EX-99.(C)(2) 18 a76341toex99-c2.txt EXHIBIT (C)(2) EXHIBIT (C)(2) [LOGO/LETTERHEAD] October 8, 2001 ARV Chandler Villas, LP c/o ARV Assisted Living, Inc. 245 Fischer Avenue, Suite D-1 Costa Mesa, CA 92626 Attention: Mr. Abdo Khoury Re: Chandler Villas 101 South Yucca Street Chandler, Arizona 85224 SLVS File No. 01-10-82 Mr. Khoury: In accordance with your request, we have conducted the required investigation, gathered the necessary data and made certain analyses that have enabled us to form an opinion of the market value of the above captioned senior housing property. This full narrative appraisal report has been prepared to be in compliance with the requirements of the Uniform Standards of Professional Appraisal Practice. This is a complete, self contained narrative appraisal report. The value stated herein is based on our understanding of the site and improvement descriptions as represented to us by the client and/or the client's representatives and professional consultants as well as other available sources. It is your responsibility to read this report and inform the appraiser of any errors of omissions you are aware of prior to utilizing it. MARKET VALUE AS IS @ 8/31/01 Based on an inspection of the property and the investigation and analysis undertaken, we have formed the opinion, subject to the assumptions and limiting conditions set forth in this report, that as of August 31, 2001, the market value of the fee simple total going concern interest of the subject as is, is FIVE MILLION SEVEN HUNDRED TWENTY FIVE THOUSAND DOLLARS ($5,725,000) Mr. Abdo Khoury October 8, 2001 Page 2 The appraisal report that follows sets forth the identification of the property and limiting conditions, pertinent facts about the areas and the subject property, comparable data, result of our investigation and analyses and the reasoning leading to the conclusions set forth. Please feel free to call me at (415) 788-4295 should you have any questions. Respectfully submitted, SENIOR LIVING VALUATION SERVICES, INC. Michael G. Boehm, MAI, CRE President CHANDLER VILLAS DISCOUNTED CASH FLOW VALUATION
Projected Net Discount Factor -- Period Income 14.0%(2) Discounted Value ------------------------------------------------------------------------------------------------------- MARKET VALUE AS IS @ 8/31/01 1 -- (10/01 -- 9/02) $ 694,483 0.8772 $ 609,196 2 -- (10/02 -- 9/03) $ 712,316 0.7695 $ 548,104 3 -- (10/03 -- 9/04) $ 733,686 0.6750 $ 495,217 4 -- (10/04 -- 9/05) $ 755,697 0.5921 $ 477,433 5 -- (10/05 -- 9/06) $ 778,367 0.5194 $ 404,260 6 -- (10/06 -- 9/07) $ 801,718/.125 Capitalized Value @ 10/06 $ 6,221,335(1) 0.5194 $3,231,167 ---------- Total Discounted Value @ 8/31/01 $5,735,377 ========== Called $5,725,000 ========== Per Unit $ 34,909
NOTES: (1) Capitalized value of reversion less 3% sales transaction charge. (2) 12.0% overall capitalization rate plus 3% cash flow growth rate less 100 basis points = 14.0% discount rate. CHANDLER VILLAS PRO FORMA INCOME & EXPENSE
Period 1 Period 2 Period 3 (10/01-9/02) (10/02-9/03) (10/03-9/04) ----------- ----------- ----------- Average Net Occupancy 94.0% 94.0% 94.0% Revenues- 129 1BR ACLF Units @ $1,342/Mo. (avg.) $ 2,108,577 $ 2,171,835 $ 2,236,990 35 2BR ACLF Units @ $1,701/Mo. (avg.) 725,136 746,890 769,297 35 AL Surcharges @ $593/Mo. (avg.) 249,060 256,532 264,228 ----------- ----------- ----------- Gross Potential Rent Income $ 3,082,774 $ 3,175,257 $ 3,270,514 Plus: Double Occupancy Fees $ 51,120 $ 52,654 $ 54,233 Plus: Other Income $ 30,828 $ 31,753 $ 32,705 ----------- ----------- ------------ Gross Potential Income $ 3,164,721 $ 3,259,663 $ 3,357,453 Less: Vacancy & Collection Losses $ (186,816) $ (195,580) $ (201,447) ----------- ----------- ----------- Effective Gross Income $ 2,977,905 $ 3,064,083 $ 3,156,006 Expenses- % EGI Real Estate Taxes - $ 64,740 $ 66,682 $ 66,683 Insurance 2.0% 59,558 61,345 63,185 Management 5.0% 148,895 153,204 157,800 Administration 10.0% 297,791 306,724 315,926 Activities 2.0% 59,558 61,345 63,185 Marketing 3.0% 89,337 92,017 94,778 Plant Operations 12.5% 372,238 383,405 394,907 Housekeeping 3.0% 89,337 92,017 94,778 Dietary $12.50/PRD 703,355 724,456 746,189 Assisted Living $25.00/PRD 300,213 309,219 318,495 Replacement Reserves $600/Unit 98,400 101,352 104,393 ----------- ----------- ----------- Total Expenses $ 2,283,422 $ 2,351,767 $ 2,422,320 (76.7)% (76.8)% (76.8)% Projected Net Income Before Debt Service $ 694,483 $ 712,316 $ 733,686 =========== =========== ===========
Period 4 Period 5 Period 6 (10/04-9/05) (10/05-9/06) (10/06-9/07) ------------ ----------- ----------- Average Net Occupancy 94.0% 94.0% 94.0% Revenues- 129 1BR ACLF Units @ $1,342/Mo. (avg.) $ 2,304,099 $ 2,373,222 $ 2,444,419 35 2BR ACLF Units @ $1,701/Mo. (avg.) 792,376 816,147 840,632 35 AL Surcharges @ $593/Mo. (avg.) 272,155 280,319 288,729 ------------ ----------- ----------- Gross Potential Rent Income $ 3,368,630 $ 3,469,689 $ 3,573,779 Plus: Double Occupancy Fees $ 55,860 $ 57,536 $ 59,262 Plus: Other Income $ 33,686 $ 34,697 $ 35,738 ------------ ----------- ----------- Gross Potential Income $ 3,458,176 $ 3,561,922 $ 3,668,779 Less: Vacancy & Collection Losses $ (207,491) $ (213,715) $ (220,127) ----------- ----------- ----------- Effective Gross Income $ 3,250,686 $ 3,348,206 $ 3,448,653 Expenses- % EGI Real Estate Taxes - $ 70,743 $ 72,865 $ 75,051 Insurance 2.0% 65,081 67,033 69,044 Management 5.0% 162,534 167,410 172,433 Administration 10.0% 325,404 335,166 345,221 Activities 2.0% 65,081 67,033 69,044 Marketing 3.0% 97,621 100,550 103,566 Plant Operations 12.5% 406,755 418,957 431,526 Housekeeping 3.0% 97,621 100,550 103,566 Dietary $12.50/PRD 768,575 791,632 815,381 Assisted Living $25.00/PRD 328,050 337,892 348,029 Replacement Reserves $600/Unit 107,524 110,750 114,073 ----------- ----------- ----------- Total Expenses $ 2,494,989 $ 2,569,839 $ 2,646,934 (76.8)% (76.8)% (76.8)% Projected Net Income Before Debt Service $ 755,697 $ 778,367 $ 801,718 =========== =========== ===========