-----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, RYt69yxZAET6+Zzt/UuRwAgqQxHJTOQpXD9Sa1+X6ZZjgNdaMPtrqYklybXg6Eh6 vckYmy5i637oZ7nN+xka0g== 0000896131-96-000037.txt : 19961027 0000896131-96-000037.hdr.sgml : 19961027 ACCESSION NUMBER: 0000896131-96-000037 CONFORMED SUBMISSION TYPE: SC 13E4 PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19961024 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DECADE COMPANIES INCOME PROPERTIES CENTRAL INDEX KEY: 0000775840 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 391518732 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E4 SEC ACT: 1934 Act SEC FILE NUMBER: 005-47179 FILM NUMBER: 96647257 BUSINESS ADDRESS: STREET 1: 250 PATRICK BLVD STE 140 CITY: BROOKFIELD STATE: WI ZIP: 53045 BUSINESS PHONE: 4147929200 MAIL ADDRESS: STREET 1: 250 PATRICK BLVD STREET 2: STE 140 CITY: BROOKFIELD STATE: WI ZIP: 53045 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: QUARLES & BRADY CENTRAL INDEX KEY: 0000896131 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: AZ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E4 BUSINESS ADDRESS: STREET 1: ONE EAST CAMELBACK ROAD SUITE 400 CITY: PHOENIX STATE: AZ ZIP: 850121659 BUSINESS PHONE: 6022305500 SC 13E4 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Schedule 13E-4 Issuer Tender Offer Statement (Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934) DECADE COMPANIES INCOME PROPERTIES -- A LIMITED PARTNERSHIP (Name of the Issuer) DECADE COMPANIES INCOME PROPERTIES -- A LIMITED PARTNERSHIP (Name of Person Filing Statement) Limited Partnership Interests (Title of Class of Securities) None (CUSIP Number of Class of Securities) Jeffrey Keierleber c/o Decade Companies Decade Companies Income Properties--A Limited Partnership 250 Patrick Boulevard, Suite 140 Brookfield, Wisconsin 53045-5864 with copies to Conrad G. Goodkind, Esq. Quarles & Brady 411 E. Wisconsin Avenue Milwaukee, Wisconsin 53202-4497 _________________________________________________________________ (Names, Addresses and Telephone Numbers of Persons Authorized to Receive Notices and Communications on Behalf of Person Filing Statements.) ______________________October 24, 1996___________________________ (Date Tender Offer First Published, Sent or Given to Security Holders) Calculation of Filing Fee Transaction Valuation* Amount of Filing Fee $7,021,457 $1404 * For purposes of calculating the filing fee only. This amount assumes the purchase of 17,466.31 Limited Partnership Interests at $402.00. The amount of the filing fee, calculated in accordance with Rule O-11 under the Securities Exchange Act of 1934, as amended, equals 1/50 of one percent of the value of the securities subject to the tender offer. [X] Check box if any part of the fee is offset as provided by Rule O-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: $1404 Form or Registration No.: Filing of Schedule 13E-3 Filing Party: DECADE COMPANIES INCOME PROPERTIES -- A LIMITED PARTNERSHIP Date Filed: October 24, 1996 This Schedule 13E-4 Issuer Tender Offer Statement is being filed by Decade Companies Income Properties -- A Limited Partnership (the "Partnership"). The Partnership is the issuer of the class of securities which is the subject of the Schedule 13E-4 transaction. Concurrently with the filing of this Issuer Tender Offer Statement, the Partnership is filing with the Securities and Exchange Commission, a Schedule 13E-3 Transaction Statement and the Offer to Purchase. A copy of the Offer to Purchase is attached as an Exhibit hereto. The information contained in the Offer to Purchase is incorporated by reference in answer to the items of this Issuer Tender Offer Statement and the Cross Reference Sheet set forth below shows the location in the Offer To Purchase of the information required to be included in response to the items of this Issuer Tender Offer Statement. The information contained in the Offer to Purchase, including all exhibits and annexes thereto, is hereby expressly incorporated by reference and the responses to each item herein are qualified in their entirety by reference to the information contained in the Offer to Purchase and the exhibits and annexes thereto. Cross Reference Sheet (Pursuant to General Instructions to Schedule 13E-4) Schedule 13E-4 Item Number Caption Caption in Offer to Repurchase (for incorporation by reference) 1. Security and Issuer (a) "The Partnership -- Background of the Partnership." (b) "The Partnership -- Background of the Partnership;" "The Offer." (c) "Lack of Market and Distributions." (d) Not Applicable. 2. Source and Amount of Funds or Other Considerations (a)--(b) "Financing the Offer." 3. Purpose of the Tender Offer and Plans or Proposal of the Issuer or Affiliate (a)--(j) "The Partnership--Certain Effects of the Offer." "The Partnership--Conduct of the Partnership After the Offer." 4. Interest in Securities of the Issuer No transactions in the Limited Partnership Interests were effected by the Partnership or a relevant party. 5. Contracts, Arrangements, Understandings or Relationships with Respect to the Issuer's Securities "The Partnership--Interests of Certain Persons in the Offer." 6. Persons Retained, Employed or to Be Compensated "The Offer--Fees and Expenses;" "The Partnership -- Fairness of the Offer." 7. Financial Information (a) "Financial Statements." (b) "Pro Forma Financial Data." 8. Additional Information (a) "The Partnership--Interests of Certain Persons in the Offer;" "The Partner- ship--Certain Effects of the Offer;" "The Partnership--Conduct of the Partnership After the Offer." (b) "The Partnership--Regulatory Matters." (c) "The Partnership--Regulatory Matters." (d) Not Applicable. (e) Offer to Purchase and the annexes and exhibits thereto. 9. Material to be Filed as Exhibits (a) (1) Offer to Purchase and the Annexes (appraisals and fairness opinions) thereto. (2) Cover letter to Limited Partners, dated October 24, 1996. (b) Not Applicable. (c) Not Applicable. (d) Not Applicable. (e) Not Applicable. (f) Not Applicable. SIGNATURES After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: October 24, 1996. DECADE COMPANIES INCOME PROPERTIES -- A LIMITED PARTNERSHIP BY: /s/ Jeffrey Keierleber Jeffrey Keierleber, General Partner of Decade Companies, General Partner of the Partnership EX-1 2 Offer to Purchase Interests of Decade Companies Income Properties--A Limited Partnership For Cash Consideration of $402 Per Interest ___________________________ This offer, the proration period and withdrawal rights will expire at 12:00 midnight, Milwaukee time, on November 22, 1996, unless extended. __________________________________ Decade Companies Income Properties--A Limited Partnership (the "Partnership") invites its Limited Partners to tender limited partnership interests (the "Interests") in the Partnership for the cash purchase price of $402 per Interest upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Acceptance (which together constitute the "Offer"). All Interests properly tendered and not withdrawn will be purchased for $402 per Interest, net to the seller in cash, upon the terms and subject to the conditions of the Offer. While this is an Offer for all Interests, in the event that more than 8,944 Interests are tendered and the Partnership determines not to, or is unable to, borrow additional funds upon acceptable terms, the tendered Interests will be prorated for payment. See "The Offer." If the Partnership obtains financing to purchase additional Interests, the Partnership will prepare and disseminate supplemental material on the financing terms and the increased number of Interests it agrees to purchase and, if required, will extend the November 22, 1996 expiration date. This Offer is not conditioned on any minimum number of Interests being tendered. In deciding whether to tender Interests, a Limited Partner should evaluate and consider the risks associated with tendering all or part of the Interests and the risks associated with continuing to hold all or part of the Interests. - - The $402 offer price is below the June 30, 1996, approximate $576 net asset value per Interest as determined by The Valuation Group. Such net asset value does not include the costs of the Partnership completing its required filings, or the costs of conducting the Offer. See "The Partnership -- Determination of the Offer Price." - - Selecting the $402 offer price involved a conflict of interest as the Partnership and non-tendering Limited Partners would prefer a lower price and the tendering Limited Partners would prefer a higher price. See "The Partnership -- Determination of the Offer Price." - - When the Partnership was originally formed, the General Partner originally intended to sell the Partnership's property within seven to nine years after the Partnership's acquisition of its investment properties. The General Partner now believes the Partnership may have to retain the property for an additional period of time in order to maximize the potential profits. See "The Partnership -- Background of the Offer," "The Partnership -- Certain Effects of the Offer" and "The Partnership -- Conduct of the Partnership After the Offer." - - If there are fewer than 300 remaining Limited Partners after completion of the this Offer, the Partnership intends to terminate the registration of Interests under the Securities Exchange Act of 1934, which will result in Limited Partners receiving less information than if the registration continued. See "The Partnership -- Conduct of the Partnership After the Offer." Neither the Partnership nor Decade Companies, its General Partner, makes any recommendation to any Limited Partner as to whether to tender or refrain from tendering Interests and no person has been authorized to make any recommendation on behalf of the Partnership as to whether Limited Partners should tender or refrain from tendering Interests pursuant to the Offer. No person has been authorized to give any information or to make any representations in connection with the Offer other than those contained in this Offer. If given or made, such recommendation, information or representation must not be relied upon as having been authorized by the Partnership. Limited Partners desiring to tender all or, subject to the terms discussed herein, any portion of their Interests should complete and sign the Letter of Acceptance, or a facsimile copy thereof, in accordance with the instructions in the Letter of Acceptance, and mail or deliver it along with any other required documents to the Partnership. A Limited Partner having Interests registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact that broker, dealer, commercial bank, trust company or other nominee and have such holder complete the Letter of Acceptance if such Limited Partner desires to tender such Interests. THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES ADMINISTRATOR OF ANY STATE, NOR HAS THE COMMISSION OR SUCH ADMINISTRATOR PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTION OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. The date of this Offer to Purchase is October 21, 1996. SUMMARY OF CERTAIN INFORMATION The following is a summary of certain information contained elsewhere in this Offer. This summary does not purport to be complete and is qualified in its entirety by reference to the more detailed information contained elsewhere in this Offer and the Annexes and Exhibits hereto. Capitalized terms used but not defined in this Summary are defined elsewhere in this Offer. Limited Partners are urged to read this Offer to Purchase and the Annex and Exhibits in their entirety. The Offer Offeror. . . . . . . . . The Partnership, a Wisconsin limited partnership, invites all of its Limited Partners to tender their Interests upon the terms and subject to the conditions of this Offer. See "The Partnership-- Background of the Partnership." Offer Price. . . . . . . $402 per Limited Partnership Interest. See "The Partnership--Determination of the Offer Price." Offer Expiration Date. . November 22, 1996, unless extended by the Partnership. See "The Offer." Offer Conditions . . . . This Offer is for all Interests and, subject to the terms and conditions of this Offer, the Partnership will purchase all of the Interests tendered and not withdrawn, provided, however, that if more than 8,944 Interests are tendered and the Partnership, in its sole discretion, determines not to, or is unable to, borrow additional funds upon acceptable terms, the Partnership will prorate the tendered Interests as set forth herein. See "The Offer--Certain Conditions" and "Financing The Offer." If the Partnership obtains financing to purchase additional Interests, the Partnership will prepare and disseminate Supplemental Materials and, if required, will extend the November 22, 1996 expiration date. If a Limited Partner tenders any Interests and owns Fractional Interests, an amount of Interests must be tendered such that a Limited Partner no longer owns any Fractional Interests. If a Limited Partner tenders less than all of their Interests, a minimum of three (3) Interests must be retained. See "The Offer." Procedures to Tender Interests. . . . A Limited Partner who desires to tender, subject to the terms and conditions herein, all or any portion of their Interests should complete and sign the Letter of Acceptance and mail or deliver it to the Partnership by the Expiration Date. See "The Offer--Procedures for Tendering Interests." Financing the Offer. . . As of the date of this Offer, the Partnership has sufficient cash reserves to purchase 8,944 Interests and may borrow additional funds to purchase additional Interests. In case more than 8,944 Interests are tendered and the Partnership does not or is not able to arrange financing, tendered Interests will be prorated. If the Partnership obtains financing to purchase additional Interests, the Partnership will prepare and disseminate supplemental material on the financing terms and may extend the November 22, 1996, expiration date. See "Financing the Offer." Proration Terms. . . . . Upon the terms and subject to the conditions of the Offer, the Partnership will accept for purchase all Interests tendered by the Expiration Date, provided that if more than 8,944 Interests are tendered and the Partnership does not, or cannot, obtain additional financing, upon acceptable terms, to purchase such additional Interests, the Partnership will prorate purchases. See "The Offer-- Proration." In the event of proration, the Partnership will first accept all of the tenders from Limited Partners who own less than 100 Interests and who tender all of their Interests by the Expiration Date. If this amount is still in excess of 8,944 and the Partnership does not, or cannot, borrow additional funds to purchase Interests, the Partnership will prorate purchases based upon the ratio of the number of Interests tendered by each Limited Partner who tendered all of their Interests and who own less than 100 Interests by the Expiration Date to the total number tendered by all Limited Partners who tender all of their Interests and who own less than 100 Interests by the Expiration Date. In prorating purchases, the General Partner intends to purchase an amount so that a Limited Partner after proration holds three or more Interests and no Fractional Interests. After this category of tendering Limited Partners has been satisfied and if there are any funds to purchase any other Interests tendered and proration is necessary, the Partnership will prorate purchases from Limited Partners who tendered some, but not all, of their Interests or who own 100 Interests or more based upon the ratio of the number of Interests tendered by each Limited Partner to the total remaining number of Interests tendered, provided that the Partnership may round the prorated amount such that a Limited Partner after the Offer will hold at least three Interests and will not hold any Fractional Interests. See "The Offer-- Proration." Certain Effects of the Repurchase Offer . . . As a result of the Offer, affiliates of the General Partner, and Limited Partners who do not tender their Interests, will acquire a greater share of the equity, profit, and losses of the Partnership, and Limited Partners who tender their Interests will no longer share in future earnings, distributions, or growth of the Partnership, if any. Further, the Limited Partners who tender will no longer share in the risks associated with achieving such earnings or the potential to realize greater value for their Interests. The General Partner and its affiliates may also benefit by receiving certain fees and distributions pursuant to the Partnership Agreement. See "The Partnership-- Interests of Certain Persons in the Offer," "The Partnership--Certain Effects of the Offer" and "The Partnership-- Conduct of the Partnership After the Offer." Opinion of Financial Advisor . . . The Valuations Group has rendered a written opinion that, subject to the assumptions set forth therein, the Offer of $402 per Interest is fair to such holders. The full text of the written opinion, dated as of October 7, 1996, which sets forth the assumptions made, procedures followed, matters considered and limits of its review, is attached as Annex D. Holders of interests are urged to and should read such opinion in its entirety. See "The Partnership--Opinion of The Valuations Group." Federal Income Tax Consequences. . . . The receipt of cash for Interests, pursuant to the Offer will be a taxable transaction for federal income tax purposes under the Internal Revenue Code of 1986, as amended, and also may be a taxable transaction under applicable state, local, foreign and other tax laws. See "The Partnership--Certain Federal Income Tax Consequences of the Offer." Cash Distributions . . . After the Offer has been consummated, the Partnership intends to make cash distributions, to the extent that cash is available, in accordance with the Partnership Agreement. See "The Partnership--Certain Effects of the Offer" and "The Partnership--Conduct of the Partnership After the Offer." Questions. . . . . . . . Questions and requests for assistance, or for additional copies of this Offer to Purchase, and the Letter of Acceptance, may be directed to the Partnership at its offices at 250 Patrick Boulevard, Suite 140, Brookfield, Wisconsin 53045-5864, telephone (414) 792-9200, facsimile (414) 792-0808, Attention: Michael G. Sweet. THE PARTNERSHIP Decade Companies Income Properties -- a Limited Partnership (the"Partnership") invites its limited partners ("Limited Partners") to tender limited partnership interests ("Interests") at the net price of $402 per Interest (the "Offer Price"), to the tendering Limited Partner in cash, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Acceptance (which together constitute the "Offer"). The $402 amount will be prorated in respect of fractional limited partnership interests ("Fractional Interests"). All references to Interests shall include Fractional Interests, unless the context otherwise requires. Neither the Partnership nor its General Partner makes any recommendation to any Limited Partner as to whether to tender or refrain from tendering Interests. Each Limited Partner, after evaluating and considering the risks associated with tendering or continuing to hold Interests, must make his or her own decision whether to tender Interests and, if so, how many Interests to tender. Background of the Partnership The Partnership is a limited partnership formed under the Wisconsin Uniform Limited Partnership Act to invest in existing residential real properties and to make equity-participating and other loans on income-producing real properties that are secured by a first or junior mortgage lien. The general partner of the Partnership is Decade Companies, a Wisconsin general partnership, (hereafter "General Partner") of which Jeffrey Keierleber and Decade 80, Inc. are currently the general partners. Decade 80, Inc. is entirely owned by Jeffrey Keierleber. Prior to December, 1992, Harold Barian was also a general partner in Decade Companies. The principal office of the Partnership and Decade Companies is located at 250 Patrick Boulevard, Suite 140, Brookfield, Wisconsin 53045-5864, Telephone (414) 792-9200. From 1986 to 1988, the Partnership raised $18 million of capital through sale of its Interests. From 1986 to 1993, the Partnership acquired six apartment complexes, three of which it continues to own. See "Business of the Partnership." At the close of business on October 1, 1996, the Partnership's 17,466.31 Interests were held by 1,936 Limited Partners. See "Description of the Limited Partnership Interests." Background of the Offer In April 1996, the Partnership received net loan proceeds of $4,057,000 from the refinancing of its mortgage loan on Town Place Apartments. The refinancing created an opportunity for the Partnership, through its General Partner, to reassess its business options and to re-evaluate its future course action in order to better meet its investment objectives. There have been 27 secondary market transactions for Limited Partner-Interests since October 1994. See "Determination of The Offer Price." Based upon this activity and based upon conversations with Limited Partners and their representatives, the General Partner believes that there are certain Limited Partners who desire to sell their Interests immediately for cash in order to obtain liquidity and other Limited Partners who do not need or desire the liquidity and would prefer the opportunity to retain their Interests in order to benefit from any potential future capital appreciation that may be realized from continued operation and eventual sale of the Partnership's property or other properties to be acquired. The General Partner believes that the Limited Partners should be entitled to make a choice between immediate liquidity and continued ownership and, thus, believes that the Offer being made hereby accommodates the differing goals of both groups of Limited Partners. The General Partner considered the possibility of expanding existing real estate operations by seeking the acquisition of additional investment properties through leveraging the Partnership. Although the General Partner strongly favors the alternative of expanding real estate operations, it has determined to use existing cash reserves in this Offer to provide Limited Partners a choice. The General Partner may in the future reconsider the merits of expanding the Partnership's real estate operation. See "The Partnership-- Conduct of the Partnership After the Offer." The General Partner also considered the advisability of a pro rata distribution of cash reserves, inclusive of the refinancing proceeds. The General Partner does not believe that such an approach would be the best alternative. The General Partner believes it is a more efficient use of the Partnership's capital either to (i) continue to operate the Partnership's properties and possibly acquire other real estate properties and leverage the Partnership (and in compliance with the securities laws terminate its public reporting requirements, if possible) or (ii) sell the property at the prevailing market price, wind up the affairs of the Partnership, liquidate and distribute the net sale proceeds and other assets. Based upon (i) its experience in real estate (ii) the long term historical increase in real estate values in the Madison, Wisconsin area and Clearwater, Florida and St. Petersburg, Florida area and (iii) the General Partner's perception that financial institutions are increasingly willing to lend to developers and real estate investors, which should result in an increase in selling prices for real estate properties, the General Partner believes the current value of the Partnership properties is more likely than not to increase in the future, provided the Partnership holds the property for a period of time and, therefore, does not believe it is the optimal time to sell the property and liquidate the Partnership. There can be no assurances, however, of any profit or a distribution if a Limited Partner decides to hold their Interests. The General Partner believes that continued ownership by the Partnership of its property is in the long-term best interests of those Limited Partners willing and able to maintain their investment in the Partnership. There can, of course, be no assurance that such appreciation will occur, or, if it does occur, that it will result in any specific level of return to the remaining Limited Partners. In determining to make the Offer, the General Partner also considered that the Partnership originally intended to sell the properties within seven to nine years after the Partnership's acquisition of its investment properties. The three properties owned by the Partnership were acquired between January 1989 and November 1993. The General Partner now believes the Partnership may be required to retain the properties for a longer period in order to maximize the potential profit on sale. Consequently, the General Partner decided that the Partnership should undertake this Offer in order to permit the Limited Partners either to sell their Interests at a price determined to be fair by an independent third party (and generally above prevailing secondary market sales prices), while offering other Limited Partners the option of holding their Interests subject to the potential of future gain or loss. Limited Partners who tender their shares pursuant to the Offer are, in effect, exchanging the certainty and liquidity of a current sale for the potentially higher return of continued ownership of their Interests, but the continued ownership of Interests also entails the risk of loss of all or a portion of the investment. Once the Offer is completed, and if the number of Limited Partners is reduced to less than 300, the Partnership will proceed with deregistration of the Interests under the Exchange Act in order to reduce the administrative overhead associated with compliance under the federal securities laws. See "The Partnership--Certain Effects of the Offer" and "The Partnership--Conduct of the Partnership After the Offer." Under the Amended and Restated Agreement of Limited Partnership, dated September 30, 1996 (the "Partnership Agreement"), the Limited Partners have the right upon a majority vote of the Interests to remove the General Partner and then designate a new General Partner, who would select an alternative other than this Offer. As of the date of this Offer, the General Partner is not aware of any efforts to remove the General Partner or seek a substitute. Determination of the Offer Price The Offer Price represents the price at which the Partnership is willing to purchase Interests and was established after considering the factors described below. No Limited Partner approval is required or sought. No special committee of the Partnership or the Limited Partners has approved this Offer and no such special committee or independent person has been retained to act on behalf of the Partnership or the Limited Partners in connection with this Offer. The General Partner is aware of 27 sales of Interest in the last three years at prices ranging from $127 to $700 per Interest. There is no public organized market for Interests and the General Partner is concerned that those limited partners who wish to dispose of their investment before liquidation of the Partnership should receive a fair price. The weighted average selling price of these 27 trades was $360 per Interest. A total of 402.56 Interests exchanged hands with an average transaction of 14.91 Interests. For the reasons set forth in this Offer, the General Partner believes $402 per Interest is fair to the Limited Partners. Limited Partners are urged to consider carefully all of the information contained in this Offer and to consult with their own advisors, including tax and financial advisors, in evaluating the terms of this Offer before deciding whether to tender their Interests. In making its determination as to fairness, the General Partner has considered the voluntary nature of the transaction, the competing interests of different groups of Limited Partners, and the current state of the real estate market in St. Petersburg, Florida, Madison, Wisconsin, Clearwater, Florida and nationally. The General Partner also considered that the Interests are not traded on any registered securities exchange or on the NASDAQ over-the-counter market, and, to the knowledge of the General Partner, there is no market for such Interests, and none is expected to develop. Thus, in the absence of the Offer, Limited Partners desiring liquidity must seek a buyer for their Interests in negotiated transactions, which to the General Partner's knowledge has generally involved prices below $400. The General Partner also determined that the liquidation value of the Partnership's property is uncertain at this time. During the past 24 months, the General Partner has not received any offers to purchase or exchange for either The Meadows Apartments or Pelican Sound Apartments (or expression of interests to such effect). Town Place has previously received such offers, as described below. Because there has been no offer for either of these properties, it is not possible precisely to determine what price a potential purchaser would be willing to pay for either of these properties. During 1994 the General Partner received 23 offers to purchase Town Place (or expressions of interests to such effect). Some of such offers have been for the purchase of Town Place in combination with other properties owned by Affiliates of the General Partner. The General Partner has considered each such offer and has generally made counter offers in response. The proposed prices have ranged from a low of $7,450,000 to a high of $9,500,000, with an average price of $8,970,000. The Partnership accepted an offer to sell Town Place for $9,500,000 but the proposed sale was cancelled by the buyer who forfeited a $100,000 escrow deposit to the Partnership. Twelve of the offers would have been below the appraised value of Town Place and the highest offer would have exceeded such amount by less than $300,000 after estimated commissions. During 1994 the General Partner received 17 offers to purchase Pelican Sound (or expressions of interests to such effect). Some of such offers have been for the purchase of Pelican Sound in combination with other properties owned by Affiliates of the General Partner. The General Partner has considered each such offer and has generally made counter offers in response. The proposed prices have ranged from a low of $13,000,000 to a high of $16,750,000, with an average price of $14,618,000. There have been no offers in 1994 to the present for The Meadows. In selecting an Offer Price, the value of the Partnership's real property as determined by appraisals was considered. The appraisal of Pelican Sound Apartments set the fair market value at $14,250,000 as of August 28, 1996. The appraisal of the Meadows II Apartments set the fair market value at $11,100,000 as of September 25, 1996. The appraisal of Town Place Apartments set the fair market value at $9,200,000 as of April 15, 1996. A copy of each appraisal report is included as Annex A, Annex B and Annex C and Limited Partners are urged to review the appraisals in their entirety. There can be no assurance that the properties could be sold at this point, or in the future, for their 1996 appraised values. It is possible that a sale at this time might yield a price which is either greater or lesser than the appraised amount. However, based upon (i) its experience in real estate, (ii) the long term historical increase in real estate value in the properties and (iii) the General Partner's perception that financial institutions are increasingly willing to lend to developers and real estate investors, which should result in the increased sales prices for real estate properties, the General Partner believes that the value of the Partnership's property is more likely than not to increase in the future, provided the Partnership holds the property for a period of time sufficient to permit a further strengthening in the real estate market in general and the Madison, Wisconsin and Clearwater, Florida and St. Petersburg metropolitan real estate markets in particular. In October, 1996, The Valuations Group orally informed the General Partner that the Interests, utilizing various methods, could be valued from a range of $253 (under a review of trading activity in similar limited partnerships) to approximately $576 (under a net asset value method) per Interest. Based upon all these factors, including, but not limited to, The Valuations Group analysis, the General Partner selected $402 per Interest as the Offer Price, which The Valuations Group opined would be fair, from a financial point of view, to such holders. At this price, and after considering the cash distributions (of between $554 and $704 per Interest that a holder, depending upon the date of purchasing the Interest) received and the tax losses previously allocated with respect to the Interests, most Limited Partners who tender will receive more than their original price at which the Interests were sold by the Partnership. In determining the Offer Price, the General Partner noted that the weighted average purchase price during the last three years was for $360 an Interest. The General Partner has not derived a definitive calculation of the liquidation value per Interest. In selecting the Offer Price, the General Partner did consider that The Valuations Group derived a net asset value of $576 per Interest, $389 per Interest under the fractional Interest discount approach, and $253 per Interest under the review of trading activity in similar limited partnerships. After considering these factors, the General Partner then selected a $402 Offer Price in order to not only provide all limited partners with an opportunity to sell at a price in excess of the current trading range, but also to provide those limited partners who do not wish to sell with an incentive to hold their investment. August 1996 Appraisal of Pelican Sound The appraisal of Pelican Sound was performed by an independent appraiser, Riggins, Atkinson, Combs & Associates, Inc. ("Riggins, Atkinson"). The appraiser was selected on the basis of its general qualifications and cost. Riggins, Atkinson previously performed similar services for the Partnership. However, there is no material relationship between (i) the appraiser, his affiliates and representatives, and (ii) the Partnership or its General Partner or affiliates. No limitations were imposed on the scope of the investigation of the appraiser. The Appraisal report is set forth in Annex A. Riggins, Atkinson appraised the property at $14,250,000 as of August 28, 1996. In preparing the appraisal, Riggins, Atkinson utilized three basic techniques for estimating market value: cost, income, and market data (or direct sales comparison), each of which derived a different value. The results of these three approaches are Cost $14,500,000 Market or Sales Comparison $14,300,000 Income $14,200,000 These approaches were then reconciled to a final estimate of value. The cost technique is based on the proposition that an informed purchaser would pay no more than the cost of producing a substitute property with the same utility as the subject property. This technique calls for comparison, weighing and relating sales data to the land and property (including improvements) being appraised. Greatest weight is placed on actual sales of similar properties made at times concurrent with the date of the appraisal and under comparable conditions. Whenever pertinent, consideration was given to prices asked by owners and offers made by prospective purchasers willing to buy. The income technique converts anticipated benefits to be derived from the ownership of property into a value estimate. Anticipated future income and/or reversions are discounted to a present worth figure through the capitalization process. This approach is based upon the underlying premise that income producing real estate is typically purchased as an investment, and from the investor's point of view earning power is the critical element affecting property value. An investor who purchases income producing real estate is essentially trading present dollars for the right to receive future dollars. This approach focuses on how change affects the value of income producing properties. The income capitalization approach provides a value indication by converting these anticipated future benefits and the various accompanying changes into a current value. This conversion process can be accomplished by either direct or yield capitalization methods. The market data or direct sales comparison technique estimates value based on comparison to prices paid in actual market transactions for similar properties. The Appraisal report contains additional information on properties which were determined to be comparable. Utilizing these techniques, the appraiser concluded $14,250,000 was the fair value. There can be no assurances that Pelican Sound will sell for an amount equal to, or greater than, the appraised amount. The appraiser's underlying analysis, supporting documents and additional information on each of the three valuation approaches is set forth in the Appraisal report, which is attached in its entirety as Annex A to the Offer to Purchase. For further information on the cost approach, Limited Partners should review the section of the appraisal captioned "Cost Approach." For further information on the market or sales comparison, Limited Partners should review the section captioned "Sales Comparison Approach." For information on the income approach, including the estimates and assumptions thereunder, including the discount rate, Limited Partners should review the section of the appraisal captioned "Income Capitalization Approach." September 1996 Appraisal of The Meadows II The appraisal of The Meadows II was performed by an independent appraiser, T.M. Warner, MAI, SRA. The appraiser was selected on the basis of his general qualifications and cost. Mr. Warner has previously performed similar services for other partnerships sponsored by the General Partner and affiliates. However, there is no material relationship between (i) the appraiser, his affiliates and representatives, and (ii) the Partnership or its General Partner or affiliates. No limitations were imposed on the scope of the investigation of the appraiser. The Appraisal report is set forth in Annex B. Mr. Warner, MAI, SRA appraised the property at $11,100,000 as of September 25, 1996. In preparing the appraisal, T.M. Warner utilized three basic techniques for estimating market value: cost, income, and market data (or direct sales comparison), each of which derived a different value. The results of these three approaches are Cost $11,400,000 Market or Sales Comparison $11,100,000 Income $11,100,000 These approaches were then reconciled to a final estimate of value. The cost technique is based on the proposition that an informed purchaser would pay no more than the cost of producing a substitute property with the same utility as the subject property. This technique calls for comparison, weighing and relating sales data to the land and property (including improvements) being appraised. Greatest weight is placed on actual sales of similar properties made at times concurrent with the date of the appraisal and under comparable conditions. Whenever pertinent, consideration was given to prices asked by owners and offers made by prospective purchasers willing to buy. The income technique converts anticipated benefits to be derived from the ownership of property into a value estimate. Anticipated future income and/or reversions are discounted to a present worth figure through the capitalization process. This approach is based upon the underlying premise that income producing real estate is typically purchased as an investment, and from the investor's point of view earning power is the critical element affecting property value. An investor who purchases income producing real estate is essentially trading present dollars for the right to receive future dollars. This approach focuses on how change affects the value of income producing properties. The income capitalization approach provides a value indication by converting these anticipated future benefits and the various accompanying changes into a current value. This conversion process can be accomplished by either direct or yield capitalization methods. The market data or direct sales comparison technique estimates value based on comparison to prices paid in actual market transactions for similar properties. The Appraisal report contains additional information on properties which were determined to be comparable. Utilizing these techniques, the appraiser concluded $11,100,000 was the fair value. There can be no assurances that The Meadows II will sell for an amount equal to, or greater than, the appraised amount. The appraiser's underlying analysis, supporting documents and additional information on each of the three valuation approaches is set forth in the Appraisal report, which is attached in its entirety as Annex B to the Offer to Purchase. For further information on the cost approach, Limited Partners should review the section of the appraisal captioned "Cost Approach." For further information on the market or sales comparison, Limited Partners should review the section captioned "Direct Sales Comparison Approach." For information on the income approach, including the estimates and assumptions thereunder, including the discount rate, Limited Partners should review the section of the appraisal captioned "Income Capitalization Approach." April 1996 Appraisal of Town Place The appraisal of Town Place was performed by an independent appraiser Riggins, Atkinson. The appraiser was selected on the basis of its general qualifications and cost. Riggins, Atkinson previously performed similar services for other partnerships sponsored by the General Partner and affiliates. There is no material relationship between (i) the appraiser, his affiliates and representatives, and (ii) the Partnership or its General Partner or affiliates. No limitations were imposed on the scope of the investigation of the appraiser. The Appraisal report is set forth in Annex C. Riggins, Atkinson appraised the property at $9,200,000 as of April 15, 1996. In preparing the appraisal, Riggins, Atkinson utilized three basic techniques for estimating market value: cost, income, and market data (or direct sales comparison), each of which derived a different value. The results of these three approaches are Cost $9,000,000 Market or Sales Comparison $8,900,000 Income $9,300,000 These approaches were then reconciled to a final estimate of value. The cost technique is based on the proposition that an informed purchaser would pay no more than the cost of producing a substitute property with the same utility as the subject property. This technique calls for comparison, weighing and relating sales data to the land and property (including improvements) being appraised. Greatest weight is placed on actual sales of similar properties made at times concurrent with the date of the appraisal and under comparable conditions. Whenever pertinent, consideration was given to prices asked by owners and offers made by prospective purchasers willing to buy. The income technique converts anticipated benefits to be derived from the ownership of property into a value estimate. Anticipated future income and/or reversions are discounted to a present worth figure through the capitalization process. This approach is based upon the underlying premise that income producing real estate is typically purchased as an investment, and from the investor's point of view earning power is the critical element affecting property value. An investor who purchases income producing real estate is essentially trading present dollars for the right to receive future dollars. This approach focuses on how change affects the value of income producing properties. The income capitalization approach provides a value indication by converting these anticipated future benefits and the various accompanying changes into a current value. This conversion process can be accomplished by either direct or yield capitalization methods. The market data or direct sales comparison technique estimates value based on comparison to prices paid in actual market transactions for similar properties. The Appraisal report contains additional information on properties which were determined to be comparable. Utilizing these techniques, the appraiser concluded $9,200,000 was the fair value. There can be no assurances that Town Place will sell for an amount equal to, or greater than, the appraised amount. The appraiser's underlying analysis, supporting documents and additional information on each of the three valuation approaches is set forth in the Appraisal report, which is attached in its entirety as Annex C to the Offer to Purchase. For further information on the cost approach, Limited Partners should review the section of the appraisal captioned "Cost Approach." For further information on the market or sales comparison, Limited Partners should review the section captioned "Market or Direct Sales Comparison Approach." For information on the income approach, including the estimates and assumptions thereunder, including the discount rate, Limited Partners should review the section of the appraisal captioned "Income Capitalization Approach." Opinion of The Valuations Group In September, 1996, the Partnership retained The Valuations Group to deliver an opinion in connection with the fairness of the offer price. The Partnership selected The Valuations Group for its familiarity and experience with valuing limited partnership interests, its independence from the Partnership and the price and scheduling terms on which it agreed to perform its services. The Partnership placed no limits on the scope of analysis and investigation and no deadline was set by which it had to complete its analysis. In October, 1996, the Partnership was orally informed, and on October 7, 1996, it confirmed in writing, that on such date of opinion $402 per Interest was fair to holders from a financial point of view. The Valuation Group's opinion is not required to be updated after the date of this Offer so as to take account of material developments, if any, which may thereafter occur or may come to its attention. A copy of the written opinion dated as of October 7, 1996 is attached hereto as Annex D. Limited Partners are urged to read this opinion in its entirety. In rendering its opinion, The Valuations Group relied, in part, without independent verification, on the accuracy and completeness of information provided to it by the Partnership. The Valuations Group did not make or obtain appraisals of the Partnership's assets, but relied upon the appraisals dated August 25, 1996, September 25, 1996 and April 15, 1996, respectively, of the Partnership's properties and did not solicit third parties who might be interested in acquiring all or a part of the Partnership or the property. See "The Partnership -- August 1996 Appraisal of Pelican Sound," "The Partnership -- September 1996 Appraisal of The Meadows II," and "The Partnership -- April 1996 Appraisal of Town Place." The Valuations Group reviewed the key assumptions of the respective appraisers and believes the assumptions and resulting conclusions in each appraisal to be both reasonable and adequately documented. In reaching its conclusions about the fairness of the Offer, The Valuations Group utilized a variety of valuation techniques and performed a number of analyses of relevant information. In forming its opinion, The Valuations Group has reviewed the Partnership's recent Securities and Exchange Commission filings and data published in real estate industry publications. Prior to being engaged to provide this opinion in connection with the fairness of the offer price, in 1995 The Valuations Group prepared an independent opinion of value for a client unrelated to the Partnership. In that opinion, The Valuations Group concluded that $440 per Interest was the fair market value for an Interest; however, The Valuations Group's current valuation based on the same methodology applied using information available as of August 15, 1996 is $389 per Interest. The difference arises from The Valuation Group (1) consideration of the expenses associated with the Town Place financing; (2) consideration of $200,000 of estimated liquidation costs; (3) consideration of limited partners distributions in excess of operational cash and (4) inclusion of a $225,000 fee due a third party upon sale of a Partnership property. The principal methods, techniques and their outcome supporting the opinion are summarized in the following paragraphs. As part of the review, The Valuations Group sought information about recent sales of the Interests. The Valuations Group, based upon information from the General Partner and its own research, found that 402.56 limited partnership units in the Partnership changed hands in 27 transactions. These transactions occurred at prices ranging from a low of $127.39 per Interest to a high of $700 per Interest. The weighted average transaction price for the 27 recorded transactions was $359.60 per Interest. The offer price is in excess of such price. As part of its analysis in support of its opinion, The Valuations Group derived an estimate of the Partnership's net asset value per Interest. This estimate, which The Valuations Group believes to be reasonable based on its analysis of Partnership information, represents the dollar amount in cash which could be available for distribution to the Partnership's Limited Partners, stated on a per Interest basis, if the Partnership's properties were sold at their appraised value and its outstanding liabilities were satisfied as of June 30, 1996. Net asset value per Interest is equal to appraised value less selling costs and repayment of debt plus net other assets (e.g., cash, receivables, less payables, etc.). This amount does not consider all of the costs of liquidating the Partnership, completing all of the filings required by the Securities and Exchange Commission or other agencies, or the costs of conducting this Offer. Based upon its analysis, The Valuations Group derived a net asset value of $576 per Interest. The offer price, which does consider the costs of liquidating the Partnership (and other related costs) and the costs of this Offer, is approximately a 30.21% discount to this derived net asset value. As an additional part of its review to support its opinion, The Valuations Group also analyzed recent trading prices for limited partnership interests trading on the limited partnership secondary market. These transactions typically occur at prices which are substantially discounted to the partnership's net asset value. Applying a 37.5% discount to The Valuations Group's derived net asset value for the Partnership, The Valuations Group estimated a trading market value of $360 per Interest. The Valuations Group also considered that fractional, non- controlling interests in limited partnerships typically trade at discounts to the partnership's net asset value. These discounts are often substantial and reflect investor preferences for a partnership's unique investment characteristics. The Valuations Group has applied discounts and premiums to net asset value based upon internally derived, weightings which represent The Valuations Group's subjective judgment as to the relative influence of a number of key factors on the value of a non-controlling, minority interest in the Partnership. These relative influences are reflected as additions to or subtractions from net asset value and are expressed as premiums or discounts applied thereto. In deriving the applicable discount for a non-controlling, minority interest in the Partnership, The Valuations Group looked at the following factors: secondary market, liquidity and investment control, cash flow and distributions, asset type and quality, management capabilities and fee structure, market capitalization, portfolio diversification, liquidation time horizon, recent historical performance, analytical complexity, and financial leverage. Factors which figured most prominently in deriving the discount appropriate to estimate the price for a non-controlling interest in the Partnership were: (i) the secondary market trading activity; (ii) lack of current distributions; (iii) weak liquidation incentives; and (iv) the analytical complexity of the Partnership. The Valuations Group, applying the fractional interest discount approach derived a value of $389 per Interest which represents a 32.47% discount from net asset value (a 25% discount for lack of marketability and control, a 2.5% discount for lack of cash flow, a 2.5% discount for liquidation time horizon, and 2.5% discount for difficulties with valuing the Interests). These analyses, taken as a whole, led The Valuations Group to conclude that the offer price of $402 per Interest is fair to Limited Partners from a financial point of view. The preparation of the fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses in the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying The Valuation Group's opinion. No partnership or transaction used in the above analysis as a comparison is identical to the Partnership or the contemplated Offer. In arriving at its fairness determination, The Valuations Group considered the results of all such analyses and did not assign any particular weight to the results of any particular analysis. The analyses were prepared for the purpose of enabling The Valuations Group to provide its opinion as to fairness and do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold. As compensation for financial advisory services rendered in connection with the Offer, the Partnership has agreed to pay The Valuations Group a fee of $9,000.00, whether or not the Offer is consummated. Interests of Certain Persons in the Offer The General Partner's interest in the Partnership will not increase as a result of the Offer. However, the General Partner could benefit if, upon the eventual sale of the Partnership's property, there were sufficient net cash proceeds to permit the General Partner to share in distributions set forth in the Amended and Restated Agreement of Limited Partnership, dated September 30, 1996 (the "Partnership Agreement"). The Partnership Agreement permits the General Partner to receive 12% of the net sale proceeds as well as other payments set forth in the Partnership Agreement, provided the Limited Partners have received a certain return. There can be no assurance, however, that there will be any such amount available for distribution to the General Partner or that the remaining Limited Partners will receive either their capital contributions or any other payment. Jeffrey Keierleber, an affiliate of the General Partner, owns 193.04 Interests and has advised the General Partner that he does not intend to tender his Interests. As a consequence of this Offer, Mr. Keierleber will acquire a greater percentage ownership of the Partnership, as will other Limited Partners who retain their Interests, and be subject to the risks and benefits associated with ownership of the Interests and the business of the Partnership. An affiliate of the General Partner will continue to manage the Partnership's property and receive property management fees from the Partnership until the property is sold. The General Partner will continue to manage the Partnership and receive partnership management fees, subject to the limitations set forth in the Partnership Agreement. Certain Effects of the Offer In addition to the effects of the Offer on tendering and nontendering Limited Partners and upon the General Partner, the Offer will affect the Partnership in several other respects. The Partnership will use some or all of its existing cash reserves for the purchase of Interests and will not have such cash reserves available for future needs and contingencies. The use of cash reserves will reduce or eliminate the Partnership's present interest income earned on such cash reserves. Moreover, if the Partnership borrows additional funds to finance the purchase of in excess of 8,944 Interests, such additional borrowing will increase the required debt service of the Partnership and reduce, eliminate, or result in a negative cash flow. The Partnership has not sought or obtained a commitment for financing and there can be no assurances as to the availability, terms or applicable conditions of any financing. The receipt of cash pursuant to the Offer will be a taxable transaction to any Limited Partners who tender Interests. See "The Partnership--Certain Federal Income Tax Consequences of the Offer." For tax qualified investors, increasing the leverage could also result in unrelated business taxable income. See "Certain Federal Income Tax Consequences of the Offer." If there are fewer than 300 remaining Limited Partners after completion of this Offer, the Partnership intends to apply to terminate the registration of the Interests under the Exchange Act. The termination of registration of the Interests under the Exchange Act is expected to reduce certain of the Partnership's administrative costs, such as legal, accounting, printing, mailing and investor communications expenses, and will reduce the information required to be furnished by the Partnership to the Securities and Exchange Commission and will make certain provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b) no longer applicable and suspend the requirement to file reports pursuant to Section 15(d). Continued holding of the Interests will subject the Limited Partners to the risks generally incident to the ownership of real property, including: (a) the uncertainty of sufficient revenue to meet fixed obligations, if any; (b) adverse changes in national economic conditions; (c) changes in the popularity of real estate as an investment; (d) adverse local market conditions due to changes in general or local economic conditions or neighborhood values; (e) changes in interest rates and the availability and terms of mortgage funds in general; (f) the financial condition of tenants and sellers of property; (g) changes in real estate tax rates or other operating expenses; (h) energy shortages or price changes; or (i) governmental actions such as rent or other economic controls, acts of God, and other factors that are beyond the control of the General Partner. Although the Partnership intends to maintain insurance with the types and amounts of coverage that are customarily maintained by prudent owners of similar properties, uninsured losses could nevertheless occur. In addition, certain expenditures associated with real estate equity investments (principally, real estate taxes and maintenance costs) are not necessarily decreased by events adversely affecting the Partnership's income from such investments. Thus, the cash required to operate a property may exceed the rental income earned thereon, and the Partnership may have to borrow funds in order to protect its investment or may be required to dispose of the property at a loss. The Partnership's ability to meet its obligations and thereafter to make distributions to the Limited Partners will depend on these factors and, for these and other reasons, no assurance of profitable operations can be made. In addition, there can be no assurance that the value of the Partnership's real estate holdings will appreciate in the future. Conduct of the Partnership After the Offer The Partnership intends to operate Pelican Sound, The Meadows II and Town Place for a number of years. There can, of course, be no assurance that the market will be better or worse than presently exists at any point in the future or that a profit will be realized by the Partnership upon an eventual sale of its property. The General Partner has no plans to seek a sale of the Partnership's property until, in its opinion, such sale is necessary or appropriate. The timing of such events cannot be predicted, but the General Partner does not anticipate such a sale for at least two years, and perhaps much longer. Other than as described in this Offer, the Partnership does not have any present plans or proposals that would result in any extraordinary transactions, or any material changes in the structure of the Partnership. If the Partnership obtains financing to fund this Offer, the amount and frequency of future cash distributions will be affected by any debt service obligations and possibly by the terms of the financing arrangement. Future distributions may also be affected by other factors, including cash flow of the Partnership's properties, cash reserves of the Partnership, and number of Interests tendered and purchased pursuant to this Offer. See "Lack of Market and Distributions." The Partnership may consider acquiring additional investment properties and leverage the Partnership. No specific properties have been identified for investment, and the General Partner will have substantial discretion in investing any funds from refinancing of the Partnership property. No assurances can be given that the Partnership will be successful in obtaining suitable investments on financially attractive terms or that, if investments are made, the objectives of the Partnership will be achieved. Upon completion of the Offer, the Partnership may consider purchasing any Interests not purchased in the Offer. Any such purchases may be on the same terms or on terms which are more or less favorable to Limited Partners than the terms of the Offer. Rule 13e-4 under the Exchange Act prohibits the Partnership and its affiliates from purchasing any Interests, other than pursuant to the Offer, until at least ten business days after the Expiration Date. Any possible future purchases by the Partnership will depend on many factors, including the market price of the Interests, the results of the Offer, the Partnership's business and financial position and general economic and market conditions. Interests the Partnership acquires pursuant to the Offer will not be available for the Partnership to issue without further Limited Partner action. Certain Federal Income Tax Consequences of the Offer The following is a general summary under currently applicable law of certain federal income tax considerations generally applicable to the sale of Interests pursuant to the Offer and the retention of Interests after the Expiration Date. The following summary is for general information only, and the tax treatment described herein may vary depending upon each Limited Partner's particular situation. Certain Limited Partners (including, but not limited to, insurance companies, tax-exempt organizations, financial institutions or broker/dealers, foreign corporations, and persons who are not citizens or residents of the United States) may be subject to special rules not discussed below. In addition, the summary does not address the federal income tax consequences to all categories of Interest holders, nor does it address the federal income tax consequences to persons who do not hold the Interests as "capital assets," as defined by the Internal Revenue Code of 1986, as amended (the "Code"). No ruling from the Internal Revenue Service ("IRS") will be sought with respect to the federal income tax consequences discussed herein; thus, there can be no assurance that the IRS will agree with the conclusions stated. For tax years prior to 1996, the Partnetship utilized an incorrect procedure for calculating and allocating certain depreciations/deductions. See "Corrections of Depreciation Methods and Allocations" below. Limited Partners are urged to consult their own tax advisors as to the particular tax consequences of a tender of their Interests to the Partnership for repurchase pursuant to the Offer, including the applicability and effect of any state, local, foreign or other tax laws, any recent changes in applicable tax laws and any proposed legislation. The following information is intended as a general statement of certain tax considerations, and Limited Partners should not construe this as legal or tax advice. Sale of Interests Pursuant to the Offer. The receipt of cash for Interests pursuant to the Offer will be a taxable transaction for federal income tax purposes and may also be a taxable transaction under applicable state, local and other tax laws. The repurchase of Interests by the Partnership pursuant to the Offer will be deemed a sale of the Interests by the tendering Limited Partner. The Partnership's payment for a Limited Partner's Interests is in complete liquidation of that portion of the Limited Partner's interest in the Partnership represented by the repurchased Interests. The recipient of such payments is taxable to the extent of any gain recognized in connection with the liquidation. In general, and subject to the recapture rules of the Code Section 751 discussed below, a holder will recognize capital gain or loss at the time his Interests are purchased by the Partnership to the extent that the money distributed to him exceeds his adjusted basis the repurchased Interests. Upon a sale of an Interest pursuant to the Offer, a Limited Partner will be deemed to have received money in the form of any cash payments to him from the Partnership and to the extent he is relieved from his proportionate share of liabilities, if any, to which the Partnership's assets are subject. A Limited Partner will thus be required to recognize gain upon the sale of his Interests to the Partnership if the amount of cash he actually receives, plus the amount he is deemed to have received as a result of being relieved of his proportionate share of Partnership nonrecourse liabilities (if any), exceeds the adjusted basis of the Limited Partner for the repurchased Interests. The income taxes payable upon the sale must be determined by each Limited Partner on the basis of his own financial interests. The adjusted basis of a Limited Partner's Interests is calculated by taking his initial basis and making certain additions and subtractions thereto. The initial basis of a Limited Partner is the amount paid for his Interests ($1,000 per Interest for those who purchased in the initial offering). This initial basis is increased by a Limited Partner's proportionate share of nonrecourse liabilities, if any, to which the Partnership's assets are subject and by the share of Partnership taxable income, capital gains and other income items allocated to the Limited Partner. A Limited Partner's basis is reduced by cash distributions and by the share of Partnership losses allocated to the Limited Partner. A selling Limited Partner will be allocated a pro rata share of the Partnership's taxable income or loss for 1996 with respect to the Interests sold in accordance with the provisions of the Partnership Agreement concerning transfers of Interests. Such allocation will affect the Limited Partner's adjusted tax basis in his Interests and, therefore, the amount of such Limited Partner's taxable gain or loss upon a sale of Interests pursuant to this Offer. For individuals, trusts and estates the income allocated will be treated as ordinary income which could be taxed at a rate as high as 39.6% for federal income tax purposes, while the corresponding reduction in taxable gain upon the sale of the Interests will result in tax savings of no more than 28% of the reduction in taxable gain. There was nonrecourse debt attributed to the Interests in the approximate amount of $23,086,000 as of June 30, 1996. Therefore, in determining the tax consequences of accepting the Offer, the Partnership's payments for Interests will be deemed to be equal to the $402 cash payment per Interest plus a pro rata share of the Partnership's nonrecourse debt (approximately $1,322 per Interest) (together, the "Selling Price"). The taxable gain (or loss) to be incurred as a consequence of accepting the Offer is determined by subtracting the adjusted basis of the purchased Interests from the Selling Price. Each Limited Partner must determine his own adjusted tax basis, as the adjusted tax basis will vary depending upon when the Limited Partner purchased the Interests and the amount of distributions received for each Interest, which varies by the day admitted to the Partnership. As of June 30, 1996, the General Partner estimates that the adjusted tax basis of each Interest held by an original Limited Partner, based on tax returns filed by the Partnership, ranges from $1,379 to $1,479, on average (for taxable limited partners), and from $2,040 to $2,068, on average (for tax-exempt limited partners), depending upon the year of investment, computed as follows:
1986 Purchase 1987 Purchase 1988 Purchase Taxable Tax Exempt Taxable Tax Exempt Taxable Tax Exempt Original Capital Contribution $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 Ordinary Income (1986 to 1990) 50 50 50 50 34 34 Rental Income 318 294 314 Interest Income Reported (through December 31, 1995) 110 110 110 110 71 71 Estimated 1996 Rental Income 3 3 3 Estimated 1996 Interest Income 7 7 7 7 7 7 Proportionate Share of Non-Recourse Debt 1,322 1,322 1,322 1,322 1,322 1,322 2,489 2,810 2,489 2,786 2,434 2,751 Less: Net Rental Losses (through December 31, 1995) (324) (325) (256) Less: Investment Interest Expense (through December 31, 1995) (43) (43) (43) (43) (43) (43) Less: Section 1231 Loss (1994) (55) (55) (55) (55) (55) (55) Less: Cash Distributions (through September 30, 1996) (661) (661) (634) (634) (574) (574) Estimated 1996 Rental Loss (16) (16) (16) Estimated 1996 Investment Interest Expense (11) (11) (11) (11) (11) (11) Estimated Current Basis Per Interest 1,379 2,040 1,405 2,043 1,479 2,068
THE FOREGOING ESTIMATE INCLUDES ESTIMATES OF THE ALLOCATED PORTIONS OF ITEMS ATTRIBUTABLE TO 1996 (INCLUDING INTEREST INCOME, AND PASSIVE ACTIVITY LOSSES). EACH LIMITED PARTNER MUST DETERMINE HIS OWN ADJUSTED BASIS. Under the foregoing and utilizing the estimated adjusted tax basis, an original Limited Partner whose Interests are purchased in the Offer would incur a gain of approximately $245 to $345 per Interest (on average) for taxable limited partners or a loss of approximately $316 to $344 per Interest (on average) for tax- exempt limited partners as follows:
1986 1986 1987 1987 1988 1988 Taxable Tax Exempt Taxable Tax Exempt Taxable Tax Exempt Cash for Interests 402 402 402 402 402 402 Relief from Non-Recourse Liabilities 1,322 1,322 1,322 1,322 1,322 1,322 Selling Price 1,724 1,724 1,724 1,724 1,724 1,724 Subtracted Basis (computed above) (1,379) (2,040) (1,405) (2,043) (1,479) (2,068) Taxable gain (loss) $ 345 $ (316) $ 319 $ (319) $ 245 $ (344)
Such a loss will be a capital loss if the Interests are a capital asset in the hands of the current Limited Partner. Capital losses are deductible only to the extent of capital gains plus, in the case of a noncorporate taxpayer, ordinary income up to $3,000. Noncorporate taxpayers can carry a net capital loss forward until it is exhausted. Corporations can carry net capital losses back three years and forward five years. The actual taxable gain (loss) for any particular Limited Partner may vary depending on that Limited Partner's particular circumstances. For example, if a current Limited Partner acquired an Interest from another Limited Partner rather than in the initial offering of Interests, the current Limited Partner's basis for his Interests is probably not between $1,379 to $1,479 for taxable limited partners (the amounts shown above). Furthermore, if the Limited Partner has suspended passive activity losses from this Partnership or from any other activity, the Limited Partner may be able to offset the income allocated to him by the Partnership for 1996 by the amount of his suspended passive activity losses. The General Partner estimates that the amount of suspended passive activity losses from this Partnership would range from $325 to $344 per Interest, on average, for taxable limited partners, unless such losses have previously been utilized by the Limited Partner. Under this assumption, the resulting net gain (loss) of the sale of Interests pursuant to this Offer would range from a net loss of $80 per Interest to a net gain of $1 per Interest for taxable limited partners. Under Code Section 469, a noncorporate taxpayer or personal service corporation can deduct passive activity losses in any year only to the extent of such individual's passive activity income for such year, and closely held corporations may not offset such losses against so-called "portfolio" income. A loss recognized by a Limited Partner upon a sale of less than 100% of his Interests pursuant to this Offer can be currently deducted (subject to other applicable limitations) to the extent of such Limited Partner's passive income from the Partnership for the year of sale or to the extent of any other passive activity income from that year, and a gain, if any, recognized by a Limited Partner upon such sale can be offset by such Limited Partner's current or carryover passive activity losses, if any, from the Partnership or from other sources. If a Limited Partner disposes of 100% of his Interests pursuant to the Offer, such Limited Partner generally will be able to deduct his remaining passive activity losses, if any, from the Partnership that could not previously be deducted by such Limited Partner due to the foregoing limitations. A taxable gain, if any, on the disposition of Interests must be allocated between ordinary income and long term capital gain. Long term capital gain or loss will be realized on such sale by a Limited Partner if (1) he or she is not a "dealer" in securities; (2) he or she has held the Interests for longer than 12 months; and (3) the Partnership has no Section 751 assets. To the extent that a portion of the gain realized on the sale of an Interest is attributable to Section 751 assets (i.e., "unrealized receivables" and "inventory items of the Partnership which have appreciated substantially in value") a Limited Partner will recognize ordinary income, and not a capital gain, upon the sale of the Interest. For purposes of Code Section 751, recapturable cost recovery allowance is treated as if it were an "unrealized receivable." Thus, gain, if any, recognized by a Limited Partner who sells an Interest will be ordinary income in an amount not in excess of his share of the Partnership's recapturable cost recovery allowance. Furthermore, if the Partnership were deemed to be a "dealer" in real estate for federal income tax purposes, the property held by the Partnership might be treated as "inventory items of the Partnership which have appreciated substantially in value" for purposes of Code Section 751 and a Limited Partner tendering his Interests would recognize ordinary income, in an amount equal to his share of the appreciation in value of the Partnership's real estate inventory. The General Partner does not believe it has operated the Partnership's business in a manner as to make the Partnership a "dealer" for tax purposes. For taxable Limited Partners the amount of recapturable cost recovery allowance per Interest purchased by a Limited Partner in the original offering is estimated to be $105 as of December 31, 1996. Therefore, approximately $105 of the taxable gain, if any, per Interest will be considered to be ordinary income, with the balance of the taxable gain (loss) considered to be capital gain (loss) for federal income tax purposes for the Limited Partners who hold their Interests as capital assets. Ordinary income recognized in 1996 is taxed at a stated maximum rate of 39.6% for federal income tax purposes. Net capital gains are taxed for federal income tax purposes at a stated maximum rate of 28%. The tax rates may actually be somewhat higher, depending on the taxpayer's personal exemptions and amount of adjusted gross income. For tax exempt Limited Partners subject to UBTI (see "Retirement Plan Investors," below), the amount of recapturable cost recovery allowance per Interest purchased by a tax exempt Limited Partner in the original offering is estimated to be $9 as of December 31, 1995. Gain realized by a foreign Limited Partner on a sale of Interests pursuant to this Offer will be subject to federal income tax. Under Code Section 1445 and related regulations, the transferee of a partnership interest held by a foreign person is generally required to deduct and withhold a tax equal to 10% of the amount realized on the disposition. The Partnership will withhold 10% of the amount realized by a tendering foreign Limited Partner. Amounts withheld would be creditable against a foreign Limited Partner's federal income tax liability, and if in excess thereof, a refund could be obtained from the Service by filing a U.S. income tax return. To prevent back-up federal income tax withholding equal to 31% of the payments made pursuant to the Offer, each Limited Partner who does not otherwise establish an exemption from such withholding must notify the Partnership of such Limited Partner's correct taxpayer identification number (or certify that such taxpayer is awaiting a taxpayer identification number) and provide certain other information by completing a Substitute Form W-9 to the Partnership. Certain Limited Partners, including corporations, are not subject to the withholding and reporting requirements. Foreign Limited Partners are subject to other requirements. See "The Offer -- Signature Guarantees and Method of Delivery." Retirement Plan Investors. Qualified pension, profit- sharing and stock bonus plans and IRA's (collectively "Qualified Plans") are generally exempt from taxation except to the extent that their unrelated business taxable income ("UBTI"), determined in accordance with Code Sections 511-514, exceeds $1,000 in any taxable year. Code Section 512(b)(5) provides generally that UBTI does not include gains or losses from the disposition of property other than inventory or property held primarily for sale to customers in the ordinary course of business. However, Code Section 512(b)(4) provides that notwithstanding Code Section 512(b)(5), a portion of the gain from the sale of debt-financed property will be treated as UBTI. Because a portion of the Partnership's assets are debt financed, a portion of the gain, if any, recognized by a Qualified Plan on the sale of an interest will be UBTI. If a Qualified Plan is not a "dealer" in securities, the remaining portion of any gain from the sale of Interests will not be UBTI unless the Partnership is deemed to be a "dealer" in real estate. The General Partner does not believe the Partnership's business has been operated in such a manner as to make it a dealer, but there is no assurance that the Service may not contend that the Partnership is a dealer. If the Partnership obtains financing to repurchase Interests, the Internal Revenue Service may contend that each nonredeeming Limited Partner has acquired an interest in debt-financed property, in addition to the current debt-financed property of the Partnership. The Internal Revenue Service may also contend that the increase in the principal amount of the Town Place Apartments mortgage loan in April 1996 could reasonably have been anticipated when the original mortgage loan had been obtained. The General Partner does not believe that the increase could have been reasonably anticipated. However, if the Internal Revenue Service were successful in either contention, some additional portion of the Partnership's income allocated to those Limited Partners that are Qualified Plans would be UBTI. Retention of Interests. There will be no immediate tax consequences to Limited Partners with respect to Interests that are not repurchased in the Offer. However, Limited Partners who retain their Interests will, henceforth, have a proportionately greater interest in the items of Partnership income and loss and in distributions by the Partnership because each remaining Interest will represent a greater percentage of the total Interests outstanding. The extent of the change in proportionate interest will depend upon the number of Interests tendered and accepted by the Partnership. Plan Limited Partners who are Qualified Plans will have a greater amount of UBTI. The actual amount of UBTI will depend upon the actual number of Interests purchased pursuant to this Offer. Limited Partners who own Interests that are not repurchased will have income or loss allocated to them by the Partnership for 1996 (estimated to be approximately $16 of net rental loss per Interest for taxable partners and $3 of net rental income for tax-exempt limited partners as of June 30, 1996. It is estimated that all limited partners will report in 1996 interest income of $7 per Interest and investment interest expense of $11 per Interest.). However, such Limited Partners will receive cash distributions from the Partnership in 1996 that can be used to pay the 1996 income taxes resulting from such allocation. As discussed above, suspended passive activity losses, if any, can be used to reduce the impact of any taxable income allocated for 1996. Correction of Depreciation Methods and Allocations. In October 1996, the General Partner discovered that in years prior to 1996 the Partnership had depreciated all of its depreciable real estate on a straight-line basis over 27-1/2 years, its land improvements on a straight-line basis over 15 years, and its tangible personal property on an accelerated basis over seven years and had allocated all of such depreciation to the taxable Limited Partners. However, because some of the Limited Partners are Qualified Plans, a portion of such property should have been treated as tax-exempt property under the Code and should have been depreciated on a straight line basis over 40 years for real estate and land improvements and over 10 years for tangible personal property. The Partnership Agreement provides that the depreciation attributable to tax-exempt real estate is to be allocated to Qualified Plans, but is silent as to the allocation with respect to other tax- exempt property. Beginning with 1996, the Partnership will compute depreciation attributable to its tax-exempt property on a straight-line basis over 40 years or 10 years, as the case may be, and will allocate such depreciation to Qualified Plans. The Partnership does not intend (and is not required) to file amended tax returns for years prior to 1996 to correct these errors. However, if the I.R.S. audits the Partnership, the I.R.S. may adjust depreciation for the three years prior to 1996 that are open to audit, thereby resulting in a timing difference with respect to such deductions. For a taxable Limited Partner, such adjustments would have the effects of decreasing the amount of depreciation allocated to the Limited Partner for the three years prior to 1996, increasing the taxable income of the Limited Partner for such years (if the losses allocated by the Partnership were not suspended passive activity losses), reducing any suspended passive activity losses for such years, increasing the Limited Partner's basis in his or her Interest and reducing the gain (or increasing the loss) on the sale of his or her Interest. The General Partner estimates that a taxable Limited Partner who used losses from the Partnership to reduce the Limited Partner's taxable income for such years would have additional taxable income of approximately $30 per Interest for each of the three years that are open to federal audit adjustment. For a Qualified Plan, such adjustments would have the effects of increasing the amount of depreciation allocated to the Qualified Plan for the three years prior to 1996, but reducing the UBTI of the Qualified Plan for such years (the General Partner estimates this amount to be approximately $32 per Interest for each of the three years that are open to federal audit adjustment), possibly creating suspended passive activity losses from some of such years, reducing the Qualified Plan's basis in its Interest and increasing the gain (or reducing the loss) on the sale of the Interest. THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY. EACH LIMITED PARTNER IS URGED TO CONSULT THEIR OWN TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH LIMITED PARTNER (INCLUDING THE APPLICABILITY AND EFFECT OF THE CONSTRUCTIVE OWNERSHIP RULES AND FOREIGN, STATE AND LOCAL TAX LAWS) OF THE DISPOSITION OF INTERESTS PURSUANT TO THE OFFER. Accounting Treatment For accounting and financial purposes, the Offer will be accounted for as a redemption of limited partnership interests in accordance with Accounting Principles Board Opinion No. 16. Regulatory Matters Except as set forth in this Section of the Offer, the Partnership is not aware of any filings, approvals or other actions by any domestic or foreign governmental or administrative agency that would be required prior to the repurchase of Interests by the Partnership pursuant to this Offer. The Interests are not "margin securities" under the regulations of the Board of Governors of the Federal Reserve System and, accordingly, such regulations are not applicable to this Offer. Because a possible consequence of the Offer may be that the Partnership would no longer be required to file reports under the Exchange Act, the Offer is subject to the requirements of Wisconsin Administrative Code Section SEC 6.05. Section SEC 6.05 permits such a transaction to occur if the following conditions are met: (1) the terms of the transaction, including compensation for the equity securities to be purchased, are fair to all holders of the securities; (2) the issuer has delivered to each holder of the securities and has filed with the Wisconsin Commissioner of Securities a complete and accurate description of the transaction at least 20 days prior to any purchase or shareholder vote authorizing the purchase; (3) non-affiliated security holders are treated no less favorably in connection with the transaction than any affiliates; and (4) the Commissioner does not find, within 15 days of the filing of the description of the transaction, that the transaction constitutes a device, scheme or artifice to defraud or tends to operate as a fraud or deceit on the holders of the securities. The Partnership has made the required filing under Section SEC 6.05 on October 11, 1996. This Offer is conditioned upon the Staff of the Wisconsin Commissioner of Securities informing the Partnership that it will not recommend that an order disallowing the tender offer be issued. The Wisconsin Commissioner of Securities will not and has not passed upon the merits of the Offer or made any finding concerning its fairness. THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE WISCONSIN COMMISSIONER OF SECURITIES NOR HAS THE COMMISSIONER PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTION OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. THE OFFER Under the terms of the Offer, the Partnership will pay for Interests validly tendered on or prior to the Expiration Date and not withdrawn in accordance with the Offer to Purchase. The term "Expiration Date" shall mean 12:00 p.m., midnight, Milwaukee time, on November 22, 1996 unless the Partnership extends this Offer and, in such event, the term "Expiration Date" shall mean the latest time and date on which the Offer, as so extended, shall expire. If, prior to the Expiration Date, the Partnership were to increase the Offer Price, such increased Offer Price would be delivered in respect of all Interests accepted pursuant to this Offer, whether or not they were tendered prior to such increase. This Offer is not conditioned on any minimum number of Interests being tendered. This Offer is, however, subject to satisfaction of certain conditions. See "The Offer--Conditions of Offer," which sets forth in full the conditions of this Offer. The General Partner reserves the right, in its sole discretion, to waive any or all of such conditions, but shall not be obligated to do so. This Offer to Purchase and the related Letter of Acceptance are being mailed by the Partnership to Limited Partners of record (in the case of Individual Retirement Accounts and qualified plans a copy will be sent to the beneficial owners). There are no appraisal rights or other rights accorded to nontendering Limited Partners under either the Partnership Agreement or applicable state law. Proration This Offer is for all Interests and upon the terms and subject to the conditions of the Offer, the Partnership will accept for payment (and thereby purchase) up to all Interests. The proration period also expires on the Expiration Date. In the event that more than 8,944 Interests are tendered by the Expiration Date, the Partnership will attempt to borrow additional funds on terms deemed acceptable by the General Partner, in its sole discretion, to enable the Partnership to purchase up to 17,466.31 Interests. If the Partnership obtains financing to purchase additional Interests, the Partnership will prepare and disseminate supplemental materials and, if required, will extend the Expiration Date. The maximum mortgage indebtedness permitted by Section 7.2B (iii) of the Partnership Agreement is 75% of the aggregate independently appraised fair market value of the properties. There can be no assurance that the Partnership will obtain such financing. In the event that more than 8,944 Interests are tendered by the Expiration Date (or such greater amount as allowed) and the Partnership does not have sufficient funds to purchase all of the Interests tendered by that date, the Partnership will prorate purchases from the Limited Partners as follows: 1. The Partnership will first accept all of the tenders from Limited Partners who own less than 100 Interests and who tender all of their Interests by the Expiration Date. If this amount is in excess of 8,944 and the Partnership does not, or cannot borrow additional funds, the Partnership will prorate purchases based upon the ratio of (a) the number of Interests tendered by each Limited Partner who own less than 100 Interests and tendered all of their Interests to (b) the total number of Interests tendered by all Limited Partners who own less than 100 Interests and tender all of their Interests. The General Partner will prorate such that every Limited Partner who has prorated Interests will not hold Fractional Interests and will not hold less than three Interests. 2. If the above category of tendering Limited Partners has been satisfied and if there are funds to purchase other Interests tendered, the Partnership will do so. This second category will consist of those (i) Limited Partners who own 100 Interests or more and (ii) Limited Partners who own less than 100 Interests and who tendered some, but not all of their Interests. If necessary, the Partnership will prorate tenders based upon the ratio of the number of Interests tendered by each Limited Partner in this second category to the total number of Interests tendered in this second category, provided that the Partnership may round the prorated amount such that a Limited Partner who tenders Interests does not hold any Fractional Interest and must hold at least three Interests. If a Limited Partner decides to tender some, but not all, Interests, such Limited Partner must tender an amount such that the Limited Partner does not hold Fractional Interests and holds at least three Interests. See "The Offer-- Procedures for Tendering Interests." If the Partnership increases or decreases the price to be paid for Interests, or the Partnership increases the number of Interests being bought and any such increase in the number of Interests being bought exceeds 2% of the outstanding Interests, or the Partnership decreases the number of Interests being bought, and the Offer is scheduled to expire less than ten business days from and including the date that notice of such increase or decrease is first published, sent or given to Limited Partners, then the Offer will be extended for ten business days from and including the date of such notice. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 A.M. through Midnight, Milwaukee, Wisconsin time. If the Partnership obtains financing, it will prepare and disseminate supplemental material and, if necessary, may extend the Expiration Date. Procedures for Tendering Interests In order for a tendering Limited Partner to participate in this Offer, Interests must be validly tendered on or prior to the Expiration Date, and not withdrawn. A valid tender requires that a properly completed and duly executed Letter of Acceptance and duly executed signature pages for any other documents required by the Letter of Acceptance be actually received by the Partnership on or prior to the Expiration Date. A Limited Partner may tender all or any portion of its Interests, including Fractional Interests, provided the Limited Partner must tender any Fractional Interests and may not hold fewer than three (3) Interests, after the tender. All Interests of the Partnership have been issued in book entry form, which means that there are no certificates for the Interests. The Partnership expects to forward cash to the Limited Partners who tender Interests within 30 days of the Expiration Date. It is a violation of Section 10(b) of the Exchange Act and Rule 10b-4 promulgated thereunder, for a person to tender Interests for such person's own account unless the person so tendering owns such Interests. Section 10(b) and Rule 10b-4 provide a similar restriction applicable to the tender or guarantee of a tender on behalf of another person. The acceptance of Interests by the Partnership for payment will constitute a binding agreement between the tendering Limited Partner and the Partnership upon the terms and subject to the conditions of the Offer, including the tendering Limited Partner's representation that (1) such Limited Partner owns the Interests being tendered within the meaning of Rule 10b-4 promulgated under the Exchange Act and (2) the tender of such Interests complies with Rule 10b-4. The Letter of Acceptance must be signed by the registered holder of the Interests, exactly as the name appears on the register of the Partnership, and payment will be made directly to that holder at the address indicated on the register. THE METHOD OF DELIVERY OF THE LETTER OF ACCEPTANCE AND ALL OTHER REQUIRED DOCUMENTS IS SOLELY AT THE OPTION AND RISK OF THE TENDERING LIMITED PARTNER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE PARTNERSHIP. OVERNIGHT COURIER SERVICE OR REGISTERED MAIL IS RECOMMENDED. Signature Guarantees and Method of Delivery No signature guarantee is required on the Letter of Acceptance if the Letter of Acceptance is signed by the registered holder of the Interests tendered therewith and payment is to be made directly to such registered holder, or if Interests are tendered for the account of a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office, branch or agency in the United States (each such entity being hereinafter referred to as an "Eligible Institution"). In all other cases, all signatures on the Letter of Acceptance must be guaranteed by an appropriate institution. See Instruction 1 of the Letter of Acceptance. If payment is requested to be made to a person or persons other than those in whose name or address the Interests stand on the Partnership's books, the signature of the Interest owner or owners on the Letter of Acceptance must be guaranteed by a federal or state chartered bank or savings and loan institution or by a broker-dealer that is a member of the New York Stock Exchange. To prevent back-up federal income tax withholding equal to 31% of the gross payments made pursuant to the Offer, each Limited Partner who does not otherwise establish an exemption from such withholding must notify the Partnership of such Limited Partner's correct taxpayer identification number (or certify that such taxpayer is awaiting a taxpayer identification number) and provide certain other information by completing the Substitute Form W-9 included in the Letter of Acceptance. Certain Limited Partners, including corporations, are not subject to the withholding and reporting requirements. Foreign Limited Partners who are subject to the different requests. All questions as to the number of Interests to be accepted and the validity, form, eligibility (including the time of receipt) and acceptance for payment of any tender of Interests will be determined by the General Partner, in its sole discretion, which determination shall be final and binding on all parties. The Partnership reserves the absolute right to reject any and all tenders it determines not to be in proper form or the acceptance of payment for which may, in the opinion of the Partnership's counsel, be unlawful. The Partnership also reserves the absolute right to waive any of the conditions of the Offer and any defect or irregularity in the tender of any particular Interest. No tender of Interests will be deemed to be properly made until all defects and irregularities have been cured or waived. The Partnership is not and will not be obligated to give notice of any defects or irregularities in tenders, and will not incur any liability for failure to give such notice. Withdrawal Rights Except as provided in this section, the tender of Interests pursuant to the Offer is irrevocable. Interests tendered pursuant to the Offer may be withdrawn at any time before the Expiration Date and, unless theretofore accepted for payment by the Partnership, may also be withdrawn after 12:00 midnight, Milwaukee time, on December 23, 1996. For a withdrawal to be effective, the Partnership must timely receive at its offices a written, telegraphic or facsimile transmission notice of withdrawal. Such notice of withdrawal must specify the name of the person having tendered the Interests to be withdrawn and the number of Interests to be withdrawn and the name of the registered holder, if different from that of the person who tendered the Interests. All questions as to the form, validity and eligibility (including time of receipt) of notices of withdrawal will be determined by the Partnership, in its sole discretion, which determination shall be final and binding on all parties. The Partnership is not and will not be obligated to give any notice of any defects or irregularities in any notice of withdrawal, and will not incur any liability for failure to give any such notice. Any Interests properly withdrawn will thereafter be deemed not tendered for purposes of the Offer. Withdrawn Interests may, however, be retendered before the Expiration Date by again following the procedures set forth in this Offer. Certain Conditions The Offer is subject to certain conditions specified in The Offer to Purchase, including the proration terms. Notwithstanding any other provision of the Offer, the Partnership shall not be required to accept for payment, purchase or pay for any Interests tendered, and may terminate or amend the Offer, or may postpone the acceptance for payment of, or the payment for, Interests tendered, if at any time on or after the date of the Offer, and at or before the time of purchase of, or payment for, any such Interests, any of the following events shall have occurred (or shall have been determined by the Partnership to have occurred) which, in the Partnership's reasonable judgment in any such case and regardless of the circumstances (including any action or omission to act by the Partnership), makes it inadvisable to proceed with the Offer or with such acceptance for purchase or payment: (a) There shall have been threatened, instituted or pending any action or proceeding by any government or governmental, regulatory or administrative agency or authority or tribunal or any other person, domestic or foreign, or before any court or governmental, regulatory or administrative authority or agency or tribunal, domestic or foreign, which: (1) challenges the making of the Offer, or the acquisition of Interests pursuant to the Offer or otherwise relates in any manner to the Offer; or (2) in the Partnership's reasonable judgment, could materially affect the business, condition (financial or other), income, operations or prospects of the Partnership or otherwise materially impair in any way the contemplated future conduct of the business of the Partnership or materially impair the Offer's contemplated benefits to the Partnership; or (b) There shall have been any action threatened, pending or taken, or approval withheld, or any statute, rule, regulation, judgment, order or injunction threatened, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the Offer or the Partnership, by any court or any government or governmental, regulatory or administrative authority or agency or tribunal, domestic or foreign, which, in the Partnership's reasonable judgment, could directly or indirectly: (1) make the acceptance for payment of, or payment for, some or all of the Interests illegal or otherwise restrict or prohibit consummation of the Offer; (2) delay or restrict the ability of the Partnership, or render the Partnership unable, to accept for payment or pay for some or all of the Interests; (3) materially impair the contemplated benefits of the Offer to the Partnership; or (4) materially affect the business, condition (financial or other), income, operations, or prospects of the Partnership, or otherwise materially impair in any way the contemplated future conduct of the business of the Partnership; or (c) There shall have occurred: (1) the declaration of any banking moratorium or suspension of payments in respect of banks in the United States; (2) any general suspension of trading in, or limitation on prices for, securities on any United States national securities exchange or in the over-the-counter market; (3) the commencement of a war, armed hostilities or any other national or international crisis directly or indirectly involving the United States; (4) any limitation (whether or not mandatory) by any governmental, regulatory or administrative agency or authority on, or any event which, in the Partnership's reasonable judgment, might affect, the extension of credit by banks or other lending institutions in the United States; (5) any change in the general political, market, economic or financial conditions in the United States or abroad that could have a material adverse effect on the Partnership's business, operations or prospects; or (6) in the case of any of the foregoing existing at the time of the commencement of the Offer, in the Partnership's reasonable judgment, a material acceleration or worsening thereof; or (d) Any change shall occur or be threatened in the business, condition (financial or other), income, operations, Interests ownership or prospects of the Partnership which, in the Partnership's reasonable judgment, is or may be material to the Partnership or its Limited Partners; or (e) A tender or exchange offer for any or all of the Interests (other than the Offer), or any merger, business combination or other similar transaction with or involving the Partnership, shall have been proposed, announced or made by any person; or (f) If (i) any entity, "group" (as that term is used in Section 13(d)(3) of the Exchange Act) or person shall have acquired or proposed to acquire beneficial ownership of more than 5% of the outstanding Interests, or (ii) such entity, group or person that has publicly disclosed any such beneficial ownership of more than 5% of the Interests prior to such date shall have acquired, or proposed to acquire, beneficial ownership of additional Interests constituting more than 2% of the outstanding Interests or shall have been granted any option or right to acquire beneficial ownership of more than 2% of the outstanding Interests. The foregoing conditions are for the Partnership's benefit and may be asserted by the General Partner regardless of the circumstances giving rise to any such condition (including any action or inaction by the Partnership or General Partner) or may be waived by the Partnership, in whole or in part. The Partnership's failure at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. Any determination by the Partnership concerning the events described in this Section shall be final and binding upon all parties. In all of the foregoing, the General Partner has conclusive authority to act for the Partnership. Estimated Costs and Fees Estimated costs and fees in connection with the Offer and the related transactions, which have been or will be paid by the Partnership, are as follows: Advisory fees . . . . . . . . . . . . . . . . . $ 9,000 Property appraisals . . . . . . . . . . . . . . 7,800 Legal fees. . . . . . . . . . . . . . . . . . . 45,000 Blue Sky fees and expenses. . . . . . . . . . . 8,000 Accounting fees . . . . . . . . . . . . . . . . 10,000 Printing, mailing fees, and EDGAR filing fees . 30,000 Commission filing fees. . . . . . . . . . . . . 3,500 Miscellaneous . . . . . . . . . . . . . . . . . 6,700 Total. . . . . . . . . . . . . . . . . . . $120,000 In connection with the Offer, the Partnership may utilize the services of the Partnership manager, and certain other employees of Decade Companies, or its affiliates. None of such persons will receive any compensation from the Partnership in connection with their services with respect to the Offer, other than the General Partner and/or its affiliates may be reimbursed at customary rates for time devoted by such person. The Partnership will not pay fees or commissions to any broker, dealer, commercial bank, trust company or other person for soliciting any Interests pursuant to the Offer. The Partnership will, however, reimburse such persons for customary handling and mailing expenses incurred in forwarding materials in respect of the Offer to the beneficial owners for which they act as nominees. No such broker, dealer, commercial bank or trust company has been authorized to act as the Partnership's agent for purposes of this Offer. FINANCING THE OFFER General If the Partnership purchases 8,944 or fewer Interests pursuant to the Offer at a Purchase Price of $402 per Interest, the Partnership anticipates that all required funds will be obtained from the Partnership's available cash. Repurchase of additional Interests, if any, would need to be funded by Partnership borrowing. At the date of this Offer, the Partnership has not sought or received any commitment for financing and there can be no assurance that such financing could be arranged on terms deemed satisfactory to the Partnership. See "Pro Forma Financial Information" for further information concerning the assumed cost of funds for the Offer. The actual amount of any funds borrowed would depend upon the results of this Offer, the interest rate of the borrowings, the term of the loan, loan amortization, and costs incurred to obtain such loan. There can be no assurances that the Partnership could obtain such financing on acceptable terms. Bank Financing If the Partnership were to obtain financing, it would likely be pursuant to a mortgage loan on Pelican Sound or The Meadows II. The General Partner has not sought or received a commitment for any financing, but based upon its past experience believes that it may be possible for the Partnership to obtain mortgage financing. If more than 8,944 Interests are tendered, the Partnership intends to determine whether it can obtain financing on acceptable terms. There can be no assurance that financing will be available on acceptable terms and the Partnership may enter into interim financing to fund this Offer. To the extent the Partnership acquires indebtedness, a Limited Partner's retained Interests will be subject to increased risks. In the event of the financing constituting acquisition indebtedness under Code Section 514(c), there may be unfavorable UBTI tax consequences for certain retirement plan investors who retain their Interests. See "The Partnership--Certain Federal Income Tax Consequences of the Offer." The Partnership intends to repay any amounts borrowed from cash flow from the Partnership's operations. DESCRIPTION OF THE LIMITED PARTNERSHIP INTERESTS As of October 1, 1996, the Partnership had 17,466.31 Interests outstanding held by 1,936 Limited Partners. The Partnership Agreement, as amended, authorized the issuance of a maximum of 18,000 interests through a public offering for a total potential Limited Partner investment of $18,000,000. BUSINESS OF THE PARTNERSHIP Since December 1986, the Partnership has been engaged in the business of investing in, operating, and making loans on residential apartment projects. The Apartment complexes owned by the Partnership are collectively referred to as "the Apartments" throughout this report. In December 1986, the Partnership acquired Laguna Vista Apartments, a 235-unit apartment complex located in Largo, Florida. In January 1989, the Partnership acquired the Meadows II Apartments, a 316- unit apartment complex located in Madison, Wisconsin. In January 1990, the Partnership acquired Ashley Pointe Apartments, a 200-unit apartment complex located in Orlando, Florida. In February 1990, the Partnership traded Laguna Vista Apartments for Town Place Apartments, a 240- unit apartment complex located in Clearwater, Florida. In June 1992, the Partnership purchased Woodbridge Apartments, a 168-unit apartment complex located in Winter Park (Orlando), Florida. In August 1993, the Partnership traded Woodbridge Apartments, and completed the trade in November 1993, for Pelican Sound Apartments, a 379-unit apartment complex located in St. Petersburg, Florida. In April 1994, Ashley Pointe Apartments was disposed with the intent to trade for a replacement property not yet identified. The Partnership previously made mortgage loans on real estate from 1986 to 1989 totaling $5,476,689, none of which are outstanding. The business of the Partnership is not seasonal, although the Partnership's property may experience cyclical fluctuations in occupancy levels in the rental markets where the Apartments are located. The Partnership does not have any employees. The Apartments are managed by Decade Properties, Inc., an affiliate of the General Partner. Employees of Decade Properties, Inc. perform the on-site management services required to operate and maintain the Apartments. Employees of the General Partner render partnership management services to the Partnership such as maintaining investor communications, compliance with tax laws and other governmental regulations, and cash management. The Partnership is not dependent upon any single tenant or small groups of tenants for its operating success. The loss of any one of or small group of tenants would not have a material adverse effect. The Partnership does not foresee any events or market trends which would have a materially adverse effect upon the Partnership's revenues, except for increased competition for residents. The real estate operation of the Partnership, including the value of its real estate holding, may be affected by many factors over which the Partnership has limited or no control, among them changes in general and local economic conditions, interest rate levels, availability and terms of financing, changes in tax laws and fluctuations in operating costs. The principal factors affecting rental rates and occupancy levels include location, ease of access, amenities, and the quality of property management. The real estate investment business is highly competitive. Additional residential rental projects may be built which may compete directly with the properties owned by the Partnership. At the present time, the Partnership conducts its real estate operations solely in the St. Petersburg, Florida, Madison, Wisconsin, and Clearwater, Florida rental markets. The Partnership competes with numerous other entities involved in real estate investment, including limited partnerships formed or to be formed by the General Partner. Many of these competitors may have greater assets than those of the Partnership or may be associated with individuals with broader experience than that of the General Partner. In addition, demand for investment properties of the type owned by the Partnership may increase or decrease. This competition is primarily based on property location, condition, and asking rent. These factors may increase or decrease the price of potential property acquisitions/sales. The residential apartment complexes which are owned and operated by the Partnership as of the date of this Offer are: Rental Name Location Units Pelican Sound St. Petersburg, Florida 379 The Meadows II Madison, Wisconsin 316 Town Place Clearwater, Florida 240 The Meadows II was acquired by the Partnership in January 1989, Town Place was acquired in February 1990, and Pelican Sound was acquired as of November 1993. The Meadows II is pledged as collateral against mortgage encumbrances of approximately $6.7 million. Town Place is pledged as collateral against a mortgage encumbrance of $6.7 million. Pelican Sound is pledged as collateral against a mortgage encumbrance of $10 million. The average monthly gross potential rent ("GPR") per unit at the Apartments for the month of December and the related occupancy rate ("OR") for December of each year is set forth below: Number December December December of Units 1995 1994 1993 GPR OR GPR OR GPR OR Pelican Sound 379 $564 92% $549 97% $531 92% The Meadows II 316 $560 92% $566 85% $557 89% Town Place 240 $569 92% $551 90% $542 93% The average monthly gross potential rent per unit at the apartment complexes for the three year period was: Number of Units 1995 1994 1993 Pelican Sound 379 $557 $537 $531 The Meadows II 316 $567 $559 $550 Town Place 240 $561 $548 $535 "Gross potential rent" represents the asking rent established by the Partnership for a vacant apartment plus the rent in effect for occupied apartments. As a general rule the asking rents are the same as the actual rents eventually established by the rental agreements. The average occupancy level at the apartment complexes for the three year period was: 1995 1994 1993 All Apartments 89% 92% 92% Pelican Sound 93% 94% 92% The Meadows II 80% 90% 93% Town Place 93% 93% 95% Ashley Pointe N/A 86% 83% Woodbridge N/A N/A 94% The range of occupancy levels at the apartment complexes for the years was: 1995 1994 1993 Pelican Sound 91.3-96.9% 91.1-96.6% 92.0% The Meadows II 69.8-91.9% 85.1-94.4% 88.5-95.6% Town Place 90.5-97.0% 88.8-97.9% 90.8-98.0% Ashley Pointe N/A 80.7-87.8% 80.1-86.5% Woodbridge N/A N/A 90.1-96.7% The differences in occupancy levels were primarily related to the Partnership's asking rents compared to other competitors in the marketplace. The General Partner is not aware of any hidden or unapparent conditions of the property, subsoil or structural conditions which would render the apartment complexes more or less valuable. The General Partner is not aware of the existence of potentially hazardous materials used in the construction or maintenance of the buildings, such as the presence of urea-formaldehyde foam insulation, and/or the existence of toxic waste, which may or may not be present at the apartment complexes. The General Partner is not aware of any groundwater contamination, underground methane gas or radon gas. The General Partner believes that the apartment complexes do not produce air emissions or waste water of environmental concern. The General Partner is not aware of any underground storage tanks. The General Partner is not aware of any incidents of spills, dumping or discharges at the property/or the presence of hazardous substances. A Phase I Environmental Site Assessment has been performed at Pelican Sound and Town Place but has not been performed at The Meadows II. The fairness opinion of the Valuations Group and the value estimates provided by the appraisers assume that no environmental problems exist. A brief description of each property follows: Pelican Sound Apartments, a residential apartment complex owned and operated by the Partnership, is located at 10200 Gandy Boulevard, St. Petersburg, Florida 33702. Pelican Sound Apartments was built in 1988 and consists of 379 one- and two- bedroom air conditioned living units with individual washers and dryers. The units range in size from 505 square feet to 910 square feet. The Complex consists of 13 two and three-story wooden frame with brick veneer garden apartment buildings plus a 1,961 square foot clubhouse/leasing office on approximately 21.59 acres. The complex includes a swimming pool with jacuzzi, two tennis courts, 569 parking spaces, and an exercise room available for all residents. The complex is located in the "Gateway" region of St. Petersburg, on Gandy Boulevard approximately one mile west of the Gandy Bridge. The location provides easy access to both Pinellas and Hillsborough business districts and is considered by the General Partner to be a positive growth area for both commercial and residential developments. The Partnership's tax basis in Pelican Sound as of December 31, 1995 is as follows: Land Furniture Building Improvements and Equipment Cost $7,695,400 $ 673,928 $ 966,214 Accumulated Depreciation (594,467) ( 93,601) (453,163) Adjusted Tax Basis $7,100,933 $ 580,327 $ 513,051 The Partnership's property is being depreciated using MACRS straightline over 27.5 years, and the furniture and equipment is being depreciated using MACRS 200% declining balance over 7 years. Pelican Sound is taxed at a $26.1279 mill rate levy for 1995 (after consideration of major state aids) and paid annual realty tax of $290,358. The apartment mix and monthly asking rents at Pelican Sound Apartments are as follows
Number of Square Asking Rent Style Units Feet 12/95 12/94 12/93 One bedroom/one bath 128 505 $480-495 $475-490 $455-465 One bedroom/one bath 156 700 $565-590 $535-565 $515-545 One bedroom/one bath/den 27 830 $625-650 $615-645 $605-680 Two bedroom/two bath 68 910 $695-715 $680-710 $670-700 379
As of the date of this Offer, there are approximately 346 leases in effect, which generally are 12 months in duration. No tenant occupies 10% or more of the property. The average annual rental rate per apartment unit is computed as follows: 1995 1994 1993 (one month) Rental Income $2,373,779 $2,322,191 $185,608 Number of Apartment Units 379 379 379 Average Effective Annual (Annualized) Rent Per Apartment Unit $ 6,263 $ 6,127 $ 5,877 The Meadows II Apartments (Phases II, III and IV), a residential apartment complex owned and operated by the Partnership, is located at 201-417 N. Thompson Drive, Madison, Wisconsin 53714. The Meadows Apartment Complex consists of 404 apartment units in 32 two-story buildings covering approximately 24 acres of land. The property was developed in four phases; between 1976 and 1980. On January 17, 1989, the Partnership acquired three of the four phases comprising 316 of the 404 rental units, which is The Meadows II. The other 88 rental units were acquired by, and are operated by, an affiliated limited partnership (Decade's Monthly Income & Appreciation Fund). The apartments in Phases II, III, and IV were completed between 1977 and 1980 and consist of one-, two- and three-bedroom units in 24 buildings. The entire complex has a total of 720 parking spaces for a 1.78 to 1 ratio of stalls per unit. In addition to the apartment units, the apartments owned by the Partnership feature one swimming pool, one lighted tennis court, and a play area. Laundry room areas and storage lockers are located in the basement of each building. The Meadows II, situated on approximately 19 acres, is located at the southeast corner of the intersection of I-90/94 and Highway 30. The property is in a growing residential neighborhood five miles northeast of Madison's Capitol Square. The primary access route is Highway 30 and East Washington Avenue. North-south linkages are provided by I-90/94 and Highway 51. Schenk Elementary School is about one-half mile southwest of the property. Public bus transportation is convenient with two bus stops servicing the property's residents. The expansion of commercial development on major arterials west of the neighborhood increases the desirability of the project's location. The Partnership's tax basis in the Meadows II as of December 31, 1995 is as follows: Building Furniture and Equipment Cost $8,590,349 $673,599 Accumulated Depreciation (2,173,585) (538,933) Adjusted Tax Basis $6,416,764 $134,666 The Partnership's property is being depreciated using MACRS straightline over 27.5 years, and the furniture and equipment is being depreciated using MACRS 200% declining balance over 7 years. Meadows II is taxed at a $32.0676 mill rate levy for 1995 (after consideration of major state aids) and paid annual realty tax of $269,368. The apartment mix and monthly asking rents at The Meadows II are as follows:
Asking Rent Style Number of Square Units Feet 12/95 12/94 12/93 One-bedroom 88 625 $480-495 $505-515 $495 One-bedroom/deluxe 12 744 $490-505 $520-535 $515-525 Two-bedroom/one bath 192 875 $550-580 $585-605 $575-590 Two-bedroom/1.5 bath/den 12 1,466 $750-850 $795-825 $760-790 Three-bedroom 12 1,466 $750-850 $805-835 $760-790 316
As of the date of this Offer, there are approximately 285 leases in effect, which generally are 12 months in duration. No tenant occupies 10% or more of the property. ** The average annual rental rate per apartment unit is computed as follows:
1995 1994 1993 1992 1991 Rental Income $1,669,548 $1,867,077 $1,897,844 $1,889,822 $1,845,651 Number of Apartment Units 316 316 316 316 316 Average Effective Annual Rent Per Apartment Unit $ 5,283 $ 5,908 $ 6,006 $ 5,980 $ 5,841
Town Place Apartments, a residential apartment complex owned and operated by the Partnership, is located at 2545 N.E. Coachman Road, Clearwater, Florida 33575. Town Place Apartments was built in 1985 and consists of 240 one- and two-bedroom units. The units range in size from 540 square feet to 1,036 square feet. The complex consists of 24 buildings plus an office on approximately 25.7 acres. The complex includes a swimming pool with jacuzzi, two tennis courts, volleyball court, a 6.7 acre lake, clubhouse, 365 parking space, and a laundromat for all residents. The property is on the south side of N.E. Coachman Road approximately one mile from the intersection of U.S. Highway 19 and Route 60. A Wal-Mart retail store is located directly across the street. The area is mostly residential with no industry or factories in the immediate area. Clearwater Beach is seven miles from the property. The Partnership's tax basis in Town Place as of December 31, 1995 is as follows: Building Furniture and Equipment Cost $4,133,018 $545,547 Accumulated Depreciation (882,963) (405,401) Adjusted Tax Basis $3,250,055 $140,146 The Partnership's property is being depreciated using MACRS straightline over 27.5 years, and the furniture and equipment is being depreciated using MACRS 200% declining balance over 7 years. Town Place is taxed at a $23.0366 mill rate levy for 1995 (after consideration of major state aids) and paid annual realty tax of $170,096. The apartment mix and monthly asking rents at Town Place Apartments are as follows:
Asking Rent Style Number of Square Units Feet 12/95 12/94 12/93 One bedroom/Suite 36 540 $470 $455 $430 One bedroom/Garden 72 720 $515-540 $485-535 $475-525 Two bedroom/one bath 36 836 $620-635 $580-600 $555-565 Two bedroom/two bath 96 1,036 $655-725 $630-685 $605-650 240
As of the date of this Offer, there are approximately 223 leases in effect, which generally are 12 months in duration. No tenant occupies 10% or more of the property. The occupancy rate expressed as a percentage for the past years is as follows: The average annual rental rate per apartment unit is computed as follows:
1995 1994 1993 1992 1991 Rental Income $1,482,684 $1,448,885 $1,475,912 $1,433,126 $1,347,739 Number of Apartment Units 240 240 240 240 240 Average Effective Annual Rent Per Apartment Unit $6,178 $6,038 $6,150 $5,971 $5,616
LACK OF MARKET AND DISTRIBUTIONS To the knowledge of the General Partner, there is no market for Interests and the Interests are not traded on any registered securities exchange or the NASDAQ over the counter market and none is expected to develop. The following table sets forth the cash distributions declared per Interest for the fiscal periods indicated: Cash Distributions Declared Per Interest 1994 1st Quarter . . . . . . . . $12.50 2nd Quarter . . . . . . . . $12.50 3rd Quarter . . . . . . . . $12.50 4th Quarter . . . . . . . . $12.50 1995 1st Quarter . . . . . . . . $12.50 2nd Quarter . . . . . . . . $12.50 3rd Quarter . . . . . . . . $12.50 4th Quarter . . . . . . . . $12.50 1996 1st Quarter . . . . . . . . $12.50 2nd Quarter . . . . . . . . $12.50 3rd Quarter . . . . . . . . $ 0 The Partnership has paid consecutive quarterly cash distributions to Limited Partners since it commenced operations on June 9, 1986. Cash distributions were suspended for the third quarter of 1996 to set aside cash reserves to be used for the repurchase of Interests. The amount and frequency of cash distributions in the future will depend on circumstances existing at the time. However, such cash distributions would be negatively affected by any decrease in cash reserves used to repurchase limited partnership Interests to the extent that such cash reserves previously supplemented cash distributions, by the amount of any required debt service, and by the administrative costs associated with the reporting requirements under the federal securities laws, if applicable. SECURITY OWNERSHIP OF THE GENERAL PARTNER As of October 1, 1996, Jeffrey Keierleber, an affiliate of the General Partner, owns 193.04 Interests of the Partnership (1.105% of the outstanding Interests). Mr. Keierleber does not intend to tender his Interests pursuant to the Offer. If the Partnership repurchases 8,944 Interests (or approximately 51.2% of the Interests outstanding at the date of the Offer) pursuant to the Offer, and Mr. Keierleber does not tender his Interests pursuant to the Offer, he would continue to own less than 2.3% of the outstanding Interests. Based upon the Partnership's records and upon information provided to the Partnership by its General Partner, Partnership Manager, and affiliates, neither the Partnership nor, to the best of the Partnership's knowledge, any of the general partners of the General Partner or Partnership Manager of the Partnership, nor any associates of any of the foregoing, has effected any transactions in the Interests during the 60 business day period prior to the date hereof. Except as set forth in this Offer neither the Partnership nor, to the best of the Partnership's knowledge, any of its affiliates, General Partner or the Partnership Manager is a party to any contract, arrangement, understanding or relationship with any other person relating, directly or indirectly, to the Offer with respect to any securities of the Partnership (including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies, consents or authorizations). SUMMARY HISTORICAL FINANCIAL INFORMATION Certain information as to the financial operation of the Partnership is contained herein. Limited Partners are urged to make their own assessment of the value of their Interests. Selected Statement of Operations Data:
Six Months Ended June 30 Year Ended December 31 1996 1995 1995 1994 (unaudited) (in thousands of dollars, except per Interest data) Revenues associated with rental properties $ 2,973 2,784 5,681 6,100 Income from rental property operation $ 1,206 1,094 (288) (297) Net Income (Loss) $ (175) (291) (470) (1,314) Per Limited Partner Interest Data: Net Income (Loss) $ (10) (17) (27) (75) Cash distributions declared $ 25 25 50 50 Average Limited Partnership Interests Outstanding 17,466.31 17,466.31 17,466.31 17,466.31 Ratio of earnings to combined fixed charges 0.77 0.61 0.68 0.23 Selected Balance Sheet Data: June 30 December 31 1996 1995 1995 1994 (unaudited) (in thousands of dollars, except per Interest data) Working Capital $ 3,646 (2,338) 2,604 2,092 Total Assets $ 30,300 27,341 26,458 27,914 Total Liabilities $ 27,872 23,684 23,417 23,526 Total Capital $ 2,428 3,657 3,041 4,388 Book value per Interest $ 139 209 174 251
Certain matters that materially affect the comparability of the information reflected in the selected financial data include the disposition of Ashley Pointe Apartments in April 1994, and the $6.7 million refinancing of the $2.5 million mortgage note on Town Place Apartments in April 1996. The fluctuation in total assets also reflects the depreciation on the rental properties. PRO FORMA FINANCIAL DATA The following unaudited pro forma condensed statements of earnings and condensed balance sheets (collectively, the "Pro Forma Statements") were prepared to illustrate the estimated effects of the Offer as if the Offer had occurred for consolidated statement of earnings presentation purposes on January 1, 1995, or January 1, 1996, as the case may be and for balance sheet presentation purposes on December 31, 1995, and June 30, 1996, respectively. The estimated transaction fees and expenses are provided solely for the purpose of presenting the pro forma financial data set forth below. The actual transaction fees and expenses may differ from the assumption used. The Pro Forma Financial data does not purport to represent what the Partnership's financial position or results of operations would actually have been if the Offer in fact had occurred at December 31, 1995, or June 30, 1996, or if the Offer had occurred on January 1, 1995, or January 1, 1996, as the case may be or to project the Partnership's financial position or results of operations for any future date or period. The following financial information should be read in conjunction with the audited consolidated financial statements and related notes thereto included elsewhere in this Offer. Decade Companies Income Properties Pro Forma Balance Sheet (Unaudited) (No Borrowing To Fund Offer)
December 31, 1995 June 30, 1996 Historical Historical Adjustments December 31, 1995 June 30, 1996 Assets (Note A) (Note A) (Note B) Pro Forma Pro Forma Investment Property, At Cost $30,927,237 $31,007,546 $30,927,237 $31,007,546 Less Accumulated Depreciation (5,393,539) (5,935,839) (5,393,539) (5,935,839) Net Book Value 25,533,698 25,071,707 25,533,698 25,071,707 Cash 56,316 4,316,763 ($3,485,385) (3,429,069) 831,378 Exchange Escrow 497,390 230,103 (230,103) 267,287 0 Escrow Deposits 186,703 340,953 186,703 340,953 Prepaid Expenses and Other Assets 137,820 91,557 137,820 91,557 Debt Issue Costs 46,440 248,654 46,440 248,654 TOTAL ASSETS $26,458,367 $30,299,737 ($3,715,488) $22,742,879 $26,584,249 Liabilities Tenant Security Deposits $169,369 $168,448 $169,369 $168,448 Accounts Payable 81,354 108,102 81,354 108,102 Other Accrued Expenses 307,339 544,387 307,339 544,387 Distributions Payable 221,154 223,154 221,154 223,154 Payable to Affiliates 3,409,338 3,508,511 3,409,338 3,508,511 Mortgage Notes Payable 19,228,533 23,319,498 19,228,533 23,319,498 TOTAL LIABILITIES 23,417,087 27,872,100 23,417,087 27,872,100 Partners' Capital General Partner (Deficit) (69,185) (72,935) (69,185) (72,935) Limited Partners 3,110,465 2,500,572 ($3,715,488) (605,023) (1,214,916) TOTAL CAPITAL AND LIABILITIES $26,458,367 $30,299,737 ($3,715,488) $22,742,879 $26,584,249
The foregoing unaudited Pro Forma Balance Sheet gives effect to certain assumptions, including purchase by the Partnership of 8,944 Interests at $402 per Interest pursuant to the Offer. The Pro Forma Balance Sheet gives effect to the transaction as if it had occurred on December 31, 1995, and June 30, 1996, respectively. The pro forma information should be read in conjunction with the historical financial information for the Partnership, but does not purport to be indicative of the results which may be obtained in the future or which would actually have been obtained had the Offer occurred as of December 31, 1995, or June 30, 1996. The December 31, 1995 pro forma amounts do not reflect the Partnership's 1996 receipt of net loan proceeds of $4,057,000 as a result of refinancing Town Place. See notes to Pro Forma Financial Statements. Decade Companies Income Properties Pro Forma Balance Sheet (Unaudited) (Borrowing $2,590,000 Million To Fund Offer)
December 31, 1995 June 30, 1996 Historical Historical Adjustments December 31, 1995 June 30, 1996 Assets (Note A) (Note A) (Note B) Pro Forma Pro Forma Investment Property, At Cost $30,927,237 $31,007,546 $30,927,237 $31,007,546 Less Accumulated Depreciation (5,393,539) (5,935,839) (5,393,539) (5,935,839) Net Book Value 25,533,698 25,071,707 25,533,698 25,071,707 Cash 56,316 4,316,763 ($3,485,413) (3,429,097) 831,350 Exchange Escrow 497,390 230,103 (230,103) 267,287 0 Escrow Deposits 186,703 340,953 186,703 340,953 Prepaid Expenses And Other Assets 137,820 91,557 137,820 91,557 Debt Issue Costs 46,440 248,654 51,800 98,240 300,454 TOTAL ASSETS $26,458,367 $30,299,737 ($3,663,716) $22,794,651 $26,636,021 Liabilities Tenant Security Deposits $169,369 $168,448 $169,369 $168,448 Accounts Payable 81,354 108,102 81,354 108,102 Other Accrued Expenses 307,339 544,387 307,339 544,387 Distributions Payable 221,154 223,154 221,154 223,154 Payable To Affiliates 3,409,338 3,508,511 3,409,338 3,508,511 Mortgage Notes Payable 19,228,533 23,319,498 $2,590,000 21,818,533 25,909,498 TOTAL LIABILITIES 23,417,087 27,872,100 2,590,000 26,007,087 30,462,100 Partners' Capital General Partner (Deficit) (69,185) (72,935) (69,185) (72,935) Limited Partners 3,110,465 2,500,572 (6,253,716) (3,143,251) (3,753,144) TOTAL CAPITAL AND LIABILITIES $26,458,367 $30,299,737 ($3,663,716) $22,794,651 $26,636,021
The foregoing unaudited Pro Forma Balance Sheet gives effect to certain assumptions, including purchase by the Partnership of 15,258 Interests at $402 per Interest pursuant to the Offer. The Pro Forma Balance Sheet gives effect to the transaction as if it had occurred on December 31, 1995, and June 30, 1996, respectively. The pro forma information should be read in conjunction with the historical financial information for the Partnership, but does not purport to be indicative of the results which may be obtained in the future or which would actually have been obtained had the Offer occurred as of December 31, 1995, or June 30, 1996. The December 31, 1995, pro forma amounts do not reflect the Partnership's 1996 receipt of net loan proceeds of $4,057,000 as a result of refinancing Town Place Apartments. See notes to Pro Forma Financial Statements. Decade Companies Income Properties Condensed Pro Forma Statement of Income (No Borrowing to Fund Offer) The following unaudited condensed Pro Forma Statement of Income and other financial information for the year ended December 31, 1995, and six months ended June 30, 1996, gives effect to certain assumptions, including the purchase by the Partnership of 8,944 Interests at $402 per Interest pursuant to the Offer. The unaudited Pro Forma Statement of Operations gives effect to this transaction as if it had occurred on January 1, 1995, or January 1, 1996, as the case may be. The pro forma information should be read in conjunction with the historical financial information for the Partnership, but does not purport to be indicative of the results which may be obtained in the future or which would actually have been obtained had the Offer occurred as of January 1, 1995, or January 1, 1996, as the case may be.
Six Months Ended December 31, 1995 June 30, 1996 Year Ended Six Months Ended Historical Historical Adjustments December 31, 1995 June 30, 1996 Assets (Note A) (Note A) (Note C) Pro Forma Pro Forma Operating Revenue $5,680,539 $2,973,288 $ 0 $5,680,539 $2,973,288 Operating Expenses (3,378,014) (1,767,582) (3,378,014) (1,767,582) Net Operating Income 2,302,525 1,205,706 2,302,525 1,205,706 Depreciation (1,110,967) (542,300) (1,110,967) (542,300) Net Income from Investment Property 1,191,558 663,406 1,191,558 663,406 Interest Income 43,069 46,395 43,069 46,395 Interest on Payables to Affiliates (33,550) (14,300) (33,550) (14,300) Administrative Expenses (190,901) (103,898) (190,901) (103,898) Net Income (Loss) Before Interest expense 1,010,176 591,603 1,010,176 591,603 Interest expense (1,479,874) (766,586) (1,479,874) (766,586) Net Income (Loss) $ (469,698) $(174,983) $ 0 $ (469,698) $(174,983) Earnings Per Interest Net Income (Loss) attributable to Limited Partners (99%) $(465,001) $(173,233) $ 0 $(465,001) $(173,233) Net Income (Loss) per Limited Partner Interest (26.62) (9.92) (54.56) (20.33) Interests Outstanding 17,466.31 17,466.31 (8,944.00) 8,522.31 8,522.31 Ratio of Earnings to Fixed Charges Earnings (Loss) Before Interest Expense $1,010,176 $591,603 $1,010,176 $591,603 Fixed Charges 1,479,874 766,586 1,479,874 766,586 Ratio 0.68 0.77 0.68 0.77
The above ratio (fixed charge ratio) compares earnings before interest expense to interest expense. It indicates how many times interest charges have been earned by the Partnership. See Notes to Pro Forma Financial Statements. Decade Companies Income Properties Condensed Pro Forma Statement of Income (Borrowing $2,590,000) to fund Offer The following unaudited condensed Pro Forma Statement of Income and other financial information for the year ended December 31, 1995, and six months ended June 30, 1996, gives effect to certain assumptions, including the purchase by the Partnership of 15,258 Interests at $402 per Interest pursuant to the Offer. The unaudited Pro Forma Statement of Operations gives effect to this transaction as if it has occurred on January 1, 1995, or January 1, 1996, as the case may be. The pro forma information should be read in conjunction with the historical financial information for the Partnership, but does not purport to be indicative of the results which may be obtained in the future or which would actually have been obtained had the Offer occurred as of January 1, 1995, or January 1, 1996, as the case may be.
Six Months Ended December 31, 1995 June 30, 1996 December 31, 1995 June 30, 1996 Year Ended Six Months Ended Historical Historical Adjustments Adjustments December 31, 1995 June 30, 1996 Assets (Note A) (Note A) (Note C) (Note C) Pro Forma Pro Forma Operating Revenue $5,680,539 $2,973,288 $ 0 $ 0 $5,680,539 $2,973,288 Operating expenses (3,378,014) (1,767,582) (3,378,014) (1,767,582) Net Operating Income 2,302,525 1,205,706 2,302,525 1,205,706 Depreciation (1,110,967) (542,300) (1,110,967) (542,300) Net Income From Investment Property 1,191,558 663,406 1,191,558 663,406 Interest Income 43,069 46,395 43,069 46,395 Interest on Payables to Affiliates (33,550) (14,300) (33,550) (14,300) Administrative Expenses (190,901) (103,898) (190,901) (103,898) Net income (loss) before interest expense 1,010,176 591,603 1,010,176 591,603 Interest expense (1,479,874) (766,586) (220,150) (110,075) (1,700,024) (876,661) Net Income (Loss) $ (469,698) $ (174,983) $ (220,150) $ (110,075) $ (689,848) $ (285,058) Earnings Per Interest Net Income (Loss) attributable to limited partners (99%) $ (465,001) $ (173,233) $ (209,143) $ (104,571) $ (674,144) $ (277,804) Net Income (Loss) per Limited Partner Interest (26.62) (9.92) (305.28) (125.80) Interests Outstanding 17,466.31 17,466.31 (15,258.00) (15,258.00) 2,208.31 2,208.31 Ratio of Earnings to Fixed Charges Earnings (loss) before interest expense $1,010,176 $ 591,603 $1,010,176 $ 591,603 Fixed Charges 1,479,874 766,586 1,700,024 876,661 Ratio 0.68 0.77 0.59 0.67
The above ratio (fixed charge ratio) compares earnings before interest expense to interest expense. It indicates how many times interest charges have been earned by the Partnership. See Notes to Pro Forma Financial Statements. Pro Forma Book Value of Limited Partner Interests (Unaudited) (No Borrowing To Fund Repurchase Offer) December 31, 1995, and June 30, 1996
December 31, 1995 June 30, 1996 Historical Historical Adjustments December 31, 1995 June 30, 1996 (Note A) (Note A) (Note D) Pro Forma Pro Forma Book value $3,110,465 $2,500,572 $(3,715,488) $(605,023) $(1,214,916) Number of limited partner Interests 17,466.31 17,466.31 (8,944.00) 8,522.31 8,522.31 Book value per limited partner Interest $ 178.08 $ 143.17 $ 415.42 $ (70.99) $ ( 142.56)
The foregoing unaudited pro forma financial information gives effect to certain assumptions, including purchase by the Partnership of 8,944 Interests at $402 per Interest pursuant to the Offer. The unaudited Pro Forma Book Value of Limited Partner Interests is derived from the unaudited Pro Forma Balance Sheet which gives effect to the transaction as if it had occurred on December 31, 1995, and June 30, 1996, respectively. The Pro Forma Information should be read in conjunction with the historical financial information of the Partnership, but does not purport to be indicative of the results which may be obtained in the future or which would actually have been obtained had the Offer occurred as of December 31, 1995, and June 30, 1996, respectively. The December 31, 1995, pro forma amounts do not reflect the Partnership's 1996 receipt of net loan proceeds of $4,056,000 as a result of refinancing Town Place. See Notes to Pro Forma Financial Statements. Decade Companies Income Properties Pro Forma Book Value of Limited Partner Interests (Unaudited) (Borrowing $2,590,000 To Fund Repurchase Offer) December 31, 1995 and June 30, 1996
December 31, 1995 June 30, 1996 Historical Historical Adjustments December 31, 1995 June 30, 1996 (Note A) (Note A) (Note D) Pro Forma Pro Forma Book value $3,110,465 $2,500,572 $(6,253,716) $(3,143,251) $ (3,753,144) Number of limited partner Interests 17,466.31 17,466.31 (15,258.00) 2,208.31 2,208.31 Book value per limited partner Interest $ 178.08 $ 143.17 $ 409.86 $ (1,423.37) $ (1,699.55)
The foregoing unaudited pro forma financial information gives effect to certain assumptions, including purchase by the Partnership of 15,258 Interests at $402 per Interest pursuant to the Offer. The unaudited Pro Forma Book Value of Limited Partner Interests is derived from the unaudited Pro Forma Balance Sheet which gives effect to the transaction as if it had occurred on December 31, 1995 and June 30, 1996, respectively. The pro forma information should be read in conjunction with the historical financial information of the Partnership, but does not purport to be indicative of the results which may be obtained in the future or which would actually have been obtained had the Offer occurred as of December 31, 1995 and June 30, 1996, respectively. The December 31, 1995 pro forma amounts do not reflect the Partnership's 1996 receipt of net loan proceeds of $4,056,000 as a result of refinancing Town Place. See Notes to Pro Forma Financial Statements. NOTES TO PRO FORMA FINANCIAL STATEMENTS DECEMBER 31, 1995 AND JUNE 30, 1996 The following notes describe the assumptions underlying the Pro Forma Financial Statements. The Pro Forma Financial Statements have been prepared to provide Limited Partners with information about the continuing impact of the Partnership's Offer by showing how it might have affected historical financial statements if the transaction had been consummated at an earlier time. The actual results which would have been achieved during the pro forma periods had the transactions occurred on the assumed date may have varied from the Pro Forma Financial Statements, and the variations may have been material. Two alternative assumptions are presented for each Pro Forma Financial Statement as of each balance sheet date and the period ended as of such date. One alternative assumes that 8,944 Interests are purchased by the Partnership using cash reserves existing as of June 30, 1996, and no funds are borrowed to finance the Offer. The other alternative assumes that the Partnership borrows $2,590,000 at 8.75% per annum, incurs financing costs of 2% of the borrowings ($51,800), and repurchases a total of 15,258 Interests. The actual amount of future borrowing will depend upon how many Interests are tendered by Limited Partners to the Partnership, and the loan interest rate, term, amortization period, and costs incurred to obtain financing. The actual amount of future borrowing will also impact how may Interests the Partnership will actually purchase. Payment of an estimated $120,000 of expenses in connection with the Offer are reflected for each alternative. A. The historical Balance Sheet, Income Statement, and book value figures are based on the audited financial statements as of and for the year ended at December 31, 1995, and the unaudited financial statements as of and for the six months ended June 30, 1996. B. Adjustments to the Pro Forma Balance Sheet give effect to certain assumptions, including purchase by the Partnership of 8,944 Interests at $402 per Interest pursuant to the Offer if no funds are borrowed, or the purchase by the Partnership of 15,258 Interests at $402 per Interest if $2,590,000 is borrowed. Under these assumptions the aggregate redemption would amount to $3,595,488 and $6,133,716, respectively. The Pro Forma Balance Sheet gives effect to the transaction as if it had occurred on the balance sheet date. However, the transaction as of December 31, 1995, results in a cash deficit reported on the pro forma balance sheet because the proceeds from the Town Place refinancing were not received until April 1996. C. Adjustments to the condensed Pro Forma Statements of Income give effect to certain assumptions, including purchase by the Partnership of 8,944 Interests at $402 per Interest pursuant to the Offer if no funds are borrowed, or the purchase by the Partnership of 15,258 Interests at $402 per Interest if $2,590,000 is borrowed. The unaudited Pro Forma Statements of Income give effect to this transaction as if it had occurred at the beginning of the periods presented. Interest expense has been increased to reflect the estimated cost of borrowing additional funds needed to consummate the transaction. An assumed interest rate of 8.75% per annum was used on the new mortgage loan of $2,590,000. D. Adjustments to the Pro Forma Book Value of Limited Partner Interests reflect the effect on the book value of the Limited Partnership Interests of the redemption of 8,944 Interests at $402 per Interest pursuant to the Offer if no funds are borrowed, or the redemption of 15,258 Interests at $402 per Interest if $2,590,000 is borrowed. INDEPENDENT AUDITORS The financial statements of the Partnership as of December 31, 1995, and 1994 and for each of the fiscal years in the three- year period ended December 31, 1995, 1994, and 1993 included herein have been audited by Ernst & Young LLP, independent auditors, as stated in their report appearing herein. AVAILABLE INFORMATION The Partnership has filed a Rule 13e-3 Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3") and Schedule 13E-4 Issuer Tender Offer Statement (the "Schedule 13E-4") with the Securities and Exchange Commission (the "Commission") with respect to the Offer. As permitted by the rules and regulations of the Commission, this Offer omits certain information contained in the Schedule 13E-3 and Schedule 13E-4. Such additional information can be inspected at and obtained from the Commission and the National Association of Securities Dealers, Inc. in the manner set forth below. For further information pertaining to the Partnership reference is made to the Schedule 13E-3, Schedule 13E-4, and the exhibits thereto. Statements contained herein concerning any such documents are not necessarily complete and, in each instance, reference is made to the copy of such document filed as an exhibit to the Schedule 13E-3 and Schedule 13E-4. Each such statement is qualified in its entirety by such reference. The Partnership is subject to the informational requirements of the Exchange Act, and in accordance therewith, files reports, proxy statements and other information with the Commission. The Limited Partnership Interests of the Partnership are not traded or listed. Schedule 13E-3 and Schedule 13E-4 and the respective exhibits thereto, as well as reports, proxy statements and other information filed by the Partnership can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of the Commission: Chicago Regional Office, Northwestern Atrium Center, Suite 1400, S.W. West Madison Street, Chicago, Illinois 60611; and New York Regional Office, 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such material can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such reports, proxy statements and other information may also be inspected at the office of the National Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006. INDEX TO FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS Page Unaudited Condensed Balance Sheet as of June 30, 1996. . . . .F-1 Unaudited Condensed Statements of Operations for the Three Months Ended June 30, 1996 and 1995 and for the Six Months Ended as of June 30, 1996 and 1995 . . . . .F-2 Unaudited Condensed Statements of Cash Flows for the Six Months Ended as of June 30, 1996 and 1995. . . . . . . .F-3 Notes to Unaudited Quarterly Financial Statements. . . . . . .F-4 Report of Independent Auditors . . . . . . . . . . . . . . . .F-5 Balance Sheets as of December 31, 1995 and 1994. . . . . . . .F-6 Statements of Operations for the Years Ended December 31, 1995, 1994, and 1993 . . . . . . . . . . . . .F-7 Statements of Changes in Partners' Capital for the Years Ended December 31, 1995, 1994, and 1993. . . . . . . . . . . . . . . . . . . . . . .F-8 Statements of Cash Flows for the Years Ended December 31, 1995, 1994, and 1993 . . . . . . . . . . . . .F-9 Notes to Financial Statements. . . . . . . . . . . . . . . . F-10 Decade Companies Income Properties - A Limited Partnership UNAUDITED CONDENSED BALANCE SHEETS June 30 December 31 1996 1995 (unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 4,316,763 $ 56,316 Restricted cash 230,103 497,390 Escrow deposits 340,953 186,703 Prepaid expenses and other assets 48,142 94,405 Total Current Assets $ 4,935,961 $ 834,814 INVESTMENT PROPERTIES, AT COST: $31,007,546 $30,927,237 Less: accumulated depreciation (5,935,839) (5,393,539) Net Investment Property $25,071,707 $25,533,698 OTHER ASSETS: Utility deposits 43,415 43,415 Debt issue costs, net of accumulated amortization 248,654 46,440 Total Other Assets 292,069 89,855 Total Assets $30,299,737 $26,458,367 LIABILITIES AND PARTNERS' CAPITAL LIABILITIES: Accounts payable and accrued taxes $607,366 $350,722 Tenant security deposits 168,448 169,369 Distributions payable 223,154 221,154 Accrued interest payable 45,123 37,971 Payables to affiliates 3,508,511 3,409,338 Mortgage notes payable 23,319,498 19,228,533 Total Liabilities $27,872,100 $23,417,087 PARTNERS' CAPITAL: General Partner Capital (72,935) (69,185) Limited Partners (authorized--18,000 Interests; outstanding--17,466.31 Interests) 2,500,572 3,110,465 Total Partners' Capital $2,427,637 $3,041,280 Total Liabilities and Partners' Capital $30,299,737 $26,458,367 Note: The balance sheet at December 31, 1995 has been derived from the audited financial statements at that date. See Notes to Financial Statements. Decade Companies Income Properties - A Limited Partnership CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Six Months Ended 6/30/96 6/30/95 6/30/96 6/30/95 Operating revenue: Rental income $1,495,409 $1,369,522 $2,973,288 $2,784,043 Operating expenses (738,612) (652,143) (1,403,002) (1,321,364) Real estate taxes (181,040) (181,127) (364,580) (368,679) Total operating expenses (919,652) (833,270) (1,767,582) (1,690,043) Net operating income 575,757 536,252 1,205,706 1,094,000 Interest expense (373,829) (374,250) (776,989) (743,220) Depreciation (272,500) (275,300) (542,300) (550,300) Amortization (2,948) (4,091) (3,897) (8,182) Net income (loss) from investment property (73,520) (117,389) (117,480) (207,702) Other income (expenses): Interest income 40,368 14,251 46,395 35,285 Partnership management (53,540) (46,507) (103,898) (118,740) (13,172) (32,256) (57,503) (83,455) NET (LOSS) $ (86,692) $ (149,645) $ (174,983) $(291,157) Net Income (loss) attributable to General Partner (1%) $(867) $(1,496) $(1,750) $(2,912) Net Income (loss) attributable to Limited Partners (99%) (85,825) (148,149) $ (173,233) $(288,245) $ (86,692) $ (149,645) $ 174,983 $(291,157) Net (loss) per Limited Partner Interest $ (4.91) $ (8.48) $ (9.92) $ (16.50) See Notes to Financial Statements Decade Companies Income Properties - A Limited Partnership STATEMENTS OF CASH FLOWS - (UNAUDITED) For The Six Months Ended June 30, 1996 1995 CASH PROVIDED FROM OPERATIONS $ 560,173 $ 410,720 INVESTING ACTIVITIES: Proceeds from exchange escrow account 267,287 485,135 Additions to investment property (80,309) (60,088) Net cash provided by investing activities 186,978 425,047 FINANCING ACTIVITIES: Proceeds from new mortgage loan 6,700,000 --- Principal payments on mortgage notes (2,609,035) (39,939) Proceeds from line of credit note 0 120,000 Payment on line of credit note 0 (220,000) Payment of debt issue costs (141,009) 0 Distributions paid to limited partners (436,660) (437,703) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 3,513,296 (577,642) INCREASE IN CASH & CASH EQUIVALENTS 4,260,447 258,125 CASH & CASH EQUIVALENTS AT THE BEGINNING OF PERIOD 56,316 16,415 CASH & CASH EQUIVALENTS AT THE END OF PERIOD $4,316,763 $ 274,540 Supplementary disclosure of cash flow information: Interest paid $ 755,404 $ 729,209 Income taxes paid 0 0 See Notes to Financial Statements Decade Companies Income Properties - A Limited Partnership Notes to Financial Statements (Unaudited) Note A--Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month and six month period ended June 30, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the year ended December 31, 1995. Report of Independent Auditors The Partners Decade Companies Income Properties--A Limited Partnership We have audited the accompanying balance sheets of Decade Companies Income Properties--A Limited Partnership (the Partnership) as of December 31, 1995 and 1994, and the related statements of operations, changes in Partners' capital and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Partnerships management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Decade Companies Income Properties--A Limited Partnership as of December 31, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Milwaukee, Wisconsin January 26, 1996 Decade Companies Income Properties - A Limited Partnership Balance Sheets December 31 1995 1994 Assets Cash and cash equivalents $ 56,316 $ 16,415 Exchange escrow (Note 4) 497,390 1,117,531 Prepaid expenses and other assets 137,820 81,220 Escrow deposits 186,703 178,881 Investment properties, at cost: Land 5,305,536 5,305,536 Buildings and improvements 23,308,727 23,304,606 Equipment 2,312,974 2,139,760 30,927,237 30,749,902 Less accumulated depreciation 5,393,539 4,282,571 $25,533,698 $26,467,331 Debt issue costs, net of accumulated amortization ($88,193-1995; $71,836-1994) 46,440 52,797 $26,458,367 $27,914,175 Liabiities and Partners' capital Liabilities: Tenant security deposits $ 16,9369 $ 166,677 Accounts payable 81,354 53,874 Accrued real estate taxes 269,368 260,514 Accrued interest payable 37,971 37,872 Distributions payable 221,154 220,264 Payables to affiliates 3,409,338 3,386,016 Note payable to bank -- 100,000 Mortgage notes payable 19,228,533 19,300,793 $23,417,087 $23,526,010 Partners' capital: General Partner (deficit) (69,185) (60,621) Limited Partners (interests authorized-18,000; interests outstanding-17,466.31 in 1995 and 1994) 3,110,465 4,448,786 3,041,280 4,388,165 $26,458,367 $27,914,175 See accompanying notes. Decade Companies Income Properties - A Limited Partnership Statements of Operations Year ended December 31 1995 1994 1993 Operating revenue associated with investment properties: Rentals $5,526,011 $5,941,610 $5,019,399 Other 154,528 158,286 171,053 5,680,539 6,099,896 5,190,452 Operating expenses associated with investment properties: Operating 2,336,602 2,394,388 2,264,054 Administrative 300,830 289,678 272,762 Depreciation 1,110,967 1,242,885 1,109,669 Interest, including amortization of debt-issue costs 1,479,874 1,707,904 1,184,747 Real estate taxes 740,582 761,975 588,386 5,968,855 6,396,830 5,419,618 Loss from operations of investment properties (288,316) (296,934) (229,166) Other Partnership income (expenses): Interest income 43,069 177,404 94,736 Interest on payables to affiliates (33,550) (28,764) (18,259) Administrative Expenses (190,901) (194,405) (174,514) Loss on disposition of investment property -- (1,071,710) -- Forfeiture fee earned -- 100,000 -- (181,382) (1,017,475) (98,037) Net loss $(469,698) $(1,314,409) $(327,203) Net loss attributable to General Partner - (1%) $ (4,697) $ (13,144) $ (3,272) Net loss attributable to Limited Partners - (99%) (465,001) (1,301,265) (323,931) $(469,698) $(1,314,409) $(327,203) Net loss per Limited Partnership interest $ (26.62) $ (74.50) $ (18.55) See accompanying notes Decade Companies Income Properties - A Limited Partnership Statements of Changes in Partners' Capital General Limited Partner's Limited Partnership Capital Partners' Interests (Deficit) Capital Total Balances at January 1, 1993 17,466.31 $(32,010) $7,820,623 $7,788,613 Distributions to Partners -- (6,061) (873,320) (879,381) Net loss for the year -- (3,272) (323,931) (327,203) Balances at December 31, 1993 17,466.31 (41,343) 6,623,372) 6,582,029 Distributions to Partners -- (6,134) (873,321) (879,455) Net loss for the year -- (13,144) (1,301,265) (1,314,409) Balances at December 31,1994 17,466.31 (60,621) 4,448,786 4,388,165 Distributions to Partners -- (3,867) (873,320) (877,187) Net loss for the year -- (4,697) (465,001) (469,698) Balances at December 31, 1995 17,466.31 $(69,185) $3,110,465 $3,041,280 () Denotes deduction or deficit Decade Companies Income Properties - A Limited Partnership Statements of Cash Flows Year ended December 31 1995 1994 1993 Operating activities Net loss for the year $(469,698) $(1,314,409) $(327,203) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 1,110,967 1,242,885 1,109,669 Loss on disposition of investment property -- 979,610 -- Amortization of debt issue costs 16,347 16,302 66,910 Changes in operating assets and liabilities: Prepaid and other assets (56,600) 42,464 (65,579) Escrow deposits (7,822) 2,686 (6,648) Security deposits payable 2,692 (29,945) 33,274 Accounts payable 27,480 (67,453) 50,729 Accrued real estate taxes 8,854 (9,407) (5,332) Accrued interest payable 99 (43,453) 18,369 Payables to affiliates 23,322 101,350 37,609 Net cash provided by operating affiliates 655,651 920,630 911,798 Investing activities Proceeds from disposition of investment property-- 2,990,181 5,326,313 Withdrawal from (deposit to) Like-Kind Exchange Escrow Trust 620,141 (1,117,531) -- Net additions to investment properties (177,334) (159,791) (2,935,771) Redemption (purchase) of short-term investments 4,000,000 (4,000,000) Net cash provided by (used in) investing activities 442,807 5,712,859 (1,609,458) Financing activities Net proceeds from issuance of mortgage note payable -- -- 4,000,000 Proceeds from note payable to bank 120,000 100,000 -- Payments on note payable to bank (220,000) -- -- Additions to debt issue costs (10,000) (13,606) (12,500) Payments on mortgage notes payable (72,260) (6,029,737) (2,685,753) Distributions paid to Limited Partners (873,320) (873,320) (873,320) Distributions paid to General Partner (2,977) (12,668) -- Net cash provided by (used in) financing activities (1,058,557) (6,829,331) 428,427 Increase (decrease) in cash and cash equivalents 39,901 (195,842) (269,233) Cash and cash equivalents at beginning of year 16,415 212,257 481,490 Cash and cash equivalents at end of year $ 56,316 $ 16,415 $ 212,257 See accompanying notes Decade Companies Income Properties - A Limited Partnership Notes To Financial Statements December 31, 1995 1. Organization and Basis of Accounting Organization Decade Companies Income Properties--A Limited Partnership (the Partnership) was organized as a limited partnership under the laws of the State of Wisconsin pursuant to a Certificate and an Agreement (the Agreement) of Limited Partnership dated June 6, 1985, for the purpose of investing primarily in residential and commercial real property. The Agreement terminates on or before December 31, 2005. The Partnership began operations June 9, 1986. The Partnership operates three residential apartment complexes located in Madison, Wisconsin, Clearwater, Florida, and St. Petersburg, Florida. The Partnership consists of a General Partner, Decade Companies--A General Partnership, of which Jeffrey Keierleber and Decade 80, Inc. are the general partners, and 1,936 Limited Partners at December 31, 1995. Basis of Accounting The Partnership's accounting records are maintained on the basis of accounting utilized for federal income tax reporting purposes. The accompanying financial statements have been prepared from such records adjusted for differences in depreciation methods and related-party transactions. Certain accrual and tax basis amounts are summarized as follows: 1995 1994 1993 ______________________________________________________ Accrual Tax Accrual Tax Accrual Tax Basis Basis Basis Basis Basis Basis ______________________________________________________ (In Thousands) Total assets $26,474 $26,132 $27,914 $27,574 $36,094 $35,722 Partners' capital (deficit): General Partner (69) (60) (61) (52) (41) (28) Limited Partners 3,110 6,360 4,449 7,617 6,623 9,659 Net loss: General Partner (5) (4) (13) (12) (3) (1) Limited Partners (465) (443) (1,301) (1,169) (324) (136) 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenses during the reporting period. Although estimates are considered to be fairly stated at the time that the estimates are made, actual results could differ from those estimates. Cash Equivalents The Partnership considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Such investments are carried at cost which approximates market value. Depreciation Depreciation is computed by the straight-line method using estimated useful lives of 30 years for the buildings and improvements and 5 years for related equipment. For federal income tax purposes, the Partnership has adopted various accelerated methods which provide for depreciation of buildings and improvements over 27.5 years and related equipment over 7 years. Fees to Affiliates Fees related to the offering, organizational and acquisition stages of the Partnership paid to the General Partner or affiliates, and deferred interest related thereto, are limited to a maximum amount as defined in the Partnership prospectus. The Partnership reached this maximum in 1993. Accordingly, interest was not charged on certain deferred fees (see Note 6) and the acquisition fee on Pelican Sound was limited (see Note 3). Acquisition fees, mortgage placement and mortgage brokerage fees, property management fees and real estate sales commissions are payable to the General Partner or affiliates of the General Partner. These fees are charged to expense as follows: Acquisition Fees Acquisition fees designated for selection, negotiation and purchase of Partnership properties have been capitalized as investment property and allocated to land, buildings and improvements and equipment based on appraised values. The portions allocated to buildings, improvements and equipment are being depreciated over the respective lives of the buildings, improvements and equipment. Mortgage Placement and Mortgage Brokerage Fees Fees for services rendered in locating potential borrowers and investigating their creditworthiness for placement of mortgage loans are payable by the Partnership to the extent not paid by the mortgagor. Any fees paid by the Partnership will be charged to expense over the terms of the mortgage loans. Property Management Fees Fees for property management and rental services are being charged to expenses over the period property management services are being performed. Real Estate Sales Commissions Fees may be earned for services rendered related to the sale of Partnership property, as defined in the Partnership prospectus. Payment of such fees to an affiliate of the General Partner shall be subordinated to a return to the Limited Partners equal to their original capital contribution plus a 6% per annum cumulative return. Expenses of Offering Sales commissions, underwriting fees and reimbursed syndication costs paid to the General Partner or affiliates of the General Partner in connection with the capital offering have been recorded as a charge to Limited Partners' capital. Reimbursed Expenses The Partnership reimburses the General Partner and affiliates of the General Partner for the actual cost of goods and materials used by or for the Partnership in the course of performing the general functions of the Partnership. These general functions include accounting, investor communications, investor documentation, legal services, tax services, computer services, risk management, and any other related operational and administrative expenses necessary for the prudent organization and operation of the Partnership. Reimbursed expenses paid by the General Partner or affiliates of the General Partner on behalf of the Partnership were as follows: Decade Companies ($89,962-1995; $84,471-1994; $68,678-1993) and Decade Properties, Inc. ($929,883-1995; $878,934-1994; $772,494-1993). At December 31, 1995, the following amounts were unpaid by the Partnership: Decade Companies ($2,949) and Decade Properties, Inc. ($50,270). Allocations and Distributions Pursuant to the Agreement, net income and losses from operations (exclusive of those from the sale or disposition of Partnership properties) are to be allocated 99% to the Limited Partners and 1% to the General Partner. In computing net income and losses from operations, depreciation expense is allocated differently to taxable and nontaxable entities. Any gains from the sale or disposition of Partnership properties will be allocated: 1) 99% to the Limited Partners and 1% to the General Partner until the cumulative gains are equal to any losses from the sale or disposition of Partnership property for all prior periods; 2) to the Limited Partners until their cumulative gains equal the sum of all sales commissions, underwriting fees, and reimbursed syndication costs for the current year and all prior years, any losses from the sale or disposition of Partnership property for the current year and all prior years, and an amount equal to 6% per annum, cumulative and noncompounded, on the Limited Partners' capital investment minus prior distributions of cash available for distribution or to the extent that prior distributions of sales proceeds exceed the Limited Partners' original capital investment ("priority return") from the inception of the Partnership to the end of the current year; 3) to the General Partner an amount equal to the distributions made to the General Partner under (iii)(b) below; 4) to the General Partner an amount equal to the distributions made to the General Partner pursuant to (iv) below; 5) to the Limited Partners until cumulative gains allocated to them are equal to (v) below; 6) to the Limited Partners until cumulative gains allocated to them are equal to (vi) below; and 7) to the General Partner until cumulative gains allocated to the General Partner are equal to (vii) below. Any losses from the sale or disposition of Partnership properties will be allocated 99% to the Limited Partners and 1% to the General Partner. Cash available for distribution, as defined in the Agreement, will be distributed 99% to the Limited Partners and 1% to the General Partner. Proceeds from the sale or disposition of Partnership properties, if any, remaining after repayment of any General Partner's loan and payment of deferred fees, will be distributed as follows: (i) to the Limited Partners, an amount equal to 100% of their original capital contribution minus any prior distributions of sales proceeds; (ii) to the Limited Partners, an amount to provide their priority return; (iii) to the General Partner an amount equal to the greater of the excess of (a) its capital contribution over the sum of all prior distributions of sales proceeds or (b) 1% of such sales proceeds; (iv) in the case of the sale of any property in which brokerage services are actually performed by the General Partner or an affiliate, to the General Partner or an affiliate, an amount equal to its subordinated real estate commission (generally up to 3% of the aggregated selling price of all properties); (v) of the remaining proceeds, 88% to the Limited Partners; (vi) then, to the Limited Partners, the deficiency, if any, in return of capital plus a cumulative preference of 10% per annum on their capital investment; and (vii) to the General Partner, the remaining balance (not to exceed 12% of the proceeds remaining after the distributions in accordance with (i) through (iv) above). Net Loss Per Limited Partnership Interest Net loss per Limited Partnership interest is based on 99% of net loss as allocated to the Limited Partners divided by the weighted average number of interests outstanding during the year. Pending Accounting Change In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to Be Disposed Of." SFAS No. 121 addresses situations where information indicates that a company might be unable to recover, through future operations or sale, the carrying amount of long-lived assets. SFAS No. 121 requires that long-lived assets that are used in operations be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. SFAS No. 121 is effective for the Partnership in 1996. The impact to the Partnership's financial statements is not expected to be material. 3. Like-Kind Exchange of Investment Property During 1993 the Partnership traded the Woodbridge Apartments for the Pelican Sound Apartments pursuant to a like-kind exchange under Section 1031 of the Internal Revenue Code. The exchange commenced on August 2, 1993, and was completed as of November_30, 1993. The Woodbridge Apartments were sold on August 2, 1993, to an unaffiliated buyer for a net selling price of $5,400,000. The sale proceeds of $5,326,313 (net of prorations of $73,687) were transferred to a Like-Kind Exchange Escrow Trust specifically reserved for the completion of the like-kind exchange and were not available for distribution. The proceeds in the Like-Kind Exchange Escrow Trust were used as follows: payoff of mortgage note payable and accrued interest on Woodbridge Apartments of $2,516,666, closing costs of $110,075 and purchase of Pelican Sound Apartments of $2,699,572. The Partnership acquired Pelican Sound Apartments for $12,550,000 as of November 30, 1993, within the time period permitted by Section 1031 of the Internal Revenue Code. The Partnership assumed a $10,000,000 mortgage note payable on the investment property (see Note 4). The General Partner earned an acquisition fee from the Partnership of $168,197 for the purchase of Pelican Sound Apartments. An affiliate of the General Partner earned a sales commission of $162,000 on the sale of Woodbridge Apartments. Both fees are unpaid as of December_31, 1995. Because the transaction is considered an exchange for financial reporting purposes, the cost basis of the Pelican Sound Apartments equals the historical cost basis of the Woodbridge Apartments exchanged plus the additional cash paid, net liabilities assumed and fees earned by the General Partner and its affiliate, and no gain or loss was recognized as a result of this transaction. 4. Investment Properties Investment properties owned at December 31, 1995, are as follows:
Costs Capitalized Initial Cost to Partnership Subsequent to Acquisition _______________________________________________________________ Buildings Buildings and and Improve- Equip- Improve- Equip- Description Encumbrances Land ments ment ments ment __________________________________________________________________________________________ (In Thousands) Meadows II Apartments Madison, Wisconsin $ 6,729 $1,144 $ 9,227 $ 442 $ 7 $262 Town Place Apartments Clearwater, Florida 2,500 1,518 5,270 252 -- 348 Pelican Sound Apartments 10,000 2,644 8,801 861 4 148 St. Petersburg, Florida $19,229 $5,306 $23,298 $1,555 $11 $758 Gross Amount at Which Carried _______________________________________________________________ Buildings and Accumulated Description Land Improvements Equipment Total Depreciation __________________________________________________________________________________________ (In Thousands) Meadows II Apartments Madison, Wisconsin $1,144 $9,234 $ 704 $11,082 $2,730 Town Place Apartments Clearwater, Florida 1,518 5,270 600 7,388 1,544 Pelican Sound Apartments St. Petersburg, Florida 2,644 8,805 1,009 12,458 1,119 $5,306 $23,309 $2,313 $30,928 $5,393 Description Date of Construction Date Acquired Meadows II Apartments, Madison, Wisconsin In phases through 1980 January 1989 Town Place Apartments, Clearwater, Florida 1985 February 1990 Pelican Sound Apartments, St. Petersburg, Florida 1987 November 1993
In April 1994, the Partnership disposed of Ashley Pointe Apartments to an unaffiliated buyer for $3,070,000. The net proceeds of $2,990,181 were transferred to a Like-Kind Exchange Escrow Trust (Trust) as it was the Partnership's intent to complete a like-kind exchange pursuant to Section 1031 of the Internal Revenue Code. The proceeds in the Trust were used to pay off the mortgage note payable on Ashley Pointe Apartments and closing costs. Proceeds of $1,094,531 were kept on deposit in the Trust to acquire a replacement property and complete the like-kind exchange. The Partnership did not identify a replacement property in the time permitted under Section 1031 and, as such, a loss of $970,958 was reported for federal income tax purposes and a loss of $979,610 occurred, for financial reporting purposes. Due to contractual arrangement, the $1,094,531 deposit (along with interest earned of $23,000) remained in the Trust as of December 31, 1994, reported as exchange escrow. As of December 31, 1995, $497,390 remains on deposit in the Trust to be used to acquire a replacement property or to provide additional liquidity for the Partnership, if necessary. Funds were withdrawn from the Trust in 1995 to fund the Partnership's financing needs. An affiliate of the General Partner earned a sales commission of $92,100 on the 1994 disposition of Ashley Pointe Apartments resulting in a total loss of $1,071,710 for financial reporting purposes. This fee is unpaid as of December 31, 1995, and is subordinated as set forth in Note 2. In 1989, the General Partner earned an acquisition fee from the Partnership of $753,688 related to the purchase of the Meadows II Apartments which was capitalized as part of the initial cost of the investment property. The acquisition fee has not been paid as of December 31, 1995. In 1992, the General Partner earned an acquisition fee from the Partnership of $264,000 related to the purchase of Woodbridge Apartments, which was capitalized as part of the initial cost of the investment property. Woodbridge Apartments was disposed of in August 1993 (see Note 3). The acquisition fee has not been paid as of December 31, 1995. A reconciliation of the cost and accumulated depreciation of the investment properties at December 31 follows: 1995 1994 1993 (In Thousands) Cost Balance at beginning of year $30,750 $35,387 $27,612 Acquisition of investment properties -- -- 12,306 Additions to investment properties 178 160 205 Disposal of investment property -- (4,797) (4,736) Balance at end of year $30,928 $30,750 $35,387 Accumulated depreciation Balance at beginning of year $ 4,282 $ 3,867 $ 2,923 Provision for the year 1,111 1,242 1,110 Disposal of investment property -- (827) (166) Balance at end of year $ 5,393 $ 4,282 $ 3,867 The aggregate cost of the investment properties for federal income tax purposes is $28,045,529 because the acquisition fees and sales commission payable to the General Partner are capitalizable for financial reporting purposes only. The accumulated depreciation for federal income tax purposes was $5,142,113, $4,030,227 and $3,645,760 at December 31, 1995, 1994 and 1993, respectively. 5. Mortgage Notes Payable Mortgage notes payable consist of the following: December 31 1995 1994 Mortgage note payable in monthly installments of $21,952, including interest at 7.5%, with final payment due December 1, 2021. $3,009,554 $3,045,772 Mortgage note payable with interest accruing at 2.48% over the monthly weighted average cost of funds of the bank, adjusted monthly, with maximum and minimum rates of 14.75% and 6.75%, respectively (7.591% at December 31, 1995). Monthly payments of principal and interest are computed annually ($27,890 commencing January 1, 1996). The final payment is due December 10, 2004. 3,718,979 3,755,021 Mortgage note payable with monthly interest installments at 1.0% over the prime rate (9.25% at December 31, 1995). The entire principal balance is due April 1, 1996. 2,500,000 $2,500,000 Mortgage note payable with monthly interest installments at 7.0% for two years. Monthly installments of $67,184, including interest at 7.0%, thereafter, with final payment due December 1, 1998, unless the term is extended for an additional five years as described in the mortgage note agreement. 10,000,000 10,000,000 $19,228,533 $19,300,793 The 7.5% mortgage note is insured under the National Housing Act and, as a result, the operation of the rental property is subject to the terms of the Regulatory Agreement between the Partnership and the Department of Housing and Urban Development (HUD). The mortgage is secured by the Meadows II property. Under the terms of the Regulatory Agreements, certain actions, including the payment of any distributions to the Partners from surplus cash generated by the Project, require the approval of The Federal Housing Administration as an agent for HUD. The Meadows II, Town Place and Pelican Sound Apartments investment properties and all associated operating revenues are pledged as collateral for the mortgage notes payable. Interest paid with respect to the mortgage notes and other indebtedness was $1,454,778, $1,735,055 and $1,099,588 in 1995, 1994 and 1993, respectively. Aggregate annual maturities of the mortgage notes payable for the five years subsequent to December 31, 1995, are as follows: $2,703,000-1996; $218,000-1997; $9,881,000-1998; $117,000-1999 and $126,000-2000. The Partnership had a $250,000 line of credit from a bank with interest charged on outstanding draws at 6%, expiring January 1995. At December 31, 1994, there was $100,000 outstanding on the line of credit. In January 1995, the line of credit was extended to January 1996 at an interest rate of 8.5%. No amounts are outstanding at December 31, 1995. 6. Income Taxes The Partnership has received an opinion from legal counsel that it will be classified as a partnership for federal income tax purposes. Therefore, Partnership losses or income and taxes attributable thereto will be the responsibility of the various Partners and no provision for income taxes has been made in the Partnership's financial statements. Differences between the net loss as reported herein and net loss reported for federal income tax purposes arise from timing differences related to depreciation, disposition of investment property and accrual-basis adjustments. The following is a reconciliation of reported net loss and net loss reported for federal income tax purposes: Year ended December 31 1995 1994 1993 Net loss as reported for financial reporting purposes $(469,698) $(1,314,409) $(327,203) Add: Depreciation (917) 22,782 153,057 Loss on disposition of investment property -- 100,752 -- Accrual basis adjustments 23,321 9,250 36,631 Net loss reported for federal income tax purposes $(447,294) $(1,181,625) $(137,515) 7. Transactions With Related Parties Decade Companies and its general partners are general partners for other limited partnerships which have invested in real estate. The Partnership also shares certain management and accounting employees and other expenses with entities that are controlled by Decade Companies and its general partner. The Partnership has executed certain contracts providing for the following fees payable to the General Partner or to affiliates of the General Partner: Decade Companies Decade Companies earned the following amount from the Partnership: acquisition fees ($168,197-1993). Interest on acquisition fees was not earned by Decade Companies in 1995, 1994 or 1993 due to the fee limitation imposed by the Partnership prospectus (see Note 2). Acquisition fees of $2,146,635 are payable to Decade Companies at December 31, 1995. Such fees were capitalized as part of the cost of the investment properties. In addition, the following other items are payable to Decade Companies at December 31, 1995: accrued interest on acquisition fees ($572,467) and mortgage placement fees ($90,246). Decade Properties Decade Properties earned the following amounts from the Partnership: property management fees ($449,205-1995; $489,960-1994; $399,221-1993), real estate sales commissions ($92,100-1994; $162,000-1993) and interest on sales commis- sions ($28,588-1995; $26,570-1994; $18,259-1993). Real estate sales commissions of $440,700 are payable to Decade Properties at December 31, 1995. Such fees were capitalized into the cost of the investment properties, except for the fee earned on the disposition of Ashley Pointe Apartments of $92,100 (see Note 4). In addition, accrued interest on sales commissions ($115,821) is payable to Decade Properties at December 31, 1995. Deferred fees payable to affiliates bear interest at the minimum rate required under the Internal Revenue Code (the Code) to avoid imputed interest under the Code and is payable only from sales proceeds, Partnership operations or cash reserves. However, as described above and in Note 2, interest has not been earned on certain deferred fees for 1995, 1994 and 1993. Charges by affiliated parties in 1996 are estimated by management to approximate $455,000 for property management fees. Interest charges by affiliated parties in 1996 are expected to approximate 1995 amounts. OFFER TO PURCHASE TABLE OF CONTENTS Page SUMMARY OF CERTAIN INFORMATION . . . . . . . . . . . . . . . . 2 THE PARTNERSHIP. . . . . . . . . . . . . . . . . . . . . . . . 4 Background of the Partnership . . . . . . . . . . . . . . 4 Background of the Offer . . . . . . . . . . . . . . . . . 4 Determination of the Offer Price. . . . . . . . . . . . . 5 August 1996 Appraisal of Pelican Sound. . . . . . . . . . 6 September 1996 Appraisal of The Meadows II. . . . . . . . 7 April 1996 Appraisal of Town Place. . . . . . . . . . . . 8 Opinion of The Valuations Group . . . . . . . . . . . . . 9 Interests of Certain Persons in the Offer . . . . . . . . 10 Certain Effects of the Offer. . . . . . . . . . . . . . . 10 Conduct of the Partnership After the Offer. . . . . . . . 11 Certain Federal Income Tax Consequences of the Offer. . . 12 Correction of Depreciation Methods and Allocations. . . . 13 Accounting Treatment. . . . . . . . . . . . . . . . . . . 15 Regulatory Matters. . . . . . . . . . . . . . . . . . . . 15 THE OFFER. . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Proration . . . . . . . . . . . . . . . . . . . . . . . . 16 Procedures for Tendering Interests. . . . . . . . . . . . 17 Signature Guarantees and Method of Delivery . . . . . . . 17 Withdrawal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Certain Conditions. . . . . . . . . . . . . . . . . . . . 18 Estimated Costs and Fees. . . . . . . . . . . . . . . . . 20 FINANCING THE OFFER. . . . . . . . . . . . . . . . . . . . . . 20 General . . . . . . . . . . . . . . . . . . . . . . . . . 20 Bank Financing. . . . . . . . . . . . . . . . . . . . . . 20 DESCRIPTION OF THE LIMITED PARTNERSHIP INTERESTS . . . . . . . 20 BUSINESS OF THE PARTNERSHIP. . . . . . . . . . . . . . . . . . 21 LACK OF MARKET AND DISTRIBUTIONS . . . . . . . . . . . . . . . 26 SECURITY OWNERSHIP OF THE GENERAL PARTNER. . . . . . . . . . . 26 SUMMARY HISTORICAL FINANCIAL INFORMATION . . . . . . . . . . . 28 PRO FORMA FINANCIAL DATA . . . . . . . . . . . . . . . . . . . 29 NOTES TO PRO FORMA FINANCIAL STATEMENTS DECEMBER 31, 1995 AND JUNE 30, 1996. . . . . . . . . . . . . . 36 INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . 37 AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . 37 INDEX TO FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . 38 ANNEX A: APPRAISAL OF PELICAN SOUND APPRAISAL Pelican Sound A 379-Unit Apartment Complex 10200 Gandy Boulevard St. Petersburg, Florida 33702 PREPARED FOR Mr. Michael Sweet Decade 250 Patrick Boulevard, Suite 140 Brookfield, Wisconsin 53045-5864 EFFECTIVE DATE August 28, 1996 TYPE OF REPORT Complete, Self-contained BY Robert E. Riggins, SRA, MAI State-certified general real estate appraiser #0000605 William W. Atkinson, MAI State-certified general real estate appraiser #0001221 RIGGINS, ATKINSON, COMBS & ASSOCIATES, INC. 18840 U.S. HIGHWAY 19 NORTH, SUITE 401 CLEARWATER, FLORIDA 34624 (813) 530-9793 08962310 September 12, 1996 Mr. Michael Sweet Decade 250 Patrick Boulevard, Suite 140 Brookfield, Wisconsin 53045-5864 Re: Appraisal Report Pelican Sound A 379-Unit Apartment Complex 10200 Gandy Boulevard St. Petersburg, Florida 33702 Dear Mr. Sweet: As requested, we have prepared an appraisal of the above captioned property. The purpose of the appraisal is to estimate the market value of the subject property, as of the effective date of August 28, 1996. Market value is defined on page 3 of the text. This appraisal reflects or addresses any significant information known to this appraiser which may materially alter the "as is" nature of the appraisal. The subject property is a 379-unit apartment complex, known as the Pelican Sound apartments. The complex, which was constructed in 1988, features one and two bedroom apartment units in two- story and three-story walk-up garden style buildings. Amenities include a clubhouse with leasing office and fitness facility, a swimming pool and spa, and tennis courts. The construction quality of the apartment complex is average to good cost and has been maintained in above average condition. The total rentable area of the buildings is 260,867 square feet. The subject site is an irregular shaped parcel located on the south side of Gandy Boulevard, east of the intersection with 4th Street in the city of St. Petersburg. The site has about 1,327 feet of road frontage. Ingress and egress is adequately provided. The total area of the site is 1,375,991 square feet or 31.59 acres. 08962310 Mr. Michael Sweet September 12, 1996 Page Two of Two It is the intent of this appraisal to be in compliance with the regulations governing federally regulated financial institutions and the Uniform Standards of Professional Appraisal Practice as adopted by the Appraisal Institute, as read and interpreted by this office. The following report contains the data, analysis, assumption and limiting conditions on which we have based our value conclusions. Your attention is directed to the "general assumptions and limiting conditions" and the "certificate of appraisal" which are considered typical for this type of assignment and have been included within the text of this report. The fee simple market value of the property described herein, subject to the assumptions and limiting conditions as set forth, as of August 28, 1996, in "as is" condition, is estimated to be: FOURTEEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($14,250,000) INCLUDING DEPRECIATED VALUE OF APPLIANCES FIVE HUNDRED FIFTY THOUSAND DOLLARS ($550,000) REAL PROPERTY THIRTEEN MILLION SEVEN HUNDRED THOUSAND DOLLARS ($13,700,000) Respectfully submitted: _____________________________ ________________________________ Robert E. Riggins MAI, SRA William W. Atkinson, MAI President Vice President State-certified general real State-certified general real estate appraiser #0000605 estate appraiser #0001221 Summary of Important Facts and Conclusions Property Location: Property located on the south side of Gandy Boulevard, east of the intersection with 4th Street, mailing address - 10200 Gandy Boulevard, St. Petersburg, Florida 33702 Owner of Record: Decade Companies Income Properties, Ltd. Property Rights Appraised: Fee Simple Estate Date of Valuation: August 28, 1996 Improvements: A 379-unit, average to good quality apartment complex that was constructed in 1988, known as the Pelican Sound Apartments - Amenities include a clubhouse with leasing office and fitness facility, a swimming pool and spa, and tennis courts Land Area: 1,375,991 square feet or 31.59 Acres Zoning and Land Use: RO-P (Residential Office Parkway) under the jurisdiction of the City of St. Petersburg - Comprehensive Land Use Plan, RO (Residential/ Office General) Highest and Best Use: As Though Vacant: A 379-unit good quality apartment development As Though Improved: Continue use as a 379-unit apartment complex Valuation Summary: Estimated Land Value: $ 2,500,000 Value by the Cost Approach: $14,500,000 Value by the Sales Comparison Approach: $14,300,000 Value by the Income Capitalization Approach: $14,200,000 Final Estimate of Value: "As Is" - Fee Simple: $14,250,000 Marketing Time: 6 Months SUBJECT PHOTOGRAPHS VIEW OF APARTMENT BUILDING AND PARKING AREAS - FACING SOUTHWEST VIEW OF CLUBHOUSE - FACING SOUTHEAST Table Of Contents Cover Page Letter Of Transmittal Summary Of Important Facts And Conclusions Subject Photographs Introduction Page PURPOSE AND DATE OF APPRAISAL. . . . . . . . . . . . . . . . . 1 FUNCTION OF THE APPRAISAL. . . . . . . . . . . . . . . . . . . 1 INTEREST APPRAISED . . . . . . . . . . . . . . . . . . . . . . 1 SCOPE OF THE APPRAISAL . . . . . . . . . . . . . . . . . . . . 1 DEFINITION OF MARKET VALUE . . . . . . . . . . . . . . . . . . 2 DEFINITION OF FEE SIMPLE OWNERSHIP . . . . . . . . . . . . . . 3 IDENTIFICATION OF THE SUBJECT PROPERTY . . . . . . . . . . . . 3 ZONING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 FLOOD INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 4 LEGAL DESCRIPTION. . . . . . . . . . . . . . . . . . . . . . . 4 TAX INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . 4 SALES HISTORY. . . . . . . . . . . . . . . . . . . . . . . . . 4 HIDDEN CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . 5 TAMPA BAY AREA ANALYSIS. . . . . . . . . . . . . . . . . . . . 6 TAMPA BAY AREA . . . . . . . . . . . . . . . . . . . . . . . . 6 NEIGHBORHOOD DESCRIPTION . . . . . . . . . . . . . . . . . . . 14 SITE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 IMPROVEMENT DESCRIPTION. . . . . . . . . . . . . . . . . . . . 23 HIGHEST AND BEST USE . . . . . . . . . . . . . . . . . . . . . 28 THE VALUATION PROCESS. . . . . . . . . . . . . . . . . . . . . 32 THE COST APPROACH. . . . . . . . . . . . . . . . . . . . . . . 33 COMPARABLE LAND SALES. . . . . . . . . . . . . . . . . . . . . 41 EXPLANATION OF ADJUSTMENTS . . . . . . . . . . . . . . . . . . 44 CORRELATION AND CONCLUSION . . . . . . . . . . . . . . . . . . 45 REPLACEMENT COST OF IMPROVEMENTS . . . . . . . . . . . . . . . 47 IMPACT FEES. . . . . . . . . . . . . . . . . . . . . . . . . . 47 DEVELOPER (ENTREPRENEURIAL) OVERHEAD AND PROFIT. . . . . . . . 47 DEPRECIATION . . . . . . . . . . . . . . . . . . . . . . . . . 48 Physical Depreciation. . . . . . . . . . . . . . . . . . . . . 48 SUMMARY OF THE COST APPROACH . . . . . . . . . . . . . . . . . 50 THE SALES COMPARISON APPROACH. . . . . . . . . . . . . . . . . 51 IMPROVED COMPARABLE NO. 1. . . . . . . . . . . . . . . . . . . 52 IMPROVED COMPARABLE NO. 2. . . . . . . . . . . . . . . . . . . 54 IMPROVED COMPARABLE NO. 3. . . . . . . . . . . . . . . . . . . 56 IMPROVED COMPARABLE COMPARISON CHART . . . . . . . . . . . . . 63 EXPLANATION OF ADJUSTMENTS . . . . . . . . . . . . . . . . . . 65 CORRELATION AND CONCLUSION . . . . . . . . . . . . . . . . . . 66 THE INCOME CAPITALIZATION APPROACH . . . . . . . . . . . . . . 69 ESTIMATE OF MARKET RENT. . . . . . . . . . . . . . . . . . . . 69 RENT COMPARABLE. . . . . . . . . . . . . . . . . . . . . . . . 70 Comparable Rent Analysis . . . . . . . . . . . . . . . . . . . 76 Comparable Rent Analysis . . . . . . . . . . . . . . . . . . . 77 Comparable Rent Analysis . . . . . . . . . . . . . . . . . . . 78 Comparable Rent Analysis . . . . . . . . . . . . . . . . . . . 79 ANALYSIS OF OPERATING HISTORY. . . . . . . . . . . . . . . . . 83 DIRECT CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . 85 BAND OF INVESTMENT . . . . . . . . . . . . . . . . . . . . . . 85 DEBT COVERAGE RATIO. . . . . . . . . . . . . . . . . . . . . . 86 SUMMARY OF THE DIRECT CAPITALIZATION APPROACH. . . . . . . . . 87 Discounted Cash Flow Analysis: . . . . . . . . . . . . . . . . 88 MULTIFAMILY INCOME PROFORMA. . . . . . . . . . . . . . . . . . 90 Summary of the Income Capitalization Approach. . . . . . . . . 93 RECAPITULATION AND FINAL RECONCILIATION. . . . . . . . . . . . 95 ESTIMATED MARKETING TIME . . . . . . . . . . . . . . . . . . . 97 CERTIFICATE OF APPRAISAL . . . . . . . . . . . . . . . . . . . 98 ASSUMPTIONS AND LIMITING CONDITIONS. . . . . . . . . . . . . . 99 Purpose and Date of Appraisal . . . . . . . . . . . . . . 1 Function of the Appraisal . . . . . . . . . . . . . . . . 1 Interest Appraised. . . . . . . . . . . . . . . . . . . . 1 Scope of The Appraisal. . . . . . . . . . . . . . . . . . 1 Definition of Market Value. . . . . . . . . . . . . . . . 3 Definition Of Fee Simple Ownership. . . . . . . . . . . . 4 Identification of the Subject Property. . . . . . . . . . 4 Zoning. . . . . . . . . . . . . . . . . . . . . . . . . . 4 Flood Information . . . . . . . . . . . . . . . . . . . . 5 Legal Description . . . . . . . . . . . . . . . . . . . . 5 Tax Information . . . . . . . . . . . . . . . . . . . . . 5 Sales History . . . . . . . . . . . . . . . . . . . . . . 6 Hidden Conditions . . . . . . . . . . . . . . . . . . . . 6 Descriptive Analysis Tampa Bay Area Analysis . . . . . . . . . . . . . . . . . 7 Neighborhood Analysis . . . . . . . . . . . . . . . . . . 17 Site Analysis . . . . . . . . . . . . . . . . . . . . . . 22 Improvement Description . . . . . . . . . . . . . . . . . 28 Highest And Best Use. . . . . . . . . . . . . . . . . . . 33 Valuation Analysis The Valuation Process . . . . . . . . . . . . . . . . . . 39 The Cost Approach . . . . . . . . . . . . . . . . . . . . 41 Comparable Land Sales . . . . . . . . . . . . . . . . . . 52 Comparable Sales Comparison Chart . . . . . . . . . . . . 53 Explanation of Adjustments. . . . . . . . . . . . . . . . 54 Correlation and Conclusion. . . . . . . . . . . . . . . . 56 Replacement Cost Of Improvements. . . . . . . . . . . . . 58 Impact Fees . . . . . . . . . . . . . . . . . . . . . . . 58 Developer Overhead and Profit . . . . . . . . . . . . . . 59 Depreciation. . . . . . . . . . . . . . . . . . . . . . . 59 Physical Depreciation . . . . . . . . . . . . . . . . . . 60 Summary of the Cost Approach. . . . . . . . . . . . . . . 63 The Sales Comparison Approach . . . . . . . . . . . . . . 64 Improved Comparables. . . . . . . . . . . . . . . . . . . 65 Improved Comparable Comparison Chart. . . . . . . . . . . 81 Explanation of Adjustments. . . . . . . . . . . . . . . . 82 Correlation and Conclusion. . . . . . . . . . . . . . . . 84 The Income Capitalization Approach. . . . . . . . . . . . 87 Estimate of Market Rent . . . . . . . . . . . . . . . . . 87 Rent Comparables. . . . . . . . . . . . . . . . . . . . . 88 Comparable Rent Analysis. . . . . . . . . . . . . . . . . 99 Analysis of Operating History . . . . . . . . . . . . . 100 Direct Capitalization . . . . . . . . . . . . . . . . . 102 Band of Investment. . . . . . . . . . . . . . . . . . . 102 Debt Coverage Ratio . . . . . . . . . . . . . . . . . . 103 Summary of the Direct Capitalization Approach . . . . . .105 cADiscounted Cash Flow Analysis:. . . . . . . . . . . . .106 Multi-family Income Proforma. . . . . . . . . . . . . . .108 Summary of the Income Capitalization Approach . . . . . .110 Recapitulation and Final Reconciliation . . . . . . . . .111 Estimated Marketing Time. . . . . . . . . . . . . . . . .114 Certificate of Appraisal. . . . . . . . . . . . . . . . .115 Assumptions and Limiting Conditions . . . . . . . . . . .117 Addendum Flood Plain Map Supplemental Subject Photographs Zoning Regulations Legal Description Rent Roll Income Statement Qualifications of Appraisers APPRAISAL REPORT Pelican Sound A 379-Unit Apartment Complex 10200 Gandy Boulevard St. Petersburg, Florida 33702 PURPOSE AND DATE OF APPRAISAL: The purpose of this appraisal is to estimate the market value of the fee simple interest in the property described herein, as of August 28, 1996, in "as is" condition. FUNCTION OF THE APPRAISAL: This appraisal report is to assist the client in a presentation to the stockholders. This appraisal reflects or addresses any significant information known to this appraiser which may materially alter the nature of the appraisal. INTEREST APPRAISED: The fee simple interest in the property described herein has been appraised. Liens and encumbrances, if not described, are unknown and the property has been analyzed as if free and clear. SCOPE OF THE APPRAISAL: A physical inspection of the subject property was made on August 28, 1996. The inspection of the property was made with the assistance of Pamela Olcott, Property Manager and Wayne Shaw, Regional Manager. Documentation supplied for the subject property included a two and a half year operating income history and a current rent roll. All of the improved structures were physically inspected from the exterior. Interior inspections were made of the leasing office, laundry/maintenance room, and a sample of 5 apartment units. Public records were reviewed for additional information on the subject property. Once a physical inspection was completed, the economic conditions of the region and neighborhood were investigated and analyzed in relation to the relevant factors which effect the market value of the subject. The cost approach, sales comparison approach, and income capitalization approach were used to evaluate the relevant factors and estimate the market value of the subject. The time period for which comparable market data was investigated was from January 1993 to the present. Data sources used to collect comparable market information include Redi, Ulticomp, Realtron, MetroScan, public records, and internal appraisal files. The cost approach is derived by estimating the value of the land and the depreciated replacement cost of the improvements. The primary factors which were considered in the search for comparable land sales were the highest and best use, the date of sale, and the location. All of the land comparables were researched, physically inspected, and confirmed with a knowledgeable source. Both Pinellas and Hillsborough Counties were searched for land comparables. Land sales in Pinellas County were limited due to the dense development in the area and the limited supply of vacant land. The replacement cost of the improvements was estimated using Marshall Valuation Service. Depreciation applicable to the improvements was estimated based on a comparison of other structures in the neighborhood. The sales comparison approach values the subject property by comparing it to similar sales in the market area. The primary factors which were considered in the search for improved comparables were age and quality of the properties, the date of sale, and the location. All of the improved comparables were researched using public records, physically inspected, and confirmed with a knowledgeable source. The search for improved comparables was limited to Pinellas County. The income capitalization approach estimates the value of the subject by dividing net operating income by a capitalization rate and estimating future cash flows and applying an appropriate discount rate. Net operating income is derived by estimating the gross potential income of the subject and then deducting for vacancy, collection loss and operating expenses. The gross potential income for the subject was derived using rent comparables. The primary factors which were considered in the search for rent comparables was the age and quality of the properties and the location. All of the rent comparables were researched using public records, physically inspected, and surveyed with a knowledgeable source. All of the rent comparables were located in the immediate subject neighborhood. Vacancy, collection loss, and expenses were supported by the rent comparables, as well as, the improved comparables. The capitalization rate was derived using comparable sales, the band of investment and the debt coverage ratio. This narrative report describes the valuation problem and contains data, analysis, assumptions and limiting conditions upon which value conclusions have been based. It is the intent of this appraisal to be in compliance with the regulations governing federally regulated financial institutions and the Uniform Standards of Professional Appraisal Practice as adopted by the Appraisal Institute, and as read and interpreted. DEFINITION OF MARKET VALUE: "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. buyer and seller are typically motivated; 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 United States 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. Important factors affecting market value include the time element, neighborhood and economic changes, as well as anticipation thereof. Market prices do not necessarily follow all of these concepts and are often affected by salesmanship and the urgency and need of the buyer and/or the seller. The essential difference between market price and market value lies in the premises of intelligence, knowledge and willingness, all of which are contemplated in market value but not in market price. The market value of the property appraised in this report is estimated as of the date shown in the certificate of appraisal. Constantly changing economic conditions have varying effects upon real property values. Even after the passage of a relatively short period, property values may change substantially and require a review of the appraisal and recertification. DEFINITION OF FEE SIMPLE OWNERSHIP: "A fee simple estate implies absolute ownership unencumbered by any other interest or estate. Partial interests in real estate are created by selling, leasing, or otherwise limiting the bundle of rights in a fee simple estate. Partial estates include leased fee and leasehold estates." IDENTIFICATION OF THE SUBJECT PROPERTY The subject property is a 379-unit apartment complex, known as the Pelican Sound apartments. The complex, which was constructed in 1988, features one and two bedroom apartment units in two- story and three-story walk-up garden style buildings. Amenities include a clubhouse with leasing office and fitness facility, a swimming pool and spa, and tennis courts. The construction quality of the apartment complex is average to good cost and has been maintained in above average condition. The total rentable area of the buildings is 260,867 square feet. The subject site is an irregular shaped parcel located on the south side of Gandy Boulevard, east of the intersection with 4th Street in the city of St. Petersburg. The site has about 1,327 feet of road frontage. Ingress and egress is adequately provided. The total area of the site is 1,375,991 square feet or 31.59 acres. ZONING: The subject site is zoned RO-P (Residential Office Parkway) under the jurisdiction of the City of St. Petersburg. Under the comprehensive land use plan, the subject has a land use of RO (Residential/Office General). The zoning classification and land use for the subject are compatible. The RO-P zoning district is intended to permit either residential or office, or a compatible mixture of these uses, at medium intensity or density of 12 units per acre for multiple use but with density up to 15 units per acre obtainable through utilization of Transfer of Development Rights. Several of the permitted principal uses and structures include multiple family development, special residential development, boarding and rooming houses, community residential homes, offices, churches, public parks, financial institutions, parking lots, motels and hotels, academic schools, and bed and breakfast homes. The subject property is developed at a density of 12.00 units per acre and appears to conform to the current zoning and land use. FLOOD INFORMATION: The subject property is located in flood zone A9. Flood zone information was determined by F.I.R.M. community panel number 125139 0207C, dated June 1, 1983. An A9 zone is defined as areas of 100-year flood; base flood elevations and flood hazard factors determined. Insurance is required for improved structures within an A9 zone. A copy of the flood map may be found at the addendum of this report. LEGAL DESCRIPTION: A tract of land in Sections 18 and 19, Township 30 South, Range 17 East, Pinellas County, Florida, being more particularly described at the addendum of the report. The legal description for the subject was supplied by the client and is assumed to be correct. No guarantee is made as to the accuracy of the legal description. TAX INFORMATION: Census Tract: 244.05 Parcel Numbers: 19-30-17-68290-001-0010 Owner of Record: Decade Companies Income Properties, Ltd. 1995 Tax Valuation: $11,576,000 Millage Rate: 26.1279 1995 Gross Tax: $302,456.57 (1995 Taxes - Paid) In review of the appraised value for the subject property, the assessed value appears to be within an acceptable range. An analysis of the tax assessment and tax comparables may be found in the income capitalization approach section of the report. SALES HISTORY: A search of Pinellas County Public Records revealed one transaction involving the subject property within the last five years. Decade Companies Income Properties, Ltd. purchased the subject property in December of 1993 for $12,000,000 . The Warrantee Deed is recorded in Pinellas County Official Record Book 8495, Page 1097. The sale was reportedly caused by threat of foreclosure and the price is not considered to reflect current market value of the subject. To our knowledge the subject property is not currently on the market for sale. HIDDEN CONDITIONS: The appraiser assumes that there are no hidden or unapparent conditions of the property, subsoil or structures which would render it more or less valuable than otherwise apparently comparable property. The appraiser assumes no responsibility for such conditions or for engineering which might be required to discover such conditions. TAMPA BAY AREA ANALYSIS TAMPA BAY AREA: The Tampa Bay Area is located on the west coast of Florida, midway up the Florida peninsula. The Tampa Bay Comprehensive Planning District 8 is geographically defined as Hillsborough, Manatee, Pasco and Pinellas Counties, which contain a total of 2,818 square miles. The primary concentration of development has taken place around Tampa Bay and along the Gulf coast. The major cities in the area are Tampa in Hillsborough County, and St. Petersburg and Clearwater in Pinellas County. The region is blessed with a moderate climate with an average minimum temperature of 48 degrees in January and an average maximum temperature of 89 degrees in July. The average annual rainfall is 56 inches, the majority of which falls in the summer months. POPULATION: The current population of the region is estimated at 2,311,198 (1995). The region has experienced a dramatic increase in population since 1970, with a total increase of 44.9% between 1970 and 1980. Population growth has slowed somewhat since 1980, with an increase of 26.8% between 1980 and 1990, or approximately 46,000 new residents annually. Total growth in 1990-1995, however, was only 132,647, or 26,529 annually. POPULATION STATISTICS
Annual % Change 1980 1990 1995 80-90 90-95 20000* Hillsborough 646,960 834,054 892,299 2.6% 1.4% 962,229 Manatee 148,445 211,707 232,700 3.6% 1.9% 257,404 Pasco 193,661 281,131 306,401 3.8% 1.7% 340,101 Pinellas 728,531 851,659 879,798 1.6% 0.7% 919,497 District 8 1,717,576 2,178,551 2,311,198 2.4% 1.2% 2,479,231 * Population projections, University of Florida. Population growth during the 1970's was 3.8% on an annual basis. In the period 1980-1990, growth in the area dropped to 2.4% annually, in part due to the overall slowing of migration to the sunbelt. With the slowdown in the economy, growth since 1990 has been only 1.2% per year for the district. Growth is due primarily to net immigration rather than natural growth. Pinellas County has recorded the lowest percentage growth due to the dwindling supply of available land. Hillsborough County is the most populous county in the area and contains the largest city, Tampa. The second most populous county in the area is Pinellas, which is geographically the second smallest county in Florida. This makes Pinellas County the most densely populated county in Florida with over 3,122 residents per square mile. Pasco County exhibited the most dramatic growth since 1980 due to its emergence as a retirement area, and increases in employment opportunities, however, as with other counties, Pasco County growth has slowed considerably. The average age of the population for the region is 39 years, as compared to 36 years for the State of Florida. The average age for the counties are 43 years for Manatee, 33 years for Hillsborough, 48 years for Pasco, and 42 years for Pinellas. The more mature populations in Manatee, Pasco and Pinellas Counties are primarily due to their history as retirement areas. Recent years have shown a slight drop in average age due to the increase in office and manufacturing employment opportunities. This is particularly true of Pinellas County, where the retirement population is being replaced by younger, working age, families. There were 961,202 households in the District in 1994, which represents an average household size of 2.40. The average household size has decreased from 2.70 in 1970, in keeping with national trends. Based on historical growth patterns, this would equate to 19,450 new household formations annually. However, the slower growth in 1990-1995 equates to only 11,033 new household formations annually. This is reflected in the significant drop in new housing starts in recent years. Housing starts have shown a slight rebound in all counties in the years 1993, 1994 and 1995, due in part to lower interest rates. Population growth is expected to rebound somewhat as the general economy improves, however, it is unlikely to reach the level of growth experienced in the 1970's and 1980's. ECONOMIC BASE: Historically the economy has been tourist and retirement oriented in the coastal counties and manufacturing and commercially oriented in Hillsborough County. While this is still true today, Pinellas County has begun to attract a larger share of new businesses, particularly in the high tech industries. Tampa, however, remains the major economic hub of the area. Major factors affecting the economic growth in the area, apart from the retirement and tourist industries, are Tampa's deep water port, Tampa International Airport and the major highway arteries servicing the area. Tampa is a major break point between railroads, air, highway and water transport. The Port of Tampa handled 52.0 million short tons in 1990, with an additional 5.3 million short tons handled by Port Manatee. Ease of access through Tampa International Airport and the interstate highway system has made the area increasingly more attractive for corporate and regional headquarters facilities, as well as high tech industry. This has spurred additional growth in the service and construction industries. The completion of I-75 through the region opened new growth opportunities in Pasco, Hillsborough and Manatee Counties, however, due to the general slowdown in the economy, this growth has not yet materialized. Taxable retail sales in the Tampa Bay Area increased from $19,521 million in 1990 to $23,502 million in 1994. Retail sales levels are generally in line with the State of Florida, however they are above national levels. The high level of retail sales is in large part due to the tourist and part time resident trade. This same influence is evident in the area employment statistics. Total personal income has increased dramatically over the period from 1985 to 1995. In 1985 the total personal income for the area was $27,463 million. By 1995 this had increased to $51,327 million, an increase of 86.9%, or 6.45% annually. Per capita income increased at a slightly slower rate than Florida as a whole to a current level of $22,208, slightly below the Florida per capita income of $22,534. PER CAPITA PERSONAL INCOME % Change Annual % 1990 1994 1995 94-95 90-95 Hillsborough $17,264 $20,743 $21,155 2.0% 4.1% Manatee $18,525 $22,968 $22,636 -1.4% 4.1% Pasco $14,424 $16,573 $17,146 3.5% 3.5% Pinellas $21,881 $24,146 $24,725 2.4% 2.5% District 8 $18,825 $21,721 $22,208 2.2% 3.4% Florida $18,683 $21,890 $22,534 2.9% 3.8% Employment in the region reflects a broad based economy, although it is skewed somewhat to the retail trade and service industries. Agriculture and mining were instrumental in the early growth of the area but have declined substantially in recent years. Historically the unemployment rate, at 5.3% in 1995, has stayed below the national and state averages. LABOR FORCE AND EMPLOYMENT (1995) Labor Unempl. Force Employed Unemployed Rate Hillsborough 503,225 475,286 27,969 5.6% Manatee 109,176 104,711 4,465 4.1% Pasco 118,654 110,789 7,865 6.6% Pinellas 441,700 419,406 22,283 5.0% District 8 1,172,755 1,110,203 62,582 5.3% The current labor force for the District is 1,172,755 or 50.7% of the population. In 1982 the labor force was 717,916 or 41.8% of the population. Not only has there been a substantial increase in labor force, there has also been a dramatic increase in the percent of population employed. EMPLOYMENT DISTRIBUTION (1993) Percent Percent Industry Total Percent Florida US Agriculture 20,910 2.20% 2.80% 2.70% Mining 125 0.00% 0.10% 1.20% Construction 42,682 4.60% 5.20% 4.50% Manufacturing 95,427 10.30% 8.70% 20.00% Transport, Communic. 50,127 5.40% 5.90% 5.60% Wholesale Trade 51,372 5.50% 5.30% 5.80% Retail Trade 188,913 20.30% 20.90% 16.40% The comparison of the District distribution with the national distribution of employment illustrates the importance of the construction, retail sales and service sector in the local economy and in Florida. This is due, in large part, to the tourist and retirement influence in the area. Employment growth had kept pace with population growth, thus providing adequate job opportunities. Due to the favorable economic environment, the quality of life in the area and the strong economic base, the Tampa Bay area should continue to grow as a major economic center. The area has been successful and should continue to be successful in attracting new businesses. SOCIAL SERVICES: All normal governmental services are adequately provided throughout the region. Electrical power is provided by Florida Power Corporation in Pasco and Pinellas Counties, Florida Power and Light in Manatee County and by Tampa Electric Company, in Hillsborough County at rates comparable with other areas of Florida. Water, sewer, sanitation, police and fire protection are provided by the various county and municipal governments. Local tax rates are generally in line with other areas of the state. Due to past growth, particularly in Hillsborough, Pasco, and Pinellas, certain services have been sorely taxed. Limited water restrictions have been implemented throughout the area during dry periods. The interior road systems are inadequate in certain high growth areas. This problem has become more critical with the implementation of the Florida Growth Management Act, which requires infrastructure improvements to be made concurrent with growth. While these factors do not appear to have had a major impact on growth thus far, they are likely to become a major factor in future growth, particularly if growth returns to past levels. The area has long been noted as a retirement and vacation spot with its gulf beaches and attractions such as Busch Gardens, Disney World and Weeki Wachee Springs. Over the years, the area has also developed a number of other cultural and leisure activities including an NFL football team, an NHL hockey team, the Ruth Eckerd Hall in Clearwater, a number of smaller theaters and the Performing Arts Center in Tampa. A 200,000 square foot convention center has been constructed in downtown Tampa, along with a new hockey arena. A sports stadium has been constructed in downtown St. Petersburg, which has been awarded a new major league baseball franchise. Shopping is abundant and easily accessible to all areas. A number of major area malls are scattered throughout the area. These new cultural and leisure amenities have given the Tampa Bay area a much more cosmopolitan atmosphere, thus making the area much more attractive to both part time visitors and permanent residents. Educational opportunities are adequately provided in the area. Each county has a public school system providing education from kindergarten through the twelfth grade, as well as private schools. Higher education is provided by a number of institutions, both public and private, including St. Petersburg Junior College, University of South Florida, University of Tampa, Hillsborough Community College, Eckerd College and Stetson University. Health services are provided by 51 hospitals, with a total of 11,273 beds. There are approximately 5,184 licensed physicians serving the area. There is also a large number of nursing homes and care facilities serving the elderly population. CONCURRENCY: Concurrency laws were enacted in 1990, statewide. Concurrency is part of the 1985 Florida Growth Management Act which states in part that all infrastructures, which are, or will be affected by any proposed development, must be in place, prior to, or concurrent with development. In most municipalities, there are seven areas that affect concurrency. 1. Solid Waste 5. Transportation 2. Drainage 6. Parks and Recreation 3. Water 7. Mass Transportation 4. Sewer The major items of concurrency which normally affect most projects are sewers and roads. Sewers and roadway capacities are also generally the most expensive to build. Concurrency laws may require the developer to pave, widen, and/or construct existing or additional roads to carry the burden of the additional traffic generated by a proposed development. The developer may also have to participate in the cost of construction to increase the sewer capacity or may have to donate land to be used for parks and recreation. As a result of rapid development, a major concern in the area lies with the inability of the existing roads to keep up with vehicular traffic demands. Streets are rated "A" through "F". Streets in the county with severe traffic problems are labeled "F". Development on streets that are rated, or are approaching, an "F" rating could be significantly curtailed. All counties have major road construction programs underway to alleviate these problems, however, they are likely to persist, at least in the short run. HOUSING MARKET: The Housing Market remains stable in the Tampa Bay area, although sales of new homes have slowed from the high levels experienced during the high growth period of the 1970's. The most active housing markets in both single family and multi-family developments are northwest Hillsborough County, north Pinellas County, and south Pasco County. New housing starts over the period 1987-1992 experienced a steady decline due to slower population growth and over building. Housing starts in all counties stabilized in 1992, with an increase in construction activity in 1993 and 1994. Preliminary estimates for 1995 indicate a slight decrease in residential construction activity, however, preliminary estimates have historically been below actual figures. The extent of future improvement in housing production is dependent on the improvement of infrastructure, as mandated by the 1985 Growth Management Act, new job creation and population increases. However, it is unlikely that housing starts will return to the levels experienced in the 1970's and early 1980's. The following chart shows the housing starts through 1995 for all counties in the metropolitan area.
HOUSING STARTS
County 1989 1990 1991 1992 1993 1994 1995* Hillsborough SF 4,100 2,454 3,167 4,237 4,484 5,208 6,809 MF 2,162 2,837 1,243 506 695 2,340 Manatee SF 1,254 1,185 1,012 1,304 1,551 1,917 2,401 MF 1,273 1,118 801 381 239 272 Pasco SF 2,080 1,460 1,484 1,661 2,098 2,177 2,054 MF 326 81 127 174 123 239 Pinellas SF 2,423 1,960 1,961 2,602 2,398 2,426 3,326 MF 1,737 1,935 1,855 591 1,241 1,101 Total (by type) SF 9,857 7,059 7,624 9,804 10,531 1,728 MF 5,498 5,971 4,026 1,652 2,298 3,952 Total 15,355 13,030 11,650 11,456 12,829 15,680 14,590 Percent Change -20.26% -15.14% -10.59% -1.67% 11.98% 22.22% -6.95% * Preliminary est., breakdown between Single and Multi Family not available.
Inventories of new single-family homes are at reasonable levels in all four counties. All counties are beginning to experience a shortage of developed lots due to the recent increase in building activity. This is particularly true of Pinellas County due to the lack of developable land. This has caused an increase in demand in southern Pasco County. New single family detached construction is over a broad range of prices, generally from $75,000 to $300,000. The most active condominium market is in the $60,000 to $90,000 price range. The multi-family market has experienced an increase in new construction over the last 24 months, particularly in Hillsborough and Pinellas County, however, exact numbers are not available for 1995. Vacancy rates have stabilized in both Pinellas and Hillsborough County at approximately 5% to 8%. Rents have increased by approximately 3% to 5% per year. Absorption rates in most well designed and well located new projects are reported to be good. An emerging trend is the renovation or replacement of older residences in existing neighborhoods. This trend is particularly noticeable in Pinellas County and south Tampa where available land is in short supply. The overall housing market remains stable, although there is continuing softness in certain submarkets. The historic ability of the Tampa Bay area to absorb new housing units should continue to support new construction in the area. Current population growth would indicate 11,033 new household formations per year, which is reflected in production of new housing units. Steady increases in rental rates and continued strong apartment absorption rates would appear to indicate future improvement. SUMMARY: In summary, the Tampa Bay area currently provides all of the normal services required by a major metropolitan area. Although the tremendous growth over the last decade has strained some of the governmental services, there should be no detrimental effects on overall growth, at least in the short run. However, if infrastructure development is not provided, as required by the concurrency provisions of the Florida Growth Management Act, long term growth could be slowed. Sources: Florida Statistical Abstract Florida Trend Economic Yearbook The Maddux Report A more detailed analysis of the specific market in which the subject is located may be found in the following Neighborhood Analysis. While our analysis will consider the market as a whole, particular attention will be paid to the specific market of the subject. TAMPA BAY AREA REGIONAL LOCATION NEIGHBORHOOD DESCRIPTION The subject site is located on the south side of Gandy Boulevard, east of 4th Street North in the city of St. Petersburg. The boundaries of the neighborhood can be generally described as Interstate 275 to the north and west, 62nd Avenue North to the south, and Tampa Bay, a large body of water, to the east. The neighborhood boundaries encompass a large residential area which is primarily within the city limits of St. Petersburg. The improvements in the subject neighborhood contain a mixture of commercial and residential uses. The main traffic arteries are typically lined with commercial improvements, including offices, service stations, convenience stores, restaurants, service shops, auto sales/repair facilities, banks, and other commercial uses. The northwest portion of the neighborhood is developed with office, manufacturing and industrial type properties and the balance of the surrounding areas are primarily developed with residential properties. As with most older cities, St. Petersburg was developed using a grid system. As is typical with these older cities, the business district usually has a central location and the supporting residential development is at the surrounding areas. The central business district for the city of St. Petersburg is concentrated in the area were Central Avenue and Tampa Bay come together. Over the years commercial development has slowly expanded into the residential areas. In St. Petersburg all Avenue's travel in an east-west direction and all Street's travel in a north-south direction. The subject neighborhood is located approximately four miles northwest of the central business district. The major north-south arteries in the neighborhood are Interstate 275, 4th Street North, and 9th Street North. The major east-west arteries in the neighborhood are Roosevelt Boulevard, Gandy Boulevard and 62nd Avenue North. The roads are continuously maintained and provide reasonably good traffic flow to and through the neighborhood. The Howard Franklin Bridge (Interstate 275) and the Gandy Bridge (Gandy Boulevard) are two of four major roadways linking Pinellas and Hillsborough counties. Employment opportunities for the subject neighborhood are good. Industrial and manufacturing employment opportunities are located to the northwest of the subject neighborhood in the Gateway area and corporate employment opportunities are located to the south in the St. Petersburg central business district. Metropolitan downtown Tampa, is located within a 20 minute driving distance to the northeast, across Tampa Bay. Both the Gandy Bridge and the Howard Franklin Bridge provide direct access from the subject neighborhood the downtown Tampa. The St. Petersburg Clearwater International Airport is located about 2 miles northwest of the neighborhood and Tampa International is located within a fifteen minute driving distance to the northeast. A number of public parks, schools, and shopping centers are located conveniently throughout the neighborhood. Elementary schools servicing the area include Lynch, North Shore, Rio Vista, and Shore Acres. Middle schools include Meadowlawn and Riviera. The high school servicing the neighborhood is Northeast, which is located just south of the subject neighborhood at the northwest corner of 54th Avenue North and 16th Street North. Parks and recreational activities servicing the area include the Mangrove Bay Municipal Golf Course, Sawgrass Lake Park, and the Willis S. John Fossil Center. Derby Lane, a seasonal greyhound racing track, is located on Gandy Boulevard, east of 4th Street North. The Pinellas County Gulf beaches are located within a 20 to 30 minute driving distance to the west or southwest. Neighborhood shopping centers servicing the neighborhood include Gateway Crossing, anchored by Publix and Walgreens, Paragon Crossing, anchored by Winn Dixie, and Rutland Plaza, anchored by Winn Dixie and Eckerd's. Gateway Mall, a regional center, is located at the northeast corner of 9th Street North and 77th Avenue North and is anchored by J Byrons, Publix, and Scotty's. Single family dwellings account for about 40% of the residential development. The remaining residential development consists of multiple family dwellings, townhouses, condominium units, and mobile homes. The area is approximately 90% developed and improved properties are generally adequately maintained. Demand for residential properties in the subject neighborhood is in line with the current supply. Land for new residential development in the area is available but limited. The permanent population of the neighborhood is estimated at 18,274 as of 1990 and is up from 14,441 in 1980. The increase of 26.5% indicates an average annual compounded increase of about 2.4% over the 10 year period. The population growth in the area has continued to increase at a decreasing rate. The growth rate for the neighborhood will be slower due to the relatively large stable population base and the limited amount of vacant land available new residential development. The average age of the population in the neighborhood is around 30 to 40 years and the average household has income around $30,000 to $40,000. The population age and income levels are attributed to the good accessibility to employment and the young professional work-force which is attracted to the neighborhood. With the exception of the residential development east of 4th Street North with frontage on Tampa Bay or the canals or small bodies of water leading to Tampa Bay, the single family subdivisions in the neighborhood cater to the lower to moderate income levels. The single family subdivision are predominately located south of Gandy Boulevard and were constructed from the early 1960's to the early 1980's. The non-waterfront subdivisions have home prices from $30,000 to $120,000 and the waterfront subdivisions have home prices from $80,000 to $450,000. Most of the condominium development in the neighborhood took place in the middle 1970's. These developments were built as an alternative to traditional detached single family housing. Unit sale prices range from $30,000 to $50,000. These complexes generally feature one or two story garden style buildings and are well maintained in average condition for the area. Many of the condominium complexes feature covered parking, a swimming pool, and washer and dryer connections in the units. The rental housing units in the area range dramatically in size and age. The newer apartment complexes are generally located along Gandy Boulevard, 4th Street North or the east side of 9th Street North. These apartment properties are generally average to good quality, are from 200 to 600 units in size, and offer a good amenity package. The older vintage apartment complexes in the neighborhood are generally located south of Gandy Boulevard. These complexes are generally average quality, are usually smaller in size, and have locations on 4th Street North or are mixed with the residential development. A market investigation was conducted in the subject neighborhood and it indicated that there is good rental demand for apartment complexes. According to local apartment managers in the area, typical vacancy rates range from 0% to l0%. Monthly rents for one bedroom apartments are from $400 to $775 a unit, monthly rents for two bedroom apartments are from $500 to $950 a unit, and monthly rents for three bedroom apartments are from $600 to $1,100 a unit. Exclusive of reserves, expenses for the newer complexes range from 35% to 50% of effective gross income and the expenses for the older complexes range from 40% to 55%. Newer apartment complexes are developed at 200 units or greater in order to be financially feasible. Mobile home parks account for most of the remaining residential development in the neighborhood. Most of these mobile home parks are relatively small and offer minimal recreational facilities. Small retail and professional office properties in the neighborhood are concentrated on 4th Street North, south of Gandy Boulevard. Larger multiple tenant office buildings, manufacturing facilities, and industrial development is generally concentrated in the northwest portion of the neighborhood, which is a part of the Gateway area. The Koger Executive Center, another large concentration of large office buildings is located south of Gandy Boulevard, between 4th Street North and 9th Street North. The supply of retail and office properties on the market for sale or for lease is in excess of demand. Predominate net rental rates are between $6.00 and $12.00 a square foot and occupancy levels are generally from 80% to 95%. Most office and retail buildings in the area sell between $40.00 and $90.00 a square foot. Water, sewer and refuse service, as well as, police and fire protection are provided by the City of St. Petersburg. Florida Power Corporation provides electrical service to the area and General Telephone Company provides telephone service. In summary, the neighborhood is located in east-central Pinellas County, and encompasses a small portion of the city of St. Petersburg. The neighborhood has a large residential population base and is well supported by local commercial facilities and general employment centers. The area is well served by local utilities and governmental services. Recreational and social amenities, including schools and parks, are also abundant in the area. Vacant land is limited and existing properties are generally maintained in adequate condition. Real property values in the neighborhood have been relatively stable and should remain relatively stable in the future. NEIGHBORHOOD MAP SITE DESCRIPTION Location: The subject site is located on the south side of Gandy Boulevard about 1,000 feet east of the intersection with 4th Street in the city of St. Petersburg. The physical mailing address of the property is 10200 Gandy Boulevard, St. Petersburg, Florida 33702. Size and Shape: The subject site is an irregular shaped interior parcel with about 1,327 feet of road frontage on Gandy Boulevard. The depth ranges from about 790 feet to about 1,300 feet. The gross area of the site is 1,375,991 square feet or 31.59 acres. Topography and Drainage: The subject site is improved with a 379-unit apartment complex known as Pelican Sound apartments. As a result of development the terrain of the site is gently rolling. The parcel has a master drainage system with water retention ponds located at the central and western portions. Drainage for the site appears to be adequate. Southern, western, and eastern portions of the site appear to be wetland areas and are described on the site plan provided as mitigation areas. From the site plan we have estimated that about 25% of the site is wetland area. Based on the improvements to the site, the wetland area was allowed to be used in determining density. Easements, Encroachments, and Other Conditions: Based on the site plan provided and a physical inspection of the property, there were no adverse easements, encroachments or conditions observed. A 30 foot public underground utility easement runs in a north-south direction along the eastern portion of the site. Flood Information: The subject property is located in flood zone A9. Flood zone information was determined by F.I.R.M. community panel number 125139 0207C, dated June 1, 1983. An A9 zone is defined as areas of 100-year flood; base flood elevations and flood hazard factors determined. Insurance is required for improved structures within an A9 zone. Soil and Subsoil: No soil analysis was made available, however given the existing improvements to the site and surrounding properties, soil conditions would appear adequate for development. At the time of inspection, there were no unusual conditions observed on the site that would suggest the presence of soil contamination. An environmental analysis for the subject property is recommended in the event that one has not already been performed. Utilities and Services: Water: City of St. Petersburg Sewer: City of St. Petersburg Electricity: Florida Power Corporation Telephone: General Telephone Company Police: City of St. Petersburg Fire: City of St. Petersburg The cost of utilities and services are similar to competing areas within the Tampa Bay area. Street Improvements: Gandy Boulevard, in front of the subject site, a dividend road with masonry sidewalks and no curbs. Telephone and electric service in the area is pole mounted. Traffic counts taken in the location of the subject for 1995 estimate travel on Gandy Boulevard at 100,134 cars daily. Travel is by both local and transient traffic. The visibility of the site is good. Ingress/Egress: Access to the site is provided only by Gandy Boulevard, to the north. Access to Gandy Boulevard is available from 4th Street to the west. Ingress and egress for the site is adequate and is easily made from all traffic directions. Ingress and egress for the site appears to be adequate during peak traffic hours. Relationship to Surrounding Properties and Uses: The subject property is bordered to the west with Derby Lanes, a seasonal greyhound racing track. To the south the subject is bordered with waterfront single family homes. To the north and east the subject is bordered with mobile home parks, apartment complexes and general office, retail, and industrial development. The existing use of the subject site as improved with an apartment complex provides a good transition from commercial to residential development. Zoning: The subject site is zoned RO-P (Residential Office Parkway) under the jurisdiction of the City of St. Petersburg. Under the comprehensive land use plan, the subject has a land use of RO (Residential/Office General). The zoning classification and land use for the subject are compatible. The RO-P zoning district is intended to permit either residential or office, or a compatible mixture of these uses, at medium intensity or density of 12 units per acre for multiple use but with density up to 15 units per acre obtainable through utilization of Transfer of Development Rights. Several of the permitted principal uses and structures include multiple family development, special residential development, boarding and rooming houses, community residential homes, offices, churches, public parks, financial institutions, parking lots, motels and hotels, academic schools, and bed and breakfast homes. Concurrency: Concurrency laws in the state of Florida became active on January 1, 1990. Concurrency is part of the 1985 growth management act which states in part that all infra-structures, which are, or will be affected by the development of a property, will be in place, prior to, or concurrent with development. In most municipalities, there are seven areas that are affected concurrency. 1. Solid Waste 5. Transportation 2. Drainage 6. Parks and Recreation 3. Water 7. Mass Transportation 4. Sewer The major items of concurrency which normally affect most projects are sewers and/or roads. Sewers and roadway capacities are also generally the most expensive to build. Concurrency laws may require the developer to pave, widen, and/or construct existing or additional roads to carry the burden of the additional traffic, (vehicular trips) that the subject project will create. The developer may also have to participate in the cost of construction to increase the sewer capacity or may have to donate land to be used for parks and recreation. Based on conversations with the City of St. Petersburg, concurrency would appear to have no adverse influence on the subject property. Summary: In summary, the subject site is located on a primary thoroughfare in the city of St. Petersburg. The site is an irregular shaped interior parcel which is 31.59 acres in size. All necessary utilities are available to the site and the topography is gently rolling and drainage appears to be adequate. The site has about 1,327 feet of road frontage, good ingress and egress to major traffic arteries and good traffic visibility. The subject is bordered with a combination of residential development and general commercial and industrial development. The location of the subject site appears well suited for multiple family residential development. TAX MAP SITE PLAN IMPROVEMENT DESCRIPTION The subject is improved with twelve two-story or three-story garden style walk-up apartment buildings containing 379 units. Amenities include a clubhouse with leasing office and fitness facility, a swimming pool and spa, and tennis courts. The apartment buildings were constructed in 1988. The buildings are irregular in shape and uniformly arranged on the site with attention given to the small ponds or lakes. The clubhouse and pool are located in the northwestern portion of the complex and the tennis courts and maintenance buildings are located in the south-central portion of the complex. The construction quality of the apartment complex is average to good cost. The exterior walls are wood frame with masonite and brick siding. The roof designs are gable, constructed of a wood truss system with a waferboard deck and a composition shingle cover. Aluminum gutters and downspouts are provided. The foundation of the buildings are a reinforced concrete slab. Windows are aluminum single hung. Exterior doors are metal, wood with glass inserts, and sliding. Interior doors are hollow core. Covered entries are located at the front of each of the units. The total rentable area of the buildings is 260,867 square feet. For the purpose of this report, the rentable area includes exterior and common walls. The square foot sizes are based on the physical measurements taken at the time of inspection. The clubhouse is 2,063 square feet in size and the two maintenance structures are respectively 482 square feet and 148 square feet in size. Landscaping is mature and consists of full sod, small to large trees, and attractive shrubbery. The landscaped areas are well maintained and irrigated by a full sprinkler system which draws from City water. Parking, as well as, ingress and egress are concrete paved and maintained in adequate condition. There are 569 open parking spaces provided and all are located relatively close to the units. The apartment complex has 1.50 parking spaces for each unit, which is considered adequate. Two additional open parking areas are provided for overflow parking. The individual units in the complex are made up of four different type floor plans, two one-bedroom units, one-bedroom with a den unit, and a two-bedroom unit. The smallest of the floor plans is the one-bedroom one-bath Bay model. These units are 513 square feet in size and there are 128 located within the complex. The largest one-bedroom one-bath unit is the Cove model. The complex has 156 of these 713 square foot units. The next larger floor plan is a one-bedroom one-bath model with a den known as the Harbor. These units are 841 square feet in size and there are 27 located within the complex. The largest of the floor plans is the two bedroom two-bath Port Model. The complex has 68 of these 901 square foot units. All of the floor plans provide living rooms with dining areas, exterior storage closets and porches or balconies. All of rooms in each of the floor plans are adequate in size and appear to provide adequate functional utility. Units include a good amount of closet space. MODEL UNITS TYPE SIZE Bay 128 3Rm/1Br/1Bth 513 Cove 156 3Rm/1Br/1Bth 713 Harbor 27 4Rm/1Br/1Bth 841 Port 68 4Rm/2Br/2Bth 901 --- ------------ ------- Total 379 1,232 Rooms 260,867 Weighted Average Unit Size = 688 Square Feet Unit interiors are of average quality construction. The floors are covered with average quality ceramic tile, carpet and vinyl. The ceramic tile areas are located at the foyers and the vinyl areas are located at the kitchens and baths. All of the units have water heaters, 125 amp electrical panels and central air systems. Standard equipment includes a refrigerator, a range/oven with a hood fan, a dishwasher, a disposal, washer and dryer, and monitored security system. Units are individually metered for electrical service and have telephone and cable television hook- ups. On August 28, 1996, the date of inspection, the apartment complex had about 11 vacant units, but typically maintains a vacancy rate of roughly 6%. All of the vacant units were reported to be in rentable condition. The current asking rent is $490 to $505 a month for the Bay units, $565 to $590 a month for the cove units, $640 to $665 a month for the Harbor units, and $710 to $735 a month for the Port units. Rent premiums are charged view amenities. Tenants are responsible for payment of electric, telephone and cable television service. As is typical, the services included in the rental rates are water, sewage, and trash removal. As is common with apartment complexes the size of the subject, the subject is professionally managed. Employees consist of a property manager, an assistant manager, leasing agents, a maintenance supervisor, maintenance assistants, a grounds keeper, and a housekeeper. The subject complex has three nonrevenue producing units which are used as models. The property manager receives compensation in lieu of the use of a two-bedroom unit free of charge. Four carpenters are currently employed by the complex on a temporary basis to replace the untreated wood around all of the balconies with new pressure treated wood. It was reported that $100,000 was budgeted in 1996 to replace the wood around the balconies and is about half way completed. The subject property is well maintained in average condition with no signs of items which are in need of immediate repair. As is typical with large wood frame apartment complexes, some minor signs of exterior wood rot were observed at the time of inspection. Roofs and exterior paint appear to be in good condition. The unit interiors and appliances are generally maintained on a continual basis. The subject is an average to good cost quality apartment complex that was constructed in 1988. In comparison to competing rental properties, the condition of the subject property is slightly above average. The Marshall Valuation Service, a national cost estimate company, indicates properties such as the subject have total lives of approximately 50 years. Based on an observation of other structures in the neighborhood, a physical life of 50 years would appear reasonable. In further observation of other structures in the neighborhood, the effective age of the subject has been estimated to be equal with actual at 8 years with a remaining life estimated at 42 years. Due to the age of the improvements, the presence of hazardous materials used in the construction, such as asbestos, is less likely. No environmental audit has been made available. In summary, the Pelican Sound apartments is an average to good cost quality apartment complex. In comparison to competing rental properties, the subject is in slightly above average condition. The unit mix, apartment sizes, and layout are well suited to the rental market. The complex is architecturally attractive and offers an average amenity package. CLUBHOUSE/POOL FACILITY UNIT FLOOR PLANS HIGHEST AND BEST USE Highest and best use is defined as: "The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value." In appraisal practice, the concept of highest and best use is the premise upon which value is based. The highest and best use analysis studies the economic market forces and identifies the most profitable and competitive use to which a property can be put. The highest and best use analysis first considers the site as though vacant. If the site is improved, the highest and best use analysis also considers the property as improved. The highest and best use of the land as if vacant may not be the same as the highest and best use of the property as improved. The use of the property as improved will continue as the highest and best use, as long as the value of the improved property exceeds the value of the vacant site. "Highest and best use of land or a site as though vacant assumes that the parcel of land is vacant or can be made vacant by demolishing any improvements." The highest and best use as though vacant will determine a use for the site, the type of improvements, and when improvements should be made. The highest and best use of the site as vacant is useful for identifying comparable land sales, as well as estimating a separate land value, which is fundamental for the cost approach. "Highest and best use of a property as improved pertains to the use that should be made of an improved property in light of its improvements." The highest and best use of a property as improved will determine whether the improvements should be maintained, adapted, or raised. The purpose of the highest and best use of the property as improved is to determine the use expected to produce the greatest value and assist in the selection of improved comparable sales. There are four criteria used in analyzing the highest and best use of both the land as though vacant and the property as improved. The highest and best use must be: 1. Physically Possible; 2. Legally Permissible; 3. Financially Feasible; 4. Maximally Productive. Highest and Best Use as Though Vacant Physically Possible Physically possible uses are those uses that can be physically put on the subject site. These uses change with the size, shape, soil, and terrain of the property. This test also considers whether public utilities are available to the site. The subject site is located on the south side of Gandy Boulevard about 1,000 feet east of the intersection with 4th Street in the city of St. Petersburg. The site is an irregular shaped interior parcel with about 1,327 feet of road frontage on Gandy Boulevard. The depth ranges from about 790 feet to about 1,300 feet. The gross area of the site is 1,375,991 square feet or 31.59 acres. Drainage for the site appears to be adequate. Southern, western, and eastern portions of the site appear to be wetland areas and are described on the site plan provided as mitigation areas. From the site plan we have estimated that about 25% of the site is wetland area. Based on the improvements to the site, the wetland area was allowed to be used in determining density. Based on the site plan provided and a physical inspection of the property, there were no adverse easements, encroachments or conditions observed. A 30 foot public underground utility easement runs in a north-south direction along the eastern portion of the site. The subject property is located in flood zone A9. Flood zone information was determined by F.I.R.M. community panel number 125139 0207C, dated June 1, 1983. An A9 zone is defined as areas of 100-year flood; base flood elevations and flood hazard factors determined. Insurance is required for improved structures within an A9 zone. No soil analysis was made available, however given the existing improvements to the site and surrounding properties, soil conditions would appear adequate for development. At the time of inspection, there were no unusual conditions observed on the site that would suggest the presence of soil contamination. An environmental analysis for the subject property is recommended in the event that one has not already been performed. The subject site is serviced by all typical urban utilities. Electrical service is provided by the Florida Power Corporation, public water and sewer service is provided by the City of St. Petersburg, and telephone service is provided by General Telephone Company. Police and fire protection are provided by the City of St. Petersburg. Electrical service, street lights and telephone service in the area are pole mounted. All services provided to the subject site are underground. Considering the size, shape, and topography of the site and the availability of utilities, many uses could be physically built on the site. Legally Permissible Legally permissible uses are those uses which are legally allowed on the subject site. These uses vary with the type of zoning, building codes, deed restrictions, and environmental restrictions imposed on the subject site. The subject site is zoned RO-P (Residential Office Parkway) under the jurisdiction of the City of St. Petersburg. Under the comprehensive land use plan, the subject has a land use of RO (Residential/Office General). The zoning classification and land use for the subject are compatible. The RO-P zoning district is intended to permit either residential or office, or a compatible mixture of these uses, at-medium intensity or density of 12 units per acre for multiple use but with density up to 15 units per acre obtainable through utilization of Transfer of Development Rights. Several of the permitted principal uses and structures include multiple family development, special residential development, boarding and rooming houses, community residential homes, offices, churches, public parks, financial institutions, parking lots, motels and hotels, academic schools, and bed and breakfast homes. The recent enactment of Concurrency Laws in the state of Florida, which became effective January 1, 1990, can directly impact on the use of a site. Concurrency is part of the 1985 Growth Management Act, which states in part that all of an area's infrastructure which are or will be affected by the development of a property must be in place or concurrent with development and must be adequate. Concurrency appears to have no adverse influence on the subject property. Based on the physical and legal characteristics of the subject property it would appear as though several types of residential development would be both physically possible and legally permissible. A change in zoning to a commercial or industrial use would be unlikely. Given that the subject site is 31.59 acres in size, the subject site could legally and physically accommodate up to 379 apartment units. Condominium, townhouse, and single family subdivision development would be less likely due to the bordering commercial and multiple family development. In addition to complying with the density requirements, all four uses would also appear to comply with building setbacks, the building coverage ratio, open areas, parking areas, and driveway requirements. Financially Feasible The test of financially feasible considers those uses which are both physically possible and legally permissible. It determines among them; which uses, if any, would generate a positive return to the property. A return is positive if the income of the property is greater than the property's operating expenses, financial expenses and capital amortization. A market investigation was conducted in the subject neighborhood and it indicated that there is good rental demand for apartment complexes. According to local apartment managers in the area, typical vacancy rates range from 0% to 10%. Monthly rents for one bedroom apartments are from $400 to $775 a unit, monthly rents for two bedroom apartments are from $500 to $950 a unit, and monthly rents for three bedroom apartments are from $600 to $1,100 a unit. Exclusive of reserves, expenses for the newer complexes range from 35% to 50% of effective gross income and the expenses for the older complexes range from 40% to 55%. Newer apartment complexes are developed at 200 units or greater in order to be financially feasible. Gandy Boulevard, in front of the subject site, a divided road with masonry sidewalks and no curbs. Telephone and electric service in the area is pole mounted. Traffic counts taken in the location of the subject for 1995 estimate travel on Gandy Boulevard at 100,134 cars daily. Travel is by both local and transient traffic. The visibility of the site is good. Access to the site is provided only by Gandy Boulevard, to the north. Access to Gandy Boulevard is available from 4th Street to the west. Ingress and egress for the site is adequate and is easily made from all traffic directions. Ingress and egress for the site appears to be adequate during peak traffic hours. The subject property is bordered to the west with Derby Lanes, a seasonal greyhound racing track. To the south the subject is bordered with waterfront single family homes. To the north and east the subject is bordered with mobile home parks, apartment complexes and general office, retail, and industrial development. Given that current occupancy and rental rates for apartment complexes are at reasonable levels, development of the subject site with an apartment complex would appear to provide a positive return. Maximally Productive Among the financially feasible uses, the use which provides the highest rate of return or value is the use which is maximally productive. Thus, is the highest and best use of the property. A market investigation indicated that most multiple family land in Pinellas County was developed at or very near maximum density. Most of the new multiple family development is for good quality apartment complexes. Absorption rates for these new developments are generally from 30 to 40 units a month. Also noted was that these developments had good recreational amenities and attractive landscaping. Therefore, the Highest and Best Use of the site "as if vacant" would be to develop the site with 379 good quality apartment units (12.00 units per acre). Highest and Best Use as Improved The subject is a 379-unit apartment complex that was built in 1988. The construction is average to good cost quality and the property has been well maintained. Most apartment complexes in the Pinellas County, which are near stabilized occupancy, are in average to good condition. It was reported that the complex maintains an occupancy rate at about a 94%, which is average for Pinellas County and the immediate area. The subject property was constructed at a density of 12.00 units per acre and appears to conform to zoning. The individual unit sizes, site layout and available parking appears well suited for use as a apartment complex. The value of the site with the improvements far exceeds the site value alone. Thus, the highest and best use of the subject property, as improved, is to continue use as a 379-unit apartment complex. Conversion to condominium units would not be reasonable due to the bordering commercial development and the large number of one bedroom units. THE VALUATION PROCESS The estimate of market value for real property involves a systematic process in which the problem is defined, the work necessary to solve the problem is planned, and the data required; is acquired, classified, analyzed and interpreted into an estimate of value. In this process, three approaches are used by the appraiser to estimate value. They are: THE COST APPROACH THE SALES COMPARISON APPROACH THE INCOME CAPITALIZATION APPROACH The cost approach is a method in which the value of a property is derived from creating a substitute property with the same utility as the subject property. In the Cost Approach, the appraiser must estimate the market value of the subject site as if vacant, by using the direct sales comparison approach, then estimate the reproduction cost new of the improvements. Depreciation from all sources is estimated and subtracted from the reproduction cost new of the improvements. The depreciated reproduction cost of all improvements is then added to the estimated site value with the results being an indicated value by the cost approach. The sales comparison approach also referred to as the market approach, involves the comparison of similar properties that have recently sold or similar properties that are currently offered for sale, with the subject property. The basic principle of substitution underlies this approach. It implies that an informed purchaser would not pay more for a property than the cost to acquire a satisfactory substitute property with the same utility as the subject property in the current market. These properties are compared to the subject with regard to differences or similarities in time, age, location, physical characteristics, and the conditions influencing the sale. The notable differences in the comparable properties are adjusted to the subject property to indicate a value range for the property being appraised. The principle of increasing and decreasing returns is important in identification of comparables. The principle of contribution is the heart of the adjustment process in determining the effect that the presence or absence of some characteristic has on the sale price. When sufficient sales data is available, these adjustments are best determined by the actions of typical buyers and sellers in the subject's market place. This value range, as indicated by the adjusted comparable properties, is reconciled into a final indicated value for the subject property by this approach. The income capitalization approach is a process which discounts anticipated income streams (whether in dollar income or amenity benefits) to a present worth figure through the capitalization process. The appraiser is again faced with obtaining certain data related to the subject and comparing it to similar physical, functional and economic properties. Comparable rental information is analyzed to estimate potential gross income (actual and/or comparative) to determine a projected net income stream. The appraiser must estimate a capitalization rate, either through extraction from the market or using other available techniques. The net income stream is capitalized into an indicated value by this approach. The value estimates as indicated by the three approaches are then reconciled into a final estimate of the property's value. In the final reconciliation, the appraiser must weigh the relative significance, defensibility, amount and accuracy of data, and applicability of each approach as it pertains to the type of property being appraised and that best approximates the value being sought in the appraisal. THE COST APPROACH The basic premise upon which this method of value estimate is based, is known as the principle of substitution. This principle logically states; "a prudent purchaser of a particular property would be willing to pay no more for that property than the cost of acquiring an equally desirable substitute." It is acknowledged that one principal method of acquiring a substitute property would be realized by the reproduction (or replacement) of the improvements of commensurate utility on an equally desirable site. This approach is most valid when analyzing new improvements which have not experienced any loss in value through normal wear and tear, or other forms of depreciation. Therefore, the cost approach estimates the current market value of a property through a process in which the replacement cost of all improvements are estimated. From this figure is deducted the total estimated loss in value (depreciation) for the improvements. The basic steps used in this approach are outlined below: Step 1 Estimate the current market value of the site. The site is valued as if vacant and free to be used in a capacity representing its highest and best use. This step is accomplished through the analysis of the sales and listings of comparable commercial sites. Step 2 Estimate the replacement cost new, of the subject improvements. This step results in the appraisers' estimate of the total cost of replacing a structure with similarity to the subject improvements. The replacement cost estimate associated with this appraisal uses the estimated cost per square foot. The method of estimating this cost factor is fully described later in this report. Step 3 Estimate the total accrued depreciation. This refers to the total loss in value, which the subject property may have experienced through physical, functional, or external factors, which would negatively influence the value of the property. Step 4 Deduct the total estimated depreciation (Step 3) from the reproduction cost estimate (Step 2) and add the current value estimate for the site (Step 1). The resulting figures represent the appraisers' estimate of the current market value of the subject via the Cost Approach. Estimate of Land Value The valuation of vacant land (Step l) is typically undertaken by the sales comparison approach (market approach). The application of this approach produces a value estimate for land by comparing it with similar properties that have recently sold, in the same or competitive neighborhoods. The sale price of these properties tends to set the range of value in which the subject property will fall, when reduced to an appropriate unit of comparison (price per square foot, per front foot, per unit, etc). Refinement of this data, by the comparative process, should lead to a logical estimate of market value as of the date of appraisal. The reliability of this technique is dependent upon (l) the degree of comparability of each sale to the subject, (2) market conditions at the time of sale, (3) verification of pertinent data, and (4) the absence of unusual conditions that influence the sale. A variety of sales within the subject's neighborhood were analyzed. Information on those sales considered to be most comparable to the subject property are set forth in the following pages. LAND COMPARABLE NO. 1: LOCATION: South side of Fletcher Avenue, just west of Interstate 75, Hillsborough County TAX I.D. NUMBER (S-T-R): Portion of 37375.0000 & and others (12-28-19) SALE DATE: February 27, 1995 GRANTOR: Mary K. Wetherington and others GRANTEE: Zom Tampa Fetcher Ltd. O.R. BOOK/PAGE: 7688/1815 & 7688/1818 SALES PRICE: $2,200,000 SIZE: 22.00 Net Acres or 958,320 Square Feet NO. OF UNITS: 352 Units (Developed) DENSITY: 16.00 Units PRICE PER SQ. FT.: $2.30 PRICE PER ACRE: $100,000 PRICE PER UNIT: $6,250 LOCATION: Average UTILITIES: Available SHAPE: Irregular TOPOGRAPHY: Basically Level ZONING: Alternate Multiple Family by Temple Terrace LAND USE: UL-2 (20 u.p.a.) FINANCING: SouthTrust Bank $14,250,000 (A & D) VERIFICATION: Representative of the Grantee, JMK COMMENTS: The site was purchased for development of The Arbors at Fletcher, a 352 unit apartment complex offering one to three bedroom units in two to three story buildings. Rents are projected between $565 and $875. The site is across from the Hidden River Business Park. TAX MAP LAND COMPARABLE NO. 2: LOCATION: West side of North Dale Mabry Highway, north of Gaither High School, northwest Hillsborough County TAX I.D. NUMBER (S-T-R): Portion of 015910.0000 (28-27-18) SALE DATE: December 22, 1994 GRANTOR: Hillsborough Farms GRANTEE: Carrollwood Place Limited Partnership O.R. BOOK/PAGE: 7624/1404 SALES PRICE: $2,190,000 SIZE: 27.33 Net Acres or 1,190,495 Square Feet NO. OF UNITS: 432 Units (Developed) DENSITY: 15.81 Units PRICE PER SQ. FT.: $1.84 PRICE PER ACRE: $80,132 PRICE PER UNIT: $5,069 LOCATION: Average UTILITIES: Available SHAPE: Irregular TOPOGRAPHY: Basically Level ZONING: PDH by Hillsborough County LAND USE: RES-12 (12 u.p.a.) FINANCING: SouthTrust Bank $17,800,000 (A & D) VERIFICATION: Representative of the Grantee, JMK COMMENTS: This site was purchased for development of The Vinings at Carrollwood Place, a 432 unit apartment complex offering one to three bedroom units in two to three story buildings. Projected rents are from $510 to $875. Access to the site is provided by an 80 foot easement from North Dale Mabry Highway. TAX MAP LAND COMPARABLE NO. 3: LOCATION: Southeast Quadrant of U.S. Highway 19 and Gulf-to-Bay Boulevard, east of Seville condominium development on Old Tampa Bay, City of Clearwater TAX I.D. NUMBER: 17-29-16-00000-340-0200 and others SALE DATE: November 8 & 9, 1993 GRANTOR: AEL Partnership & Simkin Industries, Inc. GRANTEE: ZOM Bayside Arbors, Limited O.R. BOOK/PAGE: 8469/2003 and 8469/1995 SALES PRICE: $2,880,000 ($1,800,000 and $1,080,000) SIZE: 40.00 Acres (MOL) Usable NO. OF UNITS: 360 Units DENSITY: 9.00 Units PRICE PER SQUARE FOOT: $1.65 PRICE PER ACRE: $72,000 PRICE PER UNIT: $8,000 LOCATION: Good UTILITIES: Available SHAPE: Irregular TOPOGRAPHY: Basically Level ZONING: RM-12 City of Clearwater LAND USE: RM (11.5 u.p.a.) FINANCING: Cash to Seller VERIFICATION: Eric L. Carlton, Esquire and Ellen with ZOM Properties, 11/94, WWA COMMENTS: The assembled site has a large amount of water frontage, but has limited visibility and an easement for ingress and egress. The site was developed at a lower density in order to hedge against anticipated opposition from the Seville Owners Association. The transactions were reported to be arm's-length and at market prices. TAX MAP COMPARABLE LAND SALES LAND COMPARABLE COMPARISON CHART
COMPARABLE COMPARABLE COMPARABLE 1 2 3 SALES PRICE (S.P.) $2,200,000 $2,190,000 $2,880,000 LOCATION S18&19-T30-R17 S12-T28-R19 S28-T27-R18 S17&20-T29-R16 NUMBER OF ACRES 31.59 22.00 27.33 40.00 NUMBER OF UNITS 379 352 432 360 DENSITY 12.00 16.00 15.81 9.00 PRICE/ACRE $10,000 $80,132 $72,000 PRICE/UNIT $6,250 $5,069 $8,000 DATE OF APPRAISAL/SALE 28-Aug-96 27-Feb-95 22-Dec-94 09-Nov-93 ADJUSTMENTS FINANCING/CONDITIONS OF SALE 0% 0% 0% FIN/CON ADJ SALES PRICE $2,200,000 $2,190,000 $2,880,000 MARKET CONDITIONS NUMBER OF MONTHS SINCE SALE 18 21 34 % ADJUSTMENT 0.00% 0.00% 0.00% 0.00% TIME ADJUSTED SALES PRICE $2,200,000 $2,190,000 $2,880,000 PROPERTY CHARACTERISTICS LOCATION Average-Good Average Average Good UTILITIES Available Available Available Available SHAPE Irregular Irregular Irregular Irregular SIZE 31.59 22.00 27.33 40.00 ZONING RO-P AMF PD-H RM-12 ADJUSTMENTS PRICE/SQ.FT. $2.30 $1.84 $1.65 LOCATION 5% 5% -5% UTILITIES 0% 0% 0% SIZE/SHAPE -5% -5% 5% TOPOGRAPHY 0% 0% 0% ZONING -5% -5% 7% ADJUSTED PRICE/SQ.FT. $2.18 $1.74 $1.76 ADJUSTED PRICE/ACRE $94,762 $75,935 $76,847 ADJUSTMENTS PRICE/UNIT $6,250 $5,069 $8,000 LOCATION 5% 5% -5% UTILITIES 0% 0% 0% SIZE/SHAPE -5% -5% 5% TOPOGRAPHY 0% 0% 0% ZONING 8% 7% -10% ADJUSTED PRICE/UNIT $6,733 $5,411 $7,182
EXPLANATION OF ADJUSTMENTS Where appropriate, adjustments have been made to the comparables to account for material differences from the subject. The adjustment categories include: financing/conditions of sale, market conditions (time), location, utilities, topography, and size/shape. The following is an explanation of the various adjustments. FINANCING/CONDITIONS OF SALE All sales were confirmed with either the grantee, grantor, an informed party, or through public records. There was no disclosed under market financing or sale conditions which were believed to have influenced the sale prices. Adjustments did not appear warranted for any of the comparables. MARKET CONDITIONS (TIME) Due to dense development in Pinellas County, land comparables 1 and 2 are newer sales located in Hillsborough County and land comparable 3 is an older sale located in Pinellas County. A review of the comparables would appear to indicate that no adjustment for time is warranted. LOCATION/ACCESS Factors which were included in this adjustment category are the general location of the comparables when compared to the subject. Typically, properties with good visibility and good ingress and egress in exclusive areas sell at a higher price per unit. View amenities such as golf courses and bodies of water will also generally cause properties to sell at a higher price per unit. All of the sales used were located in areas suitable for multiple family development. The subject property is located in a residential/commercial transition area on the south side of Gandy Boulevard just east of 4th Street. The site has good visibility and adequate ingress and egress. The site has no significant offsite view amenity. Due to the central Pinellas County location and convenient bridge access to Tampa, the area is has historically shown good demand for rental apartment units, thus the overall location is considered above average. Due to the large amount of frontage on Old Tampa Bay, the location of land comparable 3 was considered superior to the subject and the other two comparables. In review of the comparables, a downward adjustment of 5% appears warranted for land comparable 3. The remaining two land comparables have overall location characteristics that are slightly inferior to the subject and upward adjustments of 5% were made to these sales. UTILITIES This category is based on whether utilities were available to the site at the time of sale. Like the subject, all three of the land comparables have all public utilities available. No adjustments to the comparables are warranted. SIZE/SHAPE Size/shape adjustments were made on the basis of the comparables size/shape in relation to the subject. Typically, larger parcels or irregular shaped parcels tend to sell at a lower price per unit. Furthermore, smaller parcels are more affordable to a larger number of buyers indicating more demand and higher prices for smaller parcels. However, when larger parcels are scarce, making assemblage necessary, larger parcels sell at a higher price per unit. This is because of the time and effort necessary to assemble them. Larger parcels can also be more economically feasible to develop because the fixed development costs can be absorbed by a larger number of units. In review of the comparables, there appeared to be a slight premium paid for smaller parcels and a slight discount for larger parcels. The shapes of the comparables had no adverse influence on the number of residential units that could be placed on the sites. Based on a review of the comparables, an upward adjustment of 5% appeared warranted for land comparables 3 and downward adjustments of 5% appeared warranted for land comparables 1 and 2. TOPOGRAPHY This adjustment category is based on whether the comparable's topography was irregular and/or whether it needed to be cleared before construction could begin on the site. All of the comparables required typical site preparation and development costs and no adjustments were necessary. ZONING The subject is zoned RO-P with a RO land use which allows development of the subject site, as if vacant, at an effective density of 12.00 units per net acre. Land comparables 1 and 2 have zoning and land uses which resulted in higher developable densities and land comparable 3 has a zoning and land use which resulted in a lower developable density. Typically, the developable density of multiple family land will have a direct relationship with the price per square foot or price per acre and an inverse relationship with the price per unit. A review of the comparables confirms the relationship with the price per square foot, price per acre and price per unit. The comparables appear to indicate that a 1% change in density will cause about a 0.30% inverse change in the indicated unit values and about a 0.10% direct change in both the indicated square foot or acre values. Adjustments were made accordingly to each of the comparable land sales. CORRELATION AND CONCLUSION The three foregoing comparables have sale prices which were compared on the basis of square foot, acre and unit selling prices. All of the comparables were adjusted for differences as compared with the subject and have adjusted price per square foot values between $1.74 and $2.18. Similarly, the comparables have adjusted price per acre values between $75,935 and $94,762. The adjusted price per unit indicated by the three sales is from $5,411 to $7,182. All three units of comparison are considered applicable in valuing the subject site. Land comparables 1 and 2 are the newest two sales, but are located in Hillsborough County. Both comparables are similar to the subject in size and were purchased for slightly higher density apartment development. Land comparable 1 is located in a more remote area, but is located across the street from the Hidden River Business Park. The Hidden River Business Park is the location of several Fortune 500 companies a provides a good employment base. Land comparable 3 is located about 8.5 miles northwest of the subject property. The site has a large amount of frontage on Old Tampa Bay and was purchased for the development with a 360 unit moderate to upper income apartment complex. The size of the parcel was larger than the subject, but the developable density is lower. Considering that all three of the land comparables had similar adjustments, all were given roughly equal weight. Based on the cited comparables, the value of the subject site is estimated at $1.80 a square foot, $80,000 an acre, and $6,500 a unit. The value of the subject site is estimated using the following calculations. 1,375,991 Sq.Ft. X $1.80/Sq.Ft. = $2,476,783 31.59 Acres X $80,000/Acre = $2,527,200 379 Units X $6,500/Unit = $2,463,500 ESTIMATED VALUE OF THE SUBJECT SITE, AS IF VACANT ($2,500,000) REPLACEMENT COST OF IMPROVEMENTS The subject improvements were evaluated in terms of type of construction, design, and building materials to develop an estimate of replacement cost. The cost estimates are inclusive of indirect costs such as architect's fees and contractor's overhead and profit but not developer's profit. The estimates of the replacement cost new for the subject improvements were based on current market standards determined from discussions with various developers, contractors and architects, as well as information obtained from the Marshall Valuation Service. Local building costs and costs indicated in the Marshall Valuation Service are mutually supportive. It is our opinion that cost figures for the subject complex would fall within the lower end of the average to good cost range for class "D" multiple family residences. Base Cost $42.00 Area Multiplier 1.00 Current Cost Multiplier 1.00 Local Multiplier 0.94 Total $39.48 Rounded $39.50 ====== Based on this analysis, the indicated replacement cost for the apartment buildings is estimated at approximately $39.50 a square foot. Further replacement costs associated with the buildings is the cost of the clubhouse which is also estimated at $50.00 a square foot. The replacement cost of the covered entries, porches or balconies, storage closets, and stairs are estimated at $800,000 and the replacement cost of the appliances, fixtures, and equipment are estimated at $1,050,000. These figures are also based on Marshall Valuation Service. The contributory value of the site improvements, which include the swimming pool, concrete walks and drives, lighting, signs, landscaping, etc. is estimated at $750,000. IMPACT FEES Because of the impact of new development on the infrastructure of cities and counties, fees are now typically being assessed against new development. These fees are for increased traffic, increased use of sewers and water, radon detection, fire fighting requirements and the like. These are known as impact fees and can add substantially to the cost of new development. The impact fee estimates used in this report were based on the fee schedule for the City of St. Petersburg and are estimated at $535,000. DEVELOPER (ENTREPRENEURIAL) OVERHEAD AND PROFIT The above costs include contractors, but not developer overhead and profit. Developer profit is the reward the developer receives for taking the risk of developing the property. Developer profit can be abstracted from the market by estimating the replacement cost of a newly constructed building which has recently sold. The difference between the sales price and the replacement cost of the property is the developer profit. Sales of properties in the Tampa Bay Area were analyzed. They indicated developer overhead and profit between 10% to 15% with the more risky projects being in the higher figure. Based on this analysis a developer overhead and profit of 10% seems reasonable for the subject. ACCRUED DEPRECIATION The next step in the cost approach is to estimate the accrued depreciation for the subject. "Depreciation is a loss in property value from any cause. It may also be defined as the difference between the reproduction cost or replacement cost of the improvement and its market value." The three major components of accrued depreciation are physical deterioration, functional obsolescence, and external obsolescence. Physical deterioration can be either curable or incurable. Curable physical deterioration applies to items of deferred maintenance, which are in need of repair on the effective date of the appraisal. Whenever the contribution to market value is equal to or greater than the cost of replacement, the item is classified as curable deterioration. Incurable physical deterioration applies to structural items which naturally deteriorate and are not practical or economically feasible to correct. Functional obsolescence is an element of accrued depreciation which results from a defect, deficiency, or a superadequacy in the structure(s), materials, or design. External obsolescence results from a negative influence beyond or outside the boundaries of the site, which results in a loss in value and is nearly always incurable. Deferred Maintenance Deferred maintenance items are caused by physical deterioration and should be corrected immediately. At the time of inspection there was minor wood rot observed, however there were no substantial items of maintenance which were in need of immediate attention. Physical Depreciation The physical depreciation estimate is based on the age and the overall life expectancy of the improvements. Based on a market investigation of other structures in the neighborhood the effective age of the structure is estimated to be equal with actual at 8 years. The Marshall Valuation Service, a national cost estimate company, indicates properties such as the subject have a total physical life of about 50 years. Based on an observation of other structures in the neighborhood, a physical life estimate of 50 years would appear reasonable and will be used when estimating depreciation. Subtracting the estimated effective age from the estimated total physical life, indicates an estimated remaining life of about 42 years. The physical depreciation has been estimated by the age/life method, in which the percentage of depreciation is a function of the age of the improvements compared to the typical life for a property of the subject design and quality. The formula for estimating depreciation by the age/life method is as follows. Replacement - Def. Maint.& X ____Age______ = Depreciation Cost Short-Lived Physical Life Items $14,071,636 - $2,054,639 X 8/50 = $1,922,720 The physical depreciation for the short-lived items is estimated as follows. Roofs $163,263 X 8/20 = $ 65,305 Appliances $1,050,000 X 7/15 = $490,000 HVAC $525,860 X 7/15 = $245,401 Flooring $315,516 X 2/ 5 = $126,206 ---------- -------- $2,054,639 $926,912 Functional Obsolescence This type of depreciation generally results from defects in design. It can also be caused by changes that occur over time and have made some aspect of a structure, material, or design obsolete by current standards. Pelican Sound apartments is an average to good quality complex and in comparison to competing rental properties, the subject is in slightly above average condition. The unit mix, apartment sizes, and layout are well suited to the rental market. The complex is architecturally appealing and offers an average amenity package. The existing improvements are reasonably consistent with the highest and best use of the site as though vacant and sustain no market recognized loss in value attributed to functional obsolescence. External Obsolescence This type of depreciation is the result of diminished utility of a structure due to negative influences from outside the site. This type of depreciation is almost always incurable. An example of external obsolescence would be a garbage dump being located adjacent or within close proximity to the subject. Another example would be the local or general economy. As the local or national economy weakens there could be a temporary reduction in rents, thus reducing the market value of properties. The improvements are considered to be an appropriate improvement to the site and are reasonably consistent with highest and best use as though vacant. No evidence of external obsolescence was observed. SUMMARY Based on our analysis of the subject property and the summary of the cost approach included on the following page, the indicated value of the subject by the cost approach is: ESTIMATE OF VALUE BY THE COST APPROACH: $14,500,000 SUMMARY OF THE COST APPROACH Buildings Apartment Bldgs. 260,867 Sq.Ft. X $39.50 /SF = $10,304,247 Clubhouse 2,063 Sq.Ft. X $50.00 /SF = $103,150 Entry Porches, Stairs, etc. $800,000 Appliances, Fixtures and Equipment $1,050,000 ----------- Total Buildings $12,257,397 Impact and Other Fees $535,000 ----------- Total Improvements $12,792,397 Developer Overhead and Profit 10.00% $1,279,240 ----------- Replacement Cost New of Improvements $14,071,636 Less Depreciation Physical Deterioration Structure 16.00% $1,922,720 Roof 40.00% $65,305 Appliances 46.67% $490,000 HVAC 46.67% $245,401 Flooring 40.00% $126,206 Functional Obsolescence $0 Economic Obsolescence $0 ---------- Total Depreciation 20.25% $2,849,632 Depreciated Cost of Improvements $11,222,004 Estimated Land Value $2,500,000 Contributory Value of Site Improvements $750,000 ESTIMATE OF VALUE BY THE COST APPROACH (Rounded) $14,500,000 =========== THE SALES COMPARISON APPROACH The sales comparison approach involves a detailed comparison of the subject property with similar properties which have recently sold in the same or competitive market. This approach is based primarily on the principle of substitution. This principle states, when several commodities or services with substantially the same utility are available, the lower price attracts the greatest demand and widest distribution. In other words, a prudent investor/purchaser would not pay more to acquire a given property in the market, considering that an alternative property may be purchased for less. The five basic steps in this analysis are listed below: 1. Research the market to identify similar properties for which pertinent sales listings offerings and/or rental data is available. 2. Qualify the data as to terms, motivating forces, or bona fide nature. 3. Analyze the salient characteristics of the comparable properties in relation to the property being appraised, particularly those items relating to date of sale, location, physical characteristics, and condition of sale. 4. Consider all dissimilarities and the probable effect on the price of each sale and derive individual market value indications for the property being appraised. 5. Formulate an opinion of market value from the pattern developed from the foregoing analysis. A market investigation was conducted in the subject's area to find sales of properties comparable to the subject. The most pertinent transactions have been presented on the following pages, along with an identifying photograph and summary of important facts. IMPROVED COMPARABLE NO. 1: Lincoln Shores 11601 4th Street North PARCEL NUMBER: 18-30-17-05480-001-0012 18-30-17-05480-001-0010 18-30-17-05480-001-0011 DATE: August 1, 1995 GRANTOR: Bay View Associates, LTD GRANTEE: AETNA Life Insurance Company O.R. BOOK & PAGE: 9071/1421 & 9071/1431 SALE PRICE: $17,000,000 FINANCING: Cash DESIGN: Garden CONSTRUCTION: Frame, Average Cost CONDITION: Below Average for Age UNIT MIX: No. Total Units Rms/Bd/Ba Sq. Ft. Sq. Ft. 144 3/1/1 540 = 77,760 160 3/1/1 617 = 98,720 144 3/1/1 696 = 100,224 176 4/2/2 923 = 162,448 7 4/2/2 Loft-FP 920 = 6,440 --- ---------- -------- ------- 631 2,076 Rooms 706 SF 445,592 YEAR BUILT: 1983-84 RENTABLE BUILDING AREA: 445,592 Square Feet AVERAGE UNIT SIZE: 706 Square Feet AMENITIES: Lake, Three Swimming Pools, Lighted Tennis and Racquetball Courts, and Clubhouse with Fitness Center PROJECT SIZE: 631 Units/52.58 Acres/12.00 u.p.a. EFFECTIVE GROSS INCOME: Not Available EXPENSES: Not Available NET OPERATING INCOME: Not Available VERIFICATION: Confidential, 4/96, WWA UNIT VALUES: $ Per Unit $26,941 $ Per Room $8,189 $ Per Square Foot $38.15 E.G.I.M. Not Available O.A.R. Not Available COMMENTS: Details of this sale were limited because of a nondisclosure agreement between the buyer and the seller. It was reported, however, that because the property was in need of capital improvements it was purchased at a capitalization rate well above 9%. This apartment complex is located on a well traveled thoroughfare and was apparently at stabilized occupancy at the time of contract. IMPROVED COMPARABLE NO. 2: Country Place Village 2690 and 2775 Enterprise Road East PARCEL NUMBER: 32-28-16-00000-210-0300 32-28-16-61629-000-0010 DATE: July 20, 1995 GRANTOR: County Place Village I Joint Venture & County Place Village II Joint Venture GRANTEE: Security Capital Atlantic Incorporated O.R. BOOK & PAGE: 9055/0715 & 9055/0719 SALE PRICE: $7,555,000 ($7,932,750 Adjusted) FINANCING: Cash DESIGN: Garden CONSTRUCTION: Masonry, Good Cost CONDITION: Average+ for Age UNIT MIX: No. Total Units Rms/Bd/Ba Sq. Ft. Sq. Ft. 32 3/1/1 796 = 25,472 28 3/1/1 835 = 23,380 24 4/2/1 979 = 23,496 28 4/2/2 1,109 = 31,052 38 4/2/2TH 1,134 = 43,092 18 4/2/2TH 1,212 = 21,816 16 4/2/2TH 1,234 = 19,744 4 5/3/2TH 1,494 = 5,976 --- --------- -------- ------- 188 696 Rooms 1,032 SF 194,028 YEAR BUILT: 1984-85 RENTABLE BUILDING AREA: 194,028 Square Feet AVERAGE UNIT SIZE: 1,032 Square Feet AMENITIES: Two Swimming Pools, Lighted Tennis Courts, and Clubhouse PROJECT SIZE: 188 Units/22.22 Acres/8.45 u.p.a. EFFECTIVE GROSS INCOME: Not Available EXPENSES: Not Available NET OPERATING INCOME: Not Available VERIFICATION: Confidential, 4/96, WWA UNIT VALUES: $ Per Unit $42,195 Adjusted $ Per Room $11,398 Adjusted $ Per Square Foot $40.88 Adjusted E.G.I.M. Not Available O.A.R. Not Available COMMENTS: Details of this sale were limited because of nondisclosure by the buyer and the lack of a knowledgeable contact for the seller. It was reported, however, that the property required an adjustment because it was part of a portfolio sale. This apartment complex is located on a moderately traveled thoroughfare near a regional mall and was apparently at stabilized occupancy at the time of contract. IMPROVED COMPARABLE NO. 3: Chesapeake Apartments 2307 Cumberland Road PARCEL NUMBER: 30-28-16-00000-210-0300 DATE: March 1, 1995 GRANTOR: Gregory A. Rand, Trustee GRANTEE: Phoenix Home Life Mutual Insurance Company O.R. BOOK & PAGE: 8928/1562 SALE PRICE: $11,800,000 FINANCING: Cash DESIGN: Garden CONSTRUCTION: Frame, Average-Good Cost CONDITION: Average for Age UNIT MIX: No. Total Units Rms/Bd/Ba Sq. Ft. Sq. Ft. 96 3/1/1 600-642 = 59,616 80 3/1/1 662-680 = 53,680 64 3/1/1 718 = 45,952 88 4/2/2 911-926 = 80,828 26 4/2/2 980 = 25,480 -- ----------- ------ ------ 354 1,176 Rooms 750SF 265,556 YEAR BUILT: 1985 RENTABLE BUILDING AREA: 265,556 Square Feet AVERAGE UNIT SIZE: 750 Square Feet AMENITIES: Lakes, Swimming Pool, Tennis and Racquetball Courts, and Clubhouse PROJECT SIZE: 354 Units/27.50 Acres/12.87 u.p.a. EFFECTIVE GROSS INCOME: $2,200,000 EXPENSES: $1,100,000 (50% EGI or $3,107/Unit) NET OPERATING INCOME: $1,100,000 (Exclusive of Reserves) VERIFICATION: John D. Selby, CCIM - Agent, 4/15/96, WWA UNIT VALUES: $ Per Unit $33,333 $ Per Room $10,034 $ Per Square Foot $44.44 E.G.I.M. 5.36 O.A.R. 9.32 COMMENTS: This apartment complex is located on a moderately traveled thoroughfare within close proximity to a regional mall. Occupancy at the time of sale was at about 96%. Effective gross income was reported at $2,013,084 and net operating income was reported at $1,013,952. The above figures are based on 1995 projections by the buyer. Negotiations of $350,000 for wood siding repairs and an additional $350,000 for interest rate increases caused the purchase price to be $700,000 lower than the original contract price. Rental rates include water and sewer expenses. IMPROVED COMPARABLE NO. 4: Stonegate Apartments 31177 U.S. Highway 19 North PARCEL NUMBER: 18-28-16-00000-120-0400 DATE: March 1, 1996 GRANTOR: Jeremiah Associates, Ltd. GRANTEE: Phoenix Home Life Mutual Ins. Co. O.R. BOOK & PAGE: 9265/1189 SALE PRICE: $10,700,000 FINANCING: Principal Financial $5,400,000, 6.5% interest only, 5 years DESIGN: Garden CONSTRUCTION: Frame, Average to Good Cost CONDITION: Average+ for Age UNIT MIX: No. Total Units Rms/Bd/Ba Sq. Ft. Sq. Ft. 72 3/1/1 743 = 53,496 16 3/1/1 837 = 13,392 22 4/2/2 992 = 21,824 54 4/2/2 1,113 = 60,102 32 4/2/2 1,123 = 35,936 24 5/3/2 1,348 = 32,352 -- ----- ----- ------ 220 816 Rooms 987 SF 217,102 YEAR BUILT: 1991 RENTABLE BUILDING AREA: 217,102 Square Feet AVERAGE UNIT SIZE: 987 Square Feet AMENITIES: Swimming Pool, Spa, Sauna, Racquetball Courts, Tennis Court, Full Size Washer and Dryers, Carport/Garages and Clubhouse with Fitness Room PROJECT SIZE: 220 Units/18.89 Acres/11.65 u.p.a. EFFECTIVE GROSS INCOME: $1,700,000 EXPENSES: $700,000 NET OPERATING INCOME: $1,000,000 VERIFICATION: John Selby, CCIM, 8/96, WWA UNIT VALUES: $ Per Unit $48,636 $ Per Room $13,113 $ Per Square Foot $49.29 E.G.I.M. 6.29 O.A.R. 9.35% COMMENTS: Occupancy at the time of sale was at about 98%. Effective gross income was reported at $1,735,800 and net operating income was reported at $913,066. The buyer anticipated reducing expenses to $700,000 a year and achieving net operating income of $1,000,000. Approximately $80,000 was budgeted for deferred maintenance items. IMPROVED COMPARABLE NO. 5: Promenade at Carillon 540 Carillon Parkway PARCEL NUMBER: 12-30-16-73168-001-0010 DATE: October 21, 1994 GRANTOR: Carillon Limited Partnership I GRANTEE: Merry Land & Investment Company, Inc. O.R. BOOK & PAGE: 8820/1448 SALE PRICE: $20,650,000 FINANCING: Cash to Seller DESIGN: Garden CONSTRUCTION: Frame, Good+ Cost CONDITION: Average+ for Age UNIT MIX: No. Total Units Rms/Bd/Ba Sq. Ft. Sq. Ft. 60 3/1/1 670 = 40,200 64(8 w/Gar) 3/1/1 752 = 48,128 16 3/1/1 925 = 14,800 40 4/2/2 1,005 = 40,200 70(10 w/Gar) 4/2/2 1,040 = 72,800 44(2 w/Gar) 4/2/2 1,200 = 52,800 40(4 w/Gar) 5/3/2 1,369 = 54,760 --- ----------- -------- -------- 334 1,236 Rooms 969 SF 323,688 YEAR BUILT: 1994 RENTABLE BUILDING AREA: 323,688 Square Feet AVERAGE UNIT SIZE: 969 Square Feet AMENITIES: Swimming Pool, Spa, Full Size Washer and Dryers, Garages (90 total) and Clubhouse with Fitness Room PROJECT SIZE: 334 Units/12.00 Acres/27.83 u.p.a. EFFECTIVE GROSS INCOME: $3,200,000 EXPENSES: $1,300,000 (exclusive of reserves) NET OPERATING INCOME: $1,900,000 VERIFICATION: Julie Teague, Grantee, 9/96, WWA UNIT VALUES: $ Per Unit $61,826 $ Per Room $16,707 $ Per Square Foot $63.80 E.G.I.M. 6.45 O.A.R. 9.20% COMMENTS: Occupancy at the time of sale was at about 90% and had just reached stabilized occupancy. The buyer anticipated gross income of about $3,200,000, with net operating income of about $1,900,000. The buyer made a reserve allowance of $150 a unit, but is not included these figures. The exterior siding is currently being reconditioned, but is under the builders warranty. COMPARABLE BUILDING SALES IMPROVED COMPARABLE COMPARISON CHART
SUBJECT COMPARABLE COMPARABLE COMPARABLE COMPARABLE COMPARABLE 1 2 3 4 5 SALE PRICE $17,000,000 $7,555,000 $11,800,000 $10,700,000 $20,650,000 PROPERTY RIGHTS CONVEYED FEE SIMPLE Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple ADJUSTMENT 0 0 0 0 0 ADJUSTED SALE PRICE $17,000,000 $7,555,000 $11,800,000 $10,700,000 $20,650,000 FINANCING Cash Cash Cash Conventional Cash ADJUSTMENT 0 0 0 0 0 ADJUSTED SALE PRICE $17,000,000 $7,555,000 $11,800,000 $10,700,000 $20,650,000 DATE OF APPRAISAL/SALE 28-Aug-96 01-Aug-95 20-Jul-95 01-Mar-95 01-Mar-96 21-Oct-94 NUMBER OF MONTHS SINCE SALE 13 14 18 6 23 ADJUSTMENT 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0 0 0 0 0 ADJUSTED SALE PRICE $17,000,000 $7,932,750 $11,800,000 $10,700,000 $20,650,000 PRICE PER UNIT $26,941 $42,195 $33,333 $48,636 $61,826 PRICE PER ROOM $8,189 $11,398 $10,034 $13,113 $16,707 PRICE PER SQUARE FOOT $38.15 $40.88 $44.44 $49.29 $63.80 PHYSICAL CHARACTERISTICS LOCATION S18&19-T30-R17 S18-T30-R17 S32-T28-R16 S30-T28-R16 S18-T28-R16 S12-T30-R16 CONSTRUCTION Frame/Av-Gd Frame/Average Masonry/Good Frame/Av-Gd Frame/Av-Gd Frame/Good+ CONDITION Average+ for Age Below Avg for Age Average+ for Age Average for Age Average+ for Age Average+ for Age YEAR BUILT 1988 1983-84 1984-85 1985 1991 1994 AMENITIES/EQUIPMENT Average Average Average Average Average Average NUMBER OF UNITS 379 630 188 354 220 334 NUMBER OF ROOMS 1,232 2,076 696 1,176 816 1,236 RENTABLE BUILDING AREA 260,867 445,592 194,028 265,556 217,102 323,688 NUMBER OF ACRES 31.59 52.58 22.22 27.50 18.89 12.00 DENSITY 12.00 12.00 8.46 12.87 11.65 27.83 AVERAGE UNIT SIZE 688 706 1,032 750 987 969 AVERAGE ROOM SIZE 212 215 279 228 266 262 FINANCIAL CHARACTERISTICS EFFECTIVE GROSS INCOME $2,487,704 Not Available Not Available $2,200,000 $1,700,000 $3,200,000 E.G.I.M. Not Available Not Available 5.36 6.29 6.45 EXPENSE RATIO 47.15% Not Available Not Available 50.00% 41.18% 40.63% NET OPERATING INCOME $1,314,634 Not Available Not Available $1,100,000 $1,000,000 $1,900,000 OVERALL RATE Not Available Not Available 9.32% 9.35% 9.20% PRICE PER UNIT ADJUSTMENTS $26,941 $42,195 $33,333 $48,636 $61,826 AVERAGE UNIT SIZE -1% -17% -4% -15% -14% LOCATION 0% 5% 5% 5% 0% AGE 15% 12% 9% -9% -18% QUALITY 5% -5% 0% 0% -10% CONDITION 20% 0% 5% 0% 0% ADJUSTMENT (Cumulative) 43% -7% 15% -19% -37% $11,706 ($3,069) $5,122 ($9,135) ($22,586) ADJUSTED PRICE PER UNIT $38,647 $39,126 $38,455 $39,501 $39,240 PRICE PER ROOM ADJUSTMENTS $8,198 $11,398 $10,034 $13,113 $16,707 AVERAGE ROOM SIZE -1% -12% -3% -10% -10% LOCATION 0% 5% 5% 5% 0% AGE 15% 12% 9% -9% -18% QUALITY 5% -5% 0% 0% -10% CONDITION 20% 0% 5% 0% 0% ADJUSTMENT (Cumulative) 43% -2% 17% -14% -34% 3,558 ($192) $1,662 ($1,836) ($5,610) ADJUSTED PRICE PER ROOM $11,747 $11,206 $11,696 $11,277 $11,097 PRICE PER SQUARE FOOT ADJUSTMENTS $38.15 $40.88 $44.44 $49.29 $63.80 AVERAGE UNIT SIZE 1% 17% 4% 15% 14% LOCATION 0% 5% 5% 5% 0% AGE 15% 12% 9% -9% -18% QUALITY 5% -5% 0% 0% -10% CONDITION 20% 0% 5% 0% 0% ADJUSTMENT (Cumulative) 46% 31% 25% 10% -16% 17.68 $12.56 $11.10 $4.87 ($10.12) ADJUSTED PRICE SQUARE FOOT $55.83 $53.44 $55.54 $54.16 $53.68
The five foregoing improved sales were considered to be the most reliable indicators of market value for the subject. Prior to adjustments, the sales indicated values from $26,941 to $61,826 a unit. Based on the number of rooms, the sales indicate values from $8,189 to $16,707 and based on the number of square feet, the sales indicate values from $38.15 to $63.80. EXPLANATION OF ADJUSTMENTS Where appropriate, adjustments have been made to the comparables to account for material differences from the subject. The adjustment categories include: financing/conditions of sale, market conditions (time), average unit size, location, age, quality, and condition. The following is an explanation of the various adjustments. FINANCING/CONDITIONS OF SALE All sales were verified with either the grantee, grantor, an informed party or the public records. With the exception of improved comparable 2, there was no special financing or any special considerations which may have influenced the comparable's selling prices. It was reported that improved comparable 2 was part of a portfolio sale and required an adjustment to reflect that condition. Based on a review of the comparable sales, an upward adjustment of 5% was made to improved comparable 2. MARKET CONDITIONS (TIME) Market conditions refer to the appreciation or depreciation of a property over a period of time. The rental rates and expenses for apartment complexes have shown moderate annual increases. In review of the three improved comparables, it would appear that property values have remained relatively stable. Therefore, based on the above analysis, no market conditions adjustment will be applied to the comparables. AVERAGE UNIT SIZE Typically the average unit size of the apartment complex has a direct relationship with the price per unit, and an inverse relationship with the price per square foot. A review of the comparables indicates support for this relationship. The comparables appear to indicate that a 1% change in the average unit size will cause about a 0.50% direct change in the indicated price per unit and a 0.50% inverse change in the indicated price per square foot values. Adjustments were made accordingly for each of the improved comparables. The average room sizes of all the improved comparables are slightly larger than the subject. A review of the comparables indicates a direct relationship between the average room size and the price per room. The comparables appear to indicate that a 1% change in the average room size will cause about a 0.50% direct change in the indicated price per room. Adjustments were made accordingly for each of the improved comparables. LOCATION Factors which were included in this adjustment category are the general location of the comparables when compared to the subject. Typically, properties on major roads or in exclusive areas sell at a higher price per unit. The subject property is located in a residential/commercial transition area on the south side of Gandy Boulevard just east of 4th Street. The site has good visibility and adequate ingress and egress. The site has no significant offsite view amenity. Due to the central Pinellas County location and convenient bridge access to Tampa, the area is has historically shown good demand for rental apartment units, thus the overall location is considered above average. Improved comparables 1 and 5 are located in the same general area as the subject and therefore have reasonably similar locations. Improved comparables 2 through 4 are located in competing areas of Pinellas County and are believed to have slightly inferior locations. A review of the comparables would appear to indicate that upward adjustments of 5% are reasonable for improved comparables 2 through 4. AGE This adjustment category is based on the effective age of the comparables in relation to the subject. Properties with lower effective ages typically sell at a higher price per unit. The effective age of the comparables was determined based on a review of the actual physical ages and by an exterior inspection of the properties. A review of comparables indicate that age differences cause about a 3% per year direct change in the indicated values, which is similar to the depreciation estimate in the cost approach. Adjustments were made accordingly to each of the improved comparables. QUALITY/CONDITION This adjustment category is based on the quality and condition of the comparables in relation to the subject. Typically, the quality and condition of a property has a direct relationship with the sale price. The quality and condition of the comparables were determined by an exterior inspection of the properties and by conversations with the grantee, grantor or informed parties. Improved comparables 3 and 4 are all reasonably similar to the subject in construction quality, improved comparables 2 and 5 are superior and improved comparable 1 is inferior. Based on a review of the improved comparables, comparable 1 was adjusted upward by 5%, comparable 2 was adjusted downward by 5% and comparable 5 was adjusted downward by 10%. Physical inspections of the properties and conversations with informed parties lead us to believe that the overall condition of improved comparable 2, 4, and 5 were reasonably similar to the subject and that the overall conditions of improved comparables 1 and 3 are inferior. Based on review of the comparables, improved comparable 1 was adjusted upward by 20% and improved comparable 3 was adjusted upward by 5%. CORRELATION AND CONCLUSION Comparable 1 was a sale of Lincoln Shores, a 631 unit complex located about a mile northwest of the subject. The apartment complex was constructed in 1983-84 and was in below average condition for its age. The complex has only a slightly larger average unit size than the subject and also has a larger number of one bedroom units (71%). Comparable 2 was a sale of Country Place Village, located about 11 miles northwest of the subject. Country Place Village is a 188 unit complex that was constructed in 1984-85 and is superior in construction quality. The complex has a larger average unit size, with a mix skewed toward two-bedroom units. Comparable 3 is the sale of a 354 unit apartment complex, known as Chesapeake Apartments. The complex was constructed in 1985, is similar in construction quality, and is located about 12 miles northwest of the subject. Like the subject and Lincoln shores, this complex has a large number of one bedroom units (68%). The average unit size for this complex is slightly larger. Comparable 4 was a sale of Stonegate Apartments, located about 14 miles northwest of the subject. Stonegate is a 220 unit complex that was constructed in 1991, but is similar in construction quality. Like comparable 2, this complex has a larger average unit size, with a mix skewed toward two-bedroom units. Comparable 5 was a sale of the Promenade at Carillon located about 2 miles northwest of the subject. This apartment complex has 334 units, was constructed in 1994, and is superior in overall construction quality. The complex has a larger average unit size, with a small number of three bedroom units and a relatively equal but large distribution of one and two bedroom units. After adjustments the indicated price per unit was from $38,455 to $39,501, the indicated price per room was from $11,097 to $11,747, and the indicated price per square foot was from $53.44 to $55.83. Due to the large adjustments required for each of the comparables, all were given roughly equal weight in the final analysis. Based on the cited data and analysis, the estimated value per unit, per room and per square foot are shown as follows: 379 Units X $38,000/Unit = $14,402,000 1,232 Rooms X $11,500/Room = $14,168,000 260,867 Sq.Ft. X $55.00/Sq.Ft. = $14,347,685 The estimated values by the three approaches used, strongly support one another are within a range, from low to high, of less than 2%. Most buyers and seller place more emphases on the price per unit, thus the estimated value by the price per unit method was given slightly greater weight. Indicated Value by the Sales Comparison Approach $14,300,000 =========== THE INCOME CAPITALIZATION APPROACH The income capitalization approach relates to an investor's thinking and motivation, as to the future benefits of ownership. This is the basic tool for the valuation of income producing real estate. It is based on the principle of substitution, which is reflected in the definition of value as the present worth of all the rights to future benefits accruing to ownership. The income producing property is typically purchased for investment purposes and the projected net income stream is the critical factor affecting this market value. The income capitalization approach is practical only when the income stream can be estimated. This income estimate may be developed and supported by a comparison in the local market. An investor purchasing income producing real estate is, in effect, trading a sum of present dollars for a right to the stream of future dollars. There is a relationship between the two, and the connecting link is the process of capitalization. The function of capitalization is to translate an income projection into a present capital value indication. The valuation by the income capitalization approach consists of the following steps: 1. Estimate the market rent for the subject property through a market analysis of competitive projects to arrive at a gross income estimate; 2. Estimate the vacancy and collection losses for the income projection period; 3. Deduct the estimated vacancy and collection losses and the annual operating expenses from the gross income estimate for an estimated net income before recapture; 4. Determine the appropriate capitalization technique and gather market supported data for its application. 5. Capitalize the resulting net income figure by an appropriate capitalization rate in order to obtain an indicated value of the property. ESTIMATE OF MARKET RENT The first step in the income capitalization approach is to estimate the subject's market rent. The following rent comparables are considered the best indicators for the estimate of market rent for the subject property. RENT COMPARABLE #1: Waterford Location: 10263 Gandy Boulevard Number of Units: 384 Units Average Unit Size: 850 Square Feet Vacancy: 86% Year Built: 1989 Construction Type: Frame, Average+ Cost, Average Condition Recreation Facilities: Clubhouse with Fitness Facility, Two Swimming Pools & Two Spas, Tennis, Racquetball, and Sauna Features: Standard Kitchen and Washer/Dryers (Fireplaces in select units) Rent No. Unit Unit Schedule:Units Type Size Rent/Month Rent/Sq. Ft. 200 1/1 724 S.F. $565.00 $0.78 20 1/1 755 S.F. $575.00 $0.76 144 2/2 1,015 S.F. $715.00 $0.70 20 2/2TH 1,015 S.F. $810.00 $0.80 Rent Concessions: 1/2 Off 1st Month Rent Premiums: View, Upstairs and End Units $10 Fireplaces $20-$30 RENT COMPARABLE #2: Promenade at Carillon Location: 540 Carillon Parkway Number of Units: 334 Units Average Unit Size: 969 Square Feet Vacancy: 95% (MOL) Year Built: 1994 Construction Type: Frame, Good+ Cost, Average Condition Recreation Facilities: Clubhouse with Fitness Facility, Swimming Pool & Spa Features: Standard Kitchen Rent No. Unit Unit Schedule:Units Type Size Rent/Month Rent/Sq. Ft. 60 1/1 679 S.F. $579.00 $0.86 (8 w/Gar) 64 1/1 752 S.F. $599.00 $0.80 16 1/1 925 S.F. $719.00 $0.78 40 2/2 1,005 S.F. $749.00 $0.75 (10 w/Gar)70 2/2 1,040 S.F. $769.00 $0.74 (2 2/Gar) 44 2/2 1,200 S.F. $849.00 $0.71 (4 w/Gar) 40 3/2 1,369 S.F. $1,059.00 $0.77 Rent Concessions: 1st Month Free Premiums: Washer/Dryer $30, Alarms $10, Garage $90 RENT COMPARABLE #3: Bridgewater Place Location: 115 112th Avenue Northeast Number of Units: 260 Units Average Unit Size: 941 Square Feet Vacancy: 93% Year Built: 1989 Construction Type: Frame, Average+ Cost, Average Condition Recreation Facilities: Clubhouse with Fitness Facility, Two Swimming Pools & Two Spas, Tennis Courts, and Sauna Features: Standard Kitchen (Fireplaces in select units) Rent No. Unit Unit Schedule: Units Type Size Rent/Month Rent/Sq. Ft. 36 1/1 663 S.F. $585.00 $0.88 80 1/1 811 S.F. $640.00 $0.79 40 1/1/D 938 S.F. $730.00 $0.78 76 2/2 1,109 S.F. $820.00 $0.74 28 3/2 1,215 S.F. $950.00 $0.78 Rent Concessions: $300 1-Bedrooms and $500 2-Bedrooms Premiums: Sunken Living Rooms, Vaulted Ceilings and Fireplaces $10-$20 RENT COMPARABLE #4: West Port Colony Location: 190 112th Avenue North Number of Units: 324 Units Average Unit Size: 813 Square Feet Vacancy: 92% Year Built: 1989 Construction Type: Frame, Average+ Cost, Average Condition Recreation Facilities: Clubhouse with Fitness Facility, Swimming Pool, Spa, Tennis Courts, Racquetball Court, and Sauna Features: Standard Kitchen (Fireplaces and Washer/Dryers in select units) Rent No. Unit Unit Schedule:Units Type Size Rent/Month Rent/Sq. Ft. 72 1/1 550 S.F. $485.00 $0.88 34 1/1 677 S.F. $565.00 $0.83 86 1/1 782 S.F. $610.00 $0.78 48 2/2 918 S.F. $690.00 $0.75 48 2/2 970 S.F. $740.00 $0.76 24 2/2 1,145 S.F. $850.00 $0.74 12 3/2 1,280 S.F. $945.00 $0.74 Rent Concessions: 1st Month Free Premiums: Washer/Dryer $40, View $25, Fireplace $15 RENT COMPARABLE #5: Post Bay Location: 11901 4th Street North Number of Units: 312 Units Average Unit Size: 890 Square Feet Vacancy: 97% Year Built: 1989 Construction Type: Frame, Average+ Cost, Average Condition Recreation Facilities: Clubhouse with Fitness Facility, Swimming Pool, Spa, and Garage Parking Features: Standard Kitchen (Washer/Dryers in select units) Rent No. Unit Unit Schedule:Units Type Size Rent/Month Rent/Sq. Ft. Unk Studio 560 S.F. $500.00 $0.89 Unk 1/1 630 S.F. $530.00 $0.84 Unk 1/1 750 S.F. $620.00 $0.83 Unk 2/1 970 S.F. $735.00 $0.76 Unk 2/2 1,150 S.F. $850.00 $0.74 Unk 2/2 1,280 S.F. $880.00 $0.69 Rent Concessions: 1st Month Free Premiums: Washer/Dryer $25, Covered Parking $100, View $10 COMPARABLE RENTALS Comparable Rent Analysis One Bedroom Apartment (Small)
Subject Waterford Promenade Bridgewater West Port Colony Post Bay Data Data Adjst. Data Adjst. Data Adjst. Data Adjst. Data Adjst. Complex Size 379 384 334 260 324 312 Number 128 200 60 36 72 Unknown Unit Type 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom Baths 1 Bath 1 Bath 1 Bath 1 Bath 1 Bath 1 Bath Monthly Rent $490 $565 $579 $585 $485 $530 Size 513 724 -20 670 -15 663 -15 550 630 -10 Rent/Sq. Ft. $0.96 $0.78 $0.86 $0.88 $0.88 $0.84 Qlty/Cndt Av-Gd/Av+ Av-Gd/Av+ Good/Av+ -10 Av-Gd/Av+ Av-Gd/Av+ Av/Gd/Av+ Year Built 1988 1989 1994 1989 1989 1989 Equipment Full Appl Full Appl Std. Ktch 5 Std. Ktch 5 Std. Ktch 5 Std. Ktch 5 Location Good Good Good Good Good Good Concessions No 1/2 Month -23 1st Month -48 $300 -25 1st Month -40 1st Month -44 Occupancy 97% 86% 95% 93% 92% 97% Amenities Average Average Average Average Average Average Utilities Wtr/Sew/Trs Wtr/Sew/Trs Trsh 20 Wtr/Sew/Trs Wtr/Sew/Trs Wtr/Sew/Trs Cov. Parking No No Gar(extra) No No Gar(extra) Rents $522 $531 $550 $450 $481 $0.72 $0.79 $0.83 $0.82 $0.76 Estimated Subject Rent $490
Comparable Rent Analysis One Bedroom Apartment (Large)
Subject Waterford Promenade Bridgewater West Port Colony Post Bay Data Data Adjst. Data Adjst. Data Adjst. Data Adjst. Data Adjst. Complex Size 379 384 334 260 324 312 Number 156 200 60 80 34 Unknown Unit Type 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom Baths 1 Bath 1 Bath 1 Bath 1 Bath 1 Bath 1 Bath Monthly Rent $565 $565 $599 $640 $565 $530 Size 713 724 752 811 -10 677 5 630 Rent/Sq. Ft. $0.79 $0.78 $0.80 $0.79 $0.83 $0.84 Qlty/Cndt Av-Gd/Av+ Av-Gd/Av+ Good/Av+ -10 Av-Gd/Av+ Av-Gd/Av+ Av/Gd/Av+ Year Built 1988 1989 1994 1989 1989 1989 Equipment Full Appl Full Appl Std. Ktch 5 Std. Ktch 5 Std. Ktch 5 Std. Ktch 5 Location Good Good Good Good Good Good Concessions No 1/2 Month -23 1st Month -50 $300 -25 1st Month -47 1st Month -44 Occupancy 97% 86% 95% 93% 92% 97% Amenities Average Average Average Average Average Average Utilities Wtr/Sew/Trs Wtr/Sew/Trs Trsh 20 Wtr/Sew/Trs Wtr/Sew/Trs Wtr/Sew/Trs Cov. Parking No No Gar(extra) No No Gar(extra) Rents $542 $564 $610 $528 $491 $0.75 $0.75 $0.75 $0.78 $0.78 Estimated Subject Rent $565
Comparable Rent Analysis One Bedroom/Den Apartment
Subject Waterford Promenade Bridgewater West Port Colony Post Bay Data Data Adjst. Data Adjst. Data Adjst. Data Adjst. Data Adjst. Complex Size 379 384 334 260 200 312 Number 27 144 40 40 48 Unknown Unit Type 1 Bed/Den 2 Bedroom 2 Bedroom 1 Bed/Den 2 Bedroom 2 Bedroom Baths 1 Bath 2 Bath -10 2 Bath -10 1 Bath 2 Bath -10 1 Bath Monthly Rent $640 $715 $749 $730 $690 $735 Size 841 1015 -15 1005 -15 938 -10 918 -10 970 -10 Rent/Sq. Ft. $0.76 $0.70 $0.75 $0.78 $0.75 $0.76 Qlty/Cndt Av-Gd/Av+ Av-Gd/Av+ Good/Av+ -10 Av-Gd/Av+ Av-Gd/Av+ Av/Gd/Av+ Year Built 1988 1989 1994 1989 1989 1989 Equipment Full Appl Full Appl Std. Ktch 5 Std. Ktch 5 Std. Ktch 5 Std. Ktch 5 Location Good Good Good Good Good Good Concessions No 1/2 Month -29 1st Month -62 $300 -58 1st Month -58 1st Month -61 Occupancy 97% 86% 95% 93% 92% 97% Amenities Average Average Average Average Average Average Utilities Wtr/Sew/Trs Wtr/Sew/Trs Trsh 20 Wtr/Sew/Trs Wtr/Sew/Trs Wtr/Sew/Trs Cov. Parking No No Gar(extra) No No Gar(extra) Rents $661 $677 $700 $617 $669 $0.65 $0.67 $0.75 $0.67 $0.69 Estimated Subject Rent $640
Comparable Rent Analysis Two Bedroom Apartment
Subject Waterford Promenade Bridgewater West Port Colony Post Bay Data Data Adjst. Data Adjst. Data Adjst. Data Adjst. Data Adjst. Complex Size 379 384 334 260 324 312 Number 68 144 40 76 48 Unknown Unit Type 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom Baths 2 Bath 2 Bath 2 Bath 2 Bath 2 Bath 2 Bath Monthly Rent $710 $715 $749 $820 $690 $850 Size 901 1015 -10 1005 -10 1109 -20 918 1150 -25 Rent/Sq. Ft. $0.79 $0.70 $0.75 $0.74 $0.75 $0.74 Qlty/Cndt Av-Gd/Av+ Av-Gd/Av+ Good/Av+ -10 Av-Gd/Av+ Av-Gd/Av+ Av/Gd/Av+ Year Built 1988 1989 1994 1989 1989 1989 Equipment Full Appl Full Appl Std. Ktch 5 Std. Ktch 5 Std. Ktch 5 Std. Ktch 5 Location Good Good Good Good Good Good Concessions No 1/2 Month -29 1st Month -62 $500 -41 1st Month -47 1st Month -70 Occupancy 97% 86% 95% 93% 92% 97% Amenities Average Average Average Average Average Average Utilities Wtr/Sew/Trs Wtr/Sew/Trs Trsh 20 Wtr/Sew/Trs Wtr/Sew/Trs Wtr/Sew/Trs Cov. Parking No No Gar(extra) No No Gar(extra) Rents $676 $692 $764 $637 $760 $0.67 $0.69 $0.69 $0.69 $0.66 Estimated Subject Rent $710
The five rental properties used in the report are all considered to directly compete with the subject complex. All five rent comparables are located within two miles of the subject and all are reasonably similar in quality and condition. In comparison with the subject apartment complex, the rent comparables generally have overall similar amenity packages, but have larger average unit sizes and are all offering concessions. Rent concessions in the area are typical and appear to have influence on effective rental rates. Only Comparable 1, like the subject, offers washers and dryers in each of the units. Rent comparable 3 was the only complex to have a one-bedroom one-bath den unit, like the subject. The current base asking rent is $490 a month for the small one - bedroom units, $565 a month for the large one-bedroom units, $640 a month for the one-bedroom/den units, and $710 a month for the two-bedroom units. Additional rent of $15 to $25 is charged for lake views. A review of the July 19, 1996 rent roll indicates that the existing rent levels are in line with current base asking rents. The lag in market rent increases is offset by the additional rent charges. The rental rates for the competing properties indicate some rent premiums are paid for views. A copy of the current rent roll is provided at the addendum of the report. A summary of the rent roll is provided as follows. One-Bedroom (S) One-Bedroom (L) One-Bedroom (Den) Two- Bedroom Low Rent $475 $515 $615 $675 High Rent $540 $625 $745 $770 Mean Rent $493 $560 $655 $713 Median Rent $490 $563 $650 $710 Mode Rent $495 (30/128) $565 (36/156) $650 (5/27) $715 (14/68) Vacant/% 10/7.8% 8/5.1% 1/3.7% 4/5.9% After adjustments, the comparables have indicated monthly rents between $450 and $550 a month for the small one bedroom units, between $491 and $610 a month for the large one bedroom units, between $617 and $700 a month for the one bedroom den units, and between $637 and $764 a month for the two bedroom units. Based on the cited rent comparables, the market rents for the subject property are estimated at $490 a month for the small one bedroom units, $565 a month for the large one bedroom units, $640 a month for the one bedroom den units, and $710 a month for the two bedroom units. The projected rents are reasonably close to the mean of the adjusted rent range and are consistent with current asking rents. Vacancy and Collection Losses: Vacancy and collection loss is estimated at 7% on a stabilized basis. The five rent comparables had vacancy rates from about 3% to 14%. At the time of inspection, it was reported that the subject had about 11 vacant unrented units, but typically maintains a vacancy rate of roughly 6%. The subject property has three models, but no occupied nonrevenue producing units. It is, however, typically for the on-site manager to receive a two- bedroom unit free of charge. Documented historical vacancy and collection loss for the subject complex has ranged from 5.2% to 7.0% over the last two and a half years. Other Income: In addition to the rent income from the apartment units, other income is generated in the form of deposit forfeitures, laundry and vending income, pet fees, lost key fees, etc. When compiled, these sources of income typically generate approximately 1% to 3% of gross apartment rental income. Other income for the subject property has ranged from 2.1% to 3.4% and is estimated at the upper portion of the range, at 3% of rent income. Expenses: In order to estimate operating expenses, income and expense information for both the subject apartment complex and other apartment complexes located in the area have been analyzed. Documentation for the subject property consisted of a two and a half year operating history. Overall expenses for apartment complexes with more than 150 units typically range from 35% to 50% of effective gross income or approximately $2,700 to $3,200 per unit. The expenses estimated for the subject result in an expense ratio of 47.15%, or $3,095 per unit. The expenses for the subject property are within the predominant range. Real Estate Taxes: The 1996 proposed assessed tax value for the subject property is $11,614,200. This estimated expense also considers the assessments of several comparable properties. Assessments tend to be below actual market value of the property. The following comparables have been used due to their similarity with the subject property. Complex Assessment Per Unit Waterford $15,048,900 $39,190 Bridgewater Place $10,677,800 $41,068 West Port Colony $12,424,800 $38,348 Subject $11,614,200 $30,644 Taking into account the smaller average unit size of the subject, the 1996 assessed value of $11,614,200 for the subject property would appear reasonable. The 1996 proposed millage rate for the subject neighborhood is 25.6430 and the proposed gross tax liability is $297,823. Millage rates and assessed values have generally been relatively stable over the past two years. It is estimated that the projection period real estate taxes will be slightly higher than the 1996 real estate taxes. The projected real estate taxes for the subject are estimated at $1.15 a square foot or $299,997. Insurance: Insurance costs typically range from $0.18 to $0.22 a square foot depending on such consideration as type of construction, project size, co-insurance clauses and location. The insurance expense for 1995 was reported at $59,378 however annualized 1996 is $40,670. The insurance for the subject property is, therefore, estimated at $0.20 a square foot or $52,173. Management Fees: Management fees, charged by professional management firms, range from 4% to 6% of effective gross income depending on project size, condition and general rent levels. Considering the current rental rates and size of the subject property in comparison with other rental properties in the Tampa Bay area, the management expense is estimated at 5.0% of effective gross income. The subject property is professionally managed by Decade Properties, who's management fee has ranged from 7.5% to 8.7% of effective gross income. It was reported that the fee was above market in lieu of up-front investor syndication costs. General and Administrative Expenses: This expense category includes those items necessary for on site administration of the property such as administrative salaries, supplies, telephone, etc. Again this could vary substantially due to overall size of the complex and the efficiency of management. The general and administrative expense is estimated to be $1.10 a square foot or $286,954. Historically the general and administrative cost for the subject has ranged from $278,023 to $296,006. Most apartment complexes the size of the subject operate efficiently with 7 to 10 employees. The subject property currently has 13 employees. Four carpenters are currently employed by the complex on a temporary basis to replace the untreated wood around all of the balconies with new pressure treated wood. It was reported that $100,000 was budgeted in 1996 to replace the wood around the balconies and is about half way completed. Utilities: All units are individually metered for electrical service. The expenses charged generally include common area electrical service and water, sewer, and trash removal for the entire property. Typically, utility expenses are from $400 to $650 a unit on an annual basis. The utility expense is estimated at $0.60 a square foot or $413 a unit ($156,520). Historical utility expenses have ranged from $143,415 to $153,231. Maintenance: This expense category includes normal costs for both interior and exterior building maintenance and grounds maintenance. It is expected that the maintenance expense for the subject would fall within a range of $0.80 to $1.00 a square foot. In review of historical maintenance costs, the maintenance expense is estimated at $0.90 a square foot. Marketing: The marketing expense for yellow page listings, periodic newspaper advertisements and listings in apartment rental publications, and is estimated to be about $0.07 a square foot. Reserves: Reserves are used to annualize future costs of major maintenance or replacement (short-lived) items. The managers and/or owners of most rental properties in the Tampa Bay area generally set aside little or no reserves for future capital expenditures. For this reason, the reserves typically do not meet future capital requirements. The calculation showing the estimated annual reserves needed to repair or replace short-lived items is shown as follows. The analysis assumes that increases in replacement costs will be offset by interest earned on the reserve account. Reserves Reserves Based on Based on Remaining Remaining Total Total Structural Replacement Economic Economic Economic Economic Component Cost / Life = Life / Life = Life ______________________________________________________________________ Roofs $ 163,263 / 12 = $ 13,606 / 20 = $ 8,163 Appliances $1,050,000 / 8 = $131,250 / 15 = $ 70,000 HVAC $ 525,860 / 8 = $ 65,733 / 15 = $ 35,057 Flooring $ 315,516 / 3 = $105,172 / 5 = $ 63,103 $315,761 $176,323 Estimated Cost Per Unit (379 Units) = $833 $465 The estimated reserve expense of $833 a unit reflects the reserves that are now required due to the lack of past contributions to a reserve account. The estimated reserve expense of $465 a unit reflects the contributions that would have been necessary if the reserve account had originally been in place. For the purpose of this report, the reserve expense is for illustration purposes only and will not be included in either the direct capitalization estimate or the discounted cash flow analysis. In order for reserves to be an expense item, the expenses for the improved comparables would need to be adjusted upward, thus causing a decrease in the indicated capitalization rates. Both methods will result in the same value estimates. ANALYSIS OF OPERATING HISTORY: The operating history for the subject indicates that revenues have increased by about 2% a year. Expenses over the two and a half year period fluctuated from 48.7% to 51.1% of effective gross income. The projected expense ratio is lower due primarily to the lower projected market management fee. As follows is a summary of the reconstructed income and operating statements for 1994 through 1996 (annualized), and a projection for upcoming year. The projected income and expense figures are consistent with figures found in the direct capitalization and discounted cash flow analysis. OPERATING HISTORY
Potential Gross Income $2,450,377 $2,534,428 $2,574,581 $2,597,040 $6,842 $9.96 Vacancy & Collection Loss 128,187 5.2% 160,649 6.3% 180,621 7.0% 181,793 7.00% 7.00% Rent Income $2,322,190 $2,373,779 $2,393,960 $2,415,247 $6,373 $9.26 Other Income 47,962 2.1% 54,178 2.3% 80,973 3.4% 72,457 3.00% 3.00% Effective Gross Income $2,370,152 $2,427,957 $2,474,933 $2,487,704 $6,564 $9.54 Percent Increase 2.4% 1.9% 0.5% Expenses: Real Estate Taxes $304,842 $298,528 $297,823 * 299,997 $792 $1.15 Insurance 29,964 59,378 40,670 52,173 $138 $0.20 Management 207,292 8.7% 188,428 7.8% 185,985 7.5% 124,385 $328 5.00% General & Administrative 278,023 296,006 278,107 286,954 $757 $1.10 Utilities 143,415 153,231 152,757 156,520 $413 $0.60 Maintenance & Repairs 223,449 225,747 230,887 234,780 $619 $0.90 Marketing 21,857 17,629 19,719 18,261 $48 $0.07 Total Expenses $1,205,842 $1,239,947 $1,205,948 $1,173,070 $3,095 $4.50 Percent Increase 2.8% -2.7% -2.7% Percent of Income 50.9% 51.1% 48.7% 47.2% Net Operating Income $1,164,310 $1,188,010 $1,268,985 $1,314,634 $3,469 $5.04 *Based on Public Tax Information
The rent roll, dated July 19, 1996 indicates rent income from existing leases at $202,462 a month (excluding vacant units). Based on a straight line projection, the effective gross income is calculated as follows. $202,462 X 12 Months = $2,429,544 Other Income (3.0%) 72,886 ---------- Annual Straight Line Projection $2,502,430 This straight line projection of $2,502,430 compares reasonably well with the projected effective gross income of $2,487,704. DIRECT CAPITALIZATION The last item needed to complete the summary of the income capitalization approach is deriving the capitalization rate (O.A.R.). Direct Capitalization is the process of converting income into value either by dividing the net income by an overall rate or by multiplying the potential or effective gross income by a multiplier. When valuing property by direct capitalization, it is essential that the market comparables reflect risk, income, expenses, and physical characteristics similar to those of the property being appraised. An overall capitalization rate is established by dividing a comparable's estimated net operating income by its selling price. The basic mathematical formula for deriving this overall rate is as follows: Net Operating Income -------------------- = O.A.R. Selling Price Income and expense information was available for three of the five comparables used in the sales comparison approach. Comparable 3 (Chesapeake Apartments) sold at a 9.32% capitalization rate, comparable 4 (Stonegate Apartments) sold at a 9.35% capitalization rate, and comparable 5 (Promenade at Carillon) sold at a 9.20% capitalization rate. While income and expense information was not available for comparable 1 (Lincoln Shores), it was reported that the capitalization rate was well above 9% apparently due to necessary capital improvements. Based on conversations with Paul Wikle, CCIM, of Wikle Properties, and John D. Selby CCIM of CB Commercial it was indicated that capitalization rates for 1990 vintage institutional grade apartment properties are in the 8.5% to 9.0% range, 1980 vintage institutional grade apartment properties are in the 9.0% to 9.5% range, and 1970 vintage institutional grade apartment properties are in the 9.5% to 10.0% range. Considering that the subject complex has good occupancy and is well maintained, it is believed that an appropriate capitalization rate for the subject would fall at the middle of the range for 1980 vintage institutional grade apartment properties. Based on the above analysis, the overall rate for the subject by market extraction is estimated at 9.25%. BAND OF INVESTMENT Another type of direct capitalization is the band of investment technique. This technique builds a capitalization rate by extracting information from the market. The information which is extracted is the equity investors component (equity dividend rate) and the mortgage component (mortgage constant). Conversations with area lenders indicate that conventional financing could be obtained for a property such as the subject at an interest rate of about 8.5% fixed . The typical loan is amortized over 25 years with a five year balloon. The typical loan to value ratio for a property such as the subject is about 80% and the typical required debt coverage ratio is about 1.20. Based on the current investment rate available in the market the equity dividend rate for the subject is estimated at 7%. Assumptions Mortgage Constant: (8.50%, 25 years) 0.096627 Equity Dividend Rate: 0.07 Mortgage 0.80 x 0.096627 = 0.07730 Equity 0.20 x 0.070000 = 0.01400 ------- 0.09330 Rounded 9.13% DEBT COVERAGE RATIO Another way of estimating an overall capitalization rate is by using the typical debt service coverage ratio required by lenders and multiplying this figure by the loan to value ratio and then by the mortgage constant. Conversations with area lenders indicated that they would typically require a debt coverage ratio of l.20 on a property such as the subject. Using the above data, the overall rate by the debt coverage ratio formula is estimated as follows: DCR LV MC OAR 1.20 80% .0966 = .0927 or 9.27% DCR = Debt Coverage Ratio LV = Loan to Value Ratio MC = Annualized Mortgage Constant OAR = Overall Capitalization Rate The three techniques indicate overall capitalization rates for the subject at 9.25%, 9.13% and 9.27% respectively. Typically newer properties in good condition command lower overall rates while older properties in poor condition command higher overall rates. Also, another major factor which influences overall rates is risk. The riskier the project or property, the higher the overall rate. The overall rate of 9.25% by market extraction is given the most weight. The overall rates by both the band of investment and the debt coverage ratio lend good support to the overall rate by market extraction. These two techniques, however are only given secondary weight because the data used in these techniques can change daily. Therefore, based on the above analysis the overall rate for the subject is estimated at 9.25%. Based on the cited data and above analysis, the market value of the subject by direct capitalization is estimated as follows: SUMMARY OF THE DIRECT CAPITALIZATION APPROACH Potential Gross Income 128 (1) 1/1 $490.00 $752,640 156 (2) 1/1 $565.00 $1,057,680 27 (3) l/lD $640.00 207,360 68 (4) 2/2 $710.00 579,360 ----------- Total Potential Gross Income 2,597,040 Vacancy and Collection Loss 7.00% 181,793 ----------- Total Rent Income 2,415,247 Other Income 3.00% 72,457 ----------- Effective Gross Income 2,487,704 Expenses Real Estate Taxes 299,997 Insurance 52,173 Management 124,385 General & Administrative 286,954 Utilities 156,520 Maintenance 234,780 Marketing 18,261 ----------- Total Expenses 47.15% 1,173,070 ----------- Net Operating Income $1,314,634 =========== Capitalization Rate 9.25 ESTIMATE OF VALUE BY THE INCOME APPROACH $14,212,259 Rounded to: $14,200,000 =========== Discounted Cash Flow Analysis: The discounted cash flow analysis is an additional income capitalization approach method of valuing an income producing apartment complex. This method involves projecting an income stream for the property over a period of time and converting the cash flow to a present value. In this case, we have projected the cash flow over a 10 year holding period which is generally the maximum time a project is held due to deterioration of tax benefits. Income and expenses for the first year of the cash flow analysis are estimated as previously described in the direct capitalization approach. The sales price at the end of the period (reversion) is estimated based on the eleventh year net operating income capitalized at 9.75%. From this is deducted a sale expense estimated at 5%. The major assumption in this approach is that growth in both income and expenses are estimated at 2% a year. The stabilized vacancy rate is estimated at 7% and is supported by the recent market trends. The 2% income and expense increases are consistent with historical increases, as well as, the current trend in the consumer price index (CPI). These estimates are based on current market experience and may vary widely over time, thus pointing out the major weakness of this approach. Two separate techniques are used reflecting, 1) an unleveraged deal and 2) a leveraged deal. 1) In the first technique, an unleveraged deal, the net operating income and the net proceeds of sale are discounted to present value. This discount rate is based on expected internal rates of return by investors on various types of unleveraged properties. We have chosen a discount rate of 11.0% based on the risk and an analysis of similar real estate investments. A survey in the December 1995 issue of Appraiser News, published by the Appraisal Institute, indicates required internal rates of return for apartment properties at about 10.0% to 13.0%. 2) The second technique, a leveraged deal, incorporates debt service and loan payoff into the calculations. For the purposes of this analysis a $11,337,675 loan (1.20 DCR) is assumed at 8.50% for 25 years. The resulting cash flow and proceeds at sale are discounted to present value, to arrive at a value of the equity investment. This is then added to the original mortgage amount to arrive at a value for the subject. Due to the higher risk associated with the equity in a leveraged deal, a discount rate of 16.00% is considered appropriate. In order to check the internal rate of return relative to the capitalization rate, a basic value change formula is used. As can be determined from the following analysis, the 11.00% and 16.00% yield rates appear reasonable. The Basic Value Change Formula UNLEVERAGED DEAL Yo = Ro + [delta] a Ro = 9.25% [delta] a = CR = Compounded Rate of Income Change = 2.00% Yo = 9.25% + 2.00% = 11.25% LEVERAGED DEAL Ye = Re + [delta] a Re = 7.00% [delta] a = CR = Compounded Rate of Income Change = 8.99% Ye = 7.00% + 8.99% = 15.99% Based on this analysis, the 10 year projected pro forma and the present value of the resulting cash flows, before and after, debt service can be calculated, as follows: MULTIFAMILY INCOME PROFORMA Project: Pelican Sound Location: 10200 Gandy Boulevard Date: 08/28/96 Gross Income Estimate:
Unit Type No. Rent/Mo. Rent/Yr. Vacancy Rate: 7.00% Expenses: Other Income: 3.00% (1) 1/1 128 $490.00 $752,640 Income Growth: 3.00% R.E. Taxes $1.15 /Sq.Ft. Expense Growth: 2.00% Insurance $0.20 /Sq.Ft. (2) 1/1 156 $565.00 $1,057,680 Reversion: Management 5.00% EGI Cap. Rate: 9.75% Utilities $0.60 /Sq.Ft. (3) 1/1E 27 $640.00 $207,360 Sales Expense: 5.00% Maintenance $0.90 /Sq.Ft. Mortgage: Marketing $0.07 /Sq.Ft. (4) 2/2 68 $710.00 $579,360 Amount: $11,337,675 Gen. & Admin. $1.10 /Sq.Ft. Interest Rate: 8.50% Amortization: 25 Potential Gross Income: $2,697,040 Debt Serv. $1,095,528 Total Sq. Ft. 260,867 Bal. year 10 $9,270,881 ================================================================================================================================== Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 ================================================================================================================================== Gross Income $2,597,040 $2,648.981 $2,701,960 $2,756,000 $2,811,120 $2,867,342 $2,924,689 $2,983,183 $3,042,846 $3,103,703 Vacancy & Collection $181,793 $185,429 $189,137 $192,920 $196,778 $200,714 $204,728 $208,823 $212,999 $217,259 Rent Income $2,415,247 $2,463,552 $2,512,823 $2,563,080 $2,614,342 $2,666,628 $2,719,961 $2,774,360 $2,829,847 $2,886,444 Other Income $72,457 $73,907 $75,385 $76,892 $78,430 $79,999 $81,599 $83,231 $84,895 $86,593 Eff. Gross Income $2,487,704 $2,537,459 $2,588,208 $2,639,972 $2,692,772 $2,746,627 $2,801,560 $2,857,591 $2,914,742 $2,973,037 Expenses: R.E. Taxes $299,997 $305,997 $312,117 $318,359 $324,726 $331,221 $337,845 $344,602 $351,494 $358,524 Insurance $52,173 $53,216 $54,281 $55,366 $56,474 $57,603 $58,755 $59,930 $61,129 $62,352 Management $124,385 $126,873 $129,410 $131,999 $134,639 $137,331 $140,078 $142,880 $145,737 $148,652 Gen. & Admin. $286,954 $292,693 $298,547 $304,518 $310,608 $316,820 $323,157 $329,620 $336,212 $342,937 Utilities $156,520 $159,650 $162,843 $166,100 $169,422 $172,811 $176,267 $179,792 $83,388 $187,056 Maintenance $234,780 $239,476 $244,265 $249,150 $254,133 $259,216 $264,400 $269,688 $275,082 $280,584 Marketing $18,261 $18,626 $18,999 $19,379 $19,766 $20,162 $20,565 $20,976 $21,396 $21,824 Total Expenses $1,173,070 $1,196,532 $1,220,462 $1,244,871 $1,269,769 $1,295,164 $1,321,068 $1,347,489 $1,374,439 $1,401,928 Net. Oper. Income $1,314,634 $1,340,927 $1,367,746 $1,395,100 $1,423,003 $1,451,463 $1,480,492 $1,510,102 $1,540,304 $1,571,110 Debt Service $1,095,528 $1,095,528 $1,095,528 $1,095,528 $1,095,528 $1,095,528 $1,095,528 $1,095,528 $1,095,528 $1,095,528 Cash Flow $ 219,106 $245,399 $272,218 $299,572 $327,474 $355,934 $384,964 $414,573 $444,775 $475,581
DISCOUNTED CASH FLOW ANALYSIS Cash Flow Summary: N.O.I. Cash Flow Year 1 $1,314,634 $219,106 Year 2 1,340,927 245,399 Year 3 1,367,746 272,218 Year 4 1,395,100 299,572 Year 5 1,423,003 327,474 Year 6 1,451,463 355,934 Year 7 1,480,492 384,964 Year 8 1,510,102 414,573 Year 9 1,540,304 444,775 Year 10 1,571,110 475,581 Reversion: Est. Sales Price 16,436,224 16,436,224 Sales Expenses 821,811 821,811 Mortgage Payoff 9,270,88 ----------- ------------ Net Proceeds $15,614,413 $6,343,533 =========== ============ Discount Rate: 11.00% 16.00% Present Value: Equity 13,835,237 2,938,513 Mortgage 11,337,675 ----------- ------------ Total Present Value $13,835,237 $14,276,188 Rounded to: $13,800,000 $14,300,000 ============ ============ This analysis uses two different assumptions to arrive at an estimate of value. The first is based on an unleveraged investment in the property and does not use the mortgage in the overall calculation. It is the present value of the Net Operating Income cash flows and reversion proceeds. The second method incorporates the mortgage into the calculations to arrive at a present value of the equity investment, to which is added the original mortgage amount. Summary of the Income Capitalization Approach Three methods have been used to derive a value by the income capitalization approach: capitalized net operating income, discounted cash flow (DCF) analysis - unleveraged and discounted cash flow (DCF) analysis - leveraged. These methods have yielded the following results: Capitalized Net Income: $14,200,000 DCF-unleveraged: $13,800,000 DCF-leveraged: $14,300,000 As indicated earlier, the discounted cash flow analysis methods are based on the necessary assumptions as to income and expense growth over the holding period. While every effort has been made to make an accurate projection, this estimate could be subject to wide fluctuations over time. For this reason, these methods were given slightly less weight in the final analyzes. The capitalized net income method is more closely related to actual market transactions, in that the capitalization rate is market derived. It does not require an opinion of future movement of income and expenses, but tends to reflect the markets perceptions as to future trends. Therefore, based on the foregoing analysis, the value indication by the income capitalization approach is: $14,200,000 RECAPITULATION AND FINAL RECONCILIATION The valuation of real property involves a systematic process in which the problem is defined, the procedure necessary to solve the problem is planned, and required data is acquired, classified, analyzed and reconciled into an final value estimate. "Reconciliation is the analysis of alternative conclusions to arrive at a final value estimate." The analysis considers the reliability and accuracy of the information used in the value conclusions for the cost approach, the sales comparison approach, and the income capitalization approach. The market value estimates for each of the three approaches used are: COST APPROACH $14,500,000 SALES COMPARISON APPROACH $14,300,000 INCOME CAPITALIZATION APPROACH $14,200,000 The cost approach is a method in which the value of a property is derived from creating a substitute property with the same utility as the subject. It is typically considered to be relatively reliable for new or proposed construction. The degree of error tends to increase in this approach commensurate with the degree of accrued depreciation. This approach includes an estimate of land value based on direct comparison of the subject site with sites having similar utility which have recently sold; an estimate of the replacement cost new of the improvements; and an estimate of all forms of accrued depreciation which is deducted from the replacement cost new estimate. Three comparable land sales were used to estimate the value of the subject site. The land comparables were the best known available in the market and lend adequate support to the estimated value of the subject site. The Marshall Valuation Service was used to estimate the replacement cost of the improvements and the depreciation estimate was based on an observation of the surrounding neighborhood. The subject was constructed in 1988 and has a considerable amount of accrued depreciation due to natural physical deterioration. The cost approach is considered the least reliable in the final value estimate. The sales comparison approach involves comparing similar properties that have recently sold, or similar properties that are currently offered for sale, with the subject. The basic principle of substitution underlies this approach. Five improved apartment comparable sales were used to estimate the market value of the subject. All of the sales were 1980 or 1990 vintage apartment complexes. Improved comparables 2 through 4 are located within about 13 miles of the subject and the remaining 2 improved comparables are located within the same geographical market area, within 2 miles of the subject. Three units of comparison were used in the sales comparison approach. The three units of comparison used include the indicated price per unit, price per room and price per square foot. After analysis, all three units of comparison indicated similar values estimates. The sales comparison approach was considered a reliable estimate of market value for the subject. The income capitalization approach is also reliable when estimating the value of an income property. This approach most nearly reflects the value of the property as an investment. This approach includes an analysis of the effective gross income which the subject is capable of generating, based on rents achieved and occupancy rates at competitive properties. A deduction for normal operating expenses is made in order to derive net operating income which is capitalized at an overall rate. The resulting figure is the estimated value by the income capitalization approach. Financial information supplied included a July 19, 1996 rent roll and a two and a half year operating history. Comparable rent data was readily available and the operating expenses, capitalization rate, and discount rates were well supported by market evidence. Two techniques were used in the income capitalization approach. The first technique used was direct capitalization and the second technique was a discounted cash flow analysis which considered both a leveraged purchase and an unleveraged purchase. Both techniques indicated value estimates which were reasonably similar. The income capitalization approach was considered a reliable estimate of market value for the subject. In the final estimate of value, both the income capitalization approach and the sales comparison approach were given equal greatest weight. The cost approach was given little consideration. Therefore, based on the cited market data and the foregoing analysis, the market value of fee simple interest in the subject in "as is" condition and as of the effective date of August 28, 1996 is estimated at: FOURTEEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($14,250,000) INCLUDING DEPRECIATED VALUE OF APPLIANCES FIVE HUNDRED FIFTY THOUSAND DOLLARS ($550,000) REAL PROPERTY THIRTEEN MILLION SEVEN HUNDRED THOUSAND DOLLARS ($13,700,000) ESTIMATED MARKETING TIME: We have reviewed the typical marketing time for apartment complexes in the Tampa Bay area, as well as, discussed the marketing time with knowledgeable commercial brokers. If appropriately priced and marketed, the marketing time of the subject property is estimated at 6 months. CERTIFICATE OF APPRAISAL I certify that, to the best of my knowledge and belief: - - The statements of fact contained in this report are true and correct. - - The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional analyses, opinions, and conclusions. - - I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved. - - My compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. - - My reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice; and the requirements of the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute. Unless otherwise stated herein, the departure provision does not apply. - - I have made a personal inspection of the property that is the subject of this report. - - No one provided significant professional assistance to the person signing this report. - - The appraiser has preformed within the context of the competency provision of the Uniform Standards of Professional Appraisal Practice. - - This report was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. - - The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. - - As of the date of this report, both Robert E. Riggins and William W. Atkinson have completed the requirements of the continuing education program of the Appraisal Institute. - - This appraisal recognizes the following definition of value: Market Value: as defined in Chapter 12, Code of Federal Regulations, Part 34.42(f) is, "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. buyer and seller are typically motivated; 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 United States 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. The market value of the property described herein, subject to the assumptions and limiting conditions set forth herein, as of August 28, 1996, in "as is" condition, is estimated to be: FOURTEEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($14,250,000) INCLUDING DEPRECIATED VALUE OF APPLIANCES FIVE HUNDRED FIFTY THOUSAND DOLLARS ($550,000) REAL PROPERTY THIRTEEN MILLION SEVEN HUNDRED THOUSAND DOLLARS ($13,700,000) Respectfully submitted: ___________________________ ____________________________ Robert E. Riggins, MAI, SRA William W. Atkinson, MAI President Vice President State-certified general real State-certified general real estate appraiser #0000605 estate appraiser #0001221 ASSUMPTIONS AND LIMITING CONDITIONS The Market Value estimate of the property or properties appraised is subject to the following assumptions and limiting conditions: 1. The legal description furnished is assumed to be correct. 2. No responsibility is assumed for matters legal in character nor is any opinion rendered herein as to title which is assumed to be good and merchantable. It is assumed that the property is free and clear of liens and encumbrances and under responsible ownership and management on the appraised date. 3. It is assumed that surveys and/or plats furnished to or acquired by the appraiser and used in the making of this report are correct. The appraiser has not made a land survey or caused one to be made and therefore assumes no responsibility for their accuracy. 4. Certain data used in compiling this report was given to the appraiser from sources he considers reliable; however, he does not guarantee the correctness of such data, although as far as is reasonably possible the data has been checked and is believed to be correct. 5. The soil and the area under appraisement appears to be firm and solid, unless otherwise stated. Subsidence in the area is unknown or uncommon but the appraiser does not warrant against this condition or occurrence. 6. Subsurface rights (mineral and oil) were not considered in making this report, unless otherwise stated. 7. Any riparian rights and/or littorial rights indicated by survey, map or plat are assumed to go with the property unless easements or deeds of record were found by the appraiser to the contrary. 8. Possession of this report, or copy thereof, does not carry with it, the right of publication or reproduction nor may it be used by anyone but the applicant without prior written consent of the applicant and the appraiser and in any event only in its entirety. This limitation is not to exclude applicant from copying the report in connection with the normal course of a mortgage application of syndication of the property. 9. The appraiser, by reason of this report, is not required to give testimony in court with reference to the property herein appraised nor is he obligated to appear before any governmental body, board or agent unless arrangements have been previously made thereof. 10. The distribution of the total valuation in this report between land and improvements applies only under the existing program of utilization. The separate valuations for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. 11. Neither all nor any part of the contents of this report shall be conveyed to the public through advertising, public relations, news, sales or other media without the written consent and approval of the author, particularly as to the valuation conclusions, the identity of the appraiser or firm with which he is connected, or any reference to the American Institute of Real Estate Appraisers, or the MAI designation. 12. We are not expert in determining the presence or absence of hazardous substances, defined as all hazardous or toxic materials, wastes, pollutants or contaminants (including, but not limited to, asbestos, PCB, UFFI, or other raw materials or chemical(s) used in construction, or otherwise present on the property). We assume no responsibility for the studies or analyses which would be required to determine the presence or absence of such substances or for loss as a result of the presence of such substances. The value estimate is based on the assumption that the subject property is not so affected. ADDENDUM FLOOD PLAIN MAP SUPPLEMENTAL SUBJECT PHOTOGRAPHS INTERIOR VIEW OF CLUBHOUSE SWIMMING POOL - FACING SOUTH LAKE AND APARTMENT BUILDINGS - FACING NORTHEAST TENNIS COURTS - FACING NORTHEAST INTERIOR OF APARTMENT UNIT INTERIOR OF APARTMENT UNIT INTERIOR OF APARTMENT UNIT GRAY BOULEVARD - FACING NORTHEAST GANDY BOULEVARD - FACING SOUTHWEST City of St. Petersburg Article X ZONING ORDINANCE RO-P RESIDENTIAL OFFICE PARKWAY SEC. 64.167 PURPOSE AND INTENT. This district is intended to permit either residential or office, or a compatible mixture of these uses, at medium intensity or density of 12 units per acre for multifamily use but with density up to 15 units per acre obtainable through utilization of Transfer of Development Rights (T.D.R.). Application of this district is intended for portions of major thoroughfares where a parkway and uncluttered character is desired, with development on large lots. Developments in this zoning district which are also located within a designated community redevelopment area as such area is defined in Chapter 163 of the Florida Statutes, shall be reviewed by the Community Redevelopment Agency (see Sec. 64.31.22 of the Zoning Ordinance) for compliance with adopted Redevelopment Plans. SEC. 64.168 PERMITTED PRINCIPAL USES AND STRUCTURES. (SUBJECT TO PROVISIONS OR RESTRICTIONS CONTAINED HERE AND ELSEWHERE IN THE CHAPTER.) Site Plans for permitted uses and structures with up to 20,000 square feet gross floor area inclusive or up to 60 units inclusive require approval by the City Manager. Uses and structures with more than 20,000 square feet gross floor area or 60 units will require Site Plan approval by the Environmental Development Commission. (1) Multifamily Development of not more than 60 units. (2) Special Residential Development of not more than 60 units. (3) Boarding and Rooming Houses of not more than 20 units. (4) Community Residential Homes for 1-14 residents, subject to conditions set forth in Sec. 64.09, Subsec. 31(a) and (b). (5) Offices, provided there be no commercial display windows or storefront type of buildings. (6) Churches. (7) Public Parks, Playgrounds and Playfields. (8) Financial Institutions, without drive-in facilities, provided there are no commercial display windows or storefront type of buildings, and no illuminated signs are erected that face residential districts, where feasible. (9) Parking Lots in connection with nearby commercial uses, where this district adjoins an office, commercial or industrial district, along rear or side lot lines without an intervening street (but with or without an intervening alley), provided: (a) Such parking lots may be permitted only between the office, commercial or industrial district and the nearest street in the residential district. (b) A 5-foot solid decorative masonry wall shall be erected along the sides of such off-street parking areas where they adjoin residential property or undeveloped property in the residential district. (c) No source of illumination for such parking lots shall be directly visible from any window in any residence. (d) There shall be no movement of vehicles on such lots between 10:00 p.m. and 7:00 a.m. (e) There shall be no sales or service activities on such lots, nor parking of house trailers of any kind, nor trucks, except for operative automobiles and appurtenances and light commercial vehicles for more than 24 hours. No drive through to an adjacent or abutting facility will be permitted. (10) Motels and Hotels. (11) Academic Schools; Colleges and Universities. (12) Bed and Breakfast Homes. SEC. 64.169 PERMITTED ACCESSORY USES AND STRUCTURES. (1) Uses and structures which: (a) Are customarily accessory and clearly incidental and subordinate to permitted or permissible uses and structures. (b) Are not of a nature prohibited under "Prohibited Uses and Structures." (2) Apothecaries, for the sale of medical supplies and drugs only, may be permitted as an internal accessory use with a medical office complex when the gross floor area of the medical complex is not less than 10,000 square feet and the apothecary gross floor area does not exceed 1,000 square feet. (3) Temporary structures and operations in connection with, and on the site of, building or land preparation developments, including dredging and filling, grading, paving, installation of utilities, construction, erection of field offices, and structures for storage of equipment and building materials; provided a certificate of occupancy shall have been issued therefor. SEC. 64.170 SPECIAL EXCEPTIONS PERMISSIBLE BY THE ENVIRONMENTAL DEVELOPMENT COMMISSION. (SEE SEC. 64.23) After public notice and hearing, and subject to appropriate con- ditions and safeguards, the Environmental Development Commission may permit: (1) Multifamily Development greater than 60 dwelling units. (2) Day Care Centers. Outdoor activity areas (i.e., playgrounds) for the day care center shall be visually shielded from a residential district by 6-foot high solid decorative walls or fences, in accordance with the Fence and Wall Limitations of Sec. 64.09, Subsec. 32 of the Zoning Ordinance. (3) Community Service Clubs when on a major street, as identified by the Major Street Map and made part of this ordinance. (4) Golf Courses. (5) Recreational Uses except those in which the conduct of com- mercial affairs plays a major part. (6) Community Residential Homes for more than 14 residents, subject to conditions set forth in Sec. 64.09, Subsec. 31(c). (7) Boarding and Rooming Houses greater than 20 units. (8) Nursing Homes, when on a major street. (9) Government and Community Buildings and Uses. (10) Business and Professional Schools. (11) Utility Substations. (12) Hospitals, provided the site abuts an arterial street, as identified by the Major Street Map and made part of this ordinance. (13) Mixed Uses of a permitted or permissible nature involving a residential use. (14) Financial Institutions with drive-in facilities, providing no structure or traffic lane is located closer than 25 feet to a residential property line nor shall alleys or driveways abutting residential property be used for such operations. (15) Special Residential Development greater than 60 units. (See Sec. 64.09, Subsec. 15.) (16) Laboratories. (17) Special Commercial Development when made an integral part of a development subject to the following: (a) The purpose and intent of Special Commercial Development shall be to create a unified planned development of residential and/or office use with a limited amount of commercial development designed in a comprehensive manner with controlled access, signage, hours of operation and delivery, and sufficient landscaping in order to avoid the appearance of strip commercial development. (b) Minimum total development size: five (5) acres. (c) Special Commercial Development limited to 5 percent of the gross floor area of any phase of construction for which a certificate of occupancy is issued, but not to exceed 20,000 square feet of gross floor area. (d) Special Commercial Development uses shall be limited to the following uses: 1. Retail stores; sales and display rooms and shops, establishments for servicing household appliances, other than gasoline engines, including places in which goods are produced for sale only at retail and only on the premises (provided that all sales, storage, display of goods, or allowable production of goods shall be within enclosed buildings). 2. Service establishments, with processing on the premises provided that not over ten (10) persons shall be employed in such processing. 3. Indoor eating and drinking establishments.1 (e) The applicant shall be required to demonstrate that the proposed Special Commercial Development will be supported by and dependent upon the remainder of the development and does not duplicate existing retail opportunities in the market area. (f) The Special Commercial Development shall be internally oriented within the development and easily accessible to the remainder of the development through internal roadways, pedestrian walkways, and bicycle paths. (g) The Special Commercial Development shall not have direct vehicular access to the roadway bordering the overall development but instead shall have indirect access by internally connecting to a primary access road which enters into the overall development. (h) No Certificate(s) of Occupancy shall be issued for any portion of the Special Commercial Development until a Certificate(s) of Occupancy has been issued for the development that supports the Special Commercial Development. For a development that has been approved in phases, a Certificate(s) of Occupancy can be issued for the Special Commercial Development in each phase after a Certificate(s) of Occupancy has been issued for the phase of the development that supports the Special Commercial Development. The Special Commercial Development in each phase of a development shall not exceed the requirements of Sec. 64.170 (16)(c). (i) The applicant shall submit, at the discretion of the Planning Department, a detailed transportation study based upon the proposed uses of the Special Commercial Development which shall demonstrate that the level of service of the roadway network surrounding the overall development will not be negatively impacted. The Planning Department shall approve the study methodology prior to the study being initiated. (j) No sign or other advertising device shall be erected for a Special Commercial Development use without the approval of the Environmental Development Commission but in no case shall it exceed normal RO-P signage requirements. (k) Hours of operation and for deliveries shall occur between the hours of 7 a.m. and 11 p.m. (18) Mortuaries. (19) Parking Garages. (20) Office Research and Distribution Activities subject to the following: (a) Minimum total development size: Five (5) acres. (b) Abutting at least one (1) major street as identified by the Major Street Map and made a part of this Ordinance. (c) Office-research as principal use, printing and distri- bution only as internal accessory used. (d) For purposes of all other zoning regulations, such facilities will be considered as offices. (21) Birthing Centers (See Sec. 64.06, Definitions). (22) Communication Towers. (23) Temporary Employment Offices, subject to the following: It is the intent of this ordinance that all temporary employment offices provide sufficient interior space to house all temporary employment clients that may be waiting on site until employment is located for their clients. Temporary employment offices shall identify the maximum number of clients that will be waiting for employment on site at any given time based on historical data and shall provide sufficient interior waiting space for these clients. The minimum space per client shall be seven (7) square feet. Adequate sanitary facilities shall be provided for the maximum number of clients. SEC. 64.171 PROHIBITED USES AND STRUCTURES. All uses and structures not of a nature specifically, provision- ally, or by reasonable implication permitted herein, and any use which the Environmental Development Commission, upon appeal, and after investigating similar uses elsewhere, shall determine to be potentially noxious, dangerous, or offensive to residents of the district or to those who pass on public ways by reason of odor, smoke, noise, glare, fumes, gas, fire, explosion or emission of particulate matter, or likely for other reasons to be incompatible with the character of the district. SEC. 64.172 MAXIMUM LOT DEVELOPMENT. (1) Residential; Hotels and Motels: Multifamily: 12 units per acre (3,630 square feet per unit). Multifamily (with T.D.R.): 15 units per acre (2,904 square feet per unit). Boarding and Rooming Houses: 3,630 square feet per dwelling unit and 750 square feet per boarding and rooming unit. Community Residential Homes: 3,630 square feet per dwelling unit with 200 square feet of living space per resident. Nursing Homes: 15,000 square feet for the first eight (8) bed plus 500 square feet for each additional bed. Hotels: 1,000 square feet per rental unit. Motels: 1,200 square feet per rental unit. (2) Mixed Uses (Nonresidential with Residential or Hotels and Motels): For determining allowable floor area for nonresidential, number of allowable units or required lot size. (See Sec. 64.09, Subsec. 17 of Text for examples.) (3) All Other Uses: Floor Area Ratio (F.A.R.) = 0.35 (4) For categories (2) and (3) above, when 50 percent or more of required parking is provided on the site within and as part of the principal structure or within a multiple level parking structure, the allowable F.A.R. = 0.50 and such parking area shall not be included in the allowable F.A.R. calculation. SEC. 64.173 MINIMUM LOT REQUIREMENTS. AREA AND WIDTH. Offices; Residential; Day Care Centers; Bed and Breakfast Homes: Lot area: One (1) acre Hospitals: Lot area: Ten (10) acres Schools: Lot width: 300 feet Lot area: Elementary: Four (4) acres plus one (1) acre per 100 students and major fraction thereof. Middle: Six (6) acres plus one (1) acre per 100 students and major fraction thereof. Senior High: Eight (8) acres plus one (1) acre per 100 students and major fraction thereof. All Other Uses: Lot area: One (1) acre; or as may be determined by the Environmental Development Commission for Special Exceptions. SEC. 64.174 MINIMUM YARD REQUIREMENTS. DEPTH AND WIDTH. Special Provisions and Restrictions: Required yards abutting streets shall contain no structures except the prime identification sign, walkways and perpen- dicular driveways. Such yards shall be planted with grass, appropriate shrubbery and trees in a manner which will not impede visibility of drivers and pedestrians. No part of a yard abutting a major street shall be used for parking. Front: 50 feet Side (Street): 50 feet on major streets; 25 feet on other streets. Side (Interior): 20 feet Yards between structures on a single lot: 20 feet Rear: 25 feet SEC. 64.175 MAXIMUM HEIGHT OF STRUCTURES. 35 feet; for each additional foot of setback on all sides measured at the ground, four (4) additional feet of height is permitted (See Sec. 64.09, Subsec. 3 for height limitations); and subject to the F.A.R. requirement and Airport height guidelines. SEC. 64.176 MINIMUM OFF-STREET PARKING AND OFF-STREET LOADING REQUIREMENTS. (SEE SEC. 64.09, SUB. 7 AND 8, AND LANDSCAPING FOR VEHICULAR USE AREAS ORDINANCE.) Multifamily Dwellings: One and one-half (1-1/2) spaces for each dwelling unit. Nursing Homes: One (1) space for each 300 square feet of gross floor area. Boarding or Rooming Houses: One (1) space for each dwelling unit plus one (1) space for each boarding or rooming unit or fraction thereof. Hotels and Motels: One (1) space per rental unit. Offices; Financial Institutions; Laboratories; Mortuaries: One (1) space for each 200 square feet of floor area. Mortuaries shall provide off-street space for formation of automobile processions. Day Care Centers: One (1) space shall be provided for every ten (10) persons in the day care center. However, in no case shall there be less than two (2) parking spaces on site. There shall be a drop off/pick up area on the site (preferably in the form of a circular driveway) for a minimum of three (3) vehicles in facilities with 20 or fewer persons; for five (5) vehicles in facilities with between 21-40 persons; for seven (7) vehicles in facilities with between 41-60 persons; and nine (9) vehicles in facilities with more than 60 persons . Churches: One (1) space for each 250 square feet in congregational seating area (including aisles) in church proper and in Sunday School or other meeting rooms and classrooms. Off- street space shall be provided for taking on and discharging passengers and for formation of automobile processions. Government and Community Buildings: Three (3) spaces for each office room, plus one (1) space for each 150 square feet of seating area (including aisles) in any room used for public meetings. Community Service Clubs: One (1) space for each 100 square feet of gross floor area, or one (1) space for each three (3) seats in any room for assembly, whichever is greater, and all parking shall be shielded from view by heavy plantings; no parking to be permitted in required yards of Community Service Clubs. Schools: Elementary and Middle: Two (2) spaces for each classroom or office room, plus one (1) space for each 150 square feet of seating area (including aisles) in any auditorium or any gymnasium or cafetorium intended to be used as an auditorium. Senior High, Business and Professional Schools, Colleges and Universities: Four (4) spaces for each classroom or office room plus one (1) space each 150 square feet of seating area (including aisles) in any auditorium or any gymnasium or cafetorium intended to be used as an auditorium. Hospitals: One (1) space for each two (2) beds plus one (1) space for each staff doctor. Parking for Handicapped: See Sec. 64.09, Subsec. 7-1. Community Residential Homes: With six (6) or fewer residents: Two (2) spaces. With seven (7) or more residents: Two (2) spaces, plus one (1) space for each three (3) residents. All Other Uses: One (1) space for each 200 square feet of gross floor area, or as may be determined by the Environmental Development Commission for Special Exceptions. LEGAL DESCRIPTION DESCRIPTION: (PROPERTY DESCRIBED IN SAFECO POLICY NO. 49498 AND CHELSEA POLICY NO. 37286) THAT PART OF THE SOUTHEAST 1/4 OF SECTION 18, AND THAT PART OF THE NORTHEAST 1/4 OF SECTION 19, TOWNSHIP 30 SOUTH, RANGE 17 EAST, PINELLAS COUNTY, FLORIDA, MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCE AT THE SOUTHWEST CORNER OF THE NORTH 3/4 OF THE NORTH 1/2 OF THE NORTHEAST 1/4 OF SECTION 19, TOWNSHIP 30 SOUTH, RANGE 17 EAST, PINELLAS COUNTY, FLORIDA; THENCE SOUTH 89" 55' 46" EAST, ALONG THE SOUTH BOUNDARY OF SAID NORTH 3/4, A DISTANCE OF 1035.00 FEET TO THE POINT OF BEGINNING; THENCE NORTH 0 DEGREES 14' 59" EAST, 790.91 FEET TO A POINT ON THE SOUTHERLY RIGHT-OF-WAY LINE OF STATE ROAD 600 (GANDY BOULEVARD) ACCORDING TO O.R. 4420, PAGE 6, PUBLIC RECORDS OF PINELLAS COUNTY, FLORIDA; THENCE ALONG AND WITH THE SOUTHERLY RIGHT-OF-WAY LINE OF SAID STATE ROAD 600. THE FOLLOWING SIX (6) COURSES: (1) NORTH 79 DEGREES 47' 00" EAST, 258.08 FEET; (2) NORTH 71 DEGREES 14' 32" EAST, 102.50 FEET; (3) NORTH 65 DEGREES 57' 53" EAST, 293.84 FEET, TO A POINT ON A CURVE THAT IS CONCAVE SOUTHEASTERLY, HAVING A RADIUS OF 2809.79 FEET; THENCE ALONG THE ARC OF SAID CURVE, A CHORD BEARING AND DISTANCE OF (4) NORTH 70 DEGREES 10' 36" EAST, 147.14 FEET; (5) NORTH 71 DEGREES 40' 31" EAST, 299.68 FEET; (6) NORTH 72 DEGREES 49' 16" EAST, 225.58 FEET; THENCE LEAVING SAID RIGHT-OF-WAY LINE SOUTH 0 DEGREES 31' 53" WEST, 210.57 FEET TO A POINT ON THE NORTH BOUNDARY OF THE NORTHEAST 1/4 OF SAID SECTION 19 THAT IS NORTH 89 DEGREES 54' 50" WEST, 327.22 FEET FROM THE NORTHEAST CORNER OF SAID NORTHEAST 1/4; THENCE SOUTH 0 DEGREES 09' 57" WEST, 372.67 FEET; THENCE NORTH 81 DEGREES 08' 18" EAST, 218.93 FEET; THENCE SOUTH 0 DEGREES 09' 57" WEST, 111.00 FEET FROM AND PARALLEL WITH THE EAST BOUNDARY OF SAID NORTHEAST 1/4, A DISTANCE OF 652.38 FEET TO A POINT ON THE SOUTH BOUNDARY OF NORTH 3/4 OF THE NORTH 1/2 OF SAID NORTHEAST 1/4 THAT IS NORTH 89 DEGREES 55' 46" WEST, 111.00 FEET FROM THE SOUTHEAST CORNER OF SAID NORTH 3/4; THENCE NORTH 89 DEGREES 55' 46" WEST, ALONG SAID SOUTH BOUNDARY, 1472.68 FEET TO THE POINT OF BEGINNING. ALL BEING IN THE SOUTHEAST 1/4 OF SECTION 18 AND THE NORTHEAST 1/4 OF SECTION 19, TOWNSHIP 30 SOUTH, RANGE 17 EAST, PINELLAS COUNTY, FLORIDA, SUBJECT TO RIGHTS-OF-WAY AND EASEMENTS OF RECORD. CONTAINING 31.591 ACRES, MORE OR LESS. Pelican Sound Building Code Review 07/19/96 DECADE PROPERTIES Page 1 4:24 pm PELICAN SOUND ID 3.6.6 Rent Roll As of 19 Jul 1996 Grouping codes included: ABCDEFGHIJKLMNOPQRSTUVWXY
Unit # Name Type Sq.Ft. Autobill Deposit Moved In Lease Ends Status 0201 Bowman, Margaret HARBOR.B 830 745.00 300.00 26 May 1995 Monthly 0 0202 Hoffman, Michael COVE 700 565.00 100.00 17 May 1996 28 Feb 1997 0 0203 Smith, Phyllis M COVE 700 550.00 100.00 30 Jun 1995 31 Jan 1997 0 0204 Calvert, Theresa J COVE 700 525.00 100.00 29 Jun 1994 31 Jul 1996 0 0205 Hope, Michael R COVE 700 525.00 200.00 9 Jul 1993 31 Jul 1996 NR 0206 Titus, Leanna COVE 700 565.00 100.00 31 May 1996 28 Feb 1997 0 0207 Goldfarb, Jami COVE 700 550.00 100.00 11 Jan 1995 31 Jan 1997 0 0208 Hall, Karen COVE.W 700 565.00 100.00 9 Feb 1996 28 Feb 1997 NU 0209 Crawford, Barbara COVE.W 700 555.00 100.00 5 Apr 1996 31 Jan 1997 0 0210 Moore, Christine Hylton COVE.W 700 560.00 100.00 3 Sep 1994 31 Oct 1996 0 0211 King, Duque & Sheri COVE.W 700 590.00 100.00 14 Jun 1996 30 Jun 1997 0 0212 Chapman, Michael COVE.W 700 555.00 200.00 15 Mar 1996 31 Dec 1996 0 0213 Miller, Angela L COVE.W 700 590.00 100.00 29 Nov 1995 28 Aug 1996 0 0214 Freeman, Holly COVE 700 535.00 200.00 1 Apr 1994 31 Dec 1996 0 0215 Vacant COVE 700 565.00 0.00 VU 0216 Wilson, Michael COVE.FP 700 530.00 100.00 1 Mar 1996 30 Nov 1996 0 0217 Davenport, Mellodee COVE 700 565.00 100.00 25 Jun 1993 31 Dec 1996 0 0218 Hamada, Denise COVE 700 565.00 100.00 24 Jun 1996 23 Mar 1997 0 0219 Latour, Edmund L COVE.FP 700 550.00 200.00 8 Sep 1995 30 Jun 1997 0 0220 Vacant COVE.W 700 590.00 0.00 VU 0221 Batdorf, Robert COVE.W 700 575.00 100.00 4 Jan 1995 31 Jan 1997 0 0222 Murphy, Mark T. COVE.WFP 700 575.00 100.00 20 Mar 1993 31 Oct 1996 0 0223 Sanders, Robert COVE.W 700 515.00 100.00 16 Feb 1996 28 Feb 1997 0 0224 Drutman, Robin COVE.W 700 565.00 200.00 20 Oct 1993 31 Oct 1996 0 0225 Tucker, Laura Lee COVE.WFP 700 545.00 250.00 24 Aug 1990 31 Aug 1996 0 0226 Lopez, Ralph A. COVE 700 540.00 100.00 27 Oct 1993 30 Sep 1996 0 0227 Capitano, Irene L. COVE 700 540.00 100.00 3 Oct 1991 30 Apr 1997 0 0228 Montiero, Lisamarie COVE 700 540.00 100.00 20 Jun 1995 31 Mar 1997 0 0229 Kraczkowski, Nicole COVE 700 530.00 100.00 26 Apr 1996 31 Jan 1997 0 0230 Zalesky, Jonathan COVE 700 540.00 100.00 2 Dec 1994 31 Dec 1996 0 0231 Lockley, Donna COVE 700 535.00 100.00 26 Mar 1993 31 Mar 1997 0 0232 Bobo, Karen COVE.W 700 565.00 100.00 14 Jul 1995 31 Jul 1996 NU 0233 Guiberson, Julie COVE.W 700 515.00 100.00 19 Feb 1996 28 Feb 1997 0 0234 Schaal, Michael COVE.W 700 590.00 100.00 18 Jun 1996 31 Mar 1997 0 0235 Vacant COVE.W 700 590.00 0.00 VR 0236 Teise, Kenneth COVE.W 700 625.00 100.00 12 May 1995 Monthly NR 0237 Crowder, Stephanie COVE.W 700 565.00 100.00 12 Apr 1996 30 Apr 1997 0 0301 Rauch, Patricia HARBOR.B 830 695.00 300.00 10 Nov 1995 30 Nov 1996 0 0302 Ransinger, Tonjia L. COVE 700 540.00 200.00 1 Jan 1994 31 Oct 1996 0 0303 Moyer, Lance COVE 700 540.00 100.00 19 Dec 1993 31 Dec 1996 0 0304 French, John COVE 700 600.00 100.00 16 Aug 1995 Monthly 0 0305 Schumacker, David COVE 700 520.00 200.00 21 Mar 1996 31 Dec 1996 0 0306 Clouse, Christine\Darrin COVE 700 532.00 100.00 29 Apr 1996 31 Dec 1996 0 0307 Vacant COVE 700 565.00 0.00 VR 0308 Parham, Kristi COVE.C 700 565.00 100.00 25 May 1996 31 May 1997 0 0309 Ivey, Misty M. COVE.C 700 540.00 100.00 11 Feb 1994 31 Jul 1996 0 0310 Johnson, Ellen COVE.C 700 555.00 100.00 16 Aug 1993 31 May 1997 0 0311 Horvath, Janet COVE.W 700 555.00 200.00 19 Apr 1996 31 Jan 1997 0 0312 Bodzianowski, Michael COVE.W 700 515.00 100.00 1 Mar 1996 28 Feb 1997 0 0313 Dankert, Richard COVE.W 700 625.00 100.00 5 Apr 1991 Monthly 0 0314 Cambron, Diana COVE 700 540.00 200.00 22 Mar 1989 31 Dec 1996 0 0315 Nordquist, Elizabeth COVE 700 515.00 100.00 26 Feb 1996 30 Nov 1996 0 0316 Miller, Glenn R. COVE.FP 700 560.00 100.00 5 May 1995 28 Feb 1997 0 0317 Daras, Nick COVE 700 565.00 100.00 15 May 1996 31 May 1997 0 0318 Ponton, Rae A COVE 700 545.00 100.00 14 Apr 1995 30 Apr 1997 0 0319 Mark, Reinhold COVE.FP 700 565.00 100.00 7 Jun 1996 30 Jun 1997 0 0320 McGloine, Frederick COVE.C 700 560.00 200.00 1 Sep 1995 30 Sep 1996 0 0321 Whitaker, Erin COVE.C 700 575.00 100.00 21 Jun 1996 30 Jun 1997 0 0322 Willman, Lisa M COVE.CFP 700 550.00 100.00 31 Aug 1995 31 Aug 1996 0 0323 Schoenfelder, Robert COVE.C 700 555.00 100.00 20 Feb 1993 31 Dec 1996 0 0324 Marti, John C. COVE.C 700 550.00 100.00 15 Nov 1993 30 Nov 1996 0 0325 Adams, Amy K. COVE.CFP 700 550.00 100.00 1 Sep 1994 31 Aug 1996 0 0326 Keely, Amy J COVE 700 565.00 200.00 19 Oct 1995 31 Jul 1996 0 0327 Webb, Teresa COVE 700 565.00 200.00 6 Oct 1995 31 Oct 1996 0 0328 Urena, Alfred COVE 700 540.00 200.00 31 Aug 1995 30 Sep 1996 0 0329 Kilroy, Renee L COVE 700 550.00 200.00 4 Aug 1995 28 Feb 1997 0 0330 Nayyar, Anjali K COVE 700 540.00 100.00 11 Aug 1995 31 Aug 1996 NU 0331 Eller, Mary L COVE 700 600.00 100.00 11 Oct 1995 28 Feb 1997 0 0332 Streetman, Shannon COVE.C 700 555.00 100.00 3 Mar 1995 31 Aug 1996 NU 0333 Armstrong, David COVE.C 700 555.00 100.00 30 Apr 1994 31 Mar 1997 0 0334 Streicher, Mark H. COVE.C 700 545.00 200.00 15 Mar 1995 31 Mar 1997 0 0335 Swanson, Nancy COVE.C 700 515.00 300.00 1 Mar 1996 28 Feb 1997 0 0336 Hillary-Hale, Cynthia COVE.C 700 575.00 100.00 1 May 1996 31 Jan 1997 0 0337 Paul, Marla COVE.C 700 565.00 100.00 31 Mar 1996 31 Dec 1996 0 0401 Farmer, Gregory W BAY.C 505 485.00 100.00 8 Sep 1995 30 Sep 1996 0 0402 Eligado, Monica BAY.C 505 485.00 100.00 19 Jan 1996 18 Jan 1997 0 0403 Gaffney, Katherine BAY.C 505 480.00 100.00 7 Jul 1995 31 Jul 1996 0 0404 Zucco, Tom F BAY.C 505 485.00 100.00 13 Oct 1995 31 Jul 1996 0 0405 Wilson, Frank BAY 505 485.00 100.00 18 Aug 1995 28 Feb 1997 0 0406 Murnane, Catherine BAY 505 480.00 100.00 31 May 1994 30 Sep 1996 0 0407 Tubbs, Sharon BAY 505 490.00 100.00 1 Apr 1996 31 Dec 1996 0 0408 Ahn, Sook Yul BAY 505 480.00 100.00 1 Dec 1995 30 Nov 1996 0 0409 Digby, Julia PORT.C 910 715.00 200.00 7 Jun 1996 30 Jun 1997 0 0410 Alterkruse, John M PORT.C 910 705.00 200.00 15 Nov 1995 31 Aug 1996 0 0411 Vacant PORT.CFP 910 720.00 0.00 VR 0412 Steinke, James PORT.C 910 715.00 200.00 5 Apr 1996 31 Jan 1997 0 0403 Gortot, Frank PORT.C 910 705.00 200.00 5 Jan 1996 31 Dec 1996 0 0414 Defilippo, Richard PORT.CFP 910 705.00 200.00 16 Feb 1996 30 Nov 1996 0 0415 Brodeur, Ronald PORT.C 910 705.00 300.00 6 Mar 1996 31 Dec 1996 0 0416 Lee, Marilyn PORT.C 910 705.00 200.00 26 Jan 1996 31 Oct 1996 0 0417 Johnson, Kelly J. PORT.CFP 910 740.00 400.00 1 Jan 1994 Monthly NU 0418 Schultz, Barbara H PORT 910 695.00 200.00 17 Feb 1995 28 Feb 1997 0 0419 Guerini, Rosemarie PORT 910 695.00 200.00 15 Feb 1996 31 Dec 1996 0 0420 Cooper, William PORT.FP 910 710.00 200.00 31 May 1996 31 May 1997 0 0501 Ramos, Ronald BAY 505 480.00 100.00 30 Jul 1993 30 Apr 1997 0 0502 Clement, Laurie BAY 505 490.00 100.00 29 Mar 1996 31 Mar 1997 0 0503 Blood, Andrea BAY 505 490.00 100.00 7 Jun 1996 30 Jun 1997 0 0504 Zucchetti, Jorge BAY 505 480.00 200.00 8 Sep 1995 30 Sep 1996 0 0505 Pfeiffer, Brooks F BAY.W 505 495.00 100.00 26 Apr 1995 31 Oct 1996 0 0506 Ringquist, Linda A BAY.W 505 490.00 100.00 1 May 1995 30 Apr 1997 0 0507 Brennan, Christoph BAY.C 505 485.00 100.00 30 Jun 1995 30 Jun 1997 0 0508 Asanaka, Miyaki BAY.C 505 480.00 100.00 22 Jul 1994 31 Jul 1996 0 0509 Foronda, Edwin PORT 910 695.00 200.00 2 Nov 1994 31 Oct 1996 0 0510 Buck, William R PORT 910 0.00 0.00 1 Dec 1995 30 Nov 1996 0 0511 Hetland, Vicki PORT.FP 910 705.00 200.00 16 Feb 1996 28 Feb 1997 0 0512 Williams, Ida PORT 910 705.00 120.00 17 Apr 1993 30 Apr 1997 0 0513 Phillips, Christopher PORT 910 695.00 300.00 29 Dec 1995 31 Dec 1996 0 0514 Gibson, John PORT.FP 910 680.00 200.00 19 Jul 1995 31 Jul 1996 NU 0515 Heisler, Jan M PORT.W 910 710.00 200.00 7 Jul 1995 31 Jul 1996 NR 0516 Stransky, Jason H NO CHECKS!! PORT.W 910 715.00 200.00 1 Sep 1995 31 Aug 1996 0 0517 Abasi, Tariq & Naheeda PORT.WFP 910 735.00 200.00 20 Jun 1996 30 Jun 1997 0 0518 Kim, Yun Joong PORT.W 910 715.00 150.00 18 Oct 1992 31 Oct 1996 0 0519 Sutton Iii, William PORT.W 910 715.00 250.00 20 Feb 1993 28 Feb 1997 0 0520 Landy, Susan PORT.WFP 910 715.00 200.00 24 Feb 1995 31 Aug 1996 0 0521 Ryan, Jennifer BAY 505 480.00 300.00 12 May 1995 28 Feb 1997 0 0522 Vacant BAY 505 490.00 0.00 VR 0523 Chambers, Lance BAY 505 480.00 200.00 9 Feb 1996 28 Feb 1997 0 0524 Ramos, Janet BAY 505 490.00 100.00 24 Apr 1996 30 Apr 1997 0 0525 Phillips, Paul BAY.C 505 530.00 100.00 23 Nov 1994 Monthly 0 0526 Fischer, Carson BAY.C 505 495.00 200.00 10 May 1996 31 May 1997 0 0527 Mays, Cristie BAY.W 505 505.00 200.00 5 Apr 1996 31 Jan 1997 0 0528 Brames, Mary BAY.W 505 485.00 100.00 5 Oct 1995 31 Jul 1996 0 0601 McCluskey, phillip D PORT 910 705.00 300.00 8 Jul 1994 30 Apr 1997 NU 0602 Freeney, Donna and Sonja PORT 910 705.00 200.00 3 Jun 1996 30 Jun 1997 0 0603 Merriewether, Thomas PORT.FP 910 680.00 150.00 28 Aug 1996 31 Aug 1996 0 0604 Holtz, Kimberely PORT 910 680.00 200.00 2 Jan 1993 31 Aug 1996 NU 0605 Kondelik, Jeanne PORT 910 745.00 300.00 27 Oct 1993 Monthly 0 0606 Cahenzli, Peter PORT.FP 910 695.00 200.00 20 Jan 1995 31 Jan 1997 0 0607 Desai, Sanjeev PORT.W 910 710.00 200.00 14 Jul 1995 31 Jul 1996 0 0608 Pattton, Jr., George W. PORT.W 910 715.00 200.00 10 Nov 1995 31 Aug 1996 NU 0609 Zawrotny, James T PORT.WFP 910 770.00 100.00 20 Jun 1995 Monthly 0 0610 Richardson, John R. PORT.W 910 725.00 150.00 24 Jun 1994 30 Jun 1997 0 0611 Sande, Blake PORT.W 910 725.00 300.00 3 May 1996 28 Feb 1997 0 0612 Bentley, Melinda PORT.WFP 910 735.00 200.00 19 Jul 1996 18 May 1997 0 0613 Hicks, Diana BAY 505 490.00 100.00 6 Jun 1996 31 May 1997 0 0614 Vacant BAY 505 490.00 0.00 VR 0615 Cloud, Drew BAY 505 490.00 100.00 8 Mar 1996 31 Dec 1996 0 0616 Coldwell, Pamela BAY 505 480.00 100.00 3 Feb 1995 28 Feb 1997 0 0617 Vacant BAY.W 505 505.00 0.00 VU 0618 Levin, Eric J BAY.W 505 490.00 100.00 25 Aug 1995 31 Aug 1996 0 0619 Vacant BAY.W 505 505.00 0.00 VR 0620 Ford, Regina M BAY.W 505 495.00 100.00 9 Dec 1994 31 Jul 1996 NU 0701 Vacant BAY 505 490.00 0.00 VU 0702 Tampalacio, Mariquit B BAY 505 480.00 100.00 18 Nov 1995 31 Aug 1996 0 0703 Thomsen, Robin BAY 505 485.00 100.00 16 Dec 1994 30 Jun 1997 0 0704 Turley, Marthan A BAY 505 525.00 545.00 18 Aug 1992 Monthly 0 0705 Cristobal, Malourdes BAY 505 490.00 100.00 26 Apr 1996 31 Jan 1997 0 0706 Moore, Perry BAY 505 490.00 100.00 12 Jan 1996 31 Aug 1996 0 0707 Suzuki, Kyoko BAY.W 505 495.00 200.00 27 Jan 1995 31 Oct 1996 0 0708 Lawrence, Katie BAY.W 505 495.00 200.00 29 Jul 1993 31 Dec 1996 0 0709 Rubin, Mark BAY.W 505 540.00 100.00 2 Jul 1993 Monthly NU 0710 Coleman, Julia L. BAY.W 505 495.00 100.00 7 Oct 1994 31 Dec 1996 0 0711 Cetraro, Marco BAY.W 505 495.00 100.00 6 Jul 1992 30 Apr 1997 0 0712 Royeton, John J BAY.W 505 490.00 100.00 14 Jul 1995 31 Jul 1996 NU 0713 Labbie, Douglas COVE 700 530.00 100.00 9 Sep 1994 30 Sep 1996 0 0714 Davis, Cheryl A. COVE 700 540.00 100.00 15 Jan 1994 31 Aug 1996 0 0715 Vacant COVE.FP 700 565.00 0.00 VU 0716 Horton, Allison COVE 700 565.00 100.00 19 Jul 1996 31 Jul 1997 0 0717 Everett, Karen COVE 700 565.00 100.00 15 Apr 1996 30 Apr 1997 0 0718 Barrow, Kevin COVE.FP 700 535.00 100.00 1 Apr 1994 31 Apr 1997 0 0719 Holt, Lisa COVE.W 700 575.00 200.00 2 Aug 1994 28 Feb 1997 0 0720 Bhangu, Mala COVE.W 700 565.00 100.00 9 Nov 1994 30 Nov 1996 0 0721 Grieve, Alistair COVE.WFP 700 590.00 100.00 2 Jan 1993 31 Aug 1996 0 0722 Lonas, Jeff COVE.W 700 565.00 200.00 1 Dec 1993 30 Nov 1996 0 0723 Moser, Sandra COVE.W 700 625.00 600.00 7 Aug 1995 Monthly 0 0724 Smith, Thomas COVE.WFP 700 590.00 100.00 11 Jun 1996 31 Mar 1997 0 0725 Laughery, Michael BAY.W 505 495.00 100.00 12 Jan 1996 31 Oct 1996 0 0726 Oliver, Linda BAY.W 505 505.00 100.00 15 May 1996 28 Feb 1997 0 0727 Shapiro, Michael NO CHECKS!!! BAY.W 505 495.00 100.00 5 Aug 1994 30 Nov 1996 0 0728 Gandia, Louis BAY.W 505 505.00 100.00 17 Feb 1996 31 Oct 1996 0 0729 Bryant, Laurin BAY.W 505 495.00 200.00 19 Jan 1996 31 Oct 1996 0 0730 Gorman, Joseph BAY.W 505 515.00 100.00 17 May 1996 31 Dec 1996 0 0731 Champlin, Krista BAY.C 505 485.00 100.00 21 Mar 1995 31 Jul 1996 NU 0732 Lincoln, Debbie BAY.C 505 480.00 100.00 28 Jan 1993 31 Aug 1996 NU 0733 Stern, Ellen L BAY.C 505 495.00 100.00 12 Jul 1996 31 Jul 1997 0 0734 Vacant BAY.W 505 505.00 0.00 VU 0735 Miller, Marilyn L BAY.W 505 530.00 200.00 18 Mar 1995 Monthly 0 0736 Richardson, John BAY.W 505 495.00 100.00 28 Jun 1996 30 Jun 1997 0 0801 Lewis, Russell HARBOR 830 635.00 200.00 6 Dec 1995 31 Jul 1996 NU 0802 Carden Jr., Jimmie W HARBOR 830 640.00 200.00 3 Apr 1995 30 Nov 1996 0 0803 Yureka, Karen/Blood, Barry HARBOR 830 630.00 200.00 31 Mar 1995 31 Oct 1996 0 0804 Le, Man M COVE 700 550.00 200.00 28 Apr 1995 30 Apr 1997 0 0805 Aschi, Michael COVE 700 545.00 100.00 10 Mar 1995 31 Dec 1996 0 0806 Ochs, Lynn E. COVE 700 575.00 100.00 19 Jan 1996 30 Sep 1996 0 0807 Pemberton, Monica COVE.W 700 590.00 100.00 8 Nov 1995 30 Nov 1996 NU 0808 Buendia, Janeth COVE.W 700 575.00 100.00 10 Jan 1995 31 Oct 1996 0 0809 Rooney, Jill COVE.W 700 565.00 100.00 1 Dec 1995 30 Nov 1996 0 0810 Shaarda, Roberta HARBOR.W 830 665.00 200.00 18 Jul 1996 31 Jul 1997 0 0811 Caruthers, David L HARBOR.W 830 700.00 200.00 30 Jun 1995 Monthly 0 0812 Young, Christina HARBOR.W 830 645.00 200.00 28 Jul 1995 31 Jul 1996 0 0813 Parker, Laura COVE 700 565.00 100.00 5 Jul 1996 30 Apr 1997 0 0814 Driscoll, Carolyn COVE 700 525.00 100.00 15 Mar 1996 31 Dec 1996 0 0815 Plotsky, Ellen S COVE.FP 700 550.00 100.00 1 May 1995 30 Apr 1997 0 0816 Knecht, Debbie K COVE 700 540.00 100.00 1 Sep 1995 31 Aug 1996 0 0817 Shephard, Scott COVE 700 565.00 200.00 13 May 1996 31 May 1997 0 0818 Martin, Keith W. COVE.FP 700 540.00 250.00 21 May 1993 31 Aug 1996 0 0819 Fotopoulous, Ted COVE.W 700 565.00 100.00 1 Jul 1992 31 Oct 1996 0 0820 Sluss, Mollie A. COVE.W 700 555.00 100.00 8 Jul 1994 31 Jul 1996 NU 0821 Autrand, Terry E COVE.WFP 700 575.00 100.00 26 Jun 1995 30 Jun 1997 0 0822 Julia Santiesteban COVE.W 700 515.00 100.00 1 Mar 1996 28 Feb 1997 0 0823 Pandya, Priti COVE.W 700 555.00 100.00 15 Mar 1996 31 Mar 1997 0 0824 Kuttner, Peter COVE.WFP 700 590.00 100.00 1 Mar 1996 28 Feb 1997 0 0825 Crisci, Christopher COVE 700 530.00 300.00 26 Apr 1996 31 Jan 1997 0 0826 McCalebb, Jennifer COVE 700 540.00 200.00 7 Mar 1996 31 Dec 1996 0 0827 Sparks, Jeff COVE 700 540.00 100.00 15 Jul 1994 31 Jul 1996 NU 0828 Steele, Richard HARBOR 830 625.00 200.00 19 Jan 1996 31 Oct 1996 0 0829 Alkire, George HARBOR 830 640.00 200.00 1 May 1996 30 Apr 1997 0 0830 Ohall, Carl J. HARBOR 830 625.00 250.00 28 Jan 1993 31 Aug 1996 0 0831 Kopec, Fred HARBOR.W 830 650.00 200.00 22 Feb 1995 28 Feb 1997 0 0832 Amador, Cornelio HARBOR.W 830 665.00 200.00 10 May 1996 31 May 1997 0 0833 Wartenberg, Karen HARBOR.W 830 650.00 300.00 12 Dec 1994 30 Sep 1996 0 0834 Vacant COVE.W 700 590.00 0.00 VU 0835 Frobeen, Christine COVE.W 700 555.00 200.00 15 May 1996 28 Feb 1997 0 0836 Barnard, Sherly L. COVE.W 700 565.00 200.00 23 May 1994 30 Sep 1996 0 0901 Pomerleau, David J. BAY 505 480.00 100.00 1 Nov 1995 31 Oct 1996 0 0902 Seale, Lanny R BAY 505 475.00 100.00 4 Aug 1995 31 Aug 1996 0 0903 Rubin, Suzanne T BAY 505 490.00 100.00 26 Nov 1993 31 Dec 1996 0 0904 Doyle, Daniel BAY 505 480.00 100.00 2 Jan 1996 31 Oct 1996 0 0905 Munsey, Victoria NO CHECKS! BAY 505 480.00 100.00 28 Apr 1995 31 Jul 1996 0 0906 Lucas, Tamara BAY 505 475.00 100.00 11 Aug 1995 31 Aug 1996 0 0907 Works, Amy C BAY.W 505 495.00 100.00 19 Apr 1995 31 Jul 1996 NU 0908 Sweeny, Chris BAY.W 505 495.00 100.00 7 Feb 1996 30 Nov 1996 0 0909 Linn, John BAY.W 505 505.00 100.00 17 Apr 1996 31 Jan 1997 0 0910 Alkhatib, Tenesia BAY.W 505 495.00 100.00 12 Oct 1995 31 Jul 1996 NU 0911 Salminen, Candace M BAY.W 505 490.00 100.00 25 Jul 1995 31 Jul 1996 0 0912 Stunden, Lorie BAY.W 505 505.00 100.00 29 Mar 1996 31 Dec 1996 0 0913 Taylor, Shana/Spalding, John COVE 700 565.00 100.00 5 Jul 1996 30 Jun 1997 0 0914 Schweers, Scott COVE 700 520.00 100.00 29 Mar 1996 31 Dec 1996 0 0915 Snowden, Contance COVE.FP 700 550.00 100.00 7 Apr 1995 31 Oct 1996 0 0916 Sullivan, Marcia COVE.W 700 575.00 100.00 1 Mar 1993 28 Feb 1997 0 0917 Mullen, Steven COVE.W 700 590.00 100.00 25 Jun 1996 31 Mar 1997 0 0918 Curtis, Heather COVE.WFP 700 590.00 200.00 26 Jun 1996 30 Jun 1997 0 0919 Vacant COVE.W 700 590.00 0.00 VU 0920 Stoltzfus, Jeffrey COVE.W 700 555.00 100.00 30 Apr 1996 31 Jan 1997 0 0921 Laplante, Glenn COVE.WP 700 555.00 100.00 10 Apr 1996 31 Jan 1997 0 0922 Bernard, Cameron COVE.W 700 565.00 100.00 1 Dec 1995 30 Nov 1996 0 0923 Swihura, Alison COVE.W 700 545.00 100.00 5 Apr 1996 31 Jan 1997 0 0924 Mahdi, Mojdeh COVE.WFP 700 575.00 100.00 25 Jun 1994 31 Aug 1996 0 0925 Greenberg, Sandy BAY.W 505 505.00 100.00 21 Jun 1996 30 Jun 1997 0 0926 Beyer, Chrisitine BAY.W 505 530.00 100.00 1 Oct 1993 Monthly 0 0927 Knapp, Kelly BAY.W 505 490.00 200.00 14 Jul 1995 31 Jul 1996 0 0928 Lynch, David BAY.W 505 495.00 100.00 17 Feb 1995 30 Nov 1996 0 0929 Cappa, John R BAY.W 505 495.00 100.00 9 Jun 1995 30 Jun 1997 0 0930 Koch, Kimberly BAY.W 505 490.00 200.00 30 Apr 1994 31 May 1997 0 0931 Grano, Joan BAY.W 505 505.00 100.00 27 Dec 1995 31 Jul 1996 0 0932 Brey, Thomas BAY.W 505 500.00 100.00 22 Jan 1994 31 May 1997 0 0933 Barrett, Mark E. BAY.W 505 495.00 100.00 20 Feb 1995 31 Oct 1996 0 0934 Unger, Irwin BAY.W 505 485.00 100.00 17 Jul 1992 30 Jun 1997 0 0935 Bise, Michele L BAY.W 505 495.00 200.00 28 Apr 1995 31 Mar 1997 0 0936 Ehlen, Mary BAY.W 505 505.00 100.00 29 Apr 1996 30 Apr 1997 0 1001 Teaman, Dan BAY 505 480.00 100.00 13 Feb 1996 28 Feb 1997 0 1002 Dorrance, Jennifer BAY 505 480.00 100.00 2 Jan 1996 31 Oct 1996 0 1003 Faren, Arnel I BAY 505 480.00 200.00 25 Aug 1995 31 Aug 1996 0 1004 Vacant BAY 505 490.00 0.00 VU 1005 Thornbrugh, Kristen BAY.W 505 505.00 300.00 24 May 1996 28 Feb 1997 0 1006 Giffin, Sherri C BAY.W 505 500.00 100.00 25 Aug 1995 30 Apr 1997 0 1007 Massaro, Nicholas BAY.W 505 495.00 100.00 11 Dec 1995 20 Sep 1996 0 1008 Hamilton, Mark BAY.W 505 495.00 100.00 15 Sep 1995 30 Sep 1996 0 1009 Armstrong, Jeanne T. PORT 910 695.00 300.00 27 Nov 1995 31 Aug 1996 0 1010 Jones, Katheryn PORT 910 695.00 200.00 29 Dec 1995 30 Sep 1996 0 1011 Embree, William PORT.FP 910 695.00 200.00 29 Oct 1994 31 Oct 1996 0 1012 Wilson, Christoph PORT 910 740.00 200.00 3 Jul 1995 Monthly 0 1013 Dattilo, Bill PORT 910 705.00 300.00 12 Apr 1996 31 Jan 1997 0 1014 Boren, Catherine & Bryan PORT.FP 910 695.00 200.00 12 Jan 1996 31 Jan 1997 0 1015 Baker, Angela PORT.W 910 715.00 200.00 7 Apr 1995 31 Aug 1996 0 1016 Janus, Frank PORT.W 910 735.00 200.00 1 Jul 1996 30 Jun 1997 0 1017 Mattson, Michael PORT.WFP 910 725.00 200.00 15 Apr 1996 30 Apr 1997 0 1018 Mac Harg, Michael PORT.W 910 715.00 200.00 24 Sep 1994 30 Sep 1996 0 1019 Herman, Deborah PORT.W 910 715.00 200.00 18 Aug 1995 31 Aug 1996 0 1020 Blessing-Watson, Carolyn PORT.WFP 910 710.00 300.00 21 Jul 1995 31 Jul 1996 0 1021 Scott, Glenn BAY 505 480.00 100.00 9 Nov 1995 31 Aug 1997 0 1022 Nichols, Deanna BAY 505 480.00 200.00 25 Feb 1995 30 Nov 1996 NU 1023 China, Catherine BAY 505 475.00 200.00 8 Jul 1994 30 Apr 1997 0 1024 Holmes, Suzanna BAY 505 480.00 100.00 6 Nov 1991 31 Oct 1996 0 1025 Rothwell, Bonnie BAY.W 505 505.00 100.00 28 May 1996 30 Apr 1997 0 1026 Evans, Jennefer BAY.W 505 505.00 100.00 7 Jun 1996 30 Jun 1997 0 1027 Thompson, William J BAY.W 505 495.00 100.00 8 Nov 1995 31 Aug 1996 0 1028 Vacant BAY.W 505 505.00 0.00 VR 1101 Cruz, Wilmer BAY 505 490.00 100.00 31 May 1996 28 Feb 1997 0 1102 Juckett, Christie BAY 505 480.00 200.00 25 Sep 1993 31 Aug 1996 0 1103 Fehr, Diana Jo BAY 505 480.00 200.00 11 Aug 1995 31 Aug 1996 0 1104 Wagers, Scott BAY 505 515.00 100.00 12 Aug 1994 Monthly 0 1105 Milligan, Michael BAY 505 490.00 100.00 12 Jul 1996 30 Apr 1997 0 1106 Flores, Jeanie M BAY 505 0.00 100.00 14 Jul 1995 31 Jul 1996 NU 1107 Flack, Kenneth BAY.W 505 495.00 100.00 22 Dec 1995 30 Sep 1996 0 1108 Macmaster, Frank J BAY.W 505 540.00 200.00 18 Aug 1995 Monthly 0 1109 Yastrop, Mark BAY.W 505 495.00 100.00 6 Feb 1996 30 Nov 1996 0 1110 Anderson, Muriel BAY.W 505 505.00 100.00 7 Jun 1996 31 May 1997 0 1111 Nelson, Edward M. BAY.W 505 495.00 100.00 30 Jun 1994 31 Jul 1996 0 1112 Mann, Terry M BAY.W 505 495.00 100.00 6 Apr 1995 31 Jan 1997 0 1113 Marchaesi, Jeff & Donna COVE 700 565.00 100.00 19 Jul 1996 31 Jul 1997 0 1114 Hunt, Clarence COVE 700 515.00 100.00 23 Feb 1996 28 Feb 1997 NR 1115 Walters, Lois/Loyd COVE.FP 700 565.00 200.00 1 Feb 1996 31 Oct 1996 0 1116 Dahlstrom, Lisa M COVE 700 550.00 100.00 29 Jun 1995 30 Jun 1997 0 1117 Binios, Angela COVE 700 565.00 100.00 25 Sep 1995 3 Sep 1996 0 1118 Hanny, James COVE.FP 700 520.00 100.00 5 Apr 1996 31 Jan 1997 0 1119 Dobson, Nathan COVE.W 700 590.00 100.00 22 May 1996 31 May 1997 0 1120 Tiedemann, Terry J COVE.W 700 565.00 100.00 1 Jul 1995 30 Nov 1996 0 1121 O Conner, Kevin H COVE.WFP 700 590.00 100.00 7 Aug 1995 30 Sep 1996 0 1122 Davis, Thomas M COVE.W 700 565.00 100.00 16 Nov 1995 30 Nov 1996 0 1123 Cuppy, Shawnine COVE.W 700 590.00 200.00 31 May 1996 31 May 1997 0 1124 Kaufhold, Steven COVE.WFP 700 565.00 100.00 8 Feb 1996 30 Nov 1996 0 1125 Edwards, Terry BAY 505 475.00 100.00 19 Sep 1994 30 Nov 1996 0 1126 Newman, Terrence BAY 505 490.00 100.00 8 Mar 1996 31 Dec 1996 0 1127 Mayhall, Robert C. BAY 505 475.00 100.00 7 Jul 1995 30 Apr 1997 0 1128 Renner, Scott BAY 505 490.00 100.00 23 Jan 1996 31 Aug 1996 0 1129 Drost, William BAY 505 490.00 100.00 5 Jul 1996 31 Jul 1997 0 1130 Bodie, Matthew BAY 505 480.00 100.00 22 Dec 1995 3 Sep 1996 0 1131 Lamb, Marie BAY.W 505 505.00 100.00 15 Mar 1996 28 Feb 1997 0 1132 Carrington, Jon BAY.W 505 525.00 100.00 12 Nov 1994 Monthly 0 1133 Martin, Jennifer BAY.W 505 495.00 200.00 6 Oct 1995 30 Sep 1996 NU 1134 Reiss, William BAY.W 505 505.00 100.00 10 Jul 1996 30 Apr 1997 0 1135 Janis, Anne BAY.W 505 495.00 100.00 23 Feb 1990 31 Aug 1996 0 1136 Eric, Doyle BAY.W 505 505.00 100.00 1 May 1996 30 Apr 1997 0 1201 Cholowski, Ann M HARBOR 830 615.00 200.00 10 Jul 1995 31 Jul 1996 0 1202 Hamilton, Rebecca L HARBOR 830 615.00 200.00 28 Jul 1995 31 Jul 1996 0 1203 Vacant HARBOR 830 640.00 0.00 VU 1204 Desai, Sanjeev COVE 700 545.00 100.00 10 Mar 1995 30 Sep 1996 0 1205 Creely, Curt P COVE 700 540.00 100.00 28 Jul 1995 31 Jul 1996 0 1206 Tharpe, Donald W COVE 700 565.00 200.00 6 Oct 1995 31 Jul 1996 0 1207 Sesin, Anthony COVE.W 700 565.00 200.00 4 Nov 1994 31 Aug 1996 0 1208 Vacant COVE.W 700 590.00 0.00 VR 1209 Stoneking, Stephanie COVE.W 700 600.00 100.00 1 May 1996 30 Nov 1996 0 1210 Obara, Kathleen HARBOR.W 830 650.00 150.00 10 Mar 1994 31 Jul 1996 NU 1211 Morelli, Michelle HARBOR.W 830 650.00 200.00 22 Nov 1995 30 Nov 1996 NU 1212 Steimle, Eric HARBOR.W 830 665.00 200.00 15 May 1996 31 May 1997 0 1213 Dhaliwall, Lori COVE.W 700 0.00 0.00 26 Apr 1996 30 Apr 1997 NU 1214 Ashworth, Sherwood COVE.W 700 625.00 100.00 9 Jun 1995 Monthly 0 1215 Shelton, Wesley E COVE.WFP 700 565.00 200.00 25 Aug 1995 31 Aug 1995 0 1216 Mulks, Lori-Meyers, Todd COVE.W 700 545.00 300.00 29 Feb 1996 30 Sep 1996 0 1217 Massar, Joe COVE.W 700 590.00 100.00 17 May 1996 28 Feb 1997 0 1218 Goodall, Lorilee COVE.WFP 700 575.00 100.00 24 Jan 1995 31 Oct 1996 0 1219 Guertin, Kevin COVE.W 700 625.00 200.00 15 Oct 1993 Monthly 0 1220 Bloom, Jonathan COVE.W 700 515.00 200.00 16 Feb 1996 15 Feb 1997 0 1221 Megill, Scott COVE.WFP 700 545.00 300.00 29 Feb 1996 30 Nov 1996 0 1222 Doxater, Jay W COVE.W 700 590.00 100.00 1 Nov 1995 31 Oct 1996 0 1223 Arbuckle, Craig D. COVE.W 700 625.00 100.00 1 Jun 1994 Monthly 0 1224 Foley, Dennis M. COVE.WFP 700 590.00 100.00 1 Nov 1995 31 Oct 1996 0 1225 McLaughlin, Julie COVE.W 700 545.00 100.00 22 Mar 1996 31 Dec 1996 NU 1226 Cochrane, Jennifer COVE.W 700 590.00 100.00 19 Jul 1996 31 Jul 1997 0 1227 Deason, Gale COVE.W 700 545.00 100.00 29 Feb 1996 30 Nov 1996 0 1228 Josuweit, Thomas HARBOR.W 830 650.00 200.00 20 Dec 1995 31 Dec 1996 0 1229 Sebetzki, George HARBOR.W 830 650.00 200.00 21 Aug 1994 31 Jul 1996 NR 1230 McKyton, Richard HARBOR.W 830 645.00 200.00 28 Jul 1995 31 Jul 1996 0 1231 Fratarcangeli, Linda HARBOR.W 830 665.00 300.00 5 Apr 1996 31 Jan 1997 0 1232 Gerber, Kenneth HARBOR.W 830 645.00 200.00 28 Jul 1995 31 Jul 1996 0 1233 Dawe, Jonathon HARBOR.W 830 665.00 150.00 1 Feb 1993 30 Nov 1996 0 1234 Vacant COVE.W 700 590.00 0.00 VU 1235 Borte, Angela COVE.W 700 565.00 200.00 30 Dec 1995 30 Sep 1996 0 1236 Zander, Kimberly COVE.W 700 565.00 100.00 20 Nov 1995 31 Aug 1996 0 1301 Foster, Tim R PORT 910 695.00 200.00 16 Nov 1995 31 Aug 1996 0 1302 Zipfel, Erika PORT 910 0.00 0.00 1 Dec 1995 30 Nov 1996 0 1303 Holland, Robert E. PORT 910 730.00 200.00 28 Jan 1995 Monthly 0 1304 Alchin, John PORT 910 705.00 200.00 15 May 1996 28 Feb 1997 0 1305 Shuttera, Nicole PORT.W 910 735.00 250.00 1 Jul 1994 31 Jan 1997 0 1306 Crooks, Michael PORT.W 910 735.00 200.00 19 Jul 1996 31 Jul 1997 0 1307 Abshier, Stacie PORT.W 910 715.00 200.00 22 Dec 1995 30 Sep 1996 0 1308 Long, Elizabeth PORT.W 910 710.00 200.00 7 Jul 1995 31 Jul 1996 0 1309 Gilmore, Martha PORT 910 740.00 350.00 17 Apr 1994 Monthly 0 1310 Sanchez, Michell PORT 910 695.00 400.00 29 Jul 1994 31 Aug 1996 0 1311 Mahajan, Ranjan PORT.FP 910 695.00 200.00 5 Sep 1995 30 Jun 1997 0 1312 Vacant PORT 910 710.00 0.00 VU 1313 Campbell, James PORT 910 675.00 150.00 1 Aug 1994 31 Jul 1996 NU 1314 Fort, Kenyon PORT.FP 910 710.00 200.00 21 Jun 1996 30 Jun 1997 0 1315 Merchant, Christoph PORT.W 910 770.00 200.00 3 Nov 1995 Monthly 0 1316 Hutchinson, Buffie J PORT.W 910 715.00 300.00 8 Sep 1995 30 Sep 1996 0 1317 Einwalter, Norma PORT.WFP 910 715.00 200.00 6 Dec 1995 30 Sep 1996 0 1318 Hilley, Patricia PORT.W 910 715.00 200.00 5 Oct 1995 31 Oct 1996 0 1319 Turrell, Kathleen PORT.W 910 725.00 300.00 7 Feb 1996 30 Sep 1996 0 1320 Mc Killop, Jerry & Patricia PORT.WFP 910 720.00 250.00 13 Jun 1992 30 Jun 1997 0 1321 Vacant BAY 505 490.00 00.00 VU 1322 Hennessey, Sheryl BAY 505 480.00 100.00 7 Apr 1995 31 Jan 1997 0 1323 Dennie, Calvin R BAY 505 475.00 100.00 16 Nov 1994 31 Aug 1996 0 1324 Carter, Levon BAY 505 480.00 100.00 9 Dec 1994 30 Nov 1996 0 1325 Ciccarone, Michael BAY.W 505 495.00 100.00 30 Jun 1995 30 Jun 1997 0 1326 Palmer, Kenneth BAY.W 505 505.00 200.00 10 Jul 1996 31 Jul 1997 0 1327 Gudino, Richard BAY.W 505 495.00 100.00 6 Mar 1996 31 Dec 1996 0 1328 Spirtos, Nicki BAY.W 505 490.00 100.00 1 Aug 1994 31 Jul 1996 NU 1329 Morgan, Debra BAY.W 830 695.00 300.00 10 Oct 1994 31 Oct 1996 0
Code Status # Units Rent Schedule Amount ==================================================================================================== O Occupied, No Notice 324 Units Occupied-- 202,462.00 Actual Rent NU Occupied, Notice 29 Units Vacant-- 11,775.00 Unrented Vacant Potential NR Occupied, Notice 5 VU Vacant, Unrented 13 100% (Gross) 214,237.00 Potential Value VR Vacant, Rented 8 SU Charging A Skip, 0 Total Escrow 53,815.00 Unrented Deposits SR Charging A Skip 0 Total Rentable 258,130 Square Feet ==================================================================================================== Total Units 379 379 ====================================================================================================
SEP-09'OO MON 15:46 ID: TEL NO:# 660 P02 R: PELICANS PELICAN SOUND INCOME STATEMENT INCOME STATEMENT 1/1/93-7/31/96 1/1/96- 1993 1994 1995 7/31/96 ________________________________________________________________ GROSS POTENTIAL RENT 201,285 2,450,377 2,534,428 1,501,839 RENT LOSS-VACANT (16,149) (154,074) (169,631) (94,534) RENT LOSS-DELINQUENT (4,174) (82,818) (23,239) (7,874) RENT CONCESSION (638) (9,295) (2,781) PRIOR MONTH RENT 1,269 67,799 32,344 4,983 PREPAID RENT 3,377 41,544 9,172 (5,156) TOTAL RENTAL INCOME 185,608 2,322,190 2,373,779 1,396,477 SERVICE INCOME 3,328 46,088 53,345 45,632 OTHER INCOME 49 1,874 833 1,602 TOTAL INCOME 188,985 2,370,152 2,427,957 1,443,711 PERSONNEL 21,564 219,249 239,765 134,418 OFFICE - SITE 2,666 20,850 20,851 11,208 ADVERTISING & MARKETING 1,757 21,857 17,629 11,503 OUTSIDE CONTRACTORS 1,285 45,317 41,124 27,539 BUILDING SERVICES 10,438 117,487 117,938 65,702 SUPPLIES 1,225 34,741 34,830 16,603 UTILITIES 23,297 143,415 153,231 89,108 GROUNDS 4,273 60,383 66,717 41,443 PROFESSIONAL FEES 813 3,183 560 REPAIRS COVERED BY INSURANCE 262 968 PROPERTY MANAGEMENT FEE 10,000 207,292 188,428 108,491 PROPERTY TAXES 28,609 304,842 298,528 163,000 INSURANCE 1,800 26,964 59,378 23,724 TOTAL OPERATING EXPENSES 107,727 1,205,842 1,239,947 692,739 NET OPERATING INCOME 81,258 1,164,310 1,188,010 750,972 Robert E. Riggins, SRA, MA Education: Memphis State University - Master of Science Degree (1980): Major - - Real Estate Finance; Minor - Economics. Memphis State University - Bachelor of Business Administration Degree (1970): Major - Economics; Minor - Accounting Courses: American Institute of Real Estate Appraisers (AIREA): I-A - Basic Appraisal Principals, Methods and Techniques I-B - Capitalization Theory and Techniques II - Urban Properties VI - Real Estate Investment Analysis IX - Appraisal Administration and Review IV - Litigation Valuation Courses: Appraisal Institute Standards of Professional Practice, Parts A & B Capitalization Theory, Part B Uniform Residential Appraisal Report Seminars: Statistics in Real Estate (AIREA) Multifamily Appraisal Seminar (SREA) Investment Feasibility Analysis (SREA) Market and Marketability Analysis (SREA) Cash Flow and Risk Analysis (SREA) Instructor - Single Family Underwriting Seminar (MBA) FHLBB - R-41(c) Seminar (AIREA) Standards of Professional Practice (SREA) New URAR Appraisal Report (Appraisal Institute) 1993 USPAP "Core" Law HUD Lender Selection Roster Appraiser Training (11/94) Professional Affiliations: Member of the Appraisal Institute, MAI Designation #6123. Past President and Member of the Board of Directors, Memphis Chapter #53 of the Society of Real Estate Appraisers. Past Chairman of the Educational Committee and Candidates Committee, Memphis Chapter #51 of the American Institute of Real Estate Appraisers. Board of Directors of the Tampa Bay Chapter of the Appraisal Institute. Beta Sigma Phi, National Honorary Scholastic Fraternity. Member - FNMA Condominium Task Force. Experience: President, RIGGINS, ATKINSON, COMBS & ASSOCIATES, INC. (1994-- Present) Senior Vice President and Regional Manager, Commercial Real Estate Appraisals, AppraisalFirst, Inc. (1990 - 1994). Vice President and Regional Manager, Commercial Real Estate Appraisals, AppraisalFirst, Inc. (1987 - 1990). Regional Manager, Commercial Real Estate Appraisals, AmeriFirst Appraisal Company (1985-1987). Senior Vice President, Construction and Commercial Lending, Banksmiths Mortgage Corporation (1984-1985). Senior Vice President, Chief Appraiser, Citizens Mortgage Corporation (1983-1984). Vice President, Commercial Lending and Commercial Appraisal Departments, Leader Federal Savings and Loan Association (1972- 1983). Licenses: Licensed Real Estate Broker, State of Florida. State Certified, General Appraiser # 0000605 The Appraisal Institute conducts a program of continuing education for designated members. Designated members who meet the minimum standards of this program are awarded periodic educational certification. Robert E. Riggins is currently certified under this program. William W. Atkinson, MAI Education: Florida State University 1986, Tallahassee Florida, Bachelor of Science Degree in Finance and Real Estate. Minor in Accounting. Courses: Florida State University Real Estate Feasibility Analysis Real Estate Principles and Practices Real Estate and Its Legal Environment Real Estate Appraisal Real Estate Market Analysis Real Estate Finance Appraisal Institute Standards of Professional Practice SPP, Part A (9/94) Standards of Professional Practice SPP, Part B (9/94) Real Estate Appraisal Principles 1A1 (10/89) Basic Valuation Procedures 1A2 (3/90) Capitalization Theory and Techniques, Part A IBA (3/91) Capitalization Theory and Techniques, Part A lBB (6/91) Case Studies in Real Estate Valuation (11/92) Report Writing and Valuation Analysis (6/93) Non-Residential Demonstration Report (10/94) The Appraiser's Complete Review (2/95) Comprehensive Exam (2/95) Commercial Investment Real Estate Institute Financial Analysis For Commercial Investment Real Estate CI 101 (4/96) Market Analysis For Commercial Investment Real Estate CI 201 (8/96) Decision Analysis For Commercial Investment Real Estate CI 301 (5/96) Seminars: Appraisal Institute Demonstration Non-Residential Report Writing (3/94) USPAP "Core" Law (6/94) U.S. Department of Housing & Urban Development HUD Lender Selection Roster Appraiser Training (11/94) Professional Affiliations: Member of the Appraisal Institute, MAI Designation #10,975 Candidate For CCIM Designation Experience: Vice President, Riggins, Atkinson, Combs & Associates, Inc. (1994-Present) Staff Appraiser, Residential and Commercial Division - AppraisalFirst, Inc., Clearwater, Florida. (1987-1994) Staff Appraiser, Residential Division - AmeriFirst Appraisal Company, Clearwater, Florida (1986-1987) License: Licensed Real Estate Broker - State of Florida. State-certified general appraiser #0001221 ANNEX B: APPRAISAL OF THE MEADOWS II AN APPRAISAL OF THE MEADOWS - PHASES II, III & IV A 316 Unit Apartment Community LOCATED AT 201 - 401 North Thompson Drive Madison, Wisconsin FOR THE DECADE COMPANIES, INC. 250 PATRICK BOULEVARD SUITE 140 BROOKFIELD, WISCONSIN 53045 BY T. M . WARNER, MAI, SRA Wisconsin Certified General Appraiser 227 EFFECTIVE DATE OF APPRAISAL September 25, 1996 The Meadows II Apartments 201-401 North Thompson Drive Madison, Wisconsin Table of Contents PAGE Assumptions and Limiting Conditions. . . . . . . . . . . . . .-1- Market Value Defined . . . . . . . . . . . . . . . . . . . . .-2- Hazardous Materials. . . . . . . . . . . . . . . . . . . . . .-3- ADA Compliance . . . . . . . . . . . . . . . . . . . . . . . .-3- Property Rights Appraised. . . . . . . . . . . . . . . . . . .-3- Purpose Of The Appraisal . . . . . . . . . . . . . . . . . . .-4- Function Of The Appraisal. . . . . . . . . . . . . . . . . . .-4- Appraisal Scope. . . . . . . . . . . . . . . . . . . . . . . .-4- Inspection . . . . . . . . . . . . . . . . . . . . . . . . . .-4- Market Delineation . . . . . . . . . . . . . . . . . . . . . .-4- Data Sources . . . . . . . . . . . . . . . . . . . . . . . . .-4- Valuation Process. . . . . . . . . . . . . . . . . . . . . . .-5- Taxes and Assessments. . . . . . . . . . . . . . . . . . . . .-6- Zoning . . . . . . . . . . . . . . . . . . . . . . . . . . . .-6- Flood Hazard Statement . . . . . . . . . . . . . . . . . . . .-6- Legal Description. . . . . . . . . . . . . . . . . . . . . . .-6- Owner Of Record. . . . . . . . . . . . . . . . . . . . . . . .-6- Market Analysis. . . . . . . . . . . . . . . . . . . . . . . .-8- Subject Market Summary . . . . . . . . . . . . . . . . . . . .-8- Estimated Marketing Period . . . . . . . . . . . . . . . . . .-8- Neighborhood Description . . . . . . . . . . . . . . . . . . .-9- Site Description . . . . . . . . . . . . . . . . . . . . . . -10- Physical Description of Improvements . . . . . . . . . . . . -10- Highest and Best Use . . . . . . . . . . . . . . . . . . . . -12- The Three Approaches to Value. . . . . . . . . . . . . . . . -14- The Cost Approach. . . . . . . . . . . . . . . . . . . . . . -14- Direct Sales Comparison Approach . . . . . . . . . . . . . . -21- The Income Capitalization Approach . . . . . . . . . . . . . -29- Correlations and Conclusions . . . . . . . . . . . . . . . . -37- Certification. . . . . . . . . . . . . . . . . . . . . . . . -39- Addenda Surveys Photographs Site Plans Corporate Resume General Area Data Qualifications of the Appraiser September 25, 1996 Mr. Michael Sweet The Decade Companies 250 Patrick Boulevard, Suite 140 Brookfield, Wl 53045 RE: The Meadows Apartments - Phases II, III & IV 201- 401 North Thompson Drive Madison, Wisconsin 53714 Dear Mr. Sweet: As requested, we have prepared an analysis and valuation of the above captioned property, an irregularly shaped improved site containing a total of 848,224 square feet, or 19.473+/- acres, more or less. The site has twelve two story and basement, wood frame construction apartment buildings containing 316 apartment units, pool area, tennis courts and other recreational features. The buildings were built in 1977 to 78,79 and 1980. The buildings contain a total of 254,836+/- square feet. There are also asphalt parking areas, drives, pool, deck fencing, tennis courts, walks and patios, landscaping and project signage as described in the report. The subject's zoning is R4 Multi-Family Residential. The improvements represent a legal and conforming use in accordance with this zoning classification. The property is served by all utilities, including municipal sewer and water, and commercial gas, telephone and electric service. We have reviewed the Federal Reserve Board (FRB) rules regarding Appraisal Policies and Procedures effective 8/9/90, revised 10/94 and this report was prepared in conformance with these regulations. We have reviewed the Uniform Standards of Professional Appraisal Practice (USPAP), adopted by the Professional Standards Board of the Appraisal Foundation effective 4/27/87, revised 12/94 and to the best of our knowledge have followed the policies and procedures set forth in these regulations in appraising this property. Accordingly, this appraisal specifically complies with laws and regulations as defined in Chapters 15, 440, and 458, Wisconsin Statutes, and RL 80-86, Wisconsin Administrative Code. The value stated in this letter of transmittal is valid only in conjunction with the analysis found in the narrative portion of this report. Based on an inspection of the subject site, the improvements thereon, a study of the Southern Wisconsin apartment market, a study of sales, offerings of similar properties, as well as other environing factors pertinent to value, it is our opinion that the subject that the subject property has an estimated "Market Value" of the Fee Simple Estate as of September 25, 1996, of: Eleven Million One Hundred Thousand Dollars ($11,100,000)* *of which $1,422,000 is ascribed to the value of the land. No furniture, fixtures and equipment (FF&E) or any other personal property was valued in connection with this assignment. Respectfully submitted, T. M. Warner, MAI, SRA Wisconsin Certified and Licensed General Appraiser No. 227 As of the date of this report, I have completed the requirements of the Continuing Education Program of the Appraisal Institute Physically inspected subject property Assumptions and Limiting Conditions The certification of the Appraisers appearing in the appraisal report is subject to the following conditions and to such other specific and limiting conditions as are set forth by the Appraisers in the report The Appraisers assume no responsibility for matters of a legal nature affecting the property appraised or the title thereto, nor do the Appraisers render any opinion as to the title, which is assumed to be good and marketable. The property is appraised as though under responsible ownership. The Appraisers have made no survey of the property. Any sketch in the report may show approximate dimensions and is included to assist the reader in visualizing the property. The Appraisers are not required to give testimony or appear in court as a result of having made the appraisal with reference to the property in question, unless arrangements have been previously made therefor. Any distribution of the valuation in the report between land and improvements applies only under the existing program of utilization. The separate valuations for land and building must not be used in conjunction with any other appraisal and are invalid if so used. The Appraisers assume that there are no hidden or unapparent conditions of the property, subsoil or structures, which would render it more or less valuable. However, the appraisers have noted in the appraisal report any adverse conditions (such as, needed repairs, depreciation, the presence of hazardous wastes, toxic substances, etc.) observed during the inspection of the subject property or have become aware of during the normal research involved in performing the appraisal. Unless otherwise stated in the appraisal report, the appraiser has no knowledge of any hidden or unapparent conditions of the property or adverse environmental conditions (including the presence of hazardous wastes, toxic substances, etc.) that would make the property more or less valuable, and has assumed that there are no such conditions and makes no guarantees or warranties, express or implied, regarding the condition of the property. The appraiser will not be responsible for any such conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist. Because the appraiser is not an expert in the field of environmental hazards, the appraisal report must not be considered as an environmental assessment of the property. Information, estimates, and opinions furnished to the Appraisers and contained in the report were obtained from sources considered reliable and believed to be true and correct. However, no responsibility for accuracy of such items furnished the Appraisers can be assumed by the Appraisers. Disclosure of the contents of the appraisal report is governed by the Uniform Standards of Professional Appraisal Practice (USPAP) as adopted by the Appraisal Institute to which the Appraisers are affiliated. Neither all nor any part of the contents of the report or copy thereof (including conclusions as to the property's value, the identity of the Appraisers, professional designations, reference to any professional appraisal organizations, or the firm with which the Appraisers are connected), shall be used for any purposes by anyone but the client in the report, the borrower if appraisal fee paid by same, the mortgagee or its successors and assigns, mortgage insurers, consultants, professional appraisal organizations, any state or federally-approved financial institution, any department, agency, or instrumentality of the United States or any State or the District of Columbia, without the previous written consent of the Appraisers; nor shall it be conveyed by anyone to the public through news, advertising, public relations, sales, or other media without written consent and approval of the Appraisers. Appraisals subject to satisfactory completion, repairs, or alterations are contingent upon completion of the improvements in a workmanlike manner. (FHLMC 439, 1986) It is hereby certified that, as well as can be determined, the statements contained in this appraisal and upon which opinions expressed herein are based are correct, subject to the limiting conditions set forth. This appraisal report conforms with regard to format and content in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) as adopted by the Appraisal Institute to which the Appraisers are affiliated. All furnishings/equipment, except if specifically indicated or typically considered part of real estate, are disregarded and only the real estate is considered. Sales data used in this report is believed reliable but since it was not possible to inspect each property completely it is necessary to rely on information furnished by others and the value conclusions are subject to the correctness and verification of the said data. "Market Value", as defined below, does not reflect "Fair Value" as defined in foreclosure cases, which value may be less, nor does it reflect liquidation value. This report is not meant for insurance purposes, is not an energy inspection and is subject to an "Energy Efficiency Certificate, Stipulation or Waiver" as authorized by DILHR, if so required. This appraisal report was prepared for Mr. Michael Sweet of the Decade Companies, for company purposes and may not be used for any other purpose, without written consent from T. M. Warner, MAI, SRA. Market Value Defined The definition of "Market Value" according to Office of the Comptroller of Currency (OCC) 12 CFR 34, Subpart C 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; - Buyer and seller are typically motivated; - Both parties are well informed or well advised, and acting in what they consider their own best interests; - A reasonable time is allowed for exposure in the open market; - Payment is made in terms of cash in U.S. dollars * or in terms of financial arrangements comparable thereto; and - 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". * Adjustments to the comparables must be made for special or creative financing or sales concessions. No adjustments are necessary for those costs which are normally paid by seller as a result of tradition or law in a market area; these costs are readily identifiable since the seller pays these costs in virtually all sales transactions. Special or creative financing adjustments can be made to the comparable property by comparison to financial items offered by a third party institutional lender that is not already involved in the property or transaction. Any adjustment should not be calculated on a mechanical dollar for dollar cost of the financing or concession but the dollar amount of any adjustment should approximate the market's reaction to the financing or concessions based on the Appraisers' judgment. To aid the casual reader of this report, basic, non-definitional principles of Market Value are summarized below: - Market value is an economic concept based on the notion of trading one thing for another according to an agreed-on element of exchange such as money, services, goods, or real estate. - Market value is not the same as either "price" or "cost". - Market value assumes that a marketplace exists in which privately owned properties can be traded and that government supports and encourages, but also regulates (and therefore contributes to), the private market and the ownership of property. - Market value is based on values established in transactions between independent parties and is the equitable standard for determining value between such parties when voluntary negotiation is not possible. - Market value is determined by the market, even when it is not possible to precisely define the nature or extent of that market. Hazardous Materials The value estimated is based on the assumption that the property is not negatively affected by the existence of hazardous substances or detrimental environmental conditions, unless otherwise stated in this report. The Appraisers are not experts in the identification of hazardous substances or detrimental environmental conditions. The Appraisers' routine inspection of and inquiries about the subject property did not develop any information that indicated any apparent significant hazardous substances or detrimental environmental conditions which would affect the property negatively unless otherwise stated in this report. It is possible that tests and inspections made by a qualified hazardous substance and environmental expert would reveal the existence of hazardous substances or detrimental environmental conditions on or around the property that would negatively affect its value. ADA Compliance The Appraiser(s) have not, nor are they qualified to conduct an evaluation to determine whether or not the subject building complies with Title 111 of the Americans With Disabilities Act (ADA) printed in the Federal Register, CFR Part 36, July 26, 1991, effective January 26, 1992 relating to Public Accommodations and Commercial Facilities containing Public Accommodations. Regardless of ADA Compliance, this appraisal assumes any improvements have been completed in a workmanlike manner and in accordance with the plans and specifications and building codes of said Community or State, whichever applies. Property Rights Appraised To be appraised are the leased fee property rights in and to the herein described real estate. Fee simple ownership is described as follows: 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. Purpose Of The Appraisal This appraisal is made to estimate the current "Market Value" of the Fee Simple ownership of the subject property. Function Of The Appraisal The estimated "Market Value" as reported is to serve as a basis establishing value for for internal purposes of the ownership entity. Appraisal Scope An appraisal is a supported estimate of market value; the appraisal process itself is a type of research study or project including analysis of information found and conclusion drawn about the estimated value of the property appraised. Specifically, the report includes information about the real estate market, its supply and demand balance, and information about marketing terms, pricing, and values. As stated, the objective of the appraisal is to estimate market value of the property appraised. The appraisal is a process of research and analysis; the appraisal report is the written summary of that physical and mental activity. Thus, it is important to define here, as well as in various sections of this appraisal, the "Scope" is the extent and nature of the research and analysis involved in the appraisal process. Specific Assignment The appraisal assignment is to value the land (including any excess land) and all proposed improvements, including building fixtures and appurtenances attached thereto by each of the three recognized approaches to value: the Cost, Income Capitalization, and Direct Sales Comparison Approaches, and to establish the contributory value of any fixed building service equipment. No furnishings, fixtures and equipment (FF&E) or any other personal property was valued in connection with this assignment. Inspection The property was inspected for appraisal purposes on September 21 and September 25, 1996 by T. M. Warner, MAI, SRA. The effective date of valuation is the date of inspection, September 25, 1996. Market Delineation The subject market area is defined as similar apartment areas in Southeastern Wisconsin, focusing on the Madison Metropolitan property markets. Naturally, comparable improved and vacant land sales in the immediate area were given the greatest consideration in the market analysis. Of the specific comparable vacant and improved properties researched by the Appraisers as a basis of comparison, all are regarded as "arm's length" sales and in a market not normally subject to speculation. The motivational factors of the sales will be discussed in the valuation section to follow. Data Sources Comparable property research data sources included the appraiser's real estate market information files and computer records, physical signs indicating comparable property for sale, for lease, or sold (and corresponding agent or broker), published advertising, published news articles, personal interviews, various assessors and the appraisers' other public record reporting services. These sales and offerings were verified by physical inspection, examination of county records and conversations with the owners and/or agents of the individual properties. Included within this report is an analysis of vacant land and similar improved properties that are (were) the most comparable to the subject. The valuation of the subject is based on the (subject's) highest and best use, as defined later within this report. Cost information for the building and land improvements was obtained from the "Marshall Valuation Service" published by Marshall and Swift, Los Angeles, California, and the "Boeckh Building Valuation Manual" published by E. H. Boeckh Company, New Berlin, Wisconsin, a division of Thomson Publishing Corp. Valuation Process Application of the three conventional valuation techniques including the Cost Approach, the Direct Sales Comparison Approach and the Income Capitalization Approach, resulted in independent value estimates. In a complete appraisal, all three approaches are considered and the reasonableness and appropriateness of each technique was weighted in comparison to typical market behavior. A complete discussion of this process is located at the end of the valuation sections in the reconciliation of the three approaches. PROPERTY SALIENT FACTS Taxes and Assessments The subject property is identified as Tax Key Numbers 0710-032- 1502,1503 & 1504. The property is presently assessed as follows: Land $1,246,000 Improvements 7,154,000 Total $8,400,000 The 1995 net real estate taxes were $269,370. The present assessment ratio is 98.83%, indicating a real estate value of $8,499,444. Note: The value estimated as reported in this appraisal differs from the Tax Assessor's estimate of "Fair Market" value. As is customary, we did not consult the Assessor to question the method(s) used in the estimation. Accordingly, we are unable to review the Assessor's findings and/or comment on the accuracy of the estimate itself. No discernable pattern exists with the assessments in the area; however, we have found the commercial assessments to be relatively fair between the various properties. Zoning Zoning classification for the property is R-4 Multi-Family Residential District and the existing improvements represent a legal and conforming use in accordance with this zoning classification. All building and land improvements on the site were approved by the City of Madison. Flood Hazard Statement According to the flood hazard map published by the Department of Housing and Urban Development for the Federal Insurance Administration (FEMA) Community Panel 5500830019-D, the subject site is in a Zone C, an area of minimal flood hazard. Legal Description The subject's legal description is: Phase II: Lot 2 Certified Survey Map 1872 Phase III: Lot 1 of Certified Survey Map 2982 Phase IV: Lots 2 & 3 Certified Survey Map 2982 as further described on the attached and included surveys of lands located in the City of Madison, Dane County, Wisconsin. Owner Of Record According to Dane County Register of Deeds, there have been no recent sales of the subject property. The property was purchased in January, 1989 by the Decade Companies for $10,049,173. Area Information Regional Overview - Madison Metropolitan Area The subject is located in the city of Madison, Dane county, Wisconsin. The City of Madison is part of Madison-Dane County Metropolitan Area (SMA). Madison is located in south central Wisconsin, 140 miles northwest of Chicago and 290 miles southeast of Minneapolis. It is the state capitol and second largest city in the state. The Madison metro area had a population of 393,788 in 1995. The January of 1994 population was 389,677 and the 1990 population was 367,085. This is the largest increase in population of the 13 metro counties in Wisconsin. Madison has been a very stable community because of its major employer - the University and state and federal government. The University of Wisconsin at Madison employs 26,467 with the next major employers, the UW Hospital with 4,528 the US government with 3,700 and the Madison school district with 3,462. The unemployment rate has remained under 2% while the state has average 3.8% almost two percent under the national rate of 5.8%. The City of Madison has attracted much press in the last several years. It topped "Money" magazines list of Best Places to Live recently. Included is a copy of the article from the July, 1996 issue which will provide and detail many statistics and background information. Summary The Madison Metropolitan area's accessibility to major markets, its excellent location and superior transportation facilities, its diversified economy and its favorable social and cultural climate insure its position as an important center for trade and commerce. Prospects for continued growth and prosperity are excellent. Market Analysis MULTIPLE FAMILY MARKET The apartment market in Madison has a history of consistent growth. There are approximately 45,300 rental in the city of Madison and 69,100 rental units in Dane county. Over the past three years construction of new multi-family units in Madison has average approximately 1,100 unit per year. The balance of supply and demand has kept overall vacancy rate in the 3 to 6 percent range for most properties. 1995 was the year that construction neared saturation and the market neared an overbuilding state. Occupancies neared 7% in the far west region of Madison in 1995. The market has recovered through 1996 with projects like the Meadows now having waiting lists for several of its unit types. Newer construction will have its niche but higher construction costs and locations that are further from current amenities and workplaces should lessen their competitive impact. Subject Market Summary - Real Estate Sales With the exception of the 1990-91 recession, in spite of declining real estate values in other areas of the country, area market values have been stable to increasing. Overall, we have seen no evidence of decreasing local real estate values and this stable to upward trend is expected to continue into the foreseeable future. Demand for apartments and small freestanding one story buildings continues to be the strongest segment of the office, industrial and retail markets. Financing Ample funds are available; however, area lenders require a considerable amount of equity in multi-family properties. Although the lenders are very selective, financing for quality borrowers with 20 to 30%+/- equity has been available. Interest rates have risen slightly from the previous 25-year low observed in mid to late 1993. Summary - Estimated Marketing Period An overview of the market for property similar to the subject suggests a "typical" marketing period of less than six months. As will be mentioned later, a project similar to the subject, the 465 unit "Country Meadows" was recently offered for sale and has received over a dozen offers within a 60 day period. It is our opinion that the marketing time should be within the above mentioned time frame assuming the following: - That the subject's condition at the time of offering was the same as described in this report. - That the subject offering price was within a reasonable range of this appraisal's estimated "Market Value". Neighborhood Description The subject is located in the northeasterly portion of Madison. The area is primarily single and multifamily residential. Stoughton Road where local shopping is located is one-half mile to the west. Typical Developments The immediate area is single family residential to the south and west. There is commercial further east along Stoughton Road and the main Madison post office at Milwaukee and Stoughton intersection. To the north of Highway 30 is multifamily and single family residential in the area range in value from $75,000 to $180,000. The neighborhood is considered a stable residential area. Freeway Access/Transportation The site is buffered to the south by Highway 30 and to the east by the 1-90/94 right of way. Highway 30 and 1-90 are at higher grades than the project providing little objectionable noise pollution. The area has good transportation service with Thompson's access to the previously mentioned highways and to Milwaukee and Stoughton Roads. These streets also give good accessibility to other areas in the city and the surrounding counties. Adverse Influences Overall, the subject apartments are comparable in use to the area and do not exert or receive adverse market influences. General Remarks The area has good street access to other points in the Metropolitan Madison via via arterial streets and the freeway system. Residential values have been stable during the past year. There has been limited development of new apartments projects during the last year as developers completed rentup and stabilization of newly developed stock that had made the market become fragile. SITE IMPROVEMENTS Site Description Size The subject property has slightly over 1827 feet of frontage on North Thompson Drive, over 860 feet of frontage along the curve of Highway 30 to its north and to the southeast abuts the I90-94 right of way as can best be seen from the included surveys. The site is irregular in shape and contains 848,224 square feet or approximately 19.473 acres. Site Parking Area The subject has asphalt paved surface parking 512+/- cars. The existing asphalt paving is in average condition for its age. Concrete Concrete sidewalks, curbs, stairs and patios. There are individual patios for ground floor units. Landscaping Grass, trees and shrubs. Signs Project identification signs along N. Thompson, at the managers building and along Highway 30 and I90-94. Utilities Commercial electric and gas, municipal water, sanitary sewer and storm sewer. Topography The site is generally rolling sloping from the southeast. Bearing Quality No apparent problems. Drainage Appears adequate. Adverse Easements Typical utility, etc. To the best of the Appraisers' knowledge, there are no private restrictions, easements, or encroachments, etc., which would adversely effect the utility or value of the property. Special Assessments None known. Designated Flood Hazard Flood zone "C". See previous section of this report for map reference. Underground Tanks None known. Physical Description of Improvements The site is improved with a two story and basement apartment buildings, with a total of 316 units, of wood frame construction with brick veneer first story exterior and wood and stucco panel exterior surface finish. The 12 buildings are "L" shaped and contain a total of 254,836+/- square feet of above ground gross building. It should be noted that there is a difference between the referenced typical unit sizes and this calculated building area as shown on the rent roll. This is not unusual because typical unit sizes are a generalization. The calculated size is from surveys and the appraiser's measurements. Unit Layout Included are typical unit floor plans or layouts for the four unit types: one, two, three and four bedroom units. The subject has 100 one bedroom units, 192 two bedroom and 12 three bedroom and 12 four bedroom types of units. Building Specifications The quality of construction is assumed to be average for a building of this type. Year Built Phase II was built in 1977 to 78, Phase III in 1979 and Phase IV in 1980. Foundation Reinforced concrete footings and poured concrete block walls below grade, with a 4" reinforced concrete floor. Exterior Walls The buildings being built in phases have slightly different materials but are generally wood frame with brick veneer for the first story and wood and stucco panel trim on the second story. Wall Height 9'+/- story height for above grade levels. Framing Wood framing above grade. With wood trusses supporting the second floor and batt insulation in the first floor ceiling. The roof is supported by wood trusses. Roof Gable style, mediums pitched roof with asphalt shingles. Floors Basement Concrete as described previously. First Plyscore over wood joists. Second Appears to be glued floor system on deep floor trusses. Floor Finishes Corridors and stairwells are to be carpeted. The individual units will have a carpeted foyer, carpeting in the living rooms, bedrooms and walk-in closets and sheet vinyl in the kitchens. Bathrooms have a variety of finishes including carpet, vinyl and ceramic tile. Walls Painted 1/2" drywall on the interior walls, with 5/8" drywall on all exterior walls, common walls and both sides of the corridor walls. Assumes that there are double insulated walls on the common walls between units. Ceilings Flat painted 5/8" drywall ceilings. Windows Anodized aluminum framed double hung windows in the bedrooms, with self storing storms and screens. Each unit has an anodized aluminum framed patio door, with screens. Electrical The building has adequate electrical service, with each unit having 60+/- amps breaker boxes. All units have smoke alarms, as do the public areas, as required by building codes. Water Heater High recovery gas fired water heater. Heating/Air Conditioning Each building has hot water hydronic heating and separate sleeve electric air conditioning. Miscellaneous All units have electric range, refrigerator, dishwasher, hood and disposal. Highest and Best Use The following is given to clarify the concept of highest and best use. Highest and best use has been defined as: The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and results in the highest value. Alternatively, that use, from among reasonably probable and legal alternative uses, found to be physically possible, appropriately supported, financially feasible, and which results in highest land value. The definition immediately above applies specifically to the highest and best use of land. It is to be recognized that in cases where a site has existing improvements on it, the highest and best use may very well be determined to be different from the existing use. The existing use will continue, however, unless and until land value in its highest and best use exceeds the total value of the property in its existing use. Implied within these definitions is recognition of the contribution of that specific use to community environment or to community development goals in addition to wealth maximization of individual property owners. Also implied is that the determination of highest and best use results from the Appraisers' judgment and analytical skill, i.e., that the use determined from analysis represents an opinion, not a fact to be found. In appraisal practice, the concept of highest and best use represents the premise upon which value is based. In the context of most probable selling price (market value) another appropriate term to reflect highest and best use would be most probable use. In the context of investment value an alterative term would be most profitable use. In ascertaining the subject's highest and best use, consideration was given to such factors as zoning, location, surrounding developments, the nature of the existing building improvements and the current demand for land/buildings that are similar to the subject. The Land As If Vacant Given the land use pattens of Madison and present zoning for the area, the land would likely be improved with a similar multi- family residential buildings. Summary - Highest and Best Use The existing subject multifamily residential improvements represents the highest and best use of the subject property as of the date of this analysis. Valuation Section The Three Approaches to Value The three basic appraisal techniques used in evaluating real estate are the Cost, Direct Sales Comparison and Income Capitalization Approaches. All approaches to value rely on data derived from the market. The Cost Approach uses recent sales of vacant land having similar amenities and zoning to arrive at a land value which is added to the depreciated value of the improvements. The Direct Sales Comparison Approach is based on sales of similar, recently-sold properties which develop an indication of the most probable sale price for the property being valued. Under the Income Capitalization Approach, data is taken from the market to develop a gross income multiplier and/or a capitalization rate. The Cost Approach This approach to value can be described as: That approach in appraisal analysis which is based on the proposition that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility as the subject property. It is particularly applicable when the property being appraised involves relatively new improvements which 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 no comparable properties on the market. Methodology The procedure for valuing property with the Cost Approach includes the following steps: 1) estimate the value of the land (site) as though vacant and available for development to its highest and best use; 2) estimate the reproduction or replacement cost of the primary structure(s) as of the effective appraisal date, including direct and indirect costs; 3) estimate other costs (indirect costs) to bring the new, vacant primary structure(s) to market conditions and occupancy levels; 4) estimate an entrepreneurial profit; 5) add reproduction or replacement costs, other costs, and the entrepreneurial profit to arrive at the total cost of the primary structure(s); 6) estimate accrued depreciation due to physical deterioration, functional obsolescence, and external obsolescence; 7) deduct estimated accrued depreciation from the total cost of the primary structure(s) to derive an estimate of the depreciated cost; 8) estimate the depreciated cost of accessory buildings and site improvements; 9) add the depreciated costs of the primary structure(s), the accessory buildings, and site improvements to obtain the total depreciated cost of all the improvements; 10) add site value to the total depreciated cost of the improvements to obtain a value indication for the fee simple estate; and 11) adjust the fee simple value to reflect the interests being appraised, if necessary. Replacement Cost Defined as the estimated cost to construct, at current prices as of the effective appraisal date, a building with utility equivalent to the building being appraised, using modern materials and current standards, design, and layout. Reproduction Cost Defined as the estimated cost to construct, at current prices as of the effective date of the appraisal, an exact duplicate or replica of the building being appraised, using the same materials, construction standards, design, layout, and quality of workmanship and embodying all the deficiencies, superadequacies and obsolescence of the subject building. Considering the age and condition of the improvements, the replacement cost method was chosen for the appraisal. Cost information and estimated replacement cost estimates were generated by use of The Marshall Valuation Service. The manual is copyrighted and published by The Marshall and Swift Company, Los Angeles, California. Analysis of Overhead and Profit The estimated overhead cost, general contractor profits and developer profit are reflected in a single factor by the Boeckh cost valuation software, which may or may not be reflective of the market. Overhead costs are expenses incurred that are necessary to conduct the contractor's business. General contractor profits represent the return (profit) after all other expenses have been met involving the construction process. Entrepreneurial profit is a market derived figure that reflects the amount an entrepreneur (developer) expects to receive for his or her contributions. It represents the return required for risk and expertise associated with the development of the project, over and above the cost of the project including the contractor's profit. The important point here is the term general contractor, developer, and/or entrepreneur is not necessarily synonymous and often pertains to two (or more) entities. If the cost of developing a property is used to indicate a value, the appraiser must recognize the contribution of the entrepreneur and consider this entrepreneurial profit in addition to the direct and indirect costs, including the contractor's overhead and profit. However, not all projects will realize an entrepreneurial profit even if one appears to be reasonable from information extracted from the market. Potential entrepreneurial profit should be derived from market analysis and through interviews with developers to determine expected profits required to compel particular development. Historical profit margins should be given less emphasis, as past expectations will typically not equate to present anticipations, given a continually changing economical climate. The appraiser found that an entrepreneurial profit was represented since most facilities of this type are constructed for economic gain as would be expected from an apartment complex. Estimation of Accrued Depreciation Accrued depreciation is the difference between the replacement cost of the improvements on the effective date of the appraisal and the market value of the improvements on the same date. Depreciation is separated by three general causes including physical, functional, and economic or external. Physical Depreciation taken in this report is based on observed conditions at the time of inspection. Physical deterioration is due to normal wear and tear as a result of occupancy and weathering. The age/life method was used in estimating the physical depreciation of the building improvements. This method is estimated by dividing the remaining life of the improvements by the sum of the effective age and remaining life (known as the total physical life). The building have actual ages ranging from 16 to 19 years, the effective age of the entire building complex is estimated to be approximately years. The remaining physical life is estimated to be approximately forty-five years, assuming normal maintenance. Functional Functional obsolescence reflects the loss in value brought about by such factors as defects, deficiencies, or superadequacies that effect the structure from performing adequately the function for which it was (originally) intended. Generally, functional inadequacies are typical for older buildings and the market accepts them at a certain price level. The replacement cost method is meant to remove certain functional obsolescence relating to the overall design and construction methods, and as a result is most useful in estimating the value of newer buildings. Taking into consideration the subject's age, construction quality, design and layout, no functional obsolescence was charged to the building in the Cost Approach for the lack of adequate handicap facilities. Economic (External) Obsolescence It should be noted that gains or losses in value caused by externalities accrue to both land and buildings. Since the estimated value of the site used in the Cost Approach is its present market value as if vacant, any loss due to external causes is already included. In the Cost Approach, a loss in building value due to external causes is ascribed to external obsolescence. Economic obsolescence is stated as an impairment of desirability or useful life of a structure arising from external factors. Usually, economic obsolescence is comprised of many diverse and complex elements and can be somewhat difficult to estimate. No additional depreciation was charged as economic obsolescence in the Cost Approach, since the present area rent levels would not be economically feasible to construct this complex with its present amenities. Land Valuation The area market was observed for other vacant land sales that were similar to the subject site, as if vacant and available for development. A detailed analysis of the five sales used is given as follows. A summary table is located below. SUMMARY OF VACANT SITE SALES
Address Sale Site Size $/Unit Units/Acre Date Price (Square Feet) Land Sale 266 Junction 3/94 $438,333 265,312 $3,653 20 #1 Madison Land Sale 6009-29 Cottontail 11/93 $420,000 158,060 $7,500 15 #2 Madison Land Sale 202-10 Junction 10/93 $421,000 254,750 $3,661 20 #3 Madison Land Sale 1606 Cottontail 12/93 $288,000 140,289 $4,500 20 #4 Madison Land Sale 7402 Watts 11/92 $1,100,000 597,927 $3,943 20 #5 Madison
Analysis of Sales The subject's lot area is 848,224 square feet as taken from the included surveys. For the subject, this would indicate a density of 16.34 units per. Sale Adjustments Property Rights Conveyed No adjustments were indicated as all transfers were of the fee simple property rights. Conditions Of Sale Of the sales cited, any known sales concessions or other financing factors were taken into consideration when analyzing the subject's position in a typical "arm's length" transaction per the aforementioned "definition of market value," herein. The adjustment for financing/motivation takes into consideration any below-market (or above) interest rate financing, and other factors influencing the sale price not related to the real estate itself. All sales were reported to be arms length, thus no adjustments were indicated. Market Conditions/Date of Sale The sales sample spans a period of approximately four years, the market for vacant sites in the area has been fairly stable to improving over the past few years. An adjustment for time was indicated for the vacant sales. Neighborhood The location adjustment takes into consideration the community, neighborhood, access, visibility, and other known factors that may contribute or detract an estimate of value for the subject. Site Characteristics Topography/shape, site access, sewer/water/utilities, zoning, units permitted and site size are considered in estimating the per unit value for the subject. Summary The sales were reviewed and compared to the subject with respect to: - Method of financing and other motivational factors - Market conditions - Neighborhood - Zoning and intended use of the site - Site characteristics From this overview it is the Appraisers' opinion that the Direct Sales Comparison Approach of the site develops a value of: One Million Four Hundred Twenty-Two Thousand Dollars ($1,422,000) This indicates a value of $4,500 +/- per unit for the subject's 316 units. Area Computations: The Meadows II (Phases II,III & IV) 201-401 N. Thompson Drive Madison, TMW96:47 Land Dimensions Tax Key Numbers: 0710-032-1502,1503 & 04 From Attached Surveys Land Area Phase II Lot 2 CSM 1872 220,844 SF+/- Phase III Lot 1 CSM 2982 248,496 SF+/- Phase IV Lots 2 & 3 CSM 2982 378,885 SF+/- Total Land Area 848,224 SF +/- or 19.473 Acres +/- Building Dimensions Basement Area Gross Basement Area 102,456 First Floor Gross Finished Floor Area 127,418 SF+/- Second Floor Gross Finished Floor Area 127,418 SF+/- Gross Finished Floor Area 254,836 SF+/- First & Second Floors Wall Length 2005.6 Lineal Feet+/- Average Story Height 9.00 Feet +/- Floor to Wall Ratio 127.06 Ratio (Square feet + Lineal Feet) Gross Building Area: 254,836 SF+/- Site Improvements Asphalt Paving - Drives & parking areas Pool, deck, fencing and equipment building Tennis courts Concrete - Walks and patio Landscaping - (Grass, Shrubs & Flowers) Project Identification Signs Cost Analysis The Meadows II (Phases II,III & IV) 201-401 N. Thompson Drive Madison, WITMW 96:47 Subject Building Total Replacement Cost New Basement 102,456 $ 1,485,612 First & Second Floors 254,836 SF @ $42.10 /SF+/- = $10,728,596 Depreciation Estimate $12,214,208 Actual Age 1977-78,79 & 80+/- 16 -19 Years Effective Age 11 Years Remaining Economic Life 45 Years Depreciation Base 100% Physical Deterioration 20% Functional Obsolescence 0% Economic Obsolescence 0% Total Observed Depreciation 20% (2,442,842) Total Net Improvement Value $9,771,366 Site Improvements Depreciated Values Asphalt Paving - Drives & parking areas $95,000 Pool, deck, fencing and equipment building 17,500 Tennis courts 8,500 Concrete - Walks and patio. 25,000 Landscaping - {Grass, Shrubs & Flowers} 50,000 Project Identification Signs 2,000 $198,000 Land Value Improved Site 316 units @ 4,500 per unit Rounded to $1,422,000 $11,391,366 Estimated Value (Value in Use) - Cost Approach Rounded to $11,400,000 Direct Sales Comparison Approach This approach to value is defined as: That approach in appraisal analysis which is based on the proposition that an informed purchaser would pay no more for a property than the cost of acquiring an existing property with the same utility. This approach is applicable when an active market provides sufficient quantities of reliable data which can be verified from authoritative sources. The Direct Sales Comparison Approach is relatively unreliable in an inactive market or in estimating the value of properties for which no real comparable sales data are available. It is also questionable when sales data cannot be verified with principals to the transaction. Also referred to as the Market Comparison or Market Data Approach. The market was studied for similar improved sales and five apartment buildings sales were selected as the most comparable to the subject. A detailed analysis of each sale is given on the following pages. Listing (Sale No. 1) Country Meadows Address: 6840 Schroeder Road (West side of Madison) Date of Sale: Current listing Land Size: 29.62 acres Unit Mix: 84-Studio; 339-1 BR and 42-2BR=465 total Size: 341 to 796, average is 607 square feet Age: Phase I 1972-74 and II 1980 Sales Price: Offered at $13,050,000, final offers reported at $12,500,000 Gross Rent Multiplier: 4.24 Estimated Net Operating Income: $1,226,000 Capitalization Rate: 9.8% Price per Unit: $26,882 Sales Price Per Square Foot: $43.85 Comments: Project similar in age. Concentration of smaller units. Offering had high interest with over a dozen strong offers. All calculations were at reported final offer price. Sale No. 2 Woodhill Address: 802-834 S. Gammon Road (West side of Madison) Date of Sale: June 15,1993 Land Size: 3.70 acres Unit Mix: 28-1 BR and 6-2BR= 34 total Size: average is 1050 square feet Age: 1987 Sales Price: $1,857,000 Gross Rent Multiplier: 6.28 Estimated Net Operating Income: $175,858 Capitalization Rate: 9.47% Price per Unit: $54,618 Sales Price Per Square Foot: $48.87 Comments: Smaller project. Lower density and no amenities. Busy street location. Sale No. 3 Maple Grove Address: 3013-41 Maple Valley Drive (Southwest side of Madison) Date of Sale: 3 closings May-October 1995 Land Size: 13.2 acres Unit Mix: 160-1 BR and 72-2BR=232 total Size: average is 909 square feet Age: 1992-1995 Sales Price: $11,964,000 Gross Rent Multiplier: 6.1 Estimated Net Operating Income: $1,104,770 Capitalization Rate: 9.23% Price per Unit: $51,569 Sales Price Per Square Foot: $56.43 Comments: Newer project. Lease up of a number of units necessary. Good amenity package. Sale No. 4 High Point Woods Address: 7601 Watts Road (West side of Madison) Date of Sale: November 1, 1995 Land Size: 9.04 acres Unit Mix: 64-1 BR and 116-2BR=180 total Size: average is 921 square feet Age: 1990 Sales Price: $8,667,000 Gross Rent Multiplier: 7.22 Estimated Net Operating Income: $780,896 Capitalization Rate: 9.01% Price per Unit: $48,150 Sales Price Per Square Foot: $52.28 Comments: Newer project. Underground parking. Good west side location. Sale No. 5 Lincoln Ridge Address: 7502 Watts Road (West side of Madison) Date of Sale: November, 1995 Land Size: 22.3 acres Unit Mix: 156-1 BR and 92-2BR=248 total Size: average is 779 square feet Age: 1988 Sales Price: $9,960,000 Gross Rent Multiplier: 6.49 Estimated Net Operating Income: $920,300 Capitalization Rate: 9.24% Price per Unit: $40,161 Sales Price Per Square Foot: $51.55 Comments: Newer project. Underground parking. Good west side location Analysis of Sales Sale Adjustments Property Rights Conveyed All of the transfers were of the fee simple property rights. No adjustments were applied to any of the sales. Conditions Of Sale Of the sales cited, any known sales concessions or other financing factors were taken into consideration when analyzing the subject's position in a typical "arms' length" transaction per the aforementioned "definition of market value", herein. The adjustment for financing/motivation takes into consideration any below-market (or above) interest rate financing, and other factors influencing the sales price not related to the real estate itself. All sales were reported to be "arms' length" and no adjustments were necessary. Market Conditions/Date of Sale The sales sample spans a period of three years. The pricing structure for existing apartment buildings in the subject's market area has been stable over the past few years. Therefore, no time adjustment per year was indicated. Site Size The method of adjustment for site size is the difference between the subject and comparable multiplied by the Appraisers' observed estimate of the effect the site size has on the value of each of the comparables. Neighborhood The location adjustment takes into consideration the community, neighborhood, access, visibility, and other known factors that may cause economic (external) obsolescence. All of the comparables are in defined apartment residential neighborhoods similar to the subject. Building Characteristics Adjustments for age, quality, condition, ceiling height, floor plan, and gross area, although closely related, are separated to minimize generalization of the building as compared to the subject. The major adjustments related to the age of the building as compared to the individual sales. Adjustments for age were made on the basis of a 40 year economic life. Adjustments for construction quality and condition were not warranted for the comparables. Adjustments were warranted for all of the comparables but least applied to Sale 1 which was most comparable with the exception of smaller unit sizes and concentration of mix. Summary The sales were reviewed and compared to the subject with respect to: - Personal property - The property rights conveyed - Method of financing and other motivational factors - Date of sale - Site size - Zoning - Desirability of area - Type of building and construction quality - Building age and size - Condition of building - Quality of finish - The finished office area of the building From this overview it is the Appraisers' opinion that the Direct Sales Comparison develops an estimated "Market Value" of the Fee Simple Estate, of: Eleven Million One Hundred Thousand Dollars ($11,100,000) The market indicator is $43.56+/- per square foot for 254,836+/-square feet, or $35,126 per unit for 316 units and a GRM of 4.95. The Income Capitalization Approach This approach to value can be described as: That procedure in appraisal analysis which converts anticipated benefits (dollar income or amenities) to be derived from the ownership of property into a value estimate. The Income Capitalization Approach is widely applied in appraising income-producing properties. Anticipated future income and/or reversions are discounted to present worth through the capitalization process. The income premise is defined as: The underlying assumptions as to the pattern of the future income expectancy which represents the basis of income capitalization in the appraisal process. The income premise may be based on the assumption that, while future income installments may fluctuate, their equivalent is assumed to be: (a) a level yearly income of a certain amount; (b) a series of future incomes graduating upwards or downwards or in both directions as per the series assumed in the appraisal for valuation purposes. Subject Rentals Please refer to the Appraiser's Operating Statement for a list of the present rentals and the rent per square foot of the subject. To determine if these rentals are at market levels, the subject's units were compared to competing projects. Comparable Rentals In analyzing the subject and comparable rental projects, a comparison was made of the amenities offered. The rents were profiled on a per unit and square foot basis. The projects chosen are representative of the rental markets in Madison and appeal to a similar tenant type that the subject is likely to attract. Comparable Rentals - 1 Bedroom
Rent/SF Occupancy Size Project _____ Heat ______ Rent/Month paid S.F. Rental No. 1 County Meadows $504-548 Madison $0.76-.83 91% No 609-722 Rental No. 2 Westridge Pond $482 Madison $0.77 98% No 625 Rental No. 3 Greenbriar I $528 Madison $0.78 99% No 675 Comparable Rentals - 2 Bedroom/1 Bath Rent/SF Occupancy Size Project _____ Heat ______ Rent/Month paid S.F. Rental No. 1 County Meadows Madison $599 $0.75 91% No 796 Rental No. 2 Westridge Pond Madison $548 $0.61 98% No 900 Rental No. 3 Greenbriar I Madison $628 $0.66 99% No 950
Summary, Comparable Rentals Comparable rental analysis indicates that the existing subject rentals, after considering differences for amenities, age, condition of the unit and project location, are well supported in the market. The resident manager has waiting lists for the three and four bedroom units and is ready to implement a waiting list for the two bedroom units. Vacancy Based on recent estimates and the experience of the rental comparables, vacancy for similar apartment properties in the area is at 6 to 9%. Vacancy forecast in an appraisal is based on the investor's perceived risk of vacancy, even if the building is 100% occupied. While the quality of the tenants may be excellent in the area, vacancies do exist in the market as evidenced by the table of comparable rentals. A vacancy rate of 8% will be used for the subject based upon its last three years history and experience at Country Meadows. Expense Estimate The expenses are based on the actual expenses for the subject project, included in the addendum of this report, and adjustments made by the appraiser based on our experience with actual projects to reflect current market expenses. APPRAISER'S STABILIZED OPERATING STATEMENT TMW 96:47
# of Apartment Unit Description: Unit Size Total Net Base Rent Total Rent Total Rent Total Rent Units (Based on Projected Rental Sq.Ft. Sq.Ft. Per.Mo.$ /Month $ Per SF Per Yr. $ Income Upon Completion) 88 One Bedroom and One Bath 625 55000 $500 $44,000 $0.80 $528,000 12 One Bedroom and One Bath 744 8928 520 6,240 $0.70 $74,880 192 Two Bedrooms and One Bath 875 168000 585 112,320 $0.67 $1,347,840 12 Three Bedrooms and Two Baths 1466 17592 750 9,000 $0.51 $108,000 12 Four Bedrooms and Two Baths 1466 17592 850 10,200 $0.58 $122,400 316 267,112 $181,760 $0.68 $2,181,120 Miscellaneous Income: $16.60 $5,246 $62,947 Projected Gross Income From All Sources: $2,244,067 Vacancy and Credit Loss: 8.00% (179,525) Effective Gross Income: $2,064,542 ($/SF) ($/YR) Real Estate Taxes 1.01 269,370 Personal Property Tax 0.00 N/A Insurance 0.11 29,000 TOTAL FIXED EXPENSES $298,370 OPERATING EXPENSES Personnel 0.80 215,000 Office on site 0.04 11,500 Utilities - Common area and vacant 0.56 150,000 Management Expenses @ (5.% EGI) 0.39 103,227 Outside Contractors 0.19 52,000 Building Services 0.13 34,000 Supplies 0.11 29,000 Grounds 0.10 26,000 Profession Fees 0.03 6,800 Advertising and Marketing 0.07 17,500 Reserves 0.12 31,600 Miscellaneous 0.01 1,896 TOTAL OPERATING EXPENSES 678,523 TOTAL FIXED & OPERATING EXPENSES 3.66 976,893 NET OPERATING INCOME (NOI) 4.07 $1,087,649 Expenses as a % of Effective Gross Income 47.32% Capitalization Theory and Techniques The Income Approach is the most relevant valuation method for the valuation of property usually bought and sold based upon its income production. The analysis of the subject's income production has been stabilized for typical stabilized expenses and rental production on the operating statement included. Processing this income can be done in two ways: direct capitalization which utilizes the ratio of currently expect net operating income from comparable sales data and/or converting projected future income into an indication of present value, by discounted cashflow analysis. Both methods were utilized and produced consistent value indications for the subject. Direct Capitalization From the appraiser's stabilized operating statement, net operating income was estimated at $1,087,649. A direct capitalization rate was determined from the previous sales analyzed as well as the appraiser's experience with similar properties and the following value indicated: $1,087,649 + .0975 = $11,100,000 (Rounded) Discounted Cashflow Analysis (DCF) The table following this section is the Appraisers' analysis of the cashflow potential of the subject property over the ten (10) year projection (holding) period. The cashflows are derived from the previously mentioned rental income, less expenses and reserves. In direct capitalization, the income and expenses are assumed to be level and stabilized over the holding period. We have projected both the income and expenses to increase 2% over the holding period trailing the CPI. In the DCF, the cashflow of each period is discounted to present worth, and all present values are totaled. The future value of the equity reversion, or return OF investment is defined as the lump sum of the investment realized upon the sale of the property, is forecast at the end of the period as shown on the table and is discounted at the same rate. Selection of the Discount Rate Increasing slightly in the past few months, mortgage interest rates range from 8.0% to 10.00%. If overall capitalization rates are 9-10%+/- and interest rates are at 8.0% to 10.00%+/-, for a 70- 80% loan-to-value, with a 20 to 30 year amortization rate, the yield to the 25% equity position is between 12-16%, depending upon the expectation of the investor regarding scheduled rent increases and/or reversion. After analyzing and considering the potential risk, upside potential and reviewing the discount rate abstracted from the sales analyzed, a 15.00% discount rate was applied to this real estate investment. Estimated Reversion Value At the end of the period, normally the sale price of the subject property is estimated by capitalizing the expected net operating income (NOI) of the eleventh (11th) year at a capitalization rate comprised of the mortgage interest rate, and discount (equity yield) rate as shown on the DCF assumptions. The resulting estimated sale price of the property, less sale expenses and mortgage balance, is discounted at the same rate as the periodic income. Since we discounted the cashflow for adequate replacement reserves and the investors interviewed do not expect significant appreciation over the holding period, the estimated reversion value is not expected to increase over the present estimated value. The discounted cash value is indicated to be $11,203,000, before rounding and than rounded to $11,200,000. Conclusion The value estimate in the Income Capitalization Approach by Direct Capitalization converts only the first year NOI into value, however most represents the owner/occupant in the market. The use of a Discounted Cashflow Analysis allows for irregular cashflows. Both methods employed recognize return ON and return OF capital, however, we feel the use of a Discounted Cashflow Analysis is the appropriate method of valuation for the subject property. Both techniques support each other. Estimated Value by The Income Capitalization Approach Direct Capitalization -Eleven Million One Hundred Thousand Dollars ($11,100,000) Discounted Cash Flow-Eleven Million Two Hundred Thousand Dollars ($11,200,000)
Discounted Cashflow Analysis TMW 96:47
Year 1 2 3 4 5 6 7 8 9 10 Revenue Potential Gross Income (PGI) 2,244,067 2,288,949 $2,334,728 $2,381,422 $2,429,051 $2,477,632 $2,527,184 $2,577,728 $2,629,282 $2,681,868 Annual Change in PGI Base 2.00% 2.00% 2.00% 2.00% 2.00 2.00% 2.00% 2.00% 2.00% Vacancy and Collection Loss % 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% Vacancy and Collection Loss $ $(179,525) ($183,116) ($186,778) ($190,514) ($194,324) ($198,211) ($202,175) ($206,218) ($210,343) 2#($214,549) Effective Gross Income (EGI) $2,064,542 $2,105,833 $2,147,949 $2,190,908 $2,234,726 $2,279,421 $2,325,009 $2,371,510 $2,418,940 $2,467,319 Expenses Fixed Expenses %Change in Property Taxes Base 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Property Taxes $269,370 $274,757 $280,252 $285,857 $291,574 $297,405 $303,353 $309,420 $315,608 $321,920 %Change in Insurance Base 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Insurance $29,000 $29,580 $30,172 $30,775 $31,391 $32,019 $32,659 $33,312 $33,978 $34,658 Total Fixed Expenses $298,370 $304,337 $310,424 $316,632 $322,965 $329,424 $336,012 $342,732 $349,586 $356,578 Variable Expenses %Change In Variable Expenses 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Total Variable Expenses $678,523 $692,094 $705,936 $720,055 $734,456 $749,145 $764,128 $779,411 $794,999 $810,899 Total Expenses and Reserves $976,893 $996,431 $1,016,360 $1,036,687 $1,057,421 $1,078,569 $1,100,140 $1,122,143 $1,144,585 $1,167,477 Debt Service Mortgage Balance Beginning of Year $8,366,000 $8,268,823 $8,162,793 $8,047,104 $7,920,877 $7,783,151 $7,632,878 $7,468,917 $7,290,019 $7,094,824 Mortgage Balance End of Year $8,268,823 $8,162,793 $8,047,104 $7,920,877 $7,783,151 $7,632,878 $7,468,917 $7,290,019 $7,094,824 $6,881,848 Monthly Payment $68,781 $68,781 $68,781 $68,781 $68,781 $68,781 $68,781 $68,781 $68,781 $68,781 Total Debt Payment $825,366 $825,366 $825,366 $825,366 $825,366 $825,366 $825,366 $825,366 $825,366 $825,366 Interest $728,189 $719,337 $709,678 $699,139 $675,094 $675,094 $661,405 $646,469 $630,172 $612,390 Principal $97,177 $106,030 $115,689 $126,227 $137,726 $150,272 $163,962 $178,898 $195,195 $212,976 Cash Flow Summary Effective Gross Income (EGI) $2,064,542 $2,105,833 $2,147,949 $2,190,908 $2,234,726 $2,279,421 $2,325,009 $2,371,510 $2,418,940 $2,467,319 Total Expenses and Reserves ($976,893) ($996,431)($1,016,360)($1,036,687)********************($1,100,140)($1,122,143)($1,144,585)($1,167,477) Net Operating Income (NOI) $1,087,649 $1,109,402 $1,131,589 $1,154,221 $1,177,305 $1,200,852 $1,224,869 $1,249,367 $1,274,355 $1,299,842 Less Total Debt Service ($825,366) ($825,366) ($825,366) ($825,366) ($825,366) ($825,366) ($825,366) ($825,366) ($825,366) ($825,366) Equity Dividend $262,282 $284,035 $306,223 $328,855 $351,939 $375,486 $399,503 $424,000 $448,988 $474,475 Net Proceeds from Reversion $4,587,842 Total Cash Flow $262,282 $284,035 $306,223 $328,855 $351,939 $375,486 $399.503 $424,000 $448,988 $5,062,317 Basic Assumptions & Mortgage Data Reversion Calculations Discount Rate 15.00% Eleventh Year NOI $1,325,839 Mortgage Interest Rate 8.75% Terminal Capitalization Rate 10.75% Amortization (Years) 25 Annual Appreciation (Reversion) 1.50% Mortgage Amount $8,366,000 Reversion Value $12,333,000 Mortgage Ratio 75.00% Sales Expenses (% of Reversion Value) 7% ($863,310) First Year Expense Ratio (Includes Reserves) 47.32% Outstanding Mortgage ($6,881,848) First Year NOI (For Market Comparison) $1,087,649 Net Proceeds From Reversion $4,587,842 Stabilized OAR 9.71% Reconciliation Net Present Value of Cash Flow $2,837,274 Plus Original Mortgage Amount 8,366,000 Estimated Market Value $11,203,274 Say $11,200,000 Correlations and Conclusions Value can be defined as the power of acquiring commodities in exchange, generally for a comparable utility - the utility of the commodity parted with (money) and that of the commodity acquired in the exchange (property). All aspects of the appraisal problem have been considered and based upon information researched and received, as detailed in this report, the following observations can be made: - The subject's zoning is R-4 Multi-Family and the present improvements represent a legal and conforming use in accordance with this zoning classification. The property is served by all utilities, including municipal sewer and water, and commercial gas, telephone and electric service. - At the time of inspection of the site and existing building improvements were considered to be in average condition for their age. Quality of materials used is considered average for this type of apartment project. - There are sufficient recent sales of apartment projects of a variety of attributes to provide sufficient support and data to produce reliable value indicators and competing existing rental projects are well occupied. - The subject improvement consists of twelve apartment buildings with 316 units. This building represents an appropriate use of the land and best represents the highest and best use of the subject property as of the date of this valuation. - The area has good street access to shopping and support facilities and to the Madison Metropolitan area. Market values have been stable to increasing and vacancies appear to be declining. Reconciliation The appraisal process is based upon information and data obtained from the market. Data cited within this report is based upon verified information and all sources of information are assumed to be reliable. Proper management of the subject project is assumed. The Appraisers assume the property will be maintained according to acceptable community standards. The $11,400,000 value indicated by the Cost Approach was given consideration but less weight than the other two approaches due to the necessity of estimating depreciation for the subject. The estimate of $11,100,000 by the Direct Sales Comparison Approach was given a great deal of consideration since the data used to develop this approach was extracted from the market. The estimates of $11,200,000 using Discounted Cash Flow Analysis and $11,100,000 using Direct Capitalization provide consistent value indications. These two approaches allow for the use of market derived income and expense, and the use of market-derived indicators to estimate value. In the final analysis, the predominant value indicated was selected to provide the final value. Based on an inspection of the subject property, a study of the Madison Metropolitan apartment property market, a study of sales, offerings of similar properties, as well as other environing factors pertinent to value, it is our opinion that the subject property has an estimated "Market Value" of the Fee Simple Estate as of September 25, 1996 of: Eleven Million One Hundred Thousand Dollars ($11,100,000)* *of which $1,422,000 is ascribed to the value of the land. No furniture, fixtures and equipment (FF&E) or any other personal property was valued in connection with this assignment. Respectfully submitted, T. M. Warner, MAI, SRA Wisconsin Certified and Licensed General Appraiser No. 227 As of the date of this report, I have completed the requirements of the Continuing Education Program of the Appraisal Institute Physically inspected subject property Certification According to the best of the Appraisers' knowledge and belief, all statements and information in this report are true and correct and the Appraisers have not knowingly withheld any significant information. All contingent and limiting conditions are contained herein (imposed by the terms of the assignment or by the undersigned Appraisers affecting the analysis, opinions, and conclusions contained in this report). The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, unbiased professional analyses, opinions and conclusions. We have no present or prospective interest in the property that is the subject of this report and we have no personal interest or bias with respect to the parties involved. Neither our engagement to make this appraisal (nor any future appraisals for this client) nor any compensation therefor are contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. Our analyses, opinions, and conclusions were developed and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. The undersigned Appraisers have personally inspected the property that is the subject of this report, both inside and out. All conclusions and opinions concerning the real estate that are set forth in the appraisal report were prepared by the Appraisers whose signatures appear on this appraisal report and no one provided significant professional assistance to the persons signing the report. No change of any item of the appraisal report shall be made by anyone other than the Appraisers and the Appraisers shall have no responsibility for any such unauthorized change. The undersigned Appraisers certify to Mr. Michael Sweet of the Decade Companies that this appraisal meets those minimum standards established under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("Act") and adopted by regulators subject to the Act for federally related real estate transactions. Respectfully submitted, T. M. Warner, MAI, SRA Wisconsin Certified and Licensed General Appraiser No. 227 As of the date of this report, I have completed the requirements of the Continuing Education Program of the Appraisal Institute Physically inspected subject property One of The Meadows II buildings looking southeast from Thompson Drive Pool Area Subject Property's management office area Property Management office interior Subject Property grounds Street scene looking south along Thompson Drive Typical building exteriors and volleyball area Subject Property - Typical unit interior Mechanical room Subject Property looking northerly Subject Property THE MEADOWS APARTMENT GRAPH HERE! LOT 1, CSM NO. 2982 GRAPH HERE! LOT 2, CSM 1872 GRAPH HERE! ONE BEDROOM GRAPH TWO BEDROOM/DEN GRAPH TWO BEDROOM GRAPH THREE BEDROOM/DEN GRAPH LIVE IN AMERICA No. 1 Why Madison, Wis. Is The Big Cheese So what makes the Madison, Wis. area such a great place to live today? MONEY senior writer Carla Fried went there to ask a cross section of the residents just that. She got such convincing answers that she now says she's ready to move there herself-after winter's over. Here's what she heard: - Area population: 390,300 - Unemployment rate: 1.5% - Three-bedroom house: $123,000 - Property tax: $3,800 - Top state and local income tax: 6.93% - Sales tax: 5.5% - Violent crimes per 100,000: 280 - Annual sunny days: 190 - For more information: 608-256-8348 "There are tons of Madison leagues. I play on my company's basketball team." -Jim Kappelman, a Promega biochemist "With the festivals and things like the farmers' market, there's lot to do." -Jeanette Gunderson, a waitress for 36 years at Smoky's, which is a Madison institution "It's a great place for kids, with excellent schools." -UW professor Rich Matyi, with wife Rita and kids BEST PLACES 1996 * full of trade-offs. The 390,300 residents of Dane County, 80 miles west of Milwaukee in south-central Wisconsin, have a vibrant economy with plentiful jobs, superb health care and a range of cultural activities usually associated with cities twice as big. Yet this mid-size metro area also offers up a low crime rate and palpable friendliness you might assume are available only in, say, Andy Griffith's Mayberry. The news that the great Dane County is top dog this year probably won't surprise the region's residents. More than 90% of Madison-ians rated their quality of life good or very good in a recent survey. Since the cosmopolitan Madison area-the city accounts for about half the county's population-is surrounded by Wisconsin's ever present diary farms, it seems only right to toast 1996's No. 1 big cheese with a wedge of aged Wisconsin cheddar. Yet mid-size Madison's rise to the top this year-from No. 16 in 1995-is more than a simple dairy tale. Madison won the gold medal much like a decathlon champion who piles up point without winning any single event. As the top 10 table on page 72 shows, Madison beat all its competitors by being proficient in many of our broad categories. If residents of the Wisconsin capital have any major complaint, it might be about the weather. The average winter high is a mere 20 degrees F, and April snow-showers sometimes usher in late-May flowers. But Madisonians will tell you that's the price to pay for the sublime spring, summer and fall weather. And they do try to make the best of the cold; the city will host the 1997 International Kite Skiing World Championships next Jan. 30 to Feb. 1. If you're looking for more temperate climes with a great quality of life, Florida is this year's best state. For the second consecutive year, the Sunshine State boasts five of the top 10 places, though not the same five as last year. Punta Gorda (No. 2), 50 miles south of Sarasota on the Gulf Coast, leads the Florida flotilla, while Gainesville (No. 7) slipped from last year's No. 1 ranking. Fort Lauderdale (No. 4), Fort Myers/Cape Coral (No. 6) and Lakeland (No. 10) complete the Florida Five in our top 10. Strikingly, the state is home to 10 of the top 20 best places this year. "The Florida economy is extremely healthy," says Mark Vitner, an economist at First Union National Bank in Charlotte, N.C. who specializes in the southeastern states. Florida's 20 metro areas also have the pocketbook-friendly advantage of no state or local income tax. That was an important factor in the high rankings for Austin (No. 8) and Seattle (No. 9) too. And taxes aside, strong economies, terrific health care and low crime helped Rochester, Minn. (No. 3) and Ann Arbor (No. 5) round out our top 10. All 10 of our Best Places share some key characteristics: - -Plenty of jobs. While many Americans worry about keeping their jobs-or getting new ones if they're downsized-there are ample employment opportunities in our top 10. NPA Data Services, a Washington, D.C. research and economic forecasting firm, projects that each of these metro areas will post job gains through 1999 that easily beat the forecast 6% U.S. average. - -Great Outdoors. Yes, it gets darn cold in Ann Arbor, Madison and Rochester, but locals in all top 10 spots gloat about their natural surroundings. Weather permitting, each area offers great biking, boating, fishing, swimming and jogging opportunities. - -Manageable size. Eight of our top 10 places are either small (population below 250,000) or medium-size (up to 999,999). Fort Lauderdale (1.4 million) and Seattle (2.2 million) are the lone biggies. The box on page 92 offers more proof that the good life is harder to come by in the nation's large cities. So what makes us so mad about Madison? Start with the peppy economy. Madison's absurdly low 1.5% unemployment rate is the lowest of all 300 places we ranked. Partly, that's because the 40,000 - student University of Wisconsin accounts for nearly 13% of the area's steady work force. Madison is also home base for about 20,000 recession-resistant federal, state and county government jobs. More than 10,000 small and mid-size manufacturing and service firms help fuel local growth. You might not think of Madison as a high-tech center, but more than 300 tech firms-mostly small biomedical, pharmaceutical and micro-electronic companies-having notched average annual job growth of more than 10% during the past decade. Bill Linton, founder and president of Promega, a $60 million supplier of chemical products for researchers, says Madison's superb quality of life has been an important recruiting tool. "We don't have oceans or mountains, but even people from California like coming here," says Linton, who oversees a staff of 425. "That's because we also don't have long commutes, traffic congestion, a crime problem or overcrowded schools." The schools get understandably high marks from parents. There are 14 students per teacher in the county's public schools, on average, which is the 23rd lowest among our 300 places, according to Expansion Management, a trade magazine in Overland Park, Kans. that measures the nation's schools for MONEY. In addition, the 1,141 average SAT score for Madison high schoolers is 25% higher than the U.S. average. No wonder, then, that 91% of parents send their children to public schools. Mad City, as locals call it, is also Fun City, especially if you like boats and bikes. The Mendota and Monona lakes are separated by a half-mile-wide isthmus that serves as downtown Madison. Add in three other large lakes, and Dane County can satisfy any type of boating preference. Cyclers have more than 150 miles of bike trails and routes to pedal. In winter, cross- country skiers glide through more than 100 miles of trails. For cerebral outings, Madison has five museums, including the little- hands-on Madison Children's Museum. Saturdays in the fall are reserved for rooting on UW's revered Badgers football team. The Milwaukee Brewers and Bucks provide major league baseball and hoops action, and football's Packers are a two-hour drive in Green Bay. A popular May through October ritual is the farmers' marker, where about 18,000 residents shop each Saturday. The convivial throng could teach New Yorkers a thing or two about crowd control, as everyone moves in a fluid and orderly counterclockwise processional. Serious shoppers pull wagons to haul home portobello mushrooms, smoked trout, plants, bratwurst, baked goods and, of course, cheese. There's also plenty to do without getting out of a chair. The Canterbury Booksellers Coffeehouse Inn attracts a multigenerational crowd, where evening entertainment ranges from a jazz combo and book readings to elementary school kids reading their original works. Around the corner, you can catch an earful at the Madison Civic Center, where the Wisconsin Chamber Orchestra and Madison Symphony perform, and plays such as Edward Albee's Pulitzer prizewinning Three Tall Women are staged. Madison became No. 1 through our proprietary three-step ranking process. First, we had the New York City polling firm of Roper/Starch Worldwide survey our readers, asking a representative sample of 250 subscribers (median household income of $72,625) to rate 41 quality-of-life factors on a scale of 10 (most important) down to one (least important). Low crime was the top priority this year, although job concerns scored highly too. For a detailed look at what matters most to MONEY readers, see page 79. Next, working with Fast Forward, the Portland, Ore. demographic consulting firm, we collected data for the 300 largest metro areas as defined by the U.S. Office of Management and Budget. Flagstaff, Ariz. (No. 208) and Hattiesburg, Miss. (No. 260) joined this year's list. We used a combination of government data and information from private sources. For example, our crime figures are from the latest FBI Uniform Crime Statistics report, which covers 1994. Century 21's real estate brokers gave us the typical price of a three-bedroom home and its property taxes in each area, plus the appreciation rate over the past 12 months. Other data providers included the American Chamber of Commerce Researchers Association for cost-of-living stats; Arizona State University's Economic Outlook Center for recent job growth; and NPA Data Services for future job growth. We added three new types of data this year. To measure air quality, we used the ozone ratings of the Environmental Protection Agency. To flesh out our arts scores, we included figures from Opera America, a not-for-profit group. And in our leisure category, we awarded points to metro areas within 60 miles of the nation's most visited amusement parks, according to Amusement Business magazine. Once we had the figures, Fast Forward's Bert Sperling assigned them to our nine broad categories: crime, economy, health, housing, education, weather, leisure, arts and culture, and transportation. Then we weighted the data according to our readers' preferences. Finally, reporters visited the top 10 and bottom five places. After all, computers can't tell you everything. As in the past, some places moved substantially in our rankings. Such seismic shifts are a combination of our readers' changing preferences from last year, updated figures and new data. The new certainly improved in Norfolk/Virginia Beach/Newport News, which jumped to No. 117 from 283 last year, powered by improved rankings in health, education and housing, No. 38 Monmouth/Ocean counties, N.J. also shimmied up, from 167 in 1995, on the strength of forecast job growth. California-and its economy-is on the comeback trail from 1995, when its highest ranking was 24th-place San Francisco. This year, San Francisco, San Diego and San Jose landed in the top 20, at No. 13, 16, and 19 respectively. Benton Harbor, Mich. (No. 249) plunged the farthest; a projected job growth rate that's a third the U.S. average contributed to its 202-slot dive. The bottom five places didn't score highly in any of our categories. Lima, Ohio (No. 296) is contending with massive downsizings. For example, the General Dynamics plants employs 600 workers, compared with more than 2,000 in 1992. Talk to anyone in Davenport, Iowa (No. 297), and you'll hear that life is a lot better than the early '80s, when the nation's farm economy hit the skids. Still, the area-which includes Bettendorf, Iowa, and Moline and Rock Island, Ill.-was in the bottom third of our economy, crime and education rankings and scored poorly for leisure. To be fair, the Quad City Thunder play in the Continental Basketball League and there's riverboat gambling on the Mississippi and class-A baseball. Peoria (No.298) copes with big public school classes and small future job growth that's expected to be half the U.S. rate. Though last year's No. 300, the farming community of Yuba City, Calif. moved up to 299, it still struggles with a near 20% unemployment rate in the winter non-farming months. At the bottom, No. 300 Rockford, Ill. grapples with subpar prospects for future job growth and a below-average health-care system. The region's low number of doctors per capita rates in the bottom third of our 300 areas. Rockford also has little in the way of measurable arts, culture or leisure activities. But Sunil Puri, 35, raves about the area's friendliness. "This is a community where people really care about one another," says the land developer. On page 86, Michael Moore reports on the continuing travails of his hometown, No. 140 Flint, Mich., which was our first No. 300 and the subject of his film, Roger and Me. For detailed descriptions of our Best Places Nos. 2 through 10, read on. You can also find out how living costs vary, on page 81. And if crime is on your mind, check out the box on page 92 for a look at the metro areas with the lowest crime rates in America: Appleton/Oshkosh, Wis. and Johnstown, Pa. -C.F. No. 1 THROUGH THE YEARS 1987-1996 Our No. 1 place has moved around a lot during the past decade. First , the Northeast was Eden (Nashau, N.H. and Danbury, Conn.); then the West was best (Seattle, Bremerton, Wash. and Provo/Orem, Utah). Next the midwest (Sioux Falls, S.D. and Rochester, Minn.) and Southeast (Raleigh/Durham, N.C. and Gainesville, Fla.) scored. Now, the heartland rules again with Madison, Wis. OUR RANKING OF THE BIGGEST PLACES HOW OUR TOP 10 COMPARE IF YOU WANT TO KNOW WHY MADISON, WIS. is this year's no. 1, look at how each of our top 10 metropolitan areas scored in nine broad categories. Madison did especially well in four: economy, health, transit and education. No. 2 Punta Gorda, Fla. zoomed up 19 spots with its economy's perfect score, due partly to 16.3% projected job growth through 1999. Also, naturally, all five of our top 10 Florida areas rated highly for weather. No. 3 Rochester, Minn. is tops in health, with the Mayo Clinic. The safest place among our top 10 is No. 5 Ann Arbor, which also has a strong economy and great health care. Recent job growth of 6.76% helped propel Austin to No. 8. And our most populous winner, No. 9 Seattle, led the pack in leisure choices, with it three pro teams. The best performance figures in the top 10 are indicated by circles. -L.M.
1996 RANK (1995) Economy Health Crime Housing Education Weather Transit Leisure Arts 1 Madison, WI (16) 94 99 49 27 96 11 85 8 28 2 Punta Gorda, Fla. (6) (100) 23 56 25 29 77 28 21 27 3 Rochester, Minn.(2) 65 (100) 65 49 61 14 (100) 12 27 4 Fort Lauderdale (6) 91 57 8 49 37 71 17 41 26 5 Ann Arbor (33) 84 75 (80) 18 48 19 42 34 (45) 6 Fort Myers/Cape Coral, Fla. (34) 8 23 22 (59) 30 77 22 16 14 7 Gainesville, Fla. (1) 90 37 5 45 55 79 47 16 18 8 Austin (35) 95 27 23 41 (80) 68 26 15 18 9 Seattle (4) 70 61 22 14 46 47 60 (90) 37 10 Lakeland, Fla. (41) 78 47 11 52 36 (81) 19 37 18 1996 Metropolitan area 1995 27 Daytona Beach, Fla. (13) 11 Tampa/St. Petersburg (11) 28 Boulder (48) 12 Orlando (17) 29 Fort Pierce, Fla. (50) 13 San Francisco (24) 30 Lafayette, Ind. (20) 14 Fargo, N.D. (30) 31 Provo/Orem, Utah (29) 15 Naples, Fla. (10) 32 Charlottesville, Va. (15) 16 San Diego (86) 33 Fort Collins, Colo. (32) 17 San Antonio (129) 34 Phoenix (91) 18 Fort Walton Beach, Fla. (28) 35 Houston (162) 19 San Jose (44) 36 Sheboygan, Wis. (52) 20 Jacksonsville (3) 37 Ocala, Fla. (5) 21 Columbia, Mo. (31) 38 Monmouth/Ocean counties, N.J. (167) 22 Miami (67) 39 Dothan, Ala. (79) 23 Sarasota/Bradenton (14) 40 Los Angeles/Long Beach (94) 24 Raleigh/Durham/Chapel Hill N.C. (8) 41 McAllen, Texas (169) 25 West Palm Beach, Fla. (26) 42 Nausha, N.H. (19) 26 Brevard County, Fla. (53) 43 Brownsvillle, Texas (83) 44 Portsmouth, N.H. (119) 95 Santa Barbara (126) 45 Bryan/College Station, Texas (63) 96 Greeley, Colo. (27) 46 Abilene, Texas (106) 97 Santa Rosa, Calif. (64) 47 Tucson (60) 98 Reno (38) 48 Portland, Ore. (38) 99 Corpus Christi (164) 49 Sioux, Falls, S.D. (18) 100 Altoona, Pa. (143) 50 Manchester, N.H. (12) 101 Nashville (223) 51 Tacoma, Wash. (42) 102 Pueblo, Colo. (21) 52 Fayetteville, Ark. (59) 103 Wilmington, Del. (149) 53 Tallahassee (55) 104 Beaumont, Texas (166) 54 Pensacola, Fla. (22) 105 New Orleans (87) 55 Fort Worth/Arlington (39) 106 Galveston/Texas City (220) 56 Muncie, Ind. (54) 107 Colorado Springs (68) 57 Clarksville, Tenn. (109) 108 Baton Rouge (240) 58 Appleton/Oshkosh, Wis. (163) 109 Monroe, La. (104) 59 Killeen/Temple, Texas (138) 110 Wichita Falls, Texas (132) 60 Orange County, Calif. (88) 111 Lansing (96) 61 Springfield, M.O. (76) 112 Stamford/Norwalk, Conn. (65) 62 Roanoke (77) 113 Johnstown, Pa. (194) 63 Joplin, Mo. (73) 114 Las Vegas (9) 64 Bloomington, Ind. (57) 115 Atlanta (252) 65 Dallas (144) 116 Brazoria, Texas (121) 66 Kalamazoo/Battle Creek (81) 117 Norfolk/Virginia Beach (283) 67 Bellingham, Wash. (170) 118 Eugene/Springfield, Ore. (66) 68 San Luis Obispo, Calif. (116) 119 Green Bay (190) 69 Boston (75) 120 Duluth, Minn. (82) 70 Yuma, Ariz. (74) 121 Topeka (272) 71 Grand Rapids/Muskegon (122) 122 Athens, Ga. (146) 72 Indianapolis (199) 123 Las Cruces, N.M. (201) 73 Lynchgburg, Va. (177) 124 Waco, Texas (40) 74 Houma, La. (78) 125 Fort Wayne (134) 75 Oakland (135) 126 Texarkana, Texas (213) 76 Olympia, Wash. (43) 127 Riverside/San Bernardino, Calif. (118) 77 Salt Lake City/Ogden (62) 128 Washington, D.C. (140) 78 Lubbock, Texas (71) 129 Tyler, Texas (51) 79 Mobile (130) 130 Lafayette, La. (139) 80 La Crosse, Wis. (156) 131 Bremerton, Wash. (69) 81 St. Cloud, Minn. (150) 132 Columbus, Ga. (154) 82 Johnson City, Tenn. (234) 133 Saginaw/Bay City/Midland, Mich. (161) 83 Central New Jersey (72) 134 State College, Pa. (124) 84 Charlotte, N.C. (206) 135 Richmond (276) 85 Denver (37) 136 Sacramento (247) 86 Detroit (56) 137 Kenosha, Wis. (242) 87 Minneapolis/St. Paul (46) 138 Danville, Va. (168) 88 Honolulu (102) 140 Hagerstown, Md. (58) 89 Ventura, Calif. (84) 141 Flint, Mich. (49) 90 Long Island, N.Y. (127) 141 Albany, Ga. (115) 91 Baltimore (113) 142 Wichita (273) 92 Albuquerque (70) 143 Lexington, Ky. (125) 93 Amarillo, Texas (93) 144 Odessa/Midland, Texas (189) 94 Panama City, Fla. (99) 145 Greenville/Spartanburg, S.C. (147) 146 Cleveland/Lorain/Elyria (205) 197 Mrytle Beach, S.C. (136) 147 Eau Claire, Wis. (197) 198 Providence (153) 148 Portland, Maine (151) 199 New Bedford, Mass. (221) 149 Pittsburg (97) 200 Columbus (221) 150 Salem, N.H./Harverhill, Mass. (7) 201 Santa Cruz, Calif. (117) 151 Montgomery (230) 202 Merced. Calif. (231) 152 Lawton, Okla. (85) 203 Racine, Wis. (262) 153 Florence, Ala. (112) 204 Terre Haute, Ind. (172) 154 Worcester, Mass. (178) 205 Jackson, Miss. (92) 155 Wausau, Wis. (212) 206 Hickory, N.C. (108) 156 Laredo, Texas (180) 207 Cedar Rapids, Iowa (218) 157 Boise, Idaho (160) 208 Flagstaff, Ariz. N.L. 158 Sharon, Pa. (100) 209 Columbia, S.C. (291) 159 Middlesex County, Mass. (45) 210 Jamestown, N.Y. (193) 160 Knoxville (103) 211 Fayetteville, N.C. (241) 161 Greensboro/Winston-Salem, N.C. (90) 212 Bakersfield, Calif. (285) 162 Huntsville, Ala. (203) 213 Asheville, N.C. (217) 163 Northwest Indiana (204) 214 Canton, Ohio (286) 164 Salem, Ore. (158) 215 Monterey, Calif. (227) 165 Greenville, N.C. (233) 216 Omaha (152) 166 Danbury, Conn. (111) 217 South Bend, Ind. (225) 167 Lake Charles, La. (107) 218 Utica/Rome, N.Y. (237) 168 Bridgeport, Conn. (264) 219 Des Moines (229) 169 Wheeling, W.Va. (157) 220 Tulare County, Calif. (295) 170 Allentown/Bethlehem, Pa. (207) 221 Fresno (287) 171 Goldsboro, N.C. (101) 222 Wilmington, N.C. (215) 172 Kansas City, Mo. (209) 223 Cumberland County, N.J. (244) 173 Tuscaloosa, Ala. (186) 224 Youngstown, Ohio (239) 174 Decatur, Ala. (202) 225 Lincoln, Neb. (120) 175 Lancaster, Pa. (188) 226 Anniston, Ala. (208) 176 Evansville, Ind. (277) 227 Hunginton, W. Va. (211) 177 Milwaukee (123) 228 Bergen/Passaic counties, N.J. (181) 178 Binghamton, N.Y. (155) 229 Parkersburg, W. Va (255) 179 New London, Conn. (214) 230 Savannah (246) 180 Janesville/Beloit, Wis. (184) 231 New York City (141) 181 Longview, Texas (98) 232 Buffalo/Niagara Falls (187) 182 Jacksonville, N.C. (196) 233 Philadelphia (269) 183 Memphis (271) 234 Louisville (274) 184 Charleston, S.C. (251) 235 Biloxi/Gulfport, Miss. (171) 185 Oklahoma City (216) 236 York, Pa. (265) 186 Fitchburg, Mass. (25) 237 Birmingham (298) 187 Fort Smith, Ark. (250) 238 Brockton, Mass. (80) 188 El Paso (268) 239 Dutchess County, N.Y. (175) 189 Hamilton/Middletown, Ohio (95) 240 Northwest New Jersey (224) 190 Dover, Del. (165) 241 Cape Cod, Mass. (266) 191 Rocky Mount, N.C. (148) 242 Steubenville, Ohio (128) 192 Syracuse (142) 243 Tulsa (236) 193 Napa Valley, Calif. (137) 244 Macon (110) 194 Burlington, Vt. (228) 245 Santa Fe (275) 195 Little Rock (176) 246 Redding, Calif. (248) 196 Chicago (183) 247 St. Louis (248) 248 Chattanooga (248) 298 Peoria (297) 249 Benton Harbor, Mich. (47) 299 Yuba City, Calif. (300) 250 Charleston, W.Va. (219) 300 Rockford, Ill. (293) 251 Shreveport, La. (249) 252 Reading, Pa. (259) 253 Rochester, N.Y. (195) 254 Medford/Ashland, Ore. (173) 255 Chico/Paradise, Calif.(210) (210) 256 Yolo, Calif. (281) 257 Cincinnati (145) 258 Williamsport, Pa. (263) 259 Jackson, Miss. (222) 260 Hattiesburg, Miss. N.L. 261 Erie, Pa. (238) 262 Scranton/Wilkes/Barre (192) 263 Sumter, S.C. (260) 264 Elkhart/Goshen, Ind. (133) 265 Mercer County, N.J. (282) 266 Hartford (288) 267 Harrisburg, Pa. (289) 268 Atlantic/Cape May counties, N.J. (254) 269 Champaign, Ill. (185) 270 New Haven (174) 271 Yakima, Wash. (243) 272 Billings, Mont. (200) 273 Glens Falls, N.Y. (296) 274 Waterloo, Iowa (182) 275 Springfield, Mass. (292) 276 Bloomington/Norma, Ill. (257) 277 Toledo (261) 278 Anchorage (270) 279 Richland, Wash. (191) 280 Stockton, Calif. (253) 281 Spokane (232) 282 Dayton/Springfield (256) 283 Newburg, N.Y. (105) 284 Akron (131) 285 Modesto, Calif. (299) 286 Florence, S.C. (280) 287 Decatur, Ill. (258) 288 Sioux City, Iowa (179) 289 Augusta, Ga. (278) 290 Hudson County, N.J. (294) 291 Alexandria, La. (89) 292 Waterbury, Conn. (114) 293 Albany/Schenectady/Troy, N.Y. (267) 294 Mansfield, Ohio (235) 295 Springfield, Ill. (279) 296 Lima, Ohio (245) 297 Davenport, Iowa (290) R1 MEAD II THE MEADOWS II APARTMENTS NET OPERATING INCOME 1/1/93-7/31/96 1/1/96- 1993 1994 1995 7/31/96 GROSS POTENTIAL RENT 2,083,668 2,122,480 2,149,370 1,239,133 RENT LOSS-VACANT (150,580) (206,123) (431,111) (123,448) RENT LOSS-DELINQUENT (57,529) (61,086) (59,287) (15,188) RENT CONCESSION (2,196) (19,801) (27,791) (13,824) RENT LOSS-OFFICE/MODEL (13,140) (12,468) (9,105) (6,790) PRIOR MONTH RENT 35,525 40,472 45,800 11,886 PREPAID RENT 2,096 3,603 1,672 (5,979) TOTAL RENTAL INCOME 1,897,844 1,867,077 1,669,548 1,085,790 SERVICE INCOME 42,055 46,041 42,297 36,529 OTHER INCOME 987 159 256 0 TOTAL INCOME 1,940,886 1,913,277 1,712,101 1,122,319 PERSONNEL 181,801 174,511 193,800 132,367 OFFICE - SITE 9,192 11,535 11,546 6,598 ADVERTISING & MARKETING 9,077 10,464 15,375 9,313 OUTSIDE CONTRACTORS 46,745 48,031 64,829 37,040 BUILDING SERVICES 31,756 35,783 34,999 32,686 SUPPLIES 30,054 30,352 25,292 13,946 UTILITIES 131,519 136,626 129,167 86,771 GROUNDS 22,576 21,587 23,296 11,686 PROFESSIONAL FEES 1,948 11,559 10,489 2,990 REPAIRS COVERED BY INSURANCE (1,000) 0 0 0 PROPERTY MANAGEMENT FEE 139,341 143,970 145,372 79,824 PROPERTY TAXES 269,921 260,514 269,368 157,500 INSURANCE 27,657 28,029 29,275 13,777 TOTAL OPERATING EXPENSES 900,587 912,961 952,808 584,498 NET OPERATING INCOME 1,040,299 1,000,316 759,293 537,821
8/20/96 DECADE PROPERTIES, INC.
User: TOM Rent Roll Page Property: The Meadows II Apartments Unit Rent Per Lease Lease Reference Monthly Square Square Starting Exp. Deposits Number Name Rent Feet Foot Date Date Held 37-2011 OKEY, DENISE 585.00 875 8.02/yr 6/01/96 11/30/96 291.50 37-2012 KLEINBROOK,HEATHER, AND 450.00 625 8.64/yr 5/01/96 4/30/97 224.00 37-2013 MCMILLEN, BRADLEY & DEANA 585.00 875 8.02/yr 4/01/96 3/31/97 281.00 37-2104 HAUGE, TRACI/JUDY 480.00 625 9.22/yr 9/01/96 8/31/97 239.00 37-2015 FOGELBERG, DINA 570.00 875 7.82/yr 7/01/96 6/30/97 274.00 37-2016 PASKEY, TAMMY AND 520.00 625 9.98/yr 10/01/95 9/30/96 259.00 37-2017 SEVEDGE, MARCIA 585.00 875 8.02/yr 7/01/96 6/30/97 291.50 37-2018 MYERS, RICHARD 480.00 625 9.22/yr 10/01/95 9/30/97 239.00 37-201A DALY, JOSEPH/TOBIAS, THERESON 750.00 1466 6.14/yr 5/01/96 4/30/97 374.00 37-201B BIXBY, MARTHA & MARGARET AND 540.00 744 8.71/yr 8/01/96 7/31/97 269.00 37-2051 PETERSON, DARREN & HEATHER 545.00 625 10.46/yr 8/01/96 1/31/97 0.00 37-2052 KAMBWA, AGUSTO & CECILIA 565.00 875 7.75/yr 2/01/96 1/31/97 266.00 37-2053 SKRALY, FRANK 495.00 625 9.50/yr 9/01/96 2/28/97 246.50 37-2054 WOODHOUSE, SCOTT AND (NSF-2) 530.00 875 7.27/yr 9/01/96 8/31/96 264.00 37-2055 RICHARDSON, GARY 515.00 625 9.89/yr 7/01/96 6/30/97 241.00 37-2056 VEITH, JOHN AND (LAT-1) 565.00 875 7.75/yr 9/01/96 2/28/97 274.00 37-2057 KUNZ, WILLIAM 480.00 625 9.22/yr 1/01/96 12/31/97 239.00 37-2058 VACANT 530.00 875 7.27/yr 0.00 37-205A STOLARCZYK, THOMAS 525.00 744 8.47/yr 10/01/95 9/30/96 254.00 37-205B PERK, ALDEN & PHYLLIS 760.00 1466 6.22/yr 6/01/96 5/31/97 0.00 37-2091 RIVERA, MIGUEL & CLAUDIA 555.00 875 7.61/yr 3/01/96 12/31/96 276.50 37-2092 GUZINSKI, SEAN/NASETT, D AND 565.00 875 7.75/yr 8/01/96 7/31/97 281.50 37-2093 TROW, ROSE (30) 585.00 875 8.02/yr 7/01/96 6/30/97 274.00 37-2094 DOUMA, DANIEL & HARVEY AND 600.00 875 8.23/yr 6/01/96 6/01/96 299.00 37-2095 HILLARD, GRACE AND 565.00 875 7.75/yr 4/01/96 3/31/97 279.00 37-2096 ROGERS, DEBORAH 565.00 875 7.75/yr 8/01/96 7/31/97 281.50 37-2097 BEIERSDORF, TIMOTHY AND 605.00 875 8.30/yr 6/01/96 6/30/96 299.00 37-2098 BROESCH, JESSICA AND 550.00 875 7.54/yr 9/01/96 2/28/97 274.00 37-209A GOLD, JUDITH AND 800.00 1466 6.55/yr 3/01/96 2/28/97 399.00 37-209B GONZALEZ, JOSE/HOLLY, DEAN AND 750.00 1466 6.14/yr 9/01/96 8/31/97 374.00 37-2131 SMOOT, CASSANDRA 550.00 875 7.54/yr 9/01/95 8/31/96 274.00 37-2132 ROZMAN, SCOTT (30) 505.00 625 9.70/yr 9/01/96 8/31/97 236.00 37-2133 URSCHLITZ, DEBRA 615.00 875 8.43/yr 7/01/96 12/31/96 281.00 37-2134 ZIMMERMAN, JEREMY 480.00 625 9.22/yr 8/01/96 7/31/97 239.00 37-2135 VOLKEY, LARRY 560.00 875 7.68/yr 8/01/96 4/30/97 264.00 37-2136 RAYMER, FLETCHER 450.00 625 8.64/yr 4/01/96 3/31/97 224.00 37-2137 WAGNER, C & P/LAMESE,C AND 565.00 875 7.75/yr 8/01/96 1/31/97 281.50 37-2138 BEALE, MARY 490.00 625 9.41/yr 6/01/96 2/28/97 239.00 37-213A COYLE, KEVIN & BARBARA (NSF-2) 815.00 1466 6.67/yr 6/01/96 5/31/97 329.00 37-213B SALT, NORMAN AND 540.00 744 8.71/yr 7/01/96 6/30/97 251.00 37-2171 SEISER, EDWARD (30) 550.00 625 10.56/yr 6/01/96 6/01/96 200.00 37-2172 NELSON, TODD/DARDEN, TOM AND 595.00 875 8.16/yr 8/01/96 7/31/97 296.50 37-2173 WOHLERS, STEVE 450.00 625 8.64/yr 4/01/96 3/31/97 224.00 37-2174 BUCKINGHAM, TYRONE AND 530.00 625 10.18/yr 9/01/96 8/31/97 264.00 37-2175 BAST, MARTHA 480.00 625 9.22/yr 6/01/96 5/31/97 239.00 37-2176 WEBER, CYNTHIA AND 530.00 875 7.27/yr 9/01/95 8/31/96 264.00 37-2177 GANNON, ANTHONY AND 500.00 625 9.60/yr 3/01/96 2/28/97 249.00 37-2178 HEIBEL, JESSICA/SMART, ROXANNE & 550.00 875 7.54/yr 6/01/96 11/30/96 274.00 37-217A JONES, KATHERINE AND (NSF-1) 510.00 744 8.23/yr 5/01/96 10/31/96 244.00 37-217B CONNOR, NATHANIEL AND 815.00 1466 6.67/yr 4/01/96 9/30/96 399.00 37-2211 GRASTY, THOMAS & GRACIE 595.00 875 8.16/yr 12/01/95 12/01/95 246.00 37-2212 MANDERS, JESSICA 565.00 875 7.75/yr 7/01/96 6/30/97 281.50 37-2213 DELEU, RICHARD & JOYCE 610.00 875 8.37/yr 4/01/96 3/31/97 304.00 37-2214 CASTO, SHELIA 575.00 875 7.89/yr 8/01/96 07/31/96 264.00 37-2215 VACANT 530.00 875 7.27/yr 0.00 37-2216 HANSEN, LISA AND 565.00 875 7.75/yr 8/01/96 7/31/97 281.50 37-2217 HELGERSON, DOUGLAS AND 565.00 875 7.75/yr 8/01/96 7/31/97 281.50 37-2218 NEHLS, JEFF AND 550.00 875 7.54/yr 10/01/95 9/30/96 274.00 37-221A WILLIAMS, ANN/PERKINS, LAURA & 750.00 1466 6.14/yr 7/01/96 12/31/96 374.00 37-221B VACANT 825.00 1466 6.75/yr 0.00 37-2251 LOPPOW, GARY 575.00 875 7.89/yr 3/01/96 2/28/97 286.50 37-2252 PELTIER, MICHAEL 580.00 875 7.95/yr 8/01/96 7/31/97 289.00 37-2253 GJAVENIS, DEBBY 580.00 875 7.95/yr 4/01/96 3/31/97 289.00 37-2254 VACANT 515.00 875 7.06/yr 0.00 37-2255 GLADEM, AL AND 605.00 875 8.30/yr 8/01/96 1/31/97 281.00 37-2256 VACANT 530.00 875 7.27/yr 0.00 37-2257 DOMMERSHAUSEN, TAJARA AND 565.00 875 7.75/yr 6/01/96 5/31/97 281.50 37-2258 BIRKETT, BRIAN AND 615.00 875 8.43/yr 8/01/96 8/01/96 284.00 37-225A ROBERTSON, NATHANIEL (LAT-2) 800.00 1466 6.55/yr 6/01/96 2/28/97 399.00 37-225B VACANT 750.00 1466 6.14/yr 0.00 37-2291 SKALITZKY, NOEL 590.00 875 8.09/yr 8/01/96 1/31/97 254.00 37-2292 BRUNO, JOE 480.00 625 9.22/yr 8/01/96 7/31/97 239.00 37-2293 GENNRICH, WILIAM (LAT-1) 585.00 875 8.02/yr 8/01/96 7/31/97 0.00 37-2294 BROCK, JEFFREY AND 495.00 625 9.50 /yr 5/01/96 10/31/96 246.50 37-2295 WARNER, SUSANN AND 530.00 875 7.27/yr 9/01/95 8/31/96 264.00 37-2296 DEMROW, ROSS 505.00 625 9.70/yr 1/01/96 12/31/96 251.50 37-2297 BENISCH, KRISTIE AND 565.00 875 7.75/yr 5/01/96 4/30/97 281.50 37-2298 JORDAN, A.B. 480.00 625 9.22/yr 6/01/96 5/31/97 239.00 37-229A GEE, KEITH AND 765.00 1466 6.26/yr 4/01/96 3/31/97 300.00 37-229B HUSTON, SCOTT 490.00 744 7.90/yr 7/01/96 6/30/97 244.00 37-2331 HARMELINK, JOHN 480.00 625 9.22/yr 1/01/96 12/31/96 239.00 37-2332 VACANT 550.00 875 7.54/yr 0.00 37-2333 CHAPMAN, RANDY 480.00 625 9.22/yr 11/01/95 10/31/96 239.00 37-2334 LARSON, GARY 585.00 875 8.02/yr 6/01/96 5/31/97 261.00 37-2335 ZUELSDORF, JAMES 495.00 625 9.50/yr 10/01/95 9/30/96 241.00 37-2336 DEVINE, DARLENE 565.00 875 7.75/yr 6/01/96 5/31/97 281.50 37-2337 OLSON, DOUGLAS 480.00 625 9.22/yr 8/01/96 1/31/97 239.00 37-2338 VACANT 530.00 875 7.27/yr 0.00 37-233A BRUNNER, TERESA 585.00 744 9.44/yr 8/01/96 8/01/96 266.00 37-233B HUDZINSKI, NICOLE/BOHN, JASON 885.00 1466 7.24/yr 7/01/96 7/01/96 441.50 37-2371 STANTON/GAVEL/SCHROEDER AND 590.00 875 8.09/yr 7/01/96 12/31/96 294.00 37-2372 LAGGREN, JIM 480.00 625 9.22/yr 9/01/96 2/28/97 239.00 37-2373 VACANT 585.00 875 8.02/yr 0.00 37-2334 CHALONE, RHONDA 515.00 625 9.89/yr 4/01/96 3/31/97 256.00 37-2375 HOGG, LESLIE AND (NSF-1) 595.00 875 8.16/yr 3/01/96 8/31/96 296.50 37-2376 POPP, GARY 510.00 625 9.79/yr 9/01/96 9/30/96 234.00 37-2377 REILLY, KELLY/JAMES, KELLY AND 565.00 875 7.75/yr 8/01/96 7/31/97 281.50 37-2378 MICHER, PAUL 540.00 625 10.37/yr 9/01/95 9/01/95 269.00 37-237A STEPHENSON, ANDREW AND (LAT-1) 815.00 1466 6.67/yr 5/01/96 10/31/96 399.00 37-237B TOLBERT, JANESE 510.00 744 8.23/yr 5/01/96 4/30/97 244.00 37-2411 VACANT 515.00 625 9.89/yr 0.00 37-2412 BIERMAN, LESLIE AND 560.00 875 7.68/yr 9/01/96 9/01/96 264.00 37-2413 JAKUBOWSKI, CHRISTINA 515.00 625 9.89/yr 8/01/96 7/31/97 256.50 37-2414 VACANT 545.00 875 7.47/yr 0.00 37-2415 WICHERN, JOHN AND 480.00 625 9.22/yr 12/01/95 11/30/96 239.00 37-2416 KLUTH, LELAND 595.00 875 8.16/yr 4/01/96 3/31/97 281.50 37-2417 SUTCHER, PAUL AND 490.00 625 9.41/yr 5/01/96 4/30/97 244.00 37-2418 FISHER, CAROL 615.00 875 8.43/yr 3/01/96 9/30/96 306.50 37-241A MCQUEEN, ALISSA 515.00 744 8.31/yr 6/01/96 5/31/97 0.00 37-241B RISSEEUW, JEFF & RUTH AND (LAT-1) 800.00 1466 6.55/yr 5/01/96 4/30/97 399.00 37-2451 DETTWILER, RANDALL 605.00 875 8.30/yr 7/01/96 7/01/96 281.50 37-2452 VACANT 530.00 875 7.27/yr 0.00 37-2453 MORANGE, DIANNE AND 540.00 875 7.41/yr 1/01/96 12/31/96 264.00 37-2454 VACANT 530.00 875 7.27/yr 0.00 37-2455 VACCANT 545.00 875 7.47/yr 0.00 37-2456 VACANT 510.00 875 6.99/yr 0.00 37-2457 HILTON, TINA AND 565.00 875 7.75/yr 6/01/96 5/31/97 281.50 37-2458 OSTERVOLD, KATHRYN AND 580.00 875 7.95/yr 8/01/96 8/31/96 279.00 37-245A WILLIAMS, L/JUDKINS, T/CURRY, J 850.00 1466 6.96/yr 8/01/96 4/30/97 424.00 37-245B RING, LARRY/GOSEWEHR, GREG & 750.00 1466 6.14/yr 1/01/96 12/31/96 374.00 37-2491 NELSON, GEANIE AND 470.00 625 9.02/yr 7/01/96 12/31/96 239.00 37-2492 VACANT 550.00 875 7.54/yr 0.00 37-2493 CAUCUTT, LINDA 475.00 625 9.12/yr 5/01/96 10/31/96 236.50 37-2494 AGNEW, GREGORY & CHRISTINE 580.00 875 7.95/yr 6/01/96 4/30/97 274.00 37-2495 VACANT 515.00 625 9.89/yr 0.00 37-2496 GJERMO, KIMBERLY AND 560.00 625 10.75/yr 8/01/96 8/01/96 259.00 37-2497 HUSS, JEFFRY 520.00 625 9.98/yr 10/01/95 9/30/96 259.00 37-2498 VACANT 530.00 875 7.27/yr 0.00 37-249A COUGHLAN, TAMMY & JOSOPH 480.00 744 7.74/yr 4/01/96 3/31/97 239.00 37-249B HOERNEMAN, M/OLMSTEAD, R AND 800.00 1466 6.55/yr 9/01/96 8/31/97 399.00 37-2531 WEATHERWAX, KRISTINE AND 585.00 875 8.02/yr 9/01/95 8/31/96 291.50 37-2532 BAUMHARDT, BRIAN 515.00 625 9.89/yr 7/01/96 7/01/96 256.50 37-2533 HOUGHTON, LANNIE 565.00 875 7.75/yr 2/01/96 1/31/97 274.00 37-2534 REYNOLDS, REBECCA 450.00 625 8.64/yr 5/01/96 5/01/96 224.00 37-2535 SWETT, NICHOLAS & ELIZABETH 620.00 875 8.50/yr 7/01/96 6/30/97 309.00 37-2536 BERE, NANCY 490.00 625 9.41/yr 8/01/96 4/30/97 244.00 37-2537 VACANT 560.00 875 7.68/yr 0.00 37-2538 BISHOP, THOMAS AND 470.00 625 9.02/yr 1/01/96 12/31/96 234.00 37-253A VACANT 800.00 1466 6/55/yr 0.00 37-253B ZWEIFEL, KRISTIN 510.00 744 8.23/yr 11/01/95 10/31/96 244.00 37-2571 SPAHN, LOIS 580.00 875 7.95/yr 7/01/96 6/30/97 247.00 37-2572 NELSON, COLLEEN 570.00 875 7.82/yr 5/01/96 4/30/97 284.00 37-2573 KRUZAN, TAMARA 570.00 875 7.82/yr 7/01/96 6/30/97 284.00 37-2574 CLEMENS, DOROTHY 570.00 875 7.82/yr 8/01/96 7/31/97 284.00 37-2575 BRICK, TIFFANY AND (LAT-1) 565.00 875 7.75/yr 4/01/96 3/31/97 281.50 37-2576 VACANT 550.00 875 7.54/yr 0.00 37-2577 FJELSTAD, ELAINE AND 580.00 875 7.95/yr 10/01/95 9/30/96 274.00 37-2578 WOLFRAM, MIKE AND 565.00 875 7.75/yr 4/01/96 9/30/96 281.50 37-257A TRAINOR, JOHN AND (NSF-2) 800.00 1466 6.55/yr 3/01/96 8/31/96 399.00 37-257B VACANT 815.00 1466 6.67/yr 0.00 37-2611 FISH, CAROLYN 560.00 875 7.68/yr 4/01/95 4/01/95 279.00 37-2612 COSSETTE, CLARENCE AND 615.00 875 8.43/yr 7/01/96 6/30/97 296.50 37-2613 ROOK, SANDRA AND 580.00 875 7.95/yr 7/01/96 6/30/97 276.00 37-2614 DONAHUE, DANENE AND 585.00 875 8.02/yr 6/01/96 5/31/97 291.50 37-2615 DRURY, THERESA 600.00 875 8.23/yr 7/01/96 7/01/96 299.00 37-2616 NELSON, DAVID 615.00 875 8.43/yr 8/01/96 8/01/96 264.00 37-2617 CHRISTOFFERSON, MOLLY AND 550.00 875 7.54/yr 9/01/95 8/31/96 274.00 37-2618 GARDINER, J & M & J AND 565.00 875 7.75/yr 7/01/96 6/30/97 281.50 37-2651 LANG, ALICE & (30) 600.00 875 8.23/yr 9/01/96 5/31/97 200.00 37-2652 BRESEMAN, JANE 500.00 625 9.60/yr 7/01/96 12/31/96 246.50 37-2653 CORBETT, SONDRA 570.00 875 7.82/yr 6/01/96 5/31/97 279.00 37-2654 ZENTNER, MARK 475.00 625 9.12/yr 6/01/96 2/28/97 236.50 37-2655 SALVERSON, TINA/PARIS, PAUL AND 590.00 875 8.09/yr 6/01/96 11/30/96 294.00 37-2656 EDGE, JENNIFER AND 480.00 625 9.22/yr 8/01/96 7/31/97 239.00 37-2657 VACANT 530.00 875 7.27/yr 0.00 37-2658 WINEMAN, LARA 510.00 625 9.79/yr 9/01/96 8/31/97 254.00 37-2691 PACHE, APRIL 480.00 625 9.22/yr 7/01/96 6/30/97 239.00 37-2692 MELMS, JOHN & LISA 600.00 875 8.23/yr 6/01/96 5/31/97 291.00 37-2693 MIDTHUN, STEVE 480.00 625 9.22/yr 3/01/96 2/28/97 239.00 37-2694 VACANT 530.00 875 7.27/yr 0.00 37-2595 INTIHAR, AMY AND (LAT-1)(NSF-1) 480.00 625 9.22/yr 4/01/96 3/31/97 653.00 7-2696 YOUNG, TIMOTHY AND 595.00 875 8.16/yr 8/01/96 7/31/97 296.50 37-2697 KUHN, MICHELLE AND 490.00 625 9.41/yr 8/01/96 1/31/97 239.00 37-2698 SLIPPER, JAY & HANSON (KATIE) 630.00 875 8.64/yr 8/01/96 8/0196 314.00 37-2731 VACANT 530.00 875 7.27/yr 0.00 37-2732 HOLMES, PAMELA 500.00 625 9.60/yr 5/01/96 4/30/97 249.00 37-2733 LORD, LISA AND 530.00 875 7.27/yr 9/01/96 8/31/97 264.00 37-2734 O'BRIEN, KATIE 480.00 625 9.22/yr 8/01/96 7/31/97 239.00 37-2735 LEE, JENNIFER AND (LAT-1) 540.00 875 7.41/yr 10/01/95 9/30/96 269.00 37-2736 CLASS, BRIAN AND 500.00 625 9.60/yr 9/01/95 8/31/96 249.00 37-2737 MORK, KARI AND 530.00 875 7.27/yr 9/01/96 8/31/97 264.00 37-2738 WINTER, SARA 490.00 625 9.41/yr 7/01/96 6/30/97 239.00 37-2771 ROSE, TERRANCE 505.00 625 9.70/yr 12/01/95 11/30/96 219.00 37-2772 BLAKE, ROBERT AND 595.00 875 8.16/yr 8/01/96 7/31/97 276.00 37-2773 OLSON, JEFFREG 480.00 625 9.22/yr 3/01/96 8/31/96 239.00 37-2774 VACANT 595.00 875 8.16/yr 0.00 37-2775 YOUNG, MICHAEL 505.00 625 9.70/yr 9/01/95 8/31/96 251.50 37-2776 VACANT 595.00 875 8.16/yr 0.00 37-2777 MORTENSEN, JEFF AND 500.00 625 9.60/yr 7/01/96 12/31/96 249.00 37-2778 VACANT 520.00 875 7.13/yr 0.00 37-2811 BANFIELD, THOMAS 565.00 875 7.75/yr 6/01/96 5/31/97 281.50 37-2812 SCHNEIDER, TIFFIN AND 565.00 875 7.75/yr 7/01/96 6/30/97 281.50 37-2813 JULIAN, KENNETH & CINDY 570.00 875 7.82/yr 6/01/96 5/31/97 281.50 37-2814 BARMAN, MICHAEL 595.00 875 8.16/yr 7/01/96 6/30/97 296.50 37-2815 BOUCHARD, ROBERTA/AMANDA/DAVID 585.00 875 8.02/yr 5/01/96 10/31/96 281.50 37-2816 HIRSCH, VALERIE AND 540.00 875 7.41/yr 10/01/95 9/30/96 269.00 37-2817 CHOICE, TANYA 580.00 875 7.95/yr 8/01/96 7/31/97 269.00 37-2818 McDOWELL, PATRICK AND 595.00 875 8.16/yr 6/01/96 5/31/97 296.50 37-2851 ALBERS, WILLIAM 615.00 875 8.43/yr 3/01/96 3/01/96 269.00 37-2852 JOHNSON, JASON/WHITE, J&P AND 585.00 875 8.02/yr 5/01/96 12/31/96 281.50 37-2853 HERNANDEZ, LENIN & CARMEN 560.00 875 7.68/yr 6/01/96 11/30/96 264.00 37-2854 BUTCHER, DARRELL & CASSANDRA 585.00 875 8.02/yr 7/01/96 6/30/97 291.00 37-2855 FEMRITE, TOM 570.00 875 7.82/yr 3/01/96 2/28/97 284.00 37-2856 ERBRECHT, EMILY/JEFFREY/MOLLY 560.00 875 7.68/yr 6/01/96 11/30/96 279.00 37-2857 EMERSON, ROBIN & BETTY AND 580.00 875 7.95/yr 8/01/96 1/31/97 289.00 37-2858 SPYCHALLA, CRAIG AND (NSF-1) 570.00 875 7.82/yr 8/01/96 7/31/97 264.00 37-285A VACANT 825.00 1466 6.75/yr 0.00 37-285B VACANT 845.00 1466 6.92/yr 0.00 37-2891 STEVENS, JOSEPH (LAT-1) 595.00 875 8.16/yr 9/01/95 8/31/96 296.00 37-2892 THOMPSON, LINDA 510.00 625 9.79/yr 3/01/96 2/28/97 236.00 37-2893 BOOMER, DARRELL AND 615.00 875 8.43/yr 4/01/96 9/30/96 304.00 37-2894 KRUEGER, BRADLEY 480.00 625 9.22/yr 4/01/96 3/31/97 239.00 37-2895 TOLLEFSON, JENNIFER AND 530.00 875 7.27/yr 9/01/95 8/31/96 264.00 37-2896 FUNNEMARK, MICHELE AND 510.00 625 9.79/yr 8/01/96 4/30/97 226.00 37-2897 MEILLER, ROBIN (30) 570.00 875 7.82/yr 9/01/96 8/31/97 269.00 37-2898 VANDERVEST, LAURA 510.00 625 9.79/yr 4/01/96 9/30/96 251.50 37-289A UTKE, DANIELLE AND (FRE) 750.00 1466 6.14/yr 1/01/96 12/31/96 374.00 37-289B MORSCHAUSER, STEVE 535.00 744 8.63/yr 8/01/96 8/31/96 259.00 37-2931 CRONK, JOYCE 550.00 625 10.56/yr 8/01/96 8/01/96 274.00 37-2932 VACANT 560.00 875 7.68/yr 0.00 37-2933 WEINSTEIN, MARGAUX AND 490.00 625 9.41/yr 9/01/96 2/28/97 244.00 37-2934 HERMOSILLO, CERRY 560.00 875 7.68/yr 8/01/96 7/31/97 264.00 37-2935 BORENSTEIN, LARRY (30) 485.00 625 9.31/yr 10/01/95 9/30/96 214.00 37-2936 CARLSON, KIRK & DAWN 590.00 875 8.09/yr 8/01/96 7/31/97 291.00 37-2937 ABBE, VERNON 500.00 625 9.60/yr 7/01/96 6/30/97 249.00 37-2938 GILL, MIKE AND (LAT-1) 550.00 875 7.54/yr 2/01/96 1/31/97 274.00 37-293A YAROCH, TIMOTHY 555.00 744 8.95/yr 7/01/96 6/30/97 266.00 37-293B VACANT 850.00 1466 6.96/yr 0.00 37-3011 GALVIN, RICHARD & EILEEN (30) 580.00 875 7.95/yr 11/01/95 10/31/96 242.00 37-3012 McBRIAR, JOHN & HANNAH (30) 580.00 875 7.95/yr 7/01/96 6/30/97 0.00 37-3013 BOYLAND, DANIEL & SHAYLA 560.00 875 7.68/yr 9/01/96 8/31/97 279.00 37-3014 ABEL, PENNIE 570.00 875 7.82/yr 9/01/95 8/31/96 274.00 37-3015 BAKER, JASON AND 560.00 875 7.68/yr 8/01/96 7/31/97 264.00 37-3016 FELTON, JILL AND 560.00 875 7.68/yr 8/01/95 7/31/96 264.00 37-3017 VACANT 550.00 875 7.54/yr 0.00 37-3018 JENSEN, SHEILA AND 540.00 875 7.41/yr 11/01/95 10/31/96 269.00 37-3051 VACANT 530.00 875 7.27/yr 0.00 37-3052 SAUK, ARTHUR 490.00 625 9.41/yr 6/01/96 5/31/97 0.00 37-3053 VOLK, NORMA (30) (LAT-1) 575.00 875 7.89/yr 10/01/95 9/30/96 200.00 37-3054 PIPPIN, CAROLYN 520.00 625 9.98/yr 10/01/96 9/30/97 352.00 37-3055 MISEL, ELIZABETH AND (LAT-1) 595.00 875 8.16/yr 8/01/96 1/31/97 264.00 37-3056 MAROTZ, JOAN 510.00 625 9.79/yr 8/01/96 7/31/97 150.00 37-3057 VACANT 605.00 875 8.30/yr 0.00 37-3058 SCHMIDT, THOMAS AND 490.00 625 9.41/yr 5/01/96 4/30/97 244.00 37-3091 THIERER, MARY 490.00 625 9.41/yr 4/01/95 3/31/96 0.00 37-3092 POMIJE, CARRIE 585.00 875 8.02/yr 8/01/96 7/31/97 291.50 37-3093 DANEK, PATRICIA 495.00 625 9.50/yr 8/01/96 7/31/97 246.50 37-3094 TENIENTE, VICTOR & CHRISTINA 580.00 875 7.95/yr 4/01/96 3/31/97 271.00 37-3095 MORTON, DONALD 495.00 625 9.50/yr 5/01/96 4/30/97 246.50 37-3096 VACANT 550.00 875 7.54/yr 0.00 37-3097 JACQUART, JAMES 510.00 625 9.79/yr 8/01/96 7/31/97 150.00 37-3098 WORTHEN, KEITH & ROBIN AND 585.00 875 8.02/yr 9/01/96 2/28/97 291.50 37-3131 MYERS, BILLIE/NAWAK, DAWN AND 530.00 875 7.27/yr 10/01/95 9/30/96 264.00 37-3132 RINGELSTETTER, KRISTIE 540.00 625 10.37/yr 8/01/96 7/31/97 266.50 37-3133 KHAN, ASHFAQ AND (NSF-1) 550.00 875 7.54/yr 9/01/95 8/31/96 513.00 37-3134 GRADY, LAILA 540.00 625 10.37/yr 6/01/96 5/31/97 224.00 37-3135 VACANT 580.00 875 7.95/yr 0.00 37-3136 GANDER, BRIAN (LAT-1) (NSF-1) 500.00 625 9.60/yr 10/01/95 9/30/96 239.00 37-3137 ALTMANN, KYLE AND 565.00 875 7.75/yr 8/01/96 7/31/97 281.50 37-3138 ALSHAHERI, ALI AND 450.00 625 8.64/yr 4/01/96 9/30/96 224.00 37-3171 GEMPELER, SHELLEY 520.00 625 9.98/yr 4/01/96 3/31/97 259.00 37-3172 MANNUR, SANDEEP 530.00 875 7.27/yr 9/01/96 8/31/97 264.00 37-3173 LEARNED, HAZEL 490.00 625 9.41/yr 6/01/96 5/31/97 0.00 37-3174 EVERY, DONNA 625.00 875 8.57/yr 5/01/96 4/30/97 307.50 37-3175 GERL, VERA 490.00 625 9.41/yr 6/01/96 5/31/97 244.00 37-3176 VACANT 595.00 875 8.16/yr 0.00 37-3177 SHERBURNE, JOHN (30) 525.00 625 10.08/yr 6/01/96 5/31/97 231.00 37-3178 MANI, GARY 600.00 875 8.23/yr 10/01/95 9/30/96 294.00 37-3211 QUANDT, BRIAN & BEVERLY AND 575.00 875 7.89/yr 8/01/96 1/31/97 286.50 37-3212 DAMM, JASON AND 565.00 875 7.75/yr 8/01/96 7/31/97 281.50 37-3213 VACANT 565.00 875 7.75/yr 0.00 37-3214 BARTELS, LEROY & SYLVIA 585.00 875 8.02/yr 8/01/96 7/31/96 286.00 37-3215 JENSEN, SCOTT & JACQUELINE 560.00 875 7.68/yr 8/01/96 7/31/96 264.00 37-3216 HEMP, ERIC AND (LAT-1) 560.00 875 7.68/yr 4/01/96 9/30/96 279.00 37-3217 SYLVE, KEVIN & AMY (30) 580.00 875 7.95/yr 7/01/96 6/30/97 254.00 37-3218 PETERSON,M/CARBONE,J&C AND 565.00 875 7.75/yr 9/01/96 2/28/97 281.50 37-4011 MODEL 485.00 875 6.65/yr 0.00 37-4012 OFFICE 485.00 875 6.65/yr 0.00 37-4013 BEYER, KRISTEN AND 585.00 875 8.02/yr 8/01/96 8/31/96 274.00 37-4014 JOHNSON, SCOTT AND 560.00 875 7.68/yr 4/01/96 9/30/96 279.00 37-4015 NODOLF, JAIME AND 565.00 875 7.75/yr 8/01/96 7/31/97 281.50 37-4016 CAPENER, VALERIE AND 570.00 875 7.82/yr 5/01/96 4/30/97 234.00 37-4017 RODRIGUEZ, JUANITA 595.00 875 8.16/yr 6/01/96 5/31/97 296.50 37-4018 BRANDON, CHRIS AND 575.00 875 7.89/yr 6/01/96 2/28/97 281.50 37-4051 FLORES, JOHN & BEV (30) 585.00 875 8.02/yr 10/01/95 9/30/96 286.00 37-4052 SAWICKI, MARK AND 575.00 875 7.89/yr 7/01/96 12/31/96 291.50 37-4053 BYINGTON, JOHN 560.00 875 7.68/yr 8/01/96 7/31/97 264.00 37-4054 VACANT 530.00 875 7.27/yr 0.00 37-4055 FAIR, WENDELL 560.00 875 7.68/yr 8/01/96 7/31/97 264.00 37-4056 PERALTA, HECTOR & IRMA 560.00 875 7.68/yr 8/01/96 7/31/97 264.00 37-4057 HUBRECHT, JEB & SHANI 585.00 875 8.02/yr 5/01/96 4/30/97 291.50 37-4058 REES, SHELDON AND 595.00 875 8.16/yr 8/01/96 7/31/97 296.50 37-4091 LOGA, LISA AND 575.00 875 7.89/yr 9/01/96 2/28/97 286.50 37-4092 BESL, COREY AND 565.00 875 7.75/yr 6/01/96 5/31/97 281.50 37-4093 KENNEDY, CONNIE AND (NSF-1) 540.00 875 7.41/yr 10/01/95 9/30/96 269.00 37-4094 OSTERN, MARY & GREGORY 590.00 875 8.09/yr 9/01/96 8/31/97 0.00 37-4095 WINGER, RUSTIE AND (LAT-3) 570.00 875 7.82/yr 5/01/96 10/31/96 279.00 37-4096 HERMANSON/McKENNA/WHITFORD AND 565.00 875 7.75/yr 8/01/96 1/31/97 281.50 37-4097 STONE, MATTHER AND (LAT-1) 560.00 875 7.68/yr 11/01/95 10/31/96 279.00 37-4098 VEIUM, PHILIP AND 565.00 875 7.75/yr 1/01/96 12/31/96 247.00 37-4131 LEAL, ANASTACIO 510.00 625 9.79/yr 4/01/96 3/31/97 246.00 37-4132 VACANT 570.00 875 7.82/yr 0.00 37-4133 HERBECK, LeRAY & FLORENCE 515.00 625 9.89/yr 7/01/96 7/01/96 256.50 37-4134 KALMERTON, TAMME 575.00 875 7.89/yr 5/01/96 10/31/96 279.00 37-4135 ESSER, DALE 505.00 625 9.70/yr 4/01/96 3/31/97 178.00 37-4136 WEGER, CARRIE/EAKINS, LINDA AND 595.00 875 8.16/yr 8/01/96 1/31/97 296.50 37-4137 STEINHARDT, STEVEN 495.00 625 9.50/yr 5/01/96 10/31/96 246.50 37-4138 BAKER, J&S / DENLINGER, M AND 585.00 875 8.02/yr 9/01/96 2/28/97 291.50 37-4171 SIGAFUS, DENNY & MARY AND 580.00 875 7.95/yr 7/01/96 6/30/97 279.00 37-4172 LANGER, LORI 510.00 625 9.79/yr 2/01/96 1/31/97 254.00 37-4173 TOOLEY, JOYCE (30) 600.00 875 8.23/yr 6/01/96 5/31/97 274.00 37-4174 EARLE, JEFFERY AND 490.00 625 9.41/yr 6/01/96 11/30/96 239.00 37-4175 PHILLIPS, JOYCE AND 565.00 875 7.75/yr 7/01/96 6/30/97 281.50 37-4176 LIQUORI, ROBERT 480.00 625 9.22/yr 8/01/96 7/31/97 239.00 37-4177 MOORE, KIM AND (XFER 37-2251) 575.00 875 7.89/yr 5/01/96 4/30/97 274.00 37-4178 ROCHE, ELIZABETH 500.00 625 9.60/yr 7/01/96 6/30/97 249.00 PROPERTY TOTALS: --Percentage of Occupied Units-- Total Occupied Rents 154,125.00 Total Occupied Units 275 Total Vacant Rents 24,295.00 Total Vacant Units 41 Total Gross Rents 178,420.00 Total Units 316 Total Square Footage 266612 Percentage Occupied 87% Average Rent/Sq. Ft. / Yr. 8.03 --Percentage of Occupied Sq. Feet-- Average Rent/Sq. Ft. / Mth 0.67 Total Occupied Sq. Feet 227100 Total Security Deposits 72,371.50 Total Vacant Sq. Feet 39512 Total Square Footage 266612
T.M., WARNER, MAI, SRA Wisconsin Certified General Appraisal # 227 - Professional Experience - Previously, Mr. Warner was affiliated with The Mutual Group (US) as an Assistant Vice President and Lending Officer. Prior to that, as a senior officer an director with First Commerce Financial of Brookfield and previously, as president of National Equity Investors, real estate syndication and development company and Director of Acquisitions for Security Spring & Boe Financial Companies. Prior to that, he was associated with Landmark Research as a partner, the Appraisal Company of Houston, Texas and was manager of Appraisal Operations for Mortgage Guaranty Insurance Company (MGIC). His experience includes acquisition, negotiation, appraisal, consulting and market and financial analysis of proposed and existing projects. - Education - Master of Science - Real Estate Appraisal and Investment Analysis - University of Wisconsin Bachelor of arts - Marquette University, Milwaukee, Wisconsin - Professional Education - Society of Real Estate Appraisers Appraising Real Property Course 101 Appraising Income Producing Property Course 201 Special Applications of Appraisal Analysis Course 301 American Institution of Real Estate Appraisers Real Estate Appraisal I Principles Real Estate Appraisal III Urban Properties Real Estate Appraisal VI Investment Properties Real Estate Appraisal VII Industrial Properties Real Estate Appraisal VIII Residential Properties Contemporary Real Estate Appraisal, University of Wisconsin, 1977 - Publications - Contributing author, The Appraisal of Real Estate, Eighth Edition, The American Institute of Real Estate Appraisers, Chicago, 1983 with James A. Graaskamp and W.C. Goolsby, "Cash Equivalent Value of Real Property," The Real Estate Appraiser and Analyst, Vol. 49, No 3 Fall 1983, pp. 43-48. - Professional Designations and Memberships - MAI Member, American Institute of Real Estate Appraisers, #4645 SREA Senior Real Estate Analyst, Society of Real Estate of Appraisers ANNEX C: APPRAISAL OF TOWN PLACE APPRAISAL Town Place Apartments A 240-Unit Apartment Complex 2524 NE Coachman Road Clearwater, Florida 34625 PREPARED FOR Mr. Terry Bush Corporate Banking Republic Bank 111 Second Avenue NE, Suite 215 St. Petersburg, Florida 33701 EFFECTIVE DATE April 15, 1996 TYPE OF REPORT Complete, Self-contained BY Robert E. Riggins, SRA, MAI State-certified general real estate appraiser #0000605 William W. Atkinson, MAI State-certified general real estate appraiser #0001221 RIGGINS, ATKINSON, COMBS & ASSOCIATES, INC. 18850 U.S. HIGHWAY 19 NORTH, SUITE 525 CLEARWATER, FLORIDA 34624 (813) 530-9793 04962248 April 24, 1996 RIGGINS, ATKINSON, COMBS & ASSOCIATES, INC. Mr. Terry Bush Corporate Banking Republic Bank 111 Second Avenue NE, Suite 215 St. Petersburg, Florida 33701 Re: Appraisal Report Town Place Apartments A 240-Unit Apartment Complex 2524 NE Coachman Road Clearwater, Florida 34625 Dear Mr. Bush: As requested, we have prepared an appraisal of the above captioned property. The purpose of the appraisal is to estimate the market value of the subject property, as of the effective date of April 15, 1996. Market value is defined on page 3 of the text. This appraisal reflects or addresses any significant information known to this appraiser which may materially alter the "as is" nature of the appraisal. The subject property is a 240-unit apartment complex, known as the Town Place apartments. The complex, which was constructed in 1984, features one and two bedroom apartment units in two-story and three-story walk-up garden style buildings. Amenities include a leasing office, a swimming pool and spa, tennis courts, and a laundry/maintenance room. The construction quality of the apartment complex is average cost and has been maintained in average condition. The total rentable area of the buildings is 202,004 square feet. The subject site is an irregular shaped non-contiguous parcel located on the south side of NE Coachman Road, west of the intersection with U.S. Highway 19 in the city of Clearwater. The site has about 852 feet of road frontage. Ingress and egress is adequately provided, however it can be more difficult at peak traffic hours. The site is basically level, with a gradual downward slope from north to south. The total area of the site is 750,310 square feet or 17.22 acres. It is the intent of this appraisal to be in compliance with the regulations governing federally regulated financial institutions and the Uniform Standards of Professional Appraisal Practice as adopted by the Appraisal Institute, as read and interpreted by this office. The following report contains the data, analysis, assumption and limiting conditions on which we have based our value conclusions. Your attention is directed to the "general assumptions and limiting conditions" and the "certificate of appraisal" which are considered typical for this type of assignment and have been included within the text of this report. The fee simple market value of the property described herein, subject to the assumptions and limiting conditions as set forth, as of April 15, 1996, in "as is" condition, is estimated to be: NINE MILLION TWO HUNDRED THOUSAND DOLLARS ($9,200,000) INCLUDING DEPRECIATED VALUE OF APPLIANCES TWO HUNDRED THOUSAND DOLLARS ($200,000) REAL PROPERTY NINE MILLION DOLLARS ($9,000,000) Respectfully submitted: ______________________________ ______________________________ Robert E. Riggins, MAI, SRA William W. Atkinson, MAI President Vice President State-certified general real State-certified general real estate appraiser #0000605 estate appraiser #0001221 Summary of Important Facts and Conclusions Property Location: Property located on the south side of NE Coachman Road about 280 feet southwest of the intersection with U.S. Highway 19 in the city of Clearwater, mailing address - 2545 NE Coachman Road, Clearwater, Florida 34625 Owner of Record: Decade Companies Income Properties, Ltd. Property Rights Appraised: Fee Simple Estate Date of Valuation: April 15, 1996 Improvements: A 240-unit, average quality apartment complex that was constructed in 1984, known as the Town Place Apartments - Amenities include a leasing office, a swimming pool and spa, tennis courts, and a laundry/maintenance room Land Area: 750,310 square feet or 17.22 Acres Zoning and Land Use: RPD-14 (Residential Planned Development "Fourteen" District) under the jurisdiction of the City of Clearwater - Comprehensive Land Use Plan, MD (Medium Density Residential 15 u.p.a.) Highest and Best Use: As Though Vacant: A 222-unit good quality apartment development As Though Improved: Continue use as a 240-unit apartment complex Valuation Summary: Estimated Land Value: $1,350,000 Value by the Cost Approach: $9,000,000 Value by the Sales Comparison Approach: $8,900,000 Value by the Income Capitalization Approach: $9,300,000 Final Estimate of Value: "AS IS" - Fee Simple: $9,200,000 Marketing Time: 6 Months Subject Photographs View Of Apartment Building From Parking Area Of Public Tennis Facility Interior View Of Apartment Unit Table Of Contents Cover Page Letter Of Transmittal Summary Of Important Facts And Conclusions Subject Photographs Introduction Page Purpose and Date of Appraisal . . . . . . . . . . . . . 1 Function of the Appraisal . . . . . . . . . . . . . . . 1 Interest Appraised. . . . . . . . . . . . . . . . . . . 1 Scope of the Appraisal. . . . . . . . . . . . . . . . . 1 Definition of Market Value. . . . . . . . . . . . . . . 3 Definition of Fee Simple Ownership. . . . . . . . . . . 4 Identification of the Subject Property. . . . . . . . . 4 Zoning. . . . . . . . . . . . . . . . . . . . . . . . . 4 Flood Information . . . . . . . . . . . . . . . . . . . 6 Legal Description . . . . . . . . . . . . . . . . . . . 6 Tax Information . . . . . . . . . . . . . . . . . . . . 6 Sales History . . . . . . . . . . . . . . . . . . . . . 6 Descriptive Analysis Tampa Bay Area Analysis . . . . . . . . . . . . . . . . 7 Neighborhood Description. . . . . . . . . . . . . . . . 17 Site Description. . . . . . . . . . . . . . . . . . . . 21 Improvement Description . . . . . . . . . . . . . . . . 26 Highest and Best Use. . . . . . . . . . . . . . . . . . 31 Valuation Analysis Highest and Best Use as though Vacant . . . . . . . . . 32 Physically Possible . . . . . . . . . . . . . . . . . . 32 Legally Permissible . . . . . . . . . . . . . . . . . . 33 Financially Feasible. . . . . . . . . . . . . . . . . . 34 Maximally Productive. . . . . . . . . . . . . . . . . . 35 Highest and Best Use as Improved. . . . . . . . . . . . 35 The Valuation Process . . . . . . . . . . . . . . . . . 37 The Cost Approach . . . . . . . . . . . . . . . . . . . 39 Explanation of Adjustments. . . . . . . . . . . . . . . 52 Correlation and Conclusion. . . . . . . . . . . . . . . 54 Replacement Cost of Improvements. . . . . . . . . . . . 55 Depreciation. . . . . . . . . . . . . . . . . . . . . . 56 Summary of the Cost Approach. . . . . . . . . . . . . . 59 The Sales Comparison Approach . . . . . . . . . . . . . 60 Explanation of Adjustments. . . . . . . . . . . . . . . 71 Financing/Conditions of Sale. . . . . . . . . . . . . . 71 Market Conditions (time). . . . . . . . . . . . . . . . 71 Average Unit Size . . . . . . . . . . . . . . . . . . . 71 Location. . . . . . . . . . . . . . . . . . . . . . . . 72 Age . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Quality/Condition . . . . . . . . . . . . . . . . . . . 72 Correlation and Conclusion. . . . . . . . . . . . . . . 73 The Income Capitalization Approach. . . . . . . . . . . 75 Estimate of Market Rent . . . . . . . . . . . . . . . . 75 Rent Comparable . . . . . . . . . . . . . . . . . . . . 76 Analysis of Operating History . . . . . . . . . . . . . 88 Direct Capitalization . . . . . . . . . . . . . . . . . 91 Band of Investment. . . . . . . . . . . . . . . . . . . 92 Debt Coverage Ratio . . . . . . . . . . . . . . . . . . 92 Summary of the Direct Capitalization Approach . . . . . 94 Discounted Cash Flow Analysis . . . . . . . . . . . . . 95 Multifamily Income Proforma . . . . . . . . . . . . . . 97 Summary of the Income Capitalization Approach . . . . . 99 Recapitulation and Final Reconciliation . . . . . . . . 100 Certificate of Appraisal. . . . . . . . . . . . . . . . 104 Assumptions and Limiting Conditions . . . . . . . . . . 107 Addendum Supplemental Subject Photographs Flood Plain Map Legal Description Rent Roll Income Statements Zoning Regulations Engagement Letter Qualifications of Appraisers APPRAISAL REPORT Town Place Apartments A 240-Unit Apartment Complex 2524 NE Coachman Road Clearwater, Florida 34625 PURPOSE AND DATE OF APPRAISAL: The purpose of this appraisal is to estimate the market value of the fee simple interest in the property described herein, as of April 15, 1996, in "as is" condition. FUNCTION OF THE APPRAISAL: This appraisal report is to assist the client in the underwriting of a mortgage loan to be secured by the subject property. This appraisal reflects or addresses any significant information known to this appraiser which may materially alter the nature of the appraisal. INTEREST APPRAISED: The fee simple interest in the property described herein has been appraised. Liens and encumbrances, if not described, are unknown and the property has been analyzed as if free and clear. SCOPE OF THE APPRAISAL: A physical inspection of the subject property was made on April 15, 1996. The inspection of the property was made with the assistance of Sheryl Sallimo, Property Manager and Wayne Shaw, Regional Manager. Documentation supplied for the subject property included a four year operating income history and a current rent roll. All of the improved structures were physically inspected from the exterior. Interior inspections were made of the leasing office, laundry/maintenance room, and a sample of 5 apartment units. Public records were reviewed for additional information on the subject property. Once a physical inspection was completed, the economic conditions of the region and neighborhood were investigated and analyzed in relation to the relevant factors which effect the market value of the subject. The cost approach, sales comparison approach, and income capitalization approach were used to evaluate the relevant factors and estimate the market value of the subject. The time period for which comparable market data was investigated was from January 1993 to the present. Data sources used to collect comparable market information include Redi, Ulticomp, Realtron, MetroScan, public records, and internal appraisal files. The cost approach is derived by estimating the value of the land and the depreciated replacement cost of the improvements. The primary factors which were considered in the search for comparable land sales were the highest and best use, the date of sale, and the location. All of the land comparables were researched, physically inspected, and confirmed with a knowledgeable source. Both Pinellas and Hillsborough Counties were searched for land comparables. Land sales in Pinellas County were limited due to the dense development in the area and the limited supply of vacant land. The replacement cost of the improvements was estimated using Marshall Valuation Service. Depreciation applicable to the improvements was estimated based on a comparison of other structures in the neighborhood. The sales comparison approach values the subject property by comparing it to similar sales in the market area. The primary factors which were considered in the search for improved comparables were age and quality of the properties, the date of sale, and the location. All of the improved comparables were researched using public records, physically inspected, and confirmed with a knowledgeable source. The search for improved comparables was limited to Pinellas County. The income capitalization approach estimates the value of the subject by dividing net operating income by a capitalization rate and estimating future cash flows and applying an appropriate discount rate. Net operating income is derived by estimating the gross potential income of the subject and then deducting for vacancy, collection loss and operating expenses. The gross potential income for the subject was derived using rent comparables. The primary factors which were considered in the search for rent comparables was the age and quality of the properties and the location. All of the rent comparables were researched using public records, physically inspected, and surveyed with a knowledgeable source. All of the rent comparables were located in the immediate subject neighborhood. Vacancy, collection loss, and expenses were supported by the rent comparables, as well as, the improved comparables. The capitalization rate was derived using comparable sales, the band of investment and the debt coverage ratio. This narrative report describes the valuation problem and contains data, analysis, assumptions and limiting conditions upon which value conclusions have been based. It is the intent of this appraisal to be in compliance with the regulations governing federally regulated financial institutions and the Uniform Standards of Professional Appraisal Practice as adopted by the Appraisal Institute, and as read and interpreted. DEFINITION OF MARKET VALUE: "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. buyer and seller are typically motivated; 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 United States 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. Important factors affecting market value include the time element, neighborhood and economic changes, as well as anticipation thereof. Market prices do not necessarily follow all of these concepts and are often affected by salesmanship and the urgency and need of the buyer and/or the seller. The essential difference between market price and market value lies in the premises of intelligence, knowledge and willingness, all of which are contemplated in market value but not in market price. The market value of the property appraised in this report is estimated as of the date shown in the certificate of appraisal. Constantly changing economic conditions have varying effects upon real property values. Even after the passage of a relatively short period, property values may change substantially and require a review of the appraisal and recertification. DEFINITION OF FEE SIMPLE OWNERSHIP: "A fee simple estate implies absolute ownership unencumbered by any other interest or estate. Partial interests in real estate are created by selling, leasing, or otherwise limiting the bundle of rights in a fee simple estate. Partial estates include leased fee and leasehold estates." IDENTIFICATION OF THE SUBJECT PROPERTY: The subject property is a 240-unit apartment complex, known as the Town Place apartments. The complex, which was constructed in 1984, features one and two bedroom apartment units in two-story and three-story walk-up garden style buildings. Amenities include a leasing office, a swimming pool and spa, tennis courts, and a laundry/maintenance room. The construction quality of the apartment complex is average cost and has been maintained in average condition. The total rentable area of the buildings is 202,004 square feet. The subject site is an irregular shaped non-contiguous parcel located on the south side of NE Coachman Road, west of the intersection with U.S. Highway 19 in the city of Clearwater. The site has about 852 feet of road frontage. Ingress and egress is adequately provided, however it can be more difficult at peak traffic hours. The site is basically level, with a gradual downward slope from north to south. The total area of the site is 750,310 square feet or 17.22 acres. ZONING: The subject site is zoned RPD-14 (Residential Planned Development "Fourteen" District) under the jurisdiction of the City of Clearwater. The RPD-14 zoning allows residential development at a maximum of 14 units per net acre. As defined by the City of Clearwater, a net acre includes all uplands within a contiguous parcel of ownership excluding existing or proposed public or private roadways, right-of-way and vehicular access ways. The City of Clearwater uses an 8% factor to determine net acreage. The comprehensive land use plan, indicates that the subject has a land use of MD (Medium Density Residential 15 u.p.a.). The subject property is developed at a density of 13.94 units per acre and appears to conform to the current zoning and land use. FLOOD INFORMATION: The subject property is located in flood zones X and AE. Flood zone information was determined by F.I.R.M. community panel number 125096 0010 D, dated August 19, 1991. An X zone is defined as areas determined to be outside the 500-year flood plain or areas of 500-year flood; areas of a 100-year flood with average depths of less than 1 foot or with drainage ares less than 1 square mile; and ares protected by levees form 100-year flood. An AE zone is defined as areas with base flood elevations determined. Insurance is generally required for improved structures within the AE zone. A copy of the flood map may be found at the addendum of this report. LEGAL DESCRIPTION: A tract of land in Section 7, Township 29 South, Range 16 East, Pinellas County, Florida, being more particularly described at the addendum of the report. The legal description for the subject was supplied by the client and is assumed to be correct. No guarantee is made as to the accuracy of the legal description. TAX INFORMATION: Census Tract: 267.02 Parcel Numbers: 07-29-16-00000-110-0500 Owner of Record: Decade Companies Income Properties, Ltd. 1995 Tax Valuation: $7,691,400 Millage Rate: 23.0366 1995 Gross Tax: $177,183.71 (1995 Taxes - Paid) In review of the appraised value for the subject property, the assessed value appears to be within an acceptable range. An analysis of the tax assessment and tax comparables may be found in the income capitalization approach section of the report. SALES HISTORY: A search of Pinellas County Public Records revealed that no transactions involving the subject property have occurred over the last five years. It was reported that the subject property was under contract for sale in 1995 for $9,500,000 and was one of a number of apartment complexes being assembled for purchase by a Real Estate Investment Trust. The contract fell through apparently due to the lack of total funds raised, as well as, prior internal purchase agreements that were already in place. The trust forfeited a $100,000 non- refundable binder deposit. To our knowledge the subject property is not currently on the market for sale. HIDDEN CONDITIONS: The appraiser assumes that there are no hidden or unapparent conditions of the property, subsoil or structures which would render it more or less valuable than otherwise apparently comparable property. The appraiser assumes no responsibility for such conditions or for engineering which might be required to discover such conditions. TAMPA BAY AREA ANALYSIS TAMPA BAY AREA: The Tampa Bay Area is located on the west coast of Florida, midway up the Florida peninsula. The Tampa Bay Comprehensive Planning District 8 is geographically defined as Hillsborough, Manatee, Pasco and Pinellas Counties, which contain a total of 2,818 square miles. The primary concentration of development has taken place around Tampa Bay and along the Gulf coast. The major cities in the area are Tampa in Hillsborough County, and St. Petersburg and Clearwater in Pinellas County. The region is blessed with a moderate climate with an average minimum temperature of 48 degrees in January and an average maximum temperature of 89 degrees in July. The average annual rainfall is 56 inches, the majority of which falls in the summer months. POPULATION: The current population of the region is estimated at 2,311,198 (1995). The region has experienced a dramatic increase in population since 1970, with a total increase of 44.9% between 1970 and 1980. Population growth has slowed somewhat since 1980, with an increase of 26.8% between 1980 and 1990, or approximately 46,000 new residents annually. Total growth in 1990-1995, however, was only 132,647, or 26,529 annually. POPULATION STATISTICS
1980 1990 1995 Annual % Change 80-90 90-95 2000* Hillsborough 646,960 834,054 892,299 2.6% 1.4% 962,229 Manatee 148,445 211,707 232,700 3.6% 1.9% 257,404 Pasco 193,661 281,131 306,401 3.8% 1.7% 340,101 Pinellas 728,531 851,659 879,798 1.6% 0.7% 919,497 District 8 1,717,576 2,178,551 2,311,198 2.4% 1.2% 2,479,231 * Population projections, University of Florida
Population growth during the 1970's was 3.8% on an annual basis. In the period 1980-1990, growth in the area dropped to 2.4% annually, in part due to the overall slowing of migration to the sunbelt. With the slowdown in the economy, growth since 1990 has been only 1.2% per year for the district. Growth is due primarily to net immigration rather than natural growth. Pinellas County has recorded the lowest percentage growth due to the dwindling supply of available land. Hillsborough County is the most populous county in the area and contains the largest city, Tampa. The second most populous county in the area is Pinellas, which is geographically the second smallest county in Florida. This makes Pinellas County the most densely populated county in Florida with over 3,122 residents per square mile. Pasco County exhibited the most dramatic growth since 1980 due to its emergence as a retirement area, and increases in employment opportunities, however, as with other counties, Pasco County growth has slowed considerably. The average age of the population for the region is 39 years, as compared to 36 years for the State of Florida. The average age for the counties are 43 years for Manatee, 33 years for Hillsborough, 48 years for Pasco, and 42 years for Pinellas. The more mature populations in Manatee, Pasco and Pinellas Counties are primarily due to their history as retirement areas. Recent years have shown a slight drop in average age due to the increase in office and manufacturing employment opportunities. This is particularly true of Pinellas County, where the retirement population is being replaced by younger, working age, families. There were 961,202 households in the District in 1994, which represents an average household size of 2.40. The average household size has decreased from 2.70 in 1970, in keeping with national trends. Based on historical growth patterns, this would equate to 19,450 new household formations annually. However, the slower growth in 1990-1995 equates to only 11,033 new household formations annually. This is reflected in the significant drop in new housing starts in recent years. Housing starts have shown a slight rebound in all counties in the years 1993, 1994 and 1995, due in part to lower interest rates. Population growth is expected to rebound somewhat as the general economy improves, however, it is unlikely to reach the level of growth experienced in the 1970's and 1980's. ECONOMIC BASE: Historically the economy has been tourist and retirement oriented in the coastal counties and manufacturing and commercially oriented in Hillsborough County. While this is still true today, Pinellas County has begun to attract a larger share of new businesses, particularly in the high tech industries. Tampa, however, remains the major economic hub of the area. Major factors affecting the economic growth in the area, apart from the retirement and tourist industries, are Tampa's deep water port, Tampa International Airport and the major highway arteries servicing the area. Tampa is a major break point between railroads, air, highway and water transport. The Port of Tampa handled 52.0 million short tons in 1990, with an additional 5.3 million short tons handled by Port Manatee. Ease of access through Tampa International Airport and the interstate highway system has made the area increasingly more attractive for corporate and regional headquarters facilities, as well as high tech industry. This has spurred additional growth in the service and construction industries. The completion of I-75 through the region opened new growth opportunities in Pasco, Hillsborough and Manatee Counties, however, due to the general slowdown in the economy, this growth has not yet materialized. Taxable retail sales in the Tampa Bay Area increased from $19,521 million in 1990 to $23,502 million in 1994. Retail sales levels are generally in line with the State of Florida, however they are above national levels. The high level of retail sales is in large part due to the tourist and part time resident trade. This same influence is evident in the area employment statistics. Total personal income has increased dramatically over the period from 1985 to 1995. In 1985 the total personal income for the area was $27,463 million. By 1995 this had increased to $51,327 million, an increase of 86.9%, or 6.45% annually. Per capita income increased at a slightly slower rate than Florida as a whole to a current level of $22,208, slightly below the Florida per capita income of $22,534. PER CAPITA PERSONAL INCOME 1990 1994 1995 % Change Ann. % 94-95 90-95 Hillsborough $17,264 $20,743 $21,155 2.0% 4.1% Manatee $18,525 $22,968 $22,636 -1.4% 4.1% Pasco $14,424 $16,573 $17,146 3.5% 3.5% Pinellas $21,881 $24,146 $24,725 2.4% 1.5% District 8 $18,825 $22,208 $22,208 2.2% 3.4% Florida $18,683 $22,534 $22,534 2.9% 3.8% Employment in the region reflects a broad based economy, although it is skewed somewhat to the retail trade and service industries. Agriculture and mining were instrumental in the early growth of the area but have declined substantially in recent years. Historically the unemployment rate, at 5.3% in 1995, has stayed below the national and state averages. LABOR FORCE AND EMPLOYMENT (1995) Labor Unemply. Force Employed Unemployed Rate Hillsborough 503,225 475,286 27,969 5.6% Manatee 109,176 104,711 4,465 4.1% Pasco 118,654 110,789 7,865 6.6% Pinellas 441,700 419,406 22,283 5.0% District 8 1,172,755 1,110,203 62,582 5.3% The current labor force for the District is 1,172,755 or 50.7% of the population. In 1982 the labor force was 717,916 or 41.8% of the population. Not only has there been a substantial increase in labor force, there has also been a dramatic increase in the percent of population employed. EMPLOYMENT DISTRIBUTION (1993) Percent Percent Industry Total Percent Florida US Agriculture 20,910 2.20% 2.80% 2.70% Mining 125 0.00% 0.10% 1.20% Construction 42,682 4.60% 5.20% 4.50% Manufacturing 95,427 10.30% 8.70% 20.00% Transport, Communic. 50,127 5.40% 5.90% 5.60% Wholesale Trade 51,372 5.50% 5.30% 5.80% Retail Trade 188,913 20.30% 20.90% 16.40% Finance, Real Estate 65,773 7.10% 6.50% 5.80% Services 365,408 39.30% 37.80% 20.80% Government 49,663 5.30% 6.80% 17.20% Total 930,401 100.00 100.00% 100.00% The comparison of the District distribution with the national distribution of employment illustrates the importance of the construction, retail sales and service sector in the local economy and in Florida. This is due, in large part, to the tourist and retirement influence in the area. Employment growth had kept pace with population growth, thus providing adequate job opportunities. Due to the favorable economic environment, the quality of life in the area and the strong economic base, the Tampa Bay area should continue to grow as a major economic center. The area has been successful and should continue to be successful in attracting new businesses. SOCIAL SERVICES: All normal governmental services are adequately provided throughout the region. Electrical power is provided by Florida Power Corporation in Pasco and Pinellas Counties, Florida Power and Light in Manatee County and by Tampa Electric Company, in Hillsborough County at rates comparable with other areas of Florida. Water, sewer, sanitation, police and fire protection are provided by the various county and municipal governments. Local tax rates are generally in line with other areas of the state. Due to past growth, particularly in Hillsborough, Pasco, and Pinellas, certain services have been sorely taxed. Limited water restrictions have been implemented throughout the area during dry periods. The interior road systems are inadequate in certain high growth areas. This problem has become more critical with the implementation of the Florida Growth Management Act, which requires infrastructure improvements to be made concurrent with growth. While these factors do not appear to have had a major impact on growth thus far, they are likely to become a major factor in future growth, particularly if growth returns to past levels. The area has long been noted as a retirement and vacation spot with its gulf beaches and attractions such as Busch Gardens, Disney World and Weeki Wachee Springs. Over the years, the area has also developed a number of other cultural and leisure activities including an NFL football team, an NHL hockey team, the Ruth Eckerd Hall in Clearwater, a number of smaller theaters and the Performing Arts Center in Tampa. A 200,000 square foot convention center has been constructed in downtown Tampa, along with a new hockey arena. A sports stadium has been constructed in downtown St. Petersburg, which has been awarded a new major league baseball franchise. Shopping is abundant and easily accessible to all areas. A number of major area malls are scattered throughout the area. These new cultural and leisure amenities have given the Tampa Bay area a much more cosmopolitan atmosphere, thus making the area much more attractive to both part time visitors and permanent residents. Educational opportunities are adequately provided in the area. Each county has a public school system providing education from kindergarten through the twelfth grade, as well as private schools. Higher education is provided by a number of institutions, both public and private, including St. Petersburg Junior College, University of South Florida, University of Tampa, Hillsborough Community College, Eckerd College and Stetson University. Health services are provided by 51 hospitals, with a total of 11,273 beds. There are approximately 5,184 licensed physicians serving the area. There is also a large number of nursing homes and care facilities serving the elderly population. CONCURRENCY: Concurrency laws were enacted in 1990, statewide. Concurrency is part of the 1985 Florida Growth Management Act which states in part that all infrastructures, which are, or will be affected by any proposed development, must be in place, prior to, or concurrent with development. In most municipalities, there are seven areas that affect concurrency. 1. Solid Waste 5. Transportation 2. Drainage 6. Parks and Recreation 3. Water 7. Mass Transportation 4. Sewer The major items of concurrency which normally affect most projects are sewers and roads. Sewers and roadway capacities are also generally the most expensive to build. Concurrency laws may require the developer to pave, widen, and/or construct existing or additional roads to carry the burden of the additional traffic generated by a proposed development. The developer may also have to participate in the cost of construction to increase the sewer capacity or may have to donate land to be used for parks and recreation. As a result of rapid development, a major concern in the area lies with the inability of the existing roads to keep up with vehicular traffic demands. Streets are rated "A" through "F". Streets in the county with severe traffic problems are labeled "F". Development on streets that are rated, or are approaching, an "F" rating could be significantly curtailed. All counties have major road construction programs underway to alleviate these problems, however, they are likely to persist, at least in the short run. HOUSING MARKET: The Housing Market remains stable in the Tampa Bay area, although sales of new homes have slowed from the high levels experienced during the high growth period of the 1970's. The most active housing markets in both single family and multi-family developments are northwest Hillsborough County, north Pinellas County, and south Pasco County. New housing starts over the period 1987-1992 experienced a steady decline due to slower population growth and over building. Housing starts in all counties stabilized in 1992, with an increase in construction activity in 1993 and 1994. Preliminary estimates for 1995 indicate a slight decrease in residential construction activity, however, preliminary estimates have historically been below actual figures. The extent of future improvement in housing production is dependent on the improvement of infrastructure, as mandated by the 1985 Growth Management Act, new job creation and population increases. However, it is unlikely that housing starts will return to the levels experienced in the 1970's and early 1980's. The following chart shows the housing starts through 1995 for all counties in the metropolitan area. HOUSING STARTS
County 1989 1990 1991 1992 1993 1994 1995* Hillsborough SF 4,100 2,454 3,167 4,237 4,484 5,208 6,809 MF 2,162 2,837 1,243 506 695 2,340 Manatee SF 1,254 1,185 1,012 1,304 1,551 1,917 2,401 MF 1,273 1,118 801 381 239 272 Pasco SF 2,080 1,460 1,484 1,661 2,098 2,177 2,054 MF 326 81 127 174 123 239 Pinellas SF 2,423 1,960 1,961 2,602 2,398 2,426 3,326 MF 1,737 1,935 1,855 591 1,241 1,101 Total (by type) SF 9,857 7,059 7,624 9,804 10,531 11,728 MF 5,498 5,971 4,026 1,652 2,298 3,952 Total 15,355 13,030 11,650 11,456 12,829 15,680 14,590 Percent Change -20.26% -15.14% -10.59% -1.67% 11.98% 22.22% -6.95% * Preliminary est., breakdown between Single and Multi Family not available.
Inventories of new single-family homes are at reasonable levels in all four counties. All counties are beginning to experience a shortage of developed lots due to the recent increase in building activity. This is particularly true of Pinellas County due to the lack of developable land. This has caused an increase in demand in southern Pasco County. New single family detached construction is over a broad range of prices, generally from $75,000 to $300,000. The most active condominium market is in the $60,000 to $90,000 price range. The multi-family market has experienced an increase in new construction over the last 24 months, particularly in Hillsborough and Pinellas County, however, exact numbers are not available for 1995. Vacancy rates have stabilized in both Pinellas and Hillsborough County at approximately 5% to 8%. Rents have increased by approximately 3% to 5% per year. Absorption rates in most well designed and well located new projects are reported to be good. An emerging trend is the renovation or replacement of older residences in existing neighborhoods. This trend is particularly noticeable in Pinellas County and south Tampa where available land is in short supply. The overall housing market remains stable, although there is continuing softness in certain submarkets. The historic ability of the Tampa Bay area to absorb new housing units should continue to support new construction in the area. Current population growth would indicate 11,033 new household formations per year, which is reflected in production of new housing units. Steady increases in rental rates and continued strong apartment absorption rates would appear to indicate future improvement. SUMMARY: In summary, the Tampa Bay area currently provides all of the normal services required by a major metropolitan area. Although the tremendous growth over the last decade has strained some of the governmental services, there should be no detrimental effects on overall growth, at least in the short run. However, if infrastructure development is not provided, as required by the concurrency provisions of the Florida Growth Management Act, long term growth could be slowed. Sources: Florida Statistical Abstract Florida Trend Economic Yearbook The Maddux Report A more detailed analysis of the specific market in which the subject is located may be found in the following Neighborhood Analysis. While our analysis will consider the market as a whole, particular attention will be paid to the specific market of the subject. TAMPA BAY AREA REGIONAL LOCATION NEIGHBORHOOD DESCRIPTION The subject property is located on the south side of NE Coachman, west of U.S. Highway 19 in the city of Clearwater. The surrounding neighborhood primarily consists of well established, fully developed, residential properties with supporting commercial facilities lining the major thoroughfares. The neighborhood boundaries could readily be described as Sunset Point Road to the north, McMullen-Booth Road and Old Tampa Bay to the east, East Bay Drive to the south, and Highland Avenue to the west. The improvements in the subject neighborhood contain a mixture of commercial and residential uses. The main traffic arteries are typically lined with commercial improvements, including offices, service stations, convenience stores, restaurants, service shops, auto sales/repair facilities, banks, and other commercial uses. The balance of the surrounding areas are primarily developed with a mixture of single family and multiple family development. Single family properties in the area range substantially in size and age, thus catering from lower to higher income ranges. Likewise, the multi-family properties in the area command rents from the lower to higher income ranges. Properties are adequately maintained and many of the older ones show signs of renovation. A small municipal airport is located at the northeastern portion of the neighborhood. Several public parks, schools, shopping, a golf course, and a baseball stadium (used in the summer months by the Philadelphia Phillies) are conveniently located throughout the neighborhood. Public Beaches, regional malls, employment, and other supporting facilities are located within the neighborhood or within a short driving distance. Tampa International airport is located within a twenty-five minute driving distance, east of the subject. The major north-south arteries in the neighborhood are McMullen- Booth Road, U.S. Highway 19, Belcher Road, Hercules Avenue, Keene Road, and Highland Avenue. U.S. Highway 19 is a well traveled thoroughfare located in the eastern portion of the neighborhood and is heavily developed with office and retail properties. Both Belcher Road and McMullen-Booth Road provide alternate north- south travel routes to U.S. Highway 19, and are both improved with mixed residential and commercial development. Highland Avenue is primarily developed with residential type properties with a scattered small amount of commercial development. Hercules Avenue is primarily developed with commercial and industrial type properties. The major east-west arteries in the neighborhood are Sunset Point Road, Drew Street, Gulf-to-Bay Boulevard, Druid Road, Sunset Point Road, Belleair Road, and East Bay Drive. Both Gulf-to-Bay Boulevard and East Bay Drive are heavily developed commercial thoroughfares which carry large volumes of vehicular traffic. The remaining east-west roads are primarily developed with small "Mom and Pop" commercial properties, scattered multi-family properties, and single family subdivisions. The roads in the neighborhood provide good traffic flow and are well maintained on a continual basis. Construction to improve road conditions is currently in progress on Sunset Point Road, Keene Road, and East Bay Drive. Interstate access for the neighborhood is located within a 20 minute driving distance east or southeast of the neighborhood. Many of neighborhoods in Pinellas County lack nearby interstate access and is not considered to have any adverse influence on the subject neighborhood. Single family development in the subject neighborhood varies dramatically from older masonry or frame homes in the lower to moderate price range, to newer custom built homes in the upper price range. The majority of the homes are typically older one story, concrete block structures that are about 800 to 1,700 square feet in size and sell from $40,000 to $90,000. The market for rental housing units in the area is well diversified and is available for all household income levels. A market investigation was conducted in the subject neighborhood and it indicated that there is good demand for apartment complexes. According to local apartment managers in the area, typical vacancy rates range from 1% to 10%. Monthly rents for one bedroom apartments are from $350 to $650 a unit, monthly rents for two bedroom apartments are from $450 to $800 a unit, and monthly rents for three bedroom apartments are from $600 to $950 a unit. Several of the apartment complexes which directly compete with the subject property are Coachman Crossing, Cameron Lakes, Sunchase of Clearwater, Coral Cove, and Chesapeake. All five apartment complexes, like the subject, feature clubhouses and/or leasing offices, swimming pools and laundry facilities. As the result of the city of Clearwater being nearly fully developed there has been relatively little population growth from 1980 to 1994. The permanent population of Clearwater is estimated as of 1994 at 100,604, which is up 1,820 from 1990 and 15,076 from 1980. The median age of the neighborhood is 39.2 years, which is above the state, but below both Pinellas County and the region. In the neighborhood, 20.5% of the population is age 0 to 18, 29.5% is age 18 to 39, 27.4% is age 39 to 65, and 22.6% is age 65 or older. The population of the neighborhood is well diverse in age as the result of supporting academic schools, employment centers, health care, and recreational amenities. About 25% of the neighborhood population earns an annual household income up to $15,000, 25% earn $15,000 to $25,000, 33% earn $25,000 to $50,000, and 17% earn $50,000 and up. The annual household income figures indicate that quality employment is available to the area. All necessary public utilities are readily available in the neighborhood, including water, sewer, telephone, and electrical service. Police and fire protection are supplied by the City of Clearwater. Local governments appear to keep the streets and equipment properly maintained. In summary, the subject neighborhood has a large residential population base. The area is well-served by local utilities, governmental services, and supporting commercial facilities. Recreational and social amenities, including schools and parks, are also abundant. Vacant land is somewhat scarce in the area, and existing properties are adequately maintained, under renovation, or demolished to make way for new construction. The subject neighborhood appears to be in the stable portion of the neighborhood life cycle. Real property values in the neighborhood have been relatively stable for the past two years and should remain relatively stable in the near future. NEIGHBORHOOD MAP SITE DESCRIPTION Location: The subject site is located on the south side of NE Coachman Road about 280 feet southwest of the intersection with U.S. Highway 19 in the city of Clearwater. The physical mailing address of the property is 2545 NE Coachman Road, Clearwater, Florida 34625. Size and Shape: The subject site is an irregular shaped non-contiguous interior parcel with about 852 feet of road frontage on NE Coachmen Road and a depth of about 1,335 feet. The gross area of the site is 750,310 square feet or 17.22 acres. Topography and Drainage: The site is basically level and slopes gradually downward from north to south. The site is improved with a 240-unit apartment 11 complex known as Town Place Apartments. The parcel has a master drainage system with water retention located at the southeastern portion of the site. Drainage for the site appears to be adequate. Easements, Encroachments, and Other Conditions: Based on the survey provided and a physical inspection of the property, there were no adverse easements, encroachments or conditions observed. Flood Information: The subject property is located in flood zones X and AE. Flood zone information was determined by F.I.R.M. community panel number 125096 0010 D, dated August 19, 1991. An X zone is defined as areas determined to be outside the 500-year flood plain or areas of 500-year flood; areas of a 100-year flood with average depths of less than 1 foot or with drainage ares less than 1 square mile; and ares protected by levees form 100-year flood. An AE zone is defined as areas with base flood elevations determined. Insurance is generally required for improved structures within the AE zone. Soil and Subsoil: No soil analysis was made available, however given the existing improvements to the site and surrounding properties, soil conditions would appear adequate for development. At the time of inspection, there were no unusual conditions observed on the site that would suggest the presence of soil contamination. It was reported that a 1992 environmental analysis for the subject property found favorable results. Utilities and Services: Water: City of Clearwater Sewer: City of Clearwater Electricity: Florida Power Corporation Telephone: General Telephone Company Police: City of Clearwater Fire: City of Clearwater The cost of utilities and services are similar to competing areas within the Tampa Bay area. Street Improvements: NE Coachman Road, in front of the subject site, is a two lane road with masonry sidewalks and no curbs. Telephone and electric service in the area is wood pole mounted. U.S. Highway 19 to the east of the site is a six lane road with center turn lanes. The intersection of NE Coachman Road and U.S. Highway 19 is signaled with a traffic light. Traffic counts taken in the location of the subject for 1993 estimate travel on NE Coachman Road at 13,862 cars daily and travel on U.S. Highway 19 at 71,862 cars daily. Travel is by both local and transient traffic. The visibility of the site is adequate. Ingress/Egress: Access to the site is provided only by NE Coachman Road, to the north. Access to NE Coachman Road is available from U.S. Highway 19 to the east and Old Coachman Road or Belcher Road to the west. Ingress and egress for the site is adequate and is easily made from all traffic directions. Ingress and egress for the site may be slightly more difficult during peak traffic hours. Relationship to Surrounding Properties and Uses: The subject property is bordered to the north with a Walmart, and to the east with a motel and vacant commercial sites fronting on U.S. Highway 19. To the south, the subject is bordered with vacant land owned by Pinellas County, as well as, the spring training facility for the Philidelphia Phillies, Major League Baseball team. Within the land owned by Pinellas County, about 200 feet south of the subject site, is the Seaboard Coast Line railroad. Trains run twice daily, usually around 12:00 pm and between 1:00 and 4:00 am. To the west, the subject is bordered with high tension power lines and a competing 218 unit apartment complex, known as Coachman Crossing. The location of the high tension power lines and the railroad tacks are believed to have no significant adverse influence on the subject property. In fact, many of the units near the tracks are charged a view premium for a small lake located in the area. Located within the complex, but separately owned is the Royal Racquet Club, a public tennis facility. The land where the front entrance is located, belongs to the tennis facility, however the apartment complex maintains the entrance and has an ingress and egress easement over the land. The existing use of the subject site as improved with an apartment complex provides a good transition from commercial to residential development. Zoning: The subject site is zoned RPD-14 (Residential Planned Development "Fourteen" District) under the jurisdiction of the City of Clearwater. The RPD-14 zoning allows residential development at a maximum of 14 units per net acre. As defined by the City of Clearwater, a net acre includes all uplands within a contiguous parcel of ownership excluding existing or proposed public or private roadways, right-of-way and vehicular access ways. The City of Clearwater uses an 8% factor to determine net acreage. The comprehensive land use plan, indicates that the subject has a land use of MD (Medium Density Residential 15 u.p.a.). Concurrency: Concurrency laws in the state of Florida became active on January 1, 1990. Concurrency is part of the 1985 growth management act which states in part that all infra-structures, which are, or will be affected by the development of a property, will be in place, prior to, or concurrent with development. In most municipalities, there are seven areas that are affected concurrency. 1. Solid Waste 5. Transportation 2. Drainage 6. Parks and Recreation 3. Water 7. Mass Transportation 4. Sewer The major items of concurrency which normally affect most projects are sewers and/or roads. Sewers and roadway capacities are also generally the most expensive to build. Concurrency laws may require the developer to pave, widen, and/or construct existing or additional roads to carry the burden of the additional traffic, (vehicular trips) that the subject project will create. The developer may also have to participate in the cost of construction to increase the sewer capacity or may have to donate land to be used for parks and recreation. Based on conversations with the City of Clearwater, concurrency would appear to have no adverse influence on the subject property. Summary: In summary, the subject site is located on a secondary collector road, just west of U.S. Highway 19, a primary commercial thoroughfare in the city of Clearwater. The site is an irregular shaped non-contiguous interior parcel which is 750,310 square feet or 17.22 acres in size. All necessary utilities are available to the site and the topography is gently sloping and drainage appears to be adequate. The site has about 852 feet of road frontage, adequate ingress and egress to major traffic arteries and adequate traffic visibility. The subject is bordered with a combination of multiple family development and general commercial development. The location of the subject site appears well suited for multiple family residential development. TAX MAP IMPROVEMENT DESCRIPTION The subject is improved with twenty-four two-story or three-story garden style walk-up apartment building containing 240 units. Amenities for the apartment complex include a leasing office, a swimming pool and spa, tennis courts, and a laundry/maintenance room. The apartment buildings were constructed in 1984. The buildings are irregular in shape and uniformly arranged on the site, with the leasing office, swimming pool and tennis courts located toward the southern rear portion of the site. The construction quality of the apartment complex is average cost. The exterior walls are wood frame with wood siding. The roof designs are gable, constructed of a wood truss system with a wood deck and a composition shingle cover. Aluminum gutters and downspouts are not provided. The foundation of the buildings are a reinforced concrete slab. Windows are aluminum sliding. Exterior doors are metal and interior doors are hollow core. Covered entries are located at the front of each of the units. The total rentable area of the buildings is 202,004 square feet. For the purpose of this report, the rentable area includes exterior and common walls. The square foot sizes are based on the physical measurements taken at the time of inspection. The leasing office is 854 square feet in size and the laundry/maintenance Room is 1,056 square feet in size. The six washers and six dryers in the laundry/storage room are all leased by the apartment complex. Landscaping is mature and consists of full sod, small to large trees, and attractive shrubbery. The landscaped areas are adequately maintained and irrigated by a full sprinkler system which draws water from the lake. Parking, as well as, ingress and egress are asphalt paved and maintained in adequate condition. There are 397 open parking spaces provided and all are located relatively close to the units. The apartment complex has 1.65 parking spaces for each unit, which is considered adequate. The individual units in the complex are made up of four different type floor plans, two one-bedroom units and two two-bedroom units. The smallest of the floor plans is the one-bedroom one- bath Jasmine model. These units are 525 square feet in size and there are 36 located within the complex. The largest one-bedroom one-bath unit is the Gardenia model. The complex has 76 of these 720 square foot units. The next larger floor plan is a two- bedroom one-bath model known as the Azalea. These units are 877 square feet in size and there are 32 located within the complex. The largest and most abundant of the floor plans is the Hibiscus Model. The complex has 96 of these 1,045 square foot units. All of the floor plans provide living rooms with dining areas. All of rooms in each of the floor plans are adequate in size and appear to provide adequate functional utility. Units include a good amount of closet space. MODEL UNITS TYPE SIZE _________________________________________________________________ Jasmine 36 3Rm/1Br/1Bth 525 Gardenia 76 3Rm/1Br/1Bth 720 Azalea 32 4Rm/2Br/1Bth 877 Hibiscus 96 4Rm/2Br/2Bth 1,045 --- ------------ ------- Total 240 848 Rooms 202,004 Weighted Average Unit Size = 842 Square Feet Unit interiors are of average quality construction. The floors are covered with average quality carpet and vinyl. The vinyl areas are located at the foyers, kitchens, baths and sun room areas. All of the units have 30 gallon water heaters, 125 amp electrical panels and central air systems. Standard kitchen equipment includes a refrigerator, a range/oven with a hood fan, a dishwasher, and a disposal. Units are individually metered for electrical service and have telephone and cable television hook- ups. Hook-ups for washers and dryers are optional in all of the models. Each unit is equipped with a fire alarm. On April 15, 1996, the date of inspection, the apartment complex had 14 vacant units, which was reported to be about typical. All of the vacant units were reported to be in rentable condition. The current asking rent is $470 a month for the Jasmine units, $515 to $540 a month for the Gardenia units, $620 to $635 a month for the Azalea units, and $655 to $725 a month for the Hibiscus units. Rent premiums are charged washer and dryer hook-ups and view amenities. Tenants are responsible for payment of electric, telephone and cable television service. As is typical, the services included in the rental rates are water, sewage, and trash removal. As is common with apartment complexes the size of the subject, the subject is professionally managed. Employees consist of a property manager, an assistant manager, a part-time leasing agent, a maintenance supervisor, a maintenance assistant, a grounds keeper, and a housekeeper. The subject complex has one nonrevenue producing unit which is used as a model. The property manager receives compensation in lieu of the use of a two-bedroom unit free of charge. The subject property is well maintained in average condition with no signs of items which are in need of immediate repair. As is typical with large wood frame apartment complexes, some minor signs of exterior wood rot were observed at the time of inspection. Roofs and exterior paint appear to be in adequate condition. Asphalt resurfacing and striping will likely be required within the next two years. The unit interiors and appliances are generally maintained on a continual basis. The subject is an average cost quality apartment complex that was constructed in 1984. In comparison to competing rental properties, the condition of the subject property is average. The Marshall Valuation Service, a national cost estimate company, indicates properties such as the subject have total lives of approximately 50 years. Based on an observation of other structures in the neighborhood, a physical life of 50 years would appear reasonable. In further observation of other structures in the neighborhood, the effective age of the subject has been estimated to be equal with actual at 12 years with a remaining life is estimated at 38 years. Due to the age of the improvements, the presence of hazardous materials used in the construction, such as asbestos, is less likely. No environmental audit has been made available, however it was reported that a 1992 environmental analysis for the subject property found favorable results. In summary, the Town Place Apartments is an average cost quality apartment complex. In comparison to competing rental properties, the subject is in average condition. The unit mix, apartment sizes, and layout are well suited to the rental market. The complex is architecturally attractive and offers an average amenity package. SITE PLAN UNIT FLOOR PLANS HIGHEST AND BEST USE Highest and best use is defined as: "The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value." In appraisal practice, the concept of highest and best use is the premise upon which value is based. The highest and best use analysis studies the economic market forces and identifies the most profitable and competitive use to which a property can be put. The highest and best use analysis first considers the site as though vacant. If the site is improved, the highest and best use analysis also considers the property as improved. The highest and best use of the land as if vacant may not be the same as the highest and best use of the property as improved. The use of the property as improved will continue as the highest and best use, as long as the value of the improved property exceeds the value of the vacant site. "Highest and best use of land or a site as though vacant assumes that the parcel of land is vacant or can be made vacant by demolishing any improvements." The highest and best use as though vacant will determine a use for the site, the type of improvements, and when improvements should be made. The highest and best use of the site as vacant is useful for identifying comparable land sales, as well as estimating a separate land value, which is fundamental for the cost approach. "Highest and best use of a property as improved pertains to the use that should be made of an improved property in light of its improvements." The highest and best use of a property as improved will determine whether the improvements should be maintained, adapted, or raised. The purpose of the highest and best use of the property as improved is to determine the use expected to produce the greatest value and assist in the selection of improved comparable sales. There are four criteria used in analyzing the highest and best use of both the land as though vacant and the property as improved. The highest and best use must be: 1. Physically Possible; 2. Legally Permissible; 3. Financially Feasible; 4. Maximally Productive. Highest and Best Use as Though Vacant Physically Possible Physically possible uses are those uses that can be physically put on the subject site. These uses change with the size, shape, soil, and terrain of the property. This test also considers whether public utilities are available to the site. The subject site is located on the south side of NE Coachman Road about 280 feet southwest of the intersection with U.S. Highway 19 in the city of Clearwater. The site is an irregular shaped non- contiguous interior parcel with about 852 feet of road frontage on NE Coachmen Road and a depth of about 1,335 feet. The gross area of the site is 750,310 square feet or 17.22 acres. The site is basically level and slopes gradually downward from north to south. The site is improved with a 240-unit apartment complex known as Town Place Apartments. The parcel has a master drainage system with water retention located at the southeastern portion of the site. Drainage for the site appears to be adequate. Based on the survey provided and a physical inspection of the property, there were no adverse easements, encroachments or conditions observed. The subject property is located in flood zones X and AE. Flood zone information was determined by F.I.R.M. community panel number 125096 0010 D, dated August 19, 1991. An X zone is defined as areas determined to be outside the 500-year flood plain or areas of 500-year flood; areas of a 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. An AE zone is defined as areas with base flood elevations determined. Insurance is generally required for improved structures within the AE zone. No soil analysis was made available, however given the existing improvements to the site and surrounding properties, soil conditions would appear adequate for development. At the time of inspection, there were no unusual conditions observed on the site that would suggest the presence of soil contamination. The subject site is serviced by all typical urban utilities. Electrical service is provided by the Florida Power Corporation, public water and sewer service is provided by the City of Clearwater, and telephone service is provided by General Telephone Company. Police and fire protection are provided by the City of Clearwater. Electrical service, street lights and telephone service in the area are concrete or wood pole mounted. All services provided to the subject site are underground. Considering the size, shape, and topography of the site and the availability of utilities, many uses could be physically built on the site. Legally Permissible Legally permissible uses are those uses which are legally allowed on the subject site. These uses vary with the type of zoning, building codes, deed restrictions, and environmental restrictions imposed on the subject site. The subject site is zoned RPD-14 (Residential Planned Development "Fourteen" District) under the jurisdiction of the City of Clearwater. The RPD-14 zoning allows residential development at a maximum of 14 units per net acre. As defined by the City of Clearwater, a net acre includes all uplands within a contiguous parcel of ownership excluding existing or proposed public or private roadways, right-of-way and vehicular access ways. The City of Clearwater uses an 8% factor to determine net acreage. The comprehensive land use plan, indicates that the subject has a land use of MD (Medium Density Residential 15 u.p.a.). The recent enactment of Concurrency Laws in the state of Florida, which became effective January 1, 1990, can directly impact on the use of a site. Concurrency is part of the 1985 Growth Management Act, which states in part that all of an area's infrastructure which are or will be affected by the development of a property must be in place or concurrent with development and must be adequate. Concurrency appears to have no adverse influence on the subject property. Based on the physical and legal characteristics of the subject property it would appear as though several types of residential development would be both physically possible and legally permissible. A change in zoning to a commercial or industrial use would be unlikely. Given that the subject site is 17.22 acres in size, the subject site could legally and physically accommodate up to 222 apartment units. Condominium, townhouse, and single family subdivision development would be less likely due to the bordering commercial and multiple family development. In addition to complying with the density requirements, all four uses would also appear to comply with building setbacks, the building coverage ratio, open areas, parking areas, and driveway requirements. Financially Feasible The test of financially feasible considers those uses which are both physically possible and legally permissible. It determines among them; which uses, if any, would generate a positive return to the property. A return is positive if the income of the property is greater than the property's operating expenses, financial expenses and capital amortization. The market for rental housing units in the area is well diversified and is available for all household income levels. A market investigation was conducted in the subject neighborhood and it indicated that there is good demand for apartment complexes. According to local apartment managers in the area, typical vacancy rates range from 1% to 10%. Monthly rents for one bedroom apartments are from $350 to $650 a unit, monthly rents for two bedroom apartments are from $450 to $800 a unit, and monthly rents for three bedroom apartments are from $600 to $950 a unit. NE Coachman Road, in front of the subject site, is a two lane road with masonry sidewalks and no curbs. Telephone and electric service in the area is wood pole mounted. U.S. Highway 19 to the east of the site is a six lane road with center turn lanes. The intersection of NE Coachman Road and U.S. Highway 19 is signaled with a traffic light. Traffic counts taken in the location of the subject for 1993 estimate travel on NE Coachman Road at 13,862 cars daily and travel on U.S. Highway 19 at 71,862 cars daily. Travel is by both local and transient traffic. The visibility of the site is adequate. Access to the site is provided only by NE Coachman Road, to the north. Access to NE Coachman Road is available from U.S. Highway 19 to the east and Old Coachman Road or Belcher Road to the west. Ingress and egress for the site is adequate and is easily made from all traffic directions. Ingress and egress for the site may be slightly more difficult during peak traffic hours. The subject property is bordered to the north with a Walmart, and to the east with a motel and vacant commercial sites fronting on U.S. Highway 19. To the south, the subject is bordered with vacant land owned by Pinellas County, as well as, the spring training facility for the Philadelphia Phillies, Major League Baseball team. Within the land owned by Pinellas County, about 200 feet south of the subject site, is the Seaboard Coast Line railroad. Trains run twice daily, usually around 12:00 pm and between 1:00 and 4:00 am. To the west, the subject is bordered with high tension power lines and a competing 218 unit apartment complex, known as Coachman Crossing. The location of the high tension power lines and the railroad tracks are believed to have no significant adverse influence on the subject property. Located within the complex, but separately owned is the Royal Racquet Club, a public tennis facility. The land where the front entrance is located, belongs to the tennis facility, however the apartment complex maintains the entrance and has an ingress and egress easement over the land. The existing use of the subject site as improved with an apartment complex provides a good transition from commercial to residential development. Given that current occupancy and rental rates for apartment complexes are at reasonable levels, development of the subject site with an apartment complex would appear to provide a positive return. Maximally Productive Among the financially feasible uses, the use which provides the highest rate of return or value is the use which is maximally productive. Thus, is the highest and best use of the property. A market investigation indicated that most multiple family land in Pinellas County was developed at or very near maximum density. Most of the new multiple family development is for good quality apartment complexes. Absorption rates for these new developments are generally from 30 to 40 units a month. Also noted was that these developments had good recreational amenities and attractive landscaping. Therefore, the Highest and Best Use of the site "as if vacant" would be to develop the site with 222 good quality apartment units (14.00 units per net acre). Highest and Best Use as Improved The subject is a 240-unit apartment complex that was built in 1985. The construction is average cost quality and the property has been well maintained in average condition. Most apartment complexes in the Pinellas County, which are near stabilized occupancy, are in average to good condition. As of the inspection date, the subject had an occupancy rate at about a 94%, which is average for Pinellas County and the immediate area. The subject property was constructed at a density of 13.94 units per acre and appears to conform to zoning. The individual unit sizes, site layout and available parking appears well suited for use as a apartment complex. The value of the site with the improvements far exceeds the site value alone. Thus, the highest and best use of the subject property, as improved, is to continue use as a 240-unit apartment complex. Conversion to condominium units would not be reasonable due to the bordering commercial development and the large number of one bedroom units. THE VALUATION PROCESS The estimate of market value for real property involves a systematic process in which the problem is defined, the work necessary to solve the problem is planned, and the data required; is acquired, classified, analyzed and interpreted into an estimate of value. In this process, three approaches are used by the appraiser to estimate value. They are: THE COST APPROACH THE SALES COMPARISON APPROACH THE INCOME CAPITALIZATION APPROACH The cost approach is a method in which the value of a property is derived from creating a substitute property with the same utility as the subject property. In the Cost Approach, the appraiser must estimate the market value of the subject site as if vacant, by using the direct sales comparison approach, then estimate the reproduction cost new of the improvements. Depreciation from all sources is estimated and subtracted from the reproduction cost new of the improvements. The depreciated reproduction cost of all improvements is then added to the estimated site value with the results being an indicated value by the cost approach. The sales comparison approach also referred to as the market approach, involves the comparison of similar properties that have recently sold or similar properties that are currently offered for sale, with the subject property. The basic principle of substitution underlies this approach. It implies that an informed purchaser would not pay more for a property than the cost to acquire a satisfactory substitute property with the same utility as the subject property in the current market. These properties are compared to the subject with regard to differences or similarities in time, age, location, physical characteristics, and the conditions influencing the sale. The notable differences in the comparable properties are adjusted to the subject property to indicate a value range for the property being appraised. The principle of increasing and decreasing returns is important in identification of comparables. The principle of contribution is the heart of the adjustment process in determining the effect that the presence or absence of some characteristic has on the sale price. When sufficient sales data is available, these adjustments are best determined by the actions of typical buyers and sellers in the subject's market place. This value range, as indicated by the adjusted comparable properties, is reconciled into a final indicated value for the subject property by this approach. The income capitalization approach is a process which discounts anticipated income streams (whether in dollar income or amenity benefits) to a present worth figure through the capitalization process. The appraiser is again faced with obtaining certain data related to the subject and comparing it to similar physical, functional and economic properties. Comparable rental information is analyzed to estimate potential gross income (actual and/or comparative) to determine a projected net income stream. The appraiser must estimate a capitalization rate, either through extraction from the market or using other available techniques. The net income stream is capitalized into an indicated value by this approach. The value estimates as indicated by the three approaches are then reconciled into a final estimate of the property's value. In the final reconciliation, the appraiser must weigh the relative significance, defensibility, amount and accuracy of data, and applicability of each approach as it pertains to the type of property being appraised and that best approximates the value being sought in the appraisal. THE COST APPROACH The basic premise upon which this method of value estimate is based, is known as the principle of substitution. This principle logically states; "a prudent purchaser of a particular property would be willing to pay no more for that property than the cost of acquiring an equally desirable substitute." It is acknowledged that one principal method of acquiring a substitute property would be realized by the reproduction (or replacement) of the improvements of commensurate utility on an equally desirable site. This approach is most valid when analyzing new improvements which have not experienced any loss in value through normal wear and tear, or other forms of depreciation. Therefore, the cost approach estimates the current market value of a property through a process in which the replacement cost of all improvements are estimated. From this figure is deducted the total estimated loss in value (depreciation) for the improvements. The basic steps used in this approach are outlined below: Step 1 Estimate the current market value of the site. The site is valued as if vacant and free to be used in a capacity representing its highest and best use. This step is accomplished through the analysis of the sales and listings of comparable commercial sites. Step 2 Estimate the replacement cost new, of the subject improvements. This step results in the appraisers' estimate of the total cost of replacing a structure with similarity to the subject improvements. The replacement cost estimate associated with this appraisal uses the estimated cost per square foot. The method of estimating this cost factor is fully described later in this report. SteP 3 Estimate the total accrued depreciation. This refers to the total loss in value, which the subject property may have experienced through physical, functional, or external factors, which would negatively influence the value of the property. Step 4 Deduct the total estimated depreciation (Step 3) from the reproduction cost estimate (Step 2) and add the current value estimate for the site (Step 1). The resulting figures represent the appraisers' estimate of the current market value of the subject via the Cost Approach. Estimate of Land Value The valuation of vacant land (Step 1) is typically undertaken by the sales comparison approach (market approach). The application of this approach produces a value estimate for land by comparing it with similar properties that have recently sold, in the same or competitive neighborhoods. The sale price of these properties tends to set the range of value in which the subject property will fall, when reduced to an appropriate unit of comparison (price per square foot, per front foot, per unit, etc). Refinement of this data, by the comparative process, should lead to a logical estimate of market value as of the date of appraisal. The reliability of this technique is dependent upon (1) the degree of comparability of each sale to the subject, (2) market conditions at the time of sale, (3) verification of pertinent data, and (4) the absence of unusual conditions that influence the sale. A variety of sales within the subject's neighborhood were analyzed. Information on those sales considered to be most comparable to the subject property are set forth in the following pages. LAND COMPARABLE NO. 1: LOCATION: South side of Fletcher Avenue, just west of Interstate 75, Hillsborough County TAX I.D. NUMBER (S-T-R): Portion of 37375.0000 & and others (12- 28-19) SALE DATE: February 27, 1995 GRANTOR: Mary K. Wetherington and others GRANTEE: Zom Tampa Fetcher Ltd. O.R. BOOK/PAGE: 7688/1815 & 7688/1818 SALES PRICE: $2,200,000 SIZE: 22.00 Net Acres or 958,320 Square Feet NO. OF UNITS: 352 Units (Developed) DENSITY: 16.00 Units PRICE PER SQ. FT.: $2.30 PRICE PER ACRE: $100,000 PRICE PER UNIT: $6,250 LOCATION: Average UTILITIES: Available SHAPE: Irregular TOPOGRAPHY: Basically Level ZONING: Alternate Multiple Family by Temple Terrace LAND USE: UL-2 (20 u.p.a.) FINANCING: SouthTrust Bank $14,250,000 (A & D) VERIFICATION: Representative of the Grantee, JMK COMMENTS: The site was purchased for development of The Arbors at Fletcher, a 352 unit apartment complex offering one to three bedroom units in two to three story buildings. Rents are projected between $565 and $875. The site is across from the Hidden River Business Park. TAX MAP LAND COMPARABLE NO. 2: LOCATION: West side of North Dale Mabry Highway, north of Gaither High School, northwest Hillsborough County TAX I.D. NUMBER (S-T-R): Portion of 015910.0000 (28-27-18) SALE DATE: December 22, 1994 GRANTOR: Hillsboro Farms GRANTEE: Carrollwood Place Limited Partnership O.R. BOOK/PAGE: 7624/1404 SALES PRICE: $2,190,000 SIZE: 27.33 Net Acres or 1,190,495 Square Feet NO. OF UNITS: 432 Units (Developed) DENSITY: 15.81 Units PRICE PER SQ. FT.: $1.84 PRICE PER ACRE: $80,132 PRICE PER UNIT: $5,069 LOCATION: Average UTILITIES: Available SHAPE: Irregular TOPOGRAPHY: Basically Level ZONING: PDH by Hillsborough County LAND USE: RES-12 (12 u.p.a.) FINANCING: SouthTrust Bank $17,800,000 (A & D) VERIFICATION: Representative of the Grantee, JMK COMMENTS: This site was purchased for development of The Vinings at Carrollwood Place, a 432 unit apartment complex offering one to three bedroom units in two to three story buildings. Projected rents are from $510 to $875. Access to the site is provided by an 80 foot easement from North Dale Mabry Highway. TAX MAP LAND COMPARABLE NO. 3: LOCATION: Southeast Quadrant of U.S. Highway 19 and Gulf-to-Bay Boulevard, east of Seville condominium development on Old Tampa Bay, City of Clearwater TAX I.D. NUMBER: 17-29-16-00000-340-0200 and others SALE DATE: November 8 & 9, 1993 GRANTOR: AEL Partnership & Simkin Industries, Inc. GRANTEE: ZOM Bayside Arbors, Limited O.R. BOOK/PAGE: 8469/2003 and 8469/1995 SALES PRICE: $2,880,000 ($1,800,000 and $1,080,000) SIZE: 40.00 Acres (MOL) Usable NO. OF UNITS: 360 Units DENSITY: 9.00 Units PRICE PER SQUARE FOOT: $1.65 PRICE PER ACRE: $72,000 PRICE PER UNIT: $8,000 LOCATION: Good UTILITIES: Available SHAPE: Irregular TOPOGRAPHY: Basically Level ZONING: RM-12 City of Clearwater LAND USE: RM (11.5 u.p.a.) FINANCING: Cash to Seller VERIFICATION: Eric L. Carlton, Esquire and Ellen with ZOM Properties, 11/94, WWA COMMENTS: The assembled site has a large amount of water frontage, but has limited visibility and an easement for ingress and egress. The site was developed at a lower density in order to hedge against anticipated opposition from the Seville Owners Association. The transactions were reported to be arm's-length and at market prices. TAX MAP COMPARABLE LAND SALES LAND COMPARABLE COMPARISON CHART
COMPARABLE COMPARABLE COMPARABLE 1 2 3 SALES PRICE (S.P.) $2,200,000 $2,190,000 $2,880,000 LOCATION S07-T29-R16 S12-T28-R19 S28-T27-R18 S17&20-T29-R16 NUMBER OF ACRES 17.22 22.00 27.33 40.00 NUMBER OF UNITS 222 352 432 360 DENSITY 12.89 16.00 15.81 9.00 PRICE/ACRE $100,000 $80,132 $72,000 PRICE/UNIT $6,250 $5,069 $8,000 DATE OF APPRAISAL/SALE 15-Apr-96 27-Feb-95 22-Dec-94 09-Nov-93 ADJUSTMENTS FINANCING/CONDITIONS OF SALE 0% 0% 0% FIN/CON ADJ SALES PRICE $2,200,000 $2,190,000 $2,880,000 MARKET CONDITIONS NUMBER OF MONTHS SINCE SALE 14 16 30 % ADJUSTMENT 0.00% 0.00% 0.00% 0.00% TIME ADJUSTED SALES PRICE $2,190,000 $2,190,000 $2,880,000 PROPERTY CHARACTERISTICS LOCATION Average Average Average Good UTILITIES Available Available Available Available SHAPE Irregular Irregular Irregular Irregular SIZE 17.22 22.00 27.33 40.00 ZONING RPD-14 AMF PD-H RM-12 ADJUSTMENTS PRICE/SQ.FT. $2.30 $1.84 $1.65 LOCATION 0% 0% -10% UTILITIES 0% 0% 0% SIZE/SHAPE 0% 0% 10% TOPOGRAPHY 0% 0% 0% ZONING -4% -4% 9% ADJUSTED PRICE/SQ.FT. $2.20 $1,77 $1.78 ADJUSTED PRICE/ACRE $96,000 $76,926 $77,695 ADJUSTMENTS PRICE/UNIT $6,250 $5,069 $8,000 LOCATION 0% 0% -10% UTILITIES 0% 0% 0% SIZE/SHAPE 0% 0% 10% TOPOGRAPHY 0% 0% 0% ZONING 6% 6% -13% ADJUSTED PRICE/UNIT $6,625 $5,374 $6,890
EXPLANATION OF ADJUSTMENTS Where appropriate, adjustments have been made to the comparables to account for material differences from the subject. The adjustment categories include: financing/conditions of sale, market conditions (time), location, utilities, topography, and size/shape. The following is an explanation of the various adjustments. FINANCING/CONDITIONS OF SALE All sales were confirmed with either the grantee, grantor, an informed party, or through public records. There was no disclosed under market financing or sale conditions which were believed to have influenced the sale prices. Adjustments did not appear warranted for any of the comparables. MARKET CONDITIONS (TIME) Due to dense development in Pinellas County, land comparables 1 and 2 are newer sales located in Hillsborough County and land comparable 3 is an older sale located in Pinellas County. A review of the comparables would appear to indicate that no adjustment for time is warranted. LOCATION/ACCESS Factors which were included in this adjustment category are the general location of the comparables when compared to the subject. Typically, properties with good visibility and good ingress and egress in exclusive areas sell at a higher price per unit. View amenities such as golf courses and bodies of water will also generally cause properties to sell at a higher price per unit. All of the sales used were located in areas suitable for multiple family development. The subject property is located in a residential/commercial transition area on the south side of NE Coachman Road just west of U.S. Highway 19. The site has adequate visibility and ingress and egress. The site has no significant view amenity and the overall location is considered average. Due to the large amount of frontage on Old Tampa Bay, the location of land comparable 3 was considered superior to the subject and the other two comparables. In review of the comparables, a downward adjustment of 10% appears warranted for land comparable 3. The remaining two land comparables have overall location characteristics that are reasonably similar to the subject and no adjustments for these sales appeared necessary. UTILITIES This category is based on whether utilities were available to the site at the time of sale. Like the subject, all three of the land comparables have all public utilities available. No adjustments to the comparables are warranted. SIZE/SHAPE Size/shape adjustments were made on the basis of the comparables size/shape in relation to the subject. Typically, larger parcels or irregular shaped parcels tend to sell at a lower price per unit. Furthermore, smaller parcels are more affordable to a larger number of buyers indicating more demand and higher prices for smaller parcels. However, when larger parcels are scarce, making assemblage necessary, larger parcels sell at a higher price per unit. This is because of the time and effort necessary to assemble them. Larger parcels can also be more economically feasible to develop because the fixed development costs can be absorbed by a larger number of units. In review of the comparables, there appeared to be a slight premium paid for smaller parcels and a slight discount for larger parcels. The shapes of the comparables had no adverse influence on the number of residential units that could be placed on the sites. Based on a review of the comparables, an upward adjustment of 10% appeared warranted for land comparables 3. TOPOGRAPHY This adjustment category is based on whether the comparable's topography was irregular and/or whether it needed to be cleared before construction could begin on the site. All of the comparables required typical site preparation and development costs and no adjustments were necessary. ZONING The subject is zoned RM-14 with a MD land use which allows development of the subject site, as if vacant, at an effective density of 12.89 units per net acre. Land comparables 1 and 2 have zoning and land uses which resulted in higher developable densities and land comparable 3 has a zoning and land use which resulted in a lower developable density. Typically, the developable density of multiple family land will have a direct relationship with the price per square foot or price per acre and an inverse relationship with the price per unit. A review of the comparables confirms the relationship with the price per square foot, price per acre and price per unit. The comparables appear to indicate that a 1% change in density will cause about a 0.30% inverse change in the indicated unit values and about a 0.10% direct change in both the indicated square foot or acre values. Adjustments were made accordingly to each of the comparable land sales. CORRELATION AND CONCLUSION The three foregoing comparables have sale prices which were compared on the basis of square foot, acre and unit selling prices. All of the comparables were adjusted for differences as compared with the subject and have adjusted price per square foot values between $1.77 and $2.20. Similarly, the comparables have adjusted price per acre values between $76,926 and $96,000. The adjusted price per unit indicated by the three sales is from $5,374 to $6,890. All three units of comparison are considered applicable in valuing the subject site. Land comparables 1 and 2 are the newest two sales, but are located in Hillsborough County. Both comparables are similar to the subject in size and were purchased for slightly higher density apartment development. Land comparable 1 is located in a more remote area, but is located across the street from the Hidden River Business Park. The Hidden River Business Park is the location of several Fortune 500 companies a provides a good employment base. Land comparable 2, like the subject, is located just off of a major commercial thoroughfare. Land comparable 3 is located within 2 miles southeast of the subject property. The site has a large amount of frontage on Old Tampa Bay and was purchased for the development with a 360 unit moderate to upper income apartment complex. The size of the parcel was much larger than the subject, but the developable density is much lower. Land comparable 2, although located in Hillsborough County, has a location that was the most similar to the subject and was given slightly greater weight over land comparables 1 and 3. Based on the cited comparables, the value of the subject site is estimated at $1.90 a square foot, $80,000 an acre, and $6,000 a unit. The value of the subject site is estimated using the following calculations. 750,310 Sq.Ft. X $1.80/Sq.Ft. = $1,350,558 17.22 Acres X $80,000/Acre = $1,377,600 222 Units X $6,000/Unit = $1,332,000 ESTIMATED VALUE OF THE SUBJECT SITE, AS IF VACANT ($1,350,000) REPLACEMENT COST OF IMPROVEMENTS The subject improvements were evaluated in terms of type of construction, design, and building materials to develop an estimate of replacement cost. The cost estimates are inclusive of indirect costs such as architect's fees and contractor's overhead and profit but not developer's profit. The estimates of the replacement cost new for the subject improvements were based on current market standards determined from discussions with various developers, contractors and architects, as well as information obtained from the Marshall Valuation Service. Local building costs and costs indicated in the Marshall Valuation Service are mutually supportive. It is our opinion that cost figures for the subject complex would fall within the average cost range for class "D" multiple family residences. Base Cost $38.50 Area Multiplier 0.948 Current Cost Multiplier 1.00 Local Multiplier 0.95 Total $34.67 Rounded $35.00 ====== Based on this analysis, the indicated replacement cost for the apartment buildings is estimated at approximately $35.00 a square foot. Further replacement costs associated with the buildings are the cost of the leasing office estimated at $40.00 a square foot and the cost of the laundry and maintenance room estimated at $30.00 a square foot. The replacement cost of the entry porches and stairs are estimated at $470,000 and the replacement cost of the appliances, fixtures, and equipment are estimated at $360,000. These figures are also based on Marshall Valuation Service. The contributory value of the site improvements, which include the swimming pool, lighting, signs, landscaping, etc. is estimated at $650,000. IMPACT FEES Because of the impact of new development on the infrastructure of cities and counties, fees are now typically being assessed against new development. These fees are for increased traffic, increased use of sewers and water, radon detection, fire fighting requirements and the like. These are known as impact fees and can add substantially to the cost of new development. The impact fee estimates used in this report were based on the fee schedule for the City of Clearwater and are estimated at $720,000. DEVELOPER (ENTREPRENEURIAL) OVERHEAD AND PROFIT The above costs include contractors, but not developer overhead and profit. Developer profit is the reward the developer receives for taking the risk of developing the property. Developer profit can be abstracted from the market by estimating the replacement cost of a newly constructed building which has recently sold. The difference between the sales price and the replacement cost of the property is the developer profit. Sales of properties in the Tampa Bay Area were analyzed. They indicated developer overhead and profit between 10% to 15% with the more risky projects being in the higher figure. Based on this analysis a developer overhead and profit of 10% seems reasonable for the subject. ACCRUED DEPRECIATION The next step in the cost approach is to estimate the accrued depreciation for the subject. "Depreciation is a loss in property value from any cause. It may also be defined as the difference between the reproduction cost or replacement cost of the improvement and its market value." The three major components of accrued depreciation are physical deterioration, functional obsolescence, and external obsolescence. Physical deterioration can be either curable or incurable. Curable physical deterioration applies to items of deferred maintenance, which are in need of repair on the effective date of the appraisal. Whenever the contribution to market value is equal to or greater than the cost of replacement, the item is classified as curable deterioration. Incurable physical deterioration applies to structural items which naturally deteriorate and are not practical or economically feasible to correct. Functional obsolescence is an element of accrued depreciation which results from a defect, deficiency, or a superadequacy in the structure(s), materials, or design. External obsolescence results from a negative influence beyond or outside the boundaries of the site, which results in a loss in value and is nearly always incurable. Deferred Maintenance Deferred maintenance items are caused by physical deterioration and should be corrected immediately. At the time of inspection there was minor wood rot observed, however there were no substantial items of maintenance which were in need of immediate attention. Physical Depreciation The physical depreciation estimate is based on the age and the overall life expectancy of the improvements. Based on a market investigation of other structures in the neighborhood the effective age of the structure is estimated to be equal with actual at 12 years. The Marshall Valuation Service, a national cost estimate company, indicates properties such as the subject have a total physical life of about 50 years. Based on an observation of other structures in the neighborhood, a physical life estimate of 50 years would appear reasonable and will be used when estimating depreciation. Subtracting the estimated effective age from the estimated total physical life, indicates an estimated remaining life of about 38 years. The physical depreciation has been estimated by the age/life method, in which the percentage of depreciation is a function of the age of the improvements compared to the typical life for a property of the subject design and quality. The formula for estimating depreciation by the age/life method is as follows. Replacement - Def. Maint. & X Age = Depreciation Cost Short-Lived Physical Life Items $9,554,578 - $1,213,060 X 12/50 = $2,001,964 The physical depreciation for the short-lived items is estimated as follows. Roofs $203,914 X 12/20 = $122,348 Appliances $360,000 X 7/15 = $168,000 HVAC $405,716 X 7/15 = $189,334 Flooring $243,430 X 2/5 = $ 97,372 -------- $1,213,060 $577,054 Functional Obsolescence This type of depreciation generally results from defects in design. It can also be caused by changes that occur over time and have made some aspect of a structure, material, or design obsolete by current standards. The Town Place apartments is an average quality complex and in comparison to competing rental properties, the subject is in average condition. The unit mix, apartment sizes, and layout are well suited to the rental market. The complex is architecturally appealing and offers an average amenity package. The existing improvements are reasonably consistent with the highest and best use of the site as though vacant and sustain no market recognized loss in value attributed to functional deficiencies. External Obsolescence This type of depreciation is the result of diminished utility of a structure due to negative influences from outside the site. This type of depreciation is almost always incurable. An example of external obsolescence would be a garbage dump being located adjacent or within close proximity to the subject. Another example would be the local or general economy. As the local or national economy weakens there could be a temporary reduction in rents, thus reducing the market value of properties. The proposed improvements are considered to be an appropriate improvement to the site and are reasonably consistent with highest and best use as though vacant. No evidence of external obsolescence was observed. SUMMARY Based on our analysis of the subject property and the summary of the cost approach included on the following page, the indicated value of the subject by the cost approach is: ESTIMATE OF VALUE BY THE COST APPROACH: $9,000,000 SUMMARY OF THE COST APPROACH Buildings Apartment Bldgs. 202,004 Sq.Ft. X $35.00 /SF = $7,070,140 Leasing Office 854 Sq.Ft. X $40.00 /SF = $34,160 Laundry & Maintenance 1,056 Sq.Ft. X $30.00 /SF =$31,680 Entry Porches and Stairs $470,000 Appliances, Fixtures and Equipment $360,000 ---------- Total Buildings $7,965,980 Impact and Other Fees $720,000 Total Improvements $8,685,980 Developer Overhead and Profit 10.00% $868,598 __________ Replacement Cost New of Improvements $9,554,578 Less Depreciation Physical Deterioration Structure 24.00% $2,001,964 Roof 60.00% $122,348 Appliances 46.67% $168,000 HVAC 46.67% $189,334 Flooring 40.00% $97,372 Functional Obsolescence $0 Economic Obsolescence $0 ----------- Total Depreciation 26.99% $2,579,018 ----------- Depreciated Cost of Improvements $6,975,560 Estimated Land Value $1,350,000 Contributory Value of Site Improvements $ 650,000 ----------- ESTIMATE OF VALUE BY THE COST APPROACH (Rounded) $9,000,000 =========== THE SALES COMPARISON APPROACH The sales comparison approach involves a detailed comparison of the subject property with similar properties which have recently sold in the same or competitive market. This approach is based primarily on the principle of substitution. This principle states, when several commodities or services with substantially the same utility are available, the lower price attracts the greatest demand and widest distribution. In other words, a prudent investor/purchaser would not pay more to acquire a given property in the market, considering that an alternative property may be purchased for less. The five basic steps in this analysis are listed below: 1. Research the market to identify similar properties for which pertinent sales listings offerings and/or rental data is available. 2. Qualify the data as to terms, motivating forces, or bona fide nature. 3. Analyze the salient characteristics of the comparable properties in relation to the property being appraised, particularly those items relating to date of sale, location, physical characteristics, and condition of sale. 4. Consider all dissimilarities and the probable effect on the price of each sale and derive individual market value indications for the property being appraised. 5. Formulate an opinion of market value from the pattern developed from the foregoing analysis. A market investigation was conducted in the subject's area to find sales of properties comparable to the subject. The most pertinent transactions have been presented on the following pages, along with an identifying photograph and summary of important facts. IMPROVED COMPARABLE NO. 1: Lincoln Shores 11601 4th Street North PARCEL NUMBER: 18-30-17-05480-001-0012 18-30-17-05480-001-0010 18-30-17-05480-001-0011 DATE: August 1, 1995 GRANTOR: Bay View Associates, LTD GRANTEE: AETNA Life Insurance Company O.R. BOOK & PAGE: 9071/1421 & 9071/1431 SALE PRICE: $17,000,000 FINANCING: Cash DESIGN: Garden CONSTRUCTION: Frame, Average Cost CONDITION: Below Average for Age UNIT MIX: No. Total Units Rms/Bd/Ba Sq. Ft. Sq. Ft. 144 3/1/1 540 = 77,760 160 3/1/1 617 = 98,720 144 3/1/1 696 = 100,224 176 4/2/2 923 = 162,448 7 4/2/2 Loft 920 = 6,440 --- --------------- --- ------- 631 2,076 Rooms 706 SF 445,592 YEAR BUILT: 1983-84 RENTABLE BUILDING AREA: 445,592 Square Feet AVERAGE UNIT SIZE: 706 Square Feet AMENITIES: Lake, Three Swimming Pools, Lighted Tennis and Racquetball Courts, and Clubhouse with Fitness Center PROJECT SIZE: 631 Units/52.58 Acres/12.00 u.p.a. EFFECTIVE GROSS INCOME: Not Available EXPENSES: Not Available NET OPERATING INCOME: Not Available VERIFICATION: Confidential, 4/96, WWA UNIT VALUES: $ Per Unit $26,941 $ Per Room $8,189 $ Per Square Foot $38.15 E.G.I.M. Not Available O.A.R. Not Available COMMENTS: Details of this sale were limited because of a nondisclosure agreement between the buyer and the seller. It was reported, however, that because the property was in need of capital improvements it was purchased at a capitalization rate well above 9%. This apartment complex is located on a well traveled thoroughfare and was apparently at stabilized occupancy at the time of contract. IMPROVED COMPARABLE NO. 2: Country Place Village 2690 and 2775 Enterprise Road East PARCEL NUMBER: 32-28-16-00000-210-0300 32-28-16-61629-000-0010 DATE: July 20, 1995 GRANTOR: County Place Village I Joint Venture & County Place Village II Joint Venture GRANTEE: Security Capital Atlantic Incorporated O.R. BOOK & PAGE: 9055/0715 & 9055/0719 SALE PRICE: $7,555,000 ($7,932,750 Adjusted) FINANCING: Cash DESIGN: Garden CONSTRUCTION: Masonry, Average-Good Cost CONDITION: Average+ for Age UNIT MIX: No. Total Units Rms/Bd/Ba Sq. Ft. Sq. Ft. 32 3/1/1 796 = 25,472 28 3/1/1 835 = 23,380 24 4/2/1 979 = 23,496 28 4/2/2 1,109 = 31,052 38 4/2/2TH 1,134 = 43,092 18 4/2/2TH 1,212 = 21,816 16 4/2/2TH 1,234 = 19,744 4 5/3/2TH 1,494 = 5,976 --- --------- ----- ------- 188 696 Rooms 1,032 SF 194,028 YEAR BUILT: 1984-85 RENTABLE BUILDING AREA: 194,028 Square Feet AVERAGE UNIT SIZE: 1,032 Square Feet AMENITIES: Two Swimming Pools, Lighted Tennis Courts, and Clubhouse PROJECT SIZE: 188 Units/22.22 Acres/8.46 u.p.a. EFFECTIVE GROSS INCOME: Not Available EXPENSES: Not Available NET OPERATING INCOME: Not Available VERIFICATION: Confidential, 4/96, WWA UNIT VALUES: $ Per Unit $42,195 Adjusted $ Per Room $11,398 Adjusted $ Per Square Foot $40.88 Adjusted E.G.I.M. Not Available O.A.R. Not Available COMMENTS: Details of this sale were limited because of nondisclosure by the buyer and the lack of a knowledgeable contact for the seller. It was reported, however, that the property required an adjustment because it was part of a portfolio sale. This apartment complex is located on a moderately traveled thoroughfare near a regional mall and was apparently at stabilized occupancy at the time of contract. IMPROVED COMPARABLE NO. 3: Chesapeake Apartments 2307 Cumberland Road PARCEL NUMBER: 30-28-16-00000-210-0300 DATE: March 1, 1995 GRANTOR: Gregory A. Rand, Trustee GRANTEE: Phoenix Home Life Mutual Insurance Company O.R. BOOK & PAGE: 8928/1562 SALE PRICE: $11,800,000 FINANCING: Cash DESIGN: Garden CONSTRUCTION: Frame, Average Cost CONDITION: Average for Age UNIT MIX: No. Total Units Rms/Bd/Ba Sq. Ft. Sq. Ft. 96 3/1/1 600-642 = 59,616 80 3/1/1 662-680 = 53,680 64 3/1/1 718 = 45,952 88 4/2/2 911-926 = 80,828 26 4/2/2 980 = 25,480 --- ----------- ------- ------ 354 1,176 Rooms 750 SF 265,556 YEAR BUILT: 1985 RENTABLE BUILDING AREA: 265,556 Square Feet AVERAGE UNIT SIZE: 750 Square Feet AMENITIES: Lakes, Swimming Pool, Tennis and Racquetball Courts, and Clubhouse PROJECT SIZE: 354 Units/27.50 Acres/12.87 u.p.a. EFFECTIVE GROSS INCOME: $2,200,000 EXPENSES: $1,100,000 (50% EGI or $3,107/Unit) NET OPERATING INCOME: $1,100,000 (Exclusive of Reserves) VERIFICATION: John D. Selby, CCIM - Agent, 4/15/96, WWA UNIT VALUES: $ Per Unit $33,333 $ Per Room $10,034 $ Per Square Foot $44.44 E.G.I.M. 5.36 O.A.R. 9.32% COMMENTS: This apartment complex is located on a moderately traveled thoroughfare within close proximity to a regional mall. Occupancy at the time of sale was at about 96%. Effective gross income was reported at $2,013,084 and net operating income was reported at $1,013,952. The above figures are based on 1995 projections by the buyer. Negotiations of $350,000 for wood siding repairs and an additional $350,000 for interest rate increases caused the purchase price to be $700,000 lower than the original contract price. IMPROVED COMPARABLE NO. 4: Cameron Lakes 2550 Stag Run Boulevard PARCEL NUMBER: 06-29-16-00000-440-0100 DATE: January 27, 1995 GRANTOR: MAC International GRANTEE: Security Capital Atlantic, Inc. O.R. BOOK & PAGE: 8905/0419 SALE PRICE: $7,500,000 FINANCING: Cash DESIGN: Garden CONSTRUCTION: Frame/Masonry, Average Cost CONDITION: Average for Age UNIT MIX: No. Total Units Rms/Bd/Ba Sq. Ft. Sq. Ft. 56 3/1/1 791 = 44,296 28 3/1/1 876 = 24,528 56 4/2/2 1,021 = 57,176 28 4/2/2 1,106 = 30,968 10 4/2/2 1,268 = 12,680 5 4/2/2 1,340 = 6,700 4 4/2/1.5 1,090 = 4,360 8 4/2/2 1,250 = 10,000 8 4/2/2 1,269 = 10,152 4 5/3/2 1,588 = 6,352 --- --------- ----- ------- 207 748 Rooms 1,001 SF 207,212 YEAR BUILT: 1986 RENTABLE BUILDING AREA: 207,212 Square Feet AVERAGE UNIT SIZE: 1,001 Square Feet AMENITIES: Lake, Swimming Pool, Racquetball Court, and Clubhouse PROJECT SIZE: 207 Units/18.22 Acres/11.36 u.p.a. EFFECTIVE GROSS INCOME: Not Available EXPENSES: Not Available NET OPERATING INCOME: Not Available VERIFICATION: Confidential, 4/96, WWA UNIT VALUES: $ Per Unit $36,232 $ Per Room $10,027 $ Per Square Foot $36.19 E.G.I.M. Not Available O.A.R. Not Available COMMENTS: Details of this sale were limited because of nondisclosure by the buyer and the lack of a knowledgeable contact for the seller. It was reported, however, that the purchaser planned on major renovations at the time of sale. COMPARABLE BUILDING SALES IMPROVED COMPARABLE COMPARISON CHART
SUBJECT COMPARABLE COMPARABLE COMPARABLE COMPARABLE 1 2 3 4 SALE PRICE $17,000,000 $7,555,000 $11,800,000 $7,500,000 PROPERTY RIGHTS CONVEYED Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple ADJUSTMENT 0 0 0 0 ADJUSTED SALE PRICE $17,000,000 $7,555,000 $11,800,000 $7,500,000 FINANCING Cash Cash Cash Cash ADJUSTMENT 0 0 0 0 ADJUSTED SALE PRICE $17,000,000 $7,555,000 $11,800,000 $7,500,000 CONDITIONS OF SALE Normal Portfolio Sale Normal Normal ADJUSTMENT 0 5% 0 0 ADJUSTED SALE PRICE $17,000,000 $7,932,750 $11,800,000 $7,500,000 DATE OF APPRAISAL/SALE 15-Apr-96 01-Aug-95 20-Jul-95 01-Mar-95 27-Jan-95 NUMBER OF MONTHS SINCE SALE 9 9 14 15 ADJUSTMENT 0.00% 0.00% 0.00% 0.00% 0.00% 0 0 0 0 ADJUSTED SALE PRICE $17,000,000 $7,932,750 $11,800,000 $7,500,000 PRICE PER UNIT $26,941 $42,195 $33,333 $36,232 PRICE PER ROOM $8,189 $11,398 $10,034 $10,027 PRICE PER SQUARE FOOT $38.15 $40.88 $44.44 $36.19 PHYSICAL CHARACTERISTICS LOCATION S07-T29-R16 S18-T30-R17 S32-T28-R16 S30-T28-R16 S06-T29-R16 CONSTRUCTION Frame Frame Masonry Frame Frame/Masonry CONDITION Average+ for Age Below Avg for Age Average+ for Age Average for Age Average for Age YEAR BUILT 1984 1983-84 1984-85 1985 1986 AMENITIES/EQUIPMENT Average Average Average Average Average NUMBER OF UNITS 240 631 188 354 207 NUMBER OF ROOMS 848 2,076 696 1,176 748 RENTABLE BUILDING AREA 202,004 445,592 194,028 265,556 207,212 NUMBER OF ACRES 17.22 52.58 22.22 27.50 18.22 DENSITY 13.94 12.00 8.46 12.87 11.36 AVERAGE UNIT SIZE 842 706 1,032 750 1,001 AVERAGE ROOM SIZE 238 215 279 226 277 FINANCIAL CHARACTERISTICS EFFECTIVE GROSS INCOME $1,579,761 Not Available Not Available $2,200,000 Not Available E.G.I.M. Not Available Not Available 5.36 Not Available EXPENSE RATIO 45.02% Not Available Not Available 50.00 Not Available NET OPERATING INCOME $868,499 Not Available Not Available $1,100,000 Not Available OVERALL RATE Not Available Not Available 9.32% Not Available PRICE PER UNIT ADJUSTMENTS $26,941 $42,195 $33,333 $36,232 AVERAGE UNIT SIZE 10% -9% 6% -8% LOCATION 0% 0% 0% 0% AGE 0% 0% 0% 0% QUALITY 0% -5% 0% 0% CONDITION 15% 0% 5% 10% ADJUSTMENT (Cumulative) 27% -14% 11% 1% $7,139 ($5,717) $3,767 $435 ADJUSTED PRICE PER UNIT $34,080 $36,478 $37,100 $36,667 PRICE PER ROOM ADJUSTMENTS $8,189 $11,398 $10,034 $10,027 AVERAGE ROOM SIZE 5% -7% 3% -7% LOCATION 0% 0% 0% 0% AGE 0% 0% 0% 0% QUALITY 0% -5% 0% 0% CONDITION 15% 0% 5% 10% ADJUSTMENT (Cumulative) 21% -12% 8% 2% 1,699 ($1,328) $818 $231 ADJUSTED PRICE PER ROOM $9,888 $10,070 $10,852 $10,258 PRICE PER SQUARE FOOT ADJUSTMENTS $38.15 $40.88 $44.44 $36.19 AVERAGE UNIT SIZE -10% 9% -6% 8% LOCATION 0% 0% 0% 0% AGE 0% 0% 0% 0% QUALITY 0% -5% 0% 0% CONDITION 15% 0% 5% 10% ADJUSTMENT (cumulative) 3% 4% -1% 19% 1.34 $1.45 ($0.58) $6.80 ADJUSTED PRICE SQUARE FOOT $39.49 $42.33 $43.86 $42.99
The four foregoing improved sales were considered to be the most reliable indicators of market value for the subject. Prior to adjustments, the sales indicated values from $26,941 to $40,186 a unit. Based on the number of rooms, the sales indicate values from $8,189 to $10,885 and based on the number of square feet, the sales indicate values from $36.19 to $44.44. EXPLANATION OF ADJUSTMENTS Where appropriate, adjustments have been made to the comparables to account for material differences from the subject. The adjustment categories include: financing/conditions of sale, market conditions (time), average unit size, location, age, quality, and condition. The following is an explanation of the various adjustments. FINANCING/CONDITIONS OF SALE All sales were verified with either the grantee, grantor, an informed party or the public records. With the exception of improved comparable 2, there was no special financing or any special considerations which may have influenced the comparable's selling prices. It was reported that improved comparable 2 was part of a portfolio sale and required an adjustment to reflect that condition. Based on a review of the comparable sales, an upward adjustment of 5% was made to improved comparable 2. MARKET CONDITIONS (TIME) Market conditions refer to the appreciation or depreciation of a property over a period of time. The rental rates and expenses for apartment complexes have shown moderate annual increases. In review of the three improved comparables, it would appear that property values have remained relatively stable. Therefore, based on the above analysis, no market conditions adjustment will be applied to the comparables. AVERAGE UNIT SIZE Typically the average unit size of the apartment complex has a direct relationship with the price per unit, little or no relationship with the price per room, and an inverse relationship with the price per square foot. A review of the comparables indicates support for this relationship. The comparables appear to indicate that a 1% change in the average unit size will cause about a 0.50% direct change in the indicated price per unit and a 0.50% inverse change in the indicated price per square foot values. Adjustments were made accordingly for each of the improved comparables. The average room sizes of improved comparables 1 and 3 are slightly smaller than the subject and the average room sizes for improved comparables 2 and 4 are slightly larger. A review of the comparables indicates a direct relationship between the average room size and the price per room. The comparables appear to indicate that a 1% change in the average room size will cause about a 0.50% direct change in the indicated price per room. Adjustments were made accordingly for each of the improved comparables. LOCATION Factors which were included in this adjustment category are the general location of the comparables when compared to the subject. Typically, properties on major roads or in exclusive areas sell at a higher price per unit. The subject property is located in a mixed residential and commercial area on NE Coachman Road and provides adequate traffic ingress and egress and visibility. The overall location is considered average. All four of the improved comparables are located in areas that are similar to the subject, and all have locations that are suitable for apartment development. A review of the comparables would appear to indicate that no adjustments for location are warranted. AGE This adjustment category is based on the effective age of the comparables in relation to the subject. Properties with lower effective ages typically sell at a higher price per unit. The effective age of the comparables was determined based on a review of the actual physical ages and by an exterior inspection of the properties. All four of the improved comparables are 1980 vintage apartment complexes, like the subject, and no adjustments were necessary. QUALITY/CONDITION This adjustment category is based on the quality and condition of the comparables in relation to the subject. Typically, the quality and condition of a property has a direct relationship with the sale price. The quality and condition of the comparables were determined by an exterior inspection of the properties and by conversations with the grantee, grantor or informed parties. Improved comparables 1, 3, and 4 are all reasonably similar to the subject in construction quality and improved comparable 2 is superior. Based on a review of the comparables a downward adjustment of 5% would appear reasonable for improved comparable 2. Physical inspections of the properties and conversations with informed parties lead us to believe that the overall condition of improved comparable 2 was reasonably similar to the subject and that the overall conditions of improved comparables 1, 3, and 4 are inferior. Based on review of the three comparables, improved comparable 1 was adjusted upward by 15%, improved comparable 3 was adjusted upward by 5%, and improved comparable 4 was adjusted upward by 10%. CORRELATION AND CONCLUSION Comparable 1 was a sale of Lincoln Shores, a 631 unit complex located about a 9 miles southeast of the subject. The apartment complex was constructed in 1983-84 and was in below average condition for its age. The complex has a smaller average unit size than the subject due to the larger number of one bedroom units (71%). Comparable 2 was a sale of Country Place Village, located slightly over 2 miles northeast of the subject. Country Place Village is a 188 unit complex that was constructed in 1984-85 and is superior in construction quality. The complex has a similar unit mix, but has a larger average unit size. Comparable 3 is the sale of a 354 unit apartment complex, known as Chesapeake Apartments. The complex was constructed in 1985, is similar in construction quality, and is located about 3 miles northwest of the subject. Like Lincoln Shores, this complex has a smaller average unit size than the subject due to the larger number of one bedroom units (68%). Comparable 4 was a sale of Cameron Lakes (formerly Calibre Ridge), located about a block north of the subject. The apartment complex has 207 units, was constructed in 1986, and was in below average condition for its age. The complex has a similar unit mix, but has a larger average unit size. After adjustments the indicated price per unit was from $34,080 to $37,100, the indicated price per room was from $9,888 to $10,852, and the indicated price per square foot was from $39.49 to $43.86. In review of the four comparables, improved comparables 2 through 4 were the most similar in size and location to the subject and were therefore greatest weight in the final analysis. Based on the cited data and analysis, the estimated value per unit, per room and per square foot are shown as follows: 240 Units X $37,000/Unit = $8,880,000 848 Rooms X $10,500/Room = $8,904,000 202,004 Sq.Ft. X $43.00/Sq.Ft. = $8,686,172 The estimated values by the three approaches used, strongly support one another are within a range, from low to high, of less than 3%. Most buyers and seller place more emphases on the price per unit, thus the estimated value by the price per unit method was given slightly greater weight. Indicated Value by the Sales Comparison Approach $8,900,000 THE INCOME CAPITALIZATION APPROACH The income capitalization approach relates to an investor's thinking and motivation, as to the future benefits of ownership. This is the basic tool for the valuation of income producing real estate. It is based on the principle of substitution, which is reflected in the definition of value as the present worth of all the rights to future benefits accruing to ownership. The income producing property is typically purchased for investment purposes and the projected net income stream is the critical factor affecting this market value. The income capitalization approach is practical only when the income stream can be estimated. This income estimate may be developed and supported by a comparison in the local market. An investor purchasing income producing real estate is, in effect, trading a sum of present dollars for a right to the stream of future dollars. There is a relationship between the two, and the connecting link is the process of capitalization. The function of capitalization is to translate an income projection into a present capital value indication. The valuation by the income capitalization approach consists of the following steps: 1. Estimate the market rent for the subject property through a market analysis of competitive projects to arrive at a gross income estimate; 2. Estimate the vacancy and collection losses for the income projection period; 3. Deduct the estimated vacancy and collection losses and the annual operating expenses from the gross income estimate for an estimated net income before recapture; 4. Determine the appropriate capitalization technique and gather market supported data for its application. 5. Capitalize the resulting net income figure by an appropriate capitalization rate in order to obtain an indicated value of the property. ESTIMATE OF MARKET RENT The first step in the income capitalization approach is to estimate the subject's market rent. The following rent comparables are considered the best indicators for the estimate of market rent for the subject property. RENT COMPARABLE #1: Coachman Crossing Location: 2481 NE Coachman Road Number of Units: 218 Units Average Unit Size: 776 Square Feet Vacancy: Not Disclosed Year Built: 1985 Construction Type: Frame, Average+ Cost, Average Condition Recreation Facilities: Clubhouse with Fitness Facility, Swimming Pool & Spa, Tennis, and Laundry Features: Standard Kitchen Appliance, Washer/Dryer Connections and Fireplaces Rent Schedule: No. Unit Unit Units Type Size Rent/Month Rent/Sq.Ft. 120 1/1 652 S.F. $525.00 $0.81 30 1/1 748 S.F. $585.00 $0.78 24 2/2 873 S.F. $655.00 $0.75 44 2/2 078 S.F. $740.00 $0.69 Rent Concessions: 1 Month Free Rent Premiums: $10 to $20 for fireplaces, screened porches and washer/dryer connections RENT COMPARABLE #2: Cameron Lakes Location: 2550 Stage Run Boulevard Number of Units: 207 Units Average Unit Size: 748 Square Feet Vacancy: 98% Year Built: 1986 Construction Type: Masonry, Average Cost, Average Condition Recreation Facilities: Clubhouse with Fitness Facility, Swimming Pool & Spa, Racquet Ball and Laundry Features: Standard Kitchen Appliance, Washer/Dryer Connections, Fireplaces & Covered Parking Rent Schedule: No. Unit Unit Units Type Size Rent/Month Rent/Sq.Ft. 56 1/1 791 S.F. $540.00 $0.68 (Rent Sample) 56 2/2 1,021 S.F. $640.00 $0.63 8 2/2 1,268 S.F. $785.00 $0.62 Rent Concessions: None Premiums: $10 to $25 for fireplace, lake view and covered parking RENT COMPARABLE #3: Sunchase of Clearwater Location: 6550 150th Avenue North Number of Units: 461 Units Average Unit Size: 796 Square Feet Vacancy: 93% Year Built: 1985 Construction Type: Masonry, Average Cost, Average Condition Recreation Facilities: Clubhouse with Fitness Facility, Two Swimming Pools & Spa, Tennis, Racquetball, and Laundry Features: Standard Kitchen Appliance and Stack Washer/Dryer Rent Schedule: No. Unit Unit Units Type Size Rent/Month Rent/Sq.Ft. 40 1/1Std 500 S.F. $445.00 $0.89 53 1/1 550 S.F. S470.00 $0.85 76 1/1 720 S.F. $495.00 $0.69 100 1/1 750 S.F. $515.00 $0.69 92 2/2 972 S.F. $650.00FP $0.67 100 2/2 975 S.F. $615.00 $0.63 Rent Concessions: None Premiums: $1O to $20 for lake views RENT COMPARABLE #4: Coral Cove Location: 25 North Belcher Road Number of Units: 200 Units Average Unit size: 701 Square Feet Vacancy: 95% Year Built: 1985 Construction Type: Masonry, Average Cost, Average Condition Recreation Facilities: Clubhouse, Swimming Pool & Spa, Racquetball, and Laundry Features: Standard Kitchen Appliance and Washer/Dryer Connections Rent Schedule: No. Unit Unit Units Type Size Rent/Month Rent/Sq.Ft. 40 1/1 550 S.F. $455.00 $0.83 80 1/1 616 S.F. $505.00 $0.82 40 2/1 787 S.F. $565.00 $0.72 40 2/2 936 S.F. $660.00 $0.71 Rent Concessions: $15.00 A Month Free Rent Premiums: None RENT COMPARABLE #5: Chesapeake Location: 2307 Cumberland Road Number of Units: 354 Units Average Unit Size: 760 Square Feet Vacancy: 95% Year Built: 1985 Construction Type: Frame, Average Cost, Average Condition Recreation Facilities: Clubhouse, Swimming Pool & Spa, Tennis, Racquetball, and Laundry Features: Standard Kitchen Appliance and Washer/Dryer Connections Rent Schedule: No. Unit Unit Units Type Size Rent/Month Rent/Sq.Ft. 96 1/1 600-642 S.F. $470.00 $0.76 80 1/1 662-680 S.F. $495.00 $0.74 64 1/1 718 S.F. $505.00 $0.70 88 2/2 911-926 S.F. $615.00 $0.70 26 2/2 980 S.F. $655.00 $0.67 Rent Concessions: No Premiums: $10 for lake view COMPARABLE RENTALS Comparable Rent Analysis One Bedroom Apartment (Small)
Subject Coachman Cross Cameron Lakes Sunchase of Clear Coral Cove Chesapeake Data Data Adjst. Data Adjst. Data Adjst. Data Adjst. Data Adjst. Complex Size 240 218 207 461 200 354 Number 36 120 56 53 40 96 Unit Type 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom Baths 1 Bath 1 Bath 1 Bath 1 Bath 1 Bath 1 Bath Monthly Rent $470 $525 $540 $470 $455 $470 Size 540 652 -20 791 -50 550 550 600 Rent/Sq. Ft. $0.87 $0.81 $0.68 $0.85 $0.83 $0.78 Qlty/Cndt Avg/Avg Avg+/Avg -10 Avg/Avg Avg/Avg Avg/Avg Avg/Avg Year Built 1985 1985 1986 1985 1985 1985 Equipment Std. Ktch Std. Ktch Std. Ktch Std. Ktch Std. Ktch Std. Ktch Location Average Average Average Average Average Average Concessions No Yes No No Yes No Occupancy 94% Unknown 98% 93% 95% 95% Amenities Average Average+ -10 Average+ -10 Average+ -10 Average Average Covered Parking No No Partial No No No Rents $485 $480 $460 $455 $470 $0.74 $0.61 $0.84 $0.83 $0.78 Estimated Subject Rent $470
Comparable Rent Analysis One Bedroom Apartment (Large)
Subject Belleair Gardens Oakbrook Village Sunchase of Clear Coral Cove Chesapeake Data Data Adjst. Data Adjst. Data Adjst. Data Adjst. Data Adjst. Complex Size 240 218 207 461 200 354 Number/Mix 40 30 56 76 80 64 Unit Type 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom Baths 1 Bath 1 Bath 1 Bath 1 Bath 1 Bath 1 Bath Monthly Rent $515 $585 $540 $495 $505 $505 Size 720 748 791 720 616 20 718 Rent/Sq. Ft. $0.72 $0.78 $0.68 $0.69 $0.82 $0.70 Qlty/Cndt Avg/Avg Avg+/Avg -10 Avg/Avg Avg/Avg Avg/Avg Avg/Avg Year Built 1985 1985 1986 1985 1985 1985 Equipment Std. Ktch Std. Ktch Std. Ktch Std. Ktch Std. Ktch Std. Ktch Location Average Average Average Average Average Average Concessions No Yes No No Yes No Occupancy 94% Unknown 98% 93% 95% 95% Amenities Average Average+ -10 Average+ -10 Average+ -10 Average Average Covered Parking No No Partial No No No Rents $565 $530 $485 $525 $505 $0.76 $0.67 $0.67 $0.85 $0.70 Estimated Subject Rent $515
Comparable Rent Analysis Two Bedroom Apartment (Small)
Subject Coachman Cross Cameron Lakes Sunchase of Clear Coral Cove Chesapeake Data Data Adjst. Data Adjst. Data Adjst. Data Adjst. Data Adjst. Complex Size 240 218 207 461 200 354 Number 32 24 56 100 40 88 Unit Type 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom Baths 1 Bath 2 Bath -10 2 Bath -10 2 Bath -10 1 Bath 2 Bath -10 Monthly Rent $620 $655 $640 $615 $565 $615 Size 877 873 1021 975 787 911 Rent/Sq. Ft. $0.71 $0.75 $0.63 $0.63 $0.72 $0.68 Qlty/Cndt Avg/Avg Avg+/Avg -10 Avg/Avg Avg/Avg Avg/Avg Avg/Avg Year Built 1985 1985 1986 1985 1985 1985 Equipment Std. Ktch Std. Ktch Std. Ktch Std. Ktch Std. Ktch Std. Ktch Location Average Average Average Average Average Average Concessions No Yes No No Yes No Occupancy 94% Unknown 98% 93% 95% 95% Amenities Average Average+ -10 Average+ -10 Average+ -10 Average Average Covered Parking No No Partial No No No Rents $625 $620 $595 $565 $605 $0.72 $0.61 $0.61 $0.72 $0.66 Estimated Subject Rent $620
Comparable Rent Analysis Two Bedroom Apartment (Large)
Subject Coachman Cross Cameron Lakes Sunchase of Clear Coral Cove Chesapeake Data Data Adjst. Data Adjst. Data Adjst. Data Adjst. Data Adjst. Complex Size 240 218 207 461 200 354 Number 96 44 56 100 40 88 Unit Type 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom Baths 2 Bath 2 Bath 2 Bath 2 Bath 2 Bath 2 Bath Monthly Rent $655 $740 $640 $615 $660 $655 Size 1045 1078 1021 975 936 980 Rent/Sq. Ft. $0.63 $0.69 $0.63 $0.63 $0.71 $0.67 Qlty/Cndt Avg/Avg Avg+/Avg -10 Avg/Avg Avg/Avg Avg/Avg Avg/Avg Year Built 1985 1985 1986 1985 1985 1985 Equipment Std. Ktch Std. Ktch Std. Ktch Std. Ktch Std. Ktch Std. Ktch Location Average Average Average Average Average Average Concessions No Yes No No Yes No Occupancy 94% Unknown 98% 93% 95% 95% Amenities Average Average+ -10 Average+ -10 Average+ -10 Average Average Covered Parking No No Partial No No No Rents $720 $630 $605 $660 $655 $0.67 $0.62 $0.62 $0.71 $0.67 Estimated Subject Rent $655
The five rental properties used in the report are all considered to directly compete with the subject complex. All five rent comparables are located within five miles of the subject and all are reasonably similar in quality and condition. In comparison with the subject apartment complex, rent comparables 4 and 5 have reasonably similar amenity packages and rent comparables 1, 2, and 3 have superior amenity packages. Rent comparable 4 was the only complex to have a two-bedroom one- bath unit, like the subject. Unit size adjustments appear to be more warranted for the one-bedroom units than the two-bedroom units. Sale concessions in the area are generally short term and appear to have little or no influence on effective rental rates. The current base asking rent is $470 a month for the small one- bedroom units, $515 a month for the large one-bedroom units, $620 a month for the small two-bedroom units, and $655 a month for the large two-bedroom units. Additional rent of $15 to $25 is charged for washer/dryer connections and additional rent of $10 to $45 is charged for lake views. A review of the April 12, 1996 rent roll indicates that the existing rent levels are in line with current base asking rents. The lag in market rent increases is offset by the additional rent charges. The rental rates for the competing properties indicate some rent premiums are paid for views and floor locations. A copy of the current rent roll is provided at the addendum of the report. A summary of the rent roll is provided as follows. One-Bedroom(S) One-Bedroom(L) Two-Bedroom(S) Two-Bedroom(L) Low Rent $445 $470 $575 $625 High Rent $510 $515 $1,125* $735 Mean Rent $465 $512 $621 $669 Median Rent $460 $510 $590 $655 Mode Rent $460(12/36) $510(15/76) $590(6/32) $655(18/96) * One Unit - short-term corporate tenant, with rental furniture all utilities included in the rental rate. Before adjustments, the five rent comparables have small one bedroom rental rates between $455 and $540 a month, large one bedroom rental rates between $495 and $585 a month, small two bedroom rental rates between $565 and $655 a month, and large two bedroom rental rates between $615 and $740 a month. After adjustments, the comparables have indicated monthly rents between $455 and $485 a month for the small one bedroom units, between $485 and $565 a month for the large one bedroom units, between $565 and $625 a month for the small two bedroom units, and between $605 and $720 a month for the large two bedroom units. Based on the cited rent comparables, the market rents for the subject property are estimated at $470 a month for the small one bedroom units, $515 a month for the large one bedroom units, $620 a month for the small two bedroom units, and $655 a month for the large two bedroom units. Vacancy and Collection Losses: Vacancy and collection loss is estimated at 7% on a stabilized basis. The five rent comparables had vacancy rates from about 2% to 7%. At the time of inspection, it was reported that the subject had 14 vacant unrented unit, thus indicating a vacancy rate of roughly 6%. The subject property has a model, but no occupied nonrevenue producing units. It is, however, typically for the onsite manager to receive a two-bedroom unit free of charge. Documented historical vacancy and collection loss for the subject complex has ranged from 4.7% to 6.7% over the last four years. Other Income: In addition to the rent income from the apartment units, other income is generated in the form of deposit forfeitures, laundry and vending income, pet fees, lost key fees, etc. When compiled, these sources of income typically generate approximately 1% to 3% of gross apartment rental income. Other income for the subject property is estimated at the middle of the range, at 2% of rent income. Expenses: In order to estimate operating expenses, income and expense information for both the subject apartment complex and other apartment complexes located in the area have been analyzed. Documentation for the subject property consisted of a four year operating history. Overall expenses for apartment complexes with more than 150 units typically range from 40% to 50% of effective gross income or approximately $2,700 to $3,200 per unit. The expenses estimated for the subject result in an expense ratio of 45.02%, or $2,964 per unit. The expenses for the subject property are well within the predominant range. Real Estate Taxes: The 1995 assessed tax value for the subject property is $7,691,400. This estimated expense also considers the assessments of several comparable properties. Assessments tend to be below actual market value of the property. The following comparables have been used due to their similarity with the subject property. Complex Assessment Per Unit Cameron Lakes $ 7,283,400 $35,186 Chesapeake Apartments $10,070,600 $28,448 Coachman Crossing $ 7,095,400 $32,548 Subject $ 7,691,400 $32,048 Taking into account the 1995 assessed value of the subject property and the 1995 assessed value for similar properties, the assessed value of $7,691,400 for the subject property would appear reasonable. The 1995 millage rate for the subject neighborhood is 23.0366 and the gross tax liability is $177,183.71. Millage rates and assessed values have generally been relatively stable over the past two years. It is estimated that the projection period real estate taxes will be slightly higher than the 1995 real estate taxes. The projected real estate taxes for the subject are estimated at $0.88 a square foot or $177,764. Insurance: Insurance costs typically range from $0.15 to $0.20 a square foot depending on such consideration as type of construction, project size, co-insurance clauses and location. The insurance expense for 1995 was reported at $34,638 and appears to be reasonable. The insurance for the subject property is, therefore, estimated at $0.18 a square foot or $36,361. Management Fees: Management fees, charged by professional management firms, range from 4% to 6% of effective gross income depending on project size, condition and general rent levels. Considering the current rental rates and size of the subject property in comparison with other rental properties in the Tampa Bay area, the management expense is estimated at 5.0% of effective gross income. The subject property is professionally managed by Decade Properties, who charges the complex a 5.0% management fee. General and Administrative Expenses: This expense category includes those items necessary for on site administration of the property such as administrative salaries, supplies, telephone, etc. Again this could vary substantially due to overall size of the complex and the efficiency of management. This expense is generally from $0.40 to $0.45 a square foot. For the purpose of this appraisal, all normal administrative expenses are included in this category with appropriate consideration given for economies of scale associated with the size of the property. The general and administrative expense is, therefore, estimated to be $0.42 a square foot. Most apartment complexes the size of the subject operate efficiently with 5 to 7 employees. The subject property currently has 5 full-time employees and 1 part-time employee. Utilities: All units are individually metered for electrical service. The expenses charged generally include common area electrical service and water, sewer, and trash removal for the entire property. Typically, utility expenses are from $550 to $650 a unit on an annual basis. The utility expense is estimated at $600 a unit or roughly $0.71 a square foot. Maintenance: This expense category includes normal costs for both interior and exterior building maintenance and grounds maintenance. It is expected that the maintenance expense for the subject would fall within a range of $0.80 to $1.00 a square foot. In review of historical maintenance costs, the maintenance expense is estimated at $0.88 a square foot. Marketing: The marketing expense for yellow page listings, periodic newspaper advertisements and listings in apartment rental publications, and is estimated to be about $0.06 a square foot. Reserves: Reserves are used to annualize future costs of major maintenance or replacement (short-lived) items. The managers and/or owners of most rental properties in the Tampa Bay area generally set aside little or no reserves for future capital expenditures. For this reason, the reserves typically do not meet future capital requirements. The calculation showing the estimated annual reserves needed to repair or replace short-lived items is shown as follows. The analysis assumes that increases in replacement costs will be offset by interest earned on the reserve account.
Reserves Based Reserves Based Structural Replacement / Remaining = on Remaining / Total = on Total Component Cost Economic Life Economic Life Economic Life Economic Life Roofs $203,914 / 8 = $25,489 / 15 = $13,594 Appliances $360,000 / 8 = $45,000 / 15 = $24,000 HVAC $405,716 / 8 = $50,715 / 15 = $27,048 Flooring $243,430 / 3 = $81,143 / 5 = $48,686 $202,347 $113,328 Estimated Cost Per Unit (240 Units) = $843 $472
The estimated reserve expense of $843 a unit reflects the reserves that are now required due to the lack of past contributions to a reserve account. The estimated reserve expense of $472 a unit reflects the contributions that would have been necessary if the reserve account had originally been in place. For the purpose of this report, the reserve expense is for illustration purposes only and will not be included in either the direct capitalization estimate or the discounted cash flow analysis. In order for reserves to be an expense item, the expenses for the improved comparables would need to be adjusted upward, thus causing a decrease in the indicated capitalization rates. Both methods will result in the same value estimates. According to the 1995 income and expense statement for the subject, $46,635 was spent on capital replacements and repairs. ANALYSIS OF OPERATING HISTORY: The income summary for the subject indicates that revenues increased by 2.5% in 1993, 0.6% in 1994, and 3.6% in 1995. Expenses over the four year period fluctuated from 42.7% to 44.4% of effective gross income. The effective gross income for the subject property was reported at $1,455,692, $1,492,586, $1,500,946, and $1,554,502 respectively for the years 1992 through 1995. Operating expenses for the same time period were respectively reported at $635,575, $643,075, $641,541, and $690,479. Net operating income was respectively reported at $820,117, $849,511, $859,405 and $864,023, which indicates an average annual compounded increase of 1.3%. Although the individual expense categories show some variations and inconsistencies over time, the overall income and expense figures provided appear to be in line with the market. On the following page is a summary of the reconstructed income and operating statements for 1992 through 1995, and a projection for upcoming year. The projected income and expense figures are consistent with figures found in the direct capitalization and discounted cash flow analysis. Operating History
Units Sq.Ft. 1992 1993 1994 1995 Projected 240 202,004 Potential Gross Income $1,506,797 $1,540,945 $1,581,531 $1,616,057 $1,665,360 $6,939 $8.24 Vacancy & Collection Loss 73,580 4.9% 73,174 4.7% 103,575 6.5% 107,617 6.7% 116,575 7.00% 7.00% Rent Income $1,433,217 $1,467,771 $1,477,956 $1,508,440 $1,548,785 $6,453 $7.67 Other Income 22,475 1.6% 24,815 1.7% 22,990 1.6% 46,062 3.1% 30,976 2.00% 2.00% Effective Gross Income $1,455,692 $1,492,586 $1,500,946 $1,554,502 $1,579,761 $6,582 $7.82 Percent Increase 2.5% 0.6% 3.6% 1.6% Expenses: Real Estate Taxes $168,375 $165,835 $173,657 $172,686 $177,764 $741 $0.88 Insurance 17,529 17,818 13,082 34,638 36,361 $152 $0.18 Management 71,661 4.9% 73,389 4.9% 75,047 5.0% 77,725 5.0 78,988 $329 5.00% General & Administrative 75,782 80,053 78,305 81,803 84,842 $354 $0.42 Utilities 138,363 141,286 142,858 134,841 143,423 $598 $0.71 Maintenance & Repairs 146,997 150,527 147,301 176,824 177,764 $741 $0.88 Marketing 16,868 14,167 11,291 11,962 12,120 $51 $0.06 Total Expenses $635,575 $643,075 $641,541 $690,479 $711,262 $2,964 $3.52 Percent Increase 1.2% -0.2% 7.6% 3.0% Percent of Income 43.7% 43.1% 42.7% 44.4% 45.0% Net Operating Income $820,117 $849,511 $859,405 $864,023 $868,499 $3,619 $4.30
The rent roll, dated April 12, 1996 indicates rent income from existing leases at $132,280 a month (excluding vacant units). Based on a straight line projection, the effective gross income is calculated as follows. $132,280 X 12 Months = $1,587,360 Other Income (2.0%) 31,747 Annual Straight Line Projection $1,619,107 This straight line projection of $1,619,107 compares reasonably well with the projected effective gross income of $1,579,761. DIRECT CAPITALIZATION The last item needed to complete the summary of the income capitalization approach is deriving the capitalization rate (O.A.R.). Direct Capitalization is the process of converting income into value either by dividing the net income by an overall rate or by multiplying the potential or effective gross income by a multiplier. When valuing property by direct capitalization, it is essential that the market comparables reflect risk, income, expenses, and physical characteristics similar to those of the property being appraised. An overall capitalization rate is established by dividing a comparable's estimated net operating income by its selling price. The basic mathematical formula for deriving this overall rate is as follows: Net Operating Income -------------------- = O.A.R. Selling Price Income and expense information was available for only one of the four comparables used in the sales comparison approach. The one sale was comparable 3 (Chesapeake Apartments), which reportedly sold at a 9.3% capitalization rate, based on projected figures. While income and expense information was not available for comparable 1 (Lincoln Shores), it was reported that the capitalization rate was well above 9% apparently due to necessary capital improvements. Based on conversations with Paul Wikle, CCIM, of Wikle Properties, and John D. Selby CCIM of CB Commercial it was indicated that capitalization rates for 1990 vintage institutional grade apartment properties are in the 8.5% to 9.0% range, 1980 vintage institutional grade apartment properties are in the 9.0% to 9.5% range, and 1970 vintage institutional grade apartment properties are in the 9.5% to 10.0% range. Considering that the subject complex has good occupancy and is well maintained in average condition, it is believed that an appropriate capitalization rate for the subject would fall at the middle of the range for 1980 vintage institutional grade apartment properties. Based on the above analysis, the overall rate for the subject by market extraction is estimated at 9.30%. BAND OF INVESTMENT Another type of direct capitalization is the band of investment technique. This technique builds a capitalization rate by extracting information from the market. The information which is extracted is the equity investors component (equity dividend rate) and the mortgage component (mortgage constant). Conversations with area lenders indicate that conventional financing could be obtained for a property such as the subject at an interest rate of about 8.5% fixed. The typical loan is amortized over 25 years with a five year balloon. The typical loan to value ratio for a property such as the subject is about 80% and the typical required debt coverage ratio is about 1.20. Based on the current investment rates available in the market the equity dividend rate for the subject is estimated at 8%. Assumptions Mortgage Constant: (8.50%, 25 years) 0.096627 Equity Dividend Rate: 0.08 Mortgage 0.80 X 0.096627 = 0.07730 Equity 0.20 X 0.080000 = 0.01600 -------- 0.09330 Rounded 9.33% DEBT COVERAGE RATIO Another way of estimating an overall capitalization rate is by using the typical debt service coverage ratio required by lenders and multiplying this figure by the loan to value ratio and then by the mortgage constant. Conversations with area lenders indicated that they would typically require a debt coverage ratio of 1.20 on a property such as the subject. Using the above data, the overall rate by the debt coverage ratio formula is estimated as follows: DCR LV MC OAR 1.20 80% .0966 = .0927 or 9.27% DCR = Debt Coverage Ratio LV = Loan to Value Ratio MC = Annualized Mortgage Constant OAR = Overall Capitalization Rate The three techniques indicate overall capitalization rates for the subject at 9.30%, 9.33%, and 9.27%, respectively. Typically newer properties in good condition command lower overall rates while older properties in poor condition command higher overall rates. Also, another major factor which influences overall rates is risk. The riskier the project or property, the higher the overall rate. The overall rate of 9.30% by market extraction is given the most weight. The overall rates by both the band of investment and the debt coverage ratio lend good support to the overall rate by market extraction. These two techniques, however are only given secondary weight because the data used in these techniques can change daily. Therefore, based on the above analysis the overall rate for the subject is estimated at 9.30%. Based on the cited data and above analysis, the market value of the subject by direct capitalization is estimated as follows: SUMMARY OF THE DIRECT CAPITALIZATION APPROACH Potential Gross Income 36 (1) 1/1 $470.00 $203,040 76 (2) 1/1 $515.00 $469,680 32 (3) 2/1 $620.00 238,080 96 (4) 2/2 $655.00 754,560 ------------- Total Potential Gross Income 1,665,360 Vacancy and Collection Loss 7.00% 116,575 ------------- Total Rent Income 1,548,785 Other Income 2.00% 30,976 ------------- Effective Gross Income 1,579,761 Expenses Real Estate Taxes 177,764 Insurance 36,361 Management 78,988 General & Administrative 84,842 Utilities 143,423 Maintenance 177,764 Marketing 12,120 ------------- Total Expenses 45.02% 711,262 ------------- Net Operating Income $868,499 ------------- Capitalization Rate 9.30% ESTIMATE OF VALUE BY THE INCOME APPROACH $9,338,699 Rounded to: $9,300,000 ============= Discounted Cash Flow Analysis: The discounted cash flow analysis is an additional income capitalization approach method of valuing an income producing apartment complex. This method involves projecting an income stream for the property over a period of time and converting the cash flow to a present value. In this case, we have projected the cash flow over a 10 year holding period which is generally the maximum time a project is held due to deterioration of tax benefits. Income and expenses for the first year of the cash flow analysis are estimated as previously described in the direct capitalization approach. The sales price at the end of the period (reversion) is estimated based on the eleventh year net operating income capitalized at 9.80%. From this is deducted a sale expense estimated at 5%. The major assumption in this approach is that growth in both income and expenses are estimated at 3% a year. The stabilized vacancy rate is estimated at 6% and is supported by the recent market trends. The 3% income and expense increases are consistent with the current trend in the consumer price index (CPI). These estimates are based on current market experience and may vary widely over time, thus pointing out the major weakness of this approach. Two separate techniques are used reflecting, 1) an unleveraged deal and 2) a leveraged deal. 1) In the first technique, an unleveraged deal, the net operating income and the net proceeds of sale are discounted to present value. This discount rate is based on expected internal rates of return by investors on various types of unleveraged properties. We have chosen a discount rate of 12.0% based on the risk and an analysis of similar real estate investments. A survey in the December 1995 issue of Appraiser News, published by the Appraisal Institute, indicates required internal rates of return for apartment properties at about 10.0% to 13.0%. 2) The second technique, a leveraged deal, incorporates debt service and loan payoff into the calculations. For the purposes of this analysis a $7,490,115 loan (1.20 DCR) is assumed at 8.50% for 25 years. The resulting cash flow and proceeds at sale are discounted to present value, to arrive at a value of the equity investment. This is then added to the original mortgage amount to arrive at a value for the subject. Due to the higher risk associated with the equity in a leveraged deal, a discount rate of 20.00% is considered appropriate. In order to check the internal rate of return relative to the capitalization rate, a basic value change formula is used. As can be determined from the following analysis, the 12.00% and 20.00% yield rates appear reasonable. The Basic Value Change Formula UNLEVERAGED DEAL Yo = Ro + [delta] a Ro = 9.30% [delta] a = CR = Compounded Rate of Income Change = 2.70% Yo = 9.30% + 2.70% = 12.00% LEVERAGED DEAL Ye = Re + [delta] a Re = 5.00% [delta] a = CR = Compounded Rate of Income Change = 12.64% Ye = 9.30% + 10.96% = 20.26% Based on this analysis, the 10 year projected pro forma and the present value of the resulting cash flows, before and after, debt service can be calculated, as follows: MULTIFAMILY INCOME PROFORMA
Project: Pelican Sound Location 2545 NE Coachman Date: 04/15/96 Gross Income Estimate: Road Unit Type No. Rent/Mo. Rent/Yr. Vacancy Rate: 7.00 Expenses Other Income: 2.00% (1) 1/1 36 $470.00 $203,040 Income Growth: 3.00% R.E. Taxes $0.88 /Sq.Ft. Expense Growth: 3.00% Insurance $0.18 /Sq.Ft. (2) 1/1 76 $515.00 $469,680 Reversion: Management 5.00% /Sq.Ft. Cap Rate: 9.80% Utilities $0.71 /Sq.Ft. (3) 2/1 32 $620.00 $238,080 Sales Expenses: 5.00% Maintenance $0.88 /Sq.Ft. Mortgage: Marketing $0.06 /Sq.Ft. (4) 2/2 96 $655.00 $754,560 Amount: $7,490,115 Gen.& Admin. $0.42 /Sq.Ft. Interest Rate: 8.50% Amoritazation: 25 Potential Gross Income: $1,665,360 Debt Serv. $723,749 Total Sq. Ft. 202,004 Bal.year 10 $6,124,709 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Gross Income $1,665,360 $1,715,321 $1,766,780 $1,819,784 $1,874,377 $1,930,609 $1,988,527 $2,048,183 $2,109,628 $2,172,917 Vacancy & Collection $116,575 $120,072 $123,675 $127,385 $131,206 $135,143 $139,197 $143,373 $147,674 $152,104 Rent Income $1,548,785 $1,595,249 $1,643,105 $1,692,399 $1,743,171 $1,795,466 $1,849,330 $1,904,810 $1,961,954 $2,020,813 Other Income $30,976 $31,905 $32,862 $33,848 $34,863 $35,909 $36,987 $38,096 $39,239 $40,416 Eff. Gross Income $1,579,761 $1,627,154 $1,675,967 $1,726,247 $1,778,034 $1,831,375 $1,886,317 $1,942,906 $2,001,193 $2,061,229 Expenses: R.E. Taxes $177,764 $183,097 $188,590 $194,248 $200,075 $206,077 $212,260 $218,627 $225,186 $231,942 Insurance $36,361 $37,452 $38,575 $39,733 $40,925 $42,152 $43,417 $44,719 $46,061 $47,443 Management $78,988 $81,358 $83,798 $86,312 $88,902 $91,569 $94,316 $97,145 $100,060 $103,061 Gen. & Admin. $84,842 $147,726 $90,009 $92,709 $95,490 $98,355 $101,306 $104,345 $107,475 $110,700 Utilities $143,423 $183,097 $152,157 $156,722 $161,424 $166,267 $171,255 $176,392 $181,684 $187,134 Maintenance $177,764 $12,484 $188,590 $194,248 $200,075 $206,077 $212,260 $218,627 $225,186 $231,942 Marketing $12,120 $732,600 $12,858 $13,244 $13,641 $14,050 $14,472 $14,906 $15,353 $15,814 Total Expenses $711,262 $732,600 $754,578 $777,215 $800,532 $824,548 $849,284 $874,763 $901,005 $928,036 Net. Oper. Income $868,499 $894,554 $921,390 $949,032 $977,503 $1,006,827 $1,037,033 $1,068,143 1,100,188 $1,133,193 Debt Service $723,749 $723,749 $723,749 $723,749 $723,749 $723,749 $723,749 $723,749 $723,749 $723,749 Cash Flow $144,750 $170,805 $197,640 $225,282 $253,754 $283,078 $313,284 $344,394 $376,439 $409,444
DISCOUNTED CASH FLOW ANALYSIS Cash Flow Summary: N.O.I. Cash Flow Year 1 $868,499 $144,750 Year 2 894,554 170,805 Year 3 921,390 197,640 Year 4 949,032 225,282 Year 5 977,503 253,754 Year 6 1,006,827 283,078 Year 7 1,037,033 313,284 Year 8 1,068,143 344,394 Year 9 1,100,188 376,439 Year 10 1,133,193 409,444 Reversion: Est. Sales Price 11,910,094 11,910,094 Sales Expenses 595,505 595,505 Mortgage Payoff 6,124,709 ----------- ---------- Net Proceeds $11,314,590 $5,189,881 =========== ========== Discount Rate: 12.00% 20.00% Present Value: Equity 9,117,381 1,803,843 Mortgage 7,490,115 ----------- ----------- Total Present Value $9,117,381 $9,293,958 Rounded to: $9,100,000 $9,300,000 =========== =========== This analysis uses two different assumptions to arrive at an estimate of value. The first is based on an unleveraged investment in the property and does not use the mortgage in the overall calculation. It is the present value of the Net Operating Income cash flows and reversion proceeds. The second method incorporates the mortgage into the calculations to arrive at a present value of the equity investment, to which is added the original mortgage amount. Summary of the Income Capitalization Approach Three methods have been used to derive a value by the income capitalization approach: capitalized net operating income, discounted cash flow (DCF) analysis - unleveraged and discounted cash flow (DCF) analysis - leveraged. These methods have yielded the following results: Capitalized Net Income: $9,300,000 DCF-unleveraged: $9,100,000 DCF-leveraged: $9,300,000 As indicated earlier, the discounted cash flow analysis methods are based on the necessary assumptions as to income and expense growth over the holding period. While every effort has been made to make an accurate projection, this estimate could be subject to wide fluctuations over time. For this reason, these methods were given slightly less weight in the final analyzes. The capitalized net income method is more closely related to actual market transactions, in that the capitalization rate is market derived. It does not require an opinion of future movement of income and expenses, but tends to reflect the markets perceptions as to future trends. Therefore, based on the foregoing analysis, the value indication by the income capitalization approach is: $9,300,000 RECAPITULATION AND FINAL RECONCILIATION The valuation of real property involves a systematic process in which the problem is defined, the procedure necessary to solve the problem is planned, and required data is acquired, classified, analyzed and reconciled into an final value estimate. "Reconciliation is the analysis of alternative conclusions to arrive at a final value estimate." The analysis considers the reliability and accuracy of the information used in the value conclusions for the cost approach, the sales comparison approach, and the income capitalization approach. The market value estimates for each of the three approaches used are: COST APPROACH $9,000,000 SALES COMPARISON APPROACH $8,900,000 INCOME CAPITALIZATION APPROACH $9,300,000 The cost approach is a method in which the value of a property is derived from creating a substitute property with the same utility as the subject. It is typically considered to be relatively reliable for new or proposed construction. The degree of error tends to increase in this approach commensurate with the degree of accrued depreciation. This approach includes an estimate of land value based on direct comparison of the subject site with sites having similar utility which have recently sold; an estimate of the replacement cost new of the improvements; and an estimate of all forms of accrued depreciation which is deducted from the replacement cost new estimate. Three comparable land sales were used to estimate the value of the subject site. The land comparables were the best known available in the market and lend adequate support to the estimated value of the subject site. The Marshall Valuation Service was used to estimate the replacement cost of the improvements and the depreciation estimate was based on an observation of the surrounding neighborhood. The subject was constructed in 1984 and has a large amount of accrued depreciation due to physical deterioration. The cost approach is considered the least reliable in the final value estimate. The sales comparison approach involves comparing similar properties that have recently sold, or similar properties that are currently offered for sale, with the subject. The basic principle of substitution underlies this approach. Four improved apartment comparable sales were used to estimate the market value of the subject. Like the subject, all of the sales were 1980 vintage apartment complexes. Improved comparable 1 is located within 9 miles of the subject and the remaining 3 improved comparables are located within the same geographical market area, within 3 miles of the subject. Three units of comparison were used in the sales comparison approach. The three units of comparison used include the indicated price per unit, price per room and price per square foot. After analysis, all three units of comparison indicated similar values estimates. The sales comparison approach was considered a reliable estimate of market value for the subject. The income capitalization approach is also reliable when estimating the value of an income property. This approach most nearly reflects the value of the property as an investment. This approach includes an analysis of the effective gross income which the subject is capable of generating, based on rents achieved and occupancy rates at competitive properties. A deduction for normal operating expenses is made in order to derive net operating income which is capitalized at an overall rate. The resulting figure is the estimated value by the income capitalization approach. Financial information supplied included an April 12, 1996 rent roll and a four year operating history. Comparable rent data was readily available and the operating expenses, capitalization rate, and discount rates were well supported by market evidence. Two techniques were used in the income capitalization approach. The first technique used was direct capitalization and the second technique was a discounted cash flow analysis which considered both a leveraged purchase and an unleveraged purchase. Both techniques indicated value estimates which were reasonably similar. The income capitalization approach was considered a reliable estimate of market value for the subject. In the final estimate of value, the income capitalization approach was given greatest weight and the sales comparison approach was given secondary weight. The cost approach was given little consideration. Therefore, based on the cited market data and the foregoing analysis, the market value of fee simple interest in the subject in "as is" condition and as of the effective date of April 15, 1996 is estimated at: NINE MILLION TWO HUNDRED THOUSAND DOLLARS ($9,200,000) INCLUDING DEPRECIATED VALUE OF APPLIANCES TWO HUNDRED THOUSAND DOLLARS ($200,000) REAL PROPERTY NINE MILLION DOLLARS ($9,000,000) ESTIMATED MARKETING TIME: We have reviewed the typical marketing time for apartment complexes in the Tampa Bay area, as well as, discussed the marketing time with knowledgeable commercial brokers. If appropriately priced and marketed, the marketing time of the subject property is estimated at 6 months. CERTIFICATE OF APPRAISAL I certify that, to the best of my knowledge and belief: - - The statements of fact contained in this report are true and correct. - - The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional analyses, opinions, and conclusions. - - I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved. - - My compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. - - My reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice; and the requirements of the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute. Unless otherwise stated herein, the departure provision does not apply. - - I have made a personal inspection of the property that is the subject of this report. - - No one provided significant professional assistance to the person signing this report. - - The appraiser has performed within the context of the competency provision of the Uniform Standards of Professional Appraisal Practice. - - This report was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. - - The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. - - As of the date of this report, both Robert E. Riggins and William W. Atkinson have completed the requirements of the continuing education program of the Appraisal Institute. - - This appraisal recognizes the following definition of value: Market Value: as defined in Chapter 12, Code of Federal Regulations, Part 34.42(f) is, "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. buyer and seller are typically motivated; 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 United States 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. The market value of the property described herein, subject to the assumptions and limiting conditions set forth herein, as of April 15, 1996, in "as is" condition, is estimated to be: NINE MILLION TWO HUNDRED THOUSAND DOLLARS ($9,200,000) INCLUDING DEPRECIATED VALUE OF APPLIANCES TWO HUNDRED THOUSAND DOLLARS ($200,000) REAL PROPERTY NINE MILLION DOLLARS ($9,000,000) Respectfully submitted: ____________________________ ____________________________ Robert E. Riggins, MAI, SRA William W. Atkinson, MAI President Vice President State-certified general real State-certified general real estate appraiser #0000605 estate appraiser #0001221 ASSUMPTIONS AND LIMITING CONDITIONS The Market Value estimate of the property or properties appraised is subject to the following assumptions and limiting conditions: 1. The legal description furnished is assumed to be correct. 2. No responsibility is assumed for matters legal in character nor is any opinion rendered herein as to title which is assumed to be good and merchantable. It is assumed that the property is free and clear of liens and encumbrances and under responsible ownership and management on the appraised date. 3. It is assumed that surveys and/or plats furnished to or acquired by the appraiser and used in the making of this report are correct. The appraiser has not made a land survey or caused one to be made and therefore assumes no responsibility for their accuracy. 4. Certain data used in compiling this report was given to the appraiser from sources he considers reliable; however, he does not guarantee the correctness of such data, although as far as is reasonably possible the data has been checked and is believed to be correct. 5. The soil and the area under appraisement appears to be firm and solid, unless otherwise stated. Subsidence in the area is unknown or uncommon but the appraiser does not warrant against this condition or occurrence. 6. Subsurface rights (mineral and oil) were not considered in making this report, unless otherwise stated. 7. Any riparian rights and/or littorial rights indicated by survey, map or plat are assumed to go with the property unless easements or deeds of record were found by the appraiser to the contrary. 8. Possession of this report, or copy thereof, does not carry with it, the right of publication or reproduction nor may it be used by anyone but the applicant without prior written consent of the applicant and the appraiser and in any event only in its entirety. This limitation is not to exclude applicant from copying the report in connection with the normal course of a mortgage application of syndication of the property. 9. The appraiser, by reason of this report, is not required to give testimony in court with reference to the property herein appraised nor is he obligated to appear before any governmental body, board or agent unless arrangements have been previously made thereof. 10. The distribution of the total valuation in this report between land and improvements applies only under the existing program of utilization. The separate valuations for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. 11. Neither all nor any part of the contents of this report shall be conveyed to the public through advertising, public relations, news, sales or other media without the written consent and approval of the author, particularly as to the valuation conclusions, the identity of the appraiser or firm with which he is connected, or any reference to the American Institute of Real Estate Appraisers, or the MAI designation. 12. We are not expert in determining the presence or absence of hazardous substances, defined as all hazardous or toxic materials, wastes, pollutants or contaminants (including, but not limited to, asbestos, PCB, UFFI, or other raw materials or chemical(s) used in construction, or otherwise present on the property). We assume no responsibility for the studies or analyses which would be required to determine the presence or absence of such substances or for loss as a result of the presence of such substances. The value estimate is based on the assumption that the subject property is not so affected. ADDENDUM SUPPLEMENTAL SUBJECT PHOTOGRAPHS VIEW OF APARTMENT BUILDINGS VIEW OF APARTMENT COMPLEX AND TENNIS COURTS VIEW OF SWIMMING POOL AND LEASING OFFICE INTERIOR VIEW OF LEASING OFFICE INTERIOR VIEW OF LAUNDRY ROOM INTERIOR VIEW OF APARTMENT UNIT INTERIOR VIEW OF APARTMENT UNIT INTERIOR VIEW OF APARTMENT UNIT NE COACHMAN ROAD - FACING SOUTHWEST NE COACHMAN ROAD - FACING NORTHEAST FLOOD PLAIN MAP EXHIBIT A *** OFFICIAL RECORDS *** BOOK 7207 PAGE 914 All that certain parcel(s) of property lying and being situated in the county of Pinellas, State of Florida, and being more particularly described as follows: Parcel A A parcel of land lying in the Northeast 1/4 of Section 7, Township 29 South, Range 16 East, Pinellas County, Florida, being more particularly described as follows: Commencing at the East 1/4 corner of said Section 7; thence N 00 deg. 5438" E, for 413.55 feet, along the East line of said Section 7, the same being the centerline of U.S. Highway No. 19, to a point of intersection with the Northerly right-of-way line of Seaboard Coast Line Railroad; thence N. 81 deg. 0702" W, for 1117,55 feet, along said Northerly right-of-way line to a point of intersection with the Easterly right-of-way line of Florida Power Corporation, as described in Official Record Book1466, Page 156 of the Public Records of Pinellas County, Florida; thence N 00 deg. 4241" E. for 289.94 feet, along said Easterly right-of- way line to the POINT OF BEGINNING; thence continue N 00 deg. 4241" E. for 15.77 feet, along said Easterly right-of-way line; thence N 00 deg. 4511" E, for 1030.35 feet, along said Easterly right-of-way line, to a point of intersection with the Southerly right-of-way line of County Road No. 2 (Northeast Coachman Road), a 100 foot right-of-way; thence N 58 deg. 2140" E, for 367.38 feet, along Southerly right-of-way line to a point of intersection with Westerly line of that certain parcel of land as described in Official Record Book 4938, Page 322 of said Public Records of Pinellas County, Florida; thence along said Westerly and Southerly line of said parcel by the following six (6) courses; (1) S 31 deg. 3820" E, for 148.89 feet; (2) thence S 00 deg. 5315" W, for 202.73 feet to a point of curvature of a curve concave to the Northwest; (3) thence Southwesterly 60.99 feet along the arc of a curve having a radius of 135.19 feet, and a central angle of 25 deg. 5055"; (4) thence S 89 deg. 0645" E, for 43.53 feet; (5) thence S 00 deg. 5315" W, for 643.19 feet; (6) thence S 89 deg. 0645" E, for 505.05 feet; thence S 00 deg. 3515" W, for 133.49 feet; thence N 89 deg. 0645" W, for 418.00 feet; thence S 22 deg. 0658" W, for 103.85 feet; thence S 30 deg. 0645" E, for 36.78 feet; thence N 75 deg. 0225" W, for 58.50 feet; thence 587 deg. 33'49" W, for 129.00 feet; thence N 77 deg. 2611W", for 43.00 feet; thence S 82 deg. 3349" W, for 200.00 feet; thence N 27 deg. 5611" W, for 72.00 feet; thence N 89 deg. 1111" W, for 25.96 feet to the POINT OF BEGINNING. PARCEL B A parcel of land lying in the Northeast 1/4 of Section 7, Township 29 South, Range 15 East, Pinellas County, florida, being more particularly described as follows: Commence at the Northeast corner of said Section 7; thence S 00 deg. 3438" W, for 979.41 feet, along the East line of said Section 7, the same being the centerline of U.S. Highway No. 19; thence N 89 deg. 0645" W, for 335.76 feet to the POINT OF BEGINNING; said point also being on the West line of those certain parcels as described in Official Record Book 4059, Page 1669 and Official Record Book 4963, Page 927 of the Public Records of Pinellas County, Florida; thence N 00 deg. 5333" E, for 715.81 feet along said West line to the Southerly right-of- way line of County Road No. 2 (Northeast Coachman Road); thence S 58 deg. 2140" W, for 485.63 feet, along said Southerly right-of- way; thence leaving said Southerly right-of-way along the Easterly and Northerly lines of that certain parcel as described in Official Record Book 4938, Page 922 of the Public Records of Pinellas County, Florida by the following six (6) courses: (1) S 31 deg. 3820" E, for 69.68 feet; (2) S 89 deg. 0645" E, for 21.94 feet, (3) S 00 deg. 5315" W, for 243.94 feet, (4) S 89 deg. 0645" E, for 200.00 feet, (5) S 00 deg. 5315" W, for 135.00 feet, (6) S 89 deg. 0645" E, for 150.00 feet to the POINT OF BEGINNING. together with an easement for ingress, egress and access as set forth in Amended Dedication recorded in Official Record Book 4311, Page 1635, Public Records of Pinnellas County, Florida. LEGAL DESCRIPTION CONTINUED 4/12/96 DECADE PROPERTIES, INC. 1:19 pm User: AMAMI Rent Roll Page: Property: Town Place Apartments
Unit Rent Per Lease Lease Reference Monthly Square Square Starting Exp. Deposits Number Name Rent Feet Foot Date Date Held 39-1 Cox, Dianne 625.00 1036 7.24/yr 7/01/95 6/30/96 200.00 39-2 Bice, James 625.00 1036 7.24/yr 10/01/95 6/30/96 200.00 39-3 Troutker, Andrew & Bonnie 630.00 1036 7.36/yr 7/01/95 6/30/96 200.00 39-4 Zargaran, Theresa 655.00 1036 7.59/yr 4/10/96 3/31/97 100.00 39-5 Barr, Michael & Amy 630.00 1036 7.38/yr 9/08/95 8/31/96 300.00 39-6 Vacant 665.00 1036 7.70/yr 0.00 39-7 Matula, Leonard & Debra 730.00 1036 8.46/yr 8/26/95 7/31/96 200.00 39-8 Chappell, Brian & Dorothy 645.00 1036 7.47/yr 2/01/96 2/01/96 100.00 39-9 Pethachi, Pickappah/Vallianni 1,170.00 836 16.79/yr 4/01/96 10/31/96 200.00 39-10 Podres, Johnny 1,125.00 836 16.15/yr 2/01/96 4/30/96 0.00 39-11 Williams, Keith 580.00 836 8.33/yr 3/01/96 2/28/97 300.00 39-12 Taylor, Patricia 580.00 836 8.33/yr 8/04/95 8/31/96 200.00 39-13 Crisco, Sandra 615.00 836 8.83/yr 11/01/95 5/31/96 200.00 39-14 Bercaw, Lee & Kelly 585.00 836 8.48/yr 1/01/96 7/31/96 300.00 39-15 Sylvia, Raymond & Anita 590.00 836 8.47/yr 11/01/95 6/30/96 375.00 39-16 U.S. Coast Guard 688.00 836 9.76/yr 8/18/95 7/31/96 0.00 39-17 U.S. Coast Guard 530.00 720 8.83/yr 8/08/95 8/31/96 0.00 39-18 Vivekakadan, Rachu akd 500.00 720 8.33/yr 11/01/95 5/31/96 100.00 39-19 Hayes, Catherine 530.00 720 8.83/yr 5/01/95 4/30/96 100.00 39-20 Abdo, Kael & Raida 510.00 720 8.58/yr 9/01/95 8/31/96 100.00 39-21 Zbakic, Edin akd 555.00 720 9.25/yr 10/20/95 9/30/96 200.00 39-22 Littles, Jeanette 500.00 720 8.33/yr 8/01/95 7/31/96 199.00 39-23 Gambert, Allen 525.00 720 8.75/yr 3/01/96 9/30/96 200.00 39-24 Bailey, James 520.00 720 8.67/yr 1/01/96 7/31/96 100.00 39-25 Sabado, Brian 520.00 720 8.67/yr 1/01/96 12/31/96 100.00 39-26 Zukauskas, Robert & Brenda 515.00 720 8.58/yr 12/01/95 8/31/96 250.00 39-27 Jencik, Kimberly 520.00 720 8.67/yr 1/02/96 8/31/96 100.00 39-28 O'Conner, Ann Marie 530.00 720 8.83/yr 2/28/96 2/28/97 350.00 39-29 Fortese, Ben & Holly 535.00 720 8.92/yr 4/01/96 3/31/97 100.00 39-30 Cunningham, Grey and 520.00 720 8.67/yr 11/01/95 10/31/96 200.00 39-31 Northrup, William 460.00 540 10.22/yr 3/01/96 2/28/97 200.00 39-32 Robinson, Matthew & Jennifer 490.00 540 10.89/yr 2/02/96 8/31/96 200.00 39-33 Collazo Esparro, Francisco 460.00 540 10.22/yr 1/04/96 8/31/96 200.00 39-34 Preston, Robert 455.00 540 10.11/yr 11/18/95 5/31/96 200.00 39-35 Moser, Garnett/Carolyn 555.00 720 9.25/yr 1/01/96 1/01/96 200.00 39-36 Daniels, Ronald & Deborah 530.00 720 8.83/yr 4/01/96 12/31/96 0.00 39-37 Lee, Thomas & Laurie 485.00 720 8.08/yr 8/01/95 7/31/96 200.00 39-38 Guinther, Michelle and 510.00 720 8.50/yr 6/07/95 6/30/96 100.00 39-39 Miller, John 515.00 720 8.58/yr 8/01/95 4/30/96 100.00 39-40 El Makdissi, Elie & Joann 510.00 720 8.58/yr 4/22/95 4/30/96 200.00 39-41 Margraff, Thomas 445.00 540 9.89/yr 5/01/95 4/30/96 200.00 39-42 Hollenberg, Rich 460.00 540 10.22/yr 12/01/95 6/30/96 200.00 39-43 Vacant 475.00 540 0.00 39-44 Hughes, Glenda 460.00 540 10.56/yr 2/01/96 7/31/96 200.00 39-45 Dionne, Gerald 485.00 720 8.08/yr 5/27/95 5/31/96 100.00 39-46 Hollingsworth, Diane 485.00 720 8.08/yr 10/01/95 9/30/96 200.00 39-47 Iuliani, Vincent 500.00 720 8.33/yr 4/01/96 3/31/97 200.00 39-48 Brown, Kevin 500.00 720 8.33/yr 3/01/96 2/28/97 100.00 39-49 Hall, Mark & Christina 495.00 720 8.25/yr 4/01/96 10/31/96 300.00 39-50 Nunez, Jenny 500.00 720 8.33/yr 11/03/95 7/31/96 200.00 39-51 Mercier, Alberto and 465.00 540 10.33/yr 1/01/96 8/31/96 200.00 39-52 Vacant 465.00 540 10.33/yr 0.00 39-53 Hrinik, Dennis 460.00 540 10.22/yr 1/01/96 6/30/96 200.00 39-54 Bertke, Susan 460.00 540 10.22/yr 1/27/96 12/31/96 0.00 39-55 Klotz, Christopher 515.00 720 8.58/yr 4/01/96 10/31/96 200.00 39-56 Petterson, Mikael & Heidi 500.00 720 8.33/yr 8/01/95 8/01/95 200.00 39-57 Grossmann, Marc and 485.00 720 8.08/yr 8/26/95 7/31/96 200.00 39-58 Holzhauser, Gary Brooks 490.00 720 8.17/yr 1/01/96 12/31/96 200.00 39-59 Ward, Jeffrey 480.00 720 8.08/yr 8/01/95 7/31/96 200.00 39-60 West, Laura 470.00 720 7.83/yr 10/01/95 9/30/96 300.00 39-61 Miller, David 485.00 720 8.08/yr 12/01/95 11/30/96 200.00 39-62 Hussein, Ahmed 450.00 540 10.00/yr 2/01/96 1/31/97 100.00 39-63 Hoang, VY 455.00 540 10.11/yr 3/15/95 3/31/96 200.00 39-64 Puente, James and 460.00 540 10.22/yr 12/30/95 9/30/96 100.00 39-65 Skeme, Gail 510.00 540 11.33/yr 1/01/96 8/31/96 300.00 39-66 Mestor, Tammy 485.00 720 8.08/yr 3/01/96 2/28/97 0.00 39-67 Fischer, Lori 485.00 720 8.08/yr 5/01/95 4/30/96 300.00 39-68 Stanek, Scott & Katherine 500.00 720 8.33/yr 2/01/96 10/31/96 130.00 39-69 Thorne, Elizabeth 485.00 720 8.08/yr 7/01/95 6/30/96 100.00 39-70 Goodman, Garth 500.00 720 8.33/yr 10/08/95 5/31/96 200.00 39-71 McMatt, Bryan 470.00 540 10.44/yr 12/05/95 6/30/96 200.00 39-72 Kern, Kirsten 470.00 540 10.44/yr 3/02/96 9/30/96 200.00 39-73 Engelking, James 455.00 540 10.11/yr 7/18/95 6/30/96 100.00 39-74 Horn, Kristina and 460.00 540 10.22/yr 12/01/95 6/30/96 200.00 39-75 Furlong, Michael 485.00 720 8.08/yr 10/01/95 6/30/96 100.00 39-76 Mromyak, Thomas 545.00 720 9.08/yr 4/01/96 3/31/97 100.00 39-77 Garcia, Ramona 485.00 720 8.08/yr 8/06/95 7/31/96 100.00 39-78 Smith, Walter & Linda 485.00 720 8.08/yr 8/01/95 7/31/96 200.00 39-79 Hull, Christine 485.00 720 8.08/yr 3/01/96 2/28/97 200.00 39-80 Devine, Derek & Marie 515.00 720 8.58/yr 9/07/95 8/31/96 300.00 39-81 Nagel, Mellissa 465.00 540 10.33/yr 1/01/96 12/31/96 300.00 39-82 Ferlito, Jennifer 490.00 540 10.89/yr 12/16/95 6/30/96 200.00 39-83 Couch, Chuck 465.00 540 10.33/yr 4/01/96 10/31/96 200.00 39-84 Boudrie, Marc and 455.00 540 10.11/yr 4/30/95 4/30/96 100.00 39-85 Salkin, Ruth 500.00 720 8.33/yr 10/01/95 9/30/96 475.00 39-86 Beckman, Tracy 475.00 540 10.56/yr 4/01/96 10/31/96 300.00 39-87 Grier, Krysta 545.00 720 9.88/yr 3/01/96 3/01/96 200.00 39-88 Panczel, Erika 455.00 540 10.11/yr 10/01/95 4/30/96 99.00 39-89 Dara, Eugene & Rosetta 520.00 720 8.67/yr 4/05/96 10/31/96 300.00 39-90 Padgett, Kim 460.00 540 10.22/yr 4/01/96 3/31/97 200.00 39-91 Bunning, Michelle 560.00 720 9.33/yr 2/07/96 9/30/96 100.00 39-92 Harris, Rhee 460.00 540 10.22/yr 2/01/96 1/31/97 200.00 39-93 Albano, Toula and 600.00 836 8.61/yr 10/13/95 4/30/96 200.00 39-94 Duday, Marcia & Nancy 595.00 836 8.54/yr 2/01/96 8/31/96 300.00 39-95 Love, Katherine 605.00 836 8.68/yr 9/01/95 8/31/96 100.00 39-96 Colina, Arnie 590.00 836 8.47/yr 5/05/95 4/30/96 100.00 39-97 Shrewsberry, Mark & Lisa 580.00 836 8.33/yr 1/01/96 12/31/96 350.00 39-98 Vacant 590.00 836 8.47/yr 0.00 39-99 Chambers, Kathy 575.00 836 8.25/yr 9/01/95 5/31/96 100.00 39-100 Vacant 620.00 836 8.98/yr 0.00 39-101 Martyniak, Mike 645.00 1036 7.47/yr 11/16/95 10/31/96 200.00 39-102 Johnson, Minerya 630.00 1036 7.38/yr 2/01/96 11/30/96 200.00 39-103 McCall, Linda and 660.00 1036 7.64/yr 7/08/95 6/30/96 100.00 39-104 Jones, Judith 655.00 1036 7.59/yr 11/01/95 10/31/96 200.00 39-105 Ridderhoff, Pete & Earleen 625.00 1036 7.24/yr 6/01/95 5/31/96 300.00 39-106 Duncan, Mark and 655.00 1036 7.59/yr 7/01/95 3/31/96 100.00 39-107 Perez, Rosa 630.00 1036 7.30/yr 7/21/95 4/30/96 200.00 39-108 Quinby, Karin and 655.00 1036 7.59/yr 3/07/95 3/31/96 200.00 39-109 Barrett, Margarette 670.00 1036 7.76/yr 10/14/95 9/30/96 200.00 39-110 House, Deborah 700.00 1036 8.11/yr 3/01/96 9/30/96 300.00 39-111 Vacant 600.00 1036 7.88/yr 0.00 39-112 U.S. Coast Guard 730.00 1036 8.46/yr 7/21/95 6/30/96 0.00 39-113 U.S. Coast Guard 730.00 1036 8.46/yr 2/01/96 1/31/97 0.00 39-114 Brewer, Robyn 670.00 1036 7.76/yr 9/20/95 4/30/96 200.00 39-115 Hardin, John 640.00 1036 7.41/yr 5/01/95 4/30/96 300.00 39-116 Gillespie, Ricky & Pamela 635.00 1036 7.36/yr 6/01/95 7/31/96 99.00 39-117 Takeda, Tokurd & Kathleen 485.00 720 8.08/yr 5/01/95 4/30/96 300.00 39-118 Amrhein, Sigurd 500.00 720 8.33/yr 2/15/96 9/30/96 0.00 39-119 Graham, Linda 500.00 720 8.33/yr 1/01/96 12/31/96 100.00 39-120 Rallo, Ben 485.00 720 8.08/yr 8/01/95 7/31/96 100.00 39-121 Cucuz, Melissa 500.00 720 8.33/yr 9/01/95 8/31/96 0.00 39-122 Cloud, Tracy 500.00 720 8.33/yr 12/31/95 8/31/96 100.00 39-123 Lynch, Michael & James 490.00 540 10.89/yr 3/01/96 3/01/96 200.00 39-124 Clark, Tracy 485.00 540 10.78/yr 8/15/95 7/31/96 200.00 39-125 Lorenzo, Austin 450.00 540 10.00/yr 1/01/96 12/31/96 200.00 39-126 Kody, Mike 460.00 540 10.22/yr 4/01/96 4/01/96 200.00 39-127 Young, David & Shelba 495.00 720 8.25/yr 12/01/95 6/30/96 200.00 39-128 Dalton, Russell 515.00 720 8.58/yr 4/01/96 3/31/97 200.00 39-129 Nokks, Susan 515.00 720 8.58/yr 3/01/96 11/30/96 200.00 39-130 Wong, Seng and 500.00 720 8.33/yr 9/15/95 4/30/96 150.00 39-131 Weston, James 485.00 720 8.08/yr 5/01/95 4/30/96 200.00 39-132 Vacant 515.00 720 8.58/yr 0.00 39-133 Hatcher, Argie 470.00 540 10.44/yr 11/01/95 10/31/96 0.00 39-134 Korizzo, Joanne 460.00 540 10.22/yr 2/01/96 8/31/96 200.00 39-135 Getgen, Daniel 465.00 540 10.33/yr 1/01/96 12/31/96 200.00 39-136 Galle, Bruce 450.00 540 10.00/yr 11/01/95 10/31/96 100.00 39-137 Hill, Judith 640.00 1036 7.41/yr 10/01/95 9/30/96 250.00 39-138 Powell, Kimberly and 655.00 1036 7.59/yr 6/16/95 5/31/96 100.00 39-139 Dewitt, Monica 650.00 1036 7.53/yr 6/01/95 5/31/96 250.00 39-140 Sharp, William & Terri 655.00 1036 7.59/yr 7/02/95 6/30/96 100.00 39-141 Danahy, Rafael and 650.00 1036 7.53/yr 10/01/95 4/30/96 100.00 39-142 Vacant 655.00 1036 7.59/yr 0.00 39-143 U.S. Coast Guard 730.00 1036 8.46/yr 1/05/96 6/30/96 0.00 39-144 Holter, Michael and 645.00 1036 7.47/yr 9/01/95 8/31/96 200.00 39-145 Schoeck, Lane 650.00 1036 7.53/yr 7/01/95 6/30/96 100.00 39-146 Feeney, Kevin 655.00 1036 7.59/yr 4/07/95 4/30/96 200.00 39-147 Discioscia, Joann and 655.00 1036 7.59/yr 7/01/95 6/30/96 100.00 39-148 Traci, Louis 675.00 1036 7.82/yr 4/01/96 10/31/96 200.00 39-149 Unansky, Elaine 660.00 1036 7.64/yr 1/01/96 12/31/96 300.00 39-150 Mabee, Richard 670.00 1036 7.76/yr 4/01/96 3/31/97 200.00 39-151 Aqliano, Ruth and 625.00 1036 7.24/yr 7/01/95 6/30/96 175.00 39-152 Crawford, Lon 655.00 1036 7.59/yr 8/29/95 7/31/96 100.00 39-153 U.S. Coast Guard 730.00 1036 8.46/yr 6/30/95 6/30/96 0.00 39-154 Coyle, Tim and 670.00 1036 7.76/yr 4/01/96 4/01/96 200.00 39-155 U.S. Coast Guard 730.00 1036 8.46/yr 9/15/95 8/31/96 0.00 39-156 Miller, David 700.00 1036 8.11/yr 5/01/95 4/30/96 0.00 39-157 Vacant 655.00 1036 7.59/yr 0.00 39-158 Vacant 650.00 1036 7.53/yr 0.00 39-159 O'Connor, Tim & Angela 640.00 1036 7.41/yr 7/01/95 6/30/96 300.00 39-160 Vacant 685.00 1036 7.81/yr 0.00 39-161 Drayton, Dan 650.00 1036 7.53/yr 12/01/95 6/30/96 200.00 39-162 Setzer, Deborah and 655.00 1036 7.59/yr 9/01/95 8/31/96 100.00 39-163 Morrison, Scott and 675.00 1036 7.82/yr 4/01/96 10/31/96 300.00 39-164 Shill, Tom & Teresa 650.00 1036 7.53/yr 8/01/95 7/31/96 100.00 39-165 Stone, Rick & Shirley 655.00 1036 7.59/yr 6/23/95 5/31/96 100.00 39-166 Shaw, John & Joellen 670.00 1036 7.76/yr 11/09/95 5/31/96 350.00 39-167 Trevino, Sheila 650.00 1036 7.53/yr 11/01/95 10/31/96 350.00 39-168 Vacant 645.00 1036 7.47/yr 0.00 39-169 West, Thomas 620.00 836 8.98/yr 3/25/96 10/31/96 0.00 39-170 U.S. Coast Guard 710.00 836 10.19/yr 12/12/95 11/30/96 0.00 39-171 Dodge, Christine and 620.00 836 8.98/yr 7/01/95 6/30/96 100.00 39-172 Werner, Marianne 580.00 836 8.33/yr 5/01/95 4/30/96 250.00 39-173 Bryant, Ken 600.00 836 8.61/yr 11/01/95 8/31/96 99.00 39-174 Porras, Melba 640.00 836 9.19/yr 12/01/95 11/30/96 200.00 39-175 Lang, Judith 595.00 836 8.54/yr 9/01/95 5/31/96 200.00 39-176 Oaks, Renee 685.00 836 8.68/yr 12/01/95 12/01/95 200.00 39-177 Camillo, Albert 590.00 836 8.47/yr 4/10/95 4/30/96 200.00 39-178 Trapano, Vincent and 595.00 836 8.54/yr 11/01/95 10/31/96 100.00 39-179 Sharp, Hassan & Christina 585.00 836 8.40/yr 3/01/96 3/01/96 100.00 39-180 White, Lisa and 620.00 836 8.98/yr 8/25/95 7/31/96 200.00 39-181 Barker, Ross & Kristine 590.00 836 8.47/yr 6/01/95 5/31/96 200.00 39-182 Kozer, Blair 610.00 836 8.76/yr 11/24/95 7/31/96 300.00 39-183 Hess, Debra 590.00 836 8.47/yr 3/01/96 3/01/96 100.00 39-184 Bowman, Heidi 590.00 836 8.47/yr 9/18/95 8/31/96 200.00 39-185 Vacant 545.00 1036 6.31/yr 0.00 39-186 Falk, Jennifer and 660.00 1036 7.64/yr 9/01/95 3/31/96 200.00 39-187 Ekeberg, Kristin and 655.00 1036 7.59/yr 9/08/95 5/31/96 300.00 39-188 Colina, Ricardo & Lucy 700.00 1036 8.11/yr 1/06/96 7/31/96 200.00 39-189 Dubendorfer, Dorothea 670.00 1036 7.76/yr 2/01/96 1/31/97 200.00 39-190 Hobbs, Timothy 670.00 1036 7.76/yr 1/01/96 6/30/96 0.00 39-191 Vandervelde, Hendrick 660.00 1036 7.64/yr 12/01/95 11/30/96 200.00 39-192 Grosbeck, John and 655.00 1036 7.59/yr 4/01/96 4/01/96 200.00 39-193 U.S. Coast Guard 730.00 1036 8.46/yr 2/01/96 1/31/97 0.00 39-194 U.S. Coast Guard 730.00 1036 8.46/yr 3/01/96 2/28/97 300.00 39-195 Francis, Gerald & Laverda 650.00 1036 7.53/yr 10/01/95 9/30/96 300.00 39-196 Cribbs, William 735.00 1036 8.51/yr 4/01/96 4/01/96 200.00 39-197 Ridgeway, Ronnie & Cathy 785.00 1036 8.17/yr 3/01/96 3/01/96 200.00 39-198 Davis, Reynaldo & Sandra 655.00 1036 7.59/yr 10/01/95 9/30/96 200.00 39-199 Whitehurst, Calvin & Elizabeth 650.00 1036 7.53/yr 8/01/95 7/31/96 200.00 39-200 Jardin, Fernando (63) 665.00 1036 7.78/yr 11/01/95 10/31/96 100.00 39-201 Whoolery, Kathy 535.00 720 8.92/yr 2/01/96 8/31/96 200.00 39-202 Dobbs, Meredith 535.00 720 8.92/yr 7/08/95 6/30/96 200.00 39-203 Palmer, Alice 528.00 720 8.67/yr 7/01/95 6/30/96 200.00 39-204 Rebokus, Elsie 545.00 720 9.18/yr 4/01/96 12/31/96 200.00 39-205 Kalteux, Carolyn and 540.00 720 9.00/yr 8/01/95 7/31/96 100.00 39-206 Dancey, David 540.00 720 9.00/yr 3/01/96 9/30/96 100.00 39-207 Dupras, Dinah 540.00 720 9.00/yr 4/05/96 11/30/96 200.00 39-208 Grant, Jim 535.00 720 8.92/yr 2/01/96 1/31/97 100.00 39-209 Harrington, David & Gwen 685.00 1036 7.93/yr 5/06/95 4/30/96 300.00 39-210 Fachtmann, Richard 730.00 1036 8.46/yr 11/13/95 5/31/96 200.00 39-211 Kline, David 685.00 1036 7.93/yr 3/01/96 10/31/96 100.00 39-212 Wendt, Ellen and 700.00 1036 8.11/yr 10/01/95 4/30/96 200.00 39-213 Murren, Thomas 685.00 1036 7.93/yr 2/01/96 1/31/97 100.00 39-214 Handy, Rodney & Carolyn 680.00 1036 7.88/yr 5/01/95 4/30/96 100.00 39-215 Kaits, Diana 720.00 1036 8.34/yr 3/25/95 3/31/96 200.00 39-216 Hamel, Vicki and 685.00 1036 7.93/yr 4/07/95 4/30/96 200.00 39-217 Sharp, Adam 725.00 1036 8.41/yr 7/01/95 7/1/95 200.00 39-218 Rosati, Guy 685.00 1036 7.93/yr 3/01/96 10/31/96 100.00 39-219 Plager, Alan & Sandy 685.00 1036 7.93/yr 8/01/95 7/31/96 100.00 39-220 Lovetere, Francis and 688.00 1036 7.88/yr 7/01/95 6/30/96 200.00 39-221 Tobin, Lana and 688.00 1036 7.88/yr 3/01/96 10/31/96 300.00 39-222 Steffy, Suzanne 685.00 1036 7.93/yr 8/15/95 7/31/96 200.00 39-223 Toro, William and 655.00 1036 7.59/yr 11/01/95 7/31/96 200.00 39-224 McEuew, Kim and 685.00 1036 7.93/yr 4/27/95 4/30/96 100.00 39-225 Uhrin, Michael and 535.00 720 8.92/yr 2/10/96 1/31/97 0.00 39-226 Schrier, Gladys 585.00 720 8.42/yr 4/01/96 3/31/97 300.00 39-227 Tripp, David 525.00 720 8.75/yr 12/05/95 7/31/96 200.00 39-228 Turner, Kathleen 525.00 720 8.75/yr 10/06/95 9/30/96 250.00 39-229 Gray, Frederick 525.00 720 8.75/yr 11/11/95 10/31/96 200.00 39-230 Larson, Brian and 535.00 720 8.92/yr 8/01/95 4/30/96 250.00 39-231 Stuhner, Susan 555.00 720 9.25/yr 5/20/95 5/31/96 100.00 39-232 Diamond, Jeff 525.00 720 8.75/yr 12/04/95 11/30/96 200.00 39-233 Wooldridge, Edward & Alice 655.00 1036 7.59/yr 4/01/96 3/31/97 100.00 39-234 Galloway, Dawn and 655.00 1036 7.59/yr 7/15/95 6/30/96 200.00 39-235 Warren, Chris & Kimothy 650.00 1036 7.53/yr 9/01/95 8/31/96 100.00 39-236 Crehey, Philip 645.00 1036 7.47/yr 11/01/95 10/31/96 250.00 39-237 Jacquette, Michael 650.00 1036 7.53/yr 8/01/95 4/30/96 150.00 39-238 Bellville, Denise 650.00 1036 7.53/yr 7/01/95 7/01/95 175.00 39-239 Walton, Scott & Laurie 680.00 1036 7.88/yr 4/01/96 3/31/97 300.00 39-240 Fournier, Joyce 645.00 1036 7.47/yr 7/01/95 6/30/96 300.00
PROPERTY TOTALS: -Percentage of Occupied Units- Total Occupied Rents 132,280.00 Total Occupied Units 227 Total Vacant Rents 7,765.00 Total Vacant Units 13 Total Gross Rents 140,045.00 Total Units 240 Total Square Footage 208,368.00 Percentage Occupied 95% Average Rent/Sq. Ft. /Yr. 8.39 -Percentage of Occupied Sq. Feet- Average Rent/Sq. Ft. /Mth 8.70 Total Occupied Sq. Feet188,688.00 Total Security Deposits 39,376.00 Total Vacant Sq. Feet 11,760.00 Total Square Footage 200,368.00 Percentage Occupied 94% OPERATING STATEMENTS - TOWN PLACE APARTMENTS INCOME 1992 1993 1994 Gross Potential Rent 1,506,787 1,540,845 1,581,531 Less: Vacancy (73,580) (73,174) (103,575) Net Rental Income 1,433,217 1,487,771 1,477,956 Late Charges 5,281 4,723 4,988 Laundry & Misc. Income 17,194 20,092 15,002 Total Service & Misc. Income 22,475 24,815 22,990 TOTAL INCOME 1,455,092 1,492,588 1,500,948 EXPENSES On-Site Management 67,829 58,495 68,088 Maintenance 48,115 48,254 47,074 Cleaning 12,966 13,947 14,476 Grounds 15,269 17,873 14,642 Total Personnel 144,181 148,372 144,278 Telephone, Mileage & Postage 4,290 8,054 8,228 Miscellaneous 3,663 4,501 3,991 Total Office 7,853 10,555 10,219 Newspapers 2,353 2,427 585 Apartment Guides & Other 14,515 11,740 10,706 Total Adv. & Marketing 16,878 14,167 11,291 Painter 13,485 12,200 13,662 Carpet Shampooing 5,535 2,885 2,883 Cleaning 500 830 Total Outside Contractors 19,020 15,605 16,875 Pest Control 4,259 8,807 7,838 Rubbish 25,385 30,834 27,792 Total Building Services 29,644 38,741 35,525 Maintenance Supplies 9,797 12,387 12,466 Cleaning Supplies 1,211 1,480 1,081 Total Supplies 11,008 13,847 13,547 Gas 2,438 2,380 1,914 Electric 25,870 28,197 32,312 Sewer and Water 80,413 73,955 73,004 Total Utilities 108,719 104,545 107,230 Lawn Mowing Contract 29,400 28,400 34,468 Misc. Grounds 11,220 11,511 6,219 Total Grounds 40,620 40,911 40,687 Property Management Fee 71,661 73,389 78,047 Taxes 188,370 165,835 173,657 Insurance 17,529 17,818 18,082 Total Fixed Expenses 257,566 257,042 261,788 TOTAL EXPENSES 635,589 643,076 841,541 NET OPERATING INCOME 820,103 849,511 859,405 GROSS POTENTAL RENT 6,616,857 LESS: VACANCY (187.617) LATE CHARGES 4.181 LAUNDRY AND MISCELLANEOUS INCOME 41.881 TOTAL INCOME 1.554.502 EXPENSES ON-SITE 68.414 MAINTENANCE MANAGEMENT/REPAIR 48.889 CLEANING & OTHER 13.270 GROUNDS/SHOW & OTHER 14.875 TOTAL PERSONNEL 144.569 TELEPHONE 3.781 POSTAGE 1.827 DUES, FEES LICENSES 1.338 OFFICE EQUIPMENT & OTHER 7.273 TOTAL OFFICE 13.389 APARTMENT GUIDES & OTHER 5.688 PUBLIC RELATIONS 6.268 LEASE RENEWAL INCENTIVES & OTHER 94 TOTAL ADV. & MARKETING 11.962 PLUMBING 1.352 PAINTER 15.459 CARPET SHAMPOOING/REPAIR 6.041 DRYWALL/CARPENTRY & OTHER 3.013 TOTAL OUTSIDE CONTRACTORS 25.865 PEST CONTROL 5,568 RUBBISH 26.934 FIRE EXTINGUISHERS 2.866 FURNITURE RENTAL & OTHER 2.149 TOTAL BUILDING SERVICES 36,709 PAINT 5.14 MAINTENANCE SUPPLIES 12.32 A/C AND APPLIANCE PARTS 4.74 CLEANING SUPPLIES & OTHER 1.86 TOTAL SUPPLIES 24.065 GAS 2.146 ELECTRIC 32.528 SEWER AND WATER 67.673 TOTAL UTILITIES 102.347 LAWN MOWING CONTRACT 32.888 FERTILIZER & MULCH 4.892 EQUIPMENT SERVICE & PARTS 1.872 POOL CHEMICALS, REPAIRS & OTHER 7.681 TOTAL GROUNDS 46.525 PROPERTY MANAGEMENT FEE 77.725 TAXES 177.686 INSURANCE 34.638 TOTAL FIXED EXPENSES 285.849 CAPITALIZED REPLACEMENTS/REPAIRS 46.635 TOTAL EXPENSES 737.115 NET OPERATING INCOME 817.387 Sec. 135.076 CLEARWATER CODE Division 12. Planned Development District (PD) Sec. 135.076. General description. This district is created to provide an alternate method of land development not available within the framework of the other zoning districts. Specifically, this zone classification may be assigned to land which is to be developed utilizing innovative design techniques not made possible through the structure of the other zoning districts for the purpose of achieving one or more of the following development objectives: (1) To preserve or be otherwise sensitive to significant environmental or topographical features which exist on the site. (2) To accommodate a mixture of uses on a single parcel of land made internally and externally compatible through use limitations, sign control, building orientation, buffering, or other techniques which may be appropriate to a particular development proposal. (3) To accommodate a juxtapositioning of buildings with exceptional setback or separation distances made internally and externally compatible through strategic landscape and spatial design. (4) To accommodate a comprehensively planned and phased redevelopment project involving multiple ownerships which provides for interrelated uses, circulation patterns (both vehicular and pedestrian), building orientations, parking areas, architectural motifs, signs, open spaces, vistas, amenity areas and like features which positively contribute to the area being redeveloped and the city. All land assigned this zoning will require site plan approval by the city commission in accord with the provisions contained in chapter 137, "Administration and Enforcement," of this development code, section 137.010. Such site plan shall be reviewed by the city commission in conjunction with any application for planned development district zoning or rezoning and all development shall occur consistent with that site plan as approved by the commission or subsequently amended consistent with the provisions for amendment contained in chapter 137. (Ord. No. 4035, Sec. 2, 8-29-85) Sec. 135.077. Subdistricts. The planned development district shall be comprised of the following six (6) subdistricts, the preferred land use in each implied by the subdistrict title: (1) Residential Planned Development District (RPD). (2) Office Planned Development District (OPD). (3) Commercial Planned Development District (CPD). (4) Industrial Planned Development District (IPD). (5) Recreational Planned Development District (RecPD). (6) Clearwater Beach Planned Development District (CBPD). (Ord. No. 4035, Sec. 2, 8-29-85) LAND DEVELOPMENT CODE Sec. 135.080 Sec. 135.078. Establishment/contraction. It is intended that four (4) acres or more be provided to establish a new Residential, Office, Commercial, Industrial or Clearwater Beach Planned Development District and that fifty (50) acres or more be provided to establish a Recreational Planned Development District, unless legislatively (by ordinance) determined by the city commission to be in the public interest. Furthermore, it is intended that no existing Residential, Office, Commercial, Industrial or Clearwater Beach Planned Development District be contracted to an area of less than four (4) acres, and that no existing Recreational Planned Development District be contracted to an area of less than fifty (50) acres, unless the city commission legislatively (by ordinance) determines that a reduced area is in the public interest. (Ord. No. 4035, Sec. 2, 8-29-85) Sec. 135.079. Permitted uses. Within each of the subdistricts of the Planned Development District, only the following uses may be permitted and all require city commission approval in conjunction with site plan approval: (1) Residential Planned Development District: Any single or combination of residential uses identified as permitted in the residential zoning districts contained in this chapter. (2) Office Planned Development District: Any single or combination of uses identified as permitted in the office or residential zoning districts contained in this chapter. (3) Commercial Planned Development District: Any single or combination of uses identified as permitted in the commercial, office or residential zoning districts contained in this chapter. (4) Industrial Planned Development District: Any single or combination of uses identified as permitted in the Limited Industrial District or any commercial zoning district contained in this chapter. (5) Recreational Planned Development District: Any single or combination of uses identified as permitted in the Open Space/Recreation District, plus, retail sales and restaurants which are integral to and limited in size and scope so as to complement the recreation use which they directly serve. (6) Clearwater Beach Planned Development District: Any combination of tourist-oriented hotel, motel, restaurant, retail, service, entertainment and/or office uses. Any use proposed for a particular subdistrict of the Planned Development District must be clearly and specifically identified on the accompanying site plan to be deemed permitted. (Ord. No. 4035, Sec. 2, 8-29-85) Sec. 135.080. Conditional uses. Within each of the subdistricts of the Planned Development District, the following uses may be permitted as conditional uses: CLEARWATER CODE (1) Residential Planned Development District: Any single or combination of uses identified as conditional in the residential zoning districts contained in this chapter. (2) Office Planned Development District: Any single or combination of uses identified as conditional in the office or residential zoning districts contained in this chapter. (3) Commercial Planned Development District: Any single or combination of uses identified as conditional in the commercial, office or residential zoning districts contained in this chapter. (4) Industrial Planned Development District: Any single or combination of uses identified as conditional in the Limited Industrial District or any commercial district contained in this chapter. (5) Recreational Planned Development District: Only alcoholic beverage sales (consumption on premises) may be considered as a conditional use and only where such use is integral to and limited in size and scope so as to complement the recreation use which it directly serves. (6) Clearwater Beach Planned Development District: Any single or combination of uses identified in the commercial zoning districts contained in this chapter. (Ord. No. 4035, Sec. 2, 8-29-85) Sec. 135.081. Use limitations. All uses, whether permitted, conditional or nonconforming, shall be conducted in consonance with the use standards contained in chapter 136, section 136.005. (Ord. No. 4035, Sec. 2, 8-29- 85) Sect. 135.082. Dimensional and numerical development requirements. The following dimensional and numerical development requirement shall apply to all development within Planned Development Districts: (1) Maximum density: Twenty-eight (28) dwelling units or forty-two (42) hotel/motel units per net acre. (Ord. No. 4035, Sec. 2, 8-29-85) Sec. 135.080 CLEARWATER CODE Division 13. Limited Office District (OL) Sec. 135.083. General description. This district is created to provide a professional office district compatible with neighborhood land uses through the utilization of restrictive building heights, setbacks and lot coverage. Actual site development is to have particular emphasis on landscaping, buffering and architecture in order to preserve neighborhood integrity and consistency. (Ord. No. 4035, Sec. 2, 8-29-85) LAND DEVELOPMENT CODE Sec. 135.087 Sec. 135.084. Establishment/contraction. It is intended that two (2) acres or more be provided to establish a new Limited Office District and that no existing Limited Office District be contracted to an area of less than two (2) acres, unless the city commission legislatively (by ordinance) determines that a reduced area is in the public interest. (Ord. No. 4035, Sec. 2, 8-29-85) Sec. 135.085. Permitted uses. Within Limited Office Districts, only the following uses (and structures designed for such uses) shall be permitted: (1) Business/professional offices. (2) Funeral homes. (3) Multiple-family dwellings. (4) Townhouses. (5) Three-family dwellings. (6) Two-family dwellings. (7) Detached single-family dwellings. (8) Family care. (9) Accessory uses. (Ord. No. 4035, Sec. 2, 8-29-85) Sec. 135.086. Conditional uses. Within Limited Office Districts, the following uses may be permitted as conditional uses: (1) Veterinary offices. (2) Level I group care. (3) Level II group care. (4) Level III group care. (5) Congregate care. (6) Nursing homes. (7) Child day care. (Ord. No. 4035, Sec. 2, 8-29-85) Sec. 135.087. Use limitations. (a) Multiple-family dwellings shall be governed by the dimensional and numerical development requirements of the Multiple-Family Residential "Sixteen" District contained in section 135.051 of this chapter. (b) Townhouses shall be governed by the dimensional and numerical development requirements contained in chapter 136, section 136.012. (c) Three-family dwellings shall be governed by the dimensional and numerical development requirements of the Multiple-Family Residential "Twelve" District contained in section 135.044 of this chapter. (d) Two-family dwellings shall be governed by the dimensional and numerical development requirements of the Multiple-Family Residential "Twelve" District contained in section 135.043 of this chapter. (e) Detached single-family dwellings shall be governed by the dimensional and numerical development requirements of the Single-Family Residential "Eight" District contained in section 135.029 of this chapter. (f) Family, group and congregate care facilities shall comply with all terms contained in chapter 136, section 136.020. (g) Nursing homes shall have a maximum density of sixteen (16) units per net acre. (h) Accessory uses shall comply with all terms contained in chapter 136, section 136.008. (i) All uses, whether permitted, conditional or nonconforming, shall be conducted in consonance with the use standards contained in chapter 136, section 136.005. (Ord. No. 4035, Sec. 2, 8-29-85) LAND DEVELOPMENT CODE Sec. 135.088 Sec. 134.088. Dimensional and numerical development requirements. The following dimensional and numerical requirements shall apply to development within Limited Office Districts not expressly regulated elsewhere: (1) Minimum lot area: Six thousand (6,000) square feet. (2) Minimum lot width at setback line: Sixty (60) feet. (3) Minimum lot depth: Eighty-five (85) feet. (4) Minimum setbacks: Structures shall be afforded setbacks which measure not less than hereinafter referenced nor less than any higher standard which may be applicable to a particular property in accord with the uniform development regulations contained in chapter 136. a. Principal and accessory structures: 1. From a street right-of-way: Twenty-five (25) feet 2. From a side property line: Ten (10) feet. 3. From a rear property line: Fifteen (15) feet. b. Reserved. (5) Maximum height: Twenty-five (25) feet; except that such height limitation shall, where applicable, be increased or reduced in accord with the height bonus provisions, airport restrictions, and other regulations contained in chapter 136, section 136.004. (6) Minimum open space: a. For the lot: Thirty (30) percent of the lot area. b. For the front yard: Fifty-five (55) percent of the front yard area. (7) Maximum floor area ratio: Three-tenths (0.3). (8) Minimum building separation distance within a development: Each building within a development shall be separated from each other building within the same development by a distance equal to fifty (50) percent of the sum of the heights of such two (2) adjacent buildings, but in no case shall the separation distance be less than twenty (20) feet. (9) Maximum building coverage: Thirty (30) percent. (Ord. No. 4035, Sec. 2, 8-29-85) Division 14. General Office District (OG) Sec. 135.089. General description. This district is created to provide a general business office district compatible with other highway-oriented land uses in terms of building height, mass and setbacks. Site development shall be particularly sensitive to limiting points of access to the highway, coordinating on-site vehicular and pedestrian circulation, and enhancing the view corridor along the highway through the provision of landscaping and open space. (Ord. No. 4035, Sec. 2, 8-29-85) Sec. 135.076 LAND DEVELOOPMENT CODE Sec. 135.092 Sec. 135.090. Establishment/contraction. It is intended that two (2) acres or more be provided to establish a new General Office District and that no existing General Office District be contracted to an area of less than two (2) acres, unless the city commission legislatively (by ordinance) determines that a reduced area is in the public interest. (Ord. No. 4035, Sec. 2, 8-29-85) Sec. 135.091. Permitted uses. Within General Office Districts, only the following uses (and structures designed for such uses) shall be permitted: (1) Business/professional offices. (2) Medical clinic or laboratory. (3) Snack bar or luncheonette. (4) Accessory uses. (Ord. No. 4035, Sec. 2, 8-29-85) Sec. 135.092. Conditional uses. Within General Office Districts, the following uses may be permitted as conditional uses: (1) Veterinary offices. (2) Nursing homes. (Ord. No. 4035, Sec. 2, 8-29-85) APPRAISAL ENGAGEMENT LETTER RIGGINS, ATKINSON, COMBS & ASSOCIATES, INC. APRIL 9, 1996 Appraiser's Name Date 18850 U.S. Highway 19 North, Suite 525 (818)-530-9793 Address Phone Clearwater, Florida 34624 Ref. #_________ 2545 COACHMAN ROAD N.E., CLEARWATER Subject property address TOWN PLACE APARTMENTS Name or description of site Republic Bank welcomes the opportunity for you to provide an MAI Appraisal for our customer. Be advised that our contract for services is specifically with you as an individual, NOT others in your firm who may assist in the preparation of this report. As such, you are required to sign this engagement letter and the appraisal reports as the primary appraiser. Your signature on this engagement letter returned to Republic Bank, a copy of which is to be included within the addendum of the appraisal report, specifically acknowledged that you have no financial or other interest in the property to be appraised or relationships with the potential borrower which might cause a conflict of interest or otherwise influence your value estimate. X The legal description of the subject property is attached. X In order to access the property, contact: Wayne Shaw --- Phone # (813)-595-9484 Please complete: Cost $4,500.00. Completion date: April 24, 1996 Please confirm your engagement to appraise the above subject by signing this engagement letter and transmit by facsimile to (813) 823-6529 to the attention of Terry K. Rush THE TERMS OF THE AGREEMENT AND THE APPRAISAL STANDARDS WERE RECEIVED BY ME. THESE ARE FOR SUBJECT REAL ESTATE. Signature: Date:________ Name of Appraisal Firm: _______________________________________ Robert E. Riggins, SRA, MAI Education: Memphis State University - Master of Science Degree (1980): Major - Real Estate Finance; Minor - Economics. Memphis State University - Bachelor of Business Administration Degree (1970): Major - Economics; Minor - Accounting Courses: American Institute of Real Estate Appraisers (AIREA): I-A - Basic Appraisal Principles, Methods and Techniques I-B - Capitalization Theory and Techniques II - Urban Properties VI - Real Estate Investment Analysis IX - Appraisal Administration and Review IV - Litigation Valuation Courses: Appraisal Institute Standards of Professional Practice, Parts A & B Capitalization Theory, Part B Uniform Residential Appraisal Report Seminars: Statistics in Real Estate (AIREA) Multifamily Appraisal Seminar (SREA) Investment Feasibility Analysis (SREA) Market and Marketability Analysis (SREA) Cash Flow and Risk Analysis (SREA) Instructor - Single Family Underwriting Seminar (MBA) FHLBB - R-41(c) Seminar (AIREA) Standards of Professional Practice (SREA) New URAR Appraisal Report (Appraisal Institute) 1993 USPAP "Core" Law HUD Lender Selection Roster Appraiser Training (11/94) Professional Affiliations: Member of the Appraisal Institute, MAI Designation #6123. Past President and Member of the Board of Directors, Memphis Chapter #53 of the Society of Real Estate Appraisers. Past Chairman of the Educational Committee and Candidates Committee, Memphis Chapter #51 of the American Institute of Real Estate Appraisers. Board of Directors of the Tampa Bay Chapter of the Appraisal Institute. Beta Sigma Phi, National Honorary Scholastic Fraternity. Member - FNMA Condominium Task Force. Experience: President, RIGGINS, ATKINSON, COMBS & ASSOCIATES, INC. (1994- Present) Senior Vice President and Regional Manager, Commercial Real Estate Appraisals, AppraisalFirst, Inc. (1990-1994). Vice President and Regional Manager, Commercial Real Estate Appraisals, AppraisalFirst, Inc. (1987-1990). Regional Manager, Commercial Real Estate Appraisals, AmeriFirst Appraisal Company (1985-1987). Senior Vice President, Construction and Commercial Lending, Banksmiths Mortgage Corporation (1984-1985). Senior Vice President, Chief Appraiser, Citizens Mortgage Corporation (1983-1984) Vice President, Commercial Lending and Commercial Appraisal Departments, Leader Federal Savings and Loan Association (1972- 1983). Licenses: Licensed Real Estate Broker, State of Florida. State Certified, General Appraiser # 0000605 The Appraisal Institute conducts a program of continuing education for designated members. Designated members who meet the minimum standards of this program are awarded periodic educational certification. Robert E. Riggins is currently certified under this program. William W. Atkinson, MAI Education: Florida State University 1986, Tallahassee, Florida, Bachelor of Science Degree in Finance and Real Estate. Minor in Accounting. Courses: Florida State University: Real Estate Feasibility Analysis Real Estate Principles and Practices Real Estate and its Legal Environment Real Estate Appraisal Real Estate Market Analysis Real Estate Finance Appraisal Institute Standards of Professional Practice SPP, Part A (9/94) Standards of Professional Practice SPP, Part B (9/94) Real Estate Appraisal Principles 1A1 (10/89) Basic Valuation Procedures 1A2 (3/90) Capitalization Theory and Techniques, Part A 1BA (3/91) Capitalization Theory and Techniques, Part A 1BB (6/91) Case Studies in Real Estate Valuation (11/92) Report Writing and Valuation Analysis (6/93) Non-Residential Demonstration Report (10/94) The Appraiser's Complete Review (2/95) Comprehensive Exam (2/95) Seminars: Appraisal Institute Demonstration Non-Residential Report Writing (3/94) USPAP "Core" Law (6/94) U.S. Department of Housing & Urban Development) HUD Lender Selection Roster Appraiser Training (11/94) Professional Affiliations: Member of the Appraisal Institute, MAI Designation #10.975 Experience: Vice President, RIGGINS, ATKINSON, COMBS & ASSOCIATES, INC. (1994-Present) Staff Appraiser, Residential and Commercial Division - AppraisalFirst, Inc., Clearwater, Florida. (1987-1994) Staff Appraiser, Residential Division - AmeriFirst Appraisal Company, Clearwater, Florida. (1986-1987) License: Licensed Real Estate Broker - State of Florida. State-certified general appraiser #0001221 Annex D: Opinion of The Valuations Group [The Valuations Group] October 7, 1996 Decade Companies, General Partner Decade Companies Income Properties Brookfield Lakes Corporate Center 250 Patrick Blvd, Suite 140 Brookfield, WI 53045 Gentlemen: You have requested our opinion as to the fairness to the holders of limited partnership interests in the Decade Companies Income Partnership (the "Partnership") of an Offer to Repurchase at a price of $402 per Interest up to all of the currently outstanding Interests in the Partnership, being made by the Partnership. The Valuations Group primary business is to provide independent opinions of value for interests in general and limited partnerships. The firm and its principals have significant experience and knowledge of the factors which effect the valuation and pricing of partnership interests. Prior to being engaged to provide this opinion of fairness, in the normal course of its business The Valuations Group has prepared an independent opinion of value for a client unrelated to this transaction. This opinion indicated a fair market value of $440 per Interest and was based on information available as of August 15th, 1995. The Valuations Group' current valuation based on the same methodology applied using information available as of August 15th, 1996 is $389 per Interest. The principal causes of the valuation decline are: i) limited partner distributions in excess of operational cash flow over the 12 month period ended June 30, 1996; ii) inclusion of a $200,000 partnership "liquidation fee" not previously included in the determination of net asset value; iii) loan fees incurred in connection with the 1996 refinancing of Town Place Apartments, and; iv) inclusion of a $225,000 deferred fee due to a third-party upon sale of one of the Partnership's properties. The Valuations Group was previously unaware of the Partnership's contractual obligation to make this payment. Other than the services rendered in connection with this opinion, The Valuations Group has not provided professional services to any party to this transaction nor is the fee payable for this opinion related to the proposed transaction's success or failure. In the course of rendering its opinion, The Valuations Group has: i) Reviewed a draft of the Offer to Purchase. ii) Reviewed the original Partnership prospectus and limited partnership agreement. iii) Reviewed and analyzed financial statements and related notes contained in the Partnership's 1994 and 1995 annual reports and included in the Partnership's Form 10-Q's for the quarters ended June 30, 1995 and June 30, 1996. iv) Reviewed an independent appraisal of the Partnership's three properties dated September 25, 1996. v) Reviewed and analyzed published data on capitalization rates for properties deemed to be similar to the Properties owned by the Partnership. vi) Reviewed Partnership correspondence regarding the possible repurchase of partnership Interests. vii) Reviewed published data regarding transactions of limited partnership interests in the informal partnership secondary market and recent tender offers for interests in other limited partnerships. viii) Discussed the repurchase proposal and the partnership's history and future outlook with the Partnership's senior management. In the course of its review, The Valuations Group did not physically inspect the Partnership's properties. The Valuations Group has relied upon the accuracy and completeness of the financial, appraisal, and other information which was provided to it by the General Partner and other third parties. The Valuations Group has not made an effort to independently verify the accuracy and completeness of any such information. In connection with its opinion, The Valuations Group assumes that there will be no material change in property operations or the properties' appraised values prior to the closing of the repurchase offer transaction. The Valuations Group has not been requested to, nor has it specifically expressed or implied an opinion as to the i) alternatives to the repurchase offer; ii) partnership's capacity to enter into the proposed transaction; iii) income tax considerations to any party involved with the transaction; nor the iv) effect the proposed transaction may have, if any, on limited partners electing not to tender their Interests. Based upon, and subject to the foregoing, and other matters which we deem to be relevant, it is our opinion that as of the date hereof the offer of $402 per Interest is fair from a financial point of view. Respectfully Submitted, /S/Bryson S. Randolph) THE VALUATIONS GROUP, INC. BY: Bryson S. Randolph, Chairman EX-2 3 October 24, 1996 RE: Decade Companies Income Properties -- A Limited Partnership Dear Investor: Enclosed with this letter is an offer by the Partnership to purchase your Limited Partnership Interests ("Interests") for $402 in cash per Interest. The enclosed documents consist of an Offer to Purchase, which you should read carefully, and a Letter of Acceptance. The General Partners believe that there are both Limited Partners who desire to sell their Interests immediately for cash in order to obtain liquidity and other Limited Partners who desire to retain their Interests in order to benefit from any future profit that may be realized from continued operation and eventual sale of the Partnership's three apartment properties. The Offer is being made to accommodate the competing interests of both groups of Limited Partners. Limited Partners who tender their shares pursuant to the Offer are in effect exchanging the certainty and liquidity of a current sale for the potentially higher return of continued ownership of their Interests, but the continued ownership of Interests also entails the risk of loss of all or a portion of the investment of the remaining Limited Partners. In order to accept the Offer you must complete the enclosed Letter of Acceptance and return it on or before November 20, 1996 (unless the Offer is extended, in which case we will notify you in writing). The Letter of Acceptance must be signed by the person or persons in whose name the Interests are carried on the Partnership's records in exactly the same manner in which such name or names appear. For your convenience we have attached a label to page one of each Letter of Acceptance that indicates the name or names of the Limited Partner(s), the address of record, and the number of Interests owned. The Partnership intends to pay for Interests, which are tendered and accepted by the Partnership, on or before December 13, 1996 in the name or names that appear on the label and will be mailed to the address shown on the label, unless different instructions are given per the Letter of Acceptance. Please carefully review the enclosed Offer to Purchase which contains important information. Cash distributions have been suspended for the third quarter of 1996 to set aside cash reserves to pay for the repurchase of Interests. The amount and frequency of future distributions will be affected by several factors, including cash flow from Partnership properties, cash reserves of the Partnership, number of Interests tendered and purchased pursuant to this Offer, and any financing required to fund this Offer. Very truly yours, Michael Sweet Partnership Manager MS/mt Enclosures -----END PRIVACY-ENHANCED MESSAGE-----