 1993 5335 E Shea Blvd Scottsdale 240 Camden San Paloma 1993 6980 E Sahuaro Dr Scottsdale 324 Palisades, The 1990 13440 N 44th St Phoenix 536 Arabian Trails East 1988 16636 N 58th St Scottsdale 130 Ridge, The 1986 15202 N 40th St Phoenix 380 Wind Springs 1986 3515 E Bell Rd Phoenix 130 Greenspoint 1985 4202 E C Actus Rd Phoenix 336 Tatum Gardens 1985 15425 N Tatum Blvd Phoenix 128 Arabian Trails 1985 16636 N 58th St Scottsdale 384 Paradise Springs 1984 13616 N 43rd St Phoenix 200 Tatum Place 1984 16801 N 49th St Scottsdale 164 Saddleback 1984 4722 E Bell Rd Phoenix 582 Shadow Brook 1984 5122 E Shea Blvd Scottsdale 224 Scottsdale Meadows 1984 10888 N 70th St Scottsdale 168 Villa Encanto 1983 4315 E Thunderbird Rd Phoenix 383
Source: RealData, Inc. Commercial uses and residential support facilities are concentrated along major arterial streets and at section-line corners. Major concentrations of commercial development exist at Tatum and Shea boulevards, Tatum Boulevard and Cactus Road, and Shea Boulevard and Scottsdale Road. Three neighborhood scale shopping centers are located at the Tatum and Shea intersection. Paradise Village Gateway built in 1996 with over 295,000 square feet is anchored by Albertson's, Walgreens, Ross Dress For Less, Staples, PetSmart, and Bed Bath & Beyond. Paradise Village Marketplace with Whole Foods as the primary anchor was constructed in 2001 with over 100,000 square feet. Lastly, a Fry's Marketplace with roughly 107,000 square feet was originally built in 1976. Also, just north of the Paradise Village Gateway along Tatum Boulevard is the Anasazi Plaza I & II office development with roughly 205,000 square feet built in 1985 and 1999. One mile to the north is Paradise Valley Mall and several nearby neighborhood scale centers. Built in 1979, the 1.3 million square foot regional mall is anchored by Dillard's, Robinson's-May, J C Penny, Macy's and Sears. Five surrounding centers with a total of approximately 940,000 square feet were developed between 1979 and 1990. Notable anchor tenants include Michaels, Target, Comp USA, 20 GREENSPOINT APARTMENTS NEIGHBORHOOD ANALYSIS REI, Mervyn's, T J Maxx, Circuit City, Borders, Sports Authority, Toys R Us and Bookstar. There are also two significant office developments in the same area. Paradise Village Office Park was developed in 1986 with almost 270,000 square feet, while the Paradise Valley Corporate Center was built in 2002 with approximately 200,000 square feet. Three miles directly east are four shopping centers near the intersection of Scottsdale Road and Shea Boulevard. Wild Oats Plaza was built in 1980 and contains almost 70,000 square feet. Checker Village with Checker Auto Parts and Hancock Fabrics was constructed in 1978 with 88,900 square feet. Shea Scottsdale Center was built in 1980 with 158,900 square feet; it is anchored by Safeway and Osco Drug. Lastly, the unanchored Scottsdale Promenade with 90,000 square feet was constructed in 1986. ACCESS The road system within the entire metropolitan Phoenix area is generally designed in a grid pattern with major arterials at one-mile intervals. The major north/south arterials serving the neighborhood include Scottsdale Road, 64th Street, 56th Street, Tatum Boulevard, 40th Street and the Squaw Peak Freeway. The major east/west arterials include Shea Boulevard, Cactus Road, Thunderbird Road, Greenway Road, and Bell Road. These arterials and various interior collector streets provide adequate access to areas outside the neighborhood, including shopping centers, recreational facilities and other necessary support services. The neighborhood is considered to have excellent freeway access with the SR-51 (neighborhood western boundary) providing access to the Phoenix Central Business District and SR-101 Loop (2 miles north or 2 miles east of the neighborhood boundaries) providing access to the west or east valley cities. In November of 2004, residents of the Phoenix metropolitan area approved Proposition 400, which continues a half-cent sales tax for 20 years, and partially funds the starter segment and six extensions for the a light rail system. One of the six extensions involves a 12-mile line from central Phoenix to Paradise Valley Mall along state Route 51. However, this line is part of Phase IV of the light rail project, which scheduled to be constructed from 2021-2026. The starter segment and the other extension routes were previously discussed in the Area Analysis section of this report. COMMUNITY SERVICES In addition to what has been previously discussed, other residential support facilities are located within reasonable proximity to the subject. The area is a full service community including adequate police and fire protection provided by the cities of Phoenix, Scottsdale and Paradise Valley. 21 GREENSPOINT APARTMENTS NEIGHBORHOOD ANALYSIS Major recreational facilities within the area include a number of neighborhood scale parks and three golf courses, Stonecreek Golf Club, Orange Tree Golf Resort and Camelback Golf Club with the Resort Course and Club Course. The Phoenix Mountains Preserve also provides substantial recreational opportunities. Paradise Valley Hospital is located roughly four miles northwest at the southwest quadrant of Bell Road and 40th Street. Although not located within the immediate local area, there are three other hospitals within a reasonable distance of the property. Mayo Clinic Hospital is situated approximately four miles northeast at the southeast quadrant of 56th Street and Mayo Boulevard (just south of the Loop 101), Scottsdale Healthcare Hospital is located roughly 6.5 plus miles east at the southeast quadrant of Shea Boulevard and 90th Street, and John C. Lincoln Hospital is located miles southwest at Dunlap Avenue and 3rd Street. DEMOGRAPHICS Selected neighborhood demographics in a one-, three-, and five-mile radius from the subject are shown in the following table: 22 GREENSPOINT APARTMENTS NEIGHBORHOOD ANALYSIS SELECTED NEIGHBORHOOD DEMOGRAPHICS
4202 E. Cactus Rd. Radius 1.0 Radius 3.0 Radius 5.0 Phoenix, AZ Mile Mile Mile - ------------------ ---------- ---------- ---------- Population 2009 Population 18,635 109,293 262,203 2004 Population 17,276 104,071 243,742 2000 Population 16,336 101,404 232,095 1990 Population 15,601 92,009 180,142 Growth 2004 - 2009 7.87% 5.02% 7.57% Growth 2000 - 2004 5.75% 2.63% 5.02% Growth 1990 - 2000 4.71% 10.21% 28.84% Households 2009 Households 8,801 42,975 105,477 2004 Households 7,926 40,160 97,201 2000 Households 7,294 38,439 91,598 1990 Households 6,542 33,515 69,146 Growth 2004 - 2009 11.04% 7.01% 8.51% Growth 2000 - 2004 8.66% 4.48% 6.12% Growth 1990 - 2000 11.49% 14.69% 32.47% Income 2004 Median Household Income $ 50,962 $ 59,858 $ 59,489 2004 Estimated Average Household Income $ 65,564 $ 84,534 $ 86,509 2004 Estimated Per Capita Income $ 30,336 $ 33,122 $ 34,712 Age 25+ COllege Graduates - 2004 3,774 23,803 59,459 Age 25+ Percent College Graduates - 2004 31.2% 34.5% 36.3%
Source: CBRE Demographics in the area show moderate growth. Outer limits of Maricopa County are growing faster than the interior areas of the county due to the abundance of developable land for large-scale residential development. CONCLUSION The subject neighborhood and surrounding areas include a varied mix of property uses with supporting commercial projects. Existing neighborhood uses provide adequate opportunities for residency, shopping, services and employment within an average commute. Future development is expected to be limited and will include moderate to high price residential, as well as supporting retail and commercial uses. Overall, the subject is positioned in a favorable location for the long term with a combination of nearby office and residential land uses. The subject is well positioned in northeast Phoenix within close proximity to the Interstate 51, the Loop 101, Scottsdale and Phoenix, and major employers in 23 GREENSPOINT APARTMENTS NEIGHBORHOOD ANALYSIS the Phoenix/Mesa MSA. These factors should provide a positive outlook for the subject over a typical holding period. 24 GREENSPOINT APARTMENTS MARKET ANALYSIS MARKET ANALYSIS Marketability refers to the posture of the subject property within its marketplace and its ability to be leased, sold or marketed relative to its competition and current conditions. Within this section, we have addressed the overall market trends influencing the Phoenix apartment market, the trends occurring in the local submarket, the demographic influences affecting the subject property and our projections for the long-term market acceptance of the subject property. PROPERTY PRODUCTIVITY ANALYSIS The subject is a 336-unit garden apartment project known as Greenspoint Apartments. The property was developed in 1985 and is presently 95.8% leased. The subject is classified as a Class B apartment project by local market standards MULTI-FAMILY MARKET -- METRO PHOENIX ANALYSIS A snapshot of the multi-family apartment market as well as conditions within the submarket is presented as follows: APARTMENT MARKET STATISTICS
Category Phoenix Area Submarket 2N - -------- ------------ ------------ Existing Supply (Units) 223,913 5,547 New Construction YTD (Units) 4,868 0 Leasing YTD (Units) 4,180 53 Average Occupancy 91.2% 91.6% Average Rent per Unit $ 705 $ 803 Average Unit Size 839 Sf 910 Sf Average Rent PSF $ 0.84 $ 0.88 Date of Survey 4Q2004 4Q2004
Source: CBRE The apartment market in Phoenix moved through a rapid development phase from 1994 through 2001. This time period was characterized by rapid introduction of new space and relatively strong absorption across the Phoenix MSA. Market conditions began to change in the second half of 2001 in conjunction with the national economic downturn as vacancy rates moved upward, concessions began to increase, and rental rates plateaued. Although certain pockets of the Phoenix area are still experiencing rapid introduction of new space, new construction activity has slowed greatly across the MSA. Currently, the market is positioned in a recovery period with non-stabilized occupancy and concessions in most markets. However, declining overall capitalization rates have had a stabilizing effect on multi-family values, and this trend is expected to continue. 25 GREENSPOINT APARTMENTS MARKET ANALYSIS SUPPLY The following table depicts the changes in inventory and building permits issued for the Phoenix metropolitan area from 1991 through the present. MULTI-FAMILY INVENTORY METROPOLITAN PHOENIX
Building Year Inventory % Change Permits % Change - ---- --------- -------- -------- -------- 1991 260,501 0.6% 710 -62.4% 1992 261,095 0.2% 1,234 73.8% 1993 262,930 0.7% 1,799 45.8% 1994 264,663 0.7% 6,015 234.4% 1995 266,849 0.8% 7,719 28.3% 1996 275,919 3.4% 8,545 10.7% 1997 284,220 3.0% 7,930 -7.2% 1998 289,044 1.7% 7,877 0.7% 1999 296,761 2.7% 8,241 4.6% 2000 306,386 3.2% 8,009 -2.8% 2001 312,761 2.1% 7,201 -10.1% 2002 321,459 2.8% 5,607 -22.1% 2003 326,311 1.5% 4,836 -13.8% 2004* 330,291 1.0% 4,997 3.3%
Source: Phoenix Metropolitan Housing Study, through Fourth Quarter 2004* Roughly 36,000 apartment units were added to the Phoenix metropolitan area during the 1990's, or about 4,000 units per year on average. Permit activity remained relatively strong in 2000 and 2001, but declined 22% in 2002 and another 14% in 2003 to a decade low permit total of 4,836 in 2003. At the end of fourth, quarter 2004, 3,126 building permits were filed, which is 3.3% higher than the number of building permits filed in all of 2003. According to RealData, there are 3,631 units under construction across Phoenix MSA, and another 2,815 are in the planning stages for projects of 50 units or more. It should be noted that virtually all of the new permit activity is directed towards the luxury, or "A" quality market. The base inventory of "B" and "C" quality projects has remained fixed for several years. Furthermore, although there is market wide softness in leasing and occupancy, there is strong demand from both private capital and institutional investors for new and existing projects. The low capitalization rate environment is pushing prices upward and another development cycle is beginning in 2004. VACANCY RATES Trends in vacancy rates within the Phoenix area are presented in the following table: 26 GREENSPOINT APARTMENTS MARKET ANALYSIS APARTMENT VACANCY RATES METROPOLITAN PHOENIX
Annual Year Qtr. 1 Qtr. 2 Qtr. 3 Qtr. 4 Average - ---- ------ ------ ------ ------ ------- 1990 12% 13% 11% 10% 11.5% 1991 10% 13% 11% 10% 11.0% 1992 10% 11% 9% 8% 9.5% 1993 7% 8% 6% 4% 6.3% 1994 4%7 5% 4% 4% 4.3% 1995 3% 6% 4% 4% 4.3% 1996 4% 5% 5% 5% 4.8% 1997 5% 6% 5% 5% 5.3% 1998 4% 5% 5% 5% 5.0% 1999 5% 6% 6% 6% 6.0% 2000 6% 7% 8% 7% 7.0% 2001 8% 8% 7% 8% 7.8% 2002 8% 9% 8% 9% 8.5% 2003 10% 10% 10% 10% 10.0% 2004 9% 9% 8% 8% 8.5%
Source: Phoenix Metropolitan Housing Study, through Fourth Quarter 2004 Average year-end vacancy increased from 1998 through 2003, stabilized at 10%, but fell to 8% by the third quarter of 2004. Construction slowed dramatically over the last two years, but certain submarkets are now targeted for significant levels of new inventory, most notably the 101 Freeway corridor in north-Phoenix. Interest rates remain favorable, and this trend is expected to continue into 2005. However, while low mortgage rates have been blamed for a large-scale migration of apartment residents into the single-family market, most analysts (including home builders and apartment managers) now believe that this migration is over. Apartment residents who have the means to enter the single-family market have already done so over the last five years. Limited new construction in most areas combined with an improving employment market and a decline in migration from multi-family to single family point to an improvement in physical occupancy during 2005. It should be noted that the Phoenix Metropolitan Housing Study attempts to include all apartments via statistical inference in the previous vacancy rates. RealData, Inc. figures in the next section include only projects with 100 or more units. Therefore, there is a slight difference in apartment vacancy rates between these sources. ABSORPTION The following table depicts the number of units that have been absorbed and that remained vacant since 1990. 27 GREENSPOINT APARTMENTS MARKET ANALYSIS ANNUAL ABSORPTION RATES - METRO PHOENIX
Year Absorption % Change No. Vacant % Change - ---- ---------- -------- ---------- -------- 1990 10,482 53.9% 25,875 -24.9% 1991 2,734 -73.9% 24,650 -4.7% 1992 4,394 60.7% 20,850 -15.4% 1993 12,135 176.0% 10,550 -49.4% 1994 2,208 -81.8% 10,075 -4.5% 1995 211 -90.4% 12,050 19.6% 1996 7,820 36.1% 12,300 2.1% 1997 8,001 2.3% 13,600 10.6% 1998 3,674 -69.9% 14,525 6.8% 1999 5,017 36.6% 17,450 20.1% 2000 6,225 24.1% 20,850 19.5% 2001 1,525 -75.5% 25,700 8.2% 2002 4,273 180.2% 30,125 17.2% 2003 3,702 -13.4% 31,275 3.7% 2004* 9,230 249.3% 26,025 -16.8%
Source: Phoenix Metropolitan Housing Study, Fourth Quarter 2004* A total of 4,836 permits were issued in 2003 and 3,702 units were absorbed. As of Fourth Quarter 2004, 4,997 permits have been issued and 9,230 units have been absorbed. Although annual absorption has remained positive over the last 14 years, it tends to lag behind new construction. The large positive imbalance between new permits and absorption posted during the first three quarters of 2004 has caused the metropolitan vacancy level to drop from 10% at year-end 2003 to its current rate of 8%. However, new construction is still occurring in various pockets across the MSA, particularly within the Deer Valley/101 corridor. SALE PRICES The following table depicts several benchmarks in relation to recent sales activity in the subject's overall property class. Sales criteria involved all projects above 150 units that were developed between 1981 and 1989. 28 GREENSPOINT APARTMENTS MARKET ANALYSIS SALES TRENDS: MARICOPA COUNTY APARTMENTS
2001 2002 2003 2004 2005 ------------- ------------- ------------- ------------- ------------- Total Sales 19 11 26 32 11 Total $ Volume $ 264,005,015 $ 134,163,000 $ 225,570,396 $ 384,526,235 $ 136,027,500 Total Square Feet 4,194,503 2,675,293 4,548,576 6,693,740 2,069,596 Total Units 5,095 3,703 6,274 8,743 2,893 Total Acres 207.17 126.61 247.25 330.14 126.6 Average Sale Price $ 13,895,001 $ 12,196,636 $ 8,675,784 $ 12,016,445 $ 12,366,136 Average Number of SF 220,763 243,208 174,945 209,179 188,145 Average Price Per SF $ 62.94 $ 50.15 $ 49.59 $ 57.45 $ 65.73 Median Price Per SF $ 57.13 $ 42.56 $ 50.47 $ 58.72 $ 61.94 Average Price Per Unit $ 51,816 $ 36,231 $ 35,953 $ 43,981 $ 47,020 Median Price Per Unit $ 52,925 $ 29,885 $ 35,821 $ 42,026 $ 41,161 Average Number of Units 268 337 241 273 263 Average Number of Acres 11.51 11.51 9.51 10.32 11.51 Average Cap Rate 8.94 8.58 8.41 6.57 7.46 Average GRM 6.11 0 5.32 5.98 6.03
Source: CoStar The true number of sales for 2005 is suspect because Costar is approximately 75 days behind schedule in reporting current sales. However, the data indicate that 2004 was a record year in both the number of transactions and total dollar volume. While none of the samples is statistically valid, average unit prices have increased over the five-year time frame. There are generally more buyers than sellers in the current market. As overall capitalization rates continue to decline, the immediate outlook is for stable or improving values into 2005. RENTAL RATES The following table shows the trend in average unfurnished rental rates since 1992: 29 GREENSPOINT APARTMENTS MARKET ANALYSIS AVERAGE UNFURNISHED RENT AND ANNUAL PERCENTAGE INCREASE
Annual Year Qtr. 1 Qtr. 2 Qtr. 3 Qtr. 4 % Change - ---- ------ ------ ------ ------ -------- 1992 $431 $433 $436 $439 1.9% 1993 $445 $449 $455 $464 4.3% 1994 $475 $483 $494 $508 6.9% 1995 $523 $530 $537 $545 4.2% 1996 $553 $559 $566 $572 3.4% 1997 $578 $586 $594 $602 4.2% 1998 $614 $616 $625 $628 2.3% 1999 $636 $640 $646 $651 2.4% 2000 $657 $662 $669 $677 3.0% 2001 $683 $686 $687 $688 0.7% 2002 $691 $691 $694 $692 0.6% 2003 $694 $694 $695 $698 0.8% 2004 $700 $700 $702 $705 1.0%
Source: Real Data, Inc. Income growth is currently neutral in the Phoenix MSA, but has ranged from 0.6% to 6.9% annually over the last 12 years. The average income growth rate over the last 12 years in Phoenix has been 4.0%. The near term projection is for neutral to improving rental growth as reflected by the performance of the apartment market during the first four quarters of 2004. However, the long-term growth rate remains in the range of 2% to 3%. CONCLUSION -- MULTI-FAMILY MACRO The apartment cycle is positioned in a recovery phase following a rapid development cycle during the 1990's. Softness in leasing and occupancy are common across the MSA and new construction is ongoing. The outlook in Phoenix for the next two years includes the following: - Flat rental rates are projected into the first half of 2005, but the long-term growth rate remains at 2% to 3%, particularly in the Class A segment. - Physical vacancy is expected to improve during 2005, but a relatively high level of concessions, including free rent, will remain in effect over the next several quarters. - After several quarters of flat property values, there appears to be upward pressure on property values due to strong investor demand and declining overall rates. The final part of this analysis is presented on a submarket basis. This analysis is presented after the submarket map on the following page. 30 GREENSPOINT APARTMENTS MARKET ANALYSIS [REALDATA, INC. STATISTICAL DISTRICTS MAP] 31 GREENSPOINT APARTMENTS MARKET ANALYSIS MULTI-FAMILY MARKET -- SUBMARKET ANALYSIS The following discussion concerns the market conditions impacting the immediate subject submarket. The subject property is located in the North Paradise Valley submarket 2N as designated by RealData, Inc. The map on the preceding page delineates the area incorporated in this submarket. SUPPLY ANALYSIS An analysis of the specific inventory comprising this area indicates the following age characteristics in complexes with 100+ units. SUBMARKET APARTMENTS WITH 100+ UNITS DISTRICT 2N
Year Built Total # of Units % of Phoenix Area - ---------- ---------------- ----------------- Prior to 1972 0 0.0% 1973 to 1980 206 3.7% 1980 to 1990 2,849 51.4% 1990 to 2000 1,990 35.9% 2000 to Present 502 9.0%
Source: Realdata, Inc., 4Q2004 PROPOSED INVENTORY Within the North Paradise Valley submarket, there are currently no projects in the construction or planning stages: ABSORPTION The following table presents the historical absorption within the North Paradise Valley submarket: HISTORIC ABSORPTION 100+ UNIT COMPLEXES
Period Submarket 2N Metro Phoenix - ------ ------------ ------------- 1Q2003 20 2,021 2Q2003 -98 -218 3Q2003 -21 1,213 4Q2003 -31 256 1Q2004 35 2,066 2Q2004 -32 -53 3Q2004 41 3,021 4Q2004 9 -854 -- ----- TOTAL YTD 53 4,180 == =====
Source: Realdata, Inc., 4Q2004 VACANCY The following chart depicts recent historical vacancies within 100+ unit complexes. 32 GREENSPOINT APARTMENTS MARKET ANALYSIS STABALIZED VACANCY RATES 100+ UNIT COMPLEXES
Period Submarket 2N Metro Phoenix - ------ ------------ ------------- 1Q2003 7.66% 9.73% 2Q2003 9.30% 10.37% 3Q2003 9.50% 9.90% 4Q2003 9.73% 10.18% 1Q2004 8.84% 9.40% 2Q2004 9.41% 9.79% 3Q2004 8.53% 8.65% 4Q2004 8.36% 8.84% Avg. Last 4 Qtrs 8.79% 9.17%
Source: RealData, Inc., 4Q2004 It should be noted that the previous vacancy figures represent physical vacancy only. Deductions for economic vacancy, including collection losses, lagging rent and concessions are not included in the previous figures. Loss to lease and collections losses are nominal at this time, with both categories typically accounting for less than 1% of potential rental income. Concessions are more entrenched, and a wide variety of programs are in place. One major institutional owner uses a Lease Rent Optimizer program in which units are priced individually based upon location and days vacant. A minority of other apartment owners and managers have attempted to adjust concessions out of quoted rental rates with mixed result. The market has basically come to expect a minimum of one month free on a 12-month lease (8%). For markets with significant new construction still occurring, the norm is two to a maximum of three months free rent. RENTAL RATES The following chart summarizes rental rates in the submarket. AVERAGE RENT UNFURNISHED - NO UTILITIES 100+ UNITS
Type Submarket 2N Metro Phoenix ---- ------------ ------------- Studio $ 511 $ 458 1 BR/1 BA $ 702 $ 616 1 BR/1 + BA $ 680 $ 712 2 BR/1 BA $ 726 $ 646 2 BR/1 + BA $ 852 $ 783 3 BR/1 BA * $ 685 3BR /1 + BA $1,122 $1,043 4 BR/1 + BA * $ 983 ------ ------ Average $ 803 $ 705 ------ ------
- ---------- * No significant units of this type Source: RealData, Inc., 4Q2004 33 GREENSPOINT APARTMENTS MARKET ANALYSIS DEMOGRAPHIC ANALYSIS Demand for additional residential property is a direct function of population change. Multi-family communities are products of a clearly definable demand relating directly to population shifts. HOUSING, POPULATION AND HOUSEHOLD FORMATION POPULATION AND HOUSEHOLD PROJECTIONS
Radius 1.0 Radius 3.0 Radius 5.0 Mile Mile Mile ---------- ---------- ---------- Population 2009 Population 18,635 109,293 262,203 2004 Population 17,276 104,071 243,742 2000 Population 16,336 101,404 232,095 1990 Population 15,601 92,009 180,142 Growth 2004 - 2009 7.87% 5.02% 7.57% Growth 2000 - 2004 5.75% 2.63% 5.02% Growth 1990 - 2000 4.71% 10.21% 28.84% Households 2009 Households 8,801 42,975 105,477 2004 Households 7,926 40,160 97,201 2000 Households 7,294 38,439 91,598 1990 Households 6,542 33,515 69,146 Growth 2004 - 2009 11.04% 7.01% 8.51% Growth 2000 - 2004 8.66% 4.48% 6.12% Growth 1990 - 2000 11.49% 14.69% 32.47%
Source: CBRE Households represent a basic unit of demand in the housing market. According to the data, the subject's neighborhood is experiencing average population growth and household formation compared with the overall Phoenix MSA. INCOME DISTRIBUTIONS Household income available for expenditure on housing and other consumer items is a primary factor in determining the price/rent level of housing demand in a market area. In the case of this study, projections of household income, particularly for renters, identifies in gross terms the market from which the subject submarket draws. The following table illustrates estimated household income distribution for the subject neighborhood. 34 GREENSPOINT APARTMENTS MARKET ANALYSIS HOUSEHOLD INCOME DISTRIBUTION
Radius 1.0 Radius 3.0 Radius 5.0 Mile Mile Mile ---------- ---------- ---------- Households by Income Distribution - 2004 Less than $15K 7.83% 7.70% 8.00% $15K - $25K 8.77% 7.28% 7.84% $25K - $35K 13.74% 10.60% 10.60% $35K - $50K 18.57% 15.43% 15.41% $50K - $75K 23.61% 20.82% 19.30% $75K - $100K 12.89% 13.54% 13.50% $100K - $150K 9.16% 13.03% 13.03% $150K - $250K 3.72% 7.44% 7.61% $250K - $500K 1.30% 2.79% 3.00% $500K or more 0.39% 1.38% 1.71%
Source: CBRE The following table illustrates the median and average household income levels for the subject neighborhood. HOUSEHOLD INCOME LEVELS
Radius 1.0 Radius 3.0 Radius 5.0 Mile Mile Mile ---------- ---------- ---------- Income 2004 Median Household Income $50,962 $59,858 $59,489 2004 Estimated Average Household Income $65,564 $84,534 $86,509 2004 Estimated Per Capita Income $30,336 $33,122 $34,712
Source: CBRE An analysis of the income data indicates that the submarket is generally comprised of middle- to upper middle-income economic cohort groups, which include the target groups to which the subject property is oriented. EMPLOYMENT An employment breakdown typically indicates the working class characteristics for a given market area. The specific employment population within the indicated radii of the subject is as follows: 35 GREENSPOINT APARTMENTS MARKET ANALYSIS EMPLOYMENT BY INDUSTRY
Radius 1.0 Radius 3.0 Radius 5.0 Mile Mile Mile ---------- ---------- ---------- Occupation Agr/Frst/Fish/Hunt/Mine 0.52% 0.31% 0.35% Construction 7.59% 8.80% 9.09% Total Manufacturing 7.95% 9.14% 9.59% Wholesale Trade 4.61% 4.02% 4.02% Retail Trade 19.12% 16.11% 15.07% Transport/Warehse/Utils 5.20% 5.14% 4.51% Information 3.24% 4.00% 3.91% Fin/Insur/RE/Rent/Lse 13.48% 13.61% 14.36% Prof/Sci/Tech/Admin 12.05% 11.60% 11.66% Mgmt of Companies 0.04% 0.10% 0.12% Admin/Spprt/Waste Mgmt 0.00% 0.00% 0.00% Educational Svcs 8.35% 8.43% 8.18% Health Care/Soc Asst 11.71% 11.70% 12.10% Entertainment & Rec Services 2.86% 2.85% 2.80% Accommdtn/Food Svcs 0.00% 0.00% 0.00% Oth Svcs, Not Pub Admin 0.00% 0.00% 0.00% Public Administration 3.29% 4.17% 4.24%
Source: CBRE The previous table illustrates the employment character of the submarket, indicating a predominantly middle- to lower-middle employment profile, with the largest percentages of the population holding retail trade, FIRE related, and professional jobs. VACANCY CONCLUSION COMPARABLE PROPERTIES Comparable properties have been surveyed in order to identify the occupancy trends within the immediate submarket. The comparable data is summarized in the following table: 36 GREENSPOINT APARTMENTS MARKET ANALYSIS SUMMARY OF COMPARABLE APARTMENT RENTALS
COMP. NO. NAME LOCATION OCCUPANCY - ----- ---- -------- --------- 1 Paradise Springs 13616 N. 43rd Street, 96% Phoenix, AZ 2 Paradise Trails 4502 E. Paradise Village Pky South, 95% Phoenix, AZ 3 The Palisades 13440 N. 44th Street, 93% Phoenix, AZ 4 The Ridge 15202 N. 40th Street, 93% Phoenix, AZ 5 Townhomes On The Park 12844 N. Paradise Village Pwy West, 98% Phoenix, AZ 6 Villa Encanto 4315 E. Thunderbird Road, 94% Phoenix, AZ Subject Greenspoint Apartments 4202 East Cactus Road, 96% Phoenix, Arizona
Compiled by CBRE Prior to concessions, the comparables support a range of occupancy of 93% to 98%, with an average of 95%. The subject is 95.8% leased. Various measures of physical occupancy were discussed and analyzed within this section of this report. These benchmarks are summarized as follows: OCCUPANCY CONCLUSIONS Phoenix Area 91.2% Submarket 91.6% Rent Comparables 94.8% Subject's Current Occupancy 95.8% Subject's Stabilized Occupancy 87.0%
Compiled by CBRE Physical occupancy tends to peak in March and April in the Phoenix MSA, and declines in the summer months. The subject has averaged 10% to 17% physical vacancy since 2002 and management is 37 GREENSPOINT APARTMENTS MARKET ANALYSIS budgeting a 13% physical vacancy rate for 2005. Over the course of the first year of analysis, we have reconciled the physical occupancy conclusion at 87%, consistent with the management forecast. Concessions remain widespread and this trend will continue over the next several years. In addition to physical vacancy, we have estimated 3.0% collection loss, 8.00% long-term concessions, and 3.00% loss to lease, which will each be deducted as line items from the potential gross income. CONCLUSION The Phoenix apartment market is moving through a recovery phase at this time. New construction has slowed and the large-scale migration from multi-family to single family housing over the last five years appears to be over. The near term outlook is for general improvement in physical occupancy during 2005. Continued aggressive pricing on behalf of institutional buyers and the expectation of ongoing favorable mortgage rates in the private capital arena have driven investment rates downward. Although rent growth will most likely result in increasing overall rates over the next several quarters, there are more buyers than sellers in this market and the outlook is for continued price appreciation in the multi-family segment. The subject's immediate area contains a mix of newer projects, with very good access to employment, freeways, shopping, and entertainment facilities. No new competitive construction is occurring in the area, and the outlook is for continued improvement in leasing and occupancy. At 336 units, the subject is oriented to a wide mix of private capital and institutional buyers. 38 GREENSPOINT APARTMENTS SITE ANALYSIS SITE MAP [SITE MAP] 39 GREENSPOINT APARTMENTS SITE ANALYSIS SITE ANALYSIS The following chart provides a summary of the salient features relating to the subject site. SITE SUMMARY PHYSICAL DESCRIPTION Net Site Area 9.26 Acres 403,191 Sq. Ft. Primary Road Frontage 42nd Street 1/4 mile Secondary Road Frontage Cactus Road 205 Feet Average Depth 350 Feet Excess Land Area None Surplus Land Area None Zoning District R-5, Phoenix Multi-Family Residence Flood Map Panel No. 04013C1680G, dated July 19, 2001 Flood Zone X (Shaded)
Source: Various sources compiled by CBRE LOCATION The subject is on the north side of Cactus Road, less than one-quarter mile east of 40th Street. The street address is 4202 East Cactus Road. ASSESSOR'S PARCEL NUMBER The Maricopa County Tax Assessor's parcel number is 167-27-001W. LAND AREA The site is considered adequate in terms of size and utility. There is no unusable, excess or surplus land area. SHAPE AND FRONTAGE The site is generally irregular in shape and has adequate frontage along two primary thoroughfares within the neighborhood. INGRESS/EGRESS Ingress and egress is available to the site via two entrance points along 42nd Street. The subject does not have access from Cactus Road, but does have premium frontage along this arterial road. 40 GREENSPOINT APARTMENTS SITE ANALYSIS Cactus Road, at the subject property, is a major east/west arterial street that is improved with three lanes of traffic in each direction plus a median. Street improvements include asphalt paving and concrete curbs, gutters and sidewalks, and street lighting. Street parking is not permitted. 42nd Street, at the subject property, is a minor north/south residential street that is improved with one lane of traffic in each direction. Additional street improvements include concrete curbs, gutters and sidewalks, and street lighting. Street parking is permitted. Please refer to the prior site/plat exhibit for the layout of the streets that provide access to the subject property TOPOGRAPHY AND DRAINAGE The site is generally level and at street grade. The topography of the site is not seen as an impediment to the development of the property. During our inspection of the site, we observed no drainage problems and assume that none exist. SOILS A soil analysis for the site has not been provided for the preparation of this appraisal. In the absence of a soil report, it is a specific assumption that the site has adequate soils to support the highest and best use. EASEMENTS AND ENCROACHMENTS A title policy for the property has not been provided for the preparation of this appraisal. Based on our visual inspection and review of the site plan, the property does not appear to be adversely affected by any easements or encroachments. It is recommended that the client/reader obtain a current title policy outlining all easements and encroachments on the property, if any, prior to making a business decision. ACCESS AGREEMENTS There are no known access agreements that may affect the subject's marketability. COVENANTS, CONDITIONS AND RESTRICTIONS There are no known covenants, conditions and restrictions impacting the site that are considered to affect the marketability or highest and best use, other than zoning restrictions. UTILITIES AND SERVICES The site is within the jurisdiction of Phoenix and is provided all municipal services, including police, fire and refuse garbage collection. All utilities are available to the site in adequate quality and 41 GREENSPOINT APARTMENTS SITE ANALYSIS quantity to service the highest and best use as if vacant and as improved. Arizona Public Service provides electricity, the City of Phoenix provides water and sewer, Qwest provides telephone service, and Cox provides cable and high-speed internet access. FLOOD ZONE According to flood hazard maps published by the Federal Emergency Management Agency (FEMA), the site is within Zone X (Shaded), as indicated on the indicated Community Map Panel No. 04013C1680G, dated July 19, 2001. FEMA Zone X (Shaded): Areas of 500-year flood; areas if 100-year flood with average depths of less than 1 foot or with drainage areas less than 1 square mile; and areas protected by levees from 100-year flood. ENVIRONMENTAL ISSUES CBRE has not observed, yet is not qualified to detect, the existence of potentially hazardous material or underground storage tanks which may be present on or near the site. The existence of hazardous materials or underground storage tanks may have an affect on the value of the property. For this appraisal, CBRE has specifically assumed that any hazardous materials and/or underground storage tanks that may be present on or near the property do not affect the property. ADJACENT PROPERTIES The adjacent land uses are as follows: North: Single-family housing South: Cactus Road followed by multi-family housing and a golf course East: Anchored retail center / Medical office complex West: 42nd Street followed by single-family housing
The adjacent properties represent a mixture of retail, office and residential uses representative of a fully developed and healthy neighborhood. CONCLUSION The site has good visibility along an arterial road and is within walking distance of Paradise Valley mall. The size of the site is typical for the area and use, and there are no known detrimental uses in the immediate vicinity. Overall, there are no known factors that are considered to prevent the site from development to its highest and best use, as if vacant, or adverse to the existing use of the site. 42 GREENSPOINT APARTMENTS IMPROVEMENT ANALYSIS IMPROVEMENT LAYOUT [IMPROVEMENT LAYOUT] 43 GREENSPOINT APARTMENTS IMPROVEMENT ANALYSIS IMPROVEMENT ANALYSIS The following chart depicts the subject's building area by component. IMPROVEMENT SUMMARY Number of Buildings 14 Number of Stories 3 Gross Building Area 280,559 SF Net Rentable Area 278,064 SF Number of Units 336 Average Unit Size 828 SF Development Density 36.3 Units/Acre Parking Improvements 569 Total Spaces Open: 233 Covered: 336 Parking Ratio (spaces/unit) 1.40
PERCENT OF UNIT SIZE UNIT MIX COMMENTS NO. OF UNITS TOTAL (SF) NRA (SF) - -------- -------- ------------ ---------- ---------- --------- 1 BR, 1 BA Aspen 48 14.3% 653 31,344 1 BR, 1 BA Birchwood 60 17.9% 717 43,020 1 BR, 1 BA Cypress 60 17.9% 756 45,360 2 BR, 1.3 BA Driftwood 84 25.0% 884 74,256 2 BR, 2 BA Evergreen 84 25.0% 1,001 84,084 --- ----- ----- ------- Total/Average: 336 100.0% 828 278,064 --- ----- ----- -------
Source: Various sources compiled by CBRE As shown in the previous table, the subject consists of 10 rentable buildings as well as a clubhouse, leasing center, and several maintenance structures. There are 336 rentable apartment units, for a total net rentable area of 278,064 square feet. The gross building area was derived from the Assessor's records. Units sizes were derived from management and do not include patios or balconies. Building plans and specifications were not provided for the preparation of this appraisal. The following is a description of the subject improvements and basic construction features derived from CBRE's physical inspection. YEAR BUILT The subject property was built in 1985 and has not been recently renovated. However, the parking lot was recently resurfaced, two roofs were recently replaced, and another two roofs were being replaced on the date of inspection. FOUNDATION The foundation consists of poured reinforced concrete/perimeter footings and column pads. 44 GREENSPOINT APARTMENTS IMPROVEMENT ANALYSIS CONSTRUCTION COMPONENTS The construction components include a wood frame with wood truss and joist floor structure and plywood floor deck. FLOOR STRUCTURE The floor structure is summarized as follows: Ground Floor: Concrete slab on compacted fill Other Floors: Plywood deck with light-weight concrete cover EXTERIOR WALLS The exterior wall structure is masonry block with a painted stucco finish. The buildings have single pane aluminum frame windows. ROOF COVER All buildings exhibit flat roof surfaces with a built-up foam surface and pitched areas with a concrete tile surface. ELEVATOR/STAIR SYSTEM The subject has no elevator systems, but each building has exterior stairway access. This is common for the age and class of the subject. HVAC The individual units feature roof-mounted electric condenser/compressor units with electric strip heating within the interior of the units. The HVAC systems are assumed to be in average operating condition and adequate for the respective square footage of each individual unit. UTILITIES Each unit is individually metered for electrical usage. Management back bills for water, trash, and common gas expenses used to deliver hot water. Aggregate monthly utility reimbursements are summarized as follows: - - Aspen: $23 - - Birchwood: $25 - - Cypress: $27 - - Driftwood: $31 - - Evergreen: $36
45 GREENSPOINT APARTMENTS IMPROVEMENT ANALYSIS SECURITY The improvements are encircled by a combination block/iron wall with security keyed electronic gates at all vehicle access points. Although the management office features a security alarm system, there is no alarm oriented security system for the individual units. FIRE PROTECTION The improvements are not fire sprinklered, although all units are equipped with smoke detectors. It is assumed the improvements have adequate fire alarm systems, fire exits, fire extinguishers, fire escapes and/or other fire protection measures to meet local fire marshal requirements. PROJECT AMENITIES The project amenities include one pool and spa, fitness center, leasing office, men's and women's saunaus, security access gate, and covered parking. There is also a resident clubhouse that has a small kitchen area, fireplace, and meeting area that is available for lease. UNIT AMENITIES KITCHENS Each unit features a full appliance package including an electric range/oven, vent-hood, frost-free refrigerator with icemaker, garbage disposal, dishwasher, and built-in microwave oven. Additionally, each unit features wood cabinets with Formica countertops and vinyl tile flooring in the kitchen area. According to management, the project has experienced an adequate on-going replacement program for all kitchen appliances and no appliances are known to be inoperable. BATHROOMS The bathrooms within each unit feature combination tub/showers with ceramic tile wainscot. Additionally, each bathroom features a commode, wood cabinet with Formica counter and built-in porcelain sink, wall-mounted medicine cabinet with vanity mirror and vinyl tile flooring. INTERIOR FEATURES Each unit includes a ceiling fan in the living room with all third-floor units featuring vaulted ceilings. All units have a patio or balcony, full size washer and dryer, vertical and mini-blinds, and carpet and vinyl flooring. According to management, 168 of the units have wood burning fireplaces. INTERIOR LIGHTING Each unit features incandescent lighting in appropriate interior and exterior locations with fluorescent lighting in bathrooms and kitchen areas. 46 GREENSPOINT APARTMENTS IMPROVEMENT ANALYSIS PATIOS, BALCONIES AND STORAGE All units include a private patio or balcony area with an exterior storage room. The storage rooms are not included in the gross rentable building area. SITE AMENITIES PARKING AND DRIVES The project features adequate surface parking, including reserved handicap spaces. Access to the property is controlled via electronic security gates located at the primary entry point. All parking spaces and vehicle drives are asphalt paved and considered to be in average condition. According to management, there are 569 total parking spaces, including 336 covered spaces. The parking ratio is 1.69 spaces per unit. This ratio is both functional and legally conforming. LANDSCAPING The project features combinations of grass, gravel and natural desert landscaping which is considered to be in average condition and well maintained. All planting is sprinklered or irrigated. QUALITY AND STRUCTURAL CONDITION The overall quality of the project is considered average for the neighborhood and age. CBRE did not observe any evidence of structural fatigue and the improvements appear structurally sound for occupancy. However, CBRE is not qualified to determine structural integrity and it is recommended that the client/reader retain the services of a qualified, independent engineer or contractor to determine the structural integrity of the improvements prior to making a business decision. FUNCTIONAL UTILITY All of the floor plans are considered to feature functional layouts and the layout of the overall project is considered functional in utility. Therefore, the unit mix is also functional and no conversion is warranted to the existing improvements. PROJECT DENSITY The project's development density is commensurate with other competing properties in the neighborhood. ADA COMPLIANCE All common areas of the property appear to have handicap accessibility. The client/reader's attention is directed to the specific limiting conditions regarding ADA compliance. 47 GREENSPOINT APARTMENTS IMPROVEMENT ANALYSIS FURNITURE, FIXTURES AND EQUIPMENT The apartment units are rented on an unfurnished basis. However, miscellaneous maintenance tools, pool furniture, leasing office furniture, recreational room and clubhouse furniture, and various exercise machines are examples of personal property associated with and typically included in the sale of multifamily apartment complexes. The personal property items contained in the project are not considered to contribute significantly to the overall value of the real estate. ENVIRONMENTAL ISSUES CBRE has not observed, yet is not qualified to detect, the existence of any potentially hazardous materials such as lead paint, asbestos, urea formaldehyde foam insulation, or other potentially hazardous construction materials on or in the improvements. The existence of such substances may have an affect on the value of the property. For the purpose of this assignment, we have specifically assumed that any hazardous materials that would cause a loss in value do not affect the subject. DEFERRED MAINTENANCE Our inspection of the property indicated no major items of deferred maintenance. ECONOMIC AGE AND LIFE CBRE's estimate of the subject improvements effective age and remaining economic life is depicted in the following chart: ECONOMIC AGE AND LIFE Actual Age 20 Years Effective Age 17 Years MVS Expected Life 45 Years Remaining Economic Life 28 Years Accrued Physical Incurable Depreciation 37.8%
Compiled by CBRE The overall life expectancy is based upon our on-site observations and a comparative analysis of typical life expectancies reported for buildings of similar construction as published by Marshall and Swift, LLC, in the Marshall Valuation Service cost guide. While CBRE did not observe anything to suggest a different economic life, a capital improvement program could extend the life expectancy. CONCLUSION The improvements are considered to be in average to good overall condition and are considered to be typical for the age and location in regard to improvement design and layout, as well as interior 48 GREENSPOINT APARTMENTS IMPROVEMENT ANALYSIS and exterior amenities. Overall, there are no known factors that could be considered to adversely impact the marketability of the improvements. 49 GREENSPOINT APARTMENTS ZONING ZONING The following map indicates the zoning districts present within the subject's immediate area: [ZONING MAP] The following chart summarizes the zoning requirements applicable to the subject: 50 GREENSPOINT APARTMENTS ZONING ZONING SUMMARY Current Zoning R-5, Phoenix Multi-Family Residence District Legally Conforming Yes Uses Permitted Provides for multi-family housing development Zoning Change Not likely
CATEGORY ZONING REQUIREMENT -------- ------------------ Minimum Lot Depth 50 Feet Minimum Lot Width 40 Feet Maximum Height 2 stories and 30 feet Minimum Setbacks Front Yard 15 Feet Street Side Yard 10 feet one-story, 15 feet two-story Interior Side Yard 13 Feet Rear Yard 15 feet one-story, 20 feet two-story Maximum Bldg. Coverage 50% Maximum Density 43.5 Units per acre Parking Requirements 504 Spaces Subject's Actual Parking 569 Spaces
Source: Planning & Zoning Dept. ANALYSIS AND CONCLUSION The improvements represent a legally conforming use and, if damaged, may be restored without special permit application. It is recommended that local planning and zoning personnel be contacted regarding more specific information that might be applicable to the subject. 51 GREENSPOINT APARTMENTS TAX AND ASSESSMENT DATA TAX AND ASSESSMENT DATA The State of Arizona employs a dual (Primary, Secondary) structure for real estate taxation. The assessed value derived from "full cash value" is the basis for computing taxes for budget overrides, bond and sanitary, fire and other special districts (Secondary taxes), while the assessed value derived from "limited value" is the basis for computing taxes for the maintenance and operation of school districts, community college districts, cities, county and the state (Primary taxes). The subject's market value, assessed value, and taxes are summarized below, and do not include any furniture, fixtures and equipment. AD VALOREM TAX INFORMATION
2004 Actual 2005 Pro Forma 2006 Pro Forma Limited Full Cash Limited Full Cash Limited Full Cash ----------- ----------- ----------- ----------- ----------- ----------- 167-27-001W $12,529,125 $12,529,125 $12,870,000 $12,870,000 $14,157,000 $15,471,300 ----------- ----------- ----------- ----------- ----------- ----------- Subtotal $12,529,125 $12,529,125 $12,870,000 $12,870,000 $14,157,000 $15,471,300 Assessment Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% ----------- ----------- ----------- ----------- ----------- ----------- Assessed Values $ 1,252,913 $ 1,252,913 $ 1,287,000 $ 1,287,000 $ 1,415,700 $ 1,547,130 Taxation Type Primary Secondary Primary Secondary Primary Secondary Rates per 100 7.1941 4.2523 7.1941 4.2523 7.1941 4.2523 Assessed Values $ 1,252,913 $1,252,913 $ 1,287,000 $ 1,287,000 $ 1,415,700 $ 1,547,130 ----------- ----------- ----------- ----------- ----------- ----------- Totals $ 90,136 $ 53,278 $ 92,588 $ 54,727 $ 101,847 $ 65,789 Taxation Type Special Special Special Rates per 100 0.0000 0.0000 0.0000 Assessed Values $ 1,252,913 $ 1,287,000 $ 1,547,130 ----------- ----------- ----------- Totals $ 0 $ 0 $ 0 TOTAL TAXES $ 143,413 $ 147,315 $ 167,635 ----------- ----------- -----------
Source: Maricopa County Assessor's Office According to Maricopa County Treasurer records, there are no delinquent property taxes encumbering the subject. Our pro forma is based on actual assessed values along with 2004 tax rates. Taxes are then expected to increase at the rate of inflation. TAX COMPARABLES As a crosscheck to the subject's applicable real estate taxes, CBRE has reviewed the real estate tax information according to the Maricopa County Assessor for comparable properties in the immediate area. The following table summarizes the real estate tax comparables employed for this assignment: 52 GREENSPOINT APARTMENTS TAX AND ASSESSMENT DATA AD VALOREM TAX COMPARABLES
Comp 1 Comp 2 Comp 3 Subject Paradise Springs Paradise Trails The Ridge Greenspoint ---------------- --------------- ----------- ----------- Year Built 1984 1985 1986 1985 No. Units 200 174 380 336 Tax Year 2005 2005 2005 2005 TOTAL FULL CASH VALUE $ 9,575,700 $ 8,636,900 $12,955,600 $12,870,000 PER UNIT $ 47,879 $ 49,637 $ 34,094 $ 38,304
SOURCE: Maricopa County Assessor's Office CONCLUSION The tax comparables support an assessed value ranging from $34,094 to $49,637 per unit. The subject falls at $38,304 per unit. Therefore, the subject's 2005 pro forma taxes of $147,315 are considered reasonable. There is no basis for a tax appeal at this time. 53 GREENSPOINT APARTMENTS HIGHEST AND BEST USE HIGHEST AND BEST USE In appraisal practice, the concept of highest and best use represents the premise upon which value is based. The four criteria the highest and best use must meet are: - legal permissibility; - physical possibility; - financial feasibility; and - maximum profitability. Highest and best use analysis involves assessing the subject both as if vacant and as improved. AS VACANT LEGAL PERMISSIBILITY The legally permissible uses were discussed in detail in the site analysis and zoning sections of this report. The subject site is zoned for multi-family use. This zoning category is oriented towards garden style apartment projects, but lower intensity uses such as condominiums, churches, and single family residences are possible under the subject's current zoning. With single family homes along the north property boundary there is little probability that the subject's zoning would be changed to a higher intensity commercial, office or industrial use. Multi-family uses for the subject conform with the general plan of Phoenix. No private restrictions are known to impact the subject. PHYSICAL POSSIBILITY The physical characteristics of the subject site were discussed in detail in the site analysis. The subject parcel is irregular in shape with frontage along a primary arterial road and a neighborhood collector. The net usable site area is approximately 9.25 acres, and all off-sites, including curbs, gutters, sidewalks, storm drains, and utilities are available to the subject site. Overall, the subject site is physically suited for near term development. The overall size of the subject is small for a single-family residential subdivision. Furthermore, the neighborhood is already adequately served by schools and parks. Therefore, the most probable use from a physical and legal perspective is either multi-family development, or to hold the site as an investment. FINANCIAL FEASIBILITY The financial feasibility of a specific property is market driven, and is influenced by surrounding land uses. Based upon the supply of new projects planned for the competitive area, there is strong 54 GREENSPOINT APARTMENTS HIGHEST AND BEST USE inferential evidence that market participants perceive a need for new inventory in this area. Near term multi-family development is considered to be financially feasible. MAXIMUM PROFITABILITY The use which results in the maximum profitability of the site is beyond the scope of this assignment. Although alternate land uses may be financially feasible, the maximally productive use of the subject site is near term multi-family development. CONCLUSION: HIGHEST AND BEST USE AS VACANT Based on the foregoing analysis, the highest and best use of the site as though vacant would be for near future multi-family development. AS IMPROVED LEGAL PERMISSIBILITY The subject site was approved for apartment development and the improvements appear to represent a legally conforming use of the site. No changes from a legal perspective are necessary to maximize value. PHYSICAL POSSIBILITY The subject improvements were discussed in detail in the Improvement Analysis. The layout and positioning of the improvements are functional for apartment use based on comparison to neighborhood properties. The improvements are in average to good physical condition. Although two of the roofs were being replaced on the date of inspection, no deferred maintenance was evident. Overall, no physical changes to the subject are recommended to maximize value. FINANCIAL FEASIBILITY The financial feasibility for an apartment property is based on the amount of rent which can be generated, less operating expenses required to generate that income; if a residual amount exists then the land is being put to a productive use. As will be indicated in the Income Capitalization Approach, the subject is capable of producing a positive net cash flow and continued utilization of the improvements for apartments is considered financially feasible. MAXIMUM PROFITABILITY It appears there are no alternative uses of the existing improvements which would produce a higher net income and/or value over time than the current use, as a rental apartment complex. 55 GREENSPOINT APARTMENTS HIGHEST AND BEST USE CONCLUSION: HIGHEST AND BEST USE AS IMPROVED Based on the foregoing, the highest and best use of the property as improved is to address the deferred maintenance and then continue the current use indefinitely. 56 GREENSPOINT APARTMENTS APPRAISAL METHODOLOGY APPRAISAL METHODOLOGY In appraisal practice, an approach to value is included or omitted based on its applicability to the property type being valued and the quality and quantity of information available. COST APPROACH The cost approach is based upon the proposition that the informed purchaser would pay no more for the subject than the cost to produce a substitute property with equivalent utility. This approach is particularly applicable when the property being appraised involves relatively new improvements that represent the highest and best use of the land, or when relatively unique or specialized improvements are located on the site and for which there exist few sales or leases of comparable properties. SALES COMPARISON APPROACH The sales comparison approach utilizes sales of comparable properties, adjusted for differences, to indicate a value for the subject. Valuation is typically accomplished using physical units of comparison such as price per square foot, price per unit, price per floor, etc., or economic units of comparison such as gross rent multiplier. Adjustments are applied to the physical units of comparison derived from the comparable sale. The unit of comparison chosen for the subject is then used to yield a total value. Economic units of comparison are not adjusted, but rather analyzed as to relevant differences, with the final estimate derived based on the general comparisons. INCOME CAPITALIZATION APPROACH The income capitalization approach reflects the subject's income-producing capabilities. This approach is based on the assumption that value is created by the expectation of benefits to be derived in the future. Specifically estimated is the amount an investor would be willing to pay to receive an income stream plus reversion value from a property over a period of time. The two common valuation techniques associated with the income capitalization approach are direct capitalization and the discounted cash flow (DCF) analysis. METHODOLOGY APPLICABLE TO THE SUBJECT In valuing the subject, only the sales comparison and income capitalization approaches are applicable. However, at the client's request the Cost Approach is also presented. 57 GREENSPOINT APARTMENTS LAND VALUE LAND VALUE The following location map and table of sales summarizes the comparable data used in the valuation of the subject site. A detailed description of each transaction is included in the Addenda. [LOCATION MAP] SUMMARY OF COMPARABLE LAND SALES
TRANSACTION DENSITY ACTUAL SALE ADJUSTED SALE PRICE PER PRICE PER NO. PROPERTY LOCATION TYPE DATE ZONING (UPA) PRICE PRICE (1) ACRE BLDG UNIT - ------- ---------------------------- ---- ------ ------------------- ------- ----------- ------------- --------- --------- 1 NEC Cave Creek and Union Sale Jul-04 R4-A, Phoenix 30.21 $ 1,750,000 $1,750,000 $ 262,984 $ 8,706 Hills, Phoenix, AZ 2 NEC Loop 101 and 7th Street, Sale Oct-04 Multi-family 23.66 $ 8,169,111 $8,169,111 $ 304,818 $12,885 Phoenix, Az 3 NE Paradiseln Ln & 83 Ave, Sale Feb-05 PAD, Peoria 22.24 $ 3,173,445 $3,173,445 $ 294,028 $13,223 Peoria, AZ Subject 4202 East Cactus Road, -- -- R-5, Phoenix Multi- 27.01 -- -- -- -- Phoenix, Arizona Family Residence District
- ---------- (1) Transaction Amount Adjusted for Cash Equivalency And/or Development Costs (Where Applicable) Compiled by CBRE 58 GREENSPOINT APARTMENTS LAND VALUE ANALYSIS OF LAND SALES - GROUPED ADJUSTMENTS PROPERTY RIGHTS CONVEYED Fee simple property rights were transferred in each transaction. No adjustments for property rights are necessary. FINANCING No additional adjustments for financing are necessary. Each transaction was a cash, or cash-to-seller arrangement. CONDITIONS OF SALE Each of the sales represents a normal, arms-length transaction between knowledgeable and well informed parties. No adjustments for conditions of sale are applied. MARKET CONDITIONS The comparables represent the most recent pool of multi-family land sales in the competitive area. However, due to the slowdown of multi-family development that has occurred over the last 24 months, the pool of recent sales is somewhat limited. Average land prices have increased since the time Comparable One sold; therefore, an upward adjustments for changes in market conditions is applied. ANALYSIS OF LAND SALES - INDIVIDUAL ADJUSTMENTS The multi-family land market in the Phoenix MSA is moving through a period of disequilibrium. Therefore, a deliberate attempt to minimize the level of subjective adjustments has been made in this section. LAND SALE ONE Land Sale One was acquired by Trillium to develop a 201-unit apartment project known as Trillium at Union Hills. The site wraps around the southwest corner of Union Hills Drive and Cave Creek Road. The site contains 6.654 acres and the overall density is 30.2 units per acre. The acquisition price was $8,706 per apartment unit or $6.04 per square foot. In comparison to the subject, the location is considered to be inferior. Cabarets and mobile home parks are the dominant land uses in the immediate area. Size, frontage, and density are all similar to the subject. 59 GREENSPOINT APARTMENTS LAND VALUE LAND SALE TWO This comparable is located at the northeast corner of the 101 Freeway and 7th Street. Trillium Residential will acquired the 26.8 acre site to develop a total of 634 apartment units and condominiums. The planned density is 23.7 units per acre. The price per square foot is $7.00 and the price per planned unit is $12,885. The location is reasonably similar to the subject, and no adjustments are necessary for size or frontage. However, the density is lower than the subject and a downward adjustment for density is applied. No further adjustments are necessary. LAND SALE THREE This comparable represents 10.793 acres located at the northeast corner of Paradise Lane and 83rd Avenue. The site has an irregular shape with level, at street grade topography. At the time of the sale, the property was vacant. The site is zoned PAD, Peoria, and the proposed use is to apartment. all available to site were available to the site. The property sold in February 2005 for $3,173,445, or $13,223 per proposed unit ($6.75 per square foot). A total of 240 units are proposed, for an overall density of 22.24 units per acre. In relation to the subject, no adjustments are necessary for location, size or frontage. However, the density is lower and a downward adjustment is applied for this element of comparison. SUMMARY OF ADJUSTMENTS Based on a comparative analysis, the following table summarizes the adjustments warranted when comparing each sale to the subject. 60 GREENSPOINT APARTMENTS LAND VALUE LAND SALES ADJUSTMENT GRID
Comparable Number 1 2 3 Subject Transaction Type Sale Sale Sale -- Transaction Date Jul-04 Oct-04 Feb-05 -- Zoning R4-a, Phoenix Multi-family Pad, Peoria R-5, Phoenix Multi-family Density (UPA) 30.21 23.66 22.24 27.01 Actual Sale Price $1,750,000 $8,169,111 $3,173,445 -- Adjusted Sale Price (1) $1,750,000 $8,169,111 $3,173,445 -- Size (Acres) 6.65 26.80 10.79 9.26 Size (SF) 289,864 1,167,408 470,143 403,191 Price Per Acre $ 262,984 $ 304,818 $ 294,028 -- Price Per Sf $ 6.04 $ 7.00 $ 6.75 -- Price Per Unit $ 8,706 $ 12,885 $ 13,223 -- ---------- ---------- ---------- Price ($ Per Unit) $ 8,706 $ 12,885 $ 13,223 ---------- ---------- ---------- Property Rights Conveyed 0% 0% 0% Financing Terms (1) 0% 0% 0% Conditions of Sale 0% 0% 0% Market Conditions 10% 0% 0% ---------- ---------- ---------- Subtotal $ 9,577 $ 12,885 $ 13,223 ---------- ---------- ---------- Location 10% 0% 0% Size 0% 0% 0% Frontage 0% 0% 0% Density (UPA) 0% -10% -10% ---------- ---------- ---------- Total Other Adjustments 10% -10% -10% ========== ========== ========== Value Indication for Subject $ 10,535 $ 11,597 $ 11,900 ========== ========== ==========
- ---------- (1) Transaction Amount Adjusted for Cash Equivalency And/or Development Costs (Where Applicable) Compiled by CBRE CONCLUSION Following the adjustments process, the comparables support an overall value range of $10,535 to $11,900 per unit. Each comparable required a similar level of gross adjustments; therefore, the range is reconciled towards the middle portion. The following table presents the valuation conclusion: 61 GREENSPOINT APARTMENTS LAND VALUE CONCLUDED LAND VALUE
$ PER UNIT SUBJECT UNITS TOTAL - ---------------- ------------- ---------- $10,500 X 250 = $2,625,000 $11,500 X 250 = $2,875,000 INDICATED VALUE: $2,800,000
Compiled By CBRE The land value equates to $6.94 per square foot. The comparables support a range of $6.04 to $7.00 per square foot and indicate that the value conclusion is reasonable. 62 GREENSPOINT APARTMENTS COST APPROACH COST APPROACH In estimating the replacement cost new for the subject, the following methods/data sources have been utilized (where available): - - the comparative unit method has been employed, utilizing the Marshall Valuation Service (MVS) cost guide, published by Marshall and Swift, LLC MARSHALL VALUATION SERVICE DIRECT COST Salient details regarding the direct costs are summarized in the Cost Approach Schedule that follows this section. The MVS cost estimates include the following: 1. average architect's and engineer's fees for plans, plan check, building permits and survey(s) to establish building line; 2. normal interest in building funds during the period of construction plus a processing fee or service charge; 3. materials, sales taxes on materials, and labor costs; 4. normal site preparation including finish grading and excavation for foundation and backfill; 5. utilities from structure to lot line figured for typical setback; 6. contractor's overhead and profit, including job supervision, workmen's compensation, fire and liability insurance, unemployment insurance, equipment, temporary facilities, security, etc.; 7. site improvements (included as lump sum additions); and 8. initial tenant improvement costs are included in MVS cost estimate. However, additional lease-up costs such as advertising, marketing and leasing commissions are not included. Base building costs (direct costs), indicated by the MVS cost guide, are adjusted to reflect the physical characteristics of the subject. Making these adjustments, including the appropriate local and current cost multipliers, the Direct Building Cost is indicated. ADDITIONS Items not included in the direct building cost estimate include parking and walks, signage, landscaping, and miscellaneous site improvements. The cost for these items is estimated separately using the segregated cost sections of the MVS cost guide. INDIRECT COST Several indirect cost items are not included in the direct building cost figures derived through the MVS cost guide. These items include developer overhead (general and administrative costs), property taxes, legal and insurance costs, local development fees and contingencies, lease-up and marketing costs and miscellaneous costs. Research into these costs leads to the conclusion that an average property requires an allowance for additional indirect costs of about 5% to 15% of the total direct costs. 63 GREENSPOINT APARTMENTS COST APPROACH MVS CONCLUSION The concluded direct and indirect building cost estimate obtained via the MVS cost guide (Section 12, Page 14, dated August 2004) is illustrated as follows: MARSHALL VALUATION SERVICE COST SCHEDULE Primary Building Type: Apartment Effective Age: 17 YRS Quality/condition: Average Exterior Wall: Frame & Stucco Number of Units: 336 Number of Stories: 3 Height Per Story: 8' Number of Buildings: 14 Gross Building Area: 280,559 SF Net Rentable Area: 278,064 SF Average Unit Size: 828 SF Average Floor Area: 93,520 SF
Mvs Sec/page/class 12/14/D-good BUILDING COMPONENT ALL SPACE COMPONENT SQ. FT. 280,559 SF BASE SQUARE FOOT COST $ 68.00 SQUARE FOOT REFINEMENTS Appliances $ 1.50 Patios/balconies $ 1.00 Equipment $ 0.25 --------------- Subtotal $ 70.75 HEIGHT AND SIZE REFINEMENTS Number of Stories Multiplier 1.00 Height Per Story Multiplier 1.00 Floor Area Multiplier 1.00 --------------- Subtotal $ 70.75 COST MULTIPLIERS Current Cost Multiplier 1.05 Local Multiplier 0.99 --------------- FINAL SQUARE FOOT COST $ 73.54 BASE COMPONENT COST $ 20,633,606 --------------- BASE BUILDING COST (Via Marshall Valuation Service Cost Data) $ 20,633,606 ADDITIONS Site Improvements $ 500,000 Pool/spa $ 80,000 DIRECT BUILDING COST $ 21,213,606 --------------- INDIRECT COSTS 10.0%Of Direct Building Cost $ 2,121,361 --------------- DIRECT AND INDIRECT BUILDING COST $ 23,334,967 ROUNDED $ 23,335,000
Compiled by CBRE ENTREPRENEURIAL PROFIT Entrepreneurial profit represents the return to the developer, and is separate from contractor's overhead and profit. This line item, which is a subjective figure, tends to range from 5% to 15% of total direct and indirect costs for this property type, based on discussions with developers active in this market. ACCRUED DEPRECIATION There are essentially three sources of accrued depreciation: 64 GREENSPOINT APARTMENTS COST APPROACH 1. physical deterioration, both curable and incurable; 2. functional obsolescence, both curable and incurable; and 3. external obsolescence. PHYSICAL DETERIORATION The subject's physical condition was detailed in the Improvement Analysis section. Curable deterioration affecting the improvements results from deferred maintenance and, if applicable, was previously discussed. With regard to incurable deterioration, the subject improvements are considered to have deteriorated due to normal wear and tear associated with natural aging. ECONOMIC AGE AND LIFE Actual Age 20 Years Effective Age 17 Years MVS Expected Life 45 Years Remaining Economic Life 28 Years Accrued Physical Incurable Depreciation 37.8%
COMPILED BY CBRE FUNCTIONAL OBSOLESCENCE Based on a review of the design and layout of the improvements, no forms of curable functional obsolescence were noted. Because replacement cost considers the construction of the subject improvements utilizing modern materials and current standards, design and layout, functional incurable obsolescence is not applicable. EXTERNAL OBSOLESCENCE Based on a review of the local market and neighborhood, no forms of external obsolescence affect the subject. COST APPROACH CONCLUSION The value estimate is calculated on the Cost Approach Schedule that follows. 65 GREENSPOINT APARTMENTS COST APPROACH COST APPROACH CONCLUSION Building Type: Apartment Effective Age: 17 Yrs Quality/condition: Average Exterior Wall: Frame & Stucco Number of Units: 336 Number of Stories: 3 Height Per Story: 8' Number of Buildings: 14 Gross Building Area: 280,559 SF Net Rentable Area: 278,064 SF Average Unit Size: 828 SF Average Floor Area: 93,520 SF
DIRECT AND INDIRECT BUILDING COST $ 23,335,000 ENTREPRENEURIAL PROFIT 5.0% OF TOTAL BUILDING COST $ 1,166,750 ------------- REPLACEMENT COST NEW $ 24,501,750 ACCRUED DEPRECIATION Incurable Physical Deterioration 37.8% of Replacement Cost New Less $ (9,256,217) Curable Physical Deterioration Functional Obsolescence $ 0 External Obsolescence $ 0 --------------- Total Accrued Depreciation 37.8% of Replacement Cost New $ (9,256,217) DEPRECIATED REPLACEMENT COST $ 15,245,533 ------------- LAND VALUE $ 2,800,000 ------------- "AS IS" VALUE INDICATION $ 18,045,533 ROUNDED $ 18,000,000 VALUE PER UNIT $ 53,571
COMPILED BY CBRE 66 GREENSPOINT APARTMENTS SALES COMPARISON APPROACH SALES COMPARISON APPROACH The following location map and table of sales summarizes the comparable data used in the valuation of the subject property. A detailed description of each transaction is included in the Addenda. [LOCATION MAP] SUMMARY OF COMPARABLE APARTMENT SALES
AVG. PRICE TRANSACTION YEAR NO. UNIT ACTUAL SALE ADJUSTED PER NOI PER NO. NAME TYPE DATE BUILT UNITS SIZE PRICE SALE PRICE(1) UNIT(1) OCC. UNIT OAR - --- ---------------- ------ ------ ----- ----- ---- ------------- ------------- -------- ---- ------- ---- 1 South Creek Sale Feb-04 1986 528 894 $ 28,650,000 $ 28,900,000 $ 54,735 93% $ 3,838 7.01% Apartments, Phoenix, AZ 2 Pinnacle Grove, Sale Aug-04 1987 247 829 $ 13,200,000 $ 13,200,000 $ 53,441 95% $ 3,468 6.49% Tempe, AZ 3 Terracina, Sale Sep-04 1984 856 856 $ 42,650,000 $ 42,650,000 $ 49,825 90% $ 3,021 6.06% Phoenix, AZ 4 Reflections At Sale Feb-05 1986 256 800 $ 12,200,000 $ 12,200,000 $ 47,656 92% $ 2,655 5.57% Red Mountain, Mesa, AZ 5 Arcadia Del Sol, Escrow Mar-05 1971 260 820 $ 14,100,000 $ 14,100,000 $ 54,231 91% $ 2,254 4.16% Phoenix, AZ 6 Superstition Escrow Mar-05 1985 376 662 $ 20,400,000 $ 20,400,000 $ 54,255 86% $ 3,116 5.74% Park, Tempe, AZ Subj.Greenspoint -- -- 1985 336 828 -- -- -- 87% $ 3,267 -- Apartments, Pro Phoenix, Arizona Forma
(1) Transaction Amount Adjusted for Cash Equivalency And/or Deferred Maintenance (Where Applicable) Compiled by CBRE 67 GREENSPOINT APARTMENTS SALES COMPARISON APPROACH ANALYSIS OF IMPROVED SALES - GROUPED ADJUSTMENTS PROPERTY RIGHTS CONVEYED Fee simple property rights (subject to short term apartment leases) were transferred in each transaction. No adjustments for property rights are necessary. FINANCING No additional adjustments for financing are necessary. As noted, financing adjustments were applied prior to the derivation of an overall rate, if applicable. CONDITIONS OF SALE Each of the sales represents a normal, arms-length transaction between knowledgeable and well-informed parties. No adjustments for conditions of sale are applied. MARKET CONDITIONS Overall capitalization rates have been declining rapidly over the last 14 months. Therefore, date of sale was an important selection criteria in determining which comparables to use in this analysis. The comparables selected are all recent sales; however, based upon the trend in prices in the comparable data set, upward adjustments are necessary for Comparables One through Three. ANALYSIS OF IMPROVED SALES - INDIVIDUAL ADJUSTMENTS IMPROVED SALE ONE This comparable represents South Creek Apartments, a two-story, 472,152 square foot, 528-unit, garden apartment project that was completed in 1986, and sits on a 23.445-acre lot located at 4424 E. Baseline Road. The density is 22.52 units per acre. The exterior walls are constructed of stucco, and the project features 2 pools and spas, security gate, covered parking, sauna, fitness center. The property sold in February 2004 for $28,900,000, or $54,735 per unit. Pro Forma net operating income at the time of sale was $2,026,937, or $3,839 per unit, for an overall capitalization rate of 7.01%. Occupancy at the time of sale was 93%. In relation to the subject, the basic location is considered to be similar. No adjustments are necessary for age and condition or economic factors. However, the average unit size is larger than the subject and a downward adjustment is applied for unit size. The project is also considerably larger than the subject. There are fewer buyers in this size range and the data set supports an inverse relationship between project size and unit price. Therefore, an upward adjustment is applied for the influence of project size on unit price. Finally, the development density is considerably lower than the subject and a downward adjustment is applied for density. Overall, a downward adjustment was made. 68 GREENSPOINT APARTMENTS SALES COMPARISON APPROACH IMPROVED SALE TWO This comparable represents Pinnacle Grove, a two-story, 204,732 square foot, 247-unit, garden apartment project that was completed in 1987, and sits on a 9.79-acre lot located at 701 W Grove Parkway. The density is 25.23 units per acre. The exterior walls are constructed of frame and stucco, and the project features barbecues, cable ready, covered parking, fireplaces, two laundry facilities, pool, spa, washer/dryer hookups. The property sold in August 2004 for $13,200,000, or $53,441 per unit. Pro Forma net operating income at the time of sale was $856,705, or $3,468 per unit, for an overall capitalization rate of 6.49%. Occupancy at the time of sale was 95%. This property was encumbered by IDA bonds at the time of sale with a principal balance of $10,650,000, maturity date of April 1, 2027 and interest rate equal to the PSA Municipal Swap Index Rate + 2.25% (52-week average 0.98% at time of contract, peaked at 5.84% in May 2000). The bonds were assumable without penalty and residents pay full market rent. Both the buyer and seller attributed no gain or loss to the bonds. In relation to the subject, the majority of the elements of comparison are all similar. However, the density is significantly lower than the subject; therefore, a downward adjustment is applied for density. Overall, a downward adjustment was made. IMPROVED SALE THREE This comparable represents Terracina, a 2 and 3-story, 732,484 square foot, 856-unit, garden apartment project that was completed in 1984, and sits on a 38.5-acre lot located at 1450 E. Bell Road. The density is 22.23 units per acre. The exterior walls are constructed of frame and stucco, and the project features pools, spas, fitness center, security access gate, on-site laundry. The property sold in September 2004 for $42,650,000, or $49,825 per unit. Existing net operating income at the time of sale was $2,586,400, or $3,022 per unit, for an overall capitalization rate of 6.06%. Occupancy at the time of sale was 90%. This comparable is located at 14th Street and Bell Road in north-Phoenix. Originally developed by Spanos, the project was sold by United Dominion. Units have eight foot ceilings and patios and balconies. The three-bedroom units have washer and dryer hook-ups and the largest unit types have washers and dryers. In relation to the subject, the majority of the elements of comparison are all similar. However, the density is significantly lower than the subject; therefore, a downward adjustment is applied for density. Also, the project is considerably larger than the subject and an upward adjustment for the influence of size on unit price is necessary. Overall, an upward adjustment was made. IMPROVED SALE FOUR This comparable represents Reflections at Red Mountain, a two-story, 204,800 square foot, 256-unit, apartment project that was completed in 1986, and sits on a 11.78-acre lot located at 2601 E 69 GREENSPOINT APARTMENTS SALES COMPARISON APPROACH McKellips Rd. The density is 21.73 units per acre. The exterior walls are constructed of frame/stucco, and the project features fitness center, clubhouse, tennis court, volleyball court, playground, three swimming pools and two spas. The property sold in February 2005 for $12,200,000, or $47,656 per unit. Existing net operating income at the time of sale was $679,709, or $2,655 per unit, for an overall capitalization rate of 5.57%. Occupancy at the time of sale was 92%. The broker mentioned that the original offering price for this project was $150,000 higher, yet the purchase price was reduced to account for deferred maintenance expenses of that amount. The outlying Mesa location is further from shopping and major employment centers than the subject. The location is considered to be inferior to the subject and an upward adjustment is applied. Age and condition, average unit size, and project size are all similar. However, the density is lower than the subject and a downward adjustment is necessary for density. Overall, an upward adjustment was made. IMPROVED SALE FIVE This comparable represents Arcadia del Sol, a 2, 3 and 4-story, 213,168 square foot, 260-unit, garden apartment project that was completed in 1971, and sits on a 7.16-acre lot located at 4125 East Indian School Road. The density is 36.31 units per acre. The exterior walls are constructed of masonry/frame and stucco, and the project features washer and dryer hook-ups, patios and balconies, and fireplaces on select units. The property sold in March 2005 for $14,100,000, or $54,231 per unit. Existing net operating income at the time of sale was $586,053, or $2,254 per unit, for an overall capitalization rate of 4.16%. Occupancy at the time of sale was 91%. This property was built in three phases (1971, 1975, and 1985), and underwent an extensive ($1.03 million) exterior renovation in 2004. Phase I totals 133 units, consists of a four-story concrete block building (including demising walls) with two elevators. This comparable is generally similar to the subject in all of the major comparative categories. Overall, no net adjustment was made. IMPROVED SALE SIX This comparable represents Superstition Park, a two-story, 248,912 square foot, 376-unit, garden apartment project that was completed in 1985, and sits on a 17.95-acre lot located at 30 West Carter Drive. The density is 20.95 units per acre. The exterior walls are constructed of frame and stucco, and the project features pools, spa, covered parking, security access gate, and a central chiller/boiler system. The property sold in March 2005 for $20,400,000, or $54,255 per unit. Existing net operating income at the time of sale was $1,171,963, or $3,117 per unit, for an overall capitalization rate of 5.74%. Occupancy at the time of sale was 86%. This comparable is located in south Tempe near the Arizona State University Campus. The cap rate on actual income is 5.74%, however the cap rate using the broker's pro forma is 8.0%. 70 GREENSPOINT APARTMENTS SALES COMPARISON APPROACH The location near ASU, with a captive student base, is superior to the subject. Therefore, a downward adjustment for location is applied. Age and condition, project size, and economic factors are all similar to the subject. However, the average unit size is smaller than the subject and an upward adjustment is necessary for this element of comparison. Furthermore, the density is lower than the subject and a downward adjustment is applied for density. Overall, a downward adjustment was made. SUMMARY OF ADJUSTMENTS Based on the foregoing discussions, the following table summarizes the adjustments warranted when comparing each sale to the subject. APARTMENT SALES ADJUSTMENT GRID
Subj. Comparable Number 1 2 3 4 5 6 Pro Forma Transaction Type Sale Sale Sale Sale Escrow Escrow -- Transaction Date Feb-04 Aug-04 Sep-04 Feb-05 Mar-05 Mar-05 -- Year Built 1986 1987 1984 1986 1971 1985 1985 No. Units 528 247 856 256 260 376 336 Avg. Unit Size 894 829 856 800 820 662 828 Actual Sale Price $28,650,000 $13,200,000 $42,650,000 $12,200,000 $14,100,000 $20,400,000 -- Adjusted Sale Price (1) $28,900,000 $13,200,000 $42,650,000 $12,200,000 $14,100,000 $20,400,000 -- Price Per Unit (1) $ 54,735 $ 53,441 $ 49,825 $ 47,656 $ 54,231 $ 54,255 -- Occupancy 93% 95% 90% 92% 91% 86% 87% NOI Per Unit $ 3,838 $ 3,468 $ 3,021 $ 2,655 $ 2,254 $ 3,116 $3,267 OAR 7.01% 6.49% 6.06% 5.57% 4.16% 5.74% -- ----------- ----------- ----------- ----------- ----------- ----------- Adj. Price Per Unit $ 54,735 $ 53,441 $ 49,825 $ 47,656 $ 54,231 $ 54,255 ----------- ----------- ----------- ----------- ----------- ----------- Property Rights Conveyed 0% 0% 0% 0% 0% 0% Financing Terms (1) 0% 0% 0% 0% 0% 0% Conditions of Sale 0% 0% 0% 0% 0% 0% Market Conditions (Time) 3% 3% 3% 0% 0% 0% ----------- ----------- ----------- ----------- ----------- ----------- Subtotal $ 56,377 $ 55,045 $ 51,320 $ 47,656 $ 54,231 $ 54,255 ----------- ----------- ----------- ----------- ----------- ----------- Location 0% 0% 0% 10% 0% -5% Age and Condition 0% 0% 0% 0% 0% 0% Average Unit Size -3% 0% 0% 0% 0% 5% Project Size 3% 0% 5% 0% 0% 0% Density -5% -5% -5% -5% 0% -5% Economic Factors 0% 0% 0% 0% 0% 0% ----------- ----------- ----------- ----------- ----------- ----------- Total Other Adjustments -5% -5% 0% 5% 0% -5% =========== =========== =========== =========== =========== =========== Indicated Value Per Unit $ 53,558 $ 52,292 $ 51,320 $ 50,039 $ 54,231 $ 51,543 =========== =========== =========== =========== =========== ===========
- ---------- (1) Transaction amount adjusted for cash equivalency and/or deferred maintenance (where applicable) Compiled by CBRE Based on the preceding discussions of each comparable and the foregoing adjustment analysis, a price per unit indication near the midpoint of the indicated range was most appropriate for the subject. 71 GREENSPOINT APARTMENTS SALES COMPARISON APPROACH EFFECTIVE GROSS INCOME MULTIPLIER ANALYSIS The EGIM reflects the relationship between effective gross annual income and sales price. The EGIM is a unit of comparison that cannot be adjusted and, there, it is primarily utilized to indicate a point of tendency. The following illustrates the EGIM for each of the sales analyzed herein. EFFECTIVE GROSS INCOME MULTIPLIER ANALYSIS
Sale No. Occupancy OER EGIM - -------- --------- ----- ---- 1 93% 46.13% 7.68 2 95% 50.67% 7.60 3 90% 51.75% 7.96 4 92% 56.86% 7.74 5 91% 63.54% 8.77 6 86% 53.52% 8.09 -- ----- ---- Subj. 84% 54.87% -- -- ----- ----
Compiled by CBRE The EGIM analysis is applied as a Sales Comparison tool to compare the income generating capabilities of the comparables without the influence of operating expenses. In this instance the range is relatively narrow and we have reconciled the subject's EGIM towards the middle part of the range. SALES COMPARISON APPROACH CONCLUSION The following table presents the estimated value for the subject as indicated by the sales comparison approach. 72 GREENSPOINT APARTMENTS SALES COMPARISON APPROACH SALES COMPARISON APPROACH
TOTAL UNITS X VALUE PER UNIT = VALUE - ----------- -------------- ----- 336 X $50,000 = $16,800,000 336 X $53,000 = $17,808,000 EGI X EGIM = Value - ---------- ------- ----------- $2,432,122 X 7.75 = $18,848,942 VALUE CONCLUSION ----------- VALUE INDICATION $17,500,000 ROUNDED $17,500,000 VALUE PER UNIT $ 52,083
Compiled by CBRE NET OPERATING INCOME ANALYSIS As a cross check to the foregoing analysis, the net operating income (NOI) being generated by the comparable sales as compared to the subject's pro forma NOI that was estimated in the Income Capitalization Approach has been analyzed. In general, it is a fundamental assumption that the physical characteristics of a property (e.g., location, access, design/ appeal, condition, etc.) are reflected in the net operating income being generated, and the resultant price per unit paid for a property has a direct relationship to the NOI being generated. The following NOI analysis table illustrates the sale prices (after adjustments for conditions of sale and market conditions) of the individual sales plotted in comparison their NOIs. In addition, a trend line has been plotted based on a linear regression analysis of the comparables. The subject's indicated value has been plotted along this trend line at its pro forma stabilized NOI. 73 GREENSPOINT APARTMENTS SALES COMPARISON APPROACH NET OPERATING INCOME ANALYSIS [LINE GRAPH] The concluded value presented herein provides economic support for the direct comparison of sale comparables. 74 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH INCOME CAPITALIZATION APPROACH The following location map and table of rents summarizes the comparable data used in the valuation of the subject property. A detailed description of each transaction is included in the Addenda. [MAP] SUMMARY OF COMPARABLE APARTMENT RENTALS
COMP. YEAR NO. AVG. RENT NO. PROPERTY NAME LOCATION BUILT OCC. UNITS PER UNIT - ----- ---------------- ----------------------------- ----- ---- ----- --------- 1 Paradise Springs 13616 N. 43rd Street, 1984 96% 200 $750 Phoenix, AZ 2 Paradise Trails 4502 E. Paradise Village Pky 1985 95% 174 $652 South, Phoenix, AZ 3 The Palisades 13440 N. 44th Street, 1990 93% 536 $789 Phoenix, AZ 4 The Ridge 15202 N. 40th Street, 1986 93% 380 $610 Phoenix, AZ 5 Townhomes On 12844 N. Paradise Village Pwy 1983 98% 120 $692 The Park West, Phoenix, AZ 6 Villa Encanto 4315 E. Thunderbird Road, 1983 94% 383 $738 Phoenix, AZ Subj. Greenspoint 4202 East Cactus Road, 1985 96% 336 --- Pro Apartments Phoenix, Arizona Forma
Compiled by CBRE 75 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH The comparables are all primary competitors located around Paradise Valley Mall. ANALYSIS OF RENT COMPARABLES RENT COMPARABLE ONE This comparable is located on 43rd Street south of Thunderbird Road, or about one mile north of the subject. Paradise Springs includes 200 units situated on an 8.28 acre site. The project was developed in 1984 and is in good physical condition. Project amenities include a pool, spa, clubhouse, exercise facility, and covered parking. The unit mix includes one- and two-bedroom units. Unit amenities include eight foot ceilings, washer and dryers, and private patios or balconies. The current occupancy is 96%. Base rental rates are $660 to $795 per month. Only sewer and trash removal are included in the base rent. No concessions or premiums are currently quoted. This comparable is generally similar to the subject. RENT COMPARABLE TWO Paradise Trails is located about one-half mile east of the subject. The project includes 174 units and was developed in 1985. The net site area is 4.73 acres. The project contains three story buildings and is in average physical condition. Project amenities include a pool, spa, clubhouse, racquetball, and covered parking. Units have eight foot ceilings and full size washer and dryers. The unit mix includes one and two-bedroom units. This project is currently 95% leased. Base rent ranges from $595 to $745 per month, and there are no utilities included in the rental rates. No premium rent was reported. Concessions include one month free on a 12 month lease. Overall, therefore, this comparables supports the mid-range of market rent for the subject. RENT COMPARABLE THREE The Palisades Apartments is located along 44th Street, south of Thunderbird Road, or about one-half mile north of Paradise Valley Mall. The 536-unit project was completed in 1990. There are 750 covered parking spaces and 222 open spaces with no garages. The unit mix includes studio, one-, two- and three-bedroom units. Unit amenities include air conditioning, washer/dryer (some), dishwasher, disposal, fireplace (some), private balcony/patio, cable, satellite or direct TV (optional), security system (optional), vaulted ceilings (some), vertical blinds, storage, ceiling fans, frost-free refrigerator, walk-in closets, mini-blinds, microwave, fireplaces, and a self-cleaning oven. Complex amenities include a clubhouse/recreation room, weight/exercise room, heated swimming pool(s), spa(s), tennis court(s), volleyball court(s), laundry room(s), barbecue area(s), kitchen/wet bar, car care area, playground(s), swimming pool(s), billiards, recreation program, security patrol, security gate, computer room, and theater. Base rent is $596 to $1,108 and occupancy is 93%. No utilities are 76 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH included in the base rent. Concessions were quoted as two weeks to one month of free rent and there are no premiums for view or location. This comparable is somewhat newer than the subject and therefore supports the upper portion of the range of market rent. RENT COMPARABLE FOUR The Ridge is a 380-unit apartment project that is located at the southwest corner of 40th Street and Greenway Road. The project was constructed in 1986 and the density is about 29.0 units per acre. The project is about one mile east of the subject. Amenities include a large clubhouse, two pools, two on-site laundries, covered parking, and a security access gate. Units have eight foot ceilings and patios and balconies. Also, 80 units have stacked washers and dryers (the balance do not have hook-ups). The unit mix includes studio, one and two-bedroom units. The current occupancy is 93%. Base rental rates range from $499 to $699 per month. Concessions equate to one month free on a 12 month lease. This comparable generally supports the middle range of market rent for the subject. RENT COMPARABLE FIVE This comparable is located along the outer ring of Paradise Valley Mall about one-half mile north of the subject. Townhomes on the Park includes 120 units situated on a 6.91 acre site. The project was developed in 1983 and is in good physical condition. Project amenities include a pool, spa, clubhouse, tennis court, exercise facility, and covered parking. The unit mix includes one- and two-bedroom units. Unit amenities include eight foot ceilings, stackable washer and dryers, and private patios or balconies. The current occupancy is 98%. Base rental rates are $610 to $820 per month. Water, sewer and trash removal are included in the base rent. Concessions involve on month free on a 12 month lease. Rental premiums of $10 to $20 per month are quoted for pool and courtyard views. Overall, this comparable supports the mid-range of market rent for the subject. RENT COMPARABLE SIX This comparable is located at 43rd Street and Thunderbird Road about one mile north of the subject. Villa Encanto includes 383 units situated on a 20.85 acre site. The project was developed in 1983 and is in good physical condition. Project amenities include a pool, spa, laundry, clubhouse, exercise facility, and covered parking. The unit mix includes studio through three-bedroom units. Unit amenities include eight foot ceilings, stacked washer and dryers, and private patios or balconies. The current occupancy is 98%. Base rental rates are $615 to $820 per month. No utilities are included 77 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH in the base rent. Concessions are $50 to $120 off monthly rent, plus reduced move-in fees. View and fireplace premiums range from $10 to $20. This comparable is generally similar to the subject. SUBJECT RENTAL INFORMATION The following table depicts the subject's unit mix and rental rates. SUBJECT RENTAL INFORMATION
NO. OF UNIT UNIT QUOTED RENT TYPE UNITS SIZE (SF) OCC. RENTS PER SF - ---- ------ -------- ---- ------ ------ 1 BR, 1 BA 48 653 SF 96% $645 $0.99 1 BR, 1 BA 60 717 SF 97% $655 $0.91 1 BR, 1 BA 60 756 SF 98% $675 $0.89 2 BR, 1.3 BA 84 884 SF 94% $739 $0.84 2 BR, 2 BA 84 1,001 SF 95% $789 $0.79 ---- -------- -- ---- ----- Total/Average: 336 828 SF 96% $712 $0.86 ---- -------- -- ---- -----
Compiled by CBRE The rental rates in the previous table are base rental rates prior to premiums and concessions. Current concessions are quoted as one month free on a 12 month lease. Five and $10 discounts are quoted for second and third floor units, and premiums of $10 are quoted for units with microwaves and pool views. A $20 premium is quoted for units with wood burning fireplaces. ESTIMATE OF MARKET RENT In order to estimate the market rates for the various floor plans, the subject unit types have been compared with similar units in the comparable projects. The following is a discussion of each unit type. 78 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH ONE-BEDROOM UNITS SUMMARY OF COMPARABLE RENTALS ONE BEDROOM UNITS
RENTAL RATES COMPARABLE PLAN TYPE SIZE $/MO. $/SF - ---------- --------- ---- ----- ---- The Ridge 1 BR, 1 BA 557 SF $549 $0.99 Villa Encanto 1 BR, 1 BA 560 SF $625 $1.12 The Palisades 1 BR, 1 BA 597 SF $596 $1.00 Villa Encanto 1 BR, 1 BA 604 SF $645 $1.07 Paradise Trails 1 BR, 1 BA 608 SF $595 $0.98 Paradise Trails 1 BR, 1 BA 624 SF $585 $0.94 Subject 1 BR, 1 BA ASPEN 653 SF $645 $0.99 Townhomes On The Park 1 BR, 1 BA 670 SF $615 $0.92 Villa Encanto 1 BR, 1 BA 682 SF $660 $0.97 Paradise Springs 1 BR, 1 BA 702 SF $660 $0.94 The Palisades 1 BR, 1 BA 711 SF $685 $0.96 SUBJECT 1 BR, 1 BA BIRCHWOOD 717 SF $655 $0.91 Villa Encanto 1 BR, 1 BA 748 SF $675 $0.90 SUBJECT 1 BR, 1 BA CYPRESS 756 SF $675 $0.89 The Palisades 1 BR, 1 BA 771 SF $751 $0.97 Paradise Trails 1 BR, 1 BA 776 SF $635 $0.82 Paradise Trails 1 BR, 1 BA 800 SF $625 $0.78 Townhomes On The Park 1 BR, 1.5 BA 809 SF $690 $0.85 Paradise Springs 1 BR, 1 BA Den 907 SF $760 $0.84
Compiled by CBRE The subject's quoted rental rates are within the range indicated by the rent comparables. The subject's rent roll indicates that a majority of the occupied one-bedroom units are leased at or below the quoted rates due to recent rental increases and specials. Considering the available data, monthly market rent for the subject units is estimated at the quoted rates. 79 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH TWO-BEDROOM UNITS SUMMARY OF COMPARABLE RENTALS TWO BEDROOM UNITS
RENTAL RATES COMPARABLE PLAN TYPE SIZE $/MO. $/SF - ---------- --------- ---- ----- ---- Villa Encanto 2 BR, 1 BA 818 SF $750 $0.92 Subject 2 BR, 1.3 BA DRIFTWOOD 884 SF $739 $0.84 Townhomes On The Park 2 BR, 1 BA 890 SF $700 $0.79 Paradise Springs 2 BR, 2 BA 907 SF $770 $0.85 The Palisades 2 BR, 1 BA 932 SF $781 $0.84 The Ridge 2 BR, 2 BA 962 SF $699 $0.73 Villa Encanto 2 BR, 2 BA 967 SF $789 $0.82 Villa Encanto 2 BR, 2 BA 971 SF $789 $0.81 Paradise Springs 2 BR, 2 BA 981 SF $795 $0.81 Townhomes On The Park 2 BR, 2 BA 983 SF $780 $0.79 Villa Encanto 2 BR, 2 BA 994 SF $819 $0.82 Subject 2 BR, 2 BA EVERGREEN 1,001 SF $789 $0.79 The Palisades 2 BR, 2 BA 1,024 SF $763 $0.75 Paradise Trails 2 BR, 2 BA 1,046 SF $755 $0.72 Townhomes On The Park 2 BR, 2 BA 1,062 SF $820 $0.77 Paradise Trails 2 BR, 2 BA 1,067 SF $745 $0.70 The Palisades 2 BR, 2 BA 1,075 SF $858 $0.80
Compiled by CBRE The subject's quoted rental rates are within the range indicated by the rent comparables. The subject's rent roll indicates that a majority of the occupied two-bedroom units are leased at or below the quoted rates due to recent price increases and specials. Considering the available data, monthly market rent for the subject units is reconciled at the quoted rates. MARKET RENT CONCLUSIONS Based on the foregoing analysis and discussion, the following is the estimate of potential rental income for the subject: 80 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH MARKET RENT CONCLUSIONS
NO. UNIT MONTHLY RENT ANNUAL RENT ANNUAL UNITS UNIT TYPE SIZE TOTAL SF $/UNIT $/SF PRI $/UNIT $/SF TOTAL - ----- ------------ -------- ---------- ------ ----- -------- ------ ------ ---------- 48 1 BR, 1 BA 653 SF 31,344 SF $645 $0.99 $ 30,960 $7,740 $11.85 $ 371,520 60 1 BR, 1 BA 717 SF 43,020 SF $655 $0.91 $ 39,300 $7,860 $10.96 $ 471,600 60 1 BR, 1 BA 756 SF 45,360 SF $675 $0.89 $ 40,500 $8,100 $10.71 $ 486,000 84 2 BR, 1.3 BA 884 SF 74,256 SF $739 $0.84 $ 62,076 $8,868 $10.03 $ 744,912 84 2 BR, 2 BA 1,001 SF 84,084 SF $789 $0.79 $ 66,276 $9,468 $ 9.46 $ 795,312 336 828 SF 278,064 SF $712 $0.86 $239,112 $8,540 $10.32 $2,869,344
Compiled by CBRE RENT ADJUSTMENTS Rent adjustments are sometimes necessary to account for differences in rental rates applicable to different units within similar floor plans due to items such as location within the property, view, and level of amenities. These rental adjustments may be in the form of rent premiums or rent discounts. As noted, the rental rates for some of the subject's units vary depending upon floor height, views, and the presence of microwave ovens and/or fireplaces. However, in this analysis we have concluded at average rental rates per unit; therefore, no rent adjustments are necessary. RENT ROLL ANALYSIS The rent roll analysis serves as a crosscheck to the estimate of market rent for the subject. The collections shown on the rent roll include rent premiums and/or discounts. RENT ROLL ANALYSIS
TOTAL TOTAL REVENUE COMPONENT MONTHLY RENT ANNUAL RENT - ----------------- ------------ ----------- 322 Occupied Units at Contract $220,268 $2,643,216 Rates 14 Vacant Units at Market Rates $ 12,625 $ 151,500 -------- ---------- 336 Total Units @ Contract Rent $232,893 $2,794,716 336 Total Units @ Market Rent $239,112 $2,869,344 -------- ----------
Compiled by CBRE The variation between the total annual rent reflected in the rent roll analysis and the market rent conclusion owes to older leases that do not reflect recent increases in rental rates. POTENTIAL RENTAL INCOME CONCLUSION Within this analysis, potential rental income is estimated based upon the forward-looking market rental rates over the next twelve months. This method of calculating rental income is most prevalent in 81 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH the local market and is consistent with the method used to derive overall capitalization rates from the comparable sales data. In estimating the subject's pro forma operating data, the actual operating history and budgets have been analyzed. The following table presents the available operating data history for the subject. OPERATING HISTORY
2005 2002 90% 2003 84% 2004 83% Budget 87% YEAR-OCCUPANCY Total $/Unit Total $/Unit Total $/Unit Total $/Unit ----- ------ ----- ------ ----- ------ ------ ------- INCOME Rental Income $2,246,514 $ 6,686 $2,076,911 $ 6,181 $1,990,369 $ 5,924 $2,110,734 $ 6,282 Other Income 215,015 640 216,688 645 204,315 608 175,899 524 RUBS Income 52,992 158 38,999 116 79,571 237 87,000 259 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Effective Gross Income $2,514,521 $ 7,484 $2,332,598 $ 6,942 $2,274,255 $ 6,769 $2,373,633 $ 7,064 EXPENSES Real Estate Taxes $ 147,091 $ 438 $ 152,161 $ 453 $ 143,739 $ 428 $ 162,109 $ 482 Property Insurance 49,600 148 54,203 161 60,009 179 61,315 182 Utilities 173,257 516 160,691 478 164,107 488 191,944 571 Repair and Maintenance 61,370 183 84,565 252 58,308 174 77,353 230 Apartment Turnover 76,223 227 84,152 250 64,137 191 79,602 237 Contract Services 73,803 220 81,718 243 83,173 248 86,720 258 Advertising and Promotion 68,996 205 98,570 293 114,571 341 49,883 148 Administrative 47,047 140 72,392 215 49,915 149 50,074 149 Payroll 226,467 674 331,475 987 378,460 1,126 395,545 1,177 Management Fee 125,521 374 114,865 342 111,016 330 104,134 310 Reserves for Replacement 67,200 200 67,200 200 67,200 200 67,200 200 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Operating Expenses $1,116,575 $ 3,323 $1,301,992 $ 3,875 $1,294,635 $ 3,853 $1,325,879 $ 3,946 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net Operating Income $1,397,946 $ 4,161 $1,030,606 $ 3,067 $ 979,620 $ 2,916 $1,047,754 $ 3,118
Source: Operating statements An adjustment for replacement reserves was made to the historical figures to facilitate comparison with the subject's pro forma. LOSS TO LEASE Loss-to-lease occurs because there are leases in place at the property that are below the current quoted and/or market lease rates. That is, the subject will never attain 100% of its potential market rents at any given time because there are always existing leases in place at lower rates. As well, management often allows tenants to renew for less than the full market rate, and in turn, the landlord foregoes the cost of painting and redecorating prior to re-leasing the unit. The loss to lease associated with the subject property is estimated at [OBJECT OMITTED] of gross rental income. This method of calculating rental income is most prevalent in the local market and is consistent with the method used to derive overall capitalization rates from the comparable sales data. 82 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH RENT CONCESSIONS Rent concessions are currently prevalent in the local market in the form of free rent, reduced move-in costs and pro rated discounts. The subject's quoted concessions are basically 8%, or one month free on a 12 month lease. Concessions according to the subject's financial statements have ranged from 2% to 6% since 2002 and there is no line item for concessions in the 2005 budget. The market range for concessions ranges from 0% (meaning quoted rates have been adjusted downward to net out concessions) to three-months free (25%). Concessions among the subject's primary competitors are currently around 8% as one month free is standard in this market. Concessions are a structural component of the market and virtually never reduce to 0% in the Phoenix MSA. However, they are at atypically high levels at this point in the market cycle. Going forward, a long term concession rate of 8.00% is estimated for the subject. VACANCY & COLLECTION LOSS The subject's is currently 95.8% occupied. Meanwhile, the rent comparables average 94.8%, the submarket averages 91.6%, and the Phoenix metropolitan area averages 91.2%. The following table summarizes the historical physical occupancy within the subject according to the financial statements: OCCUPANCY
Year % PGI - ---- ----- 2002 90% 2003 84% 2004 83% 2005 Budget 87% CBRE ESTIMATE 87%
Compiled by CBRE Based upon the recent history, we have estimated the subject's stabilized physical vacancy at 13.0%. In addition, we have modeled a 3.0% collection loss in our analysis. The subject has consistently generated a 3% to 4% collection loss expense and 3% is reflected in the 2005 budget. OTHER INCOME Other income is supplemental to that derived from leasing of the improvements. This includes categories such as forfeited deposits, vending machines, late charges, etc. The subject's ancillary income is detailed as follows: 83 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH OTHER INCOME
Year Total $/Unit - ---- -------- ------ 2002 $215,015 $640 2003 $216,688 $645 2004 $204,315 $608 2005 Budget $175,899 $524 CBRE ESTIMATE $200,000 $595
Compiled by CBRE The subject's full-year other income amounts have been reasonably stable at $204,000 to $216,000 from 2002 to 2004. Other income will trend down somewhat as lease buyout fees, etc. are reduced over the next several years in an improving market. However, the pro forma has been reconciled with primary emphasis on the most recent full year of operations. RUBS INCOME The subject property includes a RUBS program (Ratio Utility Billing System), whereby a portion of the utility expense is shared by tenants and reimbursed to the landlord on a pro rata basis. The subject's RUBS income is detailed as follows: RUBS INCOME
Year Total $/Unit - ---- ------- ------ 2002 $52,992 $158 2003 $38,999 $116 2004 $79,571 $237 2005 Budget $87,000 $259 CBRE ESTIMATE $87,000 $259
Compiled by CBRE The budget is consistent with the recent history of the subject and has therefore been emphasized in the pro forma. EFFECTIVE GROSS INCOME The subject's effective gross income is detailed as follows: 84 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH EFFECTIVE GROSS INCOME
Year Total % Change - ---- ---------- -------- 2002 $2,514,521 2003 $2,332,598 -7% 2004 $2,274,255 -3% 2005 Budget $2,373,633 4% CBRE Estimate $2,432,122 2%
Compiled by CBRE Our pro forma estimate is approximately 7% higher than the most recent full year due to recently implemented rental rate increases at the subject property, which are not reflected in the historical data. Further, the pro forma estimate is within 2% of the budgeted figures for the coming year and therefore appears reasonable. OPERATING EXPENSE ANALYSIS The following subsections represent the analysis for the pro forma estimate of each category of the subject's stabilized expenses. EXPENSE COMPARABLES The following table summarizes expenses obtained from recognized industry publications and/or comparable properties. 85 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH EXPENSE COMPARABLES Comparable Number 1 2 3 ----------- ----------- ----------- Location Phoenix MSA Phoenix MSA Phoenix MSA Units 250 548 273 GLA (SF) 235,000 470,000 193,000 Expense Year 2004 2004 2004 Effective Gross Income $2,108,815 $ 8,435 $3,155,905 $5,759 $1,783,497 $ 6,533 Expenses Total $/Unit Total $/Unit Total $ /Unit ---------- ----------- ---------- ------ ---------- -------- Real Estate Taxes $ 161,306 $ 645 $ 229,128 $ 418 $ 126,564 $ 464 Property Insurance 44,220 177 136,302 249 28,392 104 Utilities 123,988 496 384,770 702 117,246 429 Repair and Maintenance 80,879 324 283,454 517 - - Apartment Turnover - - - - 120,054 440 Contract Services 56,879 228 105,901 193 34,851 128 Advertising and Promotion 48,975 196 103,340 189 49,791 182 Administrative 29,985 120 66,202 121 23,463 86 Payroll 228,418 914 510,328 931 266,115 975 Management Fee 83,295 333 142,015 259 71,439 262 (as a % of EGI) 3.9% 4.5% 4.0% Reserves for Replacement 62,500 250 109,600 200 58,056 213 ---------- ----------- ---------- ------ ---------- -------- Operating Expenses $ 920,445 $ 3,682 $2,071,040 $3,779 $ 895,971 $ 3,282 Operating Expense Ratio 43.6% 65.6% 50.2%
Source: Actual Operating Statements and IREM REAL ESTATE TAXES The real estate taxes for the subject were previously discussed. The subject's expense is detailed as follows: REAL ESTATE TAXES
Year Total $/Unit - ---- -------- ------ 2002 $147,091 $438 2003 $152,161 $453 2004 $143,739 $428 2005 Budget $162,109 $482 Expense Comparable 1 N/A $645 Expense Comparable 2 N/A $418 Expense Comparable 3 N/A $464 CBRE ESTIMATE $147,315 $438
Compiled by CBRE The subject's recent historical and budgeted amounts are similar and reflective of the historical assessment of the subject. Our estimate is based on the current assessment and 2004 tax rate, and is consistent with other properties operating in the area that were summarized in the tax and assessment section of the report. 86 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH PROPERTY INSURANCE Property insurance expenses typically include fire and extended coverage and owner's liability coverage. The subject's expense is detailed as follows: PROPERTY INSURANCE
Year Total $/Unit - ---- ------- ------ 2002 $49,600 $148 2003 $54,203 $161 2004 $60,009 $179 2005 Budget $61,315 $182 Expense Comparable 1 N/A $177 Expense Comparable 2 N/A $249 Expense Comparable 3 N/A $104 CBRE ESTIMATE $60,480 $180
Compiled by CBRE The most recent full year is consistent with the mid-point of the expense comparables and we have therefore concluded the subject's pro forma estimate at the mid-point of the typical range. Our estimate is consistent with other properties operating in the area and generally supported by the available historical and budgeted financial data. UTILITIES Utility expenses include electricity, natural gas, water, trash and sewer. The subject's expense is detailed as follows: UTILITIES
Year Total $/Unit - ---- -------- ------ 2002 $173,257 $516 2003 $160,691 $478 2004 $164,107 $488 2005 Budget $191,944 $571 Expense Comparable 1 N/A $496 Expense Comparable 2 N/A $702 Expense Comparable 3 N/A $429 CBRE ESTIMATE $184,800 $550
Compiled by CBRE The subject's utilities are gross expenses prior to any reimbursements. The total expense trended consistently from 2003 to 2004, but management is projecting a significant increase in 2005. The 87 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH pro forma has been reconciled with emphasis on the budget and the conclusion falls towards the mid-point of the range supported by the expense comparables. REPAIRS AND MAINTENANCE Repairs and maintenance expenses typically include routine on-site maintenance and repairs, as well as replacements of non-capital items. The subject's expense is detailed as follows: REPAIR AND MAINTENANCE
Year Total $/Unit - ---- ------- ------ 2002 $61,370 $183 2003 $84,565 $252 2004 $58,308 $174 2005 Budget $77,353 $230 Expense Comparable 1 N/A $324 Expense Comparable 2 N/A $517 Expense Comparable 3 N/A $ 0 CBRE ESTIMATE $84,000 $250
Compiled by CBRE The subject's repair and maintenance expenses have trended from $174 to $252 per unit and the current budget is $230 per unit. The pro forma has been reconciled between the range supported by the comparables and the subject's 2005 budget. APARTMENT TURNOVER The subject's turnover expenses are summarized as follows: APARTMENT TURNOVER
Year Total $/Unit - ---- ------- ------ 2002 $76,223 $227 2003 $84,152 $250 2004 $64,137 $191 2005 Budget $79,602 $237 Expense Comparable 1 N/A $ 0 Expense Comparable 2 N/A $ 0 Expense Comparable 3 N/A $440 CBRE ESTIMATE $84,000 $250
Compiled by CBRE The most recent years of operation support a range of $191 to $250 per unit for turnover expenses. The pro forma has been reconciled towards the upper portion of this range at $250 per unit. 88 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH CONTRACT SERVICES Contract services typically includes all outside landscaping and grounds maintenance service contracts and the cost of landscaping supplies, as well as security services. The subject's expense is detailed as follows: CONTRACT SERVICES
Year Total $/Unit - ---- ------- ------ 2002 $73,803 $220 2003 $81,718 $243 2004 $83,173 $248 2005 Budget $86,720 $258 Expense Comparable 1 N/A $228 Expense Comparable 2 N/A $193 Expense Comparable 3 N/A $128 CBRE ESTIMATE $84,000 $250
Compiled by CBRE The most recent full years of operations have trended very closely at $243 to $258 per unit. Based upon this range, the pro forma is reconciled at $250 per unit. ADVERTISING AND PROMOTION Advertising and promotion expenses typically include all costs associated with the promotion of the subject property including advertisements in local publications, trade publications, yellow pages, et cetera. The subject's expense is detailed as follows: ADVERTISING AND PROMOTION
Year Total $/Unit - ---- -------- ------- 2002 $ 68,996 $205 2003 $ 98,570 $293 2004 $114,571 $341 2005 Budget $ 49,883 $148 Expense Comparable 1 N/A $196 Expense Comparable 2 N/A $189 Expense Comparable 3 N/A $182 CBRE ESTIMATE $100,800 $300
Compiled by CBRE The pro forma has been reconciled based upon the most recent full year of operations and the current budget. Although the market is improving, the subject has struggled with below-market occupancy 89 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH over the last several years. Therefore, conclusion is reconciled towards the upper portion of this range. ADMINISTRATIVE Administrative expenses typically include legal costs, accounting, telephone, supplies, furniture, temporary help and items that are not provided by off-site management. The subject's expense is detailed as follows: ADMINISTRATIVE
Year Total $/Unit - ---- ------- ------ 2002 $47,047 $140 2003 $72,392 $215 2004 $49,915 $149 2005 Budget $50,074 $149 Expense Comparable 1 N/A $120 Expense Comparable 2 N/A $121 Expense Comparable 3 N/A $ 86 CBRE ESTIMATE $50,400 $150
Compiled by CBRE This expense category has trended closely in 2004 and in the 2005 budget; therefore, the pro forma is reconciled based upon the most recent actual operating figures. PAYROLL Payroll expenses typically include all payroll and payroll related items for all directly employed administrative personnel. Not included are the salaries or fees for off-site management firm personnel and services. The subject's expense is detailed as follows: PAYROLL
Year Total $/Unit - ---- -------- ------ 2002 $226,467 $ 674 2003 $331,475 $ 987 2004 $378,460 $1,126 2005 Budget $395,545 $1,177 Expense Comparable 1 N/A $ 914 Expense Comparable 2 N/A $ 931 Expense Comparable 3 N/A $ 975 CBRE ESTIMATE $386,400 $1,150
Compiled by CBRE 90 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH Payroll expenses within the subject increased significantly in 2004 and the budget continues this relatively high level of payroll. However, given the subject's history of below market occupancy, the relatively high payroll expenses are necessary. MANAGEMENT FEE Management expenses are typically negotiated as a percentage of collected revenues (effective gross income). The subject's expense is detailed as follows: MANAGEMENT FEE
Year Total % EGI - ---- -------- ----- 2002 $125,521 5.0% 2003 $114,865 4.9% 2004 $111,016 4.9% 2005 Budget $104,134 4.4% CBRE ESTIMATE $ 85,124 3.5%
Compiled by CBRE Professional management fees in the local market range from 3.0% to 5.0% for comparable properties. Historically, the subject has incurred a 4.4% to 5.0% management fee; however, the project is managed by the owner. Given the subject's size and the competitiveness of the local market area, we believe an appropriate management expense for the subject would be towards the lower end of the range. RESERVES FOR REPLACEMENT Reserves for replacement have been estimated based on discussions with knowledgeable market participants who indicate a range from $150 to $300 per unit for comparable properties. In this analysis, reserves of $200 per unit are modeled. OPERATING EXPENSE CONCLUSION The subject's expense is detailed as follows: 91 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH OPERATING EXPENSES
Year Total $/Unit - ---- ---------- ------ 2002 $1,116,575 $3,323 2003 $1,301,992 $3,875 2004 $1,294,635 $3,853 2005 Budget $1,325,879 $3,946 Expense Comparable 1 N/A $3,682 Expense Comparable 2 N/A $3,779 Expense Comparable 3 N/A $3,282 CBRE ESTIMATE $1,334,519 $3,972
Compiled by CBRE The subject's per unit operating expense pro forma is somewhat higher than the total per unit operating expenses indicated by the expense comparables and published data, but the subject estimate is supported by the actual operating history trend indicated above. NET OPERATING INCOME CONCLUSION The subject's net operating income is detailed as follows: NET OPERATING INCOME
Year Total $/Unit - ---- ---------- ------ 2002 $1,397,946 $4,161 2003 $1,030,606 $3,067 2004 $ 979,620 $2,916 2005 Budget $1,047,754 $3,118 CBRE ESTIMATE $1,097,602 $3,267
Compiled by CBRE Our pro forma estimate is approximately 12% higher than the most recent full year due to recently implemented rental rate increases at the subject property, which are not reflected in the historical data. Further, the pro forma estimate is within 5% of the budgeted figures for the coming year and therefore appears reasonable. DIRECT CAPITALIZATION Direct capitalization is a method used to convert a single year's estimated stabilized net operating income into a value indication. The following subsections represent different techniques for deriving an overall capitalization rate for direct capitalization. 92 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH COMPARABLE SALES The OARs confirmed for the comparable sales analyzed in the Sales Comparison Approach are as follows: COMPARABLE CAPITALIZATION RATES
Sale Sale Price Pro Forma Sale Date $/Unit Occupancy OAR - ----------------- ------ ---------- --------- --------- 1 Feb-04 $54,735 93% 7.01% 2 Aug-04 $53,441 95% 6.49% 3 Sep-04 $49,825 90% 6.06% 4 Feb-05 $47,656 92% 5.57% 5 Mar-05 $54,231 91% 4.16% 6 Mar-05 $54,255 86% 5.74% --- ---- INDICATED OAR: 84% 6.25%
Compiled by: CBRE The comparables support an overall range of 4.16% to 7.01%, with a clear downward trend over time. Excluding Comparable One, which closed more than one year ago, the range is 4.16% to 6.49%. The most recent comparables reflect overall rates that were derived from income in place. The subject's pro forma NOI is about 5% higher than the current budget; therefore, the OAR derived from the comparable sales is reconciled somewhat above the mid-point of the range. PUBLISHED INVESTOR SURVEYS The results of the most recent National Investor Survey, published by CBRE, are summarized in the following table. OVERALL CAPITALIZATION RATES
Investment Type OAR Range Average - --------------- ------------ ------- Apartments Class A 5.00% - 8.00% 6.07% Class B 5.00% - 8.00% 6.58% Class C 6.00% - 9.00% 7.37% ---- INDICATED OAR: 6.25%
Source: CBRE National Investor Survey The subject is considered to be a Class B property. The continued decline in interest rates in 2002 through 2005 had a significant impact on cap rates for investment grade properties due to the fact that most investors have been focusing on cash-on-cash returns. In other words, investors have been accepting a lower overall return due to the high equity return. There is a current lack of supply of product available for purchase in the real estate investment market. This lack of supply has exerted 93 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH additional downward pressure on capitalization rates. In addition, the relatively poor performance of the stock market has also increased the supply of capital allocated to real estate investments. Although interest rates have increased recently, short and long-term interest rates remain low by historical standards, leading to an increase capital available from short and long-term cash equivalents into real estate investments. With regard to rates, we have heard from at least three sources independently that the various investor surveys are outdated by the time they are published. Due to these trends, the subject's OAR as derived from the most recent National Investor Survey has been reconciled somewhat below the mid-point of the range supported for Class B properties. BAND OF INVESTMENT The band of the investment technique has been utilized as a crosscheck to the foregoing techniques. The analysis is shown in the following table. BAND OF INVESTMENT Mortgage Interest Rate 5.50% Mortgage Term (Amortization Period) 30 Years Mortgage Ratio (Loan-to-Value) 75% Mortgage Constant 0.06813 Equity Dividend Rate (EDR) 6.5% Mortgage Requirement 75% x 0.06813 = 0.05110 Equity Requirement 25% x 0.06500 = 0.01625 ------- 100% 0.06735 INDICATED OAR: 6.70%
Compiled by: CBRE CAPITALIZATION RATE CONCLUSION The following table summarizes the OAR conclusions. OVERALL CAPITALIZATION RATE - CONCLUSION
Source Indicated OAR - ------------------------ ------------- Comparable Sales 6.25% National Investor Survey 6.25% Band of Investment 6.70% CBRE ESTIMATE 6.25%
Compiled by: CBRE In concluding an overall capitalization rate for the subject, primary reliance has been placed upon the data obtained from the comparable sales and interviews with active market participants. This data 94 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH tends to provide the most accurate depiction of both buyer's and seller's expectations within the market and the ranges indicated are relatively tight. Further secondary support for our conclusion is noted via both the CBRE National Investor Survey and the band of investment methodology. Considering the data presented, the concluded overall capitalization rate appears to be well supported in the local market. DIRECT CAPITALIZATION SUMMARY A summary of the direct capitalization of the subject at stabilized occupancy is illustrated in the following table. 95 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH DIRECT CAPITALIZATION SUMMARY
$/Unit/Yr Total ------------ ------------- INCOME Potential Rental Income $ 8,540 $ 2,869,344 Less: Loss to Lease 3.00% (256) (86,080) Less: Concessions 8.00% (683) (229,548) Credit Loss 3.00% (228) (76,611) Vacancy 13.00% (988) (331,983) ------------ ------------- NET RENTAL INCOME $ 6,384 $ 2,145,122 Other Income 595 200,000 RUBS Income 259 87,000 ------------ ------------- EFFECTIVE GROSS INCOME $ 7,238 $ 2,432,122 EXPENSES Real Estate Taxes $ 438 $ 147,315 Property Insurance 180 60,480 Utilities 550 184,800 Repair and Maintenance 250 84,000 Apartment Turnover 250 84,000 Contract Services 250 84,000 Advertising and Promotion 300 100,800 Administrative 150 50,400 Payroll 1,150 386,400 Management Fee 3.50% 253 85,124 Reserves for Replacement 200 67,200 ------------ ------------- OPERATING EXPENSES $ 3,972 $ 1,334,519 ------------ ------------- OPERATING EXPENSE RATIO 54.87% NET OPERATING INCOME $ 3,267 $ 1,097,602 OAR / 6.25% ------------ ------------- VALUE INDICATION $ 17,560,000 ROUNDED $ 17,600,000 VALUE PER UNIT $ 52,262
CAP RATE VALUE -------- ------------ MATRIX ANALYSIS 6.00% $ 18,293,400 6.25% $ 17,561,600 6.50% $ 16,886,200
Compiled by CBRE 96 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH DISCOUNTED CASH FLOW ANALYSIS The DCF assumptions concluded for the subject are summarized as follows: SUMMARY OF DISCOUNTED CASH FLOW ASSUMPTIONS GENERAL ASSUMPTIONS Start Date Apr-05 Terms of Analysis 10 Years Software Excel GROWTH RATE ASSUMPTIONS Income Growth 3.00% Expense Growth 3.00% Inflation (CPI) 3.00% Real Estate Tax Growth 3.00% MARKET RATES - YEAR 1 Average Rent ($/Unit/Yr.) $ 8,540 Total Operating Expenses ($/Unit/Yr.) $ 3,972 OCCUPANCY ASSUMPTIONS Current Occupancy 95.83% Stabilized Occupancy 87.00% Credit Loss 3.00% Stabilized Occupancy (w/C redit Loss) 84.00% Loss to Lease 3.0% Concessions 8.0% FINANCIAL ASSUMPTIONS Discount Rate 9.00% Terminal Capitalization Rate 7.00% OTHER ASSUMPTIONS Cost of Sale 2.00% Capital Expenses (Deferred Maintenance) $ 0
Compiled by CBRE GENERAL ASSUMPTIONS The DCF analysis utilizes a 10-year projection period with fiscal year inflation and discounting. This is consistent with current investor assumptions. The analysis is done with Excel software. GROWTH RATE ASSUMPTIONS The inflation and growth rates for the DCF analysis have been estimated by analyzing the expectations typically used by buyers and sellers in the local marketplace. Published investor surveys, an analysis of 97 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH the Consumer Price Index (CPI), as well as CBRE's survey of brokers and investors active in the local market form the foundation for the selection of the appropriate growth rates. SUMMARY OF GROWTH RATES
Investment Type Rent Expenses Inflation - --------------------------------------- ---- -------- --------- U.S. Bureau of Labor Statistics (CPI-U) 10-Year Snapshot Average as of Mar-05 2.47% Apartments Class A - Average 2.88% 2.96% 2.98% Class B - Average 3.02% 2.91% 2.98% Class C - Average 3.42% 2.83% 3.00% CBRE ESTIMATE 3.00% 3.00% 3.00%
Source: C BRE National & www.bls.gov Investor Survey The inflation and growth rates for the DCF analysis have been estimated by analyzing the expectations typically used by buyers and sellers active in the local marketplace. Published investor surveys, an analysis of the Consumer Price Index (CPI), as well as CBRE's survey of brokers and investors active in the local marketplace form the foundation for the selection of the appropriate growth rates. LEASING ASSUMPTIONS The previously concluded pro forma income and expenses have been utilized as the basis for Year 1 of the holding period. All subsequent years vary according to the growth rate assumptions applied to the Year 1 estimate. OCCUPANCY ASSUMPTIONS The occupancy rate over the holding period is based on the subject's estimated stabilized occupancy rate and estimated lease-up period to achieve a stabilized occupancy position. In anticipation of a reduction in concessions over the next several years, we have stepped down the effective vacancy rate over the first four years of analysis. FINANCIAL ASSUMPTIONS Discount Rate Analysis Similar to overall capitalization rates, there has been a significant reduction in discount rates over the past several months. Once again, this is due to several factors. First, interest rates on commercial loans have dropped substantially over the past year. This has allowed investors to accept lower overall property yields, but still maintain acceptable equity yield rates. Secondly, the stock market volatility and lack of value appreciation, and lower interest rates have adversely impacted the returns on "safe" investment vehicles such as money market funds, certificates of deposit, etc. have resulted in 98 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH more funds being invested in real estate. In turn, this has caused discount rate to decline. The investment market appears to be reacting to this by accepting lower returns on real estate, which, in comparison to other investment vehicles, remain high. The results of the most recent National Investor Survey, published by CBRE, are summarized in the following table. DISCOUNT RATES
Investment Type Rate Range Average - --------------- ------------- ------- Apartments Class A 6.50% - 10.00% 8.15% Class B 6.50% - 9.50% 8.57% Class C 7.00% - 10.00% 9.17% CBRE ESTIMATE 9.00%
Source: CBRE National Investor Survey Based on discussions with some institutional clients, including RREEF, Prudential, UBS Investors, CalPERS, Teachers, CBRE Investors, etc., it appears that the market is continuing to get even more aggressive with regard to trading real estate. Part of what is driving this is that fund sponsors (the people supplying the money to be invested) are increasing the dollars they are allocating to real estate. Whereas the fund sponsors have historically allocated 6-8% of their overall fund to real estate, two sponsors have recently raised their allocations from 6% to 10%. The effect of just these two sizeable pension funds increasing their allocations is to put several hundred million more dollars out into the market chasing real estate deals. Some of the investment advisors mentioned that they literally don't know how they are going to get all of the money invested, but that it will for sure result increasing downward pressure on investment rates. The subject is a Class B project located in a fully developed market. Rent growth has been generally stagnant over the last several years, but there is reasonable expectations for an improvement in leasing and occupancy over the next several years. Given these trends, the subject's discount rate is reconciled towards the upper portion of the range supported by the National Investor Survey. The conclusion is consistent with the going in OAR and the long term growth rate in income and value. Terminal Capitalization Rate The reversionary value of the subject is based on an assumed sale at the end of the holding period based on capitalizing the Year 11 NOI at a terminal capitalization rate. Typically, for properties similar to the subject, terminal capitalization rates are 50 to 100 basis points higher than going-in capitalization rates (OARs). This is a result of the uncertainty of future economic conditions and the natural aging of the property. 99 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH TERMINAL CAPITALIZATION RATES
Investment Type Rate Range Average - --------------- ------------ ------- Apartments Class A 5.50% - 8.50% 6.64% Class B 5.50% - 8.25% 6.98% Class C 6.50% - 9.00% 7.96% CBRE ESTIMATE 7.00%
Source: C BRE National Investor Survey DISCOUNTED CASH FLOW CONCLUSION The DCF schedule(s) and value conclusions are depicted on the following page(s). 100 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH [CBRE LOGO] GREENSPOINT APARTMENTS DISCOUNTED CASH FLOW ANALYSIS BEGINNING 04/05
YEAR 1 2 3 4 5 6 ---------- ---------- ---------- ---------- ---------- ---------- REVENUE Potential Rental Income $2,869,344 $2,955,424 $3,044,087 $3,135,410 $3,229,472 $3,326,356 Less: Loss to Lease ($86,080) ($88,663) ($91,323) ($94,062) ($96,884) ($99,791) Less: Concessions ($229,548) ($236,434) ($243,527) ($250,833) ($258,358) ($266,108) Credit Loss (76,611) (78,910) (81,277) (83,715) (86,227) (88,814) Vacancy (331,983) (315,639) (298,016) (279,051) (287,423) (296,046) Other Income 287,000 295,610 304,478 313,612 323,020 332,711 ---------- ---------- ---------- ---------- ---------- ---------- Effective Gross Income $2,432,122 $2,531,388 $2,634,422 $2,741,360 $2,823,600 $2,908,308 EXPENSES Real Estate Taxes $147,315 $151,735 $156,287 $160,976 $165,805 $170,779 Property Insurance 60,480 62,294 64,163 66,088 68,071 70,113 Utilities 184,800 190,344 196,054 201,936 207,994 214,234 Repair and Maintenance 84,000 86,520 89,116 91,789 94,543 97,379 Apartment Turnover 84,000 86,520 89,116 91,789 94,543 97,379 Contract Services 84,000 86,520 89,116 91,789 94,543 97,379 Advertising and 100,800 103,824 106,939 110,147 113,451 116,855 Promotion Administrative 50,400 51,912 53,469 55,073 56,725 58,427 Payroll 386,400 397,992 409,932 422,230 434,897 447,944 Management Fee 85,124 88,599 92,205 95,948 98,826 101,791 Reserves for Replacement 67,200 69,216 71,292 73,431 75,634 77,903 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL EXPENSES $1,334,519 $1,375,476 $1,417,689 $1,461,196 $1,505,032 $1,550,183 ---------- ---------- ---------- ---------- ---------- ---------- NET INCOME $1,097,602 $1,155,913 $1,216,733 $1,280,164 $1,318,568 $1,358,126 ========== ========== ========== ========== ========== ========= Assumptions: Income Growth N/A 3.00% 3.00% 3.00% 3.00% 3.00% Loss to Lease 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Concessions 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% Credit Loss 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Vacancy 13.00% 12.00% 11.00% 10.00% 10.00% 10.00% Tax Expense Growth N/A 3.00% 3.00% 3.00% 3.00% 3.00% Op. Expense Growth N/A 3.00% 3.00% 3.00% 3.00% 3.00% Management Fee 3.50% Cost of Sale 2.00% YEAR 7 8 9 10 REVERSION ---------- ---------- ---------- ---------- ---------- REVENUE Potential Rental Income $3,426,147 $3,528,931 $3,634,799 $3,743,843 $3,856,158 Less: Loss to Lease ($102,784) ($105,868) ($109,044) ($112,315) ($115,685) Less: Concessions ($274,092) ($282,314) ($290,784) ($299,507) ($308,493) Credit Loss (91,478) (94,222) (97,049) (99,961) (102,959) Vacancy (304,927) (314,075) (323,497) (333,202) (343,198) Other Income 342,692 352,973 363,562 374,469 385,703 ---------- ---------- ---------- ---------- ---------- EFFECTIVE GROSS INCOME $2,995,558 $3,085,424 $3,177,987 $3,273,327 $3,371,526 EXPENSES Real Estate Taxes $175,902 $181,179 $186,614 $192,212 $197,978 Property Insurance 72,216 74,382 76,613 78,911 81,278 Utilities 220,661 227,281 234,099 241,122 248,356 Repair and Maintenance 100,300 103,309 106,408 109,600 112,888 Apartment Turnover 100,300 103,309 106,408 109,600 112,888 Contract Services 100,300 103,309 106,408 109,600 112,888 Advertising and 120,361 123,972 127,691 131,522 135,468 Promotion Administrative 60,180 61,985 63,845 65,760 67,733 Payroll 461,382 475,223 489,480 504,164 519,289 Management Fee 104,845 107,990 111,230 114,566 118,003 Reserves for Replacement 80,240 82,647 85,126 87,680 90,310 TOTAL EXPENSES $1,596,687 $1,644,586 $1,693,922 $1,744,737 $1,797,079 ---------- ---------- ---------- ---------- ---------- NET INCOME $1,398,871 $1,440,838 $1,484,065 $1,528,589 $1,574,447 ---------- ---------- ---------- ---------- ---------- ASSUMPTIONS: Income Growth 3.00% 3.00% 3.00% 3.00% 3.00% Loss to Lease 3.00% 3.00% 3.00% 3.00% 3.00% Concessions 8.00% 8.00% 8.00% 8.00% 8.00% Credit Loss 3.00% 3.00% 3.00% 3.00% 3.00% Vacancy 10.00% 10.00% 10.00% 10.00% 10.00% Tax Expense Growth 3.00% 3.00% 3.00% 3.00% 3.00% Op. Expense Growth 3.00% 3.00% 3.00% 3.00% 3.00% Management Fee Cost of Sale
[GRAPH]
6.75% 7.00% 7.25% ----- ----- ----- IRR 8.75% 18,288,318 17,935,461 17,606,938 9.00% 17,966,180 17,621,332 17,300,267 9.25% 17,651,336 17,314,299 17,000,506
RECONCILED VALUE INDICATION (ROUNDED): $17,621,332 DEFERRED MAINTENANCE: $ 0 ----------- AS-IS VALUE INDICATION (ROUNDED): $17,600,000 $ 52,381/Unit
101 GREENSPOINT APARTMENTS INCOME CAPITALIZATION APPROACH CONCLUSION OF INCOME CAPITALIZATION APPROACH The conclusions via the valuation methods employed for this approach are as follows:
INCOME CAPITALIZATION APPROACH VALUES Direct Capitalization Method $17,600,000 Discounted Cash Flow Analysis $17,600,000 Reconciled Value $17,600,000
Compiled by CBRE Primary emphasis has been placed on Direct Capitalization. This method is considered to best reflect the actions of buyers and sellers currently active in this market. 102 GREENSPOINT APARTMENTS RECONCILIATION OF VALUE RECONCILIATION OF VALUE The value indications from the approaches to value are summarized as follows: SUMMARY OF VALUE CONCLUSIONS COST APPROACH $18,000,000 SALES COMPARISON APPROACH $17,500,000 INCOME CAPITALIZATION APPROACH $17,600,000 RECONCILED VALUE $17,600,000
COMPILED BY CBRE The Cost Approach typically gives a reliable value indication when there is evidence for the replacement cost estimate and when there is minimal depreciation contributing to a loss in value which must be estimated. Neither factor applies to the subject. In terms of modeling investor behavior the Cost Approach is considered to be the least reliable method of valuation for the subject. Therefore, no emphasis is placed upon the Cost Approach. In the Sales Comparison Approach, the subject property is compared to similar properties that have been sold recently or for which listing prices or offers are known. The sales used in this analysis are considered fairly comparable to the subject, and the required adjustments were based on reasonable and well supported rationale. In addition, market participants are currently analyzing purchase prices on investment properties as they relate to available substitutes in the market. Therefore, the Sales Comparison Approach is considered to provide a reliable value indication and has been given emphasis in the final value reconciliation. The Income Capitalization Approach is applicable to the subject property since it is an income producing property leased in the open market. This technique best reflects the actions and motivation of the most probable buyer of the subject, and this technique most closely corresponds with the current sale of the subject. Therefore, the Income Capitalization Approach is considered to be a reasonable and substantiated value indicator and has been heavily weighted in the final value estimate. Based on the foregoing, the market value of the subject has been concluded as follows: MARKET VALUE CONCLUSION
APPRAISAL PREMISE INTEREST APPRAISED EXPOSURE DATE OF VALUE VALUE CONCLUSION - ----------------- ------------------ -------- ------------- ---------------- As Is Fee Simple Estate 6 to 12 Months April 18, 2005 $17,600,000
Compiled by CBRE 103 GREENSPOINT APARTMENTS RECONCILIATION OF VALUE SPECIAL ASSUMPTIONS None noted. 104 GREENSPOINT APARTMENTS ASSUMPTIONS AND LIMITING CONDITIONS ASSUMPTIONS AND LIMITING CONDITIONS 1. Unless otherwise specifically noted in the body of the report, it is assumed that title to the property or properties appraised is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect marketability or value. CBRE is not aware of any title defects nor has it been advised of any unless such is specifically noted in the report. CBRE, however, has not examined title and makes no representations relative to the condition thereof. Documents dealing with liens, encumbrances, easements, deed restrictions, clouds and other conditions that may affect the quality of title have not been reviewed. Insurance against financial loss resulting in claims that may arise out of defects in the subject property's title should be sought from a qualified title company that issues or insures title to real property. 2. Unless otherwise specifically noted in the body of this report, it is assumed: that the existing improvements on the property or properties being appraised are structurally sound, seismically safe and code conforming; that all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; that the roof and exterior are in good condition and free from intrusion by the elements; that the property or properties have been engineered in such a manner that the improvements, as currently constituted, conform to all applicable local, state, and federal building codes and ordinances. CBRE professionals are not engineers and are not competent to judge matters of an engineering nature. CBRE has not retained independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore, makes no representations relative to the condition of improvements. Unless otherwise specifically noted in the body of the report: no problems were brought to the attention of CBRE by ownership or management; CBRE inspected less than 100% of the entire interior and exterior portions of the improvements; and CBRE was not furnished any engineering studies by the owners or by the party requesting this appraisal. If questions in these areas are critical to the decision process of the reader, the advice of competent engineering consultants should be obtained and relied upon. It is specifically assumed that any knowledgeable and prudent purchaser would, as a precondition to closing a sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems. Structural problems and/or building system problems may not be visually detectable. If engineering consultants retained should report negative factors of a material nature, or if such are later discovered, relative to the condition of improvements, such information could have a substantial negative impact on the conclusions reported in this appraisal. Accordingly, if negative findings are reported by engineering consultants, CBRE reserves the right to amend the appraisal conclusions reported herein. 3. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the property was not observed by the appraisers. CBRE has no knowledge of the existence of such materials on or in the property. CBRE, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired. We have inspected, as thoroughly as possible by observation, the land; however, it was impossible to personally inspect conditions beneath the soil. Therefore, no representation is made as to these matters unless specifically considered in the appraisal. 4. All furnishings, equipment and business operations, except as specifically stated and typically considered as part of real property, have been disregarded with only real property being considered in the report unless otherwise stated. Any existing or proposed improvements, on or off-site, as well as any alterations or repairs considered, are assumed to be completed in a workmanlike manner according to standard practices based upon the information submitted to CBRE This report may be subject to amendment upon re-inspection of the subject property subsequent to repairs, modifications, alterations and completed new construction. Any estimate of Market Value is as of the date indicated; based upon the information, conditions and projected levels of operation. 5. It is assumed that all factual data furnished by the client, property owner, owner's representative, or persons designated by the client or owner to supply said data are accurate and correct unless otherwise specifically noted in the appraisal report. Unless otherwise specifically noted in the appraisal report, CBRE has no reason to believe that any of the data furnished contain any material error. Information and data referred to in this paragraph include, without being limited to, numerical street addresses, lot and block numbers, Assessor's Parcel Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any material error in any of the above data could have a substantial impact on the conclusions reported. Thus, CBRE reserves the right to amend conclusions reported if made aware of any such error. Accordingly, the client-addressee should carefully review 105 GREENSPOINT APARTMENTS ASSUMPTIONS AND LIMITING CONDITIONS all assumptions, data, relevant calculations, and conclusions within 30 days after the date of delivery of this report and should immediately notify CBRE of any questions or errors. 6. The date of value to which any of the conclusions and opinions expressed in this report apply, is set forth in the Letter of Transmittal. Further, that the dollar amount of any value opinion herein rendered is based upon the purchasing power of the American Dollar on that date. This appraisal is based on market conditions existing as of the date of this appraisal. Under the terms of the engagement, we will have no obligation to revise this report to reflect events or conditions which occur subsequent to the date of the appraisal. However, CBRE will be available to discuss the necessity for revision resulting from changes in economic or market factors affecting the subject. 7. CBRE assumes no private deed restrictions, limiting the use of the subject property in any way. 8. Unless otherwise noted in the body of the report, it is assumed that there are no mineral deposit or subsurface rights of value involved in this appraisal, whether they be gas, liquid, or solid. Nor are the rights associated with extraction or exploration of such elements considered unless otherwise stated in this appraisal report. Unless otherwise stated it is also assumed that there are no air or development rights of value that may be transferred. 9. CBRE is not aware of any contemplated public initiatives, governmental development controls, or rent controls that would significantly affect the value of the subject. 10. The estimate of Market Value, which may be defined within the body of this report, is subject to change with market fluctuations over time. Market value is highly related to exposure, time promotion effort, terms, motivation, and conclusions surrounding the offering. The value estimate(s) consider the productivity and relative attractiveness of the property, both physically and economically, on the open market. 11. Any cash flows included in the analysis are forecasts of estimated future operating characteristics are predicated on the information and assumptions contained within the report. Any projections of income, expenses and economic conditions utilized in this report are not predictions of the future. Rather, they are estimates of current market expectations of future income and expenses. The achievement of the financial projections will be affected by fluctuating economic conditions and is dependent upon other future occurrences that cannot be assured. Actual results may vary from the projections considered herein. CBRE does not warrant these forecasts will occur. Projections may be affected by circumstances beyond the current realm of knowledge or control of CBRE. 12. Unless specifically set forth in the body of the report, nothing contained herein shall be construed to represent any direct or indirect recommendation of CBRE to buy, sell, or hold the properties at the value stated. Such decisions involve substantial investment strategy questions and must be specifically addressed in consultation form. 13. Also, unless otherwise noted in the body of this report, it is assumed that no changes in the present zoning ordinances or regulations governing use, density, or shape are being considered. The property is appraised assuming that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, nor national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report is based, unless otherwise stated. 14. This study may not be duplicated in whole or in part without the specific written consent of CBRE nor may this report or copies hereof be transmitted to third parties without said consent, which consent CBRE reserves the right to deny. Exempt from this restriction is duplication for the internal use of the client-addressee and/or transmission to attorneys, accountants, or advisors of the client-addressee. Also exempt from this restriction is transmission of the report to any court, governmental authority, or regulatory agency having jurisdiction over the party/parties for whom this appraisal was prepared, provided that this report and/or its contents shall not be published, in whole or in part, in any public document without the express written consent of CBRE which consent CBRE reserves the right to deny. Finally, this report shall not be advertised to the public or otherwise used to induce a third party to purchase the property or to make a "sale" or "offer for sale" of any "security", as such terms are defined and used in the Securities Act of 1933, as amended. Any third party, not covered by the exemptions herein, who may possess this report, is advised that they should rely on their own independently secured advice for any decision in connection with this property. CBRE shall have no accountability or responsibility to any such third party. 15. Any value estimate provided in the report applies to the entire property, and any pro ration or division of the title into fractional interests will invalidate the value estimate, unless such pro ration or division of interests has been set forth in the report. 16. The distribution of the total valuation in this report between land and improvements applies only under the existing program of utilization. Component values for land and/or buildings are not intended to be used in conjunction with any other property or appraisal and are invalid if so used. 106 GREENSPOINT APARTMENTS ASSUMPTIONS AND LIMITING CONDITIONS 17. The maps, plats, sketches, graphs, photographs and exhibits included in this report are for illustration purposes only and are to be utilized only to assist in visualizing matters discussed within this report. Except as specifically stated, data relative to size or area of the subject and comparable properties has been obtained from sources deemed accurate and reliable. None of the exhibits are to be removed, reproduced, or used apart from this report. 18. No opinion is intended to be expressed on matters which may require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. Values and opinions expressed presume that environmental and other governmental restrictions/conditions by applicable agencies have been met, including but not limited to seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, licenses, etc. No survey, engineering study or architectural analysis has been made known to CBRE unless otherwise stated within the body of this report. If the Consultant has not been supplied with a termite inspection, survey or occupancy permit, no responsibility or representation is assumed or made for any costs associated with obtaining same or for any deficiencies discovered before or after they are obtained. No representation or warranty is made concerning obtaining these items. CBRE assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance. 19. Acceptance and/or use of this report constitutes full acceptance of the Contingent and Limiting Conditions and special assumptions set forth in this report. It is the responsibility of the Client, or client's designees, to read in full, comprehend and thus become aware of the aforementioned contingencies and limiting conditions. Neither the Appraiser nor CBRE assumes responsibility for any situation arising out of the Client's failure to become familiar with and understand the same. The Client is advised to retain experts in areas that fall outside the scope of the real estate appraisal/consulting profession if so desired. 20. CBRE assumes that the subject property analyzed herein will be under prudent and competent management and ownership; neither inefficient or super-efficient. 21. 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. 22. No survey of the boundaries of the property was undertaken. All areas and dimensions furnished are presumed to be correct. It is further assumed that no encroachments to the realty exist. 23. The Americans with Disabilities Act (ADA) became effective January 26, 1992. Notwithstanding any discussion of possible readily achievable barrier removal construction items in this report, CBRE has not made a specific compliance survey and analysis of this property to determine whether it is in conformance with the various detailed requirements of the ADA. It is possible that a compliance survey of the property together with a detailed analysis of the requirements of the ADA could reveal that the property is not in compliance with one or more of the requirements of the ADA. If so, this fact could have a negative effect on the value estimated herein. Since CBRE has no specific information relating to this issue, nor is CBRE qualified to make such an assessment, the effect of any possible non-compliance with the requirements of the ADA was not considered in estimating the value of the subject property. 24. Client shall not indemnify Appraiser or hold Appraiser harmless unless and only to the extent that the Client misrepresents, distorts, or provides incomplete or inaccurate appraisal results to others, which acts of the Client proximately result in damage to Appraiser. The Client shall indemnify and hold Appraiser harmless from any claims, expenses, judgments or other items or costs arising as a result of the Client's failure or the failure of any of the Client's agents to provide a complete copy of the appraisal report to any third party. In the event of any litigation between the parties, the prevailing party to such litigation shall be entitled to recover from the other reasonable attorney fees and costs. 25. The report is for the sole use of the client; however, client may provide only complete, final copies of the appraisal report in its entirety (but not component parts) to third parties who shall review such reports in connection with loan underwriting or securitization efforts. Appraiser is not required to explain or testify as to appraisal results other than to respond to the client for routine and customary questions. Please note that our consent to allow an appraisal report prepared by CBRE or portions of such report, to become part of or be referenced in any public offering, the granting of such consent will be at our sole discretion and, if given, will be on condition that we will be provided with an Indemnification Agreement and/or Non-Reliance letter, in a form and content satisfactory to us, by a party satisfactory to us. We do consent to your submission of the reports to rating agencies, loan participants or your auditors in its entirety (but not component parts) without the need to provide us with an Indemnification Agreement and/or Non-Reliance letter. 26. As part of the clients requested scope of work we have provided an estimate of Insurable value. We have followed appraisal standards to develop a reasonable calculation based upon Industry practices and Industry accepted manuals such as Marshall Cost Estimator. The method we employ is a derivation of the Cost Approach, which is primarily used 107 GREENSPOINT APARTMENTS ASSUMPTIONS AND LIMITING CONDITIONS as an academic exercise to help support our market value estimate and therefore is not reliable for Insurable Value estimates. Actual construction costs and related estimates can vary greatly from this estimate. This analysis should not be relied upon to determine proper insurance coverage, which can only be properly estimated by consultants considered experts in cost estimation and insurance underwriting. It is provided to aid our client as part of their overall decision making process and we make no representations or warranties regarding the accuracy of this estimate and strongly recommend other sources be utilized to develop any estimate of Insurable value. 108 GREENSPOINT APARTMENTS ADDENDA ADDENDA - -------------------------------------------------------------------------------- GREENSPOINT APARTMENTS ADDENDUM A - -------------------------------------------------------------------------------- ADDENDUM A GLOSSARY OF TERMS GREENSPOINT APARTMENTS ADDENDUM A ASSESSED VALUE Assessed value applies in ad valorem taxation and refers to the value of a property according to the tax rolls. Assessed value may not conform to market value, but it is usually calculated in relation to a market value base. + CASH EQUIVALENCY The procedure in which the sale prices of comparable properties sold with atypical financing are adjusted to reflect typical market terms. CONTRACT, COUPON, FACE, OR NOMINAL RENT The nominal rent payment specified in the lease contract. It does not reflect any offsets for free rent, unusual tenant improvement conditions, or other factors that may modify the effective rent payment. COUPON RENT See Contract, Coupon, Face, or Nominal Rent EFFECTIVE RENT 1) The rental rate net of financial concessions such as periods of no rent during a lease term; may be calculated on a discounted basis, reflecting the time value of money, or on a simple, straight-line basis. ++ 2) The economic rent paid by the lessee when normalized to account for financial concessions, such as escalation clauses, and other factors. Contract, or normal, rents must be converted to effective rents to form a consistent basis of comparison between comparables. EXCESS LAND In regard to an improved site, the land not needed to serve or support the existing improvement. In regard to a vacant site or a site considered as though vacant, the land no needed to accommodate the site's primary highest and best use. Such land may be separated from the larger site and have its own highest and best use, or it may allow for future expansion of the existing or anticipated improvement. See also surplus land. ++ FACE RENT See Contract, Coupon, Face, or Nominal Rent FEE SIMPLE ESTATE Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. ++ FLOOR AREA RATIO (FAR) The relationship between the above-ground floor area of a building, as described by the building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area; also called building-to-land ratio. ++ FULL SERVICE LEASE A lease in which rent covers all operating expenses. Typically, full service leases are combined with an expense stop, the expense level covered by the contract lease payment. Increases in expenses above the expense stop level are passed through to the tenant and are known as expense pass-throughs. GOING CONCERN VALUE Going concern value is the value of 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 the business value. + GROSS BUILDING AREA (GBA) The sum of all areas at each floor as measured to the exterior walls. INSURABLE VALUE Insurable Value is based on the replacement and/or reproduction cost of physical items that are subject to loss from hazards. Insurable value is that portion of the value of an asset or asset group that is acknowledged or recognized under the provisions of an applicable loss insurance policy. This value is often controlled by state law and varies from state to state. + INVESTMENT VALUE Investment value is the value of an investment to a particular investor based on his or her investment requirements. In contrast to market value, investment value is value to an individual, not value in the marketplace. Investment value reflects the subjective relationship between a particular investor and a given investment. When measured in dollars, investment value is the price an investor would pay for an investment in light of its perceived capacity to satisfy his or her desires, needs, or investment goals. To estimate investment value, specific investment criteria must be known. Criteria to evaluate a real estate investment are not necessarily set down by the individual investor; they may be established by an expert on real estate and its value, that is, an appraiser. + LEASED FEE See leased fee estate LEASED FEE ESTATE An ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the leased fee are specified by contract terms contained within the lease.++ GREENSPOINTS APARTMENTS ADDENDUM A LEASEHOLD See leasehold estate LEASEHOLD ESTATE The interest held by the lessee (the tenant or renter) through a lease conveying the rights of use and occupancy for a stated term under certain conditions.++ LOAD FACTOR The amount added to usable area to calculate the rentable area. It is also referred to as a "rentable add-on factor" which, according to BOMA, "is computed by dividing the difference between the usable square footage and rentable square footage by the amount of the usable area. Convert the figure into a percentage by multiplying by 100. MARKET RENT The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the specified lease agreement including term, rental adjustment and revaluation, permitted uses, use restrictions, and expense obligations. ++ MARKET VALUE Market value is one of the central concepts of the appraisal practice. Market value is differentiated from other types of value in that it is created by the collective patterns of the market. Market value means 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 and 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: 1) A reasonable time is allowed for exposure in the open market; 2) Both parties are well informed or well advised, and acting in what they consider their own best interests; 3) Buyer and seller are typically motivated; 4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5) 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.Section MARKETING PERIOD The time it takes an interest in real property to sell on the market subsequent to the date of an appraisal. ++ NET LEASE Lease in which all or some of the operating expenses are paid directly by the tenant. The landlord never takes possession of the expense payment. In a Triple Net Lease all operating expenses are the responsibility of the tenant, including property taxes, insurance, interior maintenance, and other miscellaneous expenses. However, management fees and exterior maintenance are often the responsibility of the lessor in a triple net lease. A modified net lease is one in which some expenses are paid separately by the tenant and some are included in the rent. NET RENTABLE AREA (NRA) 1) The area on which rent is computed. 2) The Rentable Area of a floor shall be computed by measuring to the inside finished surface of the dominant portion of the permanent outer building walls, excluding any major vertical penetrations of the floor. No deductions shall be made for columns and projections necessary to the building. Include space such as mechanical room, janitorial room, restrooms, and lobby of the floor. * NOMINAL RENT See Contract, Coupon, Face, or Nominal Rent OCCUPANCY RATE The relationship or ratio between the income received from the rented units in a property and the income that would be received if all the units were occupied.++ PROSPECTIVE FUTURE VALUE "UPON COMPLETION OF CONSTRUCTION" prospective future value "upon completion of construction" is the prospective value of a property on the future date that construction is completed, based upon market conditions forecast to exist, as of that completion date. The value estimate at this stage is stated in current dollars unless otherwise indicated. PROSPECTIVE FUTURE VALUE "UPON REACHING STABILIZED OCCUPANCY" Prospective future value "upon reaching stabilized occupancy" is the prospective value of a property at a future point in time when all improvements have been physically constructed and the property has been leased to its optimum level of long-term occupancy. The value estimate at this stage is stated in current dollars unless otherwise indicated. REASONABLE EXPOSURE TIME The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based upon an analysis of past events assuming a competitive and open market. ++ RENT See full service lease net lease market rent contract, coupon, face, or nominal rent effective rent SHELL SPACE Space which has not had any interior finishing installed, including even basic improvements such as ceilings and interior walls, as well as partitions, floor coverings, wall coverings, etc.. SURPLUS LAND Land not necessary to support the highest and best use of the existing improvement but, because of physical limitations, building placement, or neighborhood norms, cannot be sold off separately. Such land may or may not contribute positively to value and may or may not accommodate future expansion of an existing or anticipated improvement. See also excess land. ++ USABLE AREA 1) The area actually used by individual tenants. 2) The Usable Area of an office building is computed by measuring to the finished surface of the office side of corridor and other permanent walls, to the center of partitions that separate the office from adjoining usable areas, and to the inside finished surface of the dominant portion of the permanent outer building walls. Excludes areas such as mechanical rooms, janitorial room, restrooms, lobby, and any major vertical penetrations of a multi-tenant floor. * USE VALUE Use value is a concept based on the productivity of an economic good. Use value is the value a specific property has for a specific use. Use value focuses on the value the real estate contributes to the enterprise of which it is a part, without regard to the property's highest and best use or the monetary amount that might be realized upon its sale. + VALUE APPRAISED During the real estate development process, a property typically progresses from a state of unimproved land to construction of improvements to stabilized occupancy. In general, the market value associated with the property increases during these stages of development. After reaching stabilized occupancy, ongoing forces affect the property during its life, including a physical wear and tear, changing market conditions, etc. These factors continually influence the property's market value at any given point in time. See also market value "as is" on the appraisal date market value "as if complete" on the appraisal date prospective future value "upon completion of construction" prospective future value "upon reaching stabilized occupancy" - --------------- + The Appraisal of Real Estate, Twelfth Edition, Appraisal Institute, 2001. ++ The Dictionary of Real Estate Appraisal, Fourth Edition, 2002. Section The Office of the Comptroller of the Currency, 12 CFR Part 34, Subpart C, -34.42(f), August 24, 1990. This definition is compatible with the definition of market value contained in The Dictionary of Real Estate Appraisal, Third Edition, and the Uniform Standards of Professional Appraisal Practice adopted by the Appraisal Standards Board of The Appraisal Foundation, 1992 edition. This definition is also compatible with the OTS, RTC, FDIC, NCUA, and the Board of Governors of the Federal Reserve System definition of market value. * 2000 BOMA Experience Exchange Report, Income/Expense Analysis for Office Buildings (Building Owners and Managers Association, 2000) ++ Statement on Appraisal Standard No. 6, Appraisal Standards Board of The Appraisal Foundation, September 19, 1992. GREENSPOINT APARTMENTS ADDENDUM B ADDENDUM B ADDITIONAL PHOTOGRAPHS GREENSPOINT APARTMENTS ADDENDUM B [PICTURE] CLUBHOUSE [PICTURE] MODEL KITCHEN GREENSPOINT APARTMENTS ADDENDUM B [PICTURE] TYPICAL FULL SIZE WASHER AND DRYER [PICTURE] MODEL LIVING ROOM GREENSPOINT APARTMENTS ADDENDUM B [PICTURE] VACANT LIVING ROOM [PICTURE] COURTYARD VIEWS GREENSPOINT APARTMENTS ADDENDUM B [PICTURE] INTERIOR STREET SCENE [PICTURE] FACING EAST ALONG CACTUS ROAD FROM THE SUBJECT GREENSPOINT APARTMENTS ADDENDUM C ADDENDUM C IMPROVED COMPARABLE SALES GREENSPOINT APARTMENTS ADDENDUM D ADDENDUM D RENT COMPARABLES GREENSPOINT APARTMENTS ADDENDUM E ADDENDUM E OPERATING DATA GREENSPOINT APARTMENTS ADDENDUM F ADDENDUM F LEGAL DESCRIPTION GREENSPOINT APARTMENTS ADDENDUM G ADDENDUM G ENGAGEMENT LETTER GREENSPOINT APARTMENTS ADDENDUM H ADDENDUM H MISCELLANEOUS EXHIBITS GREENSPOINT APARTMENTS ADDENDUM I ADDENDUM I QUALIFICATIONS EX-99.(C)(12) 5 d18178a7exv99wxcyx12y.txt APPRAISAL OF SANDS POINT BY C.B. RICHARD ELLIS EXHIBIT (c)(12) SANDS POINT APARTMENTS 8330 North 19th Avenue Phoenix, Maricopa County, Arizona CBRE File No. 05-271PH-0628 [PICTURE] COMPLETE APPRAISAL SELF CONTAINED REPORT PREPARED FOR: Mr. Myles Diamond Assistant Vice President GMAC COMMERCIAL MORTGAGE CORPORATION 200 Witmer Road Horsham, Pennsylvania 19044 VALUATION & ADVISORY SERVICES [CBRE LOGO] CB RICHARD ELLIS VALUATION & ADVISORY SERVICES [CBRE LOGO] CB RICHARD ELLIS 2415 East Camelback Road Phoenix, AZ 85016 T (602) 735-5649 F (602) 735-5176 www.cbre.com May 9, 2005 Mr. Myles Diamond Assistant Vice President GMAC COMMERCIAL MORTGAGE CORPORATION 200 Witmer Road Horsham, Pennsylvania 19044 RE: Appraisal of Sands Point Apartments 8330 North 19th Avenue Phoenix, Maricopa County, Arizona CBRE File No 05-271PH-0628 Dear Mr. Diamond: At your request and authorization, CBRE has prepared a Complete Appraisal of the market value of the referenced property and presented our analysis in the following Self Contained Appraisal Report. The subject is a 432 -unit garden-style apartment property built in 1985 and situated on a 11.720-acre site in Phoenix, Maricopa County, Arizona. Currently the facility is 72.9% occupied and in average condition. The subject is more fully described, legally and physically within the enclosed report. Data, information, and calculations leading to the value conclusion are incorporated in the report following this letter. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter. Based on the analysis contained in the following report, the market value of the subject is concluded as follows: MARKET VALUE CONCLUSION
APPRAISAL PREMISE INTEREST APPRAISED EXPOSURE DATE OF VALUE VALUE CONCLUSION - ----------------- ------------------ -------- ------------- ---------------- As Is Fee Simple Estate 6 to 12 months April 21, 2005 $ 18,000,000 As If Stabilized Fee Simple Estate 6 to 12 months April 21, 2005 $ 18,150,000
Compiled by CBRE The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, our interpretation of the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice Mr. Myles Diamond May 9, 2005 Page 2 of the Appraisal Institute, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Title XI Regulations and GMAC Commercial Mortgage Corporation's appraisal standards. The report is for the sole use of the client; however, client may provide only complete, final copies of the appraisal report in its entirety (but not component parts) to third parties who shall review such reports in connection with loan underwriting or securitization efforts. Appraiser is not required to explain or testify as to appraisal results other than to respond to the client for routine and customary questions. Please note that our consent to allow an appraisal report prepared by CBRE or portions of such report, to become part of or be referenced in any public offering, the granting of such consent will be at our sole discretion and, if given, will be on condition that we will be provided with an Indemnification Agreement and/or Non-Reliance letter, in a form and content satisfactory to us, by a party satisfactory to us. We do consent to your submission of the reports to rating agencies, loan participants or your auditors in its entirety (but not component parts) without the need to provide us with an Indemnification Agreement and/or Non-Reliance letter. It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us. Respectfully submitted, CBRE - VALUATION & ADVISORY SERVICES /s/ William J. Davis William J. Davis Vice President Arizona Certified General Real Estate Appraiser No. 30784 Phone: 602-735-5649 Fax: 602-735-5613 Email: jim.davis@cbre.com SANDS POINT APARTMENTS CERTIFICATION OF THE APPRAISAL CERTIFICATION OF THE APPRAISAL We certify to the best of our 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 reported assumptions and limiting conditions and are our personal, impartial and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in or bias with respect to the property that is the subject of this report and have no personal interest in or bias with respect to the parties involved with this assignment. 4. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 5. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 6. This appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan. 7. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice of The Appraisal Foundation and the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute, as well as the requirements of the State of Arizona relating to review by its duly authorized representatives. This report also conforms to the requirements of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). 8. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 9. William J. Davis, MAI has completed the requirements of the continuing education program of the Appraisal Institute. 10. William J. Davis, MAI has made a personal inspection of the property that is the subject of this report. 11. Todd Lamb assisted in the research portion of this report. 12. William J. Davis, MAI has extensive experience in the appraisal/review of similar property types. 13. William J. Davis, MAI is currently certified in the state where the subject is located. 14. Valuation & Advisory Services operates as an independent economic entity within CBRE. Although employees of other CBRE divisions may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy are maintained at all times with regard to this assignment without conflict of interest. /s/ William J. Davis - -------------------------------- William J. Davis, MAI Vice President Arizona Certified General Real Estate Appraiser No. 30784 i SANDS POINT APARTMENTS SUBJECT PHOTOGRAPHS SUBJECT PHOTOGRAPHS [PICTURE] STREET VIEW OF THE SUBJECT [PICTURE] POOL VIEW OF SUBJECT ii SANDS POINT APARTMENTS SUMMARY OF SALIENT FACTS SUMMARY OF SALIENT FACTS PROPERTY NAME Sands Point Apartments LOCATION 8330 North 19th Avenue, Phoenix, Arizona ASSESSOR'S PARCEL NUMBER 158-06-002B HIGHEST AND BEST USE As Though Vacant Multi-family residential development As Improved Continued multi-family use PROPERTY RIGHTS APPRAISED Fee Simple Estate LAND AREA 11.72 AC 510,511 SF IMPROVEMENTS Property Type Apartment Number of Buildings 23 Number of Stories 3 Net Rentable Area 339,852SF Number of Units 432 Average Unit Size 787SF Year Built 1985 Condition Average ESTIMATED EXPOSURE TIME 6 to 12 Months FINANCIAL INDICATORS Current Occupancy 72.9% Stabilized Occupancy 88.0% Estimated Lease-up Period 6 Months Overall Capitalization Rate 6.25% Discount Rate 8.75% Terminal Capitalization Rate 7.00%
PRO FORMA OPERATING DATA TOTAL PER UNIT ----- -------- Effective Gross Income $ 2,743,905 $ 6,352 Operating Expenses $ 1,611,481 $ 3,730 Expense Ratio 58.73% Net Operating Income $ 1,132,424 $ 2,621
iii SANDS POINT APARTMENTS SUMMARY OF SALIENT FACTS
VALUATION - AS IS TOTAL PER UNIT ----- -------- Sales Comparison Approach $ 18,360,000 $ 42,500 Income Capitalization Approach $ 18,000,000 $ 41,667 Insurable Value $ 22,390,000 $ 51,829
CONCLUDED MARKET VALUE
APPRAISAL PREMISE INTEREST APPRAISED DATE OF VALUE VALUE - ----------------- ------------------ ------------- ----- As Is Fee Simple Estate April 21, 2005 $ 18,000,000 As If Stabilized Fee Simple Estate April 21, 2005 $ 18,150,000
Compiled by CBRE SPECIAL ASSUMPTIONS None noted. iv SANDS POINT APARTMENTS TABLE OF CONTENTS TABLE OF CONTENTS CERTIFICATION OF THE APPRAISAL .... i SUBJECT PHOTOGRAPHS ............... ii SUMMARY OF SALIENT FACTS .......... ii TABLE OF CONTENTS ................. v INTRODUCTION ...................... 1 AREA ANALYSIS ..................... 5 NEIGHBORHOOD ANALYSIS ............. 19 MARKET ANALYSIS ................... 24 SITE ANALYSIS ..................... 40 IMPROVEMENT ANALYSIS .............. 44 ZONING ............................ 50 TAX AND ASSESSMENT DATA ........... 52 HIGHEST AND BEST USE .............. 54 APPRAISAL METHODOLOGY ............. 57 SALES COMPARISON APPROACH ......... 58 INCOME CAPITALIZATION APPROACH .... 65 RECONCILIATION OF VALUE ........... 91 ASSUMPTIONS AND LIMITING CONDITIONS 93
ADDENDA A Glossary of Terms B Additional Photographs C Improved Comparable Sales D Rent Comparables E Operating Data F Engagement Letter G Miscellaneous Exhibits H Qualifications A v SANDS POINT APARTMENTS INTRODUCTION INTRODUCTION PROPERTY IDENTIFICATION The subject is a 432 -unit garden-style apartment property built in 1985 and situated on a 11.720-acre site in Phoenix, Maricopa County, Arizona. Currently the facility is 72.9% occupied. Known as Sands Point, the subject is located near the intersection of 19th Avenue and Northern Avenue. The unit mix includes one and two-bedroom units and there are 23 three-story apartment buildings. Common amenities include two pools, one spa, clubhouse, tennis court, volleyball, on-site laundry facilities and covered parking. Units have patios and balconies, washer and dryer hook-ups (washers and dryers are an option), vaulted ceilings and fireplaces on third story units. The subject is more fully described, legally and physically within the enclosed report. OWNERSHIP AND PROPERTY HISTORY Title to the property is currently vested in the name of Century Properties Fund XIX, who acquired title to the property in 1995. There have been no other ownership transfer of the property since then. The subject is not currently listed for sale. RELEVANT DATES The following table illustrates the various dates associated with the valuation of the subject property: RELEVANT DATES Date of Report: May 9, 2005 Date of Inspection: April 21, 2005 Date of Value As Is: April 21, 2005 As If Stabilized: April 21, 2005
Compiled by CBRE PURPOSE OF THE APPRAISAL The purpose of this appraisal is to estimate the market value of the subject property. The current economic definition agreed upon by agencies that regulate federal financial institutions in the U.S. (and used herein) is as follows: 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 and 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: 1. buyer and seller are typically motivated; 1 SANDS POINT APARTMENTS INTRODUCTION 2. both parties are well informed or well advised, and acting in what they consider their own best interests; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. 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. (1) PREMISE OF THE APPRAISAL The premise of this appraisal valuation is "as is" on the date of value. Additionally, the subject has been valued assuming a stabilized level of occupancy on the date of inspection. TERMS AND DEFINITIONS The Glossary of Terms in the Addenda provides definitions for terms that are, and may be used in this appraisal. INTENDED USE AND USER OF REPORT This appraisal is to be used for mortgage underwriting decisions by the client, GMAC Commercial Mortgage Corporation. PROPERTY RIGHTS APPRAISED The interest appraised represents the fee simple estate. SCOPE OF WORK The scope of the assignment relates to the extent and manner in which research is conducted, data is gathered and analysis is applied, all based upon the purpose of the appraisal and its intended use, as previously outlined. CBRE completed the following steps for this assignment: 1. physically identified and inspected both the interior and exterior of the subject property, as well as its surrounding environs; identified and considered those characteristics that may have a legal, economic or physical impact on the subject; 2. physically inspected the micro and/or macro market environments with respect to physical and economic factors relevant to the valuation process; expanded this knowledge through interviews with regional and/or local market participants, available published data and other various resources; - ---------- (1) Appraisal Standards Board of The Appraisal Foundation, Uniform Standards of Professional Appraisal Practice, 2003 ed. (Washington, DC: The Appraisal Foundation, 2003), 219; Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002), 177-178. This definition is also compatible with the OTS, OCC, RTC, FDIC, FRS and NCUA definitions of market value. 2 SANDS POINT APARTMENTS INTRODUCTION 3. conducted regional and/or local research with respect to applicable tax data, zoning requirements, flood zone status, demographics, income and expense data, and comparable listing, sale and rental information; 4. analyzed the data gathered through the use of appropriate and accepted appraisal methodology to arrive at a probable value indication via each applicable approach to value; 5. correlated and reconciled the results into a reasonable and defensible value conclusion, as defined herein; and 6. estimated a reasonable exposure time and marketing time associated with the value estimate presented. To develop the opinion of value, CBRE performed a Complete Appraisal as defined by the Uniform Standards of Professional Appraisal Practice (USPAP). This means that no departures from Standard 1 were invoked. In this Complete Appraisal, CBRE used all appropriate approaches to value. Furthermore, the value conclusion reflects all known information about the subject, market conditions, and available data. This appraisal of the subject has been presented in the form of a Self-Contained Appraisal Report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of the USPAP. That is, this report incorporates, to the fullest extent possible, practical explanation of the data, reasoning and analysis that were used to develop the opinion of value. This report also includes thorough descriptions of the subject and the market for the property type. SPECIAL APPRAISAL INSTRUCTIONS There have been no special appraisal instructions for this assignment. EXPOSURE/MARKETING TIME Current appraisal guidelines require an estimate of a reasonable time period in which the subject property could be brought to market and sold. This reasonable time frame can either be examined historically or prospectively. In a historic analysis, this is referred to as exposure time. Exposure time always precedes the date of value, with the underlying premise being the time a property would have been on the market prior to the date of value, such that it would sell at its appraised value as of the date of value. On a prospective basis, the term marketing time is most often used. The exposure/marketing time is a function of price, time, and use. It is not an isolated estimate of time alone. It is different for various types of real estate and under various market conditions. A discussion of an appropriate exposure/marketing time estimate for the subject property is presented in the following sections. In consideration of these factors, we have analyzed the following: - exposure periods for comparable sales used in this appraisal; - marketing time information from the CB Richard Ellis, Inc. National Investor Survey; and 3 SANDS POINT APARTMENTS INTRODUCTION - the opinions of market participants. The following table presents the information derived from these sources. EXPOSURE TIME INFORMATION
Exposure Time (Months) Investment Type Range Average - --------------- -------------- -------- Comparable Sales Data 1.0 - 6.0 3.0 Apartments Class A 1.0 - 9.0 4.1 Class B 1.0 - 6.0 3.7 Class C 3.0 - 12.0 7.2 CBRE ESTIMATE 6 TO 12 MONTHS
Source: CBRE National Investor Survey In general, the improved sales indicate exposure times in the lower to middle portion of the range indicated by the investor survey. In addition to the sales and survey data, we have also reviewed the assumptions and conclusions reached in the Valuation section of this report, particularly the income estimates and rates of return. Based on these analyses, we have concluded an exposure/marketing time of 6 to 12 months would be considered reasonable for the subject property. This exposure/marketing time reflects current economic conditions, current real estate investment market conditions, the terms and availability of financing for real estate acquisitions, and property and market-specific factors. It assumes that the subject property is (or has been) actively and professionally marketed. The marketing/exposure time would apply to all valuation premises included in this report. 4 SANDS POINT APARTMENTS AREA ANALYSIS AREA ANALYSIS [MAP] LOCATION The subject is located in Phoenix, within the Phoenix-Mesa metropolitan statistical area (MSA). The MSA, located entirely within two counties, Maricopa and Pinal, includes the state capital and the state's largest city, Phoenix. POPULATION The following table shows changes in population from the 1990 and 2000 censuses, estimates for the current year, and forward projections for the MSA. As these data demonstrate, there has been a significant increase in the area population during the last two decades and that growth is projected to continue into the foreseeable future. 5 SANDS POINT APARTMENTS AREA ANALYSIS POPULATION OF PHOENIX-MESA MSA BY CITY/TOWN
1990-2000 2000-2004 2004-2009 2004 1990 2000 2004 2009 Compound Compound Compound Percentage City/Town Census Census Estimate Projection Annual Growth Annual Growth Annual Growth of MSA --------- ------ ------ -------- ---------- ------------- ------------- ------------- ---------- Apache Junction ** 18,981 31,851 34,017 37,053 5.3% 1.7% 1.7% 0.9% Avondale 18,393 35,897 59,379 83,809 6.9% 13.4% 7.1% 1.6% Buckeye 4,939 6,537 6,572 6,649 2.8% 0.1% 0.2% 0.2% Carefree 1,514 2,927 3,493 4,229 6.8% 4.5% 3.9% 0.1% Cave Creek 2,060 3,728 4,056 4,498 6.1% 2.1% 2.1% 0.1% Chandler 91,281 176,502 217,693 266,771 6.8% 5.4% 4.1% 6.0% El Mirage 5,050 7,609 19,426 29,761 4.2% 26.4% 8.9% 0.5% Fountain Hills 10,016 20,235 22,862 26,365 7.3% 3.1% 2.9% 0.6% Gila Bend 1,800 1,980 1,886 1,834 1.0% -1.2% -0.6% 0.1% Gilbert 33,357 109,750 152,082 201,934 12.6% 8.5% 5.8% 4.2% Glendale 151,698 218,973 234,410 256,766 3.7% 1.7% 1.8% 6.4% Gold Camp * 2,107 6,028 8,086 10,566 11.1% 7.6% 5.5% 0.2% Goodyear 6,298 18,875 32,516 46,345 11.6% 14.6% 7.3% 0.9% Guadalupe 5,458 5,228 5,172 5,205 -0.4% -0.3% 0.1% 0.1% Litchfield Park 3,303 3,810 3,909 4,076 1.4% 0.6% 0.8% 0.1% Maricopa * 665 1,040 1,401 1,822 4.6% 7.7% 5.4% 0.0% Mesa 294,715 396,330 439,842 495,541 3.0% 2.6% 2.4% 12.0% New River 4,056 10,740 16,454 22,508 10.2% 11.3% 6.5% 0.5% Paradise Valley 11,931 13,663 14,176 15,075 1.4% 0.9% 1.2% 0.4% Peoria 51,991 108,357 131,149 159,055 7.6% 4.9% 3.9% 3.6% Phoenix 989,709 1,320,896 1,398,726 1,515,160 2.9% 1.4% 1.6% 38.3% Queen Creek ** 2,414 4,314 6,171 8,417 6.0% 9.4% 6.4% 0.2% Rio Verde 454 1,419 1,638 1,908 12.1% 3.7% 3.1% 0.0% Scottsdale 131,271 202,705 223,458 251,715 4.4% 2.5% 2.4% 6.1% Sun City 36,844 38,289 35,254 32,629 0.4% -2.0% -1.5% 1.0% Sun City West 16,519 26,343 25,137 24,197 4.8% -1.2% -0.8% 0.7% Sun Lakes 7,361 11,943 11,985 12,218 5.0% 0.1% 0.4% 0.3% Surprise 7,954 30,868 54,170 77,066 14.5% 15.1% 7.3% 1.5% Tempe 142,495 158,625 159,817 164,099 1.1% 0.2% 0.5% 4.4% Tolleson 4,437 4,974 5,122 5,400 1.1% 0.7% 1.1% 0.1% Wickenburg 4,573 5,082 5,064 5,202 1.1% -0.1% 0.5% 0.1% Youngtown 2,557 3,010 3,007 3,063 1.6% 0.0% 0.4% 0.1% Other 172,263 263,334 315,861 376,787 4.3% 4.7% 3.6% 8.6% --------- --------- --------- --------- ---- ---- --- ----- Total MSA 2,238,464 3,251,862 3,653,991 4,157,723 3.8% 3.0% 2.6% 100.0% --------- --------- --------- --------- ---- ---- --- -----
- ---------- * Pinal County, ** partially Pinal County, otherwise Maricopa County Source: Claritas, Inc. Compiled by: CB Richard Ellis The State of Arizona is projected to gain over 690,000 new residents over the next five years, or more than 135,000 residents per year. Of this amount, 73% (500,000 total) of the forecast growth is projected to occur in the Phoenix-Mesa MSA. Water availability and employment issues are driving this growth in the Phoenix area, where approximately 65% of the state's inhabitants reside. The following list provides comparative population gain for the top 10 MSAs. Phoenix-Mesa has consistently ranked among the top 10. 6 SANDS POINT APARTMENTS AREA ANALYSIS POPULATION GROWTH IN SELECTED METROPOLITAN AREAS
Rank Metropolitan Statistical Area 1990 Census 2000 Census Change % Gain - ----------------------------------- ----------- ----------- ------ ------ 1 Las Vegas-Paradise, NV 741,459 1,375,765 634,306 85.5% 2 Austin-Round Rock, TX 846,227 1,249,763 403,536 47.7% 3 Raleigh-Cary, NC 541,100 797,071 255,971 47.3% 4 Phoenix-Mesa-Scottsdale, AZ 2,238,480 3,251,876 1,013,396 45.3% 5 Atlanta-Sandy Springs-Marietta, GA 3,069,425 4,247,981 1,178,556 38.4% 6 Orlando, FL 1,224,852 1,644,561 419,709 34.3% 7 Denver-Aurora, CO 1,666,883 2,179,240 512,357 30.7% 8 Charlotte-Gastonia-Concord, NC-SC 1,024,643 1,330,448 305,805 29.8% 9 Dallas-Fort Worth-Arlington, TX 3,989,294 5,161,544 1,172,250 29.4% 10 Portland-Vancouver-Beaverton, OR-WA 1,523,741 1,927,881 404,140 26.5% --------- --------- --------- ----
Population growth for 81 metroplitan areas with total population exceeding 500,000, ranked by percent change, based on total population estimates for 1990 to 2000. Source: US Census Bureau Compiled by: CB Richard Ellis Although Phoenix-Mesa ranks below its close neighbor Las Vegas-Paradise in percentage gain, Phoenix-Mesa surpasses Las Vegas-Paradise by a large margin in net population gain. The overall percentage gain for all metropolitan markets is 14.0%, representing the addition of approximately 28.6 million people in metropolitan areas. HOUSEHOLDS The following table shows changes in demographic statistics by household based on the 2000 Census. 7 SANDS POINT APARTMENTS AREA ANALYSIS MSA HOUSEHOLD PROFILES BY CITY/TOWN
Households Housing Income ------------------------------- --------------------- ------------------------------ 2000 2004 2009 Owner Persons Median Average Per City/Town Census Estimate Projection Occupied per HH Household Household Capita - ------------------- ------ -------- ---------- -------- ------- --------- --------- ------- Apache Junction ** 13,795 14,782 16,153 81.9% 2.28 $ 34,712 $ 41,300 $18,231 Avondale 10,642 17,569 24,430 81.6% 3.36 $ 58,191 $ 67,994 $20,214 Buckeye 2,158 2,144 2,134 64.3% 3.08 $ 39,667 $ 50,171 $16,110 Carefree 1,388 1,638 1,949 87.9% 2.11 $ 90,008 $147,690 $69,540 Cave Creek 1,571 1,683 1,828 84.9% 2.46 $ 85,734 $114,321 $46,878 Chandler 62,353 76,983 94,359 74.3% 2.81 $ 64,561 $ 76,855 $27,310 El Mirage 2,121 5,425 8,441 71.4% 3.62 $ 41,141 $ 45,703 $12,604 Fountain Hills 8,653 9,961 11,726 83.6% 2.29 $ 65,899 $ 85,041 $37,071 Gila Bend 659 623 598 61.0% 3.09 $ 28,638 $ 35,404 $11,466 Gilbert 35,416 49,021 65,018 85.4% 3.11 $ 78,610 $ 90,502 $29,114 Glendale 75,776 80,766 87,803 65.3% 2.87 $ 48,488 $ 60,238 $21,010 Gold Camp * 2,785 3,796 5,072 65.0% 2.27 $ 70,815 $ 87,152 $38,206 Goodyear 6,169 10,812 15,909 86.4% 2.69 $ 63,947 $ 78,106 $26,354 Guadalupe 1,110 1,092 1,092 69.0% 4.73 $ 32,622 $ 41,774 $ 8,868 Litchfield Park 1,508 1,566 1,650 87.2% 2.48 $ 77,108 $103,184 $41,440 Maricopa * 292 396 523 75.3% 3.11 $ 40,971 $ 46,675 $14,861 Mesa 146,637 162,513 182,271 67.9% 2.68 $ 46,780 $ 59,070 $22,010 New River 3,921 5,899 7,879 92.6% 2.78 $ 78,281 $ 87,517 $31,655 Paradise Valley 5,034 5,178 5,440 96.6% 2.71 $159,358 $221,212 $81,456 Peoria 39,181 47,147 56,877 85.9% 2.74 $ 60,229 $ 70,953 $25,849 Phoenix 465,762 491,643 528,687 60.8% 2.79 $ 44,429 $ 61,770 $21,991 Queen Creek ** 1,217 1,730 2,332 89.4% 3.56 $ 70,335 $ 83,605 $23,449 Rio Verde 761 860 976 96.2% 2.09 $ 83,735 $118,141 $56,601 Scottsdale 90,669 100,626 113,803 70.2% 2.21 $ 62,847 $ 94,952 $42,936 Sun City 23,478 21,742 20,071 87.6% 1.60 $ 33,710 $ 43,479 $26,964 Sun City West 14,996 14,534 14,183 95.3% 1.74 $ 44,980 $ 59,092 $33,735 Sun Lakes 6,688 6,836 7,106 96.1% 1.79 $ 48,417 $ 66,642 $37,123 Surprise 12,495 22,438 32,462 90.1% 2.39 $ 53,200 $ 63,063 $26,342 Tempe 63,602 64,931 67,194 50.7% 2.38 $ 45,205 $ 59,869 $24,591 Tolleson 1,432 1,494 1,597 65.7% 3.43 $ 42,687 $ 50,891 $14,838 Wickenburg 2,341 2,340 2,406 63.6% 2.22 $ 33,742 $ 45,406 $20,625 Youngtown 1,641 1,633 1,637 63.6% 1.77 $ 23,674 $ 31,222 $17,712 Other 87,994 104,407 123,894 95.5% 2.52 N/A $ 56,924 $19,570 --------- --------- --------- ---- ---- -------- -------- ------- Total MSA 1,194,245 1,334,208 1,507,500 69.2% 2.66 $ 49,478 $ 66,405 $24,499 --------- --------- --------- ---- ---- -------- -------- -------
* Pinal County, ** partially Pinal County, otherwise Maricopa County Source: Claritas, Inc. Compiled by: CB Richard Ellis ECONOMIC BASE Maricopa County's economy is built on a base of activities including manufacturing, government, regional hub activities, travel and tourism, services and construction. Each of these five components of the economic base react differently to economic cycles. Mining and agriculture are also significant economic contributors, although they no longer hold their historically dominant positions. Maricopa County is the largest producer of crops and livestock in the state and places high among all counties in the nation in terms of the cash value of its agricultural products. 8 SANDS POINT APARTMENTS AREA ANALYSIS EMPLOYMENT The following chart represents the diversity of Phoenix-Mesa's economic base. 2004 PHOENIX-MESA NON-FARM EMPLOYMENT BY SECTOR [PIE CHART] Other Service Providing 24% Good Producing 16% Trade, Transportation & Utilities 21% Professional & Business Services 16% Leisure & Hospitality 10% Government 13%
Source: University of Arizona 2005/2006 Economic Outlook Compiled by: CB Richard Ellis Historically, employment has grown by 174% over the last 20 years in Phoenix, compared with 50% nationally. Arizona was one of the first states to recover all of the jobs that were lost during the 2001 recession. Non-farm employment grew approximately 2.0% in 2004. This is due in part to the fact that Arizona has not experienced the same slowdown in hiring in the retail, education and health and social services sectors that the country has seen as a whole. Retail employment is merely growing at a slower pace than previously, and some of the largest skill shortages in Arizona are for teachers, nurses, medical technologists, and pharmacists. However, telecommunications and manufacturing have continued to struggle. Strong productivity gains, outsourcing, off shoring, and commoditization are blamed for the manufacturing segment's fall of 20% over the last five years. The following table shows the history and projections for employment in the Phoenix-Mesa MSA, broken down by sector. 9 SANDS POINT APARTMENTS AREA ANALYSIS PHOENIX-MESA NON-FARM EMPLOYMENT HISTORY AND PROJECTIONS
Sector 2002 2003 2004 2005 2006 2007 2008 2009 2010 ------ --------- --------- --------- --------- --------- --------- --------- --------- --------- Good Producing 270,500 270,400 271,900 289,100 300,600 302,700 300,700 304,100 310,400 Trade, Transportation & Utilities 326,700 334,300 342,900 342,900 358,000 380,300 389,700 399,800 412,000 Professional & Business Services 254,000 262,000 273,800 291,100 304,500 314,500 322,100 329,200 339,200 Leisure & Hospitality 152,400 155,700 163,300 169,700 173,700 178,100 182,800 188,300 194,300 Government 211,600 214,700 219,700 224,700 229,500 233,700 237,500 242,200 248,700 Other Service Providing 384,000 401,400 400,100 434,000 446,700 450,000 465,300 479,800 494,600 --------- --------- --------- --------- --------- --------- --------- --------- --------- Total 1,599,200 1,638,500 1,671,700 1,751,500 1,813,000 1,859,300 1,898,100 1,943,400 1,999,200 --------- --------- --------- --------- --------- --------- --------- --------- ---------
Source: University of Arizona 2005/2006 Economic Outlook Compiled by: CB Richard Ellis Note that both the manufacturing and information sectors (of which telecommunications is a part) are expected to grow in 2005. The general forecast is for much stronger growth of 79,800 jobs, or 4.8% in 2005. Professional and business services are expect to post the most new jobs, however the fastest growing major sectors are expected to be construction, professional and business services, and financial activities. All of the major employment categories are projected to post increases over the next year within the Phoenix-Mesa MSA with exception to Trade, Transportation and Utilities, which is expected to remain stagnant. However, that sector too is expected to increase from 2006 onward. There are several large projects that will contribute significantly to future job growth, which include the T-Gen project in Downtown Phoenix, and a possible expansion of Intel in Chandler. The Translational Genomics Research Institute (T-Gen) includes three major Arizona Universities as partners and has a mission of discovering genetic markers of disease and identifying new treatments. Intel Corp., the world's largest semiconductor company, is considering an expansion that could mean up to $5 billion in revenue for the city of Chandler. The company may upgrade one of two existing chip-manufacturing plants and is considering adding another. Corporate officials are eyeing the Ocotillo campus in Chandler as the site for a new manufacturing facility, which would be the third in the complex. Intel already owns more than 700 acres at the Ocotillo complex. About half of the area is still available for construction. A decision on the project could be made by the middle of 2005. If the company decides to go ahead with the expansion, it would take 18 months to two years to complete. The following chart depicts employment growth history and projections for the Phoenix-Mesa MSA and the State of Arizona through 2010: 10 SANDS POINT APARTMENTS AREA ANALYSIS PHOENIX-MESA JOB GROWTH [BAR CHART]
2003 2004 2005 2006 2007 2008 2009 2010 Phoenix-Mesa 39,300 33,200 79,800 61,500 46,300 38,800 45,300 55,800 Arizona 51,200 41,900 114,20 75,600 52,800 48,000 56,700 70,900
Source: University of Arizona Economic Outlook 2005/2006 Compiled by: CB Richard Ellis University of Arizona forecasters are projecting average annual growth of nearly 330,000 new jobs in the Phoenix MSA during the 2004 through 2010 forecast period, or 2.6% annually. The following table summarizes trends in unemployment across the MSA, State, and Nation: ANNUAL UNEMPLOYMENT RATES
MSA State USA --- ----- --- 1995 3.8% 5.1% 5.6% 1996 3.5% 5.5% 5.4% 1997 3.0% 4.6% 5.0% 1998 2.9% 4.1% 4.5% 1999 2.7% 4.4% 4.2% 2000 2.7% 4.0% 4.0% 2001 4.0% 4.7% 4.8% 2002 5.7% 6.2% 5.8% 2003 5.0% 5.6% 6.0% 2004 4.0% 4.8% 5.5%
Source: Arizona Department of Economic Security Compiled by: CB Richard Ellis As can be seen from the last 10 years of unemployment data, Phoenix-Mesa consistently outperforms the state of Arizona and the United States in employment rates, despite its fast-paced population growth. 11 AREA ANALYSIS SANDS POINT APARTMENTS 2005 TOP 10 PRIVATE EMPLOYERS
Company Headquarters No. of Employees ------- ------------ ---------------- Wal-Mart No 19,510 Banner Health Systems Yes 14,447 Honeywell International No 12,000 Wells Fargo & Co. No 11,000 Raytheon Missile Systems No 10,530 Basha's Inc. Yes 9,646 Albertson's-Osco No 9,500 Intel Corp. No 9,500 Safeway Stores No 9,500 JPMorganChase & Co. No 9,200
Source: The Business Journal, Book of Lists 2005 The greater Phoenix area is a $ 50 billion marketplace driven by technology. World-leading companies such as Intel, Avnet, Motorola, AlliedSignal, Honeywell and Boeing Company have chosen Phoenix for their corporate or regional headquarter. Industry giants such as American Express, Phelps Dodge, Sumitomo Sitix, Prudential, Charles Schwab and Mayo Clinic have major operations in Phoenix. REAL ESTATE TRENDS The following table presents 10-year trends in rental rates and vacancy within the major non-residential real estate categories across the MSA: HISTORICAL RENTAL AND VACANCY RATES
Period Office Industrial Retail Apartment (4Q) Rent/SF Vacancy Rent/SF Vacancy Rent/SF Vacancy Rent/Unit Vacancy - ------ -------- ------- ------- ------- -------- ------- --------- ------- 1995 $ 14.64 11.71% $0.52 6.64% $ 10.27 8.70% $ 545 4% 1996 $ 15.61 9.51% $0.65 5.69% $ 11.18 7.94% $ 572 5% 1997 $ 18.33 9.22% $0.70 7.01% $ 11.64 7.53% $ 602 5% 1998 $ 19.20 9.46% $0.75 7.08% $ 12.65 6.28% $ 628 5% 1999 $ 20.49 9.97% $0.68 8.06% $ 14.01 5.52% $ 651 6% 2000 $ 18.79 9.87% $0.60 7.38% $ 14.98 5.25% $ 677 7% 2001 $ 19.66 16.02% $0.71 9.84% $ 15.81 6.59% $ 688 8% 2002 $ 19.25 18.82% $0.73 10.34% $ 16.55 7.30% $ 692 9% 2003 $ 18.86 18.38% $0.72 9.70% $ 16.86 7.38% $ 698 10% 2004 $ 19.50 16.40% $0.77 8.53% $ 17.64 6.05% $ 705 8%
Sources: CB Richard Ellis, Real Data, Phoenix Metropolitan Housing Study Vacancy in all categories increased beginning in the mid-1990s. The commercial real estate market in general is moving through an overbuilt phase. However, aggressive pricing on behalf of investors and favorable mortgage interest rates have had a favorable influence on overall values during this downturn. 12 SANDS POINT APARTMENTS AREA ANALYSIS The following table presented trends in new and resale home prices across the MSA: SINGLE FAMILY MEDIAN HOME PRICES [BAR CHART]
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- Resale $ 90,500 $ 97,000 $105,000 $113,585 $120,000 $128,900 $136,000 $144,900 $155,000 $174,815 New Home $127,600 $130,750 $136,130 $139,070 $146,710 $150,770 $156,560 $159,990 $173,240 $195,000
Source: Arizona Real Estate Center Average new homes have increased in price 4.3% compounded annually over the last 10 years, and resales have increased nearly 6.8% annually over the same time period. The price increases over the latter years were achieved during an economic downturn and are attributable primarily to the favorable mortgage rate environment. According to the University of Arizona 2005/2006 Economic Outlook, the ratio of average home prices to average household income is the highest it has been for nearly 30 years. New housing prices are now 3-1/2 times household incomes. Existing housing is now priced at three times household income. Further, as a long-term average, the Arizona homebuilding industry supplies roughly 400 housing units for each 1,000-person increase in new residents. Today, 550 housing units are supplied for each 1,000-person increase in population. However, an unbelievable amount of money is flowing into Arizona real estate from out-of-state buyers who consider local prices to be cheap. Factors that could adversely affect housing price increases are disruptions in the mortgage lending environment or more than modest increases in interest rates. Population growth, on the other hand, will continue to apply upward pressure to housing prices. RETAIL SALES The following chart depicts trends in retail sales across the MSA: 13 SANDS POINT APARTMENTS AREA ANALYSIS PHOENIX-MESA RETAIL SALES [BAR CHART]
2002 2003 2004 2005 2006 2007 2008 2009 2010 $38.1 $41.1 $44.9 $47.7 $49.6 $52.0 $54.7 $57.7 $61.2
Numbers shown are $billion Source: University of Arizona Economic Outlook 2005/2006 The University of Arizona's 2005/2006 Economic Outlook is predicting a 6.4% increase in retail sales in 2005 and a 4.5% average annual increase over the next 7 years. GOVERNMENTAL INFLUENCES Planning and zoning within Maricopa County is administered by the individual municipalities, and all of the incorporated areas within the county have adopted comprehensive zoning policies and long term general plans. The state legislature mandates assessment ratios and basic property tax policy, while Maricopa County determines assessed values. Local municipalities determine tax rates. Arizona has a 5% sales tax and Maricopa County has a 7.0% sales tax. Most of the municipalities within Maricopa County also have a sales tax. The State of Arizona employs a dual (Primary, Secondary) structure for real estate taxation. The assessed value derived from "full cash value" is the basis for computing taxes for budget overrides, bond and sanitary, fire and other special districts (Secondary taxes), while the assessed value derived from "limited value" is the basis for computing taxes for the maintenance and operation of school districts, community college districts, cities, county and the state (Primary taxes). TRANSPORTATION The Phoenix area is moving ahead with major infrastructure projects that will help carry the region well into the next decade. The freeway plan originally called for constructing 16 new limited access highways totaling 244 miles. Since the passage of Proposition 300, more than 70 miles of new freeways have been opened, including the Agua Fria, the Pima/Price-Loop 101, and the Red Mountain Freeways. In March 2002, the final segment of the 61-mile $1.25 billion Loop 101 Freeway system was finished. This milestone freeway now makes is possible to travel unobstructed 14 SANDS POINT APARTMENTS AREA ANALYSIS from Chandler, north through Tempe and Scottsdale, west through Phoenix and Glendale, and ultimately south to Interstate 10. The current ADOT construction plan is presented as follows: REGIONAL FREEWAY SYSTEM July 2004 Certification [FLOOR PLAN]
Remaining Life Cycle Cost (Millions) 2005 - 2007 - ------------------------------ Design $ 10 R/W $ 95 Construction $560 ---- Total $665 Obligated Roadway Construction $340
MASS TRANSIT The Regional Public Transportation authority coordinates mass transit throughout the metropolitan area under the title of Valley Metro. Valley Metro includes six private carriers that are contracted to the various municipalities. Additionally, voters gave initial approval to a light rail system in 2001. The starter segment will run from Spectrum Mall in northwest Phoenix, through central Phoenix to the downtown area, and then east through Tempe and into Mesa. Most recently, the construction phase was scheduled to begin in late 2004 and the rail system is planned to be operational by late 2008. This starter segment is expected to cost $1.3 million. The following presents the construction schedule for the 20-mile starter segment: 15 SANDS POINT APARTMENTS AREA ANALYSIS [METRO LOGO] PROJECT SCHEDULE [BAR CHART] [MAP] In November of 2004, residents of the Phoenix metropolitan area approved Proposition 400, which continues a half-cent sales tax for 20 years, generating an estimated $15 billion for the valley's transportation plan. Proposition 400 partially funds the starter segment and six extensions: - - 2 miles south along Rural Road in Tempe, from the main line on Apache Boulevard (Phase II: 2011-2015) 16 SANDS POINT APARTMENTS AREA ANALYSIS - - 2.7 miles on Main Street in Mesa from the former Tri-City Mall to downtown (Phase II: 2011-2015) - - 12 miles from central Phoenix to Paradise Valley Mall along state Route 51 (Phase IV: 2021-2026) - - 5 miles from 19th Avenue in Phoenix to downtown Glendale (Phase III: 2016-2020) - - 5 miles from 19th Avenue in Phoenix to Metro Center mall (Phase II: 2011-2015) - - 11 miles along I-10 in the West Valley to 79th Avenue (Phase III: 2016-2020) The plan includes park and-ride lots along the line. Approximately $2.3 million of the Proposition 400 funding is allocated toward the extension routes. The light rail system relies in part on federal funding. The federal government formally committed to its portion of the Valley's light rail system on January 24th in a funding grant that will pay nearly half of the construction costs of the 20-mile starter line. The government is funding $587.2 million of the $1.3 billion cost of the project, which has started construction. Phoenix, Mesa, and Tempe pay the remainder for the line that will run through the three municipalities. The agreement will provide annual funding through 2011. There is also a separate $60 million that will be available from federal Congestion Mitigation and Air Quality funds. According to Valley Metro, there are additional possible extensions to the light rail system in Scottsdale and Glendale. Scottsdale and Tempe completed a Major Investment Study in 2002 that recommended a high capacity transit route on Scottsdale Road. In early 2003, the Scottsdale City Council officially approved Scottsdale Road as a high-capacity transit corridor. While no technology has yet been approved for this corridor, the identification of Scottsdale Road as a high-capacity transit corridor leaves the option open for light rail or other high capacity modes here. SKY HARBOR INTERNATIONAL AIRPORT The airport was established in 1929, and the first air traffic control tower and Terminal 1 were completed in 1952. Terminal 2 was added in 1962, and in 1979, Terminal 3 and the new control tower were completed at a cost of approximately $48 million. In 1990, Terminal 4 (the Barry M. Goldwater Terminal) was completed. Sky Harbor is now ranked as the fifth busiest airport in the world (just ahead of Paris and behind Los Angeles) with about 560,000 take offs and landings annually. The airport now has three terminals and runways (the original terminal was razed) with over 100 gates, and serves over 35.0 million passengers each year. The City of Phoenix recently embarked on a $1.2 billion dollar expansion of the airport that added a third runway in 2000. With the planned expansion of Terminal Four, the capacity will be raised in the next 15 years to 110 gates and 60 million passengers. A state of the art $35.0 million people mover system is planned to be operational in 2009, and this will provide an underground connection to a new, seven-story 18,000-car parking 17 SANDS POINT APARTMENTS AREA ANALYSIS garage. Also, the new Sky Harbor Rental Car Center is under construction west of the airport. The new rental car center will consolidate all of the eight car rental agencies and their maintenance facilities into one location. The scheduled occupancy is November 2005. The project is 2.5 million square feet of space. The project can accommodate 5,600 rental cars. However, Sky Harbor already supports 40,000 rental cars in the immediate area of the airport. RAIL SERVICE Two transcontinental rail lines, the Southern Pacific and the Santa Fe Railroad, and two Amtrak lines serve Phoenix. Most major southwest cities are readily accessible by rail at very competitive rates. Proximity to rail service in the northwest and southwest regions combined with a plentiful supply of industrially zoned properties has been an important factor in growth of these two regions in the 1980s. While many industrial park developers would like rail access to provide flexibility in attracting new users, few valley manufacturers are required to locate near rail lines. Instead, they employ the numerous common carrier trucking firms to move raw materials and finished goods. Consequently, rail access has had only a small impact on the location of manufacturing in the country in recent years. CONCLUSION The Phoenix-Mesa MSA is emerging from an economic downturn that began in 2000. Claritas is projecting population growth to average 100,000 new residents per year through 2009 and the University of Arizona is projecting an average of 124,000 new residents per year, and an average employment growth of 55,000 new non-farm jobs per year through 2010, with 79,800 new non-farm jobs project for 2005. Major infrastructure projects within the freeway, rail and airport systems are underway to facilitate this growth. The near term outlook is for the local economy to continue its move back into a growth and development phase across all of the major economic sectors. Over the long term, the Phoenix MSA will strengthen is position as the dominant social and economic hub of the southwestern US. 18 SANDS POINT APARTMENTS NEIGHBORHOOD ANALYSIS NEIGHBORHOOD ANALYSIS [MAP] LOCATION The subject is located in central Phoenix, near the intersection of Butler Drive (between Northern Avenue and Dunlap Avenue) and 19th Avenue, in Maricopa County. The defined neighborhood is located approximately five miles north of the central business district of Phoenix. BOUNDARIES The neighborhood boundaries are detailed as follows: North: Dunlap Avenue South: Camelback Avenue East: 7th Street West: Interstate 17 The defined neighborhood covers eight square miles, and the subject is located in the central part of the neighborhood. 19 SANDS POINT APARTMENTS NEIGHBORHOOD ANALYSIS LAND USE The subject neighborhood is predominantly a residential district that is west of the affluent "north-central" residential district, and which is north of the downtown and Camelback corridor employment districts. Beyond periodic infill projects, the neighborhood has been fully developed for decades. The housing base in the area includes ranch style single family residences that were developed in the 1950's and early 1960's. Although small pockets of relatively high-end housing are interspersed throughout the area, typical single family homes range from about 1,500 to 2,000 square feet. Claritas reports median 2004 housing values of $285,000 and $312,000 within one and three miles of the subject. The subject property is located one about a mile east of Metrocenter, a regional mall that represents the largest concentration of commercial development within the subject neighborhood. The mall was constructed in 1973, and was originally designed for a total of 268 tenants within 1.6 million square feet. Numerous peripheral retail, restaurant, hotel, office and multifamily residential uses have been developed throughout the approximate 120 acre campus which comprises the Metrocenter project. Metrocenter extends between Peoria Avenue on the north, and the Arizona Canal on the south, and between the Black Canyon Freeway on the east and 31st Avenue on the west. Anchor tenants for the regional mall include Dillard's, Robinson's-May, and Sears. Macy's recently left the mall and Westcor is considering bringing in a discount anchor as a replacement. The 342-room Sheraton Crescent Hotel is located within a business district at the northwest corner of Interstate 17 and Dunlap Road. Surrounding this facility to the north, south and east is a light industrial and business district known as Northwest Business Center. This project is owned by RREEF and is fully developed. Typical buildings in this area include clean light industrial facilities that were developed from the late 1970's to the early 1980's, and a combination of garden and mid-rise office buildings that were primarily developed in the mid-1980's, but infill office development is still occurring in the area. Major employers/tenants in this neighborhood include US West, Southwest Gas, American Express, Liberty Mutual, and Federated Insurance. However, typical office tenants and employers in the neighborhood include local or regional users who occupy 1,000 to 5,000 square feet suites. Access to employment and transportation is the primary draw for office users in the neighborhood. The subject is within a five to 10 minute drive of the fast-growing Deer Valley employment corridor along the intersection of Interstate 17 and the 101 Loop. American Express, Honeywell, Discover Card, Safeway, Petsmart, and Phoenix General Hospital all have existing administrative facilities within the neighborhood boundaries, and there are literally dozens of smaller industrial and office employers within the area. Additionally, in the last two years several large scale back-office users have entered this market. One demographic study that was prepared in the mid-1990's found that there are 20 SANDS POINT APARTMENTS NEIGHBORHOOD ANALYSIS approximately 5,000 jobs within a three mile radius of the intersection of Interstate 17 and the Loop 101 freeway. Not surprisingly, therefore, one of the most prevalent land uses in the neighborhood consists of high quality office and back office employment facilities, and these property types are positioned in a major growth phase as of the effective date of this report. Mark-Taylor introduced the 600-unit San Valiente apartment project to the neighborhood in 1996 and 1998. This project is located near Dunlap Avenue and 22nd Avenue. Other apartment projects in the are primarily 1980's era projects consisting of 150 to 250 units. The housing base in the neighborhood conforms with the employment base in the area. Executive housing is available within 15 to 30 minutes of the neighborhood. The entire subject neighborhood is within the city limits of Phoenix and is provided all necessary community services including public schools, police and fire protection, and water and sanitary sewer service. The neighborhood lies within the Glendale Union High School and Washington Elementary School Districts which include Moon Valley and Cortez High Schools, Cholla and Royal Palm Junior High Schools and various elementary schools. Ottawa University, located one block east of the subject, offers bachelors and masters programs in liberal arts education and currently has 2,500 students enrolled. Cholla Branch Public Library is located across the street from Metrocenter regional mall. The private suppliers of public services include natural gas from Southwest Gas Corporation, electricity by the Salt River Project and telephone by US West Communications. The above services and suppliers are considered adequate in quality and quantity for the subject neighborhood at present and in the future. Approximately one-quarter of a mile north of the subject property, along the west side of the Cave Creek Wash, is the Rose Mofford Sports Complex. This project includes lighted playing fields, tennis courts, racquetball courts, a swimming pool, and playground areas. Other recreational facilities within the neighborhood include the 18-hole EI Caro Golf Course and Cactus, Cortez, Cave Creek, Hoshoni and Royal Palm Parks. The North Mountain Preserve features scenic hiking trails in the far northeast portion of the neighborhood. TRANSPORTATION INFLUENCES Dunlap Avenue, Northern Avenue, Glendale Avenue, Bethany Home Road, and Camelback Road are the primary east-west arterials serving the subject neighborhood. The principal north-south thoroughfares within the immediate neighborhood include the Black Canyon Freeway (Interstate 17) and 19th and 7th Avenues, as well as 7th Street. In 2000, Maricopa County voters approved a $1.0 billion light rail system that will run from central Phoenix, through downtown, and ultimately through Tempe and into Mesa. The 20-mile stretch that will comprise the first segment of the project will start at the intersection of 19th Avenue and Bethany 21 SANDS POINT APARTMENTS NEIGHBORHOOD ANALYSIS Home Road. A train station and parking facility is therefore required at this intersection. In 2000, the City of Phoenix identified three sites in the area as potential parking facilities, including the southwest corner of the intersection, which is improved with a 1950's-era bowling alley; the Phoenix Spectrum mall site, which would require the construction of a three-story parking garage; and the Montebello site, which is improved with a neighborhood shopping center. The City's first choice was the mall site; however, negotiations with the owners broke down and the location was removed from consideration. During the summer of 2002, the Phoenix City Council formally designated the Montebello parcel at 19th Avenue and Montebello as the site for an 825-space park and ride facility. A light rail station is planned for the Spectrum Mall site, and the rail line will run south along 19th Avenue, east along Camelback Avenue, and then south through downtown Phoenix. The development time line began in late 2003 and should reach its end in late 2006. The project is dependent upon Federal funding, but Phoenix and Tempe have decided to move forward with land acquisition and planning in advance of Federal funding. Land acquisition costs are currently estimated at $116 million and the Regional Public Transit Authority (RPTA) plans to spend one-third of that amount during 2003. Overall, the planned rail system is further testament to the revitalization that is unfolding within the neighborhood. DEMOGRAPHICS Selected demographics in a one, three, and five-mile radius from the subject are shown in the table on the following page. 22 SANDS POINT APARTMENTS NEIGHBORHOOD ANALYSIS SELECTED NEIGHBORHOOD DEMOGRAPHICS
8330 N. 19th Ave. Radius 1.0 Radius 3.0 Radius 5.0 Phoenix, AZ Mile Mile Mile - -------------------------------------------- ---------- ---------- ---------- Population 2009 Population 18,283 186,370 465,340 2004 Population 17,040 174,033 436,280 2000 Population 16,049 164,248 413,050 1990 Population 14,772 132,982 361,351 Growth 2004 - 2009 7.29% 7.09% 6.66% Growth 2000 - 2004 6.17% 5.96% 5.62% Growth 1990 - 2000 8.64% 23.51% 14.31% Households 2009 Households 10,724 87,048 208,098 2004 Households 10,029 81,936 196,570 2000 Households 9,477 77,874 187,281 1990 Households 8,512 66,064 166,852 Growth 2004 - 2009 6.93% 6.24% 5.86% Growth 2000 - 2004 5.82% 5.22% 4.96% Growth 1990 - 2000 11.34% 17.88% 12.24% Income 2004 Median Household Income $ 64,253 $ 53,968 $ 49,706 2004 Estimated Average Household Income $ 100,286 $ 98,795 $ 87,711 2004 Estimated Per Capita Income $ 59,160 $ 46,752 $ 39,839 Age 25+ College Graduates - 2004 9,049 66,709 149,485 Age 25+ Percent College Graduates - 2004 64.8% 54.4% 49.2%
Source: CBRE The relatively low growth rates projected for the subject's area are the result of a lack of vacant land for new development. A more detailed overview of demographic trends within the competitive area is presented in the Market Analysis section of this report. SUMMARY AND CONCLUSIONS The subject neighborhood is positioned in a long term period of stability in terms of a typical neighborhood life cycle. Although infill development and renovation is evident in the retail and multi-family segment, the outlook is for stable market conditions including limited new development over the near term. The long term outlook for the neighborhood is favorable due to the convenient access to employment, freeways, and shopping. By local standards barriers to entry are high in this area, and this has a favorable influence on the long term potential of the subject. 23 SANDS POINT APARTMENTS MARKET ANALYSIS MARKET ANALYSIS Marketability refers to the posture of the subject property within its marketplace and its ability to be leased, sold or marketed relative to its competition and current conditions. Within this section, we have addressed the overall market trends influencing the Phoenix apartment market, the trends occurring in the local submarket, the demographic influences affecting the subject property and our projections for the long-term market acceptance of the subject property. PROPERTY PRODUCTIVITY ANALYSIS The subject is a 432-unit garden apartment project known as Sands Point Apartments. The property was developed in 1985 and is presently 72.9% leased. The subject is classified as a Class B apartment project by local market standards MULTI-FAMILY MARKET -- METRO PHOENIX ANALYSIS A snapshot of the multi-family apartment market as well as conditions within the submarket is presented as follows: APARTMENT MARKET STATISTICS
Category Phoenix Area Submarket 4S - ---------------------------- ------------ ------------ Existing Supply (Units) 223,870 8,484 New Construction YTD (Units) 3,432 0 Leasing YTD (Units) 907 179 Average Occupancy 92.0% 92.0% Average Rent Per Unit $ 713 $ 617 Average Unit Size 655 SF 713 SF Average Rent PSF $ 1.09 $ 0.87 Date of Survey 1Q 2005
Source: RealData The apartment market in Phoenix moved through a rapid development phase from 1994 through 2001. This time period was characterized by rapid introduction of new space and relatively strong absorption across the Phoenix MSA. Market conditions began to change in the second half of 2001 in conjunction with the national economic downturn as vacancy rates moved upward, concessions began to increase, and rental rates plateaued. Although certain pockets of the Phoenix area are still experiencing rapid introduction of new space, new construction activity has slowed greatly across the MSA. Currently, the market is positioned in a recovery period with non-stabilized occupancy and concessions in most markets. However, declining overall capitalization rates have had a stabilizing effect on multi-family values, and this trend is expected to continue. 24 SANDS POINT APARTMENTS MARKET ANALYSIS SUPPLY The following table depicts the changes in inventory and building permits issued for the Phoenix metropolitan area from 1991 through the present. MULTI-FAMILY INVENTORY METROPOLITAN PHOENIX
Building Year Inventory % Change Permits % Change - ----- --------- -------- -------- -------- 1991 260,501 0.6% 710 -62.4% 1992 261,095 0.2% 1,234 73.8% 1993 262,930 0.7% 1,799 45.8% 1994 264,663 0.7% 6,015 234.4% 1995 266,849 0.8% 7,719 28.3% 1996 275,919 3.4% 8,545 10.7% 1997 284,220 3.0% 7,930 -7.2% 1998 289,044 1.7% 7,877 0.7% 1999 296,761 2.7% 8,241 4.6% 2000 306,386 3.2% 8,009 -2.8% 2001 312,761 2.1% 7,201 -10.1% 2002 321,459 2.8% 5,607 -22.1% 2003 326,311 1.5% 4,836 -13.8% 2004* 330,291 1.0% 4,997 3.3%
Source: Phoenix Metropolitan Housing Study, through Fourth Quarter 2004* Roughly 36,000 apartment units were added to the Phoenix metropolitan area during the 1990's, or about 4,000 units per year on average. Permit activity remained relatively strong in 2000 and 2001, but declined 22% in 2002 and another 14% in 2003 to a decade low permit total of 4,836 in 2003. At the end of fourth, quarter 2004, 3,126 building permits were filed, which is 3.3% higher than the number of building permits filed in all of 2003. According to RealData, there are 3,631 units under construction across Phoenix MSA, and another 2,815 are in the planning stages for projects of 50 units or more. It should be noted that virtually all of the new permit activity is directed towards the luxury, or "A" quality market. The base inventory of "B" and "C" quality projects has remained fixed for several years. Furthermore, although there is market wide softness in leasing and occupancy, there is strong demand from both private capital and institutional investors for new and existing projects. The low capitalization rate environment is pushing prices upward and another development cycle is beginning in 2004. VACANCY RATES Trends in vacancy rates within the Phoenix area are presented in the following table: 25 SANDS POINT APARTMENTS MARKET ANALYSIS APARTMENT VACANCY RATES METROPOLITAN PHOENIX
Annual Year Qtr. 1 Qtr. 2 Qtr. 3 Qtr. 4 Average - ---- ------ ------ ------ ------ ------- 1990 12% 13% 11% 10% 11.5% 1991 10% 13% 11% 10% 11.0% 1992 10% 11% 9% 8% 9.5% 1993 7% 8% 6% 4% 6.3% 1994 4%7 5% 4% 4% 4.3% 1995 3% 6% 4% 4% 4.3% 1996 4% 5% 5% 5% 4.8% 1997 5% 6% 5% 5% 5.3% 1998 4% 5% 5% 5% 5.0% 1999 5% 6% 6% 6% 6.0% 2000 6% 7% 8% 7% 7.0% 2001 8% 8% 7% 8% 7.8% 2002 8% 9% 8% 9% 8.5% 2003 10% 10% 10% 10% 10.0% 2004 9% 9% 8% 8% 8.5%
Source: Phoenix Metropolitan Housing Study, through Fourth Quarter 2004 Average year-end vacancy increased from 1998 through 2003, stabilized at 10%, but fell to 8% by the third quarter of 2004. Construction slowed dramatically over the last two years, but certain submarkets are now targeted for significant levels of new inventory, most notably the 101 Freeway corridor in north-Phoenix. Interest rates remain favorable, and this trend is expected to continue into 2005. However, while low mortgage rates have been blamed for a large-scale migration of apartment residents into the single-family market, most analysts (including home builders and apartment managers) now believe that this migration is over. Apartment residents who have the means to enter the single-family market have already done so over the last five years. Limited new construction in most areas combined with an improving employment market and a decline in migration from multi-family to single family point to an improvement in physical occupancy during 2005. It should be noted that the Phoenix Metropolitan Housing Study attempts to include all apartments via statistical inference in the previous vacancy rates. RealData, Inc. figures in the next section include only projects with 100 or more units. Therefore, there is a slight difference in apartment vacancy rates between these sources. ABSORPTION The following table depicts the number of units that have been absorbed and that remained vacant since 1990. 26 SANDS POINT APARTMENTS MARKET ANALYSIS ANNUAL ABSORPTION RATES - METRO PHOENIX
Year Absorption % Change No. Vacant % Change - ----- ---------- -------- ---------- -------- 1990 10,482 53.9% 25,875 -24.9% 1991 2,734 -73.9% 24,650 -4.7% 1992 4,394 60.7% 20,850 -15.4% 1993 12,135 176.0% 10,550 -49.4% 1994 2,208 -81.8% 10,075 -4.5% 1995 211 -90.4% 12,050 19.6% 1996 7,820 36.1% 12,300 2.1% 1997 8,001 2.3% 13,600 10.6% 1998 3,674 -69.9% 14,525 6.8% 1999 5,017 36.6% 17,450 20.1% 2000 6,225 24.1% 20,850 19.5% 2001 1,525 -75.5% 25,700 8.2% 2002 4,273 180.2% 30,125 17.2% 2003 3,702 -13.4% 31,275 3.7% 2004* 9,230 249.3% 26,025 -16.8%
Source: Phoenix Metropolitan Housing Study, Fourth Quarter 2004* A total of 4,836 permits were issued in 2003 and 3,702 units were absorbed. As of Fourth Quarter 2004, 4,997 permits have been issued and 9,230 units have been absorbed. Although annual absorption has remained positive over the last 14 years, it tends to lag behind new construction. The large positive imbalance between new permits and absorption posted during the first three quarters of 2004 has caused the metropolitan vacancy level to drop from 10% at year-end 2003 to its current rate of 8%. However, new construction is still occurring in various pockets across the MSA, particularly within the Deer Valley/101 corridor. SALE PRICES The following table depicts several benchmarks in relation to recent sales activity in the subject's overall property class. Sales criteria involved all projects above 150 units that were developed between 1981 and 1989. 27 SANDS POINT APARTMENTS MARKET ANALYSIS SALES TRENDS: MARICOPA COUNTY APARTMENTS
2001 2002 2003 2004 2005 ------------ ------------ ------------ ------------ ------------ Total Sales 19 11 26 32 11 Total $ Volume $264,005,015 $134,163,000 $225,570,396 $384,526,235 $136,027,500 Total Square Feet 4,194,503 2,675,293 4,548,576 6,693,740 2,069,596 Total Units 5,095 3,703 6,274 8,743 2,893 Total Acres 207.17 126.61 247.25 330.14 126.6 Average Sale Price $ 13,895,001 $ 12,196,636 $ 8,675,784 $ 12,016,445 $ 12,366,136 Average Number of SF 220,763 243,208 174,945 209,179 188,145 Average Price Per SF $ 62.94 $ 50.15 $ 49.59 $ 57.45 $ 65.73 Median Price Per Sf $ 57.13 $ 42.56 $ 50.47 $ 58.72 $ 61.94 Average Price Per Unit $ 51,816 $ 36,231 $ 35,953 $ 43,981 $ 47,020 Median Price Per Unit $ 52,925 $ 29,885 $ 35,821 $ 42,026 $ 41,161 Average Number of Units 268 337 241 273 263 Average Number of Acres 11.51 11.51 9.51 10.32 11.51 Average Cap Rate 8.94 8.58 8.41 6.57 7.46 Average GRM 6.11 0 5.32 5.98 6.03
Source:CoStar The true number of sales for 2005 is suspect because Costar is approximately 75 days behind schedule in reporting current sales. However, the data indicate that 2004 was a record year in both the number of transactions and total dollar volume. While none of the samples is statistically valid, average unit prices have increased over the five-year time frame. There are generally more buyers than sellers in the current market. As overall capitalization rates continue to decline, the immediate outlook is for stable or improving values into 2005. RENTAL RATES The following table shows the trend in average unfurnished rental rates since 1992: 28 SANDS POINT APARTMENTS MARKET ANALYSIS AVERAGE UNFURNISHED RENT AND ANNUAL PERCENTAGE INCREASE
Annual Year Qtr. 1 Qtr. 2 Qtr. 3 Qtr. 4 % Change - ---- ------ ------ ------ ------ -------- 1992 $431 $433 $436 $439 1.9% 1993 $445 $449 $455 $464 4.3% 1994 $475 $483 $494 $508 6.9% 1995 $523 $530 $537 $545 4.2% 1996 $553 $559 $566 $572 3.4% 1997 $578 $586 $594 $602 4.2% 1998 $614 $616 $625 $628 2.3% 1999 $636 $640 $646 $651 2.4% 2000 $657 $662 $669 $677 3.0% 2001 $683 $686 $687 $688 0.7% 2002 $691 $691 $694 $692 0.6% 2003 $694 $694 $695 $698 0.8% 2004 $700 $700 $702 $705 1.0%
Source: Real Data, Inc. Income growth is currently neutral in the Phoenix MSA, but has ranged from 0.6% to 6.9% annually over the last 12 years. The average income growth rate over the last 12 years in Phoenix has been 4.0%. The near term projection is for neutral to improving rental growth as reflected by the performance of the apartment market during the first four quarters of 2004. However, the long-term growth rate remains in the range of 2% to 3%. CONCLUSION--MULTI-FAMILY MACRO The apartment cycle is positioned in a recovery phase following a rapid development cycle during the 1990's. Softness in leasing and occupancy are common across the MSA and new construction is ongoing. The outlook in Phoenix for the next two years includes the following: - Flat rental rates are projected into 2005, but the long-term growth rate remains at 2% to 3%, particularly in the Class A segment. - Physical vacancy is expected to improve during 2005, but a relatively high level of concessions, including free rent, will remain in effect over the next several quarters. - After several quarters of flat property values, there appears to be upward pressure on property values due to strong investor demand and declining overall rates. The final part of this analysis is presented on a submarket basis. This analysis is presented after the submarket map on the following page. 29 SANDS POINT APARTMENTS MARKET ANALYSIS [MAP] 30 SANDS POINT APARTMENTS MARKET ANALYSIS MULTI-FAMILY MARKET -- SUBMARKET ANALYSIS The following discussion concerns the market conditions impacting the immediate subject submarket. The subject property is located in the Metrocenter submarket 4S as designated by RealData, Inc. The map on the preceding page delineates the area incorporated in this submarket. SUPPLY ANALYSIS An analysis of the specific inventory comprising this area indicates the following age characteristics in complexes with 100+ units. SUBMARKET APARTMENTS WITH 100+ UNITS DISTRICT 4S
Year Built Total # of Units % of Phoenix Area - --------------- ---------------- ----------------- Prior to 1972 559 6.6% 1973 to 1980 2,277 26.8% 1980 to 1990 4,985 58.8% 1990 to 2000 663 7.8% 2000 to Present 0 0.0%
Source: RealData PROPOSED INVENTORY Gray Development is planning the 205-unit Arete project at 2506 W. Avenue, less than one mile northwest of the subject. There is a high degree of probability that this project will be constructed; however, the Class A rental structure will not overlap with the subject. ABSORPTION The following table presents the historical absorption within the Metrocenter submarket: HISTORIC ABSORPTION 100+ UNIT COMPLEXES
Period Submarket 4S Metro Phoenix - --------- ------------ ------------- 1Q2003 35 2,021 2Q2003 145 -218 3Q2003 -12 1,213 4Q2003 -124 256 1Q2004 125 2,066 2Q2004 45 -53 3Q2004 -170 3,021 4Q2004 -216 -854 1Q2005 176 907 ---- ----- TOTAL YTD 176 907 ---- -----
Source: RealData 31 SANDS POINT APARTMENTS MARKET ANALYSIS VACANCY The following chart depicts recent historical vacancies within 100+ unit complexes. STABALIZED VACANCY RATES 100+ UNIT COMPLEXES
Period Submarket 4S Metro Phoenix - --------- ------------ ------------- 1Q2003 11.57% 9.73% 2Q2003 9.73% 10.37% 3Q2003 9.95% 9.90% 4Q2003 11.49% 10.18% 1Q2004 10.41% 9.40% 2Q2004 10.20% 9.79% 3Q2004 9.56% 8.65% 4Q2004 10.12% 8.84% 1Q2005 7.70% 8.03%
Source: RealData It should be noted that the previous vacancy figures represent physical vacancy only. Deductions for economic vacancy, including collection losses, lagging rent and concessions are not included in the previous figures. Vacancy improved significantly from the end of 2004 through the first quarter of 2005. This is attributable to the following factors: - New construction has slowed across the Phoenix MSA - Mortgage rates are increasing thereby reducing migration from the multi-family market to the single family market - At least eight projects with 1,146 units were removed from the multi-family inventory during the first quarter of 2005 due to condominium conversion. Numerous additional conversions are planned. These trends are projected to remain in effect for the balance of 2005. However, concessions remain widespread, typically from 8% to 25% of the gross lease rate. RENTAL RATES The following chart summarizes rental rates in the submarket. 32 SANDS POINT APARTMENTS MARKET ANALYSIS AVERAGE RENT UNFURNISHED - NO UTILITIES 100+ UNITS
Type Submarket 4S Metro Phoenix ---- ------------ ------------- Studio $ 455 $ 464 1 BR/1 BA $ 653 $ 623 1 BR/1+ BA $ 725 $ 700 2 BR/1 BA $ 826 $ 651 2 BR/1+ BA $ 936 $ 792 3 BR/1 BA * $ 675 3BR /1+ BA $ 1,161 $ 1,050 4 BR/1+ BA * $ 984 ------------ ----------- Average $ 758 $ 713 ------------ -----------
- ---------- * No significant units of this type Realdata The average rental structure within the subject neighborhood is somewhat higher than the average for metro-Phoenix due to the concentration of several high-end Class A projects in the mix. DEMOGRAPHIC ANALYSIS Demand for additional residential property is a direct function of population change. Multi-family communities are products of a clearly definable demand relating directly to population shifts. HOUSING, POPULATION AND HOUSEHOLD FORMATION POPULATION AND HOUSEHOLD PROJECTIONS
Radius 1.0 Radius 3.0 Radius 5.0 Mile Mile Mile ---------- ---------- ---------- Population 2009 Population 18,283 186,370 465,340 2004 Population 17,040 174,033 436,280 2000 Population 16,049 164,248 413,050 1990 Population 14,772 132,982 361,351 Growth 2004 - 2009 7.29% 7.09% 6.66% Growth 2000 - 2004 6.17% 5.96% 5.62% Growth 1990 - 2000 8.64% 23.51% 14.31% Households 2009 Households 10,724 87,048 208,098 2004 Households 10,029 81,936 196,570 2000 Households 9,477 77,874 187,281 1990 Households 8,512 66,064 166,852 Growth 2004 - 2009 6.93% 6.24% 5.86% Growth 2000 - 2004 5.82% 5.22% 4.96% Growth 1990 - 2000 11.34% 17.88% 12.24%
- ----------------------- Source: CBRE 33 SANDS POINT APARTMENTS MARKET ANALYSIS Households represent a basic unit of demand in the housing market. According to the data, the subject's neighborhood is densely populated and experiencing average population growth and household formation compared with the overall Phoenix MSA. INCOME DISTRIBUTIONS Household income available for expenditure on housing and other consumer items is a primary factor in determining the price/rent level of housing demand in a market area. In the case of this study, projections of household income, particularly for renters, identifies in gross terms the market from which the subject submarket draws. The following table illustrates estimated household income distribution for the subject neighborhood. HOUSEHOLD INCOME DISTRIBUTION
Radius 1.0 Radius 3.0 Radius 5.0 Mile Mile Mile ---------- ---------- ----------- Households by Income Distribution - 2004 Less Than $15K 8.16% 12.35% 13.21% $15K - $25K 5.82% 9.87% 10.46% $25K - $35K 8.35% 11.18% 12.03% $35K - $50K 15.60% 13.61% 14.55% $50K - $75K 19.55% 15.53% 15.90% $75K - $100K 12.32% 9.52% 9.58% $100K - $150K 12.26% 10.33% 9.80% $150K - $250K 10.79% 8.90% 7.82% $250K - $500K 4.78% 4.71% 3.69% $500K or more 2.37% 4.01% 2.96%
- ----------------------- Source: CBRE The following table illustrates the median and average household income levels for the subject neighborhood. HOUSEHOLD INCOME LEVELS
Radius 1.0 Radius 3.0 Radius 5.0 Mile Mile Mile ---------- ---------- ---------- Income 2004 Median Household Income $ 64,253 $ 53,968 $ 49,706 2004 Estimated Average Household Income $ 100,286 $ 98,795 $ 87,711 2004 Estimated Per Capita Income $ 59,160 $ 46,752 $ 39,839
- ----------------------- Source: CBRE An analysis of the income data indicates that the submarket is generally comprised of middle- to upper middle-income economic cohort groups, which include the target groups to which the subject property is oriented. 34 SANDS POINT APARTMENTS MARKET ANALYSIS EMPLOYMENT An employment breakdown typically indicates the working class characteristics for a given market area. The specific employment population within the indicated radii of the subject is as follows: EMPLOYMENT BY INDUSTRY
Radius 1.0 Radius 3.0 Radius 5.0 Mile Mile Mile ---------- ---------- ---------- Occupation Agr/Frst/Fish/Hunt/Mine 3.40% 3.00% 2.70% Construction 3.56% 5.60% 5.78% Total Manufacturing 7.53% 6.80% 7.24% Wholesale Trade 5.38% 4.61% 4.43% Retail Trade 8.10% 8.96% 9.20% Transport/Warehse/Utils 5.80% 4.30% 4.41% Information 3.31% 2.86% 2.83% Fin/Insur/RE/Rent/Lse 12.94% 12.12% 9.86% Prof/Sci/Tech/Admin 22.53% 15.99% 14.08% Mgmt of Companies 0.11% 0.26% 0.22% Admin/Spprt/Waste Mgmt 2.89% 4.32% 4.41% Educational Svcs 6.92% 7.27% 8.94% Health Care/Soc Asst 6.22% 8.54% 10.23% Entertainment & Rec Services 2.08% 1.74% 1.66% Accommdtn/Food Svcs 4.53% 7.11% 7.00% Oth Svcs, Not Pub Admin 3.67% 4.83% 5.09% Public Administration 1.02% 1.69% 1.92%
- -------------------- Source: CBRE The previous table illustrates the employment character of the submarket, indicating a predominantly middle- to lower-middle employment profile, with the largest percentages of the population holding retail trade, FIRE related, and professional jobs. VACANCY CONCLUSION COMPARABLE PROPERTIES Comparable properties have been surveyed in order to identify the occupancy trends within the immediate submarket. The comparable data is summarized in the following table: 35 SANDS POINT APARTMENTS MARKET ANALYSIS SUMMARY OF COMPARABLE APARTMENT RENTALS
COMP. NO. NAME LOCATION OCCUPANCY - ------- ---------------------- ----------------------- --------- 1 Hunter's Ridge 8902 N 19th Avenue, 94% Phoenix, AZ 2 Maya Linda 8222 N 19th Avenue, 91% Phoenix, AZ 3 Mission Shadows 8111 N. 19th Avenue, 88% Phoenix, AZ 4 The Fairways 2045 W Butler Drive, 93% Phoenix, AZ 5 The Greens 8445 N 23rd Avenue, 94% Phoenix, AZ 6 The Links 2121 W Royal Palm Road, 95% Phoenix, AZ - ------- ---------------------- ----------------------- --------- Subject Sands Point Apartments 8330 North 19th Avenue, 73% Phoenix, Arizona
- --------------------- Compiled by CBRE Prior to concessions, the comparables support a range of occupancy of 88% to 95%, with an average of 93%. The subject is 72.9% leased. Various measures of physical occupancy were discussed and analyzed within this section of this report. These benchmarks are summarized as follows: OCCUPANCY CONCLUSIONS Phoenix Area 92.0% Submarket 92.0% Rent Comparables 92.5% Subject's Current Occupancy 72.9% - ------------------------------ ---- Subject's Stabilized Occupancy 88.0%
- ------------------------ Compiled by CBRE Physical occupancy tends to peak in March and April in the Phoenix MSA, and declines in the summer months. The subject has averaged 9% to 18% physical vacancy since 2003 and the owner is 36 SANDS POINT APARTMENTS MARKET ANALYSIS budgeting 15% physical vacancy for 2005. Given the positive trends in vacancy demonstrated in the first quarter figures, as well as the occupancy levels of the primary competitors, we have reconciled the physical occupancy conclusion at 88%. Concessions remain widespread and this trend will continue over the next several years. In addition to physical vacancy, we have estimated 4.0% collection loss, 8.00% long-term concessions, and 1.50% loss to lease, which will each be deducted as line items from the potential gross income. LEASE-UP ANALYSIS According to the rent roll provided, the subject is 73% occupied with 117 vacant units. In order to achieve a stabilized level of occupancy, a total of 65 net units will need to be leased (73% to 88%). The manager that facilitated the inspection of the subject was new to the project and unfamiliar with the recent operations. The senior manager was unwilling or unable to discuss the recent history of the subject. However, no trends within the submarket or physical deficiencies associated with the improvements appear to be the cause of the current non-stable occupancy. In addition to the high physical occupancy, we note that collection losses have ranged from 4.1% to 7.5% over the last three years with a clear upward trend in this category. Furthermore, late charges and lease cancellation fees are by far the biggest other income categories in the financial statements since 2003. All of these trends point to management as either a primary or contributing cause to the current below market occupancy. This appraisal assumes competent management, and current net absorption rates in the new construction market ranges from 20 to 30 units per month without having to contend with rollover. In this analysis, we have modeled a six month lease-up period. This assumes effective net absorption of roughly 11 units per month and a steady absorption phase over the next six months beginning with the date of value. The average market rental rate per unit developed later in this report is $598. The lease-up deduction is, therefore, $116,610 (65 units x $598 per month x 6 months x 50% (average loss during a six month lease-up)). To this amount we have estimated a 20% entrepreneurial incentive to acquire a non-stable property and move-it through lease-up. This amount ($140,000) is applied a deduction in the valuation sections to arrive at an "as is" value of the subject. CONCLUSION The Phoenix apartment market is moving through a recovery phase at this time. New construction has slowed and the large-scale migration from multi-family to single family housing over the last five years appears to be over. The near term outlook is for general improvement in physical occupancy during 2005. Continued aggressive pricing on behalf of institutional buyers and the expectation of ongoing favorable mortgage rates in the private capital arena have driven investment rates downward. Although rent growth will most likely result in increasing overall rates over the next several quarters, 37 SANDS POINT APARTMENTS MARKET ANALYSIS there are more buyers than sellers in this market and the outlook is for continued price appreciation in the multi-family segment. The subject's immediate area is fully developed with limited potential for new inventory. This is predominantly a Class B market, but there are a handful of high-quality Class A projects. Access to freeways, employment, and shopping is good and the relationship between rental rates and home prices is favorable. At 432 units, the subject is oriented to a wide mix of private capital and institutional buyers. 38 SANDS POINT APARTMENTS SITE ANALYSIS [SITE MAP] 39 SANDS POINT APARTMENTS SITE ANALYSIS SITE ANALYSIS The following chart provides a summary of the salient features relating to the subject site. SITE SUMMARY
PHYSICAL DESCRIPTION Net Site Area 11.72 Acres 510,511 Sq. Ft. Primary Road Frontage 19th Avenue 500 Feet Secondary Road Frontage Butler Drive 1,000 Feet Average Depth 500 Feet Excess Land Area None Surplus Land Area None Zoning District R-5, Phoenix Multi-family Residence Flood Map Panel No. 04013C1665H, dated July 19, 2001 Flood Zone X (Shaded)
- ---------- Source: Various sources compiled by CBRE LOCATION The subject is located at the southwest corner of 19th Avenue and Butler Drive, about one-half mile north of Northern Avenue. The street address is 8330 North 19th Avenue. ASSESSOR'S PARCEL NUMBER The Maricopa County Tax Assessor's parcel number is 158-06-002B. LAND AREA The site is considered adequate in terms of size and utility. There is no unusable, excess or surplus land area. SHAPE AND FRONTAGE The site is generally rectangular in shape and has adequate frontage along two primary thoroughfares within the neighborhood. INGRESS/EGRESS Ingress and egress is available to the site via two entrance points, one is along 19th Avenue and the other is along Butler Drive. Butler Drive is a two-lane neighborhood collector street. It has curbs and gutters along both sides of the road, and there is a traffic signal at the intersection with 19th Avenue. 40 SANDS POINT APARTMENTS SITE ANALYSIS Nineteenth Avenue is a primary arterial road with six lanes of traffic in each direction. There is a bus stop just south of the subject, and street parking is not permitted. Please refer to the prior site/plat exhibit for the layout of the streets that provide access to the subject property. TOPOGRAPHY AND DRAINAGE The site is generally level and at street grade. The topography of the site is not seen as an impediment to the development of the property. During our inspection of the site, we observed no drainage problems and assume that none exist. SOILS A soil analysis for the site has not been provided for the preparation of this appraisal. In the absence of a soil report, it is a specific assumption that the site has adequate soils to support the highest and best use. EASEMENTS AND ENCROACHMENTS A title policy for the property has not been provided for the preparation of this appraisal. Based on our visual inspection and review of the site plan, the property does not appear to be adversely affected by any easements or encroachments. It is recommended that the client/reader obtain a current title policy outlining all easements and encroachments on the property, if any, prior to making a business decision. ACCESS AGREEMENTS There are no known access agreements that may affect the subject's marketability. COVENANTS, CONDITIONS AND RESTRICTIONS There are no known covenants, conditions and restrictions impacting the site that are considered to affect the marketability or highest and best use, other than zoning restrictions. UTILITIES AND SERVICES The site is within the jurisdiction of Phoenix and is provided all municipal services, including police, fire and refuse garbage collection. All utilities are available to the site in adequate quality and quantity to service the highest and best use as if vacant and as improved. Arizona Public Service provides electricity, the City of Phoenix provides water and sewer, Qwest provides telephone service, and Cox provides cable and high-speed internet access. 41 SANDS POINT APARTMENTS SITE ANALYSIS FLOOD ZONE According to flood hazard maps published by the Federal Emergency Management Agency (FEMA), the site is within Zone X (Shaded), as indicated on the indicated Community Map Panel No. 04013C1665H, dated July 19, 2001. FEMA Zone X (Shaded): Areas of 500-year flood; areas if 100-year flood with average depths of less than 1 foot or with drainage areas less than 1 square mile; and areas protected by levees from 100-year flood. ENVIRONMENTAL ISSUES CBRE has not observed, yet is not qualified to detect, the existence of potentially hazardous material or underground storage tanks which may be present on or near the site. The existence of hazardous materials or underground storage tanks may have an affect on the value of the property. For this appraisal, CBRE has specifically assumed that any hazardous materials and/or underground storage tanks that may be present on or near the property do not affect the property. ADJACENT PROPERTIES The adjacent land uses are as follows: North: Royal Palm Middle School South: Multi-family East: Retail West: Multi-family The adjacent properties represent a mixture of retail, office and residential uses representative of a fully developed and healthy neighborhood. CONCLUSION The site has good visibility along an arterial road. The size of the site is typical for the area and use, and there are no known detrimental uses in the immediate vicinity. Overall, there are no known factors that are considered to prevent the site from development to its highest and best use, as if vacant, or adverse to the existing use of the site. 42 SANDS POINT APARTMENTS IMPROVEMENT ANALYSIS IMPROVEMENT LAYOUT [IMPROVEMENT LAYOUT PICTURE] 43 SANDS POINT APARTMENTS IMPROVEMENT ANALYSIS IMPROVEMENT ANALYSIS The following chart depicts the subject's building area by component. IMPROVEMENT SUMMARY Number of Buildings 23 Number of Stories 3 Net Rentable Area 339,852 SF Number of Units 432 Average Unit Size 787 SF Development Density 36.9 Units/Acre Parking Improvements 569 Total Spaces Open: 432 Covered: 159 Parking Ratio(spaces/unit) 1.32
PERCENT OF UNIT SIZE UNIT MIX COMMENTS NO. OF UNITS TOTAL (SF) NRA (SF) - ----------- ----------- ------------ ---------- --------- -------- 1 BR, 1 BA Apache 96 22.2% 597 57,312 1 BR, 1 BA Mohave 72 16.7% 678 48,816 1 BR, 1 BA Mesquite 48 11.1% 732 35,136 1 BR, 1 BA Saguaro 48 11.1% 782 37,536 2 BR, 1 BA Desert Willow 48 11.1% 863 41,424 2 BR, 2 BA Joshua 36 8.3% 951 34,236 2 BR, 2 BA Ocotillo 48 11.1% 999 47,952 2 BR, 2 BA Palo Verde 36 8.3% 1,040 37,440 ------------ ---------- --------- -------- Total/Average: 432 100.0% 787 339,852 ------------ ---------- --------- --------
Source: Various sources compiled by CBRE As shown in the previous table, the subject consists of 23 rental buildings as well as a clubhouse and several laundry facilities. There are 432 rentable apartment units, for a total net rentable area of 339,852 square feet. Units sizes were derived from management and do not include patios or balconies. Building plans and specifications were not provided for the preparation of this appraisal. The following is a description of the subject improvements and basic construction features derived from CBRE's physical inspection. YEAR BUILT The subject property was built in 1985 and has not been recently renovated FOUNDATION The foundation consists of poured reinforced concrete/perimeter footings and column pads. 44 SANDS POINT APARTMENTS IMPROVEMENT ANALYSIS CONSTRUCTION COMPONENTS The construction components include a wood frame with wood truss and joist floor structure and plywood floor deck. FLOOR STRUCTURE The floor structure is summarized as follows: Ground Floor: Concrete slab on compacted fill Other Floors: Plywood deck with light-weight concrete cover EXTERIOR WALLS The exterior wall structure is masonry block with a painted stucco finish. The buildings have single pane aluminum frame windows. ROOF COVER All buildings exhibit flat roof surfaces with a built-up foam surface and pitched areas with a concrete tile surface. ELEVATOR/STAIR SYSTEM The subject has no elevator systems, but each building has exterior stairway access. This is common for the age and class of the subject. HVAC The individual units feature roof-mounted electric condenser/compressor units with electric strip heating within the interior of the units. The HVAC systems are assumed to be in average operating condition and adequate for the respective square footage of each individual unit. UTILITIES Each unit is individually metered for electrical usage. Management back bills for water, trash, and common gas expenses used to deliver hot water. Aggregate monthly utility reimbursements are summarized as follows: - Apache: $ 27 - Mohave: $ 32 - Mesquite: $ 34 - Saguaro: $ 36 - Desert Willow: $ 40 - Joshua: $ 44
45 SANDS POINT APARTMENTS IMPROVEMENT ANALYSIS - Ocotillo: $ 46 - Palo Verde: $ 48
SECURITY The improvements are encircled by a combination block/iron wall with security keyed electronic gates at all vehicle access points. Although the management office features a security alarm system, there is no alarm oriented security system for the individual units. FIRE PROTECTION The improvements are not fire sprinklered, although all units are equipped with smoke detectors. It is assumed the improvements have adequate fire alarm systems, fire exits, fire extinguishers, fire escapes and/or other fire protection measures to meet local fire marshal requirements. PROJECT AMENITIES The project amenities include two pools, one spa, tennis and volleyball courts, leasing office/clubhouse, fitness center, on-site laundries, security access gate, and covered parking. UNIT AMENITIES KITCHENS Each unit features a full appliance package including an electric range/oven, vent-hood, frost-free refrigerator with icemaker, garbage disposal, dishwasher, and built-in microwave oven. Additionally, each unit features wood cabinets with Formica countertops and vinyl tile flooring in the kitchen area. According to management, the project has experienced an adequate on-going replacement program for all kitchen appliances and no appliances are known to be inoperable. BATHROOMS The bathrooms within each unit feature combination tub/showers with ceramic tile wainscot. Additionally, each bathroom features a commode, wood cabinet with Formica counter and built-in porcelain sink, wall-mounted medicine cabinet with vanity mirror and vinyl tile flooring. INTERIOR FEATURES Each unit includes a ceiling fan in the living room with all third-floor units featuring vaulted ceilings. All units have a patio or balcony, washer and dryer hook-ups, vertical and mini-blinds, and carpet and vinyl flooring. Third floor units also have wood burning fireplaces. 46 SANDS POINT APARTMENTS IMPROVEMENT ANALYSIS INTERIOR LIGHTING Each unit features incandescent lighting in appropriate interior and exterior locations with fluorescent lighting in bathrooms and kitchen areas. PATIOS, BALCONIES AND STORAGE All units include a private patio or balcony area with an exterior storage room. The storage rooms are not included in the gross rentable building area. SITE AMENITIES PARKING AND DRIVES The project features adequate surface parking, including reserved handicap spaces. All parking spaces and vehicle drives are asphalt paved and considered to be in average condition. According to management, there are 591 total parking spaces, including 432 covered spaces. The parking ratio is 1.37 spaces per unit. The City of Phoenix requires 1.3 spaces for each studio unit; 1.5 spaces for each one-bedroom unit; 1.5 spaces for each two; 2 spaces for each three-bedroom unit. Under this scenario, the subject requires 648 on-site parking spaces to conform with zoning. LANDSCAPING The project features combinations of grass, gravel and natural desert landscaping which is considered to be in average condition and well maintained. All planting is sprinklered or irrigated. QUALITY AND STRUCTURAL CONDITION The overall quality of the project is considered average for the neighborhood and age. CBRE did not observe any evidence of structural fatigue and the improvements appear structurally sound for occupancy. However, CBRE is not qualified to determine structural integrity and it is recommended that the client/reader retain the services of a qualified, independent engineer or contractor to determine the structural integrity of the improvements prior to making a business decision. FUNCTIONAL UTILITY All of the floor plans are considered to feature functional layouts and the layout of the overall project is considered functional in utility. Therefore, the unit mix is also functional and no conversion is warranted to the existing improvements. 47 SANDS POINT APARTMENTS IMPROVEMENT ANALYSIS PROJECT DENSITY The project's development density is commensurate with other competing properties in the neighborhood. ADA COMPLIANCE The client/reader's attention is directed to the specific limiting conditions regarding ADA compliance. FURNITURE, FIXTURES AND EQUIPMENT The apartment units are rented on an unfurnished basis. However, miscellaneous maintenance tools, pool furniture, leasing office furniture, recreational room and clubhouse furniture, and various exercise machines are examples of personal property associated with and typically included in the sale of multifamily apartment complexes. The personal property items contained in the project are not considered to contribute significantly to the overall value of the real estate. ENVIRONMENTAL ISSUES CBRE has not observed, yet is not qualified to detect, the existence of any potentially hazardous materials such as lead paint, asbestos, urea formaldehyde foam insulation, or other potentially hazardous construction materials on or in the improvements. The existence of such substances may have an affect on the value of the property. For the purpose of this assignment, we have specifically assumed that any hazardous materials that would cause a loss in value do not affect the subject. DEFERRED MAINTENANCE Our inspection of the property indicated no major items of deferred maintenance. ECONOMIC AGE AND LIFE CBRE's estimate of the subject improvements effective age and remaining economic life is depicted in the following chart: ECONOMIC AGE AND LIFE Actual Age 20 Years Effective Age 20 Years MVS Expected Life 45 Years Remaining Economic Life 25 Years Accrued Physical Incurable Depreciation 44.4%
Compiled by CBRE 48 SANDS POINT APARTMENTS IMPROVEMENT ANALYSIS The overall life expectancy is based upon our on-site observations and a comparative analysis of typical life expectancies reported for buildings of similar construction as published by Marshall and Swift, LLC, in the Marshall Valuation Service cost guide. While CBRE did not observe anything to suggest a different economic life, a capital improvement program could extend the life expectancy. CONCLUSION The improvements are considered to be in average to good overall condition and are considered to be typical for the age and location in regard to improvement design and layout, as well as interior and exterior amenities. Overall, there are no known factors that could be considered to adversely impact the marketability of the improvements. 49 SANDS POINT APARTMENTS ZONING ZONING The following map indicates the zoning districts present within the subject's immediate area: [MAP] The following chart summarizes the zoning requirements applicable to the subject: 50 SANDS POINT APARTMENTS ZONING ZONING SUMMARY Current Zoning R-5, Phoenix Multi-Family Residence District Legally Conforming See comments Uses Permitted Provides for multi-family housing development Zoning Change Not likely
CATEGORY ZONING REQUIREMENT - ------------------------ ------------------------------------ Minimum Lot Depth 50 Feet Minimum Lot Width 40 Feet Maximum Height 2 stories and 30 feet Minimum Setbacks Front Yard 15 Feet Street Side Yard 10 feet one-story, 15 feet two-story Interior Side Yard 13 Feet Rear Yard 15 feet one-story, 20 feet two-story Maximum Bldg. Coverage 50% Maximum Density 43.5 Units per acre Parking Requirements 648 Spaces Subject's Actual Parking 569 Spaces
Source: Planning & Zoning Dept. ANALYSIS AND CONCLUSION The parking ratio appears to fall below current standards for the subject, which require a minimum parking ratio of 1.5 spaces per unit. This condition is not curable, yet does not affect the marketability of the subject. No other areas of non-conformance are evident. It is recommended that local planning and zoning personnel be contacted regarding more specific information that might be applicable to the subject. 51 SANDS POINT APARTMENTS TAX AND ASSESSMENT DATA TAX AND ASSESSMENT DATA The State of Arizona employs a dual (Primary, Secondary) structure for real estate taxation. The assessed value derived from "full cash value" is the basis for computing taxes for budget overrides, bond and sanitary, fire and other special districts (Secondary taxes), while the assessed value derived from "limited value" is the basis for computing taxes for the maintenance and operation of school districts, community college districts, cities, county and the state (Primary taxes). The subject's market value, assessed value, and taxes are summarized below, and do not include any furniture, fixtures and equipment. AD VALOREM TAX INFORMATION
2004 Actual 2005 Pro Forma 2006 Pro Forma Limited Full Cash Limited Full Cash Limited Full Cash ----------- ----------- ----------- ----------- ----------- ----------- 158-06-002B $15,086,070 $15,086,070 $15,086,070 $15,086,070 $15,086,070 $15,086,070 ----------- ----------- ----------- ----------- ----------- ----------- Subtotal $15,086,070 $15,086,070 $15,086,070 $15,086,070 $15,086,070 $15,086,070 Assessment Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% ----------- ----------- ----------- ----------- ----------- ----------- Assessed Values $ 1,508,607 $ 1,508,607 $ 1,508,607 $ 1,508,607 $ 1,508,607 $ 1,508,607 Taxation Type Primary Secondary Primary Secondary Primary Secondary Rates per 100 8.4963 4.7109 8.4963 4.7109 8.4963 4.7109 Assessed Values $ 1,508,607 $ 1,508,607 $ 1,508,607 $ 1,508,607 $ 1,508,607 $ 1,508,607 ----------- ----------- ----------- ----------- ----------- ----------- Totals $ 128,176 $ 71,069 $ 128,176 $ 71,069 $ 128,176 $ 71,069 Taxation Type Special Special Special Rates per 100 0.0000 0.0000 0.0000 Assessed Values $ 1,508,607 $ 1,508,607 $ 1,508,607 ----------- ----------- ----------- Totals $ 0 $ 0 $ 0 TOTAL TAXES $ 199,245 $ 199,245 $ 199,245
Source: Maricopa County Assessor's Office According to Maricopa County Treasurer records, there are no delinquent property taxes encumbering the subject. Our pro forma is based on actual assessed values along with 2004 tax rates. Taxes are then expected to increase at the rate of inflation. TAX COMPARABLES As a crosscheck to the subject's applicable real estate taxes, CBRE has reviewed the real estate tax information according to the Maricopa County Assessor for comparable properties in the immediate area. The following table summarizes the real estate tax comparables employed for this assignment: 52 SANDS POINT APARTMENTS TAX AND ASSESSMENT DATA AD VALOREM TAX COMPARABLES
Comp 1 Comp 2 Comp 3 Subject Year Built 1984 1985 1986 1985 No. Units 200 174 380 432 Tax Year 2005 2005 2005 2005 TOTAL FULL CASH VALUE $9,575,700 $8,636,900 $12,955,600 $15,086,070 PER UNIT $ 47,879 $ 49,637 $ 34,094 $ 34,921
SOURCE: Maricopa County Assessor's Office CONCLUSION The tax comparables support an assessed value ranging from $34,094 to $49,637 per unit. The subject falls at $34,921 per unit. Therefore, the subject's 2005 pro forma taxes of $199,245 are considered reasonable. There is no basis for a tax appeal at this time. 53 SANDS POINT APARTMENTS HIGHEST AND BEST USE HIGHEST AND BEST USE In appraisal practice, the concept of highest and best use represents the premise upon which value is based. The four criteria the highest and best use must meet are: - legal permissibility; - physical possibility; - financial feasibility; and - maximum profitability. Highest and best use analysis involves assessing the subject both as if vacant and as improved. AS VACANT LEGAL PERMISSIBILITY The legally permissible uses were discussed in detail in the site analysis and zoning sections of this report. The subject site is zoned for multi-family use. This zoning category is oriented towards garden style apartment projects, but lower intensity uses such as condominiums, churches, and single family residences are possible under the subject's current zoning. With multi-family projects to the south and west and a school to the north there is little probability that the subject's zoning would be changed to a higher intensity commercial, office or industrial use. Multi-family uses for the subject conform with the general plan of Phoenix. No private restrictions are known to impact the subject. PHYSICAL POSSIBILITY The physical characteristics of the subject site were discussed in detail in the site analysis. The subject parcel is rectangular in shape with frontage along a primary arterial road and a neighborhood collector. The net usable site area is approximately 11.72 acres, and all off-sites, including curbs, gutters, sidewalks, storm drains, and utilities are available to the subject site. Overall, the subject site is physically suited for near term development. The overall size of the subject is small for a single-family residential subdivision. Furthermore, the neighborhood is already adequately served by schools and parks. Therefore, the most probable use from a physical and legal perspective is either multi-family development, or to hold the site as an investment. FINANCIAL FEASIBILITY The financial feasibility of a specific property is market driven, and is influenced by surrounding land uses. Based upon the supply of new projects planned for the competitive area, there is strong 54 SANDS POINT APARTMENTS HIGHEST AND BEST USE inferential evidence that market participants perceive a need for new inventory in this area. Near term multi-family development is considered to be financially feasible. MAXIMUM PROFITABILITY The use which results in the maximum profitability of the site is beyond the scope of this assignment. Although alternate land uses may be financially feasible, the maximally productive use of the subject site is near term multi-family development. CONCLUSION: HIGHEST AND BEST USE AS VACANT Based on the foregoing analysis, the highest and best use of the site as though vacant would be for near future multi-family development. AS IMPROVED LEGAL PERMISSIBILITY The subject site was approved for apartment development; however, the improvements appear to represent a legally non-conforming use due to parking. This issue is not curable, nor does it impact the marketability of the subject. Therefore, no changes from a legal perspective are necessary to maximize value. PHYSICAL POSSIBILITY The subject improvements were discussed in detail in the Improvement Analysis. The layout and positioning of the improvements are functional for apartment use based on comparison to neighborhood properties. The improvements are in average to good physical condition. No deferred maintenance was evident. Overall, no physical changes to the subject are recommended to maximize value. FINANCIAL FEASIBILITY The financial feasibility for an apartment property is based on the amount of rent which can be generated, less operating expenses required to generate that income; if a residual amount exists then the land is being put to a productive use. As will be indicated in the Income Capitalization Approach, the subject is capable of producing a positive net cash flow and continued utilization of the improvements for apartments is considered financially feasible. MAXIMUM PROFITABILITY It appears there are no alternative uses of the existing improvements which would produce a higher net income and/or value over time than the current use, as a rental apartment complex. 55 SANDS POINT APARTMENTS HIGHEST AND BEST USE CONCLUSION: HIGHEST AND BEST USE AS IMPROVED Based on the foregoing, the highest and best use of the property as improved is to complete the lease-up and then continue the current use indefinitely. 56 SANDS POINT APARTMENTS APPRAISAL METHODOLOGY APPRAISAL METHODOLOGY In appraisal practice, an approach to value is included or omitted based on its applicability to the property type being valued and the quality and quantity of information available. COST APPROACH The cost approach is based upon the proposition that the informed purchaser would pay no more for the subject than the cost to produce a substitute property with equivalent utility. This approach is particularly applicable when the property being appraised involves relatively new improvements that represent the highest and best use of the land, or when relatively unique or specialized improvements are located on the site and for which there exist few sales or leases of comparable properties. SALES COMPARISON APPROACH The sales comparison approach utilizes sales of comparable properties, adjusted for differences, to indicate a value for the subject. Valuation is typically accomplished using physical units of comparison such as price per square foot, price per unit, price per floor, etc., or economic units of comparison such as gross rent multiplier. Adjustments are applied to the physical units of comparison derived from the comparable sale. The unit of comparison chosen for the subject is then used to yield a total value. Economic units of comparison are not adjusted, but rather analyzed as to relevant differences, with the final estimate derived based on the general comparisons. INCOME CAPITALIZATION APPROACH The income capitalization approach reflects the subject's income-producing capabilities. This approach is based on the assumption that value is created by the expectation of benefits to be derived in the future. Specifically estimated is the amount an investor would be willing to pay to receive an income stream plus reversion value from a property over a period of time. The two common valuation techniques associated with the income capitalization approach are direct capitalization and the discounted cash flow (DCF) analysis. METHODOLOGY APPLICABLE TO THE SUBJECT In valuing the subject, only the sales comparison and income capitalization approaches are applicable and have been used. The cost approach is not applicable in the estimation of market value due to lack of use by market participants and the amount of depreciation impacting the subject. The exclusion of the Cost Approach does not diminish the reliability of the value conclusion and does not represent a limitation on the scope of the appraisals that requires departure from USPAP. 57 SANDS POINT APARTMENTS SALES COMPARISON APPROACH SALES COMPARISON APPROACH The following location map and table of sales summarizes the comparable data used in the valuation of the subject property. A detailed description of each transaction is included in the Addenda. [LOCATION MAP] SUMMARY OF COMPARABLE APARTMENT SALES
TRANSACTION YEAR NO. AVG. UNIT ACTUAL SALE ADJUSTED PRICE PER NOI PER NO. NAME TYPE DATE BUILT UNITS SIZE PRICE SALE PRICE (1) UNIT (1) OCC. UNIT OAR - --- ------------------ ------ ------ ----- ----- --------- ----------- -------------- --------- ---- ------- ---- 1 Smoketree Sale Aug-03 1974 280 678 $11,132,000 $11,132,000 $39,757 95% $ 2,640 6.64% Apartments, Phoenix, AZ 2 South Creek Sale Feb-04 1986 528 894 $28,650,000 $28,900,000 $54,735 93% $ 3,838 7.01% Apartments, Phoenix, AZ 3 Terracina, Sale Sep-04 1984 856 856 $42,650,000 $42,650,000 $49,825 90% $ 3,021 6.06% Phoenix, AZ 4 Desert Shadows, Sale Jan-05 1980 548 829 $22,478,000 $22,478,000 $41,018 86% $ 1,979 4.83% Phoenix, AZ 5 Superstition Park, Escrow Mar-05 1985 376 662 $20,400,000 $20,400,000 $54,255 86% $ 3,116 5.74% Tempe, AZ 6 Thunderbird Ranch, Escrow Mar-05 1979 672 789 $28,990,000 $28,990,000 $43,140 93% $ 3,020 7.00% Phoenix, AZ Subj. Sands Point - - 1985 432 787 - - - 88% $ 2,621 - Pro Apartments, Forma Phoenix, Arizona
(1) Transaction Amount Adjusted for Cash Equivalency And/or Deferred Maintenance (Where Applicable) Compiled By CBRE 58 SANDS POINT APARTMENTS SALES COMPARISON APPROACH ANALYSIS OF IMPROVED SALES - GROUPED ADJUSTMENTS PROPERTY RIGHTS CONVEYED Fee simple property rights (subject to short term apartment leases) were transferred in each transaction. No adjustments for property rights are necessary. FINANCING No additional adjustments for financing are necessary. As noted, financing adjustments were applied prior to the derivation of an overall rate, if applicable. CONDITIONS OF SALE Each of the sales represents a normal, arms-length transaction between knowledgeable and well-informed parties. No adjustments for conditions of sale are applied. MARKET CONDITIONS Overall capitalization rates have been declining rapidly over the last 24 months. Therefore, date of sale was an important selection criteria in determining which comparables to use in this analysis. The comparables selected are all recent sales; however, based upon the trend in prices in the comparable data set, upward adjustments are necessary for Comparables One through Three. ANALYSIS OF IMPROVED SALES - INDIVIDUAL ADJUSTMENTS IMPROVED SALE ONE Smoketree apartments is a 280-unit project that is located in northwest Phoenix near the Metrocenter mall. The improvements contain two-story, walk-up buildings that were constructed in 1974. The density is 17.7 units per acre. Amenities include pools, covered parking, laundries, and tennis courts. The project is master-metered with a central chiller/boiler system; however, residents pay for plug-ins within the unit (not HVAC). The unit mix includes studio, one, and two-bedroom apartments. The project was in average condition at the time of sale, and was 95% occupied. The pro forma OAR was 6.64%. The location is considered to be similar to the subject. However, the comparable was developed in 1974, or 11 years before the subject. Therefore an upward adjustment is necessary for age and condition. Also, the average unit size is smaller than the subject and an upward adjustment is applied for this element of comparison. No further adjustments are necessary. 59 SANDS POINT APARTMENTS SALES COMPARISON APPROACH IMPROVED SALE TWO This comparable represents South Creek Apartments, a two-story, 472,152 square foot, 528-unit, garden apartment project that was completed in 1986, and sits on a 23.445-acre lot located at 4424 E. Baseline Road. The density is 22.52 units per acre. The exterior walls are constructed of stucco, and the project features two pools and spas, security gate, covered parking, sauna, fitness center. The property sold in February 2004 for $28,900,000, or $54,735 per unit. Pro Forma net operating income at the time of sale was $2,026,937, or $3,839 per unit, for an overall capitalization rate of 7.01%. Occupancy at the time of sale was 93%. In relation to the subject, the basic location is considered to be similar. However, the physical condition of the project is superior to the subject and a downward adjustment is necessary. The average unit size is larger than the subject and a downward adjustment is applied for unit size. The remaining elements are comparison are all similar. IMPROVED SALE THREE This comparable represents Terracina, a two and three-story, 732,484 square foot, 856-unit, garden apartment project that was completed in 1984, and sits on a 38.5-acre lot located at 1450 E. Bell Road. The density is 22.23 units per acre. The exterior walls are constructed of frame and stucco, and the project features pools, spas, fitness center, security access gate, on-site laundry. The property sold in September 2004 for $42,650,000, or $49,825 per unit. Existing net operating income at the time of sale was $2,586,400, or $3,022 per unit, for an overall capitalization rate of 6.06%. Occupancy at the time of sale was 90%. This comparable is located at 14th Street and Bell Road in north-Phoenix. Originally developed by Spanos, the project was sold by United Dominion. Units have eight foot ceilings and patios and balconies. The three-bedroom units have washer and dryer hook-ups and the largest unit types have washers and dryers. In relation to the subject, the basic location is considered to be similar. However, the physical condition of the project is superior to the subject and a downward adjustment is necessary. The average unit size is larger than the subject and a downward adjustment is applied for unit size. The remaining elements are comparison are all similar. IMPROVED SALE FOUR Desert Shadows is a 548-unit apartment project that is located in northwest Phoenix near the intersection of 19th Avenue and Thunderbird Road. The project was developed in 1980 and is in average physical condition. The unit mix includes one, two, and three-bedroom units and the site area is 26.92 acres. The overall density is therefore 20.36 units per acre. All buildings are two-story walk-ups and project amenities include four pools and spas, saunas, basketball court, playground, clubhouse, and covered parking. The project was acquired for $22,478,000 in January 2005. The 60 SANDS POINT APARTMENTS SALES COMPARISON APPROACH OAR based upon income in place was 4.83%. However, the buyer is planning a major capital improvement and repositioning program over the next three years. The location is similar to the subject, but the physical condition is inferior. Therefore, an upward adjustment is applied for age and condition. The average unit size is larger than the subject and a downward adjustment is necessary for unit size. The remaining elements of comparison are all similar to the subject. IMPROVED SALE FIVE This comparable represents Superstition Park, a two-story, 248,912 square foot, 376-unit, garden apartment project that was completed in 1985, and sits on a 17.95-acre lot located at 30 West Carter Drive. The density is 20.95 units per acre. The exterior walls are constructed of frame and stucco, and the project features pools, spa, covered parking, security access gate, and a central chiller/boiler system. The property sold in March 2005 for $20,400,000, or $54,255 per unit. Existing net operating income at the time of sale was $1,171,963, or $3,117 per unit, for an overall capitalization rate of 5.74%. Occupancy at the time of sale was 86%. This comparable is located in south Tempe near the Arizona State University Campus. The cap rate on actual income is 5.74%, however the cap rate using the broker's pro forma is 8.0%. The location near ASU, with a captive student base, is superior to the subject. Therefore, a downward adjustment for location is applied. Age and condition, project size, and economic factors are all similar to the subject. However, the average unit size is smaller than the subject and an upward adjustment is necessary for this element of comparison. No additional adjustments are necessary. IMPROVED SALE SIX Thunderbird Ranch is a 672-unit apartment project that is located in northwest Phoenix near the intersection of 19th Avenue and Thunderbird Road. Developed in 1979 by the Spanos Company, the project contains 77 rental buildings on a 29.43 acre site. Amenities include four pools, spas, two clubhouses, on-site laundries and covered parking. There is no security gate. Units have eight foot ceilings and patios and balconies, and the three bedroom units have washer and dryer hook-ups. The project is in escrow to be acquired for $28,990,000, or $43,139 per unit. The OAR based upon trailing 12 month income is 7.0%. The buyer is planning a capital improvement and repositioning program over three years. The capital investment is planned to be $5.2 million. No specific adjustments are necessary for this comparable. SUMMARY OF ADJUSTMENTS Based on the foregoing discussions, the following table summarizes the adjustments warranted when comparing each sale to the subject. 61 SANDS POINT APARTMENTS SALES COMPARISON APPROACH APARTMENT SALES ADJUSTMENT GRID
Subj. Pro Comparable Number 1 2 3 4 5 6 Forma Transaction Type Sale Sale Sale Sale Escrow Escrow -- Transaction Date Aug-03 Feb-04 Sep-04 Jan-05 Mar-05 Mar-05 -- Year Built 1974 1986 1984 1980 1985 1979 1985 No. Units 280 528 856 548 376 672 432 Avg. Unit Size 678 894 856 829 662 789 787 Actual Sale Price $11,132,000 $28,650,000 $42,650,000 $22,478,000 $20,400,000 $28,990,000 -- Adjusted Sale Price (1) $11,132,000 $28,900,000 $42,650,000 $22,478,000 $20,400,000 $28,990,000 -- Price Per Unit (1) $ 39,757 $ 54,735 $ 49,825 $ 41,018 $ 54,255 $ 43,140 -- Occupancy 95% 93% 90% 86% 86% 93% 88% Noi Per Unit $ 2,640 $ 3,838 $ 3,021 $ 1,979 $ 3,116 $ 3,020 $2,621 OAR 6.64% 7.01% 6.06% 4.83% 5.74% 7.00% -- ----------- ----------- ----------- ----------- ----------- ----------- Adj. Price Per Unit $ 39,757 $ 54,735 $ 49,825 $ 41,018 $ 54,255 $ 43,140 ----------- ----------- ----------- ----------- ----------- ----------- Property Rights Conveyed 0% 0% 0% 0% 0% 0% Financing Terms (1) 0% 0% 0% 0% 0% 0% Conditions of Sale 0% 0% 0% 0% 0% 0% Market Conditions (Time) 5% 3% 3% 0% 0% 0% ----------- ----------- ----------- ----------- ----------- ----------- Subtotal $ 41,745 $ 56,377 $ 51,320 $ 41,018 $ 54,255 $ 43,140 ----------- ----------- ----------- ----------- ----------- ----------- Location 0% 0% 0% 0% -15% 0% Age and Condition 5% -10% -10% 5% 0% 0% Average Unit Size 5% -5% -5% -5% 5% 0% Project Size 0% 0% 0% 0% 0% 0% Density 0% 0% 0% 0% 0% 0% Economic Factors 0% 0% 0% 0% 0% 0% ----------- ----------- ----------- ----------- ----------- ----------- Total Other Adjustments 10% -15% -15% 0% -10% 0% =========== =========== =========== =========== =========== =========== INDICATED VALUE PER UNIT $ 45,919 $ 47,920 $ 43,622 $ 41,018 $ 48,830 $ 43,140 =========== =========== =========== =========== =========== ===========
(1) Transaction amount adjusted for cash equivalency and/or deferred maintenance (where applicable) Compiled by CBRE Based on the preceding discussions of each comparable and the foregoing adjustment analysis, a price per unit indication near the midpoint of the indicated range was most appropriate for the subject. EFFECTIVE GROSS INCOME MULTIPLIER ANALYSIS The EGIM reflects the relationship between effective gross annual income and sales price. The EGIM is a unit of comparison that cannot be adjusted and, there, it is primarily utilized to indicate a point of tendency. The following illustrates the EGIM for each of the sales analyzed herein. 62 SANDS POINT APARTMENTS SALES COMPARISON APPROACH EFFECTIVE GROSS INCOME MULTIPLIER ANALYSIS
Sale No. Occupancy OER EGIM - -------- --------- --- ---- 1 95% 58.40% 6.26 2 93% 46.13% 7.68 3 90% 51.75% 7.96 4 86% 65.62% 7.12 5 86% 53.52% 8.09 6 93% 49.70% 7.18 ---- ----- ---- Subj. 84% 58.73% -- ---- ----- ----
Compiled by CBRE The EGIM analysis is applied as a Sales Comparison tool to compare the income generating capabilities of the comparables without the influence of operating expenses. In this instance the range is relatively narrow and we have reconciled the subject's EGIM towards the middle part of the range. SALES COMPARISON APPROACH CONCLUSION The following table presents the estimated value for the subject as indicated by the sales comparison approach. SALES COMPARISON APPROACH
OTAL UNITS X VALUE PER UNIT = VALUE - ---------- --- -------------- --- ------------- 432 X $ 41,000 = $ 17,712,000 432 X $ 45,000 = $ 19,440,000
EGI X EGIM = VALUE - ---------- --- -------------- --- -------------- $ 2,743,905 X 7.00 = $ 19,207,334 VALUE CONCLUSION INDICATED STABILIZED VALUE $ 18,500,000 Lease-Up Discount ($ 140,000) ------------- VALUE INDICATION $ 18,360,000 ROUNDED $ 18,360,000 VALUE PER UNIT $ 42,500
Compiled by CBRE 63 SANDS POINT APARTMENTS SALES COMPARISON APPROACH NET OPERATING INCOME ANALYSIS As a cross check to the foregoing analysis, the net operating income (NOI) being generated by the comparable sales as compared to the subject's pro forma NOI that was estimated in the Income Capitalization Approach has been analyzed. In general, it is a fundamental assumption that the physical characteristics of a property (e.g., location, access, design/ appeal, condition, etc.) are reflected in the net operating income being generated, and the resultant price per unit paid for a property has a direct relationship to the NOI being generated. The following NOI analysis table illustrates the sale prices (after adjustments for conditions of sale and market conditions) of the individual sales plotted in comparison their NOIs. In addition, a trend line has been plotted based on a linear regression analysis of the comparables. The subject's indicated value has been plotted along this trend line at its pro forma stabilized NOI. NET OPERATING INCOME ANALYSIS [LINE GRAPH] COMPILED BY CBRE The concluded value presented herein provides economic support for the direct comparison of sale comparables. 64 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH INCOME CAPITALIZATION APPROACH The following location map and table of rents summarizes the comparable data used in the valuation of the subject property. A detailed description of each transaction is included in the Addenda. [MAP] SUMMARY OF COMPARABLE APARTMENT RENTALS
COMP. YEAR NO. AVG. RENT NO. PROPERTY NAME LOCATION BUILT OCC. UNITS PER UNIT - ---- --------------- ------------------------ ----- ---- ----- --------- 1 Hunter's Ridge 8902 N 19th Avenue, 1987 94% 428 $ 532 Phoenix, AZ 2 Maya Linda 8222 N 19th Avenue, 1980 91% 360 $ 490 Phoenix, AZ 3 Mission Shadows 8111 N. 19th Avenue, 1986 88% 237 $ 642 Phoenix, AZ 4 The Fairways 2045 W Butler Drive, 1981 93% 160 $ 601 Phoenix, AZ 5 The Greens 8445 N 23rd Avenue, 1980 94% 136 $ 611 Phoenix, AZ 6 The Links 2121 W Royal Palm Road, 1980 95% 207 $ 613 Phoenix, AZ ---- --- ---- --------- Subj. Sands Point Apartments 8330 North 19th Avenue, 1985 73% 432 -- Pro Phoenix, Arizona ---- --- ---- --------- Forma
Compiled by CBRE 65 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH The comparables are all primary competitors located around Paradise Valley Mall. ANALYSIS OF RENT COMPARABLES RENT COMPARABLE ONE Hunter's Ridge is a 428-unit project that is located about one-half mile north of the subject near 19th Avenue and Dunlap Avenue. The project was developed in 1987 and contains two and three story walk-up units. Amenities include a pool, spa, fitness center, racquetball, playground, and covered parking. Units have eight foot ceilings, washers and dryers, and fireplaces on select units. The unit mix includes one and two-bedroom units. The current occupancy is 94%. Base rent ranges from $455 to $630. Water, sewer and trash removal are included in the base rent. Concessions are equivalent to one month free on a 12 month lease, prorated. No premium rent was reported. This comparable is similar to the subject and supports the mid-range of market rent. RENT COMPARABLE TWO This comparable represents a two and three story, 213,528 square foot, Class B garden apartment building which was completed in 1980, and is located at 8222 N 19th Avenue. The exterior walls are constructed of frame and stucco, and the project features covered parking, pools, spas, on-site laundry and a security patrol. The property is currently 91% leased and the unit mix includes studios, and one-, and two-bedroom units. Base rent is $399 to $650 per month, including water, sewer, and refuse removal. Concessions are reflected in monthly rental deductions that are already netted out of the quoted rates. This comparable is generally similar to the subject. RENT COMPARABLE THREE Mission Shadows is a Picerne project that is located along 19th Avenue north of Northern Avenue. Developed in 1986, the project contains 237 units. The density is 28.24 units per acre. Project amenities include a pool, spa, fitness center, on-site laundry, security gate, and covered parking. Units have eight foot ceilings, patios and balconies, but no washer or dryer hook-ups. The unit mix includes studio, one, and two-bedroom units. The current occupancy is 88%. Base rent ranges from $495 to $735 per unit. No utilities are included in the base rent. Concessions involve one month free on a 12-month lease. This comparable is also somewhat inferior to the subject. RENT COMPARABLE FOUR The Fairways is located along Butler Drive, about two blocks west of the subject. The project was developed in 1981 and contains 160 units. The buildings are two-story walk-ups and the unit mix includes studio through three bedroom units. Amenities include pool, spa, racquetball, basketball, covered parking and an on-site laundry. Units have patios and balconies and washer and dryer hook-ups. The current occupancy is 93%. Base rent ranges from $460 to $764. Specials involve 66 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH one month free rent pro rated over a 12 month lease. No premium rent was reported. This comparable is similar to the subject. RENT COMPARABLE FIVE The Greens is located along the El Caro golf course about one mile west of the subject. The project was developed in 1980 and contains 130 units. Project amenities consists of a pool, clubhouse, laundry and covered parking. Units have eight foot ceilings and patios and balconies, but lack washers and dryers. The current occupancy is 94% and base rental rates range from $575 to $715. Water, sewer and refuse removal are included in the base rent. Special involve one month free on a 12 month lease and an additional $20 to $40 off. This comparable is also similar to the subject. RENT COMPARABLE SIX The links is a 207-unit apartment project that is located on the El Caro golf course about one mile west of the subject. The project was developed in 1980 and contains studios, one, and two-bedroom units. The density is 28.77 units per acre. Amenities include a pool, spa, clubhouse, covered parking, on-site laundry and a security patrol. The current occupancy is 95%. Base rent is $460 to $700, and no utilities are included. Concessions are one month free on a 12 month lease, and premiums are $25 for views of the golf course. This comparable is similar to the subject. SUBJECT RENTAL INFORMATION The following table depicts the subject's unit mix and rental rates. SUBJECT RENTAL INFORMATION
No. of Unit Quoted Rent Type Units Size (SF) Rents Per SF - ----------------- ------ -------- --------- ------------ 1 BR, 1 BA 96 597 SF $ 499 $ 0.84 1 BR, 1 BA 72 678 SF $ 533 $ 0.79 1 BR, 1 BA 48 732 SF $ 577 $ 0.79 1 BR, 1 BA 48 782 SF $ 631 $ 0.81 2 BR, 1 BA 48 863 SF $ 643 $ 0.75 2 BR, 2 BA 36 951 SF $ 686 $ 0.72 2 BR, 2 BA 48 999 SF $ 686 $ 0.69 2 BR, 2 BA 36 1,040 SF $ 708 $ 0.68 Total/Average: 432 787 SF $ 598 $ 0.76 Compiled by CBRE
The rental rates in the previous table are base rental rates prior to premiums and concessions. Current concessions are quoted as one month free on a 12 month lease. 67 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH ESTIMATE OF MARKET RENT In order to estimate the market rates for the various floor plans, the subject unit types have been compared with similar units in the comparable projects. The following is a discussion of each unit type. ONE-BEDROOM UNITS SUMMARY OF COMPARABLE RENTALS ONE BEDROOM UNITS
RENTAL RATES COMPARABLE PLAN TYPE SIZE $/MO. $/SF - ----------------- --------------------- ------ ----- ------ Mission Shadows 1 BR, 1 BA 444 SF $ 520 $ 1.17 Hunter's Ridge 1 BR, 1 BA 465 SF $ 455 $ 0.98 Hunter's Ridge 1 BR, 1 BA 555 SF $ 470 $ 0.85 Maya Linda 1 BR, 1 BA 555 SF $ 475 $ 0.86 Maya Linda 1 BR, 1 BA 579 SF $ 490 $ 0.85 SUBJECT 1 BR, 1 BA APACHE 597 SF $ 499 $ 0.84 The Fairways 1 BR, 1 BA 600 SF $ 530 $ 0.88 The Greens 1 BR, 1 BA golf cour 606 SF $ 575 $ 0.95 Mission Shadows 1 BR, 1 BA 614 SF $ 590 $ 0.96 The Greens 1 BR, 1 BA 625 SF $ 575 $ 0.92 Mission Shadows 1 BR, 1 BA 662 SF $ 610 $ 0.92 SUBJECT 1 BR, 1 BA MOHAVE 678 SF $ 533 $ 0.79 Hunter's Ridge 1 BR, 1 BA 683 SF $ 535 $ 0.78 The Links 1 BR, 1.5 BA Loft 725 SF $ 625 $ 0.86 SUBJECT 1 BR, 1 BA MESQUITE 732 SF $ 577 $ 0.79 The Links 1 BR, 1 BA Flat 742 SF $ 535 $ 0.72 SUBJECT 1 BR, 1 BA SAGUARO 782 SF $ 631 $ 0.81
Compiled by CBRE The subject's quoted rental rates are within the range indicated by the rent comparables. The subject's rent roll indicates that a majority of the occupied one-bedroom units are leased at or below the quoted rates due to recent rental increases and specials. Considering the available data, monthly market rent for the subject units is estimated at the quoted rates. 68 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH TWO-BEDROOM UNITS SUMMARY OF COMPARABLE RENTALS TWO BEDROOM UNITS
RENTAL RATES COMPARABLE PLAN TYPE SIZE $/MO. $/SF - ------------------ ------------------------- -------- ----- ------ Hunter's Ridge 2 BR, 1.5 BA 792 SF $ 585 $ 0.74 Maya Linda 2 BR, 1 BA 799 SF $ 625 $ 0.78 The Fairways 2 BR, 1 BA 829 SF $ 620 $ 0.75 Mission Shadows 2 BR, 2 BA 852 SF $ 715 $ 0.84 The Greens 2 BR, 1.5 BA 861 SF $ 675 $ 0.78 SUBJECT 2 BR, 1 BA DESERT WILLOW 863 SF $ 643 $ 0.75 Maya Linda 2 BR, 2 BA 879 SF $ 650 $ 0.74 The Fairways 2 BR, 2 BA 895 SF $ 694 $ 0.78 Mission Shadows 2 BR, 2 BA 901 SF $ 735 $ 0.82 The Greens 2 BR, 2 BA 904 SF $ 715 $ 0.79 Hunter's Ridge 2 BR, 2 BA 911 SF $ 630 $ 0.69 The Links 2 BR, 1 BA Flat 918 SF $ 650 $ 0.71 Mission Shadows 2 BR, 2 BA 934 SF $ 735 $ 0.79 SUBJECT 2 BR, 2 BA JOSHUA 951 SF $ 686 $ 0.72 SUBJECT 2 BR, 2 BA OCOTILLO 999 SF $ 686 $ 0.69 SUBJECT 2 BR, 2 BA PALO VERDE 1,040 SF $ 708 $ 0.68 The Links 2 BR, 2 BA Flat 1,084 SF $ 700 $ 0.65
Compiled by CBRE The subject's quoted rental rates are within the range indicated by the rent comparables. The subject's rent roll indicates that a majority of the occupied two-bedroom units are leased at or below the quoted rates due to recent price increases and specials. Considering the available data, monthly market rent for the subject units is reconciled at the quoted rates. MARKET RENT CONCLUSIONS Based on the foregoing analysis and discussion, the following is the estimate of potential rental income for the subject: 69 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH MARKET RENT CONCLUSIONS
No. Unit Monthly Rent Annual Rent Annual Units Unit Type Size Total SF $/Unit $/SF PRI $/Unit $/SF Total - ----- ---------- -------- ---------- ------ -------- ---------- --------- -------- ----------- 96 1 BR, 1 BA 597 SF 57,312 SF $ 499 $ 0.84 $ 47,904 $ 5,988 $ 10.03 $ 574,848 72 1 BR, 1 BA 678 SF 48,816 SF $ 533 $ 0.79 $ 38,376 $ 6,396 $ 9.43 $ 460,512 48 1 BR, 1 BA 732 SF 35,136 SF $ 577 $ 0.79 $ 27,696 $ 6,924 $ 9.46 $ 332,352 48 1 BR, 1 BA 782 SF 37,536 SF $ 631 $ 0.81 $ 30,288 $ 7,572 $ 9.68 $ 363,456 48 2 BR, 1 BA 863 SF 41,424 SF $ 643 $ 0.75 $ 30,864 $ 7,716 $ 8.94 $ 370,368 36 2 BR, 2 BA 951 SF 34,236 SF $ 686 $ 0.72 $ 24,696 $ 8,232 $ 8.66 $ 296,352 48 2 BR, 2 BA 999 SF 47,952 SF $ 686 $ 0.69 $ 32,928 $ 8,232 $ 8.24 $ 395,136 36 2 BR, 2 BA 1,040 SF 37,440 SF $ 708 $ 0.68 $ 25,488 $ 8,496 $ 8.17 $ 305,856 - ---- -------- ---------- ----- ------ ---------- --------- -------- ----------- 432 787 SF 339,852 SF $ 598 $ 0.76 $ 258,240 $ 7,173 $ 9.12 $ 3,098,880 - ---- -------- ---------- ----- ------ ---------- --------- -------- -----------
Compiled by CBRE RENT ADJUSTMENTS Rent adjustments are sometimes necessary to account for differences in rental rates applicable to different units within similar floor plans due to items such as location within the property, view, and level of amenities. These rental adjustments may be in the form of rent premiums or rent discounts. As noted, the rental rates for some of the subject's units vary depending upon floor height, views, and the presence of microwave ovens and/or fireplaces. Management is quoting and receiving $10 rental premiums for third story units with fireplaces and vaulted ceilings. This premium is in line with market rates and is therefore modeled as additional rental income in this analysis (144 units x $10 per month x 12 months = $17,280). RENT ROLL ANALYSIS The rent roll analysis serves as a crosscheck to the estimate of market rent for the subject. The collections shown on the rent roll include rent premiums and/or discounts. RENT ROLL ANALYSIS
Total Total Revenue Component Monthly Rent Annual Rent - ------------------------------------------ ------------ ----------- 315 Occupied Units at Contract Rates $ 191,842 $ 2,302,104 117 Vacant Units at Market Rates $ 68,604 $ 823,248 ----------- ----------- 432 Total Units @ Contract Rent $ 260,446 $ 3,125,352 432 Total Units @ Market Rent $ 259,680 $ 3,116,160
Compiled by CBRE The rent roll is skewed because there are so many vacant units modeled at market rent. However, there is a general correlation between the rent roll and our estimate of market rent. 70 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH POTENTIAL RENTAL INCOME CONCLUSION Within this analysis, potential rental income is estimated based upon the forward-looking market rental rates over the next twelve months. This method of calculating rental income is most prevalent in the local market and is consistent with the method used to derive overall capitalization rates from the comparable sales data. In estimating the subject's pro forma operating data, the actual operating history and budgets have been analyzed. The following table presents the available operating data history for the subject. OPERATING HISTORY
Trailing 12 2005 YEAR-OCCUPANCY 2003 82% 2004 87% (3/04 -2/05) 91% Budget 85% - -------------- ---- --- ---- --- ------------ --- ------ --- Total $/Unit Total $/Unit Total $/Unit Total $/Unit ----------- -------- ----------- -------- -------------- -------- ----------- -------- INCOME Rental Income $ 2,218,495 $ 5,135 $ 2,243,888 $ 5,194 $ 2,215,236 $ 5,128 $ 2,371,126 $ 5,489 Other Income 247,306 572 334,248 774 298,904 692 235,843 546 RUBS Income 84,850 196 130,769 303 134,737 312 145,200 336 ----------- -------- ----------- -------- -------------- -------- ----------- -------- Effective Gross Income $ 2,550,651 $ 5,904 $ 2,708,905 $ 6,271 $ 2,648,877 $ 6,132 $ 2,752,169 $ 6,371 EXPENSES Real Estate Taxes $ 204,028 $ 472 $ 199,570 $ 462 $ 199,416 $ 462 $ 205,537 $ 476 Property Insurance 71,010 164 76,035 176 75,081 174 77,042 178 Utilities 228,015 528 243,127 563 241,442 559 271,385 628 Repair and Maintenance 71,257 165 56,307 130 70,889 164 65,713 152 Apartment Turnover 107,376 249 100,730 233 104,295 241 117,293 272 Contract Services 71,560 166 64,942 150 75,154 174 91,164 211 Advertising and Promotion 103,188 239 91,588 212 91,294 211 82,265 190 Administrative 67,540 156 69,849 162 70,331 163 73,682 171 Payroll 405,017 938 486,306 1,126 476,398 1,103 420,896 974 Management Fee 124,732 289 132,397 306 129,922 301 125,847 291 Reserves for Replacement 86,400 200 86,400 200 86,400 200 86,400 200 ----------- -------- ----------- -------- -------------- -------- ----------- -------- Operating Expenses $ 1,540,123 $ 3,565 $ 1,607,251 $ 3,720 $ 1,620,622 $ 3,751 $ 1,617,224 $ 3,744 =========== ======== =========== ======== ============== ======== =========== ======== NET OPERATING INCOME $ 1,010,528 $ 2,339 $ 1,101,654 $ 2,550 $ 1,028,255 $ 2,380 $ 1,134,945 $ 2,627
Source: Operating statements An adjustment for replacement reserves was made to the historical figures to facilitate comparison with the subject's pro forma. LOSS TO LEASE Loss-to-lease occurs because there are leases in place at the property that are below the current quoted and/or market lease rates. That is, the subject will never attain 100% of its potential market rents at any given time because there are always existing leases in place at lower rates. As well, management often allows tenants to renew for less than the full market rate, and in turn, the landlord foregoes the cost of painting and redecorating prior to re-leasing the unit. The loss to lease associated with the subject property is estimated at 1.50% of gross rental income. This method of calculating rental income is most prevalent in the local market and is consistent with the method used to derive overall capitalization rates from the comparable sales data. 71 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH RENT CONCESSIONS Rent concessions are currently prevalent in the local market in the form of free rent, reduced move-in costs and pro rated discounts. The subject's quoted concessions are basically 8%, or one month free on a 12 month lease. Trailing 12 month concessions were 7% of PRI and concessions for 2004 were the same rate. However, given the physical occupancy challenges of the subject, we have modeled a long term concession rate of 8.00% for the subject. VACANCY & COLLECTION LOSS The subject's is currently 72.9% occupied. Meanwhile, the rent comparables average 92.5%, the submarket averages 92.0%, and the Phoenix metropolitan area averages 92.0%. The following table summarizes the historical physical occupancy within the subject according to the financial statements: OCCUPANCY Year % PGI - ------------------------ ----- 2003 82% 2004 87% Trailing 12 (3/04 -2/05) 91% 2005 Budget 85% CBRE ESTIMATE 88% ----
Compiled by CBRE Based upon the recent history, we have estimated the subject's stabilized physical vacancy at 12.0%. In addition, we have modeled a 4.0% collection loss in our analysis. The subject has consistently generated a 3% to 7% collection loss expense and 3.4% is reflected in the 2005 budget. OTHER INCOME Other income is supplemental to that derived from leasing of the improvements. This includes categories such as forfeited deposits, vending machines, late charges, etc. The subject's ancillary income is detailed as follows: OTHER INCOME
Year Total $/Unit - ------------------------- ---------- -------- 2003 $ 247,306 $ 572 2004 $ 334,248 $ 774 Trailing 12 (3/04 -2/05) $ 298,904 $ 692 2005 Budget $ 235,843 $ 546 CBRE ESTIMATE $ 230,000 $ 532
Compiled by CBRE 72 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH The subject's other income amounts have been skewed upward by high late fees and lease-buyout fees. As the subject moves into a stabilized level of operations, these forms of income will be reduced. Therefore, the budget has been emphasized in the pro forma. RUBS INCOME The subject property includes a RUBS program (Ratio Utility Billing System), whereby a portion of the utility expense is shared by tenants and reimbursed to the landlord on a pro rata basis. The subject's RUBS income is detailed as follows: RUBS INCOME
Year Total $/Unit - ------------------------- ---------- ------- 2003 $ 84,850 $ 196 2004 $ 130,769 $ 303 Trailing 12 (3/04 -2/05) $ 134,737 $ 312 2005 Budget $ 145,200 $ 336 CBRE ESTIMATE $ 145,000 $ 336
Compiled by CBRE The budget is consistent with the recent history of the subject and has therefore been emphasized in the pro forma. EFFECTIVE GROSS INCOME The subject's effective gross income is detailed as follows: EFFECTIVE GROSS INCOME
Year Total % Change - ------------------------- ------------ -------- 2003 $ 2,550,651 -- 2004 $ 2,708,905 6% Trailing 12 (3/04 -2/05) $ 2,648,877 -2% 2005 Budget $ 2,752,169 4% CBRE ESTIMATE $ 2,743,905 0%
Compiled by CBRE Our pro forma estimate is approximately 3% higher than the most recent full year and is within 1% of the 2005 budget. Both benchmarks serve as reasonableness tests for out conclusion. OPERATING EXPENSE ANALYSIS The following subsections represent the analysis for the pro forma estimate of each category of the subject's stabilized expenses. 73 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH EXPENSE COMPARABLES The following table summarizes expenses obtained from recognized industry publications and/or comparable properties. EXPENSE COMPARABLES
Comparable Number 1 2 3 ----------- ------------ ----------- Location Phoenix MSA Phoenix MSA Phoenix MSA Units 250 548 273 GLA (SF) 235,000 470,000 193,000 Expense Year 2004 2004 2004 Effective Gross Income $ 2,108,815 $ 8,435 $ 3,155,905 $ 5,759 $ 1,783,497 $ 6,533
Expenses Total $/Unit Total $/Unit Total $/Unit ------------ ----------- ------------ ------------ ----------- ----------- Real Estate Taxes $ 161,306 $ 645 $ 229,128 $ 418 $ 126,564 $ 464 Property Insurance 44,220 177 136,302 249 28,392 104 Utilities 123,988 496 384,770 702 117,246 429 Repair and Maintenance 80,879 324 283,454 517 - - Apartment Turnover - - - - 120,054 440 Contract Services 56,879 228 105,901 193 34,851 128 Advertising and Promotion 48,975 196 103,340 189 49,791 182 Administrative 29,985 120 66,202 121 23,463 86 Payroll 228,418 914 510,328 931 266,115 975 Management Fee 83,295 333 142,015 259 71,439 262 (as a % of EGI) 3.9% 4.5% 4.0% Reserves for Replacement 62,500 250 109,600 200 58,056 213 ------------ ----------- ------------ ------------ ----------- ----------- Operating Expenses $ 920,445 $ 3,682 $ 2,071,040 $ 3,779 $ 895,971 $ 3,282 Operating Expense Ratio 43.6% 65.6% 50.2%
Source: Actual Operating Statements and IREM REAL ESTATE TAXES The real estate taxes for the subject were previously discussed. The subject's expense is detailed as follows: REAL ESTATE TAXES
Year Total $/Unit - -------------------------- ---------- ------- 2003 $ 204,028 $ 472 2004 $ 199,570 $ 462 Trailing 12 (3/04 -2/05) $ 199,416 $ 462 2005 Budget $ 205,537 $ 476 Expense Comparable 1 N/A $ 645 Expense Comparable 2 N/A $ 418 Expense Comparable 3 N/A $ 464 CBRE ESTIMATE $ 199,245 $ 461
Compiled by CBRE 74 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH The subject's recent historical and budgeted amounts are similar and reflective of the historical assessment of the subject. Our estimate is based on the current assessment and 2004 tax rate, and is consistent with other properties operating in the area that were summarized in the tax and assessment section of the report. PROPERTY INSURANCE Property insurance expenses typically include fire and extended coverage and owner's liability coverage. The subject's expense is detailed as follows: PROPERTY INSURANCE
Year Total $/Unit - -------------------------- ---------- -------- 2003 $ 71,010 $ 164 2004 $ 76,035 $ 176 Trailing 12 (3/04 -2/05) $ 75,081 $ 174 2005 Budget $ 77,042 $ 178 Expense Comparable 1 N/A $ 177 Expense Comparable 2 N/A $ 249 Expense Comparable 3 N/A $ 104 CBRE ESTIMATE $ 77,760 $ 180
Compiled by CBRE The most recent full year is consistent with the mid-point of the expense comparables and we have therefore concluded the subject's pro forma estimate at the mid-point of the typical range. Our estimate is consistent with other properties operating in the area and generally supported by the available historical and budgeted financial data. UTILITIES Utility expenses include electricity, natural gas, water, trash and sewer. The subject's expense is detailed as follows: 75 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH UTILITIES
Year Total $/Unit - ------------------------ ---------- -------- 2003 $ 228,015 $ 528 2004 $ 243,127 $ 563 Trailing 12 (3/04 -2/05) $ 241,442 $ 559 2005 Budget $ 271,385 $ 628 Expense Comparable 1 N/A $ 496 Expense Comparable 2 N/A $ 702 Expense Comparable 3 N/A $ 429 CBRE ESTIMATE $ 270,000 $ 625
Compiled by CBRE The subject's utilities are gross expenses prior to any reimbursements. The total expense trended consistently from 2003 to 2004, but management is projecting a significant increase in 2005. The pro forma has been reconciled with emphasis on the budget and the conclusion falls towards the midpoint of the range supported by the expense comparables. REPAIRS AND MAINTENANCE Repairs and maintenance expenses typically include routine on-site maintenance and repairs, as well as replacements of non-capital items. The subject's expense is detailed as follows: REPAIR AND MAINTENANCE
Year Total $/Unit - ------------------------ --------- -------- 2003 $ 71,257 $ 165 2004 $ 56,307 $ 130 Trailing 12 (3/04 -2/05) $ 70,889 $ 164 2005 Budget $ 65,713 $ 152 Expense Comparable 1 N/A $ 324 Expense Comparable 2 N/A $ 517 Expense Comparable 3 N/A $ 0 CBRE ESTIMATE $ 69,120 $ 160
Compiled by CBRE The subject's repair and maintenance expenses have trended from $130 to $164 per unit and the current budget is $152 per unit. The pro forma has been reconciled between the range supported by the comparables and the subject's 2005 budget. APARTMENT TURNOVER The subject's turnover expenses are summarized as follows: 76 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH APARTMENT TURNOVER
Year Total $/Unit - ------------------------- ---------- -------- 2003 $ 107,376 $ 249 2004 $ 100,730 $ 233 Trailing 12 (3/04 -2/05) $ 104,295 $ 241 2005 Budget $ 117,293 $ 272 Expense Comparable 1 N/A $ 0 Expense Comparable 2 N/A $ 0 Expense Comparable 3 N/A $ 440 CBRE ESTIMATE $ 118,800 $ 275
Compiled by CBRE The most recent years of operation support a range of $233 to $249 per unit for turnover expenses. The pro forma has been reconciled towards the upper portion of this range at $275 per unit. CONTRACT SERVICES Contract services typically includes all outside landscaping and grounds maintenance service contracts and the cost of landscaping supplies, as well as security services. The subject's expense is detailed as follows: CONTRACT SERVICES
Year Total $/Unit - ------------------------- --------- ------- 2003 $ 71,560 $ 166 2004 $ 64,942 $ 150 Trailing 12 (3/04 -2/05) $ 75,154 $ 174 2005 Budget $ 91,164 $ 211 Expense Comparable 1 N/A $ 228 Expense Comparable 2 N/A $ 193 Expense Comparable 3 N/A $ 128 CBRE ESTIMATE $ 86,400 $ 200
Compiled by CBRE The most recent full years of operations have trended from $150 to $174 per unit and the budget is $211 per unit. The expense comparables support a range of $128 to $228 per unit. Based upon this range, the pro forma is reconciled at $200 per unit. ADVERTISING AND PROMOTION Advertising and promotion expenses typically include all costs associated with the promotion of the subject property including advertisements in local publications, trade publications, yellow pages, et cetera. The subject's expense is detailed as follows: 77 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH ADVERTISING AND PROMOTION
Year Total $/Unit - ------------------------- ---------- ------- 2003 $ 103,188 $ 239 2004 $ 91,588 $ 212 Trailing 12 (3/04 -2/05) $ 91,294 $ 211 2005 Budget $ 82,265 $ 190 Expense Comparable 1 N/A $ 196 Expense Comparable 2 N/A $ 189 Expense Comparable 3 N/A $ 182 CBRE ESTIMATE $ 97,200 $ 225
Compiled by CBRE The pro forma has been reconciled based upon the most recent full year of operations and the current budget. Although the market is improving, the subject has struggled with below-market occupancy over the last several years. Therefore, conclusion is reconciled somewhat above the recent full-year levels for the subject. ADMINISTRATIVE Administrative expenses typically include legal costs, accounting, telephone, supplies, furniture, temporary help and items that are not provided by off-site management. The subject's expense is detailed as follows: ADMINISTRATIVE
Year Total $/Unit - ------------------------- --------- -------- 2003 $ 67,540 $ 156 2004 $ 69,849 $ 162 Trailing 12 (3/04 -2/05) $ 70,331 $ 163 2005 Budget $ 73,682 $ 171 Expense Comparable 1 N/A $ 120 Expense Comparable 2 N/A $ 121 Expense Comparable 3 N/A $ 86 CBRE ESTIMATE $ 64,800 $ 150
Compiled by CBRE This expense category has trended from $156 to $163 per unit per year for the subject, and the budget is $171 per unit. The comparables support a range of $86 to $120. The pro forma is based reconciled between the level supported by the comparables and the subject's current budget. 78 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH PAYROLL Payroll expenses typically include all payroll and payroll related items for all directly employed administrative personnel. Not included are the salaries or fees for off-site management firm personnel and services. The subject's expense is detailed as follows: PAYROLL
Year Total $/Unit - ------------------------- ---------- --------- 2003 $ 405,017 $ 938 2004 $ 486,306 $ 1,126 Trailing 12 (3/04 -2/05) $ 476,398 $ 1,103 2005 Budget $ 420,896 $ 974 Expense Comparable 1 N/A $ 914 Expense Comparable 2 N/A $ 931 Expense Comparable 3 N/A $ 975 CBRE ESTIMATE $ 432,000 $ 1,000
Compiled by CBRE Payroll expenses within the subject increased significantly in 2004. Payroll then trends downward through the 2005 budget. The pro forma is estimated based upon the expense comparables and the current budget. MANAGEMENT FEE Management expenses are typically negotiated as a percentage of collected revenues (effective gross income). The subject's expense is detailed as follows: MANAGEMENT FEE
Year Total % EGI - -------------------------- ---------- ------ 2003 $ 124,732 4.9% 2004 $ 132,397 4.9% Trailing 12 (3/04 -2/05) $ 129,922 4.9% 2005 Budget $ 125,847 4.6% CBRE ESTIMATE $ 109,756 4.0%
Compiled by CBRE Professional management fees in the local market range from 3.0% to 5.0% for comparable properties. Historically, the subject has incurred a 4.6% to 4.9% management fee; however, the project is managed by the owner. Given the subject's size and the competitiveness of the local market area, we believe an appropriate management expense for the subject would be towards the lower end of the range. 79 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH RESERVES FOR REPLACEMENT Reserves for replacement have been estimated based on discussions with knowledgeable market participants who indicate a range from $150 to $300 per unit for comparable properties. In this analysis, reserves of $200 per unit are modeled. OPERATING EXPENSE CONCLUSION The subject's expense is detailed as follows: OPERATING EXPENSES
Year Total $/Unit - ------------------------ ----------- -------- 2003 $ 1,540,123 $ 3,565 2004 $ 1,607,251 $ 3,720 Trailing 12 (3/04 -2/05) $ 1,620,622 $ 3,751 2005 Budget $ 1,617,224 $ 3,744 Expense Comparable 1 N/A $ 3,682 Expense Comparable 2 N/A $ 3,779 Expense Comparable 3 N/A $ 3,282 CBRE ESTIMATE $ 1,611,481 $ 3,730
Compiled by CBRE The subject's per unit operating expense pro forma is within the range supported by the expense comparables and is consistent with the recent operations of the subject. NET OPERATING INCOME CONCLUSION The subject's net operating income is detailed as follows: NET OPERATING INCOME
Year Total $/Unit - ------------------------ ------------ ---------- 2003 $ 1,010,528 $ 2,339 2004 $ 1,101,654 $ 2,550 Trailing 12 (3/04 -2/05) $ 1,028,255 $ 2,380 2005 Budget $ 1,134,945 $ 2,627 CBRE ESTIMATE $ 1,132,424 $ 2,621
Compiled by CBRE Our pro forma estimate is approximately 9% higher than the most recent full year due to recently implemented rental rate increases at the subject property, which are not reflected in the historical data. The pro forma estimate conforms very closely with the budget. 80 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH DIRECT CAPITALIZATION Direct capitalization is a method used to convert a single year's estimated stabilized net operating income into a value indication. The following subsections represent different techniques for deriving an overall capitalization rate for direct capitalization. COMPARABLE SALES The OARs confirmed for the comparable sales analyzed in the Sales Comparison Approach are as follows: COMPARABLE CAPITALIZATION RATES
Sale Sale Price Pro Forma Sale Date $/Unit Occupancy OAR - -------------- ------ ---------- --------- --------- 1 Aug-03 $ 39,757 95% 6.64% 2 Feb-04 $ 54,735 93% 7.01% 3 Sep-04 $ 49,825 90% 6.06% 4 Jan-05 $ 41,018 86% 4.83% 5 Mar-05 $ 54,255 86% 5.74% 6 Mar-05 $ 43,140 93% 7.00% - -------------- ------ ----- ---- INDICATED OAR: 84% 6.25% - -------------- ----- ----
Compiled by: CBRE The comparables support an overall range of 4.83% to 7.01%, with a downward trend over time (Comparable Six is skewed by a planned renovation/repositioning). The most recent comparables reflect overall rates that were derived from income in place. The subject's pro forma NOI is about 9% higher than the trailing 12 month figures, but is below the budget. Therefore, the OAR derived from the comparable sales is reconciled somewhat above the mid-point of the range. PUBLISHED INVESTOR SURVEYS The results of the most recent National Investor Survey, published by CBRE, are summarized in the following table. OVERALL CAPITALIZATION RATES
Investment Type OAR Range Average - --------------- ------------ ------- Apartments Class A 5.00% - 8.00% 6.07% Class B 5.00% - 8.00% 6.58% Class C 6.00% - 9.00% 7.37% ---- INDICATED OAR: 6.50% - -------------- ----
Source: CBRE National Investor Survey 81 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH The subject is considered to be a Class B property. The continued decline in interest rates in 2002 through 2005 had a significant impact on cap rates for investment grade properties due to the fact that most investors have been focusing on cash-on-cash returns. In other words, investors have been accepting a lower overall return due to the high equity return. There is a current lack of supply of product available for purchase in the real estate investment market. This lack of supply has exerted additional downward pressure on capitalization rates. In addition, the relatively poor performance of the stock market has also increased the supply of capital allocated to real estate investments. Although interest rates have increased recently, short and long-term interest rates remain low by historical standards, leading to an increase capital available from short and long-term cash equivalents into real estate investments. With regard to rates, we have heard from at least three sources independently that the various investor surveys are outdated by the time they are published. Due to these trends, the subject's OAR as derived from the most recent National Investor Survey has been reconciled somewhat below the mid-point of the range supported for Class B properties. BAND OF INVESTMENT The band of the investment technique has been utilized as a crosscheck to the foregoing techniques. The analysis is shown in the following table. BAND OF INVESTMENT
Mortgage Interest Rate 5.25% Mortgage Term (Amortization Period) 30 Years Mortgage Ratio (Loan-to-Value) 75% Mortgage Constant 0.06626 Equity Dividend Rate (EDR) 6.5% Mortgage Requirement 75% x 0.06626 = 0.04970 Equity Requirement 25% x 0.06500 = 0.01625 -------- ------- 100% 0.06595 INDICATED OAR: 6.60% - --------------
Compiled by: CBRE CAPITALIZATION RATE CONCLUSION The following table summarizes the OAR conclusions. 82 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH OVERALL CAPITALIZATION RATE - CONCLUSION
Source Indicated OAR - -------------------------- ------------- Comparable Sales 6.25% National Investor Survey 6.50% Band of Investment 6.60% CBRE ESTIMATE 6.25%
Compiled by: CBRE In concluding an overall capitalization rate for the subject, primary reliance has been placed upon the data obtained from the comparable sales and interviews with active market participants. This data tends to provide the most accurate depiction of both buyer's and seller's expectations within the market and the ranges indicated are relatively tight. Further secondary support for our conclusion is noted via both the CBRE National Investor Survey and the band of investment methodology. Considering the data presented, the concluded overall capitalization rate appears to be well supported in the local market. DIRECT CAPITALIZATION SUMMARY A summary of the direct capitalization of the subject at stabilized occupancy is illustrated in the following table. 83 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH DIRECT CAPITALIZATION SUMMARY
$/Unit/Yr Total --------- ------------ INCOME Potential Rental Income $7,213 $ 3,116,160 Less: Loss to Lease 1.50% (108) (46,742) Less: Concessions 8.00% (577) (249,293) Credit Loss 4.00% (261) (112,805) Vacancy 12.00% (783) (338,415) ------ ----------- NET RENTAL INCOME $5,484 $ 2,368,905 Other Income 532 230,000 RUBS Income 336 145,000 ------ ----------- EFFECTIVE GROSS INCOME $6,352 $ 2,743,905 EXPENSES Real Estate Taxes $ 461 $ 199,245 Property Insurance 180 77,760 Utilities 625 270,000 Repair and Maintenance 160 69,120 Apartment Turnover 275 118,800 Contract Services 200 86,400 Advertising and Promotion 225 97,200 Administrative 150 64,800 Payroll 1,000 432,000 Management Fee 4.00% 254 109,756 Reserves for Replacement 200 86,400 ------ ----------- OPERATING EXPENSES $3,730 $ 1,611,481 ------ ----------- OPERATING EXPENSE RATIO 58.73% NET OPERATING INCOME $2,621 $ 1,132,424 OAR /6.25% ----------- INDICATED STABILIZED VALUE $18,120,000 Lease-Up Discount (140,000) ----------- VALUE INDICATION $17,980,000 ROUNDED $18,000,000 VALUE PER UNIT $ 41,620
CAP RATE VALUE -------- ----------- MATRIX ANALYSIS 6.00% $18,733,700 6.25% $17,978,800 6.50% $17,281,900
Compiled by CBRE 84 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH DISCOUNTED CASH FLOW ANALYSIS The DCF assumptions concluded for the subject are summarized as follows: SUMMARY OF DISCOUNTED CASH FLOW ASSUMPTIONS GENERAL ASSUMPTIONS Start Date Apr-05 Terms of Analysis 10 Years Software Excel GROWTH RATE ASSUMPTIONS Income Growth 3.00% Expense Growth 3.00% Inflation (CPI) 3.00% Real Estate Tax Growth 3.00% MARKET RATES - YEAR 1 Average Rent ($/Unit/Yr.) $ 7,173 Total Operating Expenses ($/Unit/Yr.) $ 3,730 OCCUPANCY ASSUMPTIONS Current Occupancy 72.92% Stabilized Occupancy 88.00% Credit Loss 4.00% Stabilized Occupancy (w/Credit Loss) 84.00% Loss to Lease 1.5% Concessions 8.0% Estimated Lease-up Period 6 Months FINANCIAL ASSUMPTIONS Discount Rate 8.75% Terminal Capitalization Rate 7.00% OTHER ASSUMPTIONS Cost of Sale 2.00% Capital Expenses (Deferred Maintenance) $ 0
Compiled by CBRE GENERAL ASSUMPTIONS The DCF analysis utilizes a 10-year projection period with fiscal year inflation and discounting. This is consistent with current investor assumptions. The analysis is done with Excel software. GROWTH RATE ASSUMPTIONS The inflation and growth rates for the DCF analysis have been estimated by analyzing the expectations typically used by buyers and sellers in the local marketplace. Published investor surveys, an analysis of 85 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH the Consumer Price Index (CPI), as well as CBRE's survey of brokers and investors active in the local market form the foundation for the selection of the appropriate growth rates. SUMMARY OF GROWTH RATES
Investment Type Rent Expenses Inflation - --------------- ----- -------- --------- U.S. Bureau of Labor Statistics (CPI-U) 10-Year Snapshot Average as of Mar-05 2.47% Apartments Class A - Average 2.88% 2.96% 2.98% Class B - Average 3.02% 2.91% 2.98% Class C - Average 3.42% 2.83% 3.00% CBRE ESTIMATE 3.00% 3.00% 3.00%
Source: CBRE National Investor Survey & www.bls.gov The inflation and growth rates for the DCF analysis have been estimated by analyzing the expectations typically used by buyers and sellers active in the local marketplace. Published investor surveys, an analysis of the Consumer Price Index (CPI), as well as CBRE's survey of brokers and investors active in the local marketplace form the foundation for the selection of the appropriate growth rates. LEASING ASSUMPTIONS The previously concluded pro forma income and expenses have been utilized as the basis for Year 1 of the holding period. All subsequent years vary according to the growth rate assumptions applied to the Year 1 estimate. OCCUPANCY ASSUMPTIONS The occupancy rate over the holding period is based on the subject's estimated stabilized occupancy rate and estimated lease-up period to achieve a stabilized occupancy position. In anticipation of a reduction in concessions over the next several years, we have stepped down the effective vacancy rate over the first four years of analysis. FINANCIAL ASSUMPTIONS DISCOUNT RATE ANALYSIS Similar to overall capitalization rates, there has been a significant reduction in discount rates over the past several months. Once again, this is due to several factors. First, interest rates on commercial loans have dropped substantially over the past year. This has allowed investors to accept lower overall property yields, but still maintain acceptable equity yield rates. Secondly, the stock market volatility and lack of value appreciation, and lower interest rates have adversely impacted the returns on "safe" investment vehicles such as money market funds, certificates of deposit, etc. have resulted in 86 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH more funds being invested in real estate. In turn, this has caused discount rate to decline. The investment market appears to be reacting to this by accepting lower returns on real estate, which, in comparison to other investment vehicles, remain high. The results of the most recent National Investor Survey, published by CBRE, are summarized in the following table. DISCOUNT RATES
Investment Type Rate Range Average - --------------- -------------- ------- Apartments Class A 6.50% - 10.00% 8.15% Class B 6.50% - 9.50% 8.57% Class C 7.00% - 10.00% 9.17% CBRE ESTIMATE 8.75%
Source: CBRE National Investor Survey Based on discussions with some institutional clients, including RREEF, Prudential, UBS Investors, CalPERS, Teachers, CBRE Investors, etc., it appears that the market is continuing to get even more aggressive with regard to trading real estate. Part of what is driving this is that fund sponsors (the people supplying the money to be invested) are increasing the dollars they are allocating to real estate. Whereas the fund sponsors have historically allocated 6-8% of their overall fund to real estate, two sponsors have recently raised their allocations from 6% to 10%. The effect of just these two sizeable pension funds increasing their allocations is to put several hundred million more dollars out into the market chasing real estate deals. Some of the investment advisors mentioned that they literally don't know how they are going to get all of the money invested, but that it will for sure result increasing downward pressure on investment rates. The subject is a Class B project located in a fully developed market. Rent growth has been generally stagnant over the last several years, but there is reasonable expectations for an improvement in leasing and occupancy over the next several years. Given these trends, the subject's discount rate is reconciled towards the upper portion of the range supported by the National Investor Survey. The conclusion is consistent with the going in OAR and the long term growth rate in income and value. TERMINAL CAPITALIZATION RATE The reversionary value of the subject is based on an assumed sale at the end of the holding period based on capitalizing the Year 11 NOI at a terminal capitalization rate. Typically, for properties similar to the subject, terminal capitalization rates are 50 to 100 basis points higher than going-in capitalization rates (OARs). This is a result of the uncertainty of future economic conditions and the natural aging of the property. 87 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH TERMINAL CAPITALIZATION RATES
Investment Type Rate Range Average - --------------- -------------- ------- Apartments Class A 5.50% - 8.50% 6.64% Class B 5.50% - 8.25% 6.98% Class C 6.50% - 9.00% 7.96% CBRE ESTIMATE 7.00%
Source: CBRE National Investor Survey DISCOUNTED CASH FLOW CONCLUSION The DCF schedule(s) and value conclusions are depicted on the following page(s). 88 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH [CBRE LOGO] SANDS POINT APARTMENTS DISCOUNTED CASH FLOW ANALYSIS BEGINNING 04/05
YEAR 1 2 3 4 5 6 - ---- ------------- ------------- ------------- ------------- ------------- ------------- REVENUE Potential Rental Income $ 3,116,160 $ 3,209,645 $ 3,305,934 $ 3,405,112 $ 3,507,265 $ 3,612,483 Less: Loss to Lease ($ 46,742) ($ 48,145) ($ 49,589) ($ 51,077) ($ 52,609) ($ 54,187) Less: Concessions ($ 249,293) ($ 256,772) ($ 264,475) ($ 272,409) ($ 280,581) ($ 288,999) Credit Loss (112,805) (116,189) (119,675) (123,265) (126,963) (130,772) Vacancy (338,415) (348,567) (329,106) (308,163) (317,407) (326,930) Other Income 375,000 386,250 397,838 409,773 422,066 434,728 ------------ ------------ ------------ ------------ ------------ ------------ EFFECTIVE GROSS INCOME $ 2,743,905 $ 2,826,222 $ 2,940,928 $ 3,059,972 $ 3,151,770 $ 3,246,324 EXPENSES Real Estate Taxes $ 199,245 $ 205,222 $ 211,379 $ 217,720 $ 224,252 $ 230,980 Property Insurance 77,760 80,093 82,496 84,971 87,520 90,146 Utilities 270,000 278,100 286,443 295,036 303,887 313,004 Repair and Maintenance 69,120 71,194 73,330 75,530 77,796 80,130 Apartment Turnover 118,800 122,364 126,035 129,816 133,710 137,721 Contract Services 86,400 88,992 91,662 94,412 97,244 100,161 Advertising and Promotion 97,200 100,116 103,119 106,213 109,399 112,681 Administrative 64,800 66,744 68,746 70,808 72,932 75,120 Payroll 432,000 444,960 458,309 472,058 486,220 500,807 Management Fee 109,756 113,049 117,637 122,399 126,071 129,853 Reserves for Replacement 86,400 88,992 91,662 94,412 97,244 100,161 ------------ ------------ ------------ ------------ ------------ ------------ TOTAL EXPENSES $ 1,611,481 $ 1,659,826 $ 1,710,818 $ 1,763,375 $ 1,816,275 $ 1,870,764 ------------ ------------ ------------ ------------ ------------ ------------ NET INCOME $ 1,132,424 $ 1,166,396 $ 1,230,110 $ 1,296,597 $ 1,335,496 $ 1,375,560 ============ ============ ============ ============ ============ ============ ASSUMPTIONS: Income Growth N/A 3.00% 3.00% 3.00% 3.00% 3.00% Loss to Lease 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% Concessions 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% Credit Loss 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% Vacancy 12.00% 12.00% 11.00% 10.00% 10.00% 10.00% Tax Expense Growth N/A 3.00% 3.00% 3.00% 3.00% 3.00% Op. Expense Growth N/A 3.00% 3.00% 3.00% 3.00% 3.00% Management Fee 4.00% Cost of Sale 2.00% YEAR 7 8 9 10 REVERSION - ---- ------------- ------------- ------------- ------------- ------------- REVENUE Potential Rental Income $ 3,720,857 $ 3,832,483 $ 3,947,457 $ 4,065,881 $ 4,187,857 Less: Loss to Lease ($ 55,813) ($ 57,487) ($ 59,212) ($ 60,988) ($ 62,818) Less: Concessions ($ 297,669) ($ 306,599) ($ 315,797) ($ 325,270) ($ 335,029) Credit Loss (134,695) (138,736) (142,898) (147,185) (151,600) Vacancy (336,738) (346,840) (357,245) (367,962) (379,001) Other Income 447,770 461,203 475,039 489,290 503,969 ------------ ------------ ------------ ------------ ------------ EFFECTIVE GROSS INCOME $ 3,343,713 $ 3,444,025 $ 3,547,345 $ 3,653,765 $ 3,763,378 EXPENSES Real Estate Taxes $ 237,909 $ 245,046 $ 252,397 $ 259,969 $ 267,768 Property Insurance 92,850 95,636 98,505 101,460 104,504 Utilities 322,394 332,066 342,028 352,289 362,858 Repair and Maintenance 82,534 85,010 87,560 90,187 92,893 Apartment Turnover 141,853 146,109 150,492 155,007 159,657 Contract Services 103,166 106,261 109,449 112,732 116,114 Advertising and Promotion 116,061 119,543 123,129 126,823 130,628 Administrative 77,374 79,695 82,086 84,549 87,085 Payroll 515,831 531,306 547,245 563,662 580,572 Management Fee 133,749 137,761 141,894 146,151 150,535 Reserves for Replacement 103,166 106,261 109,449 112,732 116,114 ------------ ------------ ------------ ------------ ------------ TOTAL EXPENSES $ 1,926,887 $ 1,984,694 $ 2,044,234 $ 2,105,561 $ 2,168,728 ------------ ------------ ------------ ------------ ------------ NET INCOME $ 1,416,826 $ 1,459,331 $ 1,503,111 $ 1,548,205 $ 1,594,650 ============ ============ ============ ============ ============ ASSUMPTIONS: Income Growth 3.00% 3.00% 3.00% 3.00% 3.00% Loss to Lease 1.50% 1.50% 1.50% 1.50% 1.50% Concessions 8.00% 8.00% 8.00% 8.00% 8.00% Credit Loss 4.00% 4.00% 4.00% 4.00% 4.00% Vacancy 10.00% 10.00% 10.00% 10.00% 10.00% Tax Expense Growth 3.00% 3.00% 3.00% 3.00% 3.00% Op. Expense Growth 3.00% 3.00% 3.00% 3.00% 3.00% Management Fee Cost of Sale
EGI, EXPENSES, AND NOI [BAR CHART] SALE / YIELD MATRIX Terminal Cap Rate
6.75% 7.00% 7.25% ---------- ---------- ---------- IRR 8.50% 18,870,536 18,504,830 18,164,345 8.75% 18,536,664 18,179,279 17,846,541 9.00% 18,210,377 17,861,104 17,535,920
RECONCILED VALUE INDICATION (ROUNDED): $ 18,180,000 LEASE-UP ($ 140,000) ------------ AS-IS VALUE INDICATION (ROUNDED): $ 18,040,000 $41,759/Unit
89 SANDS POINT APARTMENTS INCOME CAPITALIZATION APPROACH CONCLUSION OF INCOME CAPITALIZATION APPROACH The conclusions via the valuation methods employed for this approach are as follows: INCOME CAPITALIZATION APPROACH VALUES
As Is on As Stabilized on April 21, 2005 April 21, 2005 -------------- ---------------- Direct Capitalization Method $18,000,000 $18,140,000 Discounted Cash Flow Analysis $18,040,000 $18,180,000 ----------- ----------- RECONCILED VALUE $18,000,000 $18,150,000 ----------- -----------
Compiled by CBRE Primary emphasis has been placed on Direct Capitalization. This method is considered to best reflect the actions of buyers and sellers currently active in this market. 90 SANDS POINT APARTMENTS RECONCILIATION OF VALUE RECONCILIATION OF VALUE The value indications from the approaches to value are summarized as follows: SUMMARY OF VALUE CONCLUSIONS
As Is on As Stabilized on April 21, 2005 April 21, 2005 -------------- ---------------- Sales Comparison Approach $18,360,000 $18,500,000 Income Capitalization Approach $18,000,000 $18,140,000 ----------- ----------- Reconciled Value $18,000,000 $18,150,000 ----------- -----------
Compiled by CBRE The Cost Approach typically gives a reliable value indication when there is evidence for the replacement cost estimate and when there is minimal depreciation contributing to a loss in value which must be estimated. Neither factor applies to the subject. In terms of modeling investor behavior the Cost Approach is considered to be the least reliable method of valuation for the subject. Therefore, the Cost Approach was not applied in this analysis. In the Sales Comparison Approach, the subject property is compared to similar properties that have been sold recently or for which listing prices or offers are known. The sales used in this analysis are considered fairly comparable to the subject, and the required adjustments were based on reasonable and well supported rationale. In addition, market participants are currently analyzing purchase prices on investment properties as they relate to available substitutes in the market. Therefore, the Sales Comparison Approach is considered to provide a reliable value indication and has been given emphasis in the final value reconciliation. The Income Capitalization Approach is applicable to the subject property since it is an income producing property leased in the open market. This technique best reflects the actions and motivation of the most probable buyer of the subject, and this technique most closely corresponds with the current sale of the subject. Therefore, the Income Capitalization Approach is considered to be a reasonable and substantiated value indicator and has been heavily weighted in the final value estimate. Based on the foregoing, the market value of the subject has been concluded as follows: MARKET VALUE CONCLUSION
APPRAISAL PREMISE INTEREST APPRAISED EXPOSURE DATE OF VALUE VALUE CONCLUSION - ----------------- ------------------ -------------- -------------- ---------------- As Is Fee Simple Estate 6 to 12 months April 21, 2005 $18,000,000 As If Stabilized Fee Simple Estate 6 to 12 months April 21, 2005 $18,150,000
Compiled by CBRE 91 SANDS POINT APARTMENTS RECONCILIATION OF VALUE SPECIAL ASSUMPTIONS None noted. 92 SANDS POINT APARTMENTS ASSUMPTIONS AND LIMITING CONDITIONS ASSUMPTIONS AND LIMITING CONDITIONS 1. Unless otherwise specifically noted in the body of the report, it is assumed that title to the property or properties appraised is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect marketability or value. CBRE is not aware of any title defects nor has it been advised of any unless such is specifically noted in the report. CBRE, however, has not examined title and makes no representations relative to the condition thereof. Documents dealing with liens, encumbrances, easements, deed restrictions, clouds and other conditions that may affect the quality of title have not been reviewed. Insurance against financial loss resulting in claims that may arise out of defects in the subject property's title should be sought from a qualified title company that issues or insures title to real property. 2. Unless otherwise specifically noted in the body of this report, it is assumed: that the existing improvements on the property or properties being appraised are structurally sound, seismically safe and code conforming; that all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; that the roof and exterior are in good condition and free from intrusion by the elements; that the property or properties have been engineered in such a manner that the improvements, as currently constituted, conform to all applicable local, state, and federal building codes and ordinances. CBRE professionals are not engineers and are not competent to judge matters of an engineering nature. CBRE has not retained independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore, makes no representations relative to the condition of improvements. Unless otherwise specifically noted in the body of the report: no problems were brought to the attention of CBRE by ownership or management; CBRE inspected less than 100% of the entire interior and exterior portions of the improvements; and CBRE was not furnished any engineering studies by the owners or by the party requesting this appraisal. If questions in these areas are critical to the decision process of the reader, the advice of competent engineering consultants should be obtained and relied upon. It is specifically assumed that any knowledgeable and prudent purchaser would, as a precondition to closing a sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems. Structural problems and/or building system problems may not be visually detectable. If engineering consultants retained should report negative factors of a material nature, or if such are later discovered, relative to the condition of improvements, such information could have a substantial negative impact on the conclusions reported in this appraisal. Accordingly, if negative findings are reported by engineering consultants, CBRE reserves the right to amend the appraisal conclusions reported herein. 3. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the property was not observed by the appraisers. CBRE has no knowledge of the existence of such materials on or in the property. CBRE, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired. We have inspected, as thoroughly as possible by observation, the land; however, it was impossible to personally inspect conditions beneath the soil. Therefore, no representation is made as to these matters unless specifically considered in the appraisal. 4. All furnishings, equipment and business operations, except as specifically stated and typically considered as part of real property, have been disregarded with only real property being considered in the report unless otherwise stated. Any existing or proposed improvements, on or off-site, as well as any alterations or repairs considered, are assumed to be completed in a workmanlike manner according to standard practices based upon the information submitted to CBRE This report may be subject to amendment upon re-inspection of the subject property subsequent to repairs, modifications, alterations and completed new construction. Any estimate of Market Value is as of the date indicated; based upon the information, conditions and projected levels of operation. 5. It is assumed that all factual data furnished by the client, property owner, owner's representative, or persons designated by the client or owner to supply said data are accurate and correct unless otherwise specifically noted in the appraisal report. Unless otherwise specifically noted in the appraisal report, CBRE has no reason to believe that any of the data furnished contain any material error. Information and data referred to in this paragraph include, without being limited to, numerical street addresses, lot and block numbers, Assessor's Parcel Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any material error in any of the above data could have a substantial impact on the conclusions reported. Thus, CBRE reserves the right to amend conclusions reported if made aware of any such error. Accordingly, the client-addressee should carefully review 93 SANDS POINT APARTMENTS ASSUMPTIONS AND LIMITING CONDITIONS all assumptions, data, relevant calculations, and conclusions within 30 days after the date of delivery of this report and should immediately notify CBRE of any questions or errors. 6. The date of value to which any of the conclusions and opinions expressed in this report apply, is set forth in the Letter of Transmittal. Further, that the dollar amount of any value opinion herein rendered is based upon the purchasing power of the American Dollar on that date. This appraisal is based on market conditions existing as of the date of this appraisal. Under the terms of the engagement, we will have no obligation to revise this report to reflect events or conditions which occur subsequent to the date of the appraisal. However, CBRE will be available to discuss the necessity for revision resulting from changes in economic or market factors affecting the subject. 7. CBRE assumes no private deed restrictions, limiting the use of the subject property in any way. 8. Unless otherwise noted in the body of the report, it is assumed that there are no mineral deposit or subsurface rights of value involved in this appraisal, whether they be gas, liquid, or solid. Nor are the rights associated with extraction or exploration of such elements considered unless otherwise stated in this appraisal report. Unless otherwise stated it is also assumed that there are no air or development rights of value that may be transferred. 9. CBRE is not aware of any contemplated public initiatives, governmental development controls, or rent controls that would significantly affect the value of the subject. 10. The estimate of Market Value, which may be defined within the body of this report, is subject to change with market fluctuations over time. Market value is highly related to exposure, time promotion effort, terms, motivation, and conclusions surrounding the offering. The value estimate(s) consider the productivity and relative attractiveness of the property, both physically and economically, on the open market. 11. Any cash flows included in the analysis are forecasts of estimated future operating characteristics are predicated on the information and assumptions contained within the report. Any projections of income, expenses and economic conditions utilized in this report are not predictions of the future. Rather, they are estimates of current market expectations of future income and expenses. The achievement of the financial projections will be affected by fluctuating economic conditions and is dependent upon other future occurrences that cannot be assured. Actual results may vary from the projections considered herein. CBRE does not warrant these forecasts will occur. Projections may be affected by circumstances beyond the current realm of knowledge or control of CBRE 12. Unless specifically set forth in the body of the report, nothing contained herein shall be construed to represent any direct or indirect recommendation of CBRE to buy, sell, or hold the properties at the value stated. Such decisions involve substantial investment strategy questions and must be specifically addressed in consultation form. 13. Also, unless otherwise noted in the body of this report, it is assumed that no changes in the present zoning ordinances or regulations governing use, density, or shape are being considered. The property is appraised assuming that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, nor national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report is based, unless otherwise stated. 14. This study may not be duplicated in whole or in part without the specific written consent of CBRE nor may this report or copies hereof be transmitted to third parties without said consent, which consent CBRE reserves the right to deny. Exempt from this restriction is duplication for the internal use of the client-addressee and/or transmission to attorneys, accountants, or advisors of the client-addressee. Also exempt from this restriction is transmission of the report to any court, governmental authority, or regulatory agency having jurisdiction over the party/parties for whom this appraisal was prepared, provided that this report and/or its contents shall not be published, in whole or in part, in any public document without the express written consent of CBRE which consent CBRE reserves the right to deny. Finally, this report shall not be advertised to the public or otherwise used to induce a third party to purchase the property or to make a "sale" or "offer for sale" of any "security", as such terms are defined and used in the Securities Act of 1933, as amended. Any third party, not covered by the exemptions herein, who may possess this report, is advised that they should rely on their own independently secured advice for any decision in connection with this property. CBRE shall have no accountability or responsibility to any such third party. 15. Any value estimate provided in the report applies to the entire property, and any pro ration or division of the title into fractional interests will invalidate the value estimate, unless such pro ration or division of interests has been set forth in the report. 16. The distribution of the total valuation in this report between land and improvements applies only under the existing program of utilization. Component values for land and/or buildings are not intended to be used in conjunction with any other property or appraisal and are invalid if so used. 94 SANDS POINT APARTMENTS ASSUMPTIONS AND LIMITING CONDITIONS 17. The maps, plats, sketches, graphs, photographs and exhibits included in this report are for illustration purposes only and are to be utilized only to assist in visualizing matters discussed within this report. Except as specifically stated, data relative to size or area of the subject and comparable properties has been obtained from sources deemed accurate and reliable. None of the exhibits are to be removed, reproduced, or used apart from this report. 18. No opinion is intended to be expressed on matters which may require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. Values and opinions expressed presume that environmental and other governmental restrictions/conditions by applicable agencies have been met, including but not limited to seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, licenses, etc. No survey, engineering study or architectural analysis has been made known to CBRE unless otherwise stated within the body of this report. If the Consultant has not been supplied with a termite inspection, survey or occupancy permit, no responsibility or representation is assumed or made for any costs associated with obtaining same or for any deficiencies discovered before or after they are obtained. No representation or warranty is made concerning obtaining these items. CBRE assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance. 19. Acceptance and/or use of this report constitutes full acceptance of the Contingent and Limiting Conditions and special assumptions set forth in this report. It is the responsibility of the Client, or client's designees, to read in full, comprehend and thus become aware of the aforementioned contingencies and limiting conditions. Neither the Appraiser nor CBRE assumes responsibility for any situation arising out of the Client's failure to become familiar with and understand the same. The Client is advised to retain experts in areas that fall outside the scope of the real estate appraisal/consulting profession if so desired. 20. CBRE assumes that the subject property analyzed herein will be under prudent and competent management and ownership; neither inefficient or super-efficient. 21. 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. 22. No survey of the boundaries of the property was undertaken. All areas and dimensions furnished are presumed to be correct. It is further assumed that no encroachments to the realty exist. 23. The Americans with Disabilities Act (ADA) became effective January 26, 1992. Notwithstanding any discussion of possible readily achievable barrier removal construction items in this report, CBRE has not made a specific compliance survey and analysis of this property to determine whether it is in conformance with the various detailed requirements of the ADA. It is possible that a compliance survey of the property together with a detailed analysis of the requirements of the ADA could reveal that the property is not in compliance with one or more of the requirements of the ADA. If so, this fact could have a negative effect on the value estimated herein. Since CBRE has no specific information relating to this issue, nor is CBRE qualified to make such an assessment, the effect of any possible non-compliance with the requirements of the ADA was not considered in estimating the value of the subject property. 24. Client shall not indemnify Appraiser or hold Appraiser harmless unless and only to the extent that the Client misrepresents, distorts, or provides incomplete or inaccurate appraisal results to others, which acts of the Client proximately result in damage to Appraiser. The Client shall indemnify and hold Appraiser harmless from any claims, expenses, judgments or other items or costs arising as a result of the Client's failure or the failure of any of the Client's agents to provide a complete copy of the appraisal report to any third party. In the event of any litigation between the parties, the prevailing party to such litigation shall be entitled to recover from the other reasonable attorney fees and costs. 25. The report is for the sole use of the client; however, client may provide only complete, final copies of the appraisal report in its entirety (but not component parts) to third parties who shall review such reports in connection with loan underwriting or securitization efforts. Appraiser is not required to explain or testify as to appraisal results other than to respond to the client for routine and customary questions. Please note that our consent to allow an appraisal report prepared by CBRE or portions of such report, to become part of or be referenced in any public offering, the granting of such consent will be at our sole discretion and, if given, will be on condition that we will be provided with an Indemnification Agreement and/or Non-Reliance letter, in a form and content satisfactory to us, by a party satisfactory to us. We do consent to your submission of the reports to rating agencies, loan participants or your auditors in its entirety (but not component parts) without the need to provide us with an Indemnification Agreement and/or Non-Reliance letter. 26. As part of the clients requested scope of work we have provided an estimate of Insurable value. We have followed appraisal standards to develop a reasonable calculation based upon Industry practices and Industry accepted manuals such as Marshall Cost Estimator. The method we employ is a derivation of the Cost Approach, which is primarily used 95 SANDS POINT APARTMENTS ASSUMPTIONS AND LIMITING CONDITIONS as an academic exercise to help support our market value estimate and therefore is not reliable for Insurable Value estimates. Actual construction costs and related estimates can vary greatly from this estimate. This analysis should not be relied upon to determine proper insurance coverage, which can only be properly estimated by consultants considered experts in cost estimation and insurance underwriting. It is provided to aid our client as part of their overall decision making process and we make no representations or warranties regarding the accuracy of this estimate and strongly recommend other sources be utilized to develop any estimate of Insurable value. 96 SANDS POINT APARTMENTS ADDENDA ADDENDA SANDS POINT APARTMENTS ADDENDUM A ADDENDUM A GLOSSARY OF TERMS SANDS POINT APARTMENTS ADDENDUM A ASSESSED VALUE Assessed value applies in ad valorem taxation and refers to the value of a property according to the tax rolls. Assessed value may not conform to market value, but it is usually calculated in relation to a market value base. + CASH EQUIVALENCY The procedure in which the sale prices of comparable properties sold with atypical financing are adjusted to reflect typical market terms. CONTRACT, COUPON, FACE, OR NOMINAL RENT The nominal rent payment specified in the lease contract. It does not reflect any offsets for free rent, unusual tenant improvement conditions, or other factors that may modify the effective rent payment. COUPON RENT See Contract, Coupon, Face, or Nominal Rent EFFECTIVE RENT 1) The rental rate net of financial concessions such as periods of no rent during a lease term; may be calculated on a discounted basis, reflecting the time value of money, or on a simple, straight-line basis. ++ 2) The economic rent paid by the lessee when normalized to account for financial concessions, such as escalation clauses, and other factors. Contract, or normal, rents must be converted to effective rents to form a consistent basis of comparison between comparables. EXCESS LAND In regard to an improved site, the land not needed to serve or support the existing improvement. In regard to a vacant site or a site considered as though vacant, the land no needed to accommodate the site's primary highest and best use. Such land may be separated from the larger site and have its own highest and best use, or it may allow for future expansion of the existing or anticipated improvement. See also surplus land. ++ FACE RENT See Contract, Coupon, Face, or Nominal Rent FEE SIMPLE ESTATE Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. ++ FLOOR AREA RATIO (FAR) The relationship between the above-ground floor area of a building, as described by the building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area; also called building-to-land ratio. ++ FULL SERVICE LEASE A lease in which rent covers all operating expenses. Typically, full service leases are combined with an expense stop, the expense level covered by the contract lease payment. Increases in expenses above the expense stop level are passed through to the tenant and are known as expense pass-throughs. GOING CONCERN VALUE Going concern value is the value of 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 the business value. + GROSS BUILDING AREA (GBA) The sum of all areas at each floor as measured to the exterior walls. INSURABLE VALUE Insurable Value is based on the replacement and/or reproduction cost of physical items that are subject to loss from hazards. Insurable value is that portion of the value of an asset or asset group that is acknowledged or recognized under the provisions of an applicable loss insurance policy. This value is often controlled by state law and varies from state to state. + INVESTMENT VALUE Investment value is the value of an investment to a particular investor based on his or her investment requirements. In contrast to market value, investment value is value to an individual, not value in the marketplace. Investment value reflects the subjective relationship between a particular investor and a given investment. When measured in dollars, investment value is the price an investor would pay for an investment in light of its perceived capacity to satisfy his or her desires, needs, or investment goals. To estimate investment value, specific investment criteria must be known. Criteria to evaluate a real estate investment are not necessarily set down by the individual investor; they may be established by an expert on real estate and its value, that is, an appraiser. + LEASED FEE See leased fee estate LEASED FEE ESTATE An ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the leased fee are specified by contract terms contained within the lease.++ SANDS POINT APARTMENTS ADDENDUM A LEASEHOLD See leasehold estate LEASEHOLD ESTATE The interest held by the lessee (the tenant or renter) through a lease conveying the rights of use and occupancy for a stated term under certain conditions.++ LOAD FACTOR The amount added to usable area to calculate the rentable area. It is also referred to as a "rentable add-on factor" which, according to BOMA, "is computed by dividing the difference between the usable square footage and rentable square footage by the amount of the usable area. Convert the figure into a percentage by multiplying by 100. MARKET RENT The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the specified lease agreement including term, rental adjustment and revaluation, permitted uses, use restrictions, and expense obligations. ++ MARKET VALUE Market value is one of the central concepts of the appraisal practice. Market value is differentiated from other types of value in that it is created by the collective patterns of the market. Market value means 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 and 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: 1) A reasonable time is allowed for exposure in the open market; 2) Both parties are well informed or well advised, and acting in what they consider their own best interests; 3) Buyer and seller are typically motivated; 4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5) 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. (SS) MARKETING PERIOD The time it takes an interest in real property to sell on the market subsequent to the date of an appraisal. ++ NET LEASE Lease in which all or some of the operating expenses are paid directly by the tenant. The landlord never takes possession of the expense payment. In a Triple Net Lease all operating expenses are the responsibility of the tenant, including property taxes, insurance, interior maintenance, and other miscellaneous expenses. However, management fees and exterior maintenance are often the responsibility of the lessor in a triple net lease. A modified net lease is one in which some expenses are paid separately by the tenant and some are included in the rent. NET RENTABLE AREA (NRA) 1) The area on which rent is computed. 2) The Rentable Area of a floor shall be computed by measuring to the inside finished surface of the dominant portion of the permanent outer building walls, excluding any major vertical penetrations of the floor. No deductions shall be made for columns and projections necessary to the building. Include space such as mechanical room, janitorial room, restrooms, and lobby of the floor. * NOMINAL RENT See Contract, Coupon, Face, or Nominal Rent OCCUPANCY RATE The relationship or ratio between the income received from the rented units in a property and the income that would be received if all the units were occupied.++ PROSPECTIVE FUTURE VALUE "UPON COMPLETION OF CONSTRUCTION" Prospective future value "upon completion of construction" is the prospective value of a property on the future date that construction is completed, based upon market conditions forecast to exist, as of that completion date. The value estimate at this stage is stated in current dollars unless otherwise indicated. PROSPECTIVE FUTURE VALUE "UPON REACHING STABILIZED OCCUPANCY" Prospective future value "upon reaching stabilized occupancy" is the prospective value of a property at a future point in time when all improvements have been physically constructed and the property has been leased to its optimum level of long-term occupancy. The value estimate at this stage is stated in current dollars unless otherwise indicated. REASONABLE EXPOSURE TIME The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based upon an analysis of past events assuming a competitive and open market. -- RENT See full service lease net lease market rent contract, coupon, face, or nominal rent effective rent SANDS POINT APARTMENTS ADDENDUM A SHELL SPACE Space which has not had any interior finishing installed, including even basic improvements such as ceilings and interior walls, as well as partitions, floor coverings, wall coverings, etc.. SURPLUS LAND Land not necessary to support the highest and best use of the existing improvement but, because of physical limitations, building placement, or neighborhood norms, cannot be sold off separately. Such land may or may not contribute positively to value and may or may not accommodate future expansion of an existing or anticipated improvement. See also excess land. ++ USABLE AREA 1) The area actually used by individual tenants. 2) The Usable Area of an office building is computed by measuring to the finished surface of the office side of corridor and other permanent walls, to the center of partitions that separate the office from adjoining usable areas, and to the inside finished surface of the dominant portion of the permanent outer building walls. Excludes areas such as mechanical rooms, janitorial room, restrooms, lobby, and any major vertical penetrations of a multi-tenant floor. * USE VALUE Use value is a concept based on the productivity of an economic good. Use value is the value a specific property has for a specific use. Use value focuses on the value the real estate contributes to the enterprise of which it is a part, without regard to the property's highest and best use or the monetary amount that might be realized upon its sale. + VALUE APPRAISED During the real estate development process, a property typically progresses from a state of unimproved land to construction of improvements to stabilized occupancy. In general, the market value associated with the property increases during these stages of development. After reaching stabilized occupancy, ongoing forces affect the property during its life, including a physical wear and tear, changing market conditions, etc. These factors continually influence the property's market value at any given point in time. See also market value "as is" on the appraisal date market value "as if complete" on the appraisal date prospective future value "upon completion of construction" prospective future value "upon reaching stabilized occupancy" - -------------------- + The Appraisal of Real Estate, Twelfth Edition, Appraisal Institute, 2001. ++ The Dictionary of Real Estate Appraisal, Fourth Edition, 2002. (SS) The Office of the Comptroller of the Currency, 12 CFR Part 34, Subpart C, - -34.42(f), August 24, 1990. This definition is compatible with the definition of market value contained in The Dictionary of Real Estate Appraisal, Third Edition, and the Uniform Standards of Professional Appraisal Practice adopted by the Appraisal Standards Board of The Appraisal Foundation, 1992 edition. This definition is also compatible with the OTS, RTC, FDIC, NCUA, and the Board of Governors of the Federal Reserve System definition of market value. * 2000 BOMA Experience Exchange Report, Income/Expense Analysis for Office Buildings (Building Owners and Managers Association, 2000) - -- Statement on Appraisal Standard No. 6, Appraisal Standards Board of The Appraisal Foundation, September 19, 1992. SANDS POINT APARTMENTS ADDENDUM B ADDENDUM B ADDITIONAL PHOTOGRAPHS SANDS POINT APARTMENTS ADDENDUM B [PICTURE] CLUBHOUSE / ELEVATIONS [PICTURE] MODEL KITCHEN SANDS POINT APARTMENTS ADDENDUM B [PICTURE] MODEL LIVING ROOM [PICTURE] THIRD STORY VAULTED CEILINGS SANDS POINT APARTMENTS ADDENDUM B [PICTURE] VACANT LIVING ROOM [PICTURE] TENNIS / VOLLEYBALL COURTS SANDS POINT APARTMENTS ADDENDUM B [PICTURE] INTERIOR STREET SCENE [PICTURE] FACING NORTH ALONG 19TH AVENUE FROM THE SUBJECT SANDS POINT APARTMENTS ADDENDUM C ADDENDUM C IMPROVED COMPARABLE SALES APARTMENT SALE NO. 1 SMOKETREE APARTMENTS LOCATION DATA Location: 3161 W CHERYL DR PHOENIX,AZ 85051 County: MARICOPA Assessor's Parcel No: 149-16-067 Atlas Ref: 103 - 161/LL PHYSICAL DATA Type: MULTI-FAMILY GARDEN Land Area: 10.190 ACRES Grs Liv.Area 189,880 SF Number of Units: 280 Average Unit Size: 678 SF Year Built: 1974 No. of Stories: 2 Exterior: FRAME/STUCCO Condition: GOOD Amenities: BALCONY, BBQ, CEILING FANS, CLUB HOUSE, COVERED PARKING, PATIO, SALE DATA POOL Transaction Type: SALE Date: 8/2003 Marketing Time: N/A Grantor: JERRY MONKARSH 310-278-1830 Grantee: MARC SAMPLIN (CFO) 914-899-8000 Document No.: 1077315 Sale Price: $11,132,000 Financing: CASH TO SELLER Cash Eq.Price: $11,132,000 Req.Capital Cost: $0 Adj. Sale Price: $11,132,000 Verification: BROKER ANALYSIS Buyers Und. Crit.: OTHER Overall Cap. Rate (OAR): 6.64 % Projected IRR: N/A % Eff. Gross Multiplier (EGIM): 6.26 Oper. Expense Ratio (OER): 58.40 % Price Per Square Foot: $58.63 Price Per Unit: $39,757 [PICTURE] FINANCIAL DATA Source: BROKER Occupancy at Sale: 95% Existing or ProForma Inc: EXISTING
TOTAL PER UNIT ------------ -------- Potential Gross Income: $ 1,870,764 $ 6,681 Vacancy and Credit Loss: $ 93,538 $ 334 Effective Gross Income: $ 1,777,226 $ 6,347 Expenses and Reserves: $ 1,037,916 $ 3,706 Net Operating Income: $ 739,310 $ 2,640
UNIT MIX
UNIT TYPE NO. SF % - --------- ---- ------- ----- Studio 86 450 30 1 Bedroom 148 720 52 2 Bedroom 46 970 16 === ======= ===== TOTALS 280 189,880 100
COMMENTS This comparable represents the August 2003 sale of Smoketree Apartments, a 280 unit property located at 3161 W. Cheryl Dr. in Phoenix, Arizona. The property was developed in 1974 with 16 2-story buildings. The project is master-metered for HVAC. Tenants pay plug-ins. The property sold for $11,132,000 or $39,757 per unit. According to the broker the effective gross income was $1,777,226 with property taxes of $81,232 and expenses of $956,684 for a net operating income of $739,310. The overall capitalization rate for the sale was 6.64%. The buyer assumed the existing financing of $7.0 million at 6.945%, 30 year amortization due in 2008 and carried an additional $2.3 million at a 2.37%. [CBRE LOGO] APARTMENT SALE NO. 2 SOUTH CREEK APARTMENTS LOCATION DATA Location: 4424 E. BASELINE ROAD PHOENIX,AZ 85044 County: MARICOPA Assessor's Parcel No: 123-19-004 Atlas Ref: N/A PHYSICAL DATA Type: MULTI-FAMILY GARDEN Land Area: 23.445 ACRES Grs Liv.Area 472,152 SF Number of Units: 528 Average Unit Size: 894 SF Year Built: 1986 No. of Stories: 2 Exterior: STUCCO Condition: GOOD Amenities: 2 POOLS AND SPAS, SECURITY GATE, COVERED PARKING, SAUNA, FITNESS SALE DATA CENTER Transaction Type: SALE Date: 2/2004 Marketing Time: 3 MONTHS Grantor: ERP OPERATING LP Grantee: FAIRFIELD SOUTHCREEK Document No.: 04-131014 Sale Price: $28,650,000 Financing: CASH TO SELLER Cash Eq.Price: $28,650,000 Req.Capital Cost: $250,000 Adj. Sale Price: $28,900,000 Verification: BROKERS/BUYER/MANAGEMENT/INSPE ANALYSIS Buyers Und. Crit.: DIRECT CAP Overall Cap. Rate (OAR): 7.01% Projected IRR: N/A% Eff. Gross Multiplier (EGIM): 7.68 Oper. Expense Ratio (OER): 46.13% Price Per Square Foot: $61.21 Price Per Unit: $54,734 [PICTURE] FINANCIAL DATA Source: APPRAISER Occupancy at Sale: 93 Existing or ProForma Inc: PRO FORMA
TOTAL PER UNIT -------------- ----------- Potential Gross Income: $ 4,431,720 $ 8,393 Vacancy and Credit Loss: $ 668,747 $ 1,266 Effective Gross Income: $ 3,762,973 $ 7,126 Expenses and Reserves: $ 1,736,036 $ 3,287 Net Operating Income: $ 2,026,937 $ 3,838
UNIT MIX
UNIT TYPE NO. SF % - ---------- --- ------- --- 1 BR, 1 BA 160 655 30 2 BR, 2 BA 152 940 28 2 BR, 2 BA 112 980 21 2 BR, 2 BA 52 1006 9 3 BR, 2 BA 52 1200 9 === ======= === TOTALS 528 472,152 100
COMMENTS This comparable is a 528-unit garden apartment project that is located in southeast Phoenix. The improvements were constructed in 1986 and were in good physical condition at the time of sale. The density is 22.52 units per acre. Each unit has a patio or balcony and a washer and dryer. The buyer incurred an additional $250,000 in poly buteline pipe replacement costs. Reserves of $250 per unit are factored into the pro forma. The OAR based upon annualized income in place at the time of sale was 6.80%. [CBRE LOGO] APARTMENT SALE NO. 3 TERRACINA LOCATION DATA Location: 1450 E. BELL ROAD PHOENIX,AZ 85022 County: MARICOPA Assessor's Parcel No: 214-14-304 Atlas Ref: N/A PHYSICAL DATA Type: MULTI-FAMILY GARDEN Land Area: 38.500 ACRES Grs Liv.Area 732,484 SF Number of Units: 856 Average Unit Size: 856 SF Year Built: 1984 No. of Stories: 2 & 3 Exterior: FRAME AND STUCCO Condition: GOOD Amenities: POOLS, SPAS, FITNESS CENTER, SECURITY ACCESS GATE, ON-SITE SALE DATA LAUNDRY Transaction Type: SALE Date: 9/2004 Marketing Time: 6 MONTHS Grantor: UDR TEXAS PROPERTIES, LP Grantee: REPFUND TERRACINA APARTMENTS, Document No.: 04-1076443 Sale Price: $42,650,000 Financing: CASH TO SELLER Cash Eq.Price: $42,650,000 Req.Capital Cost: $0 Adj. Sale Price: $42,650,000 Verification: BROKER ANALYSIS Buyers Und. Crit.: DIRECT CAP Overall Cap. Rate (OAR): 6.06 % Projected IRR: N/A % Eff. Gross Multiplier (EGIM): 7.96 Oper. Expense Ratio (OER): 51.75 % Price Per Square Foot: $58.23 Price Per Unit: $49,824 [PICTURE] FINANCIAL DATA Source: BROKER Occupancy at Sale: 90% Existing or ProForma Inc: EXISTING
TOTAL PER UNIT --------------- --------- Potential Gross Income: $ 7,147,595 $ 8,349 Vacancy and Credit Loss: $ 1,786,899 $ 2,087 Effective Gross Income: $ 5,360,696 $ 6,262 Expenses and Reserves: $ 2,774,296 $ 3,241 Net Operating Income: $ 2,586,400 $ 3,021
UNIT MIX
UNIT TYPE NO. SF % - --------- --- ------- --- 1BR, 1BA 384 720 44 2BR, 1BA 192 840 22 2BR, 2BA 232 1006 27 3BR, 2BA 32 1194 3 3BR, 2BA 16 1444 1 === ======= === TOTALS 856 732,464 100
COMMENTS This comparable is located at 14th Street and Bell Road in north-Phoenix. Originally developed by Spanos, the project is being sold by United Dominion. Units have eight foot ceilings and patios and balconies. The three-bedroom units have washer and dryer hook-ups and the largest three-bedroom units have washers and dryers. The project was marketed at a pro forma cap rate of 6.5%. The trailing 12-month cap rate is 6.1%, adjusted for $300 in reserves. The asking price was $44,320,000, or $51,776 per unit. [CBRE LOGO] APARTMENT SALE NO. 4 DESERT SHADOWS LOCATION DATA Location: 14230 N 19TH AVENUE PHOENIX,AZ 85023 County: MARICOPA Assessor's Parcel No: 208-23-274A Atlas Ref: N/A PHYSICAL DATA Type: MULTI-FAMILY GARDEN Land Area: 26.920 ACRES Grs Liv.Area 454,208 SF Number of Units: 548 Average Unit Size: 829 SF Year Built: 1980 No. of Stories: 1 & 2 Exterior: FRAME & STUCCO Condition: AVERAGE Amenities: 4 POOLS, 4 SPAS, 2 TENNIS COURTS, BASKETBALL COURT, INLINE HOCKEY SALE DATA COURT, PLAYGROUND, CLUBHOUSE, Transaction Type: SALE Date: 1/2005 Marketing Time: N/A Grantor: DESERT SHADOWS APARTMENTS, INC. Grantee: BASCOM ARIZONA VENURES, LLC Document No.: 05-104879 Sale Price: $22,478,000 Financing: MARKET TERMS Cash Eq.Price: $22,478,000 Req.Capital Cost: $0 Adj. Sale Price: $22,478,000 Verification: BUYER/BROKER/CONTRACT ANALYSIS Buyers Und. Crit.: DIRECT CAP Overall Cap. Rate (OAR): 4.83 % Projected IRR: N/A % Eff. Gross Multiplier (EGIM): 7.12 Oper. Expense Ratio (OER): 65.62 % Price Per Square Foot: $49.49 Price Per Unit: $41,018 [PICTURE] FINANCIAL DATA Source: SELLER Occupancy at Sale: 86 % Existing or ProForma Inc: EXISTING
TOTAL PER UNIT ------------ -------- Potential Gross Income: $ 3,586,256 $6,544 Vacancy and Credit Loss: $ 430,351 $ 785 Effective Gross Income: $ 3,155,905 $5,758 Expenses and Reserves: $ 2,071,041 $3,779 Net Operating Income: $ 1,084,864 $1,979
UNIT MIX
UNIT TYPE NO. SF % - --------- --- ------- --- 1 BR, 1 BA 224 700 40 2 BR, 1 BA 176 816 32 2 BR, 2 BA 120 978 21 3 BR, 2 BA 16 1194 2 3 BR, 2 BA 12 1444 2 === ======= === TOTALS 548 454,208 100
COMMENTS Project amenities include 4 pools, 4 spas, 2 tennis courts, basketball court, inline hockey court, playground, clubhouse, exercise/fitness room, computer room, 2 saunas, and 8 laundry facilities. The cap rate is calculated on income in place at the time of sale, adjusted for $200 per unit in reserves. The buyer is planning to reposition the project over four years with $4.6 million in capital renovations. [CBRE LOGO] APARTMENT SALE NO. 5 SUPERSTITION PARK LOCATION DATA Location: 30 WEST CARTER DRIVE TEMPE,AZ 85282 County: MARICOPA Assessor's Parcel No: 133-41-609 TO 613 Atlas Ref: 149 LZ:172 PHYSICAL DATA Type: MULTI-FAMILY GARDEN Land Area: 17.950 ACRES Grs Liv.Area 248,912 SF Number of Units: 376 Average Unit Size: 662 SF Year Built: 1985 No. of Stories: 2 Exterior: FRAME & STUCCO Condition: GOOD Amenities: AC, DW, DSP, FFR, MW, PBP, CTO, CF, WIS, STG, MB, SCO, VB; SP, SALE DATA SPA, LND, PLY, BBQ, SG. Transaction Type: ESCROW Date: 3/2005 Marketing Time: N/A Grantor: MERIDIAN REALTY INVESTORS, LP Grantee: NOT DISCLOSED Document No.: N/A Sale Price: $20,400,000 Financing: CASH TO SELLER Cash Eq.Price: $20,400,000 Req.Capital Cost: $0 Adj. Sale Price: $20,400,000 Verification: BROKER ANALYSIS Buyers Und. Crit.: DIRECT CAP Overall Cap. Rate (OAR): 5.74 % Projected IRR: N/A % Eff. Gross Multiplier (EGIM): 8.09 Oper. Expense Ratio (OER): 53.52 % Price Per Square Foot: $81.96 Price Per Unit: $54,255 [PICTURE] FINANCIAL DATA Source: SELLER Occupancy at Sale: 86% Existing or ProForma Inc: EXISTING
TOTAL PER UNIT ------------ --------- Potential Gross Income: $ 3,044,771 $ 8,097 Vacancy and Credit Loss: $ 523,092 $ 1,391 Effective Gross Income: $ 2,521,679 $ 6,706 Expenses and Reserves: $ 1,349,716 $ 3,589 Net Operating Income: $ 1,171,963 $ 3,116
UNIT MIX
UNIT TYPE NO. SF % - --------- --- ------- --- Studio 96 408 25 1 BR, 1 BA 52 560 13 1 BR, 1 BA 56 614 14 2 BR, 2 BA 64 773 17 2 BR, 2 BA 108 896 28 === ======= === TOTALS 376 248,912 100
COMMENTS This comparable is located in south Tempe, along Kyrene Road north of Baseline. The project is master-metered for utilities and has a central chiller. The cap rate on actual income is 5.74%, however the cap rate using the broker's pro forma is 8.0%. Both analyses include an allowance for replacement reserves. [CBRE LOGO] APARTMENT SALE NO. 6 THUNDERBIRD RANCH LOCATION DATA Location: 1944 W THUNDERBIRD ROAD PHOENIX, AZ 85023 County: MARICOPA Assessor's Parcel No: 208-32-336A, 672A Atlas Ref: 103-162/LH
PHYSICAL DATA Type: MULTI-FAMILY WALK-UP Land Area: 29.430 ACRES Grs Liv.Area 530,256 SF Number of Units: 672 Average Unit Size: 789 SF Year Built: 1979 RENOVATED 2001 No. of Stories: 1 & 2 Exterior: STUCCO Condition: AVERAGE Amenities: POOL, SPA, SAUNA, TENNIS, VOLLEYBALL, BASKETBALL, REC PROGRAM, PLAYGROUND, CLUBHOUSE
SALE DATA Transaction Type: ESCROW Date: 3/2005 Marketing Time: N/A Grantor: THUNDERBIRD RANCH ASSOCIATES Grantee: N/A Document No.: N/A Sale Price: $ 28,990,000 Financing: CASH TO SELLER Cash Eq.Price: $ 28,990,000 Req.Capital Cost: $ 0 Adj. Sale Price: $ 28,990,000 Verification: CONFIDENTIAL
ANALYSIS Buyers Und. Crit.: DIRECT CAP Overall Cap. Rate (OAR): 7.00 % Projected IRR: N/A % Eff. Gross Multiplier (EGIM): 7.18 Oper. Expense Ratio (OER): 49.70 % Price Per Square Foot: $ 54.67 Price Per Unit: $ 43,139
[PICTURE] FINANCIAL DATA Source: SELLER Occupancy at Sale: 93% Existing or ProForma Inc: EXISTING
TOTAL PER UNIT ------------ -------- Potential Gross Income: $ 5,066,445 $ 7,539 Vacancy and Credit Loss: $ 1,031,022 $ 1,534 Effective Gross Income: $ 4,035,423 $ 6,005 Expenses and Reserves: $ 2,005,660 $ 2,984 Net Operating Income: $ 2,029,763 $ 3,020
UNIT MIX
UNIT TYPE NO. SF % - --------- --- ------- --- 1 BR, 1 BA 368 680 54 2 BR, 1 BA 128 816 19 2 BR, 2 BA 136 910 20 3 BR, 2 BA 24 1196 3 3 BR, 2 BA 16 1444 2 --- ------- --- TOTALS 672 530,256 100 === ======= ===
COMMENTS This is an escrow sale with a planned closing date in May 2005. The cap rate is derived from income in place as of 2/05 and includes reserves of $275 per unit. The project density is 22.83 units per acre. This property is located along an arterial street in proximity to the freeway, shopping, schools, golf and medical facilities. [CBRE LOGO] SANDS POINT APARTMENTS ADDENDUM D ADDENDUM D RENT COMPARABLES APARTMENT COMPARABLE NO. 1 HUNTER'S RIDGE LOCATION DATA Location: 8902 N 19TH AVENUE PHOENIX,AZ 85021 County: MARICOPA Assessor's Parcel No: 158-05-034 Atlas Ref: 103 LM:162
PHYSICAL DATA Type: GARDEN Number of Units: 428 Year Built: 1987 No. of Stories: 2 & 3 Average Unit Size: 677SF Exterior: Condition: GOOD Amenities: SEE COMMENTS
[PICTURE] OCCUPANCY / LEASE DATA Occupancy: 94% Rent Premiums: SEE COMMENTS Concessions: SEE COMMENTS Typical Lease Term: 6 TO 12 MONTHS Utilities incl. in Rent: WATER, SEWER, TRASH, HOT WATER Tenant Profile: 20-48 AGE, 10% COUPLES, 80% WORKING Management Co.: SEVO MILLER, INC. Phone No: (602)944-1115 Survey Date: 4/05
RENT SUMMARY
UNIT TYPE NO. SF RENT RENT PSF - ------------ --- ------- ----- -------- 1 BR, 1 BA 56 465 455 0.98 1 BR, 1 BA 112 555 470 0.85 1 BR, 1 BA 104 683 535 0.78 2 BR, 1.5 BA 96 792 585 0.74 2 BR, 2 BA 60 911 630 0.69 --- ------- ----- ------- TOTALS 428 289,924 $ 532 $ 0.79 === ======= ===== =======
COMMENTS Hunter's Ridge is located off of 19th Ave just south of Dunlap Ave. The 428-unit project was finished in 1987. The density is 35.64 units per acre. There are 428 covered spaces, and 245 open spaces. The unit mix includes one-, and two-bedroom units. Unit amenities include air conditioning, washer/dryer hookups (some), dishwasher, disposal, frost-free refrigerator, fireplace (some), walk-in closets (some), storage, private balcony/patio, cable, satellite or direct TV (optional), security system, mini-blinds, vertical blinds, self-cleaning oven, and ceiling fans (some). Complex amenities include clubhouse/recreation room, kitchen/wet bar, weight/exercise room, heated swimming pool(s), spa(s), racquetball court(s), volleyball court(s), laundry room(s), barbecue(s), playground(s), security patrol, and swimming pool(s). Base rent is $455 to $630 and occupancy is 94%. Water, sewer, trash collection, and hot water are included in the base rent. Concessions were quoted as one month free with a 12-15 month lease. There are no rent premiums. [CBRE LOGO] APARTMENT COMPARABLE NO. 2 MAYA LINDA LOCATION DATA Location: 8222 N 19TH AVENUE PHOENIX,AZ 85021 County: MARICOPA Assessor's Parcel No: 158-06-022B Atlas Ref: 103 LM:162
PHYSICAL DATA Type: GARDEN Number of Units: 360 Year Built: 1980 No. of Stories: 2 & 3 Average Unit Size: 593 SF Exterior: STUCCO Condition: AVERAGE Amenities: SEE COMMENTS
[PICTURE] OCCUPANCY / LEASE DATA Occupancy: 91% Rent Premiums: SEE COMMENTS Concessions: SEE COMMENTS Typical Lease Term: 6 TO 12 MONTHS Utilities incl. in Rent: WATER, SEWER, TRASH, HOT WATER Tenant Profile: 20-30 AGE, COUPLES 20%, WORKING 80% Management Co.: SKY WEST DEVELOPMENT CO. Phone No: (602) 995-3555 Survey Date: 04/05
RENT SUMMARY
UNIT TYPE NO. SF RENT RENT PSF - ---------- --- ------- ------- -------- Studio 108 455 399 0.88 1 BR, 1 BA 40 555 475 0.86 1 BR, 1 BA 144 579 490 0.85 2 BR, 1 BA 12 799 625 0.78 2 BR, 2 BA 56 879 650 0.74 --- ------- ------- ------- TOTALS 360 213,528 $ 490 $ 0.83 === ======= ======= =======
COMMENTS Maya Linda is located off of 19th Ave north of Northern Ave. The 360-unit project was finished in 1980. The density is 34.23 units per acre. There are 360 covered spaces, and 192 open spaces. The unit mix includes studios, and one-, and two-bedroom units. Unit amenities include air conditioning, dishwasher, disposal, walk-in closets (some), private balcony/patio (some), storage (some), cable, satellite or direct TV (optional), ceiling fans (some), frost-free refrigerator (some), vertical blinds, and mini-blinds. Complex amenities include clubhouse/recreation room, kitchen/wet bar, weight/exercise room, swimming pool(s), heated swimming pool(s), spa(s), laundry room(s), barbecue(s), and security patrol. Base rent is $399 to $650 and occupancy is 91%. Water, sewer, trash collection, and hot water are included in the base rent. Concessions are included in the quoted rents. Rents increase with pool locations. [CBRE LOGO] APARTMENT COMPARABLE NO. 3 MISSION SHADOWS LOCATION DATA Location: 8111 N. 19TH AVENUE PHOENIX, AZ 85021 County: MARICOPA Assessor's Parcel No: 158-07-001B Atlas Ref: 104 LM: 163
PHYSICAL DATA Type: GARDEN Number of Units: 237 Year Built: 1986 No. of Stories: 2 Average Unit Size: 721 SF Exterior: STUCCO Condition: AVERAGE Amenities: SEE COMMENTS
[PICTURE] OCCUPANCY / LEASE DATA Occupancy: 88% Rent Premiums: SEE COMMENTS Concessions: SEE COMMENTS Typical Lease Term: 6, 9, 12 MONTHS Utilities incl. in Rent: NONE Tenant Profile: 20-40 AGE, 41% COUPLES, 91% WORKING Management Co.: PICERNE DEVELOPMENT CO. Phone No: (602)861-9904 Survey Date: 4/05
RENT SUMMARY
UNIT TYPE NO. SF RENT RENT PSF - ------------ --- ------- ----- -------- Studio 12 400 495 1.24 1 BR, 1 BA 19 444 520 1.17 1 BR, 1 BA 56 614 590 0.96 1 BR, 1 BA 52 662 610 0.92 2 BR, 2 BA 28 852 715 0.84 2 BR, 2 BA 10 901 735 0.82 2 BR, 2 BA 60 934 735 0.79 --- ------- ----- ------- TOTALS 237 170,950 $ 642 $ 0.89 === ======= ===== =======
COMMENTS Mission Shadows is located off of 19th Ave north of Northern Ave. The 237-unit project was finished in 1986. The density is 28.24 units per acre. There are 237 covered spaces, and 133 open spaces. The unit mix includes studios, and one-, and two-bedroom units. Unit amenities include air conditioning, ceiling fans, washer/dryer hookups (some), dishwasher, disposal, frost-free refrigerator, private balcony/patio (some), walk-in closets (some), cable, satellite or direct TV (optional), icemaker (some), and storage (some). Complex amenities include weight/exercise room, swimming pool(s), heated swimming pool(s), spa(s), laundry room(s), barbecue(s), putting green, and security gate. Base rent is $495 to $735 and occupancy is 88%. No utilities are included in the base rent. Concessions were quoted as a $280 move-in and one free month rent. There are no rent premiums. [CBRE LOGO] APARTMENT COMPARABLE NO. 4 THE FAIRWAYS LOCATION DATA Location: 2045 W BUTLER DRIVE PHOENIX,AZ 85021 County: MARICOPA Assessor's Parcel No: 158-06-022D Atlas Ref: 103 LM:162
PHYSICAL DATA Type: GARDEN Number of Units: 160 Year Built: 1981 No. of Stories: 2 Average Unit Size: 739 SF Exterior: STUCCO Condition: AVERAGE Amenities: HEATED POOL/SPA, BBQ, SPORT COURTS, RACQUETBALL, BASKETBALL, LAUNDRY
[PICTURE] OCCUPANCY / LEASE DATA Occupancy: 93% Rent Premiums: NONE Concessions: 1 MO. PRORATED OVER 12 MOS Typical Lease Term: 6 & 12 MONTHS Utilities incl. in Rent: HOT WATER Tenant Profile: WORKING Management Co.: WMC MANAGEMENT Phone No: (602)995-9698 Survey Date: 4/05
RENT SUMMARY
UNIT TYPE NO. SF RENT RENT PSF - ---------- --- ------- ----- -------- Studio 20 429 460 1.07 1 BR, 1 BA 52 600 530 0.88 2 BR, 1 BA 36 829 620 0.75 2 BR, 2 BA 32 895 694 0.78 3 BR, 2 BA 8 919 704 0.77 3 BR, 2 BA 12 1048 764 0.73 --- ------- ----- ------- TOTALS 160 118,192 $ 601 $ 0.81 === ======= ===== =======
COMMENTS The Fairways apartments and is located at 2045 W. Butler Drive, Phoenix, AZ. The 160-unit project was completed in 1981. There are 160 covered and 64 open parking spaces with no garages. The unit mix includes studio and one-, two- and three-bedroom units. Complex amenities include a swimming pool, sports court, and laundry room. Unit amenities include air conditioning, disposal, frost-free refrigerator, private balcony/patio, storage, ceiling fans, fireplace (some), washer/dryer hookups (some), dishwasher, mini-blinds, vertical blinds, self-cleaning oven, cable, satellite or direct TV (optional), and walk-in closets (some). Base rents range from $465 for the studio unit to $774 for the three-bedroom unit. This property is master-metered for gas and water. Tenants are responsible for paying all utilities. Current concessions include a $99 move-in. There are no rental premiums. [CBRE LOGO] APARTMENT COMPARABLE NO. 5 THE GREENS LOCATION DATA Location: 8445 N 23RD AVENUE PHOENIX,AZ 85021 County: MARICOPA Assessor's Parcel No: 158-06-016 Atlas Ref: 103 LM:162
PHYSICAL DATA Type: GARDEN Number of Units: 136 Year Built: 1980 No. of Stories: 2 Average Unit Size: 696 SF Exterior: STUCCO Condition: AVERAGE Amenities: HEATED POOL, CLUBHOUSE, BBQ, LAUNDRY
[PICTURE] OCCUPANCY / LEASE DATA Occupancy: 94% Rent Premiums: NONE Concessions: SEE COMMENTS Typical Lease Term: 9 & 12 MONTHS Utilities incl. in Rent: WATER, SEWER, TRASH, HOT WATER Tenant Profile: WORKING Management Co.: OWNER Phone No: (602)995-9183 Survey Date: 4/05
RENT SUMMARY
UNIT TYPE NO. SF RENT RENT PSF - -------------------- --- ------ ---- -------- 1 BR, 1 BA golf cour 40 606 575 0.95 1 BR, 1 BA 56 625 575 0.92 2 BR, 1.5 BA 16 861 675 0.78 2 BR, 2 BA 24 904 715 0.79 --- ------ ---- ----- TOTALS 136 94,712 $611 $0.88 --- ------ ---- -----
COMMENTS The Greens is located on 23rd Avenue just south of Butler Drive in Phoenix. The 136-unit project was completed in 1980. There are 136 covered and 50 open spaces with no garages. The density is 32.02 units per acre. The unit mix includes one- and two-bedroom units. Unit amenities include air conditioning, dishwasher, disposal, frost-free refrigerator, private balcony/patio, storage, cable, satellite or direct TV (optional), mini-blinds, vertical blinds, ceiling fans, self-cleaning oven (some), and walk-in closets (some). Complex amenities include laundry room(s), barbecue areas, a clubhouse/recreation room, a kitchen/wet bar, and a swimming pool. Base rent is $575 to $715 and occupancy is 94%. No utilities are included in the base rent. Concessions were quoted at a $99 move-in along with rents discounted $20 to $40 per month. There are no rental premiums. Units have patios and balconies, but lack washers and dryers. [CBRE LOGO] APARTMENT COMPARABLE NO. 6 THE LINKS LOCATION DATA Location: 2121 W ROYAL PALM ROAD PHOENIX,AZ 85021 County: MARICOPA Assessor's Parcel No: 158-06-020 Atlas Ref: 103 LM:162
PHYSICAL DATA Type: GARDEN Number of Units: 207 Year Built: 1980 No. of Stories: 2 Average Unit Size: 845 SF Exterior: FRAME & STUCCO Condition: AVERAGE Amenities: HEATED POOL/SPA, CLUBHOUSE, BILLIARDS, PUTTING GREEN, BBQ, LAUNDRY, SECURITY PATROL
[PICTURE] OCCUPANCY / LEASE DATA Occupancy: 95 Rent Premiums: $25 FOR GOLF COURSE VIEW Concessions: 1/2 MO. FREE ON 6 MO. LEASE Typical Lease Term: 6 TO 12 MONTHS Utilities incl. in Rent: NONE Tenant Profile: 30-60 AGE, 45% COUPLES, 80% WORKING Management Co.: PEDRO & NELIDA MIQUEO Phone No: (602)995-9313 Survey Date: 01/2005
RENT SUMMARY
UNIT TYPE NO. SF RENT RENT PSF - ----------------- --- ------- ---- -------- Studio Flat 13 519 460 0.89 1 BR, 1 BA Flat 56 742 535 0.72 1 BR, 1.5 BA Loft 42 725 625 0.86 2 BR, 1 BA Flat 48 918 650 0.71 2 BR, 2 BA Flat 48 1084 700 0.65 --- ------- ---- -------- TOTALS 207 174,845 $613 $ 0.73 === ======= ==== ========
COMMENTS The Links is located on the El Caro Golf Course off of 23rd Avenue just north of Northern Avenue. The 207-unit project was finished in 1980. The density is 28.77 units per acre. There are 207 covered parking spaces, 79 open parking spaces, and no garages. The unit mix includes studios and one-, and two-bedroom units. Unit amenities include air conditioning, washer/dryer hookups (some), a dishwasher, a microwave, a disposal, a frost-free refrigerator (some), a private balcony/patio, storage (some), walk-in closets (some), cable, satellite or direct TV (optional), ceiling fans, mini-blinds, vertical blinds, and vaulted ceilings (some). Complex amenities include a clubhouse/recreation room, swimming pool(s), heated swimming pool(s), spa(s), laundry room(s), barbecue area(s), billiards, a kitchen/wet bar, a putting green, and security patrol. Base rent is $460 to $700 and occupancy is 95%. No utilities are included in the base rent. Concessions were quoted as up to one month free and a $99 move-in. Rents increase by $25 with a golf course view. [CBRE LOGO] SANDS POINT APARTMENTS ADDENDUM E ADDENDUM E OPERATING DATA AIMCO STATEMENT OF OPERATIONS - DETAIL 008685 - Sands Point For the Period Ended December 2005 (12OSD) Run Date: 1/28/2005 9:50 AM APPLICATION: AIMCOPROPERTY USER ID: gcoalson
PREVIOUS PREVIOUS CURRENT CURRENT YR YR MONTH MONTH MONTH CUR MONTH BUDGET VARIANCE ACTUAL VARIANCE - ------- -------- -------- --------- INCOME 242,461 (242,461) 263,184 (263,184) 500000 - Market Rent 0 0 (6,267) 6,267 500001 - Leases Under/Over Schedule 0 0 (812) 812 500500 - Rent - Right Price Adjustment 0 0 (1,990) 1,990 500501 - Renewal Price Adjustment (2) 2 0 0 512300 - Commercial Rent - ------- -------- ------- -------- 242,459 (242,459) 254,116 (254,116) TOTAL GROSS POTENTIAL RENT 0 0 1,475 (1,475) 519100 - Concessions Reimbursement 0 0 (669) 669 522025 - Service Maintenance Guarantee 0 0 (12,359) 12,359 625002 - Concessions/Special Promotions 0 0 (2,969) 2,969 625005 - Renewal Concession (23) 23 0 0 625006 - Discount - Residents Monthly 0 0 (5,894) 5,894 625009 - Concession Amortization - ------- -------- ------- -------- (23) 23 (20,417) 20,417 TOTAL CONCESSIONS (30,685) 30,685 (39,951) 39,951 522000 - Vacancy Loss - ------- -------- ------- -------- (30,685) 30,685 (39,951) 39,951 TOTAL VACANCY LOSS 0 0 (1,960) 1,960 631200 - Administrative Units - ------- -------- ------- -------- 0 0 (1,960) 1,960 TOTAL OTHER RENTAL LOSSES - ------- -------- ------- -------- (30,708) 30,708 (62,327) 62,327 TOTAL RENTAL LOSS - ------- -------- ------- -------- 211,752 (211,752) 191,788 (191,788) NET RENTAL INCOME 0 0 0 0 590508 - Resident Util Pymts: Electricity 6,775 (6,775) 3,545 (3,545) 590509 - Resident Util Pymts: Water/Swr 3,550 (3,550) 6,776 (6,776) 590510 - Resident Util Pymts: Ntrl Gas 1,775 (1,775) 1,501 (1,501) 590513 - Resident Util Pymts: Trash - ------- -------- ------- -------- 12,100 (12,100) 11,822 (11,822) TOTAL UTILITY PAYMENTS FROM RESIDENTS PREVIOUS CURRENT CURRENT CURRENT PREVIOUS YR YTD YTD YTD YEAR CURRENT YTD ACTUAL BUDGET VARIANCE ACTUAL VARIANCE ------- --------- ---------- --------- ----------- INCOME 500000 - Market Rent 264,142 2,900,326 (2,636,184) 3,194,550 (2,930,408) 500001 - Leases Under/Over Schedule (6,918) 0 (6,918) (2,915) (4,003) 500500 - Rent - Right Price Adjustment (626) 0 (626) (36,986) 36,360 500501 - Renewal Price Adjustment (1,674) 0 (1,674) (51,786) 50,112 512300 - Commercial Rent 0 (24) 24 0 0 ------- --------- ---------- --------- ----------- TOTAL GROSS POTENTIAL RENT 254,924 2,900,302 (2,645,378) 3,102,863 (2,847,939) 519100 - Concessions Reimbursement 1,056 0 1,056 34,550 (33,494) 522025 - Service Maintenance Guarantee 0 0 0 (669) 669 625002 - Concessions/Special Promotions (23,798) 0 (23,798) (201,321) 177,524 625005 - Renewal Concession (2,796) 0 (2,796) (24,482) 21,686 625006 - Discount - Residents Monthly 0 (276) 276 (260) 260 625009 - Concession Amortization 4,813 0 4,813 (15,989) 20,802 ------- --------- ---------- --------- ----------- TOTAL CONCESSIONS (20,724) (276) (20,448) (208,171) 187,447 522000 - Vacancy Loss (54,774) (430,434) 375,660 (405,828) 351,054 ------- --------- ---------- --------- ----------- TOTAL VACANCY LOSS (54,774) (430,434) 375,660 (405,828) 351,054 631200 - Administrative Units (1,942) 0 (1,942) (23,837) 21,895 ------- --------- ---------- --------- ----------- TOTAL OTHER RENTAL LOSSES (1,942) 0 (1,942) (23,837) 21,895 ------- --------- ---------- --------- ----------- TOTAL RENTAL LOSS (77,440) (430,710) 353,270 (637,836) 560,396 ------- --------- ---------- --------- ----------- NET RENTAL INCOME 177,484 2,469,592 (2,292,109) 2,465,027 (2,287,543) 590508 - Resident Util Pymts: Electricity 187 0 187 1,266 (1,079) 590509 - Resident Util Pymts: Water/Swr 6,194 81,300 (75,106) 75,722 (69,529) 590510 - Resident Util Pymts: Ntrl Gas 3,342 42,600 (39,258) 33,857 (30,516) 590513 - Resident Util Pymts: Trash 1,444 21,300 (19,856) 19,923 (18,479) ------- --------- ---------- --------- ----------- TOTAL UTILITY PAYMENTS FROM RESIDENTS 11,167 145,200 (134,033) 130,769 (119,602)
1 AIMCO STATEMENT OF OPERATIONS - DETAIL 008685 - Sands Point For the Period Ended December 2005 (12OSD) Run Date: 1/28/2005 9:51 AM APPLICATION: AIMCOPROPERTY USER ID: gcoalson
PREVIOUS PREVIOUS PREVIOUS CURRENT CURRENT YR YR CURRENT CURRENT CURRENT PREVIOUS YR MONTH MONTH MONTH CUR MONTH YTD YTD YTD YEAR CURRENT YTD BUDGET VARIANCE ACTUAL VARIANCE ACTUAL BUDGET VARIANCE ACTUAL VARIANCE - ------- -------- -------- --------- ------- --------- --------- --------- ----------- 0 0 0 0 591000 - Laundry Income 982 8,100 (7,118) 10,350 (9,369) 0 0 0 0 591002 - Vending Income 0 959 (959) 876 (876) 0 0 1,405 (1,405) 591007 - AS - Cable TV 0 5,800 (5,800) 5,789 (5,789) 0 0 412 (412) 591011 - Soft Drink Vending 293 1,700 (1,407) 2,243 (1,949) 375 (375) 397 (397) 599006 - Individual Washer/Dryer Income 477 4,500 (4,024) 3,493 (3,017) - ------ ------- ------- ------- ------------------------------------------ ------- -------- -------- -------- -------- 375 (375) 2,214 (2,214) TOTAL ANCILLARY SERVICES INCOME 1,752 21,059 (19,307) 22,751 (21,000) 483 (483) 1,637 (1,637) 500005 - Month to Month Fee 563 8,503 (7,940) 10,707 (10,143) 0 0 0 0 500006 - Short Term Lease Fee 0 293 (293) 293 (293) 6,000 (6,000) 7,320 (7,320) 592001 - Late Charges 4,488 72,000 (67,512) 85,384 (80,896) 100 (100) 100 (100) 592002 - NSF Charges 100 1,200 (1,100) 2,000 (1,900) 0 0 0 0 592004 - Admin Fees - Resident Charges 173 0 173 0 173 0 0 150 (150) 592006 - Keys, Locks, Lock Changes 636 0 636 1,145 (509) 300 (300) 300 (300) 592007 - Transfer Fee 0 600 (600) 2,400 (2,400) 0 0 0 0 592009 - Miscellaneous Resident Charges 0 150 (150) 158 (158) 539 (539) 600 (600) 592010 - Non-refundable Admin Fees 700 12,239 (11,539) 8,035 (7,335) 0 0 0 0 592012 - Rental Verification Fees 4 0 4 0 4 1,324 (1,324) 4,052 (4,052) 593000 - Cleaning & Damage Fees 2,040 26,954 (24,914) 41,434 (39,394) 30 (30) 0 0 593002 - Pet Damage Charges 0 619 (619) 1,200 (1,200) 175 (175) 764 (764) 599002 - Legal Fees 3,405 2,100 1,305 11,432 (8,027) 132 (132) 150 (150) 599003 - Non-refundable Pet Fees 450 3,002 (2,552) 2,350 (1,900) 7,500 (7,500) 13,707 (13,707) 599004 - Lease Cancellation Fees 10,638 90,000 (79,362) 147,891 (137,253) 494 (494) 385 (385) 599005 - Application Fees 805 10,123 (9,318) 8,932 (8,127) 0 0 0 0 599007 - Clubhouse Rentals 0 200 (200) 150 (150) 400 (400) 347 (347) 599013 - Monthly Pet Rent 315 4,800 (4,485) 5,939 (5,625) 0 0 0 0 599099 - Miscellaneous Income 0 0 0 166 (166) (1,500) 1,500 (735) 735 599200 - Fee Adjustments (16) (18,000) 17,984 (18,119) 18,103 - ------ ------- ------- ------- ------------------------------------------ ------- -------- -------- -------- -------- 15,978 (15,978) 28,776 (28,776) TOTAL MISCELLANEOUS INCOME 24,301 214,784 (190,483) 311,497 (287,197) - ------ ------- ------- ------- ------------------------------------------ ------- -------- -------- -------- -------- 28,453 (28,453) 42,812 (42,812) TOTAL OTHER INCOME 37,219 381,042 (343,823) 465,017 (427,798) (9,137) 9,137 (19,269) 19,269 637000 - Bad Debt Expense (10,641) (104,879) 94,238 (238,797) 228,157 914 (914) 2,713 (2,713) 637001 - Bad Debt Collections 371 10,688 (10,317) 20,460 (20,089) 0 0 0 0 637003 - Bad Debt Collection: Profess 56 0 56 0 56
2 AIMCO STATEMENT OF OPERATIONS - DETAIL 008685 - Sands Point For the Period Ended December 2005 (12OSD) APPLICATION: AIMCOPROPERTY Run Date: 1/28/2005 9:51 AM USER ID: gcoalson
PREVIOUS PREVIOUS CURRENT CURRENT YR YR MONTH MONTH MONTH CUR MONTH BUDGET VARIANCE ACTUAL VARIANCE - -------- --------- -------- --------- (365) 365 284 (284) 637005 - Bank Reconciliation Adjustments - ------- -------- ------- -------- (8,589) 8,589 (16,273) 16,273 TOTAL BAD DEBT EXPENSE - ------- -------- ------- -------- 231,615 (231,615) 218,328 (218,328) EFFECTIVE GROSS INCOME - ------- -------- ------- -------- OPERATING EXPENSES 23 23 0 0 610040 - Recreational Equipment 55 55 0 0 615600 - Fire Protection 6 6 0 0 619300 - Lease - Equipment - ------- -------- ------- -------- 83 83 0 0 COMMON AREA EXPENSE 2,256 2,256 6,239 6,239 645001 - Electricity - Vacant 1,975 1,975 (4,339) (4,339) 645003 - Electricity - List Bills 6,116 6,116 5,253 5,253 645100 - Water 11,398 11,398 6,175 6,175 645203 - Gas - List Bills 0 0 0 0 645204 - Gas - Laundry 3,801 3,801 4,322 4,322 645300 - Sewer - ------- -------- ------- -------- 25,545 25,545 17,651 17,651 TOTAL UTILITIES EXPENSE 1,285 1,285 0 0 626002 - Washer/Dryer Rental 200 200 0 0 631701 - Contract Common Area Cleaning 410 410 3,546 3,546 651900 - Contract Exterminating 1,500 1,500 1,443 1,443 652500 - Contract Trash Removal 0 0 140 140 653002 - Contract Courtesy Patrol 38 38 15 15 653004 - Contract Alarm System 37 37 0 0 653005 - Alarm Repair 2,300 2,300 3,070 3,070 653700 - Contract Yards and Grounds 979 979 527 527 654200 - Contract Repairs 0 0 0 0 654202 - Maintenance Contract 0 0 0 0 654230 - Contract Security 150 150 0 0 654302 - Electrical - Contract 200 200 847 847 654402 - Plumbing Contract CURRENT CURRENT CURRENT PREVIOUS PREVIOUS YR YTD YTD YTD YEAR CURRENT YTD ACTUAL BUDGET VARIANCE ACTUAL VARIANCE ------- --------- ---------- --------- ---------- 637005 - Bank Reconciliation Adjustments 1,614 (4,275) 5,889 (2,802) 4,415 ------- --------- ---------- --------- ---------- TOTAL BAD DEBT EXPENSE (8,600) (98,466) 89,866 (221,139) 212,539 ------- --------- ---------- --------- ---------- EFFECTIVE GROSS INCOME 206,103 2,752,169 (2,546,065) 2,708,905 (2,502,802) ------- --------- ---------- --------- ---------- OPERATING EXPENSES 610040 - Recreational Equipment 0 272 272 266 266 615600 - Fire Protection 0 660 660 647 647 619300 - Lease - Equipment 0 66 66 0 0 ------- --------- ---------- --------- ---------- COMMON AREA EXPENSE 0 998 998 914 914 645001 - Electricity - Vacant 3,609 28,529 24,920 32,358 28,749 645003 - Electricity - List Bills 2,230 27,745 25,515 23,462 21,232 645100 - Water 0 84,517 84,517 75,754 75,754 645203 - Gas - List Bills 7,103 84,350 77,247 64,586 57,483 645204 - Gas - Laundry 0 0 0 0 0 645300 - Sewer 0 46,245 46,245 46,968 46,968 ------- --------- ---------- --------- ---------- TOTAL UTILITIES EXPENSE 12,942 271,385 258,444 243,127 230,185 626002 - Washer/Dryer Rental 1,589 15,420 13,831 2,344 756 631701 - Contract Common Area Cleaning 922 2,400 1,478 1,011 89 651900 - Contract Exterminating 711 8,131 7,420 10,970 10,259 652500 - Contract Trash Removal 2,405 18,000 15,595 16,119 13,714 653002 - Contract Courtesy Patrol 140 0 (140) 356 216 653004 - Contract Alarm System 50 456 406 165 115 653005 - Alarm Repair 0 449 449 85 85 653700 - Contract Yards and Grounds 2,281 27,600 25,319 27,980 25,699 654200 - Contract Repairs 91 11,748 11,657 527 436 654202 - Maintenance Contract 380 0 (380) 0 (380) 654230 - Contract Security 0 360 360 498 498 654302 - Electrical - Contract 0 1,800 1,800 0 0 654402 - Plumbing Contract 1,754 2,400 646 4,886 3,132
3 AIMCO STATEMENT OF OPERATIONS - DETAIL 008685 - Sands Point For the Period Ended December 2005 (12OSD) APPLICATION: AIMCOPROPERTY Run Date: 1/28/2005 9:51 AM USER ID: gcoalson
PREVIOUS PREVIOUS PREVIOUS CURRENT CURRENT YR YR CURRENT CURRENT CURRENT PREVIOUS YR MONTH MONTH MONTH CUR MONTH YTD YTD YTD YEAR CURRENT YTD BUDGET VARIANCE ACTUAL VARIANCE ACTUAL BUDGET VARIANCE ACTUAL VARIANCE - ------ -------- -------- --------- ------- ------- -------- -------- ----------- 200 200 0 0 654602 - Contract HVAC 195 2,400 2,205 0 (195) ----- ----- ----- ----- ----------------- ---- ------ ------ ------ ------ ------- 7,299 7,299 9,587 9,587 TOTAL CONTRACT SERVICE 10,518 91,164 80,646 64,942 54,424 0 0 0 0 612800 - Irrigation Maint 0 750 750 808 808 350 350 0 0 617600 - Window & Glass Repair 0 4,200 4,200 2,504 2,504 48 48 0 0 632924 - Recreation Equipment Maintenance 0 574 574 90 90 300 300 0 0 651500 - Cleaning Supplies 210 3,600 3,390 3,447 3,238 0 0 0 0 652000 - Exterminating Supplies 0 0 0 75 75 8 8 52 52 652300 - Gas/Oil/Mileage 0 92 92 132 132 100 100 0 0 653600 - Landscaping Supplies 0 3,150 3,150 4,354 4,354 500 500 273 273 654101 - Electrical Supplies 372 6,300 5,928 6,152 5,780 600 600 297 297 654102 - Plumbing Supplies 902 9,150 8,248 6,962 6,059 500 500 10 10 654103 - Appliance Parts 303 6,150 5,847 5,860 5,557 150 150 146 146 654105 - Plumbing Fixtures/Repairs 0 2,100 2,100 6,571 6,571 108 108 256 256 654109 - Window Replacement 357 1,296 939 1,413 1,056 0 0 151 151 654199 - Other Maintenance Materials 2,902 0 (2,902) 151 (2,751) 0 0 0 0 654201 - Roof Repairs 295 0 (295) 0 (295) 129 129 0 0 654204 - Fence Repairs 0 1,543 1,543 1,543 1,543 150 150 0 0 654205 - Interior Building Improvements 0 1,800 1,800 1,497 1,497 550 550 0 0 654206 - Exterior Building Improvements 0 6,600 6,600 7,626 7,626 0 0 0 0 654209 - Sewer Repairs 0 0 0 578 578 12 12 0 0 654232 - Limited Access Gate Repairs 0 146 146 0 0 0 0 0 0 654500 - Elevator Expense 0 0 0 201 201 400 400 123 123 654601 - HVAC Parts & Supplies 113 5,600 5,487 4,376 4,263 25 25 0 0 654603 - Boiler Parts & Supplies 0 304 304 298 298 200 200 124 124 654700 - Pool Expense 189 3,850 3,661 3,766 3,578 (60) (60) 661 661 655200 - R & M Rebate - MRO 0 (2,782) (2,782) (2,997) (2,997) (177) (177) 35 35 655201 - R & M Rebate - Other (6) (740) (734) (391) (384) 54 54 74 74 656005 - Light Bulbs 183 648 465 74 (109) 0 0 0 0 656300 - Misc. 0 0 0 497 497 0 0 0 0 657000 - Equipment/Vehicle Expense 0 0 0 282 282 0 0 0 0 659001 - Fire Protection Equip Maint 0 11,382 11,382 435 435 ----- ----- ----- ----- ----- ------ ------ ------ ------ 3,946 3,946 2,202 2,202 TOTAL REPAIRS & MAINTENANCE 5,819 65,713 59,894 56,307 50,488
4 AIMCO STATEMENT OF OPERATIONS - DETAIL 008685 - Sands Point For the Period Ended December 2005 (12OSD) APPLICATION: AIMCOPROPERTY Run Date: 1/28/2005 9:51 AM USER ID: gcoalson
PREVIOUS PREVIOUS PREVIOUS CURRENT CURRENT YR YR CURRENT CURRENT CURRENT PREVIOUS YR MONTH MONTH MONTH CUR MONTH YTD YTD YTD YEAR CURRENT YTD BUDGET VARIANCE ACTUAL VARIANCE ACTUAL BUDGET VARIANCE ACTUAL VARIANCE - ------- -------- -------- --------- ------- ------- -------- -------- ---------- 1,350 1,350 1,395 1,395 651700 - Contract Cleaning 1,425 24,100 22,675 22,174 20,749 1,349 1,349 1,505 1,505 656002 - Contract Carpet Cleaning and Dyes 3,311 25,904 22,594 22,528 19,217 2,529 2,529 655 655 656003 - Contract Painting - Interior 1,450 39,743 38,293 31,931 30,481 444 444 0 0 656099 - Decorating - Contract Other 1,075 7,081 6,006 6,699 5,624 167 167 0 0 656101 - Drapery/Miniblinds Repairs 0 3,040 3,040 2,191 2,191 1,040 1,040 319 319 656102 - Painting Supplies 995 17,424 16,429 15,207 14,212 ----- ----- ----- ----- ----- ------ ------ ------ ------ 6,881 6,881 3,874 3,874 TOTAL TURNOVER EXPENSE 8,256 117,293 109,037 100,730 92,474 0 0 50 50 617104 - Radios/Pagers 33 0 (33) 471 438 1,348 1,348 1,404 1,404 629001 - Dues and Subscriptions 0 2,860 2,860 1,404 1,404 0 0 0 0 631015 - Office Rent 0 0 0 107 107 900 900 812 812 631100 - Office Supplies 888 10,800 9,913 10,857 9,970 250 250 116 116 631101 - Office Equipment 105 3,000 2,895 1,639 1,534 75 75 275 275 631102 - Bank Charges 153 900 747 2,173 2,020 1,800 1,800 517 517 631104 - Applicant Screening 826 21,600 20,774 20,619 19,792 400 400 190 190 631105 - Uniforms 292 4,800 4,508 3,428 3,136 35 35 0 0 631106 - Express Mail, Stamps 27 420 393 214 187 475 475 350 350 631108 - Credit Card Service Fees 446 5,700 5,254 5,445 5,000 150 150 0 0 632500 - Professional Fees 0 900 900 580 580 400 400 1,923 1,923 634000 - Legal Fees 1,562 4,800 3,238 7,162 5,600 725 725 635 635 636000 - Telephone 631 8,700 8,069 7,572 6,941 225 225 205 205 639004 - Computer Maint & Supplies 240 4,610 4,370 2,622 2,382 250 250 87 87 639007 - Training & Travel 0 2,000 2,000 3,217 3,217 0 0 20 20 639099 - Miscellaneous Administrative 245 0 (245) 2,339 2,093 216 216 0 0 655100 - Resident Stmt Processing Fee 0 2,592 2,592 0 0 ----- ----- ----- ----- ----- ------ ------ ------ ------ 7,249 7,249 6,583 6,583 TOTAL ADMINISTRATIVE EXPENSES 5,448 73,682 68,234 69,849 64,401 959 959 723 723 621003 - Periodicals 1,445 11,508 10,063 11,145 9,700 ----- ----- ----- ----- ----- ------ ------ ------ ------ 959 959 723 723 PERIODICALS 1,445 11,508 10,063 11,145 9,700 1,330 1,330 1,932 1,932 611200 - Web Advertising 2,236 15,960 13,724 13,975 11,739 ----- ----- ----- ----- ----- ------ ------ ------ ------ 1,330 1,330 1,932 1,932 INTERNET LEADS 2,236 15,960 13,724 13,975 11,739 0 0 0 0 621001 - Newspaper Advertising 265 3,000 2,735 5,746 5,481
5 AIMCO STATEMENT OF OPERATIONS - DETAIL 008685 - Sands Point For the Period Ended December 2005 (12OSD) APPLICATION: AIMCOPROPERTY Run Date: 1/28/2005 9:51 AM USER ID: gcoalson
PREVIOUS PREVIOUS CURRENT CURRENT YR YR CURRENT CURRENT CURRENT PREVIOUS PREVIOUS YR MONTH MONTH MONTH CUR MONTH YTD YTD YTD YEAR CURRENT YTD BUDGET VARIANCE ACTUAL VARIANCE ACTUAL BUDGET VARIANCE ACTUAL VARIANCE - ------- -------- -------- --------- ------- -------- -------- -------- ------------ 0 0 0 0 NEWSPAPERS 265 3,000 2,735 5,746 5,481 500 500 807 807 625001 - Referral Fees 550 6,000 5,450 4,657 4,107 500 500 0 0 625008 - Resident Referral Concessions 0 6,000 6,000 5,400 5,400 (230) (230) 503 503 625010 - Resident Referral Amortization 503 (2,762) (3,264) (28) (531) (203) (203) (403) (403) 625012 - Referral Fee Amortization (126) (2,436) (2,311) (2,115) (1,989) --- --- --- --- ----- ----- ----- ----- ----- 567 567 906 906 APARTMENT BROKERS 927 6,802 5,875 7,914 6,987 675 675 266 266 621013 - Leasing Promotions 1,227 8,100 6,873 8,606 7,379 --- --- --- --- ----- ----- ----- ----- ----- 675 675 266 266 ACTIVE OUTREACH 1,227 8,100 6,873 8,606 7,379 0 0 333 333 611100 - Marketing Phone Services 255 0 (255) 1,066 811 0 0 0 0 621007 - Brochures - New Leases 0 2,000 2,000 194 194 350 350 0 0 621011 - Flags/Banners 0 5,200 5,200 8,534 8,534 700 700 98 98 621012 - Move-in Gifts 1,189 8,400 7,211 11,997 10,808 0 0 385 385 625000 - Signage 623 0 (623) 727 103 0 0 0 0 626001 - Furniture - Models 0 0 0 506 506 336 336 304 304 629002 - Phone Sales 0 11,539 11,539 1,248 1,248 ----- ----- ----- ----- ----- ------ ------ ------ ------ 1,386 1,386 1,120 1,120 POINT OF SALE 2,067 27,139 25,072 24,271 22,204 113 113 113 113 621014 - Newsletters 113 1,356 1,243 1,373 1,260 50 50 1,524 1,524 621015 - Resident Relations 362 600 238 8,027 7,665 0 0 1,009 1,009 625007 - Resident Relations Concessions 80 0 (80) 9,632 9,552 650 650 0 0 625101 - Resident Functions 0 7,800 7,800 890 890 ----- ----- ----- ----- ----- ------ ------ ------ ------ 813 813 2,645 2,645 RETENTION 555 9,756 9,201 19,921 19,366 0 0 0 0 621099 - Advertising - Other 0 0 0 10 10 ----- ----- ----- ----- ----- ------ ------ ------ ------ 0 0 0 0 OTHER MARKETING 0 0 0 10 10 ----- ----- ----- ----- ----- ------ ------ ------ ------ 5,729 5,729 7,592 7,592 TOTAL MARKETING EXPENSE 8,721 82,265 73,543 91,588 82,866 8,393 8,393 5,948 5,948 621000 - Leasing Payroll 9,145 100,714 91,569 81,820 72,675 750 750 0 0 627200 - Miscellaneous Incentives 0 9,000 9,000 0 0 2,000 2,000 0 0 627300 - Leasing Commissions 0 27,200 27,200 23,078 23,078
6 AIMCO STATEMENT OF OPERATIONS - DETAIL 008685 - Sands Point For the Period Ended December 2005 (12OSD) APPLICATION: AIMCOPROPERTY Run Date: 1/28/2005 9:51 AM USER ID: gcoalson
PREVIOUS PREVIOUS PREVIOUS CURRENT CURRENT YR YR CURRENT CURRENT CURRENT PREVIOUS YR MONTH MONTH MONTH CUR MONTH YTD YTD YTD YEAR CURRENT YTD BUDGET VARIANCE ACTUAL VARIANCE ACTUAL BUDGET VARIANCE ACTUAL VARIANCE - ------- --------- -------- --------- -------- ---------- ----------- ---------- ----------- 0 0 1,801 1,801 627301 - Commission Amortization 1,801 0 (1,801) 3,202 1,402 650 650 0 0 627400 - Leasing Renewal Incentives 0 11,746 11,746 8,611 8,611 0 0 0 0 627500 - Coast-to-Coast Incentive 0 102 102 100 100 0 0 9 9 631000 - Salaries - Administrative 6 0 (6) 18,877 18,871 3,658 3,658 4,645 4,645 633000 - Salaries - Manager 5,128 43,890 38,762 49,660 44,532 5,941 5,941 1,893 1,893 633100 - Employee Apartments 2,490 62,793 60,303 53,436 50,947 0 0 0 0 651000 - Cleaning Payroll 0 0 0 12,832 12,832 1,992 1,992 2,759 2,759 653001 - Salaries - Courtesy Officer 4,501 23,910 19,408 10,176 5,675 0 0 0 0 653500 - Grnd Pr Payroll 0 0 0 1,895 1,895 9,152 9,152 10,533 10,533 654000 - Salaries - Maintenance 15,727 109,825 94,097 135,646 119,919 0 0 3,237 3,237 659800 - Payroll Adjustment (12,155) 0 12,155 734 12,888 (1,511) (1,511) (361) (361) 659900 - Repairs Payroll Capitalized (364) (18,103) (17,740) (20,398) (20,035) 2,035 2,035 1,892 1,892 671100 - Payroll Taxes 2,784 25,748 22,964 33,990 31,206 (1,434) (1,434) 0 0 671109 - Laundry Payroll Taxes 0 (17,271) (17,271) 0 0 1,883 1,883 1,735 1,735 672200 - Workers Compensation 2,675 22,601 19,926 36,328 33,653 1,562 1,562 2,092 2,092 672300 - Health Ins. & Other Benefits 4,174 18,742 14,568 31,385 27,211 0 0 (274) (274) 831001 - Ranking Bonus 748 0 (748) 4,932 4,185 ------- --------- ---------- --------- ---------- 35,071 35,071 35,909 35,909 TOTAL PAYROLL EXPENSE 36,660 420,896 384,235 486,306 449,645 - ------- -------- ------- -------- ------- --------- ---------- --------- ---------- 91,804 91,804 83,398 83,398 TOTAL CONTROLLABLE OPERATING EXPENSES 88,364 1,123,395 1,035,031 1,113,761 1,025,397 - ------- -------- ------- -------- ------- --------- ---------- --------- ---------- 139,811 (139,811) 134,930 (134,930) CONTROLLABLE NOI 117,740 1,628,774 (1,511,034) 1,595,144 (1,477,404) - ------- -------- ------- -------- NON-CONTROLLABLE OPERATING EXPENSES ------- --------- ---------- --------- ---------- 0 0 0 0 625013 - Topside Comm/Ref Amortization 0 0 0 (14,451) (14,451) - ------- -------- ------- -------- ------- --------- ---------- --------- ---------- 0 0 0 0 TOTAL MISC NON-CONTROLLABLE REV & ??? 0 0 0 (14,451) (14,451) 10,018 10,018 9,720 9,720 632000 - Management Fees 20,716 125,847 105,131 132,397 111,681 - ------- -------- ------- -------- ------- --------- ---------- --------- ---------- 10,018 10,018 9,720 9,720 TOTAL MANAGEMENT & ACCOUNTING FEES 20,716 125,847 105,131 132,397 111,681 (3) (3) (26) (26) 545000 - IN Conc Interest Income (78) (33) 44 (134) (57) (11) (11) (32) (32) 549001 - Security Deposit Interest (31) (133) (102) (232) (201)
7 AIMCO STATEMENT OF OPERATIONS - DETAIL 008685 - Sands Point For the Period Ended December 2005 (12OSD) APPLICATION: AIMCOPROPERTY Run Date: 1/28/2005 9:51 AM USER ID: gcoalson
PREVIOUS PREVIOUS CURRENT CURRENT YR YR MONTH MONTH MONTH CUR MONTH BUDGET VARIANCE ACTUAL VARIANCE ------ -------- -------- --------- ------ -------- -------- -------- (14) (14) (58) (58) TOTAL INTEREST INCOME 23 23 0 0 639002 - Ad Valorem Tax Service 17,100 17,100 13,382 13,382 671001 - Real Estate Taxes 4 4 50 50 671900 - Business Licenses and Permits ------ -------- ------- -------- 17,128 17,128 13,432 13,432 TOTAL TAXES 6,482 6,482 6,482 6,482 672000 - Hazard Insurance 125 125 130 130 672100 - Fidelity Bond Insurance (187) (187) 0 0 672900 - Other Insurance - ------- -------- ------- -------- 6,420 6,420 6,612 6,612 TOTAL INSURANCE - ------- -------- ------- -------- 23,548 23,548 20,044 20,044 TOTAL TAXES & INSURANCE - ------- -------- ------- -------- 33,553 33,553 29,707 29,707 TOTAL NONCONTROLLABLE OPERATING EXPENSES - ------- -------- ------- -------- 125,357 125,357 113,104 113,104 TOTAL OPERATING EXPENSES - ------- -------- ------- -------- 106,259 (106,259) 105,224 (105,224) NET OPERATING INCOME - ------- -------- ------- -------- NON-OPERATING EXPENSES 1,302 1,302 1,251 1,251 916003 - Amort - Loan Fee ------ -------- ------- -------- 1,302 1,302 1,251 1,251 TOTAL PROPERTY AMORT DEF LOAN EXPENSE 60,898 60,898 61,795 61,795 682001 - Interest 1st Mortgage ------ -------- ------- -------- 60,898 60,898 61,795 61,795 TOTAL PROPERTY MORTGAGE EXPENSE ------ -------- ------- -------- 62,200 62,200 63,046 63,046 TOTAL INTEREST EXPENSE 0 0 0 0 661100 - Depr-Bldgs/Excess Mgmt Fees - PPA 5,188 5,188 5,125 5,125 662000 - Deprec. - Buildings 47,055 47,055 49,508 49,508 666000 - Deprec. - Furnishings PREVIOUS CURRENT CURRENT CURRENT PREVIOUS YR YTD YTD YTD YEAR CURRENT YTD ACTUAL BUDGET VARIANCE ACTUAL VARIANCE -------- ---------- ----------- ---------- ----------- ------- --------- --------- --------- --------- TOTAL INTEREST INCOME (109) (166) (58) (367) (258) 639002 - Ad Valorem Tax Service 90 281 191 275 185 671001 - Real Estate Taxes 17,100 205,205 188,105 199,245 182,144 671900 - Business Licenses and Permits 50 51 1 50 0 ------- --------- --------- --------- --------- TOTAL TAXES 17,240 205,537 188,296 199,570 182,330 672000 - Hazard Insurance 6,481 77,782 71,301 76,815 70,334 672100 - Fidelity Bond Insurance 130 1,500 1,370 1,417 1,287 672900 - Other Insurance (3,599) (2,240) 1,358 (2,196) 1,402 ------- --------- --------- --------- --------- TOTAL INSURANCE 3,013 77,042 74,029 76,035 73,022 ------- --------- --------- --------- --------- TOTAL TAXES & INSURANCE 20,253 282,579 262,326 275,605 255,352 ------- --------- --------- --------- --------- TOTAL NONCONTROLLABLE OPERATING EXPENSES 40,861 408,259 367,398 393,184 352,324 ------- --------- --------- --------- --------- TOTAL OPERATING EXPENSES 129,224 1,531,654 1,402,430 1,506,945 1,377,721 ------- --------- --------- --------- --------- NET OPERATING INCOME 76,879 1,220,515 (1,143,636) 1,201,960 (1,125,081) ------- --------- --------- --------- --------- NON-OPERATING EXPENSES 916003 - Amort - Loan Fee 1,251 15,392 14,141 15,915 14,664 ------- --------- --------- --------- --------- TOTAL PROPERTY AMORT DEF LOAN EXPENSE 1,251 15,392 14,141 15,915 14,664 682001 - Interest 1st Mortgage 61,982 740,054 678,072 749,878 687,896 ------- --------- --------- --------- --------- TOTAL PROPERTY MORTGAGE EXPENSE 61,982 740,054 678,072 749,878 687,896 ------- --------- --------- --------- --------- TOTAL INTEREST EXPENSE 63,233 755,446 692,213 765,793 702,560 661100 - Depr-Bldgs/Excess Mgmt Fees - PPA 0 3 3 3 3 662000 - Deprec. - Buildings 5,198 62,714 57,516 58,953 53,755 666000 - Deprec. - Furnishings 49,071 579,188 530,117 584,769 535,699
8 AIMCO STATEMENT OF OPERATIONS - DETAIL 008685 - Sands Point For the Period Ended December 2005 (12OSD) APPLICATION: AIMCOPROPERTY Run Date: 1/28/2005 9:51 AM USER ID: gcoalson
CURRENT CURRENT PREVIOUS YR PREVIOUS YR MONTH MONTH MONTH CUR MONTH BUDGET VARIANCE ACTUAL VARIANCE - -------- -------- ----------- ------------- 52,244 52,244 54,633 54,633 TOTAL DEPRECIATION EXPENSE 2 2 25 25 834000 - Legal - ------- ------- ------- ------- 2 2 25 25 TOTAL PARTNERSHIP LEGAL 0 0 0 0 839100 - Asset Disposal Costs 0 0 0 0 931000 - Office Payroll - ------- ------- ------- ------- 0 0 0 0 TOTAL PARTNERSHIP OTHER EXPENSE - ------- ------- ------- ------- 2 2 25 25 TOTAL PARTNERSHIP EXPENSE - ------- ------- ------- ------- 114,446 114,446 117,704 117,704 TOTAL NON-OPERATING EXPENSES - ------- ------- ------- ------- (8,187) 8,187 (12,480) 12,480 NET INCOME(LOSS) - ------- ------- ------- ------- CHANGE IN ASSETS 0 0 0 0 111000 - Petty Cash - ------- ------- ------- ------- 0 0 0 0 CHANGE IN OTHR CASH & CASH EQUI 0 0 (18,026) 18,026 113000 - Tenant/Member Accts. Rec. 0 0 13,727 (13,727) 114089 - Allowance for Bad Debt - ------- ------- ------- ------- 0 0 (4,299) 4,299 CHANGE IN TENANTS' RENT RECEIVABLES 0 0 3,233 (3,233) 113600 - Credit Card Receivable 0 0 (644) 644 114001 - Ancillary Services A/R 0 0 (1,248) 1,248 114004 - A/R AIMCO 0 0 1,045 (1,045) 114011 - AR - Rebates 0 0 4,119 (4,119) 114016 - A/R Insurance Refund 0 0 0 0 114301 - Subsidy Voucher Clearing Account 0 0 (40) 40 116000 - Accrued Interest Short Term Investments - ------- ------- ------- ------- 0 0 6,465 (6,465) CHANGE IN OTHER RECEIVABLES CURRENT CURRENT CURRENT PREVIOUS PREVIOUS YR YTD YTD YTD YEAR CURRENT YTD ACTUAL BUDGET VARIANCE ACTUAL VARIANCE -------- ---------- ---------- ---------- ----------- TOTAL DEPRECIATION EXPENSE 54,269 641,905 587,636 643,726 589,457 834000 - Legal 58 1,150 1,092 1,142 1,085 ------- --------- --------- --------- --------- TOTAL PARTNERSHIP LEGAL 58 1,150 1,092 1,142 1,085 839100 - Asset Disposal Costs 0 0 0 2,250 2,250 931000 - Office Payroll 11,070 2,841 (8,229) 2,841 (8,229) ------- --------- --------- --------- --------- TOTAL PARTNERSHIP OTHER EXPENSE 11,070 2,841 (8,229) 5,091 (5,979) ------- --------- --------- --------- --------- TOTAL PARTNERSHIP EXPENSE 11,128 3,991 (7,137) 6,233 (4,894) ------- --------- --------- --------- --------- TOTAL NON-OPERATING EXPENSES 128,630 1,401,342 1,272,712 1,415,753 1,287,123 ------- --------- --------- --------- --------- NET INCOME(LOSS) (51,751) (180,827) 129,076 (213,793) 162,042 CHANGE IN ASSETS 111000 - Petty Cash 600 0 600 (300) 900 ------- --------- --------- --------- --------- CHANGE IN OTHR CASH & CASH EQUI 600 0 600 (300) 900 113000 - Tenant/Member Accts. Rec. 27,273 0 27,273 (13,736) 41,009 114089 - Allowance for Bad Debt (13,727) 0 (13,727) 12,049 (25,777) ------- --------- --------- --------- --------- CHANGE IN TENANTS' RENT RECEIVABLES 13,545 0 13,545 (1,687) 15,232 113600 - Credit Card Receivable (3,589) 0 (3,589) 3,224 (6,812) 114001 - Ancillary Services A/R 13,413 0 13,413 (753) 14,165 114004 - A/R AIMCO 1,248 0 1,248 (1,248) 2,496 114011 - AR - Rebates 571 0 571 2,636 (2,065) 114016 - A/R Insurance Refund 0 0 0 0 0 114301 - Subsidy Voucher Clearing Account 603 0 603 (603) 1,207 116000 - Accrued Interest Short Term Investments 76 0 76 (76) 151 ------- --------- --------- --------- --------- CHANGE IN OTHER RECEIVABLES 12,322 0 12,322 3,180 9,141
9 AIMCO STATEMENT OF OPERATIONS - DETAIL 008685 - Sands Point For the Period Ended December 2005 (12OSD) APPLICATION: AIMCOPROPERTY Run Date: 1/28/2005 9:51 AM USER ID: gcoalson
CURRENT CURRENT PREVIOUS YR PREVIOUS YR MONTH MONTH MONTH CUR MONTH BUDGET VARIANCE ACTUAL VARIANCE - ------- -------- ----------- ----------- 0 0 6,568 (6,568) 119100 - Cash - Tenant Security Deposit -- -- ------ ------- 0 0 6,568 (6,568) CHANGE IN TENANTS' SECURITY DEPOSITS 0 0 31 (31) 121005 - Prepaid Payroll 0 0 106 (106) 121099 - Other Prepaid Expense 0 0 6,612 (6,612) 124000 - Prepaid Prop. & Liab. Insurance 0 0 5,894 (5,894) 126000 - Prepaid Concessions 0 0 503 (503) 126100 - Prepaid Resident Referrals 0 0 1,801 (1,801) 126200 - Prepaid Commissions 0 0 (403) 403 126300 - Prepaid Referral Fees 0 0 0 0 161002 - Electricity Deposit -- -- ------ ------- 0 0 14,544 (14,544) CHANGE IN PREPAID EXPENSES 0 0 0 0 141000 - Land -- -- ------ ------- 0 0 0 0 CHANGE IN LAND ACQUISITION 0 0 0 0 142000 - Buildings 0 0 0 0 142001 - Building Improvements 0 0 0 0 142402 - Balconies 0 0 0 0 142415 - Other Building Improvements 0 0 0 0 143001 - HVAC Condensing Units 0 0 0 0 143002 - Major Sewer Replacement 0 0 0 0 144001 - Office Equipment 0 0 0 0 145002 - Furniture - Model/Club 0 0 0 0 145003 - Furniture - Outdoor 0 0 0 0 146500 - Appliances -- -- ------ ------- 0 0 0 0 CHANGE IN BUILDING FURNITURE & FIXTURES 0 0 (2,274) 2,274 143005 - Plumbing Fixtures 0 0 0 0 145699 - Cabinets 0 0 0 0 146001 - Drapes/Miniblinds 0 0 0 0 146299 - Countertops 0 0 (388) 388 146501 - Dishwasher 0 0 0 0 146502 - Stoves CURRENT CURRENT CURRENT PREVIOUS PREVIOUS YR YTD YTD YTD YEAR CURRENT YTD ACTUAL BUDGET VARIANCE ACTUAL VARIANCE -------------- ------- ---------- -------- ----------- 119100 - Cash - Tenant Security Deposit 61,770 0 61,770 (61,770) 123,541 ---------- -- ---------- ------ ---------- CHANGE IN TENANTS' SECURITY DEPOSITS 61,770 0 61,770 (61,770) 123,541 121005 - Prepaid Payroll 12,800 0 12,800 0 12,800 121099 - Other Prepaid Expense 537 0 537 (21) 557 124000 - Prepaid Prop. & Liab. Insurance 11,925 0 11,925 (1,113) 13,039 126000 - Prepaid Concessions 65,946 0 65,946 15,989 49,957 126100 - Prepaid Resident Referrals 2,403 0 2,403 (2,403) 4,805 126200 - Prepaid Commissions 8,874 0 8,874 (8,874) 17,748 126300 - Prepaid Referral Fees 2,115 0 2,115 (2,115) 4,229 161002 - Electricity Deposit 24,380 0 24,380 0 24,380 ---------- -- ---------- ------ ---------- CHANGE IN PREPAID EXPENSES 128,979 0 128,979 1,464 127,516 141000 - Land 2,146,775 0 2,146,775 0 2,146,775 ---------- -- ---------- ------ ---------- CHANGE IN LAND ACQUISITION 2,146,775 0 2,146,775 0 2,146,775 142000 - Buildings 144,839 0 144,839 0 144,839 142001 - Building Improvements 12,163,470 0 12,163,470 0 12,163,470 142402 - Balconies 8,160 0 8,160 0 8,160 142415 - Other Building Improvements 8,195 0 8,195 0 8,195 143001 - HVAC Condensing Units 24,628 0 24,628 0 24,628 143002 - Major Sewer Replacement 1,129 0 1,129 0 1,129 144001 - Office Equipment 5,144 0 5,144 0 5,144 145002 - Furniture - Model/Club 9,857 0 9,857 0 9,857 145003 - Furniture - Outdoor 9,167 0 9,167 0 9,167 146500 - Appliances 37,616 0 37,616 0 37,616 ---------- -- ---------- ------ ---------- CHANGE IN BUILDING FURNITURE & FIXTURES 12,412,205 0 12,412,205 0 12,412,205 143005 - Plumbing Fixtures 64,909 0 64,909 (6,170) 71,079 145699 - Cabinets 1,799 0 1,799 0 1,799 146001 - Drapes/Miniblinds 21,017 0 21,017 (2,141) 23,158 146299 - Countertops 4,873 0 4,873 0 4,873 146501 - Dishwasher 19,046 0 19,046 (2,958) 22,003 146502 - Stoves 1,734 0 1,734 (275) 2,009
10 AIMCO STATEMENT OF OPERATIONS - DETAIL 008685 - Sands Point For the Period Ended December 2005 (12OSD) APPLICATION: AIMCOPROPERTY Run Date: 1/28/2005 9:51 AM USER ID: gcoalson
CURRENT CURRENT PREVIOUS YR PREVIOUS YR CURRENT CURRENT CURRENT PREVIOUS PREVIOUS YR MONTH MONTH MONTH CUR MONTH YTD YTD YTD YEAR CURRENT YTD BUDGET VARIANCE ACTUAL VARIANCE ACTUAL BUDGET VARIANCE ACTUAL VARIANCE - ------- -------- ----------- ----------- ------- ------- -------- --------- ----------- 0 0 0 0 146503 - Refrigerators 26,808 0 26,808 (819) 27,627 0 0 (169) 169 146505 - Microwaves 3,553 0 3,553 (459) 4,012 0 0 0 0 146506 - Washers / Dryers 20,411 0 20,411 0 20,411 0 0 0 0 146510 - GE Dishwasher Replacements 1,351 0 1,351 0 1,351 0 0 (2,984) 2,984 146601 - Carpet - Unit 416,702 0 416,702 (56,787) 473,489 0 0 0 0 146602 - Tile 16,218 0 16,218 0 16,218 0 0 (1,182) 1,182 146603 - Vinyl 117,979 0 117,979 (20,632) 138,612 0 0 0 0 146999 - Garbage Disposals 2,808 0 2,808 0 2,808 0 0 0 0 147499 - Interior Decoration 2,423 0 2,423 0 2,423 0 0 0 0 147520 - Locks & Keys 391 0 391 0 391 0 0 0 0 147530 - Window Replacement 165 0 165 (165) 331 -- -- ------ ----- ------- -- ------- -------- ------- 0 0 (6,998) 6,998 CHANGE IN TURN CR 722,187 0 722,187 (90,406) 812,593 0 0 0 0 141002 - Parking Area 65,802 0 65,802 0 65,802 0 0 0 0 141003 - Swimming Pool - Decking 15,934 0 15,934 0 15,934 0 0 0 0 141015 - Perimeter Fencing 69,411 0 69,411 0 69,411 0 0 0 0 142401 - Clubhouse Renovations 461 0 461 0 461 0 0 0 0 142408 - Electrical/Breakers 15,497 0 15,497 (4,007) 19,504 0 0 0 0 142409 - Lighting - interior 16,856 0 16,856 0 16,856 0 0 0 0 142412 - Signage 8,738 0 8,738 0 8,738 0 0 0 0 142413 - Roof Replacement - Asphalt 164,708 0 164,708 (37,798) 202,506 0 0 0 0 142414 - Roof Replacement - Other 71,129 0 71,129 (71,129) 142,257 0 0 0 0 143004 - Water Heaters 18,374 0 18,374 0 18,374 0 0 0 0 144100 - Office Computers 8,948 0 8,948 (422) 9,370 0 0 0 0 145199 - Furniture & Fixtures 2,026 0 2,026 0 2,026 0 0 0 0 145499 - Air Conditioning 68,609 0 68,609 (10,417) 79,026 0 0 0 0 146899 - Fencing 2,223 0 2,223 (658) 2,881 0 0 (466) 466 147001 - Maintenance Equipment 9,495 0 9,495 (2,761) 12,256 0 0 0 0 147199 - Golf Carts 1,439 0 1,439 0 1,439 0 0 (8,158) 8,158 147600 - Landscaping 48,655 0 48,655 (8,158) 56,813 0 0 0 0 147799 - Model Interior 6,507 0 6,507 0 6,507 0 0 0 0 147899 - Painting - Building Exterior 219,035 0 219,035 (184,744) 403,779 0 0 0 0 147999 - Painting - Building Interior 8,186 0 8,186 (8,186) 16,373 0 0 0 0 148001 - Golf Cart 8,173 0 8,173 0 8,173
11 AIMCO STATEMENT OF OPERATIONS - DETAIL 008685 - Sands Point For the Period Ended December 2005 (12OSD) APPLICATION: AIMCOPROPERTY Run Date: 1/28/2005 9:51 AM USER ID: gcoalson
CURRENT CURRENT PREVIOUS YR PREVIOUS YR MONTH MONTH MONTH CUR MONTH BUDGET VARIANCE ACTUAL VARIANCE - ------- -------- ----------- ----------- 0 0 0 0 148610 - Fitness Equipment 0 0 0 0 148630 - Fire Safety 0 0 0 0 148799 - Resurfacing - Seal / Stripe 0 0 0 0 149000 - Miscellaneous Fixed Assets 0 0 0 0 149299 - Structural 0 0 0 0 149310 - Natural Gas Costs 0 0 0 0 149399 - Telephone 0 0 (73) 73 149700 - Cap X Rebate - MRO 0 0 (4) 4 149701 - Cap X Rebate - Other 0 0 8,844 (8,844) 149999 - Capital Replacements -CI allocation - ------ ----- ------ ------ 0 0 143 (143) CHANGE IN PROJECT CR (1,511) 1,511 (361) 361 149901 - Cap X Cap Payroll - ------ ----- ------ ------ (1,511) 1,511 (361) 361 CHANGE IN CR CAP PAYROLL - ------ ----- ------ ------ (1,511) 1,511 (7,215) 7,215 CHANGE IN CAPITAL REPLACEMENTS 0 0 0 0 150899 - ICE Cap Payroll 0 0 0 0 155199 - Initial - Furniture and Fixtures 0 0 0 0 155499 - Initial - Air Conditioning 0 0 0 0 155999 - Initial - Carpet/Vinyl 0 0 0 0 156199 - Initial - Computers 0 0 0 0 156299 - Initial - Counter Tops 0 0 0 0 156399 - Initial - Dishwashers 0 0 0 0 156499 - Initial - Drapery-Blinds 0 0 0 0 156599 - Initial - Electrical 0 0 0 0 156899 - Initial - Fencing 0 0 0 0 156999 - Initial - Garbage Disposals 0 0 0 0 157199 - Initial - Golf Carts 0 0 0 0 157599 - Initial - Landscaping 0 0 0 0 157899 - Initial - Painting - Building Exterior 0 0 0 0 158199 - Initial - Parking Lots 0 0 0 0 158299 - Initial - Plumbing 0 0 0 0 158399 - Initial - Pool CURRENT CURRENT CURRENT PREVIOUS PREVIOUS YR YTD YTD YTD YEAR CURRENT YTD ACTUAL BUDGET VARIANCE ACTUAL VARIANCE ------- ------- -------- --------- ----------- 148610 - Fitness Equipment 1,086 0 1,086 0 1,086 148630 - Fire Safety 724 0 724 0 724 148799 - Resurfacing - Seal / Stripe 2,087 0 2,087 0 2,087 149000 - Miscellaneous Fixed Assets 1,504,231 0 1,504,231 0 1,504,231 149299 - Structural 40,330 0 40,330 0 40,330 149310 - Natural Gas Costs 26,407 0 26,407 (26,407) 52,815 149399 - Telephone 105 0 105 (105) 209 149700 - Cap X Rebate - MRO (1,650) 0 (1,650) 308 (1,958) 149701 - Cap X Rebate - Other (4,409) 0 (4,409) 159 (4,568) 149999 - Capital Replacements -CI allocation (165,632) 0 (165,632) 165,632 (331,263) --------- ------- --------- -------- --------- CHANGE IN PROJECT CR 2,233,487 0 2,233,487 (188,694) 2,422,180 149901 - Cap X Cap Payroll 117,124 (18,103) 135,227 (20,398) 137,522 --------- ------- --------- -------- --------- CHANGE IN CR CAP PAYROLL 117,124 (18,103) 135,227 (20,398) 137,522 --------- ------- --------- -------- --------- CHANGE IN CAPITAL REPLACEMENTS 3,072,798 (18,103) 3,090,901 (299,497) 3,372,296 150899 - ICE Cap Payroll 10,787 0 10,787 0 10,787 155199 - Initial - Furniture and Fixtures 7,734 0 7,734 0 7,734 155499 - Initial - Air Conditioning 4,469 0 4,469 0 4,469 155999 - Initial - Carpet/Vinyl 83,905 0 83,905 0 83,905 156199 - Initial - Computers 5,385 0 5,385 0 5,385 156299 - Initial - Counter Tops (2,615) 0 (2,615) 0 (2,615) 156399 - Initial - Dishwashers 2,425 0 2,425 0 2,425 156499 - Initial - Drapery-Blinds 1,764 0 1,764 0 1,764 156599 - Initial - Electrical 6,172 0 6,172 0 6,172 156899 - Initial - Fencing 2,950 0 2,950 0 2,950 156999 - Initial - Garbage Disposals 1,277 0 1,277 0 1,277 157199 - Initial - Golf Carts 5,175 0 5,175 0 5,175 157599 - Initial - Landscaping 3,031 0 3,031 0 3,031 157899 - Initial - Painting - Building Exterior 38,245 0 38,245 0 38,245 158199 - Initial - Parking Lots 37,070 0 37,070 0 37,070 158299 - Initial - Plumbing 3,171 0 3,171 0 3,171 158399 - Initial - Pool 14,858 0 14,858 0 14,858
12 AIMCO STATEMENT OF OPERATIONS - DETAIL 008685 - Sands Point For the Period Ended December 2005 (12OSD) APPLICATION: AIMCOPROPERTY Run Date: 1/28/2005 9:51 AM USER ID: gcoalson
CURRENT CURRENT PREVIOUS YR PREVIOUS YR MONTH MONTH MONTH CUR MONTH BUDGET VARIANCE ACTUAL VARIANCE - ------- -------- ----------- ----------- 0 0 0 0 158499 - Initial - Ranges 0 0 0 0 158599 - Initial - Recreation Facilities 0 0 0 0 158699 - Initial - Refrigerators 0 0 0 0 158799 - Initial - Resurfacing 0 0 0 0 158899 - Initial - Roofs 0 0 0 0 158999 - Initial - Signage 0 0 0 0 159299 - Initial - Structural 0 0 0 0 159799 - Initial - Water Heaters 0 0 0 0 159899 - Initial - Other 0 0 0 0 159900 - Initial - Range Queens - --- --- ------- ------- 0 0 0 0 CHANGE IN INITIAL PROPERTY & EQUIPMENT 0 0 0 0 165199 - Enhance - Furniture & Fixtures 0 0 0 0 165999 - Enhance - Carpet/Vinyl 0 0 0 0 166299 - Enhance - Counter Tops 0 0 0 0 166499 - Enhance - Drapery-Blinds 0 0 0 0 166799 - Enhance - Equipment 0 0 (2,224) 2,224 167199 - Enhance - Golf Carts 0 0 0 0 167299 - Enhance - Grounds Lighting 0 0 0 0 167799 - Enhance - Model Interior 0 0 0 0 168299 - Enhance - Plumbing 0 0 0 0 168499 - Enhance - Ranges 0 0 0 0 168699 - Enhance - Refrigerators 0 0 0 0 169699 - Enhance - Washers & Dryers 0 0 0 0 169799 - Enhance - Water Heaters 0 0 0 0 169899 - Enhance - Other 0 0 2,224 (2,224) 169999 - Enhanced Property - CI allocation acct - --- --- ------- ------- 0 0 0 0 CHANGE IN ENHANCED PROPERTY & EQUIPMENT 0 0 (11,069) 11,069 179999 - Capital Improvements allocation account - --- --- ------- ------- 0 0 (11,069) 11,069 CHANGE IN CAPITAL IMPROVEMENTS 0 0 5,125 (5,125) 149803 - Acc. Depr - Bldg 0 0 49,508 (49,508) 149809 - Acc. Depr - Furn. Fixtures CURRENT CURRENT CURRENT PREVIOUS PREVIOUS YR YTD YTD YTD YEAR CURRENT YTD ACTUAL BUDGET VARIANCE ACTUAL VARIANCE ----------- ------- ------------ --------- ----------- 158499 - Initial - Ranges 715 0 715 0 715 158599 - Initial - Recreation Facilities 1,227 0 1,227 0 1,227 158699 - Initial - Refrigerators 2,180 0 2,180 0 2,180 158799 - Initial - Resurfacing 12,830 0 12,830 0 12,830 158899 - Initial - Roofs 14,879 0 14,879 0 14,879 158999 - Initial - Signage 1,195 0 1,195 0 1,195 159299 - Initial - Structural 41,801 0 41,801 0 41,801 159799 - Initial - Water Heaters 6,438 0 6,438 0 6,438 159899 - Initial - Other 3,536 0 3,536 0 3,536 159900 - Initial - Range Queens 11,159 0 11,159 0 11,159 ---------- --- ----------- -------- ---------- CHANGE IN INITIAL PROPERTY & EQUIPMENT 321,763 0 321,763 0 321,763 165199 - Enhance - Furniture & Fixtures 12,997 0 12,997 (6,544) 19,541 165999 - Enhance - Carpet/Vinyl 2,518 0 2,518 0 2,518 166299 - Enhance - Counter Tops 680 0 680 0 680 166499 - Enhance - Drapery-Blinds 79 0 79 0 79 166799 - Enhance - Equipment 403 0 403 0 403 167199 - Enhance - Golf Carts 4,449 0 4,449 (4,449) 8,897 167299 - Enhance - Grounds Lighting 37,063 0 37,063 0 37,063 167799 - Enhance - Model Interior 8,099 0 8,099 0 8,099 168299 - Enhance - Plumbing 19,335 0 19,335 0 19,335 168499 - Enhance - Ranges 463 0 463 0 463 168699 - Enhance - Refrigerators 774 0 774 0 774 169699 - Enhance - Washers & Dryers 11,980 0 11,980 0 11,980 169799 - Enhance - Water Heaters 29,800 0 29,800 (29,800) 59,600 169899 - Enhance - Other 11,238 0 11,238 0 11,238 169999 - Enhanced Property - CI allocation acct (10,993) 0 (10,993) 10,993 (21,985) ---------- --- ----------- -------- ---------- CHANGE IN ENHANCED PROPERTY & EQUIPMENT 128,885 0 128,885 (29,800) 158,685 179999 - Capital Improvements allocation account 176,624 0 176,624 (176,624) 353,248 ---------- --- ----------- -------- ---------- CHANGE IN CAPITAL IMPROVEMENTS 176,624 0 176,624 (176,624) 353,248 149803 - Acc. Depr - Bldg (7,441,433) 0 (7,441,433) 58,953 (7,500,386) 149809 - Acc. Depr - Furn. Fixtures (2,732,440) 0 (2,732,440) 584,769 (3,317,210)
13 AIMCO STATEMENT OF OPERATIONS - DETAIL 008685 - Sands Point For the Period Ended December 2005 (12OSD) APPLICATION: AIMCOPROPERTY Run Date: 1/28/2005 9:51 AM USER ID: gcoalson
CURRENT CURRENT PREVIOUS YR PREVIOUS YR MONTH MONTH MONTH CUR MONTH BUDGET VARIANCE ACTUAL VARIANCE - ------- -------- ----------- ----------- - ------ ----- ------ ------- 0 0 54,633 (54,633) CHANGE IN ACCUMULATED DEPRECIATION 0 0 0 0 192101 - Loan Cost 0 0 1,251 (1,251) 192102 - Amortization - ------ ----- ------ ------- 0 0 1,251 (1,251) CHANGE IN OTHER ASSETS - ------ ----- ------ ------- (1,511) 1,511 60,878 (60,878) CHANGE IN TOTAL ASSETS - ------ ----- ------ ------- CHANGE IN LIABILITIES 0 0 6,367 (6,367) 211000 - Accounts Payable 0 0 0 0 211003 - Accounts Payable - Other 0 0 (2,464) 2,464 211008 - Accrued AP - Expenses 0 0 368 (368) 211050 - Outstanding Check Liability 0 0 1,295 (1,295) 211100 - Accrued Accounts Payable - ------ ----- ------ ------- 0 0 5,567 (5,567) CHANGE IN ACCOUNTS PAYABLE 0 0 2,229 (2,229) 212000 - Accrued Wages and Payroll Taxes 0 0 734 (734) 215800 - Accrued Payroll - ------ ----- ------ ------- 0 0 2,963 (2,963) CHANGE IN PAYROLL ACCRUALS 0 0 0 0 211090 - Partnership A/P 0 0 (161) 161 212900 - Sales Taxes Payable 0 0 13,382 (13,382) 215000 - Accrued Property Taxes - ------ ----- ------ ------- 0 0 13,222 (13,222) CHANGE IN ACCRUED EXPENSES 0 0 (3,299) 3,299 219100 - Tenant Sec. Dep. Held in Trust 0 0 (252) 252 219101 - Security Deposit Refund - ------ ----- ------ ------- 0 0 (3,551) 3,551 CHANGE IN TENANTS' SECURITY DEPOSITS 0 0 (1,865) 1,865 221000 - Prepaid Rent - ------ ----- ------ ------- 0 0 (1,865) 1,865 CHANGE IN DEFERRED RENTAL REVENUE CURRENT CURRENT CURRENT PREVIOUS PREVIOUS YR YTD YTD YTD YEAR CURRENT YTD ACTUAL BUDGET VARIANCE ACTUAL VARIANCE ------------ -------- ------------ -------- ------------ ----------- ------- ----------- ------- ----------- CHANGE IN ACCUMULATED DEPRECIATION (10,173,873) 0 (10,173,873) 643,722 (10,817,596) 192101 - Loan Cost 150,152 0 150,152 0 150,152 192102 - Amortization (143,896) 0 (143,896) 15,015 (158,911) ----------- ------- ----------- ------- ----------- CHANGE IN OTHER ASSETS 6,256 0 6,256 15,015 (8,759) ----------- ------- ----------- ------- ----------- CHANGE IN TOTAL ASSETS 8,308,650 (18,103) 8,326,753 93,702 8,214,948 ----------- ------- ----------- ------- ----------- CHANGE IN LIABILITIES 211000 - Accounts Payable (10,832) 0 (10,832) (19,578) 8,746 211003 - Accounts Payable - Other 0 0 0 (39,688) 39,688 211008 - Accrued AP - Expenses (11,714) 0 (11,714) 11,714 (23,429) 211050 - Outstanding Check Liability (368) 0 (368) 368 (735) 211100 - Accrued Accounts Payable (1,295) 0 (1,295) 1,295 (2,591) ----------- ------- ----------- ------- ----------- CHANGE IN ACCOUNTS PAYABLE (24,209) 0 (24,209) (45,888) 21,679 212000 - Accrued Wages and Payroll Taxes (2,111) 0 (2,111) 2,111 (4,223) 215800 - Accrued Payroll (17,808) 0 (17,808) 734 (18,542) ----------- ------- ----------- ------- ----------- CHANGE IN PAYROLL ACCRUALS (19,920) 0 (19,920) 2,845 (22,765) 211090 - Partnership A/P (29,857) 0 (29,857) 0 (29,857) 212900 - Sales Taxes Payable (3,694) 0 (3,694) (289) (3,406) 215000 - Accrued Property Taxes (99,622) 0 (99,622) (2,280) (97,343) ----------- ------- ----------- ------- ----------- CHANGE IN ACCRUED EXPENSES (133,174) 0 (133,174) (2,568) (130,606) 219100 - Tenant Sec. Dep. Held in Trust (60,468) 0 (60,468) (23,000) (37,468) 219101 - Security Deposit Refund 252 0 252 (252) 505 ----------- ------- ----------- ------- ----------- CHANGE IN TENANTS' SECURITY DEPOSITS (60,216) 0 (60,216) (23,252) (36,963) 221000 - Prepaid Rent (6,503) 0 (6,503) (5,445) (1,057) ----------- ------- ----------- ------- ----------- CHANGE IN DEFERRED RENTAL REVENUE (6,503) 0 (6,503) (5,445) (1,057)
14 AIMCO STATEMENT OF OPERATIONS - DETAIL 008685 - Sands Point For the Period Ended December 2005 (12OSD) APPLICATION: AIMCOPROPERTY Run Date: 1/28/2005 9:51 AM USER ID: gcoalson
CURRENT CURRENT PREVIOUS YR PREVIOUS YR MONTH MONTH MONTH CUR MONTH BUDGET VARIANCE ACTUAL VARIANCE - -------- -------- ----------- ----------- 0 0 0 0 211101 - Mgmt. Fee Payable - AIMCO - -------- -------- ----------- ----------- 0 0 0 0 CHANGE IN FEES PAYABLE (14,792) 14,792 (13,613) 13,613 232001 - Principal 1st Mortgage - -------- -------- ----------- ----------- (14,792) 14,792 (13,613) 13,613 CHANGE IN MORTGAGE NOTES PAYABLE 0 0 (282) 282 213000 - Accrued Interest Payable - -------- -------- ----------- ----------- 0 0 (282) 282 CHANGE IN MORTGAGE INTEREST ACCR - -------- -------- ----------- ----------- (14,792) 14,792 2,440 (2,440) CHANGE IN TOTAL LIABILITIES - -------- -------- ----------- ----------- CHANGE IN EQUITY 0 0 0 0 325001 - Retained Earnings - -------- -------- ----------- ----------- 0 0 0 0 CHANGE IN CUMULATIVE LOSSES 0 0 0 0 312003 - Partners Capital 0 0 (10,000) 10,000 314000 - Investment in Properties - -------- -------- ----------- ----------- 0 0 (10,000) 10,000 CHANGE IN PARTNER EQUITY - -------- -------- ----------- ----------- 0 0 (10,000) 10,000 CHANGE IN TOTAL EQUITY - -------- -------- ----------- ----------- (14,792) 14,792 (7,560) 7,560 CHANGE IN TOTAL LIAB & EQUITY - -------- -------- ----------- ----------- (24,490) 24,490 40,837 (40,837) NET CASH FLOW - -------- -------- ----------- ----------- 0 0 38,495 (38,495) 111400 - Aimco Prop. LP - Indy Conc. 0 0 2,342 (2,342) 112001 - Cash in Bank - Field - -------- -------- ----------- ----------- 0 0 40,837 (40,837) CHANGE IN OPERATING CASH - -------- -------- ----------- ----------- CURRENT CURRENT CURRENT PREVIOUS PREVIOUS YR YTD YTD YTD YEAR CURRENT YTD ACTUAL BUDGET VARIANCE ACTUAL VARIANCE ---------- -------- ---------- -------- ----------- 211101 - Mgmt. Fee Payable - AIMCO 0 0 0 (239) 239 ---------- -------- ---------- -------- ----------- CHANGE IN FEES PAYABLE 0 0 0 (239) 239 232001 - Principal 1st Mortgage (8,928,960) (170,923) (8,758,037) (157,308) (8,771,652) ---------- -------- ---------- -------- ----------- CHANGE IN MORTGAGE NOTES PAYABLE (8,928,960) (170,923) (8,758,037) (157,308) (8,771,652) 213000 - Accrued Interest Payable (61,982) 0 (61,982) (1,092) (60,890) ---------- -------- ---------- -------- ----------- CHANGE IN MORTGAGE INTEREST ACCR (61,982) 0 (61,982) (1,092) (60,890) ---------- -------- ---------- -------- ----------- CHANGE IN TOTAL LIABILITIES (9,234,963) (170,923) (9,064,040) (232,948) (9,002,015) ---------- -------- ---------- -------- ----------- CHANGE IN EQUITY 325001 - Retained Earnings (941,112) 0 (941,112) (262,284) (678,828) ---------- -------- ---------- -------- ----------- CHANGE IN CUMULATIVE LOSSES (941,112) 0 (941,112) (262,284) (678,828) 312003 - Partners Capital (2,031,004) 0 (2,031,004) 0 (2,031,004) 314000 - Investment in Properties 3,568,182 0 3,568,182 446,000 3,122,182 ---------- -------- ---------- -------- ----------- CHANGE IN PARTNER EQUITY 1,537,178 0 1,537,178 446,000 1,091,178 ---------- -------- ---------- -------- ----------- CHANGE IN TOTAL EQUITY 809,859 0 809,859 446,000 363,859 ---------- -------- ---------- -------- ----------- CHANGE IN TOTAL LIAB & EQUITY (8,425,103) (170,923) (8,254,180) 213,052 (8,638,155) ---------- -------- ---------- -------- ----------- NET CASH FLOW (168,204) (369,853) 201, 649 92,962 (261,166) ---------- -------- ---------- -------- ----------- 111400 - Aimco Prop. LP - Indy Conc. (101,432) 0 (101,432) 89,544 (190,977) 112001 - Cash in Bank - Field (15,021) 0 (15,021) 3,417 (18,438) ---------- -------- ---------- -------- ----------- CHANGE IN OPERATING CASH (116,453) 0 (116,453) 92,962 (209,415) ---------- -------- ----------- -------- -----------
15 AIMCO STATEMENT OF OPERATIONS - DETAIL 008685 - Sands Point For the Period Ended December 2005 (12OSD) APPLICATION: AIMCOPROPERTY Run Date: 1/28/2005 9:51 AM USER ID: gcoalson
CURRENT CURRENT PREVIOUS YR PREVIOUS YR MONTH MONTH MONTH CUR MONTH BUDGET VARIANCE ACTUAL VARIANCE - ------- -------- ----------- ----------- CALCULATION OF FREE CASH FLOW 116,263 (116,263) 114,886 (114,886) REPORTABLE NOI PLUS: (1,511) 1,511 (7,215) 7,215 Change In Capital Replacements 0 0 0 0 Change In Initial Property & Equipment - ------- -------- ----------- ----------- 114,752 (114,752) 107,670 (107,670) EQUALS FREE CASH FLOW - ------- -------- ----------- ----------- Current Current Current Previous Previous Yr YTD YTD YTD Year Current YTD Actual Budget Variance Actual Variance --------- --------- ---------- --------- ----------- CALCULATION OF FREE CASH FLOW REPORTABLE NOI 97,487 1,346,195 (1,248,709) 1,319,539 (1,222,052) PLUS: Change In Capital Replacements 3,072,798 (18,103) 3,090,901 (299,497) 3,372,296 Change In Initial Property & Equipm 321,763 0 321,763 0 321,763 --------- --------- ---------- --------- ----------- EQUALS FREE CASH FLOW 3,492,047 1,328,092 2,163,955 1,020,041 2,472,006 --------- --------- ---------- --------- -----------
16 AIMCO 12 Month Operating Trend - Detail 008685 - Sands Point For the Period Ended February 2005 (1212OTD) APPLICATION: AIMCOPROPERTY Run Date: 3/1/2005 10:43 AM USER ID: gcoalson
MAR 04 APR 04 MAY 04 JUN 04 JLY 04 AUG 04 SEP 04 OCT 04 -------- --------- -------- -------- -------- -------- --------- -------- INCOME 500000 - Market Rent 268,658 268,658 265,268 264,448 264,448 271,288 260,118 265,582 500001 - Leases Under/Over Schedule (1,597) (3,546) (2,047) 3,111 1,928 (1,004) 9,531 2,606 500500 - Rent - Right Price Adjustment (5,173) (4,339) (3,728) (3,208) (3,059) (2,071) (1,780) (1,519) 500501 - Renewal Price Adjustment (5,927) (5,851) (5,657) (4,237) (3,891) (3,414) (3,047) (2,664) -------- -------- -------- -------- -------- -------- -------- -------- TOTAL GROSS POTENTIAL RENT 255,962 254,922 253,836 260,113 259,426 264,798 264,822 264,005 519100 - Concessions Reimbursement 1,911 7,893 3,007 3,747 679 658 1,618 250 522025 - Service Maintenance Guarante 0 0 0 0 0 0 0 0 625002 - Concessions/Special Promotior (15,080) (14.069) (12,020) (15,252) (19,526) (32,291) (22,986) (23,779) 625005 - Renewal Concession (2,081) (1,527) (733) (2,252) (1,376) (1,097) (2,370) (2,583) 625006 - Discount - Residents Monthly (38) (38) (38) 0 0 0 (23) (23) 625009 - Concession Amortization (358) (5,811) (5,553) (987) 2,394 12,143 4,336 2,790 -------- -------- -------- -------- -------- -------- -------- -------- TOTAL CONCESSIONS (15,646) (13,552) (15,338) (14,743) (17,828) (20,587) (19,425) (23,346) 522000 - Vacancy Loss (26,453) (32,058) (35,993) (42,692) (39,388) (33,199) (30,796) (30,274) -------- -------- -------- -------- -------- -------- -------- -------- TOTAL VACANCY LOSS (26,453) (32,058) (35,993) (42,692) (39,388) (33,199) (30,796) (30,274) 631200 - Administrative Units (2,047) (2,047) (2,027) (1,997) (1,997) (2,037) (1,957) (1,957) -------- -------- -------- -------- -------- -------- -------- -------- TOTAL OTHER RENTAL LOSSES (2,047) (2,047) (2,027) (1,997) (1,997) (2,037) (1,957) (1,957) -------- -------- -------- -------- -------- -------- -------- -------- TOTAL RENTAL LOSS (44,147) (47,657) (53,358) (59,433) (59,214) (55,823) (52,179) (55,577) -------- -------- -------- -------- -------- -------- -------- -------- NET RENTAL INCOME 211,815 207,264 200,478 200,681 200,212 208,976 212,643 208,429 590508 - Resident Util Pymts: Electricity 5 5 5 30 137 392 220 113 590509 - Resident Util Pymts: Water/Sw 6,746 6,411 6,279 6,335 6,423 6,770 6,922 6,920 590510 - Resident Util Pymts: Ntrl Gas 1,705 1,891 2,047 2,449 2,787 3,186 3,385 3,559 590513 - Resident Util Pymts: Trash 1,666 1,682 1,683 1,755 1,773 1,834 1,803 5,288 -------- -------- -------- -------- -------- -------- -------- -------- TOTAL UTILITY PAYMENTS FROM RESII 10,122 9,990 10,014 10,569 11,120 12,181 12,330 15,879 591000 - Laundry Income 1,942 0 1,894 0 1,516 0 1,399 352 591002 - Vending Income 80 0 143 93 62 93 86 107 591007 -AS - Cable TV 0 0 0 1,505 0 1,388 0 0 591011 - Soft Drink Vending 0 436 0 0 559 0 0 436 599006 - Individual Washer/Dryer Income 255 219 225 195 249 405 290 394 -------- -------- -------- -------- -------- -------- -------- -------- TOTAL ANCILLARY SERVICES INCOME 2,277 655 2,262 1,793 2,386 1,886 1,775 1,289 500005 - Month to Month Fee 407 687 1,350 447 1,147 1,107 1,243 1,383 NOV 04 DEC 04 JAN 05 FEB 05 Total -------- --------- --------- -------- ---------- INCOME 500000 - Market Rent 265,582 263,184 264,142 259,963 3,181,339 500001 - Leases Under/Over Schedule 2,330 (6,267) (6,533) 2,640 1,153 500500 - Rent - Right Price Adjustment (793) (812) (652) (601) (27,737) 500501 - Renewal Price Adjustment (2,532) (1,990) (1,674) (1,530) (42,413) ------- -------- -------- -------- ---------- TOTAL GROSS POTENTIAL RENT 264,587 254,116 255,282 260,473 3,112,342 519100 - Concessions Reimbursement 0 1,475 1,056 663 22,954 522025 - Service Maintenance Guarante 0 (669) 0 0 (669) 625002 - Concessions/Special Promotior (17,710) (12,359) (23,267) (12,492) (220,830) 625005 - Renewal Concession (2,622) (2,969) (2,821) (2,392) (24,822) 625006 - Discount - Residents Monthly (23) 0 0 0 (184) 625009 - Concession Amortization (997) (5,894) 4,813 (7,637) (760) ------- -------- -------- -------- ---------- TOTAL CONCESSIONS (21,352) (20,417) (20,219) (21,858) (224,311) 522000 - Vacancy Loss (38,057) (39,951) (54,361) (64,621) (467,844) ------- -------- -------- -------- ---------- TOTAL VACANCY LOSS (38,057) (39,951) (54,361) (64,621) (467,844) 631200 - Administrative Units (1,957) (1,960) (1.942) (1,887) (23,812) ------- -------- -------- -------- ---------- TOTAL OTHER RENTAL LOSSES (1,957) (1,960) (1,942) (1,887) (23,812) ------- -------- -------- -------- ---------- TOTAL RENTAL LOSS (61,367) (62,327) (76,522) (88,366) (715,968) ------- -------- -------- -------- ---------- NET RENTAL INCOME 203,220 191,788 178,760 172,107 2,396,374 590508 - Resident Util Pymts: Electricity 193 0 187 186 1,472 590509 - Resident Util Pymts: Water/Sw 6,816 3,545 6,221 6,116 75,503 590510 - Resident Util Pymts: Ntrl Gas 3,663 6,776 3,358 3,276 38,081 590513 - Resident Util Pymts: Trash (2,177) 1,501 1,450 1,422 19,681 ------- -------- -------- -------- ---------- TOTAL UTILITY PAYMENTS FROM RESII 8,495 11,822 11,215 11,000 134,737 591000 - Laundry Income 1,351 0 982 0 9,436 591002 - Vending Income 82 0 0 72 817 591007 -AS - Cable TV 0 1,405 0 1,328 5,626 591011 - Soft Drink Vending 0 412 293 0 2,137 599006 - Individual Washer/Dryer Income 376 397 477 458 3,940 ------- -------- -------- -------- ---------- TOTAL ANCILLARY SERVICES INCOME 1,809 2,214 1,752 1,857 21,955 500005 - Month to Month Fee 730 1,637 587 623 11,347
1 AIMCO 12 MONTH OPERATING TREND - DETAIL 008685 - Sands Point For the Period Ended February 2005 (1212OTD) APPLICATION: AIMCOPROPERTY Run Date: 3/1/2005 10:43 AM USER ID: gcoalson
MAR 04 APR 04 MAY 04 JUN 04 JLY 04 AUG 04 SEP 04 OCT 04 NOV 04 DEC 04 ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- 500006 - Short Term Lease Fee 0 0 0 277 17 0 0 0 0 0 592001 - Late Charges 5,535 7,985 16,805 1,260 7,985 6,205 7,340 8,619 4,525 7,320 592002 - NSF Charges 250 200 225 75 125 200 275 75 50 100 592004 - Admin Fees - Resident Charges 0 0 0 0 0 0 0 0 0 0 592006 - Keys, Locks, Lock Changes 0 150 135 85 25 125 75 175 0 150 592007 - Transfer Fee 300 0 0 0 300 0 600 300 0 300 592009 - Miscellaneous Resident Charges 0 0 0 100 0 50 0 0 8 0 592010 - Non-refundable Admin Fees 1,300 400 500 1,600 400 (200) 635 800 100 600 592011 - Storage Space 0 0 0 0 0 0 0 0 0 0 592012 - Rental Verification Fees 0 0 0 0 0 0 0 0 0 0 593000 - Cleaning & Damage Fees 2,859 5,157 3,498 3,837 3,405 3,717 4,536 2,362 1,846 4,052 593002 - Pet Damage Charges 0 0 0 0 800 0 0 0 400 0 599002 - Legal Fees 350 961 501 1,501 (99) 305 541 1,743 1,770 764 599003 - Non-refundable Pet Fees 0 200 200 200 200 500 150 150 0 150 599004 - Lease Cancellation Fees 6,667 13,417 15,300 8,881 4,769 13,128 6,082 16,686 15,437 13,707 599005 - Application Fees 840 770 945 841 737 667 665 596 386 385 599007 - Clubhouse Rentals 0 0 50 00 0 100 0 0 0 0 599013 - Monthly Pet Rent 535 635 560 533 477 430 443 400 359 347 599014 - Contra Lease Cancellation Fees 0 0 0 0 0 0 0 0 0 0 599099 - Miscellaneous Income 442 25 58 125 5 0 (124) 0 0 0 599200 - Fee Adjustments (1,100) (285) 0 (8,420) (2,525) (2,584) (665) (1,180) 0 (735) ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- TOTAL MISCELLANEOUS INCOME 18,384 30,302 40,127 11,342 17,767 23,751 21,796 32,110 25,612 28,776 ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- TOTAL OTHER INCOME 30,783 40,947 52,403 23,704 31,273 37,818 35,900 49,279 35,916 42,812 637000 - Bad Debt Expense (9,474) (24,556) (22,874) (18,736) (8,928) (13,084) (16,809) (23,538) (25,129) (19,269) 637001 - Bad Debt Collections 1,279 1,119 2,475 1,811 3,405 866 868 3,221 754 637003 - Bad Debt Collection: Professior 0 0 0 0 0 0 0 0 0 0 637005 - Bank Reconciliation Adjustment 0 (370) 95 176 131 (284) (1,961) (149) (1,118) 284 ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- TOTAL BAD DEBT EXPENSE (8,194) (23,807) (20,304) (16,750) (5,393) (12,502) (17,903) (20,466) (25,493) (16,273) EFFECTIVE GROSS INCOME 234,403 224,405 232,577 207,635 226,092 234,292 230,641 237,241 213,644 218,328 OPERATING EXPENSES 610040 - Recreational Equipment 90 0 0 0 176 0 0 0 0 0 615600 - Fire Protection 0 647 0 0 0 0 0 0 0 0 ------ ------- ------- ------- ------ ------- ------- ------- ------- ------- COMMON AREA EXPENSE 90 647 0 0 176 0 0 0 0 0 645001 - Electricity - Vacant 1,271 1,096 1,696 2,639 2,868 4,247 3,715 3,249 3,851 6,239
JAN 05 FEB 05 Total ------- -------- -------- 500006 - Short Term Lease Fee 0 0 293 592001 - Late Charges 4,333 3,523 81,435 592002 - NSF Charges 75 50 1,700 592004 - Admin Fees - Resident Charges 173 0 173 592006 - Keys, Locks, Lock Changes 566 607 2,093 592007 - Transfer Fee 0 300 2,100 592009 - Miscellaneous Resident Charges 0 0 158 592010 - Non-refundable Admin Fees 800 600 7,535 592011 - Storage Space 0 150 150 592012 - Rental Verification Fees 4 0 4 593000 - Cleaning & Damage Fees 1,854 1,109 38,231 593002 - Pet Damage Charges 0 0 1,200 599002 - Legal Fees 2,804 1,297 12,438 599003 - Non-refundable Pet Fees 150 450 2,350 599004 - Lease Cancellation Fees 3,129 27,372 144,576 599005 - Application Fees 805 735 8,372 599007 - Clubhouse Rentals 0 0 150 599013 - Monthly Pet Rent 315 332 5,366 599014 - Contra Lease Cancellation Fees 0 (24,583) (24,583) 599099 - Miscellaneous Income 0 0 530 599200 - Fee Adjustments (16) (1,160) (18,669) ------- -------- -------- TOTAL MISCELLANEOUS INCOME 15,578 11,404 276,949 ------- -------- -------- TOTAL OTHER INCOME 28,544 24,261 433,641 637000 - Bad Debt Expense (8,340) (7,772) (198,511) 637001 - Bad Debt Collections 371 0 18,882 637003 - Bad Debt Collection: 56 412 469 Professior 637005 - Bank Reconciliation 1,614 (395) (1,978) Adjustment ------- -------- ------- TOTAL BAD DEBT EXPENSE (6,299) (7,755) (181,138) EFFECTIVE GROSS INCOME 201,005 188,613 2,648,877 OPERATING EXPENSES 610040 - Recreational Equipment 0 0 266 615600 - Fire Protection 0 0 647 ------- -------- -------- COMMON AREA EXPENSE 0 0 914 645001 - Electricity - Vacant 1,773 1,836 34,479
2 AIMCO 12 MONTH OPERATING TREND - DETAIL 008685 - Sands Point For the Period Ended February 2005 (1212OTD) APPLICATION: AIMCOPROPERTY Run Date: 3/1/2005 10:43 AM USER ID: gcoalson
MAR 04 APR 04 MAY 04 JUN 04 JLY 04 AUG 04 SEP 04 OCT 04 NOV 04 ------ ------ ------ ------ ------ ------ ------ ------ ------ 645003 - Electricity - List Bills 1,774 1,636 2,230 2,352 2,471 2,447 2,627 2,500 6,240 645100 - Water 5,127 6,293 6,096 6,973 6,795 8,276 8,226 5,401 5,579 645203 - Gas - List Bills 8,025 6,430 5,324 0 8,698 2,919 3,243 3,439 5,141 645204 - Gas - Laundry 0 0 0 4,631 (4,631) 0 0 0 0 645300 - Sewer 4,046 3,984 3,797 4,312 3,589 4,402 4,286 4,247 4,399 649000 - Misc Utility Charges 0 0 0 0 0 0 0 0 0 ------ ------ ------ ------ ------ ------ ------ ------ ------ TOTAL UTILITIES EXPENSE 20,242 19,437 19,143 20,907 19,791 22,291 22,096 18,836 25,210 626002 - Washer/Dryer Rental 0 0 0 0 0 0 1,059 1,285 0 631701 - Contract Common Area Cleanin 0 31 0 0 0 0 0 160 820 651900 - Contract Exterminating 346 401 346 406 736 440 10 345 376 652500 - Contract Trash Removal 1,439 1,377 1,919 1,509 1,473 1,488 1,382 1,468 1,458 653002 - Contract Courtesy Patrol 0 0 0 0 0 140 114 (38) 0 653004 - Contract Alarm System 0 0 38 0 38 0 0 38 0 653005 - Alarm Repair 85 0 0 0 0 0 0 0 0 653700 - Contract Yards and Grounds 2,281 2,281 2,281 2,281 2,281 2,281 2,281 2,281 2,281 654200 - Contract Repairs 0 0 0 0 0 0 0 0 0 654202 - Maintenance Contract 0 0 0 0 0 0 0 0 0 654230 - Contract Security 0 0 90 0 0 90 0 138 90 654402 - Plumbing Contract (64) 1,875 1,384 0 0 0 300 0 0 654602 - Contract HVAC 0 0 0 0 0 0 0 0 0 ------ ------ ------ ------ ------ ------ ------ ------ ------ TOTAL CONTRACT SERVICE 4,087 5,965 6,057 4,196 4,527 4,439 5,146 5,676 5,025 612800 - Irrigation Maint 0 249 (249) 0 0 808 0 0 0 617600 - Window & Glass Repair 291 296 464 403 150 0 0 225 675 632924 - Recreation Equipment Maintenance 0 0 0 0 0 0 0 0 90 651500 - Cleaning Supplies 441 267 289 438 64 327 636 363 359 652000 - Exterminating Supplies 0 0 75 0 0 0 0 0 0 652300 - Gas/Oil/Mileage 0 0 7 7 28 0 38 0 0 653600 - Landscaping Supplies 0 0 249 789 0 0 0 2,380 674 654100 - Repairs/Maint. - Materials 0 0 0 0 0 0 0 0 0 654101 - Electrical Supplies 676 118 944 516 189 307 1,131 113 773 654102 - Plumbing Supplies 1,407 91 1,644 12 0 644 428 873 459 654103 - Appliance Parts 498 180 398 395 385 914 901 630 392 654104 - Equipment Rental/Repair 0 0 0 0 0 0 0 0 0 654105 - Plumbing Fixtures/Repairs 0 1,249 (1,546) 1,727 569 435 1,547 1,253 713 654109 - Window Replacement 0 464 (464) 0 182 198 0 327 0 654120 - Keys and Locks 0 0 0 0 0 0 0 0 0 654199 - Other Maintenance Materials 0 0 0 0 0 0 0 0 0 654201 - Roof Repairs 0 0 0 0 0 0 0 0 0 654204 - Fence Repairs 0 0 0 0 0 0 1,500 0 0
DEC 04 JAN 05 FEB 05 Total ------ ------ ------ ------- 645003 - Electricity - List Bills (4,339) 2,017 1,977 23,932 645100 - Water 5,253 6,980 1,156 72,154 645203 - Gas - List Bills 6,175 6,255 5,283 60,932 645204 - Gas - Laundry 0 0 0 0 645300 - Sewer 4,322 3,400 5,154 49,939 649000 - Misc Utility Charges 0 0 6 6 ------ ------ ------ ------- TOTAL UTILITIES EXPENSE 17,651 20,425 15,412 241,442 626002 - Washer/Dryer Rental 0 1,589 1,682 5,615 631701 - Contract Common Area Cleanin 0 922 100 2,033 651900 - Contract Exterminating 3,546 711 345 8,005 652500 - Contract Trash Removal 1,443 1,433 2,423 18,813 653002 - Contract Courtesy Patrol 140 140 140 636 653004 - Contract Alarm System 15 50 0 178 653005 - Alarm Repair 0 0 0 85 653700 - Contract Yards and Grounds 3,070 2,281 2,420 28,300 654200 - Contract Repairs 527 0 234 761 654202 - Maintenance Contract 0 0 835 835 654230 - Contract Security 0 0 0 408 654402 - Plumbing Contract 847 1,754 195 6,290 654602 - Contract HVAC 0 195 0 195 ------ ------ ------ ------- TOTAL CONTRACT SERVICE 9,587 9,074 8,374 72,154 612800 - Irrigation Maint 0 0 0 808 617600 - Window & Glass Repair 0 0 0 2,504 632924 - Recreation Equipment Maintenance 0 0 0 90 651500 - Cleaning Supplies 0 210 143 3,536 652000 - Exterminating Supplies 0 0 0 75 652300 - Gas/Oil/Mileage 52 0 0 132 653600 - Landscaping Supplies 0 0 56 4.148 654100 - Repairs/Maint. - Materials 0 0 402 402 654101 - Electrical Supplies 273 372 817 6,230 654102 - Plumbing Supplies 297 902 843 7,601 654103 - Appliance Parts 10 303 942 5,947 654104 - Equipment Rental/Repair 0 0 446 446 654105 - Plumbing Fixtures/Repairs 146 0 438 6,531 654109 - Window Replacement 256 357 965 2,286 654120 - Keys and Locks 0 0 203 203 654199 - Other Maintenance Materials 151 2,902 202 3,256 654201 - Roof Repairs 0 295 0 295 654204 - Fence Repairs 0 0 0 1,500
3 AIMCO 12 MONTH OPERATING TREND - DETAIL 008685 - Sands Point For the Period Ended February 2005 (1212OTD) APPLICATION: AIMCOPROPERTY Run Date: 3/1/2005 10:43 AM USER ID: gcoalson
MAR 04 APR 04 MAY 04 JUN 04 JLY 04 AUG 04 SEP 04 OCT 04 NOV 04 ------ ------ ------ ------ ------ ------ ------ ------ ------ 654205 - Interior Building Improvements 96 327 259 0 0 210 1 0 0 654206 - Exterior Building Improvements 771 1,167 748 655 160 823 824 734 378 654232 - Limited Access Gate Repairs 0 0 0 0 0 0 0 0 0 654500 - Elevator Expense 0 0 0 0 0 0 0 27 174 654601 - HVAC Parts & Supplies 168 897 303 91 139 1,252 624 189 371 654603 - Boiler Parts & Supplies 0 0 0 0 80 0 80 0 0 654700 - Pool Expense 232 196 224 746 182 649 499 400 163 655200 - R & M Rebate - MRO (45) (96) (148) (228) (284) 4 (1,112) (451) (613) 655201 - R & M Rebate - Other (25) (22) (34) (26) (18) (120) (24) (80) (25) 656005 - Light Bulbs 0 0 0 0 0 0 0 0 0 656300 - Misc. 0 0 65 0 0 0 0 0 0 657000 - Equipment/Vehicle Expense 0 20 0 261 0 0 0 0 0 659001 - Fire Protection Equip Maint 0 0 0 0 0 134 0 0 0 ------ ----- ----- ----- ----- ------ ------ ----- ----- TOTAL REPAIRS & MAINTENANCE 4,509 5,402 3,228 5,786 1,826 6,585 7,073 6,984 4,583 651700 - Contract Cleaning 1,598 1,060 1,548 1,733 1,190 2,524 2,340 2,898 2,625 656002 - Contract Carpet Cleaning and C 1,719 1,654 1,399 2,318 1,671 1,940 2,513 2,109 2,237 656003 - Contract Painting - Interior 2,410 1,935 3,385 2,725 3,781 4,410 3,300 1,650 2,635 656099 - Decorating - Contract Other 398 761 640 400 185 835 1,245 415 445 656101 - Drapery/Miniblinds Repairs 609 486 124 0 376 0 0 0 0 656102 - Painting Supplies 1,144 1,216 1,565 227 1,654 3,019 1,879 1,421 691 ------ ----- ----- ----- ----- ------ ------ ----- ----- TOTAL TURNOVER EXPENSE 7,877 7,112 8,661 7,402 8,858 12,728 11,278 8,492 8,633 617104 - Radios/Pagers 0 0 0 0 0 0 0 0 421 629001 - Dues and Subscriptions 0 0 0 0 0 0 0 0 0 631015 - Office Rent 0 0 0 0 0 0 0 107 0 631100 - Office Supplies 839 1,072 1,314 245 2,623 1,070 745 399 346 631101 - Office Equipment 150 146 127 107 175 159 132 0 133 631102 - Bank Charges 165 512 154 153 303 141 167 189 0 631104 - Applicant Screening 1,024 1,871 1,023 2750 1,382 2,619 1,579 883 3,132 631105 - Uniforms 253 245 273 389 212 351 254 395 354 631106 - Express Mail, Stamps 23 51 24 7 9 0 49 9 0 631108 - Credit Card Service Fees 350 336 348 407 414 1,238 342 432 523 631111 - Resident Eviction/Separation 0 0 0 0 0 0 0 0 0 632500 - Professional Fees 0 0 350 0 230 0 0 0 0 634000 - Legal Fees 52 105 565 1,271 (99) 10 153 1,563 830 636000 - Telephone 583 590 605 512 940 532 515 518 420 639004 - Computer Maint & Supplies (287) 104 302 203 203 233 205 298 534 639006 - Parking Expense 0 0 0 0 0 0 0 0 0 639007 - Training & Travel 34 262 338 299 71 194 206 557 456 639099 - Miscellaneous Administrative 9 77 539 0 94 397 279 226 419
DEC 04 JAN 05 FEB 05 Total ------ ------ ------ ------- 654205 - Interior Building Improvements 0 0 396 1,289 654206 - Exterior Building Improvements 0 0 0 6,260 654232 - Limited Access Gate Repairs 0 0 90 90 654500 - Elevator Expense 0 0 0 201 654601 - HVAC Parts & Supplies 123 113 229 4,498 654603 - Boiler Parts & Supplies 0 0 0 160 654700 - Pool Expense 124 189 160 3,762 655200 - R & M Rebate - MRO 661 (82) (192) (2,586) 655201 - R & M Rebate - Other 35 (6) (14) (359) 656005 - Light Bulbs 74 183 144 401 656300 - Misc. 0 0 0 65 657000 - Equipment/Vehicle Expense 0 0 0 282 659001 - Fire Protection Equip Maint 0 0 10,702 10,836 ----- ----- ------ ------- TOTAL REPAIRS & MAINTENANCE 2,202 5,737 16,973 70,889 651700 - Contract Cleaning 1,395 770 2,411 22,089 656002 - Contract Carpet Cleaning and C 1,505 2,655 2,405 24,125 656003 - Contract Painting - Interior 655 1,450 5,910 34,246 656099 - Decorating - Contract Other 0 1,075 0 6,399 656101 - Drapery/Miniblinds Repairs 0 0 6 1,602 656102 - Painting Supplies 319 572 2,127 15,834 ----- ----- ------ ------- TOTAL TURNOVER EXPENSE 3,874 6,523 12,858 104,295 617104 - Radios/Pagers 50 4 79 554 629001 - Dues and Subscriptions 1,404 0 0 1,404 631015 - Office Rent 0 0 0 107 631100 - Office Supplies 812 835 705 11,005 631101 - Office Equipment 116 105 105 1,457 631102 - Bank Charges 275 0 284 2,342 631104 - Applicant Screening 517 826 1,118 18,724 631105 - Uniforms 190 241 310 3,468 631106 - Express Mail, Stamps 0 27 40 239 631108 - Credit Card Service Fees 350 446 304 5,490 631111 - Resident Eviction/Separation 0 0 2,283 2,283 632500 - Professional Fees 0 0 161 741 634000 - Legal Fees 1,923 1,562 47 7,981 636000 - Telephone 635 493 614 6,957 639004 - Computer Maint & Supplies 205 240 225 2,464 639006 - Parking Expense 0 0 50 50 639007 - Training & Travel 87 0 263 2,768 639099 - Miscellaneous Administrative 20 166 71 2,296
4 AIMCO 12 MONTH OPERATING TREND - DETAIL 008685 - Sands Point For the Period Ended February 2005 (1212OTD) APPLICATION: AIMCOPROPERTY Run Date: 3/1/2005 10:43 AM USER ID: gcoalson
MAR 04 APR 04 MAY 04 JUN 04 JLY 04 AUG 04 SEP 04 -------- -------- -------- -------- -------- -------- -------- TOTAL ADMINISTRATIVE EXPENSES 3,195 5,374 5,963 6,342 6,556 6,943 4,625 621003 - Periodicals 891 879 1,006 969 959 959 959 -------- -------- -------- -------- -------- -------- -------- PERIODICALS 891 879 1,006 969 959 959 959 611200 - Web Advertising 1,356 1,098 1,143 908 766 1,704 1,441 -------- -------- -------- -------- -------- -------- -------- INTERNET LEADS 1,356 1,098 1,143 908 766 1,704 1,441 621001 - Newspaper Advertising 1,100 0 1,290 0 23 2,466 0 -------- -------- -------- -------- -------- -------- -------- NEWSPAPERS 1,100 0 1,290 0 23 2,466 0 625001 - Referral Fees 0 275 275 550 550 0 825 625008 - Resident Referral Concessions 0 0 0 900 600 1,300 1,000 625010 - Resident Referral Amortization 920 456 403 (475) (218) (938) (585) 625012 - Referral Fee Amortization (378) (172) (137) (344) (275) 247 (516) -------- -------- -------- -------- -------- -------- -------- APARTMENT BROKERS 542 559 540 632 657 610 724 621013 - Leasing Promotions 241 551 921 2,785 597 2,241 184 -------- -------- -------- -------- -------- -------- -------- ACTIVE OUTREACH 241 551 921 2,785 597 2,241 184 611100 - Marketing Phone Services 0 0 0 122 80 0 176 621007 - Brochures - New Leases 0 0 0 0 0 0 0 621011 - Flags/Banners (539) 832 746 562 1,098 1,961 952 621012 - Move-in Gifts 0 492 624 1,799 2,021 423 3,316 625000 - Signage 0 196 0 0 0 0 38 626001 - Furniture - Models 36 0 0 0 0 0 250 629002 - Phone Sales 0 0 0 0 0 8 436 -------- -------- -------- -------- -------- -------- -------- POINT OF SALE (503) 1,520 1,370 2,483 3,200 2,391 5,168 621014 - Newsletters 113 231 113 128 113 113 113 621015 - Resident Relations 348 721 572 1,088 453 1,208 1,022 625007 - Resident Relations Concessions 0 30 0 360 584 1,244 (680) 625101 - Resident Functions 0 0 141 56 245 0 0 -------- -------- -------- -------- -------- -------- -------- RETENTION 461 982 826 1,631 1,396 2,564 455 621099 - Advertising - Other 0 0 0 0 0 0 0 -------- -------- -------- -------- -------- -------- -------- OTHER MARKETING 0 0 0 0 0 0 0 -------- -------- -------- -------- -------- -------- -------- TOTAL MARKETING EXPENSE 4,087 5,589 7,097 9,408 7,598 12,935 8,931 621000 - Leasing Payroll 5,456 4,444 5,574 6,221 9,199 7,732 7,185 OCT 04 NOV 04 DEC 04 JAN 05 FEB 05 Total -------- -------- -------- -------- -------- -------- TOTAL ADMINISTRATIVE EXPENSES 5,577 7,568 6,583 4,945 6,660 70,331 621003 - Periodicals 959 896 723 723 723 10,644 -------- -------- -------- -------- -------- -------- PERIODICALS 959 896 723 723 723 10,644 611200 - Web Advertising 1,370 1,247 1,932 1,745 2,006 16,715 -------- -------- -------- -------- -------- -------- INTERNET LEADS 1,370 1,247 1,932 1,745 2,006 16,715 621001 - Newspaper Advertising 128 0 0 265 600 5,871 -------- -------- -------- -------- -------- -------- NEWSPAPERS 128 0 0 265 600 5,871 625001 - Referral Fees 550 275 807 550 825 5,482 625008 - Resident Referral Concessions 0 1,000 0 0 1,800 6,600 625010 - Resident Referral Amortization 403 (498) 503 503 (1,230) (756) 625012 - Referral Fee Amortization (220) 82 (403) (126) (387) (2,627) -------- -------- -------- -------- -------- -------- APARTMENT BROKERS 733 860 906 927 1,008 8,699 621013 - Leasing Promotions 459 73 266 427 1,684 10,429 -------- -------- -------- -------- -------- -------- ACTIVE OUTREACH 459 73 266 427 1,684 10,429 611100 - Marketing Phone Services 177 177 333 0 255 1,321 621007 - Brochures - New Leases 156 0 0 0 0 156 621011 - Flags/Banners 348 332 0 0 114 6,406 621012 - Move-in Gifts 1,469 960 98 1,189 0 12,390 625000 - Signage 0 108 385 422 622 1,770 626001 - Furniture - Models 0 0 0 0 0 286 629002 - Phone Sales 268 232 304 389 434 2,071 -------- -------- -------- -------- -------- -------- POINT OF SALE 2,418 1,809 1,120 2,000 1,424 24,401 621014 - Newsletters 113 113 113 113 113 1,486 621015 - Resident Relations 35 850 1,524 293 0 8,114 625007 - Resident Relations Concessions 0 0 1,009 80 90 2,717 625101 - Resident Functions 108 0 0 0 1,658 2,208 -------- -------- -------- -------- -------- -------- RETENTION 255 963 2,645 486 1,860 14,525 621099 - Advertising - Other 10 0 0 0 0 10 -------- -------- -------- -------- -------- -------- OTHER MARKETING 10 0 0 0 0 10 -------- -------- -------- -------- -------- -------- TOTAL MARKETING EXPENSE 6,332 5,848 7,592 6,572 9,305 91,294 621000 - Leasing Payroll 7,968 8,730 5,948 9,145 8,007 85,609
5 AIMCO 12 MONTH OPERATING TREND - DETAIL 008685 - Sands Point For the Period Ended February 2005 (1212OTD) APPLICATION: AIMCOPROPERTY Run Date: 3/1/2005 10:43 AM USER ID: gcoalson
MAR 04 APR 04 MAY 04 JUN 04 JLY 04 AUG 04 ---------- ---------- ---------- ---------- ---------- ---------- 627300 - Leasing Commissions 1,830 542 0 868 1,835 9,100 627301 - Commission Amortization 1,710 2,206 2,337 1,363 (1,040) (5,858) 627400 - Leasing Renewal Incentives 1,940 0 0 0 1,510 630 627500 - Coast-to-Coast Incentive 100 0 0 0 0 0 631000 - Salaries - Administrative 2,087 2,264 2,152 2,198 4,517 7 633000 - Salaries - Manager 3,190 3,231 3,303 3,376 6,072 4,888 633100 - Employee Apartments 5,329 5,504 5,376 5,696 4,982 3,079 651000 - Cleaning Payroll 1,440 1,440 1,447 1,454 2,182 1,213 653001 - Salaries - Courtesy Officer 0 0 0 484 1,125 968 653500 - Grnd Pr Payroll 0 0 0 0 0 632 654000 - Salaries - Maintenance 9,333 9,446 9,417 9,514 14,489 10,939 659800 - Payroll Adjustment 2,439 2,439 4,034 2,439 (14,036) 2,503 659900 - Repairs Payroll Capitalized (2,703) (3,235) (1,757) (905) (1,009) (2,440) 671100 - Payroll Taxes 2,650 2,387 2,533 2,592 4,190 3,278 672200 - Workers Compensation 3,162 3,236 3,346 3,369 5,437 3,698 672300 - Health Ins. & Other Benefits 3,761 3,581 1,506 2,840 4,985 2,074 831001 - Ranking Bonus 0 0 1,215 772 3,678 1,130 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL PAYROLL EXPENSE 41,724 37,485 40,483 42,282 48,115 43,572 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL CONTROLLABLE OPERATING EXP 85,811 87,011 90,633 96,324 97,447 109,493 ---------- ---------- ---------- ---------- ---------- ---------- CONTROLLABLE NOI 148,593 137,394 141,944 111,311 128,645 124,799 ---------- ---------- ---------- ---------- ---------- ---------- NON-CONTROLLABLE OPERATING EXPENSES 625013 - Topside Comm/Ref Amortization (14,451) 0 0 0 0 0 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL MISC NON-CONTROLLABLE REV (14,451) 0 0 0 0 0 632000 - Management Fees 11,293 11,103 11,090 10,824 11,490 10,973 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL MANAGEMENT & ACCOUNTING 11,293 11,103 11,090 10,824 11,490 10,973 545000 - IN Conc Interest Income 0 (3) 0 (18) (3) (9) 549001 - Security Deposit Interest 0 (9) 0 (14) (28) (43) ---------- ---------- ---------- ---------- ---------- ---------- TOTAL INTEREST INCOME 0 (12) 0 (32) (31) (53) 639002 - Ad Valorem Tax Service 55 0 0 0 30 0 671001 - Real Estate Taxes 17,249 17,248 17,248 17,248 17,248 17,248 671900 - Business Licenses and Permits 0 0 0 0 0 0 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL TAXES 17,304 17,248 17,248 17,248 17,278 17,248 SEP 04 OCT 04 NOV 04 DEC 04 JAN 05 FEB 05 Total ---------- ---------- ---------- ---------- ---------- ---------- ---------- 627300 - Leasing Commissions 5,425 275 0 0 0 0 19,875 627301 - Commission Amortization (2,281) 1,108 1,858 1,801 1,801 1,709 6,712 627400 - Leasing Renewal Incentives 0 0 0 0 0 0 4,080 627500 - Coast-to-Coast Incentive 0 0 0 0 0 0 100 631000 - Salaries - Administrative 0 9 0 9 0 1,229 14,471 633000 - Salaries - Manager 4,604 4,046 4,173 4,645 5,128 3,427 50,084 633100 - Employee Apartments 4,173 3,548 3,624 1,893 2,490 1,544 47,237 651000 - Cleaning Payroll 0 0 0 0 0 0 9,177 653001 - Salaries - Courtesy Officer 968 1,936 1,936 2,759 4,501 2,904 17,581 653500 - Grnd Pr Payroll 936 655 (328) 0 0 0 1,895 654000 - Salaries - Maintenance 11,166 15,509 9,993 10,533 15,727 9,406 135,474 659800 - Payroll Adjustment 2,503 2,503 4,024 3,237 (12,155) 1,912 1,842 659900 - Repairs Payroll Capitalized (1,148) (822) (1,442) (361) (364) (1,403) (17,588) 671100 - Payroll Taxes 2,535 2,385 2,034 1,892 2,784 2,449 31,711 672200 - Workers Compensation 2,298 (646) 1,905 1,735 2,675 2,216 32,430 672300 - Health Ins. & Other Benefits 1,640 421 1,083 2,092 4,174 1,963 30,119 831001 - Ranking Bonus 1,208 (654) (2,142) (274) 748 (91) 5,589 ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL PAYROLL EXPENSE 41,211 38,243 35,448 35,909 36,654 35,272 476,398 ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL CONTROLLABLE OPERATING EXP 100,360 90,140 92,315 83,398 89,930 104,855 1,127,716 ---------- ---------- ---------- ---------- ---------- ---------- ---------- CONTROLLABLE NOI 130,281 147,101 121,329 134,930 111,076 83,758 1,521,161 ---------- ---------- ---------- ---------- ---------- ---------- ---------- NON-CONTROLLABLE OPERATING EXPENSES 625013 - Topside Comm/Ref Amortization 0 0 0 0 0 0 (14,451) ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL MISC NON-CONTROLLABLE REV 0 0 0 0 0 0 (14,451) 632000 - Management Fees 10,638 11,122 10,952 9,720 10,726 9,990 129,922 ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL MANAGEMENT & ACCOUNTING 10,638 11,122 10,952 9,720 10,726 9,990 129,922 545000 - IN Conc Interest Income 8 (7) (74) (26) (133) (93) (358) 549001 - Security Deposit Interest (39) (35) (33) (32) (31) (31) (294) ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL INTEREST INCOME (31) (41) (106) (58) (164) (124) (652) 639002 - Ad Valorem Tax Service 190 0 0 0 90 0 365 671001 - Real Estate Taxes 17,248 17,248 13,382 13,382 17,100 17,100 198,951 671900 - Business Licenses and Permits 0 0 0 50 50 0 100 ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL TAXES 17,438 17,248 13,382 13,432 17,240 17,100 199,416
6 AIMCO 12 MONTH OPERATING TREND - DETAIL 008685 - Sands Point For the Period Ended February 2005 (1212OTD) APPLICATION: AIMCOPROPERTY Run Date: 3/1/2005 10:43 AM USER ID: gcoalson
MAR 04 APR 04 MAY 04 JUN 04 JLY 04 AUG 04 SEP 04 ---------- ---------- ---------- ---------- ---------- ---------- ---------- 672000 - Hazard Insurance 6,387 6,387 6,387 6,482 6,482 6,482 6,482 672100 - Fidelity Bond Insurance 112 112 112 112 112 112 112 672900 - Other Insurance 0 0 0 0 0 0 0 ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL INSURANCE 6,499 6,499 6,499 6,594 6,594 6,594 6,594 ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL TAXES & INSURANCE 23,803 23,747 23,747 23,842 23,872 23,842 24,032 615700 - Environmental Expenses 0 0 0 0 0 0 0 ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL PROPERTY UPGRADES 0 0 0 0 0 0 0 ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL NONCONTROLLABLE OPERATING 20,646 34,839 34,837 34,634 35,331 34,763 34,639 ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL OPERATING EXPENSES 106,457 121,850 125,470 130,957 132,778 144,255 134,999 ---------- ---------- ---------- ---------- ---------- ---------- ---------- NET OPERATING INCOME 127,947 102,555 107,107 76,678 93,315 90,037 95,642 ---------- ---------- ---------- ---------- ---------- ---------- ---------- NON-OPERATING EXPENSES 916003 - Amort - Loan Fee 1,251 1,251 1,251 1,251 1,251 1,251 1,251 ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL PROPERTY AMORT DEF LOAN E 1,251 1,251 1,251 1,251 1,251 1,251 1,251 682001 - Interest 1st Mortgage 62,898 62,809 62,368 62,630 62,269 62,448 62,356 ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL PROPERTY MORTGAGE EXPENSE 62,898 62,809 62,368 62,630 62,269 62,448 62,356 ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL INTEREST EXPENSE 64,149 64,061 63,620 63,881 63,520 63,699 63,607 661100 - Depr-Bldgs/Excess Mgmt Fees 0 0 3 0 0 0 0 662000 - Deprec. - Buildings 4,469 5,273 4,506 4,672 5,264 5,067 5,067 666000 - Deprec. - Furnishings 48,028 48,058 48,556 49,522 48,772 49,638 50,258 ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL DEPRECIATION EXPENSE 52,497 53,330 53,066 54,193 54,036 54,705 55,325 834000 - Legal 567 41 0 266 171 3 12 ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL PARTNERSHIP LEGAL 567 41 0 266 171 3 12 831900 - Appraisal Fees 0 0 0 0 0 0 0 839100 - Asset Disposal Costs 0 0 0 0 0 0 0 931000 - Office Payroll 0 0 1,958 1,188 0 (305) 0 ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL PARTNERSHIP OTHER EXPENSE 0 0 1,958 1,188 0 (305) 0 OCT 04 NOV 04 DEC 04 JAN 05 FEB 05 Total ---------- ---------- ---------- ---------- ---------- ---------- 672000 - Hazard Insurance 6,482 6,482 6,482 6,481 6,481 77,497 672100 - Fidelity Bond Insurance 149 130 130 130 (141) 1,183 672900 - Other Insurance 0 0 0 (3,599) 0 (3,599) ---------- ---------- ---------- ---------- ---------- ---------- TOTAL INSURANCE 6,630 6,612 6,612 3,013 6,340 75,081 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL TAXES & INSURANCE 23,878 19,994 20,044 20,253 23,441 274,496 615700 - Environmental Expenses 0 0 0 0 2 2 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL PROPERTY UPGRADES 0 0 0 0 2 2 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL NONCONTROLLABLE OPERATING 34,959 30,840 29,707 30,815 33,309 389,317 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL OPERATING EXPENSES 125,099 123,155 113,104 120,744 138,164 1,517,034 ---------- ---------- ---------- ---------- ---------- ---------- NET OPERATING INCOME 112,142 90,488 105,224 80,261 50,449 1,131,843 ---------- ---------- ---------- ---------- ---------- ---------- NON-OPERATING EXPENSES 916003 - Amort - Loan Fee 1,251 2,151 1,251 1,251 1,251 15,915 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL PROPERTY AMORT DEF LOAN E 1,251 2,151 1,251 1,251 1,251 15,915 682001 - Interest 1st Mortgage 61,988 62,170 61,795 61,982 61,887 747,600 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL PROPERTY MORTGAGE EXPENSE 61,988 62,170 61,795 61,982 61,887 747,600 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL INTEREST EXPENSE 63,239 64,321 63,046 63,233 63,138 763,515 661100 - Depr-Bldgs/Excess Mgmt Fees 0 0 0 0 0 3 662000 - Deprec. - Buildings 5,141 5,125 5,125 5,198 5,580 60,486 666000 - Deprec. - Furnishings 49,850 49,540 49,508 49,071 49,183 589,983 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL DEPRECIATION EXPENSE 54,991 54,665 54,633 54,269 54,763 650,473 834000 - Legal 9 11 25 54 4 1,163 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL PARTNERSHIP LEGAL 9 11 25 54 4 1,163 831900 - Appraisal Fees 2,250 (2,250) 0 0 0 0 839100 - Asset Disposal Costs 0 2,250 0 0 0 2,250 931000 - Office Payroll 0 0 0 11,070 208 14,119 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL PARTNERSHIP OTHER EXPENSE 2,250 0 0 11,070 208 16,369
7 AIMCO 12 MONTH OPERATING TREND - DETAIL 008685 - Sands Point For the Period Ended February 2005 (1212OTD) APPLICATION: AIMCOPROPERTY Run Date: 3/1/2005 10:43 AM USER ID: gcoalson
MAR 04 APR 04 MAY 04 JUN 04 JLY 04 AUG 04 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL PARTNERSHIP EXPENSE 567 41 1,958 1,454 171 (303) ---------- ---------- ---------- ---------- ---------- ---------- TOTAL NON-OPERATING EXPENSES 117,214 117,432 118,644 119,529 117,728 118,101 ---------- ---------- ---------- ---------- ---------- ---------- NET INCOME(LOSS) 10,733 (14,877) (11,536) (42,851) (24,413) (28,065) ---------- ---------- ---------- ---------- ---------- ---------- CHANGE IN ASSETS 111000 - Petty Cash 0 0 0 0 0 0 ---------- ---------- ---------- ---------- ---------- ---------- CHANGE IN OTHR CASH & CASH EQUI 0 0 0 0 0 0 113000 - Tenant/Member Accts. Rec. (11,225) 500 (27,663) 36,797 (9,609) 1,646 114089 - Allowance for Bad Debt 6,536 (4,332) 11,994 (12,879) 6,332 (2,715) ---------- ---------- ---------- ---------- ---------- ---------- CHANGE IN TENANTS' RENT RECEIVABLES (4,689) (3,831) (15,669) 23,918 (3,277) (1,069) 113600 - Credit Card Receivable (644) 1,318 (298) (2,025) 372 (1,581) 114000 - Accounts Receivable (Other) 2,281 0 0 (10) 10 0 114001 - Ancillary Services A/R 0 0 0 0 0 0 114004 - A/R AIMCO 0 0 0 0 0 0 114011 - AR - Rebates 481 0 (89) (198) 287 (604) 114016 - A/R Insurance Refund 0 0 0 0 2,196 0 114301 - Subsidy Voucher Clearing Acc 0 0 0 0 0 (559) 116000 - Accrued Interest Short Term In 0 0 0 0 (21) (11) ---------- ---------- ---------- ---------- ---------- ---------- CHANGE IN OTHER RECEIVABLES 2,118 1,318 (387) (2,232) 2,844 (2,755) 119100 - Cash - Tenant Security Deposit (27,000) (2,009) (46,738) 1,486 (28) (43) ---------- ---------- ---------- ---------- ---------- ---------- CHANGE IN TENANTS' SECURITY DEP (27,000) (2,009) (46,738) 1,486 (28) (43) 121005 - Prepaid Payroll 0 0 0 0 0 (305) 121099 - Other Prepaid Expense (500) 104 104 104 104 104 124000 - Prepaid Prop. & Liab. Insurance (49,724) 6,499 6,499 2,963 6,594 6,594 126000 - Prepaid Concessions 358 5,811 5,553 987 (2,394) (12,143) 126100 - Prepaid Resident Referrals (388) 75 75 (713) (338) (938) 126200 - Prepaid Commissions (7,120) 819 1,280 634 (1,116) (5,858) 126300 - Prepaid Referral Fees (378) (172) (137) (344) (275) 247 126400 - Prepaid Resident Referrals Topside (1,067) 381 328 238 120 0 126500 - Prepaid Commissions Topside (3,247) 1,386 1,057 728 76 0 ---------- ---------- ---------- ---------- ---------- ---------- CHANGE IN PREPAID EXPENSES (62,065) 14,904 14,758 4,597 2,771 (12,299) 143005 - Plumbing Fixtures 0 (1,171) 0 0 0 0 SEP 04 OCT 04 NOV 04 DEC 04 JAN 05 FEB 05 Total ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL PARTNERSHIP EXPENSE 12 2,259 11 25 11,124 212 17,532 ---------- ---------- ---------- ---------- ---------- ---------- ---------- TOTAL NON-OPERATING EXPENSES 118,944 120,489 118,997 117,704 128,626 118,113 1,431,520 ---------- ---------- ---------- ---------- ---------- ---------- ---------- NET INCOME(LOSS) (23,303) (8,347) (28,509) (12,480) (48,365) (67,664) (299,676) ---------- ---------- ---------- ---------- ---------- ---------- ---------- CHANGE IN ASSETS 111000 - Petty Cash 0 0 (300) 0 0 0 (300) ---------- ---------- ---------- ---------- ---------- ---------- ---------- CHANGE IN OTHR CASH & CASH EQUI 0 0 (300) 0 0 0 (300) 113000 - Tenant/Member Accts. Rec. (557) (3,966) 8,246 (18,026) 16,935 2,450 (4,471) 114089 - Allowance for Bad Debt (1,789) 686 (3,953) 13,727 (12,567) 755 1,795 ---------- ---------- ---------- ---------- ---------- ---------- ---------- CHANGE IN TENANTS' RENT RECEIVABLES (2,345) (3,280) 4,293 (4,299) 4,368 3,205 (2,676) 113600 - Credit Card Receivable (531) 135 3,411 3,233 (3,589) 2,320 2,122 114000 - Accounts Receivable (Other) 0 0 0 0 0 0 2,281 114001 - Ancillary Services A/R 0 (3,901) 3,792 (644) 0 0 (753) 114004 - A/R AIMCO 0 0 0 (1,248) 1,248 0 0 114011 - AR - Rebates (141) 415 (190) 1,045 314 (133) 1,187 114016 - A/R Insurance Refund 0 (4,119) 0 4,119 (3,599) 2,466 1,064 114301 - Subsidy Voucher Clearing Acc (559) 515 0 0 603 0 0 116000 - Accrued Interest Short Term In 27 0 (30) (40) 13 (35) (97) ---------- ---------- ---------- ---------- ---------- ---------- ---------- CHANGE IN OTHER RECEIVABLES (1,204) (6,955) 6,983 6,465 (5,009) 4,619 5,804 119100 - Cash - Tenant Security Deposit 6,061 (35) (33) 6,568 (31) (31) (61,832) ---------- ---------- ---------- ---------- ---------- ---------- ---------- CHANGE IN TENANTS' SECURITY DEP 6,061 (35) (33) 6,568 (31) (31) (61,832) 121005 - Prepaid Payroll 212 31 31 31 0 0 0 121099 - Other Prepaid Expense (699) 106 106 106 (143) 86 (419) 124000 - Prepaid Prop. & Liab. Insurance 6,594 5,067 6,612 6,612 (855) 6,611 10,067 126000 - Prepaid Concessions (4,336) (2,790) 997 5,894 (4,813) 7,637 760 126100 - Prepaid Resident Referrals (585) 403 (498) 503 503 (1,230) (3,130) 126200 - Prepaid Commissions (2,281) 1,108 1,858 1,801 1,801 1,709 (5,365) 126300 - Prepaid Referral Fees (516) (220) 82 (403) (126) (387) (2,627) 126400 - Prepaid Resident Referrals 0 0 0 0 0 0 0 126500 - Prepaid Commissions Topside 0 0 0 0 0 0 0 ---------- ---------- ---------- ---------- ---------- ---------- ---------- CHANGE IN PREPAID EXPENSES (1,612) 3,705 9,190 14,544 (3,633) 14,426 (713) 143005 - Plumbing Fixtures 0 0 0 (2,274) 0 (617) (4,063)
8 AIMCO 12 MONTH OPERATING TREND - DETAIL 008685 - Sands Point For the Period Ended February 2005 (1212OTD) APPLICATION: AIMCOPROPERTY Run Date: 3/1/2005 10:44 AM USER ID: gcoalson
MAR 04 APR 04 MAY 04 JUN 04 JLY 04 AUG 04 --------- -------- -------- -------- -------- -------- 146001 - Drapes/Miniblinds 0 (233) 0 (280) 0 (945) 146501 - Dishwasher 0 0 (182) 0 (441) (668) 146502 - Stoves 0 0 (275) 0 0 0 146503 - Refrigerators 0 0 (379) 0 0 0 146505 - Microwaves 0 (289) 0 0 0 0 146601 - Carpet - Unit (4,989) (4,142) (5,672) (7,227) (5,605) (5,060) 146603 - Vinyl (747) (874) (1,687) (1,716) (3,915) (2,730) 146999 - Garbage Disposals 0 0 0 0 0 0 147530 - Window Replacement - Turn CR 0 0 0 0 (165) 0 -------- ------- ------- ------- ------- ------- CHANGE IN TURN CR (5,736) (6,710) (8,195) (9,223) (10,125) (9,402) 141002 - Parking Area 0 0 0 0 0 0 141003 - Swimming Pool - Decking 0 0 0 0 0 0 142408 - Electrical/Breakers 0 0 0 0 0 0 142413 - Roof Replacement - Asphalt (97,241) 60,729 0 0 0 0 142414 - Roof Replacement - Other 0 0 0 (71,129) 0 0 142421 - Balcony Replacement / Repair 0 0 0 0 0 0 144100 - Office Computers 0 0 0 0 0 0 145199 - Furniture & Fixtures 9,000 0 0 0 0 0 145499 - Air Conditioning 0 (339) (1,479) (2,077) (330) (768) 146899 - Fencing 0 0 0 0 0 0 147001 - Maintenance Equipment 0 0 0 0 0 (2,296) 147600 - Landscaping 0 0 0 0 0 0 147899 - Painting - Building Exterior (14,963) (15,034) (36,273) (23,886) (33,376) (5,503) 147999 - Painting - Building Interior 96 (2,777) 96 (2,735) (2,770) 0 149299 - Structural 0 0 0 0 0 0 149399 - Telephone (19) 20 0 0 (26) (26) 149700 - Cap X Rebate - MRO 5 11 16 25 32 466 149701 - Cap X Rebate - Other 3 2 4 3 2 13 149999 - Capital Replacements - CI allocation 0 0 33,719 0 104,081 542 -------- ------- ------- ------- ------- ------- CHANGE IN PROJECT CR (103,119) 42,613 (3,917) (99,799) 67,612 (7,572) 149901 - Cap X Cap Payroll (2,703) (3,235) (1,757) (905) (1,009) (2,440) -------- ------- ------- ------- ------- ------- CHANGE IN CR CAP PAYROLL (2,703) (3,235) (1,757) (905) (1,009) (2,440) -------- ------- ------- ------- ------- ------- CHANGE IN CAPITAL REPLACEMENTS (111,559) 32,668 (13,869) (109,927) 56,478 (19,414) 165199 - Enhance - Furniture & Fixtures (6,544) 0 0 0 0 0 167199 - Enhance - Golf Carts 0 0 0 0 0 0 169799 - Enhance - Water Heaters 0 0 0 0 0 (29,800) 169999 - Enhanced Property - CI allocation 0 0 6,544 0 0 0 SEP 04 OCT 04 NOV 04 DEC 04 JAN 05 FEB 05 Total -------- -------- ------- ------- -------- --------- --------- 146001 - Drapes/Miniblinds 0 (684) 0 0 (1,159) (1,018) (4,317) 146501 - Dishwasher (441) (220) (418) (388) 0 (616) (3,374) 146502 - Stoves 0 0 0 0 0 0 (275) 146503 - Refrigerators (440) 0 0 0 0 0 (819) 146505 - Microwaves 0 0 0 (169) 0 0 (459) 146601 - Carpet - Unit (5,319) (7,752) (4,353) (2,984) (4,193) (6,556) (63,851) 146603 - Vinyl (2,490) (3,209) (1,002) (1,182) (1,568) (2,304) (23,424) 146999 - Garbage Disposals 0 0 0 0 0 (272) (272) 147530 - Window Replacement - Turn CR 0 0 0 0 0 0 (165) ------- ------- ------ ------ ------- -------- -------- CHANGE IN TURN CR (8,689) (11,865) (5,773) (6,998) (6,920) (11,383) (101,019) 141002 - Parking Area 0 0 0 0 0 (3,200) (3,200) 141003 - Swimming Pool - Decking 0 0 0 0 (265) 0 (265) 142408 - Electrical/Breakers (4,007) 0 0 0 0 (752) (4,759) 142413 - Roof Replacement - Asphalt 0 0 0 0 0 0 (36,513) 142414 - Roof Replacement - Other 0 0 0 0 0 0 (71,129) 142421 - Balcony Replacement / Repair 0 0 0 0 0 (550) (550) 144100 - Office Computers 0 0 0 0 (1,452) 0 (1,452) 145199 - Furniture & Fixtures 0 0 0 0 0 0 9,000 145499 - Air Conditioning (4,713) 0 (713) 0 0 0 (10,417) 146899 - Fencing (658) 0 0 0 (800) 0 (1,458) 147001 - Maintenance Equipment 0 0 0 (466) 0 0 (2,761) 147600 - Landscaping 0 0 0 (8,158) 0 0 (8,158) 147899 - Painting - Building Exterior (6,705) 0 0 0 0 0 (135,741) 147999 - Painting - Building Interior 0 0 0 0 0 0 (8,090) 149299 - Structural 0 0 0 0 (2,265) 0 (2,265) 149399 - Telephone 0 (52) 0 0 0 0 (104) 149700 - Cap X Rebate - MRO 124 50 (423) (73) 9 21 263 149701 - Cap X Rebate - Other 118 9 3 (4) 1 2 155 149999 - Capital Replacements - CI allocation (26,977) 43,788 1,634 8,844 3,227 5,581 174,440 ------- ------- ------ ------ ------- -------- -------- CHANGE IN PROJECT CR (42,818) 43,795 501 143 (1,545) 1,102 (103,003) 149901 - Cap X Cap Payroll (1,148) (822) (1,442) (361) (364) (1,403) (17,588) ------- ------- ------ ------ ------- -------- -------- CHANGE IN CR CAP PAYROLL (1,148) (822) (1,442) (361) (364) (1,403) (17,588) ------- ------- ------ ------ ------- -------- -------- CHANGE IN CAPITAL REPLACEMENTS (52,655) 31,108 (6,713) (7,215) (8,828) (11,684) (221,610) 165199 - Enhance - Furniture & Fixtures 0 0 0 0 0 0 (6,544) 167199 - Enhance - Golf Carts (2,224) 0 0 (2,224) 0 0 (4,449) 169799 - Enhance - Water Heaters 0 0 0 0 0 0 (29,800) 169999 - Enhanced Property - CI allocation 29,800 (27,576) 0 2,224 0 0 10,993
9 AIMCO 12 MONTH OPERATING TREND - DETAIL 008685 - Sands Point For the Period Ended February 2005 (1212OTD) APPLICATION: AIMCOPROPERTY Run Date: 3/1/2005 10:44 AM USER ID: gcoalson
MAR 04 APR 04 MAY 04 JUN 04 JLY 04 AUG 04 SEP 04 --------- -------- --------- -------- --------- -------- -------- CHANGE IN ENHANCED PROPERTY & (6,544) 0 6,544 0 0 (29,800) 27,576 179999 - Capital Improvements allocation 0 0 (40,263) 0 (104,081) (542) (2,823) -------- ------- -------- ------- -------- ------- ------- CHANGE IN CAPITAL IMPROVEMENTS 0 0 (40,263) 0 (104,081) (542) (2,823) 149803 - Acc. Depr - Bldg 4,469 5,273 4,506 4,672 5,264 5,067 5,067 149809 - Acc. Depr - Furn. Fixtures 48,028 48,058 48,556 49,522 48,772 49,638 50,258 -------- ------- -------- ------- -------- ------- ------- CHANGE IN ACCUMULATED DEPRECIATION 52,497 53,330 53,062 54,193 54,036 54,705 55,325 192101 - Loan Cost 0 0 0 0 (900) 0 0 192102 - Amortization 1,251 1,251 1,251 1,251 1,251 1,251 1,251 196000 - Offering Costs (2,250) 0 0 0 0 0 0 -------- ------- -------- ------- -------- ------- ------- CHANGE IN OTHER ASSETS (999) 1,251 1,251 1,251 351 1,251 1,251 -------- ------- -------- ------- -------- ------- ------- CHANGE IN TOTAL ASSETS (158,240) 97,631 (41,311) (26,713) 9,094 (9,966) 29,574 -------- ------- -------- ------- -------- ------- ------- CHANGE IN LIABILITIES 211000 - Accounts Payable 126,365 52,581 (213,659) 79,024 7,646 (32,095) (54,939) 211003 - Accounts Payable - Other 56,770 (60,729) 0 0 0 0 0 211008 - Accrued AP - Expenses 0 0 0 0 109 (101) 436 211050 - Outstanding Check Liability 0 0 0 0 0 0 0 211100 - Accrued Accounts Payable (24,095) (2,312) 555 5,275 (5,830) 0 0 -------- ------- -------- ------- -------- ------- ------- CHANGE IN ACCOUNTS PAYABLE 159,040 (10,460) (213,104) 84,299 1,926 (32,196) (54,503) 212000 - Accrued Wages and Payroll Ta 2,439 2,439 5,249 3,211 (10,359) 1,884 3,711 215800 - Accrued Payroll 0 0 0 0 0 0 0 -------- ------- -------- ------- -------- ------- ------- CHANGE IN PAYROLL ACCRUALS 2,439 2,439 5,249 3,211 (10,359) 1,884 3,711 212900 - Sales Taxes Payable 68 (103) (99) (53) 38 145 94 215000 - Accrued Property Taxes 17,249 (84,654) 17,248 17,248 17,248 17,248 17,248 215001 - Accrued Taxes Prior Year 0 0 0 0 0 0 0 -------- ------- -------- ------- -------- ------- ------- CHANGE IN ACCRUED EXPENSES 17,317 (84,757) 17,149 17,195 17,286 17,393 17,342 219100 - Tenant Sec. Dep. Held in Trust (3,279) (4,430) (760) (1,791) (2,309) (3,938) 230 219101 - Security Deposit Refund (114) 101 (126) 50 (25) 57 42 -------- ------- -------- ------- -------- ------- ------- CHANGE IN TENANTS' SECURITY DEP (3,393) (4,329) (886) (1,741) (2,334) (3,882) 272 221000 - Prepaid Rent (2,674) 940 (612) 4,210 5,213 (2,139) 3,539 OCT 04 NOV 04 DEC 04 JAN 05 FEB 05 Total -------- -------- -------- -------- ------- --------- CHANGE IN ENHANCED PROPERTY & (27,576) 0 0 0 0 (29,800) 179999 - Capital Improvements allocation (16,212) (1,634) (11,069) (3,227) (5,581) (185,433) ------- ------- ------- ------- ------ -------- CHANGE IN CAPITAL IMPROVEMENTS (16,212) (1,634) (11,069) (3,227) (5,581) (185,433) 149803 - Acc. Depr - Bldg 5,141 5,125 5,125 5,198 5,580 60,486 149809 - Acc. Depr - Furn. Fixtures 49,850 49,540 49,508 49,071 49,183 589,983 ------- ------- ------- ------- ------ -------- CHANGE IN ACCUMULATED DEPRECIATION 54,991 54,665 54,633 54,269 54,763 650,470 192101 - Loan Cost 0 900 0 0 0 0 192102 - Amortization 1,251 1,251 1,251 1,251 1,251 15,015 196000 - Offering Costs 2,250 0 0 0 0 0 ------- ------- ------- ------- ------ -------- CHANGE IN OTHER ASSETS 3,501 2,151 1,251 1,251 1,251 15,015 ------- ------- ------- ------- ------ -------- CHANGE IN TOTAL ASSETS 39,248 68,602 60,878 39,159 60,967 168,924 ------- ------- ------- ------- ------ -------- CHANGE IN LIABILITIES 211000 - Accounts Payable 109,261 (104,797) 6,367 5,926 11,606 (6,713) 211003 - Accounts Payable - Other 0 0 0 0 0 (3,959) 211008 - Accrued AP - Expenses 268 13,466 (2,464) 7,247 707 19,669 211050 - Outstanding Check Liability 0 0 368 227 0 595 211100 - Accrued Accounts Payable 0 0 1,295 420 2,585 (22,108) ------- ------- ------- ------- ------ -------- CHANGE IN ACCOUNTS PAYABLE 109,529 (91,331) 5,567 13,820 14,898 (12,516) 212000 - Accrued Wages and Payroll Ta 1,849 810 2,229 (11,407) (739) 1,316 215800 - Accrued Payroll 0 0 734 11,070 0 11,804 ------- ------- ------- ------- ------ -------- CHANGE IN PAYROLL ACCRUALS 1,849 810 2,963 (337) (739) 13,120 212900 - Sales Taxes Payable (83) (68) (161) (259) (103) (583) 215000 - Accrued Property Taxes (82,374) 13,382 13,382 (82,522) 17,100 (102,196) 215001 - Accrued Taxes Prior Year 0 0 0 99,622 0 99,622 ------- ------- ------- ------- ------ -------- CHANGE IN ACCRUED EXPENSES (82,457) 13,314 13,222 16,842 16,997 (3,157) 219100 - Tenant Sec. Dep. Held in Trust (1,634) (1,778) (3,299) (781) (3,835) (27,602) 219101 - Security Deposit Refund (99) 0 (252) 153 0 (213) ------- ------- ------- ------- ------ -------- CHANGE IN TENANTS' SECURITY DEP (1,733) (1,778) (3,551) (627) (3,835) (27,815) 221000 - Prepaid Rent (5,196) 1,263 (1,865) 1,218 (227) 3,668
10 AIMCO 12 MONTH OPERATING TREND - DETAIL 008685 - Sands Point For the Period Ended February 2005 (1212OTD) APPLICATION: AIMCOPROPERTY Run Date: 3/1/2005 10:44 AM USER ID: gcoalson
MAR 04 APR 04 MAY 04 JUN 04 JLY 04 AUG 04 SEP 04 -------- --------- -------- -------- -------- -------- -------- CHANGE IN DEFERRED RENTAL REVENUE (2,674) 940 (612) 4,210 5,213 (2,139) 3,539 232001 - Principal 1st Mortgage (12,792) (12,881) (12,970) (13,060) (13,151) (13,242) (13,334) ------- -------- ------- ------- ------- ------- ------- CHANGE IN MORTGAGE NOTES PAYABLE (12,792) (12,881) (12,970) (13,060) (13,151) (13,242) (13,334) 213000 - Accrued Interest Payable 0 0 (352) 0 (270) 0 0 ------- -------- ------- ------- ------- ------- ------- CHANGE IN MORTGAGE INTEREST 0 0 (352) 0 (270) 0 0 ------- -------- ------- ------- ------- ------- ------- CHANGE IN TOTAL LIABILITIES 159,936 (109,047) (205,526) 94,114 (1,689) (32,181) (42,972) ------- -------- ------- ------- ------- ------- ------- CHANGE IN EQUITY 325001 - Retained Earnings 0 0 0 0 0 0 0 ------- -------- ------- ------- ------- ------- ------- CHANGE IN CUMULATIVE LOSSES 0 0 0 0 0 0 0 314000 - Investment in Properties 0 20,000 261,000 0 0 60,000 40,000 ------- -------- ------- ------- ------- ------- ------- CHANGE IN PARTNER EQUITY 0 20,000 261,000 0 0 60,000 40,000 ------- -------- ------- ------- ------- ------- ------- CHANGE IN TOTAL EQUITY 0 20,000 261,000 0 0 60,000 40,000 ------- -------- ------- ------- ------- ------- ------- ------- -------- ------- ------- ------- ------- ------- CHANGE IN TOTAL LIAB & Equity 159,936 (89,047) 55,474 94,114 (1,689) 27,819 (2,972) ------- -------- ------- ------- ------- ------- ------- ------- -------- ------- ------- ------- ------- ------- NET CASH FLOW 12,430 (6,293) 2,627 24,550 (17,008) (10,212) 3,299 ------- -------- ------- ------- ------- ------- ------- 100800 - Operating Cash - Self Restricted 8,944 (8,944) 0 0 0 0 0 111400 - Aimco Prop. LP - Indy Conc. 2,645 (583) 3,483 323 457 (6,408) 2,459 111600 - Cash on Hold - Indy Concentration 0 0 0 0 0 0 0 112001 - Cash in Bank - Field 841 3,234 (856) 24,227 (17,465) (3,804) 840 ------- -------- ------- ------- ------- ------- ------- CHANGE IN OPERATING CASH 12,430 (6,293) 2,627 24,550 (17,008) (10,212) 3,299 ------- -------- ------- ------- ------- ------- ------- CALCULATION OF FREE CASH FLOW REPORTABLE NOI 124,789 113,647 118,197 87,470 104,773 100,957 106,249 PLUS: OCT 04 NOV 04 DEC 04 JAN 05 FEB 05 Total -------- -------- -------- --------- --------- ---------- CHANGE IN DEFERRED RENTAL REVENUE (5,196) 1,263 (1,865) 1,218 (227) 3,668 232001 - Principal 1st Mortgage (13,426) (13,520) (13,613) (13,708) (13,803) (159,499) ------- ------- ------- -------- -------- --------- CHANGE IN MORTGAGE NOTES PAYABLE (13,426) (13,520) (13,613) (13,708) (13,803) (159,499) 213000 - Accrued Interest Payable (276) 0 (282) 0 0 (1,179) ------- ------- ------- -------- -------- --------- CHANGE IN MORTGAGE INTEREST (276) 0 (282) 0 0 (1,179) ------- ------- ------- -------- -------- --------- CHANGE IN TOTAL LIABILITIES 8,289 (91,241) 2,440 17,207 13,291 (187,378) ------- ------- ------- -------- -------- --------- CHANGE IN EQUITY 325001 - Retained Earnings 0 0 0 (213,793) 0 (213,793) ------- ------- ------- -------- -------- --------- CHANGE IN CUMULATIVE LOSSES 0 0 0 (213,793) 0 (213,793) 314000 - Investment in Properties 0 75,000 (10,000) (48,000) 0 398,000 ------- ------- ------- -------- -------- --------- CHANGE IN PARTNER EQUITY 0 75,000 (10,000) (48,000) 0 398,000 ------- ------- ------- -------- -------- --------- CHANGE IN TOTAL EQUITY 0 75,000 (10,000) (48,000) 0 398,000 ------- ------- ------- -------- -------- --------- ------- ------- ------- -------- -------- --------- CHANGE IN TOTAL LIAB & Equity 8,289 (16,241) (7,560) (30,793) 13,291 210,622 ------- ------- ------- -------- -------- --------- ------- ------- ------- -------- -------- --------- NET CASH FLOW 39,191 23,853 40,837 (39,999) 6,594 79,870 ------- ------- ------- -------- -------- --------- 100800 - Operating Cash - Self Restricted 0 0 0 0 0 0 111400 - Aimco Prop. LP - Indy Conc. (2,472) 62,923 38,495 (34,724) 5,238 71,837 111600 - Cash on Hold - Indy Concentration 41,000 (41,000) 0 0 0 0 112001 - Cash in Bank - Field 663 1,929 2,342 (5,274) 1,357 8,034 ------- ------- ------- -------- -------- --------- CHANGE IN OPERATING CASH 39,191 23,853 40,837 (39,999) 6,594 79,870 ------- ------- ------- -------- -------- --------- CALCULATION OF FREE CASH FLOW REPORTABLE NOI 123,223 101,334 114,886 90,822 60,317 1,246,664 PLUS:
11 AIMCO 12 MONTH OPERATING TREND - DETAIL 008685 - Sands Point For the Period Ended February 2005 (1212OTD) APPLICATION: AIMCOPROPERTY Run Date: 3/1/2005 10:44 AM USER ID: gcoalson
MAR 04 APR 04 MAY 04 JUN 04 JLY 04 AUG 04 SEP 04 -------- -------- -------- -------- -------- --------- -------- Change In Capital Replacements (111,559) 32,668 (13,869) (109,927) 56,478 (19,414) (52,655) -------- -------- ------- -------- ------- ------- ------- EQUALS FREE CASH FLOW 13,231 146,314 104,328 (22,458) 161,251 81,543 53,595 -------- -------- ------- -------- ------- ------- ------- OCT 04 NOV 04 DEC 04 JAN 05 FEB 05 Total -------- -------- -------- ---------- --------- --------- Change In Capital Replacements 31,108 (6,713) (7,215) (8,828) (11,684) (221,610) ------- ------ ------- ------- ------- --------- EQUALS FREE CASH FLOW 154,331 94,621 107,670 81,994 48,633 1,025,054 ------- ------ ------- ------- ------- ---------
12 SANDS POINT APARTMENTS ADDENDUM F ADDENDUM F ENGAGEMENT LETTER GMAC Commercial Mortgage Corporation [GMAC LOGO] 200 Witmer Road Horsham, PA 19044 Phone: 215-328-1323 Fax: 215-328-3370 April 11, 2005 Jerry P. Gisclair II, MAI Senior Managing Director CB Richard Ellis 201 S. Orange Avenue Suite 1500 Orlando, FL 33606 RE: APPRAISAL CONTRACT LETTER SANDS POINT 8330 N. 19TH STREET PHOENIX, AZ 85021 Dear Mr. Gisclair: This letter is to confirm GMACCM's request for you to complete an appraisal assignment for the following real property: PROPERTY DESCRIPTION ADDRESS CITY/STATE Sands Point 8330 N. 19th Avenue Phoenix, AZ 85021 To assist you in the assignment, in terms of receiving information concerning the subject property and/or gaining access to the property, you may contact: The Property Manager at 602-864-3400. The appraisal shall conform to GMAC Commercial Mortgage Appraisal Reporting Guidelines. Further, the appraisal shall meet and conform to the current Uniform Standards of Professional Appraisal Practice promulgated by the Appraisal Standards Board of the Appraisal Foundation. The appraisal shall consist of a complete self-contained Title XI narrative appraisal report. A statement must be included in the Letter of Transmittal that the appraisal is prepared in compliance with the requirements of Title XI of the Federal Financial Institution Reform, Recovery and Enforcement Act of 1989 (FIRREA) and the Uniform Standards of Professional Appraisal Practice. The purpose of the appraisal is to estimate the Market Value based upon terms of cash of the subject property as defined in the Appraisal Reporting Guidelines. The use of the report is for interim financing purposes. The property interest to be appraised is fee simple subject to the existing lease agreements (if applicable). You shall determine and fully explain what you believe is the typical marketing period for the property and explain how this determination has affected your market value conclusion. The following estimates of market value will be required: Page 1 of 5 GMAC Commercial Mortgage Corporation 200 Witmer Road Horsham, PA 19044 Phone: 215-328-1323 Fax: 215-328-3370 1. "As Is" Market Value on the appraisal date. 2. Prospective Future Value Upon Reaching Stabilized Occupancy reported in current dollars as of a current date, if the property is not yet stabilized. 3. An insurable value. Refer to Page 3 and 4 of the GMACCM Appraisal Reporting Guidelines for a description of the aforementioned values. The following points are important to consider in the process of completing the appraisal assignment. (1) A current market analysis including information on the specific Phoenix, AZ market inventory, new construction, rent incentives, rental rates and occupancy levels and absorption rates. (2) Include the name, title and telephone number of the persons contacted to verify the comparable sales data. (3) Analyze the vacancy and collection loss factor using data from comparable properties in the subject market and the current physical and economic vacancy of the subject property. (4) The Capitalization and Discount Rates used in the Income Approach should be supported by an analysis of sales data extracted and verified from the market, investor sources and published data such as the Korpacz Real Estate Investor Survey. If the Band of Investment Method is used, the mortgage and equity rates should be adequately supported in the report. (5) An Operating Expense Analysis that reviews each applicable line item listed in historical and/or budgeted operating statements. The analysis of operating expenses should focus on historical and/or budgeted operating statements of the subject and market data (where appropriate). An effort should be made to include three (3) operating expense comparables. (6) Indicate in the Letter of Transmittal and the Summary of Important Conclusions any special Assumptions and/or Limiting Conditions pertaining to this appraisal assignment. (7) Make note and comment on the existence of the following: Legal Non- Conforming Use, Adverse Easement and Encroachments. (8) Contact with the local municipal zoning office must be made. Verify in detail, the level of conformity of the subject property to the applicable zoning code. Indicate the threshold and reconstruction limits in the case of a legal non-conforming use. Page 2 of 5 GMAC Commercial Mortgage Corporation 200 Witmer Road Horsham, PA 19044 Phone: 215-328-1323 Fax: 215-328-3370 (9) Analyze the current and projected real estate tax imposition of the subject property. Indicate that contact was made with the local assessor in the process of gathering tax and assessment data. Tax comparables are required. (10) A Discounted Cash Flow Analysis will be prepared on acceptable appraisal software using current leasing data on the subject property and current market assumptions as a basis for the analysis. Provide us with a hard copy and disk of your analysis. (11) Supply evidence of Errors and Omissions Insurance and a copy of State Certification in the Addenda of the report. (12) The nature of this appraisal assignment may negate compliance with one or more of the aforementioned points. You shall also make note of any evidence of possible hazardous waste contamination. GMACCM recognizes that as an appraiser you are not an expert on the existence of hazardous waste nor does the appraisal assignment require an analysis of such possible contamination. However, if physical signs are evident, a notation of such should be incorporated in the Letter of Transmittal. In this appraisal assignment, you will complete each of the three accepted approaches to valuation (Cost Approach, Sales Comparison Approach and Income Approach). We require that YOU sign the final appraisal report as the primary appraiser and YOU OR YOUR DESIGNATED REPRESENTATIVE WILL PERSONALLY INSPECT the subject and each of the comparable properties. Please make every effort to have the effective date of the appraisal as close to the delivery date as possible. In addition, all persons assisting in the preparation and analysis of the appraisal should be identified. The instructions and requirements set forth in this contract letter and GMACCM Appraisal Reporting Guidelines are to be copied and included in the Addendum of the Appraisal Report. GMACCM reserves the right to convey a copy of the appraisal to third parties, assigns, and pertinent parties involved in the contemplated loan transaction. Recognize, however, that as a matter of standard policy, we do not provide a copy of the appraisal report to the borrower until after the loan closes. Also, please note that you may be requested to meet with us and possible third parties by phone or at your offices to discuss the analysis and valuation conclusions in the appraisal report without any additional charges when limited to three (3) meetings. The terms and conditions of this engagement letter supersede the assumptions and limiting conditions of the appraisal. Assumptions, opinions and conclusions in the appraisal report are not to be communicated to anyone except the undersigned. It is our understanding that a draft of the appraisal will be prepared by May 9, 2005. The draft of the appraisal report will be addressed and submitted to the undersigned and also submitted to STEVEN HILDEBRAND, STEVEN_HILDEBRAND@GMACCM.COM of our GMACCM-PLG Horsham office located at 200 Witmer Road, Horsham, PA 19044. Based Page 3 of 5 GMAC Commercial Mortgage Corporation 200 Witmer Road Horsham, PA 19044 Phone: 215-328-1323 Fax: 215-328-3370 on prompt delivery of all pertinent information necessary to complete this assignment, the final appraisal report will be due one week after final comments from the GMACCM Underwriter. The appraisal fee for this assignment is $5,500 (all-inclusive). The appraisal fee will be paid upon receipt of one (1) original unbound copy, three (3) bound copies and one (1) electronic copy of the completed appraisal report and confirmation by the GMACCM Reviewer that the appraisal complies with the terms and conditions set forth in this letter, FIRREA requirements and GMACCM Appraisal Reporting Guidelines. GMACCM reserves the right to suspend payment of the appraisal fee if the Appraiser's performance under this agreement is deemed unsatisfactory and the appraiser fails to cure such unsatisfactory performance within 10 days of such notice. If the draft and final appraisal reports are not completed and delivered to GMACCM by the date stated above, GMACCM reserves the right to (1) cancel the assignment for cause and no fee will be paid, or (2) reduce the appraisal fee by five (5) percent per day commencing on the completion date and thereafter, until the appraisal report is received. The penalty will be deducted from the agreed upon appraisal fee stated in this letter. If a delay is anticipated, contact the undersigned immediately to discuss an extension of the completion date. You agree to indemnify, defend and hold GMACCM and its directors, officers, employees, harmless from any and all claims losses, costs (including attorney's fees), and liabilities caused by adjudicated fraud, negligence or intentional fraud in preparing this appraisal for GMACCM. You warrant that you are in compliance with all applicable state and federal licensing and certification regulations in the state where the subject property is located. Please acknowledge your understanding and approval of this engagement to the undersigned by 2 days after current date. Please contact the undersigned at 215-328-1323 should you have any questions regarding this assignment. Sincerely, /s/ Myles Diamond Myles Diamond Assistant Vice President Myles_Diamond@GMACCM.COM Page 4 of 5 GMAC Commercial Mortgage Corporation 200 Witmer Road Horsham, PA 19044 Phone: 215-328-1323 Fax: 215-328-3370 APPROVED AND ACCEPTED BY: JERRY P. GISCLAIR II, MAI CB RICHARD ELLIS 201 S. ORANGE AVENUE SUITE 1500 ORLANDO, FL 33606 _________________________ __________________________ NAME: DATE: TITLE: Page 5 of 5 SANDS POINT APARTMENTS ADDENDUM G ADDENDUM G MISCELLANEOUS EXHIBITS INTERIOR AMENITIES - - Distinctive one and two bedroom floorplans - - Wood-burning fireplace* - - Ceramic tile entries - - Vaulted Ceilings* - - Vertical and mini-blinds - - Washer and dryer connections - - Ceiling fans - - Oversized walk-in closets - - Private patios and balconies - - Entry doors with private viewers - - Wired for alarm systems - - Pre-wired for cable - - High Speed Internet Access *Select apartment homes COMMUNITY FEATURES - - Gated community - - 2 Refreshing pools and spa - - Reserved covered parking - - Fitness center and saunas - - Lighted tennis court - - Sand volleyball court - - Clothing care centers - - Clubroom with kitchen and lounge area - - 24-Hour service guarantee - - National coast to coast transfer program - - AIMCO Homeplanner program [THE APACHE FLOOR PLAN] [THE MOJAVE FLOOR PLAN] [THE MESQUITE FLOOR PLAN] [THE SAGUARO FLOOR PLAN] [THE DESERT WILLOW FLOOR PLAN] [THE JOSHUA FLOOR PLAN] [THE OCOTILLO FLOOR PLAN] [THE PALO VERDE FLOOR PLAN] [SITE PLAN] SANDS POINT APARTMENTS 8330 N. 19th Avenue - Phoenix, AZ 85021 - Phone: 602-864-3400 Fax: 602-864-8827 - E-Mail: Sandspoint@aimco.com Website: www.SandspointApts.com
Floor Plans Square Feet Prices - --------------------------------------------------- ----------- ------ Apache (1 Bedroom/1 Bath) 597 From $499 Mohave (1 Bedroom/1 Bath) 678 From $533 Mesquite (1 Bedroom/1 Bath) 732 From $577 Saguaro (1 Bedroom/Den) 782 From $631 Desert Willow (2 Bedroom/1 Bath) 863 From $643 Joshua (2 Bedroom/2 Bath) 951 From $686 Ocotillo (2 Bedroom/2 Bath) 999 From $686 Palo Verde (2 Bedroom/2 Bath) 1040 From $708 Prices do not include 1.8% sales tax and utilities.
Security Deposits (Refundable): $99 (1x1)/$150 (2x2) Administrative Fees (Non-Refundable): $101.80 Application Fee (Non-Refundable): $35.63 (Per person over the age of 18) Pet Fee: $150 Non Refundable (per pet) Pet Rent: $20 (per pet) Maximum of 2 pets per apartment. Pets under 30 lbs. At full growth and/or 36" in height.
Utilities: - ---------- Apache: Water $16 Trash $9 Gas $2 Total $27 Mohave: Water $19 Trash $10 Gas $3 Total $32 Mesquite: Water $20 Trash $11 Gas $3 Total $34 Saguaro: Water $22 Trash $11 Gas $3 Total $36 Desert Willow: Water $24 Trash $13 Gas $3 Total $40 Joshua: Water $26 Trash $14 Gas $4 Total $44 Ocotillo: Water $27 Trash $15 Gas $4 Total $46 Palo Verde: Water $29 Trash $15 Gas $4 Total $48
Amenities: - Full Size Washer & Dryers Available - Wood Burning Fire Places in Select Units - Gated Community - Ceiling Fan in Every Bedroom - Reserved Covered Parking - Storage on all Patios/Balconies - Two Refreshing Large pools, one with Hot Tub - Fitness Center - Clubhouse - Vaulted Ceilings in Select Units - Resident Video Movie Rentals Prices are subject to change without notice. As of 4/11/2005 EXHIBIT "A" Legal Description That part of the Southwest quarter of Section 18, Township 3 North, Range 4 East of the Gila and Salt River Base and Meridian, Maricopa County, Arizona, being more particularly described as follows: COMMENCING at the intersection of the Northerly right-of-way line of Cactus Road as shown on the Map of Dedication for PARADISE VILLAGE as recorded in Book 195 of Maps, page 30, records of Maricopa County and the monument line of 42nd Street as shown on the plat of LAS HACIENDAS DE PARADISE VILLAGE as recorded in Book 207 of Maps, page 22, records of Maricopa County and on the plat of PARADISE VALLEY VILLAGE UNIT TWO, as recorded in Book 197 of Maps, page 22, records of Maricopa County; thence North 60 degrees 37' 40" East along said right-of-way line a distance of 30.00 feet; thence North 29 degrees 26' 46" West along a line parallel with and 30.00 feet Easterly of, as measured at right angles to, said monument line of 42nd Street a distance of 17.00 feet to the POINT OF BEGINNING; thence continuing North 29 degrees 26' 46" West along said parallel line a distance of 209.18 feet to a point of curvature; thence Northeasterly along said parallel line and a curve concave to the Southeast, having a central angle of 67 degrees 58' 36" and a radius of 924.40 feet, a distance of 1096.72 feet to a point of non-tangency; thence South 42 degrees 04' 56" East along the boundary of parcel "A" as recorded in Docket 13925, page 448, records of Maricopa County a distance of 154.90 feet; thence North 47 degrees 56' 03" East along said boundary of parcel "A", a distance of 211.04 feet; thence North 79 degrees 30' 08" East along said boundary of parcel "A" a distance of 25.02 feet; thence South 10 degrees 24' 23" East along the Westerly boundary of a parcel of land recorded in Docket 11469, page 393, records of Maricopa County a distance of 473.39 feet; thence South 18 degrees 38' 03" East along said Westerly boundary a distance of 50.08 feet; thence South 75 degrees 04' 11" West along the Northerly boundary of two parcels of land recorded in Docket 12601, page 1546, records of Maricopa County a distance of 370.39 feet; thence South 18 degrees 44' 36" East along the Westerly boundary of said parcels 4 distance of 378.34 feet to a point on said Northerly right-of-way line of Cactus Road; thence South 63 degrees 06' 56" West along said right-of-way line a distance of 44.56 feet; thence South 60 degrees 37' 40" West along said right-of-way line a distance of 149.95 feet to a point lying 47.00 feet North 60 degrees 37' 40" East of the Point of Commencement; thence North 74 degrees 28' 13" West a distance of 24.04 feet to the POINT OF BEGINNING. [Greenspoint Apartments] Exhibit "A" [MAP] This is an official copy of a portion of the above referenced flood map. It was extracted using F-MIT On-Line. This map does not reflect changes or amendments which may have been made a subsequent to the date on the title block. For the latest product information about National Flood Insurance Program flood maps check the FEMA Flood Map Store at www.msc.fema.gov SANDS POINT APARTMENTS ADDENDUM H ADDENDUM H QUALIFICATIONS QUALIFICATIONS WILLIAM J. DAVIS, MAI ASSISTANT VICE PRESIDENT CB Richard Ellis, Inc. Valuation and Advisory Services 2415 East Camelback Road Phoenix, Arizona 85016 (602) 735-5649 EDUCATIONAL Bachelor of Science Degree, Real Estate, Arizona State University, Tempe, Arizona LICENSE(S)/CERTIFICATION(S) Certified General Appraiser: State of Arizona (No. 30784) PROFESSIONAL Appraisal Institute Designated Member (MAI), Certificate No. 11,493 Published Author: Commercial Leasing Update, August, 1997, Apartment Market Overview EMPLOYMENT EXPERIENCE
1989-1992 Residential Real Estate Appraiser, Siebrand & Associates, Scottsdale, Arizona 1992-1998 Staff Real Estate Appraiser, Sell, Huish & Associates, Inc., Tempe, Arizona 1998-1998 Senior Commercial Real Estate Appraiser, Sell & Associates, Inc., Tempe, Arizona 1998-Present Assistant Vice President, CB Richard Ellis, Inc., Phoenix, Arizona
Appraisal experience has been in the fee preparation of real estate appraisals, feasibility studies, rent analyses and market studies of commercial and multifamily residential properties. Experience encompasses a wide variety of property types including office, retail, industrial, multifamily, hotel/motel, casinos, resorts, medical office buildings, nursing homes, restaurants, car washes, sand and rock mining and other special purpose properties as well as both urban and rural lands. The valuation of fractional interests in real property is one of my particular areas of expertise. Assignments completed in Arizona, Nevada, New Mexico, North Dakota, and Montana. Qualified and testified as an expert witness in United States Superior Court in Arizona. The Intermountain Region of CB Richard Ellis, Inc. Valuation and Advisory Services covers the states of Arizona, Colorado, Idaho, Montana, Nebraska, Nevada, New Mexico, North and South Dakota, Utah and Wyoming. The regional office is based in Phoenix, Arizona, with satellite offices in the cities of Denver, Las Vegas, Salt Lake City, and Tucson. CORRESP 6 filename6.txt July 8, 2005 VIA EDGAR & HAND DELIVERY Abby Adams, Esq. Office of Mergers and Acquisitions Division of Corporation Finance Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549-0303 Re: NATIONAL PROPERTY INVESTORS III, CENTURY PROPERTIES FUND XIX AND DAVIDSON INCOME REAL ESTATE, L.P. AMENDED SCHEDULE TO-T/13E-3S FILED JUNE 7, 2005 BY AIMCO PROPERTIES LP, ET AL. Dear Ms. Adams: On behalf of AIMCO Properties, L.P. ("AIMCO OP"), we are responding to comments 1 through 6 of the Staff's comment letter, dated June 16, 2005, regarding the Tender Offer Statements and Rule 13e-3 Transaction Statements on Schedule TO (the "Schedule TOs") referred to above. AIMCO OP previously responded to comment 7 in its response letter dated June 21, 2005, and filed amendments to the Schedule TOs for Century Properties Fund XV and Fox Strategic Housing Income Partners. AIMCO OP previously filed an amendment to the Schedule TO for Davidson Income Real Estate, L.P. ("DIRE") on July 7, 2005, and concurrently with the filing of this letter has filed an amendment to the Schedule TO for each of Century Properties Fund XIX ("CPF XIX") and National Property Investors III ("NPI III") that includes as an exhibit a Supplement to the Amended and Restated Offer to Purchase, reflecting additional disclosure in response to the Staff's comments set forth below. We have set forth below each of the Staff's comments and AIMCO OP's response to each comment. Century Properties Fund XIX Davidson Income Real Estate, L.P. National Property Investors III 1. We note the additional disclosure regarding the appraisals performed by CBRE in 2003. On page 39 of the CPF XIX offer that you list as a positive factor the fact that your "estimate of the gross property value for Misty Woods Apartments is approximately $23,093 higher than the sales price for the property in the purchase and sale contract dated May 19, 2005" (emphasis added). We note from page 13 of that offer that you subtract a prepayment penalty from the gross property value in calculating your determination of the value of a partnership unit. It is unclear whether it is appropriate to compare the gross property value Securities and Exchange Commission July 8, 2005 Page 2 to the sales price, because it is unclear whether the prepayment penalty would be charged if the property were sold. Please disclose whether the partnership would be required to pay a prepayment penalty on the mortgage of that property if it were sold in accord with the current sale contract. Also, with a view toward disclosure, tell us whether the prepayment penalty applies in all cases. In addition, please disclose whether any of the other itemized additions or subtractions from the net property value, as outlined on page 14, would differ if this property were sold under the current contract. Disclose the estimated transaction costs associated with the sale, to whom they are paid and how they are allocated among the properties to be sold. It is unclear whether your estimated value or the actual contract price would provide a higher valuation of the partnership. RESPONSE: Disclosure has been included in the Supplement for CPF XIX in response to all of the points raised in this comment. The Supplement clarifies that the contract sale price and the gross property value are directly comparable, and that a prepayment penalty is ordinarily payable in connection with any sale of the property. However, as indicated in the Supplement, under the terms of the mortgage for Misty Woods Apartments, a prepayment penalty would not be payable during the six-month period immediately prior to the maturity date, which is January 1, 2006. 2. Provide similar information for the tender offer for units of National Property Investors III. We note the discussion on page 27 regarding the general partner's views of the value of the partnership as determined by you versus the actual sale price. This disclosure is unclear for two reasons. First, you state that the "net equity value distributable to limited partners would have resulted in a lower offer price," however, it is unclear how you have calculated the "net equity value distributable." For example, do you mean that, once the sales proceeds were distributed to unit holders, the partnership would be worth less? Do you mean that the net proceeds from the sale, after transaction costs, would be less than the starting point of your valuation, and therefore the limited partnership units would be valued less before any distribution resulting from the sale? Second, without additional information, it is unclear how the general partner reached this conclusion. Please revise the document to provide the basis for this statement. Disclose the expected transaction costs associated with this sale. We note that the property is being sold in a bundle with other properties. We also note the disclosure of additional information in a Form 8-K filed May 25, 2005. With a view toward disclosure, tell us how the transaction costs charged to this property are determined, who makes the determination, and to whom you will pay the transaction costs. For example, will the transaction costs be owed to your affiliates? We note that, absent a prepayment penalty and with all other expenses and additions (as indicated on page 13) remaining the same, the value per unit based on the disclosed sale price of Pinetree Apartments would be $208.49 per unit, which is approximately 17% higher than the current offer price. RESPONSE: The Supplement for NPI III includes the requested disclosure. In particular, the Supplement clarifies that the net equity value per unit is the amount that would be distributed to limited partners in a hypothetical liquidation and winding up of the partnership in which the properties are sold at the values indicated, except that no deduction is made for the transaction costs typically associated with a sale of the properties. If an amount were deducted for estimated Securities and Exchange Commission July 8, 2005 Page 3 transaction costs, the original calculation of net equity value per unit would have resulted in a lower number and, as a result, the offer price would have been lower. Accordingly, the general partner may conclude that the current offer price is fair, even though it is lower than the net equity value per unit that results when the contract sale price for Pinetree Apartments is used rather than AIMCO OP's determination of gross property value, because, among other things, the general partner believes that transaction costs would result in a distribution to limited partners that is lower than the offer price. 3. You provide liquidation value as a means for comparison for unit holders. Tell us what consideration you have given to calculating liquidation value (see pages 20-21 of the NPI III offer) using the sale price of the property under contract for each partnership rather than, or in addition to, the value determined by the appraiser in 2003. RESPONSE: The Supplements for CPF XIX and NPI III indicate what the liquidation value would be if the sales price of the property under contract is used, instead of its appraised value. 4. On page 40 you state that the general partner has determined that offer price is fair despite the higher appraised values, in part, because "the general partner believes that appraisals obtained by lenders in connection with refinancings, such as those prepared by CBRE, tend to overstate actual property values somewhat." Expand this disclosure to clarify the general partner's conclusion and the basis for its conclusion. RESPONSE: The Supplements for CPF XIX and DIRE include the requested disclosure. In addition, we are supplementally providing you with copies of articles that describe the conflicts that appraisers face in these situations and the pressure to overstate property values. 5. We note from the partnership's Form 8-Ks dated May 19, 2005 and June 3, 2005 that it refinanced mortgages on the Greenspoint and Sandspoint properties owned by CPF XIX. The risk factor on page 11, the disclosure on page 43, and the disclosure on pages 61-62 do not appear to agree. Please revise or advise. Also tell us whether you or, to your knowledge, the lenders obtained appraisals for either of these properties in connection with the refinancing, and whether you know the value of any appraisal or have obtained or been offered a copy of any appraisal. Finally, please tell us whether the general partner received fees or other compensation in connection with the refinancings. We note the fees paid in connection with prior refinancings, which are disclosed on page 42 of this offer. RESPONSE: The Supplement for CPF XIX includes the requested disclosure, as well as information describing the appraisals obtained in connection with these refinancings. AIMCO OP supplementally advises the Staff that AIMCO OP received a copy of each appraisal subsequent to the filing of the amendments to the Schedule TOs on June 7, 2005. These appraisals have been filed as exhibits in an amendment to the Schedule TO for CPF XIX. The general partner did not receive any fees or other compensation in connection with the refinancings. Securities and Exchange Commission July 8, 2005 Page 4 6. In addition, we note that the new mortgage on the Greenspoint property has a principal amount of $11 million, replacing the prior mortgage, which had an outstanding principal balance of $7,981,000. In the Form 8-K for Sandspoint, you report that a mortgage for $11 million replaces a mortgage with a principal amount outstanding of $8,859,000. Please revise your disclosure to reflect these changes. For example, it appears you should revise the disclosure to reflect the partnership's plans for the excess cash, if any, received in these refinancings. Also tell us whether the excess cash could be distributed to limited partners pursuant to the partnership agreement. In addition, we note that you subtract mortgage debt in calculating the net equity value per unit and the liquidation value per unit of the partnership, but the mortgage debt figure has not changed since you first filed this offer in February 2005. Please tell us whether the refinancings or any other factors materially change your assessment of the value of the partnership since the offer was filed. RESPONSE: The Supplement for CPF XIX includes the requested disclosure. AIMCO OP supplementally advises the Staff that a portion of the remaining loan proceeds could be distributed to limited partners pursuant to the partnership agreement. However, the partnership agreement also permits the general partner to use the proceeds for other purposes. In this case, the general partner has determined that it is in the best interests of the limited partners for the partnership to retain the cash for use in funding the proposed redevelopment of Sunrunner Apartments. As indicated in the Supplement, AIMCO OP has recalculated the net equity value per unit and the net liquidation value per unit to reflect events that have occurred since the offer was first filed on February 16, 2005. Neither the refinancings nor any other facts have caused AIMCO OP or the general partner to materially change its assessment of the value of the partnership. We would appreciate your prompt attention to this letter. Please do not hesitate to contact the undersigned at (213) 687-5527 or Jonathan Friedman at (213) 687-5396 if you have any questions or comments regarding this letter or the revised Schedule TOs. Very truly yours, /s/ Jonathan Ko Jonathan Ko cc: Daniel L. Jablonsky, Esq. - Securities and Exchange Commission, Division of Enforcement Martha Long - Apartment Investment and Management Company Miles Cortez, Esq. - Apartment Investment and Management Company Joseph Coco, Esq. - Skadden, Arps, Slate, Meagher & Flom LLP Jonathan Friedman, Esq. - Skadden, Arps, Slate, Meagher & Flom LLP -----END PRIVACY-ENHANCED MESSAGE-----