EX-99.(C)(6) 8 d07250a2exv99wxcyx6y.txt APPRAISAL OF PLANTATION CREEK APARTMENTS PLANTATION CREEK 6925 ROSWELL ROAD ATLANTA, GEORGIA MARKET VALUE - FEE SIMPLE ESTATE AS OF MAY 22, 2003 PREPARED FOR: APARTMENT INVESTMENT AND MANAGEMENT COMPANY (AIMCO) C/O LINER YANKELEVITZ SUNSHINE & REGENSTREIF LLP & LIEFF CABRASER HEIMANN & BERNSTEIN ON BEHALF OF NUANES, ET. AL. [AMERICAN APPRAISAL ASSOCIATES(R) LOGO] [AMERICAN APPRAISAL ASSOCIATES(R) LOGO] [AMERICAN APPRAISAL ASSOCIATES(R) LETTERHEAD] JUNE 27, 2003 Apartment Investment and Management Company ("AIMCO") c/o Mr. Steven A. Velkei, Esq. Liner Yankelevitz Sunshine & Regenstreif LLP 1100 Glendon Avenue, 14th Floor Los Angeles, California 90024-3503 Nuanes, et al.( "Plaintiffs ") c/o Ms. Joy Kruse Lieff Cabraser Heimann & Bernstein Embarcadero Center West 275 Battery Street, 30th Floor San Francisco, California 94111 RE: PLANTATION CREEK 6925 ROSWELL ROAD ATLANTA, FULTON COUNTY, GEORGIA In accordance with your authorization, we have completed the appraisal of the abovereferenced property. This complete appraisal is intended to report our analysis and conclusions in a summary format. The subject property consists of an apartment project having 484 units with a total of 550,360 square feet of rentable area. The improvements were built in 1976. The improvements are situated on 34.96 acres. Overall, the improvements are in good condition. As of the date of this appraisal, the subject property is 98% occupied. It is our understanding the appraisal will be used by the clients to assist the San Mateo Superior Court in the settlement of litigation between the above mentioned clients. The appraisal is intended to conform to the Uniform Standards of Professional Appraisal Practice ("USPAP") as promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. The appraisal is presented in a summary report, and the Departure Provision of USPAP has not been invoked in this appraisal. It is entirely inappropriate to use this value conclusion or the report for any purpose other than the one stated. AMERICAN APPRAISAL ASSOCIATES, INC. LETTER OF TRANSMITTAL PAGE 2 PLANTATION CREEK, ATLANTA, GEORGIA The opinions expressed in this appraisal cover letter can only be completely understood by reading the narrative report, addenda, and other data, which is attached. The appraisal is subject to the attached general assumptions and limiting conditions and general service conditions. As a result of our investigation, it is our opinion that the fee simple market value of the subject, effective May 22, 2003 is: ($22,300,000) Respectfully submitted, AMERICAN APPRAISAL ASSOCIATES, INC. -s- Michael Bates June 27, 2003 Michael Bates, MAI #053272 Assistant Manager, Real Estate Group State of Georgia, Certified General Real Property Appraiser #CG00685 Report By: Steven M. Zenkovich, ASA State of Georgia, Certified General Real Property Appraiser #CG004796 AMERICAN APPRAISAL ASSOCIATES, INC. TABLE OF CONTENTS PAGE 3 PLANTATION CREEK, ATLANTA, GEORGIA TABLE OF CONTENTS Cover Letter of Transmittal Table of Contents APPRAISAL DATA Executive Summary............................................................... 4 Introduction.................................................................... 9 Area Analysis................................................................... 11 Market Analysis................................................................. 14 Site Analysis................................................................... 16 Improvement Analysis............................................................ 16 Highest and Best Use............................................................ 17 VALUATION Valuation Procedure............................................................. 18 Sales Comparison Approach....................................................... 20 Income Capitalization Approach.................................................. 26 Reconciliation and Conclusion................................................... 37
ADDENDA Exhibit A - Photographs of Subject Property Exhibit B - Summary of Rent Comparables and Photograph of Comparables Exhibit C - Assumptions and Limiting Conditions Exhibit D - Certificate of Appraiser Exhibit E - Qualifications General Service Conditions AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 4 PLANTATION CREEK, ATLANTA, GEORGIA EXECUTIVE SUMMARY PART ONE - PROPERTY DESCRIPTION PROPERTY NAME: Plantation Creek LOCATION: 6925 Roswell Road Atlanta, Georgia INTENDED USE OF ASSIGNMENT: Court Settlement PURPOSE OF APPRAISAL: "As Is" Market Value of the Fee Simple Estate INTEREST APPRAISED: Fee simple estate DATE OF VALUE: May 22, 2003 DATE OF REPORT: June 27, 2003 PHYSICAL DESCRIPTION - SITE & IMPROVEMENTS: SITE: Size: 34.96 acres, or 1,522,858 square feet Assessor Parcel No.: 17-0073-LL-041-1; 17-0073-LL-042-9 Floodplain: Community Panel No. 135160 0153E (June 22, 1998) Flood Zone X, an area outside the floodplain. Zoning: A (Medium Density Apartment District) BUILDING: No. of Units: 484 Units Total NRA: 550,360 Square Feet Average Unit Size: 1,137 Square Feet Apartment Density: 13.8 units per acre Year Built: 1976 UNIT MIX AND MARKET RENT: GROSS RENTAL INCOME PROJECTION
MARKET RENT SQUARE ------------------- MONTHLY ANNUAL UNIT TYPE FEET PER UNIT PER SF INCOME INCOME -------------- ------ -------- ------ -------- ----------- 1Br/1Ba-1A10 810 $ 616 $ 0.76 $ 76,384 $ 916,608 2Br/1Ba-2A10 1,080 $ 700 $ 0.65 $ 56,000 $ 672,000 2Br/2Ba-2A2 1,100 $ 714 $ 0.65 $ 49,980 $ 599,760 2Br/2.5Ba-2A25 1,380 $ 852 $ 0.62 $ 20,448 $ 245,376 2Br/2Ba-2B2 1,300 $ 754 $ 0.58 $ 96,512 $ 1,158,144 3Br/2Ba-3A2 1,500 $ 839 $ 0.56 $ 48,662 $ 583,944 ------ -------- ----------- Total $347,986 $ 4,175,832
OCCUPANCY: 98% ECONOMIC LIFE: 45 Years EFFECTIVE AGE: 20 Years AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 5 PLANTATION CREEK, ATLANTA, GEORGIA REMAINING ECONOMIC LIFE: 25 Years SUBJECT PHOTOGRAPHS AND LOCATION MAP: SUBJECT PHOTOGRAPHS [EXTERIOR - TYPICAL APARTMENT BUILDING PICTURE] [LEASING OFFICE PICTURE] AREA MAP [MAP] AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 6 PLANTATION CREEK, ATLANTA, GEORGIA NEIGHBORHOOD MAP [MAP] HIGHEST AND BEST USE: As Vacant: Hold for future multi-family development As Improved: Continuation as its current use METHOD OF VALUATION: In this instance, the Sales Comparison and Income Approaches to value were utilized. AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 7 PLANTATION CREEK, ATLANTA, GEORGIA PART TWO - ECONOMIC INDICATORS INCOME CAPITALIZATION APPROACH
DIRECT CAPITALIZATION Amount $/Unit --------------------- ------------ -------------- Potential Rental Income $4,175,832 $8,628 Effective Gross Income $3,923,374 $8,106 Operating Expenses $1,811,761 $3,743 46.2% of EGI Net Operating Income: $1,990,613 $4,113 Capitalization Rate 9.00% DIRECT CAPITALIZATION VALUE $21,800,000 * $45,041 / Unit DISCOUNTED CASH FLOW ANALYSIS: Holding Period 10 years 2002 Economic Vacancy 30% Stabilized Vacancy & Collection Loss: 13% Lease-up / Stabilization Period N/A Terminal Capitalization Rate 9.50% Discount Rate 11.00% Selling Costs 2.00% Growth Rates: Income 3.00% Expenses: 3.00% DISCOUNTED CASH FLOW VALUE $22,200,000 * $45,868 / UNIT RECONCILED INCOME CAPITALIZATION VALUE $22,000,000 $45,455 / UNIT
SALES COMPARISON APPROACH PRICE PER UNIT: Range of Sales $/Unit (Unadjusted) $45,313 to $52,311 Range of Sales $/Unit (Adjusted) $44,464 to $49,844 VALUE INDICATION - PRICE PER UNIT $22,700,000 * $46,901 / UNIT EGIM ANALYSIS Range of EGIMs from Improved Sales 5.59 to 6.44 Selected EGIM for Subject 6.10 Subject's Projected EGI $3,923,374 EGIM ANALYSIS CONCLUSION $23,600,000 * $48,760 / UNIT NOI PER UNIT ANALYSIS CONCLUSION $21,500,000 * $44,421 / UNIT RECONCILED SALES COMPARISON VALUE $22,500,000 $46,488 / UNIT
---------------------------- * Value indications are after adjustments for concessions, deferred maintenance, excess land and lease-up costs, if any. AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 8 PLANTATION CREEK, ATLANTA, GEORGIA PART THREE - SUMMARY OF VALUE CONCLUSIONS SALES COMPARISON APPROACH: Price Per Unit $22,700,000 NOI Per Unit $21,500,000 EGIM Multiplier $23,600,000 INDICATED VALUE BY SALES COMPARISON $22,500,000 $46,488 / UNIT INCOME APPROACH: Direct Capitalization Method: $21,800,000 Discounted Cash Flow Method: $22,200,000 INDICATED VALUE BY THE INCOME APPROACH $22,000,000 $45,455 / UNIT RECONCILED OVERALL VALUE CONCLUSION: $22,300,000 $46,074 / UNIT
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 9 PLANTATION CREEK, ATLANTA, GEORGIA INTRODUCTION IDENTIFICATION OF THE SUBJECT The subject property is located at 6925 Roswell Road, Atlanta, Fulton County, Georgia. Atlanta identifies it as 17-0073-LL-041-1; 17-0073-LL-042-9. SCOPE OF THE ASSIGNMENT The property, neighborhood, and comparables were inspected by Steven M. Zenkovich, ASA on May 22, 2003. Michael Bates, MAI has not made a personal inspection of the subject property. Steven M. Zenkovich, ASA performed the research, valuation analysis and wrote the report. Michael Bates, MAI reviewed the report and concurs with the value. Both, Michael Bates, MAI and Steven M. Zenkovich, ASA have extensive experience in appraising similar properties and meet the USPAP competency provision. The scope of this investigation comprises the inspection of the property and the collection, verification, and analysis of general and specific data pertinent to the subject property. We have researched current improved sales and leases of similar properties, analyzing them as to their comparability, and adjusting them accordingly. We completed the Sales Comparison and Income Capitalization Approaches to value. From these approaches to value, a concluded overall value was made. DATE OF VALUE AND REPORT This appraisal was made to express the opinion of value as of May 22, 2003. The date of the report is June 27, 2003. PURPOSE AND USE OF APPRAISAL The purpose of the appraisal is to estimate the market value of the fee simple interest in the subject property. It is understood that the appraisal is intended to assist the clients in litigation settlement proceedings. The appraisal was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. PROPERTY RIGHTS APPRAISED We have appraised the Fee Simple Estate in the subject property (as applied in the Sales & Income Approaches), subject to the existing short-term leases. A Fee Simple Estate is AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 10 PLANTATION CREEK, ATLANTA, GEORGIA defined in The Dictionary of Real Estate Appraisal, 3rd ed. (Chicago: Appraisal Institute, 1993), as: "Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat." MARKETING/EXPOSURE PERIOD MARKETING PERIOD: 6 to 12 months EXPOSURE PERIOD: 6 to 12 months HISTORY OF THE PROPERTY Ownership in the subject property is currently vested in Century Properties Growth Find XXII. To the best of our knowledge, no transfers of ownership or offers to purchase the subject are known to have occurred during the past three years. AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 11 PLANTATION CREEK, ATLANTA, GEORGIA AREA / NEIGHBORHOOD ANALYSIS NEIGHBORHOOD ANALYSIS A neighborhood is a group of complementary land uses. The function of the neighborhood analysis is to describe the immediate surrounding environs. The subject is located in the city of Atlanta, Georgia. Overall, the neighborhood is characterized as a suburban setting with the predominant land use being residential. The subject's neighborhood is generally defined by the following boundaries. NEIGHBORHOOD BOUNDARIES East - Georgia Highway 400 West - Roswell Road South - Abernathy Road North - Dalrymple Road MAJOR EMPLOYERS Major employers in the subject's area include Home Depot, Delta Air Lines, and United Parcel Service, which are the largest employers in Atlanta. Delta Air Lines continues to reduce their work force due to the downturn in the air transportation sector. The unemployment rate in Atlanta is up, but is still much lower than nationally. The overall economic outlook for the area is considered very favorable. DEMOGRAPHICS We have reviewed demographic data within the neighborhood. The following table summarizes the key data points. AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 12 PLANTATION CREEK, ATLANTA, GEORGIA NEIGHBORHOOD DEMOGRAPHICS
AREA -------------------------------------------- CATEGORY 1-Mi. RADIUS 3-Mi. RADIUS 5-Mi. RADIUS MSA --------------------------- ------------ ------------ ------------ ---------- POPULATION TRENDS Current Population 11,752 75,371 184,145 4,326,075 5-Year Population 12,656 82,660 198,191 4,877,672 % Change CY-5Y 7.7% 9.7% 7.6% 12.8% Annual Change CY-5Y 1.5% 1.9% 1.5% 2.6% HOUSEHOLDS Current Households 5,374 34,445 79,857 1,580,438 5-Year Projected Households 5,815 38,272 86,828 1,773,314 % Change CY - 5Y 8.2% 11.1% 8.7% 12.2% Annual Change CY-5Y 1.6% 2.2% 1.7% 2.4% INCOME TRENDS Median Household Income $66,324 $68,715 $ 76,846 $ 61,400 Per Capita Income $37,315 $43,848 $ 46,779 $ 25,922 Average Household Income $80,938 $94,890 $108,163 $ 70,955
Source: Demographics Now The subject neighborhood's population is expected to show increases below that of the region. The immediate market offers superior income levels as compared to the broader market. The following table illustrates the housing statistics in the subject's immediate area, as well as the MSA region. HOUSING TRENDS
Area -------------------------------------------- CATEGORY 1-Mi. RADIUS 3-Mi. RADIUS 5-Mi. RADIUS MSA --------------------------- ------------ ------------ ------------ ---------- HOUSING TRENDS % of Households Renting 49.41% 47.12% 38.21% 30.54% 5-Year Projected % Renting 51.08% 49.08% 39.53% 29.71% % of Households Owning 35.28% 43.71% 53.53% 61.85% 5-Year Projected % Owning 34.51% 42.41% 52.68% 63.29%
Source: Demographics Now AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 13 PLANTATION CREEK, ATLANTA, GEORGIA SURROUNDING IMPROVEMENTS The following uses surround the subject property: North - Multifamily housing South - Multifamily housing East - Multifamily housing West - Roswell Road and multifamily housing CONCLUSIONS The subject is well located within the city of Atlanta. The neighborhood is characterized as being mostly suburban in nature and is currently in the stable stage of development. The economic outlook for the neighborhood is judged to be very favorable with a good economic base. AMERICAN APPRAISAL ASSOCIATES, INC. MARKET ANALYSIS PAGE 14 PLANTATION CREEK, ATLANTA, GEORGIA MARKET ANALYSIS The subject property is located in the city of Atlanta in Fulton County. The overall pace of development in the subject's market is more or less decreasing. Demand for new apartment development in the local market has decreased significantly. There are no known projects under construction at this time. The following table illustrates historical vacancy rates for the subject's market. HISTORICAL VACANCY RATE
PERIOD REGION SUBMARKET ------------- ------ --------- 1998 Year-End 6.9% 6.8% 1999 Year-End 6.5% 6.3% 2000 Year-End 4.8% 5.1% 2001 Year-End 9.0% 7.9% 2002 Year-End 10.1% 9.2% 2003 1Q03 11.3% 9.9%
Source: Reis Subtrend Futures, 1st Quarter 2003 Occupancy trends in the subject's market are decreasing. Historically speaking, the subject's submarket has outperformed the overall market. Rent concessions have become prevalent over the past 1-2 years. Competing projects are typically offering two months of free rent prorated over a 12-month term. Lease agreements at the subject property typically reflect reduced rent in lieu of free rent concessions. Market rents in the subject's market have been following a decreasing trend. The following table illustrates historical rental rates for the subject's market. HISTORICAL AVERAGE RENT
PERIOD REGION % CHANGE SUBMARKET % CHANGE ------------- ------ -------- --------- -------- 1998 Year-End N/A - $874 - 1999 Year-End N/A N/A $902 3.2% 2000 Year-End N/A N/A $939 4.1% 2001 Year-End N/A N/A $947 0.9% 2002 Year-End N/A N/A $958 1.2% 2003 1Q03 N/A N/A $958 0.0%
Source: Reis Subtrend Futures, 1st Quarter 2003 The following table illustrates a summary of the subject's competitive set. AMERICAN APPRAISAL ASSOCIATES, INC. MARKET ANALYSIS PAGE 15 PLANTATION CREEK, ATLANTA, GEORGIA COMPETITIVE PROPERTIES
NO. PROPERTY NAME UNITS OCPY. YEAR BUILT PROXIMITY TO SUBJECT ------- ----------------------------- ----- ----- ---------- --------------------------- R-1 The Magnolia at Sandy Springs 268 93% 1980 1-mile north of subject R-2 Greystone Apartments 150 78% 1965 Directly across the street R-3 Morgan Falls 972 85% 1986, 1991 3-miles north of the subject R-4 The Cliffs of Dunwoody 419 77% 1969 2-miles north of subject R-5 Stonecourt of Sandy Springs 147 92% 1973 Directly across the street Subject Plantation Creek 484 98% 1976
The above table reflects average asking rents, and does not reflect rent concessions. Average asking rents outpaced the inflation rate in 1999 and 2000. Growth rates slowed significantly as the market contracted. At present, rental rates remain static, and concessions are routinely offered. AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 16 PLANTATION CREEK, ATLANTA, GEORGIA PROPERTY DESCRIPTION
SITE ANALYSIS Site Area 34.96 acres, or 1,522,858 square feet Shape Irregular Topography Moderate slope Utilities All necessary utilities are available to the site. Soil Conditions Stable Easements Affecting Site None other than typical utility easements Overall Site Appeal Average Flood Zone: Community Panel 135160 0153E, dated June 22, 1998 Flood Zone Zone X Zoning A, the subject improvements represent a legal conforming use of the site.
REAL ESTATE TAXES
ASSESSED VALUE - 2002 ---------------------------------------------- TAX RATE / PROPERTY PARCEL NUMBER LAND BUILDING TOTAL MILL RATE TAXES --------------- ---------- ---------- ---------- --------- -------- 17-0073-LL-041- 1; 17-0073-LL- 042-9 $1,336,200 $8,401,120 $9,737,320 $0.03630 $353,426
IMPROVEMENT ANALYSIS Year Built 1976 Number of Units 484 Net Rentable Area 550,360 Square Feet Construction: Foundation Reinforced concrete slab Frame Heavy or light wood Exterior Walls Wood or vinyl siding Roof Composition shingle over a wood truss structure Project Amenities Amenities at the subject include a swimming pool, tennis court, car wash, barbeque equipment, laundry room, picnic area, and parking area. Unit Amenities Individual unit amenities include a balcony, cable TV connection, alarm system, and washer dryer connection. Appliances available in each unit include a refrigerator,
AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 17 PLANTATION CREEK, ATLANTA, GEORGIA stove, dishwasher, water heater, garbage disposal, and oven.
Unit Mix:
UNIT AREA UNIT TYPE NUMBER OF UNITS (SQ. FT.) -------------- --------------- --------- 1Br/1Ba-1A10 124 810 2Br/1Ba-2A10 80 1,080 2Br/2Ba-2A2 70 1,100 2Br/2.5Ba-2A25 24 1,380 2Br/2Ba-2B2 128 1,300 3Br/2Ba-3A2 58 1,500
Overall Condition Good Effective Age 20 years Economic Life 45 years Remaining Economic Life 25 years Deferred Maintenance None HIGHEST AND BEST USE ANALYSIS In accordance with the definition of highest and best use, an analysis of the site relating to its legal uses, physical possibilities, and financial feasibility is appropriate. The highest and best use as vacant is to hold for future multi-family development. The subject improvements were constructed in 1976 and consist of a 484-unit multifamily project. The highest and best use as improved is for continued multifamily use. Overall, the highest and best use of the subject property is the continued use of the existing apartment project. AMERICAN APPRAISAL ASSOCIATES, INC. VALUATION PROCEDURE PAGE 18 PLANTATION CREEK, ATLANTA, GEORGIA THE VALUATION PROCEDURE There are three traditional approaches, which can be employed in establishing the market value of the subject property. These approaches and their applicability to the valuation of the subject are summarized as follows: THE COST APPROACH The application of the Cost Approach is based on the principle of substitution. This principle may be stated as follows: no one is justified in paying more for a property than that amount by which he or she can obtain, by purchase of a site and construction of a building, without undue delay, a property of equal desirability and utility. In the case of a new building, no deficiencies in the building should exist. In the case of income-producing real estate, the cost of construction plays a minor and relatively insignificant role in determining market value. The Cost Approach is typically only a reliable indicator of value for: (a) new properties; (b) special use properties; and (c) where the cost of reproducing the improvements is easily and accurately quantified and there is no economic obsolescence. In all instances, the issue of an appropriate entrepreneurial profit - the reward for undertaking the risk of construction, remains a highly subjective factor especially in a market lacking significant speculative development. THE SALES COMPARISON APPROACH The Sales Comparison Approach is an estimate of value based upon a process of comparing recent sales of similar properties in the surrounding or competing areas to the subject property. Inherent in this approach is the principle of substitution. The application of this approach consists of comparing the subject property with similar properties of the same general type, which have been sold recently or currently are available for sale in competing areas. This comparative process involves judgment as to the similarity of the subject property and the comparable sale with respect to many value factors such as location, contract rent levels, quality of construction, reputation and prestige, age and condition, among others. The estimated value through this approach represents the probable price at which a willing seller would sell the subject property to a willing and knowledgeable buyer as of the date of value. AMERICAN APPRAISAL ASSOCIATES, INC. VALUATION PROCEDURE PAGE 19 PLANTATION CREEK, ATLANTA, GEORGIA THE INCOME CAPITALIZATION APPROACH The theory of the Income Capitalization Approach is based on the premise that present value is the value of the cash flow and reversionary value the property will produce over a reasonable holding (ownership) period. The Discounted Cash Flow Analysis will convert equity cash flows (including cash flows and equity reversion) into a present value utilizing an internal rate of return (or discount rate). The Internal Rate of Return (IRR) will be derived from a comparison of alternate investments, a comparative analysis of IRR's used by recent buyers of similar properties, and a review of published industry surveys. The Direct Capitalization Analysis converts one year of income into an overall value using overall capitalization rates from similar sales. The overall rates take into consideration buyers assumptions of the market over the long-term. The results of the Income Capitalization Analysis are usually the primary value indicator for income producing properties. Investors expect a reasonable rate of return on their equity investment based on the ownership risks involved; this approach closely parallels the investment decision process. RECONCILIATION In this instance, we have completed the Sales Comparison and Income Capitalization Approaches to value. As an income producing property, the income approach is a primary approach to value. The Sales Comparison Approach is also considered reliable as investors are buying similar buildings in the market. Our research indicates that market participants are generally not buying, selling, investing, or lending with reliance placed on the methodology of the Cost Approach to establish the value. Therefore, we have decided that the Cost Approach is not a reliable indicator of value for the subject, and this approach has not been utilized. AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 20 PLANTATION CREEK, ATLANTA, GEORGIA SALES COMPARISON APPROACH Use of market or comparable sales requires the collection and analysis of comparable sales data. Similar properties recently sold are compared to the subject and adjusted based on any perceived differences. This method is based on the premise that the costs of acquiring a substitute property would tend to establish a value for the subject property. The premise suggests that if a substitute is unavailable in the market, the reliability of the approach may be subordinate to the other approaches. The reliance on substitute properties produces shortcomings in the validity of this approach. Geographic and demographic characteristics from each submarket restrict which sales may be selected. Recent sales with a similar physical characteristics, income levels, and location are usually limited. The sales we have identified, however, do establish general valuation parameters as well as provide support to our conclusion derived through the income approach method. The standard unit of comparison among similar properties is the sales price per unit and price per square foot of net rentable area. To accurately adjust prices to satisfy the requirements of the sales comparison approach, numerous calculations and highly subjective judgments would be required including consideration of numerous income and expense details for which information may be unreliable or unknown. The sales price per unit and square foot are considered relevant to the investment decision, but primarily as a parameter against which value estimates derived through the income approach can be judged and compared. In examining the comparable sales, we have applied a subjective adjustment analysis, which includes specific adjustments derived from our experience and consulting with the market participants. SALES COMPARISON ANALYSIS Detailed on the following pages are sales transactions involving properties located in the subject's competitive investment market. Photographs of the sale transactions are located in the Addenda. Following the summary of sales is an adjustment grid that is used to arrive at a value. AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 21 PLANTATION CREEK, ATLANTA, GEORGIA SUMMARY OF COMPARABLE SALES -IMPROVED
COMPARABLE COMPARABLE DESCRIPTION SUBJECT I - 1 I - 2 ----------- ------- ---------- ---------- Property Name Plantation Creek Cumberland Pines Concord Crossing LOCATION: Address 6925 Roswell Road 3339 Seven Pines Court 2935 Old Concord Road SE City, State Atlanta, Georgia Atlanta, GA Smyrna, GA County Fulton Cobb Cobb PHYSICAL CHARACTERISTICS: Net Rentable Area (SF) 550,360 185,246 207,460 Year Built 1976 1973 1975 Number of Units 484 216 190 Unit Mix: Type Total Type Total Type Total 1Br/1Ba - 1A10 124 1Br/1Ba 90 1Br/1Ba 30 2Br/1Ba - 2A10 80 2Br/2Ba 118 2Br/2Ba 127 2Br/2Ba -2A2 70 3Br/2Ba 8 3Br/2Ba 33 2Br/2.5Ba-2A25 24 2Br/2Ba - 2B2 128 3Br/2Ba - 3A2 58 Average Unit Size (SF) 1,137 858 1,092 Land Area (Acre) 34.9600 13.6000 15.7800 Density (Units/Acre) 13.8 15.9 12.0 Parking Ratio (Spaces/Unit) 2.00 2.50 N/A Parking Type (Gr., Cov., etc.) Open Open Open CONDITION: Good Good Good APPEAL: Good Fair Fair AMENITIES: Pool/Spa Yes/No Yes/Yes Yes/Yes Gym Room No Yes Yes Laundry Room Yes Yes No Secured Parking No No No Sport Courts No Yes Yes Washer/Dryer Connection Yes Yes Yes Other Other OCCUPANCY: 98% 90% 91% TRANSACTION DATA: Sale Date March, 2003 July, 2002 Sale Price ($) $10,800,000 $9,200,000 Grantor Earl Phillips (LLC) Garden Woodsong Grantee Vinings Vista (LLC) Woodsong Apartments Sale Documentation Book 13703, Page 4724 Book 13561, Page 2533 Verification AAA Files, Comps Inc. AAA Files, Comps Inc. Telephone Number ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF ---------------------------------------------------------------------------------------------------------------------------- Potential Gross Income $1,864,080 $8,630 $10.06 $1,601,328 $8,428 $7.72 Vacancy/Credit Loss $ 186,408 $ 863 $ 1.01 $ 160,133 $ 843 $0.77 ----------------------------------------------------------- Effective Gross Income $1,677,672 $7,767 $ 9.06 $1,441,195 $7,585 $6.95 Operating Expenses $ 777,600 $3,600 $ 4.20 $ 627,000 $3,300 $3.02 ----------------------------------------------------------- Net Operating Income $ 900,072 $4,167 $ 4.86 $ 814,195 $4,285 $3.92 ----------------------------------------------------------- NOTES: None None PRICE PER UNIT $50,000 $48,421 PRICE PER SQUARE FOOT $ 58.30 $ 44.35 EXPENSE RATIO 46.3% 43.5% EGIM 6.44 6.38 OVERALL CAP RATE 8.33% 8.85% Cap Rate based on Pro Forma or Actual Income? PRO FORMA PRO FORMA COMPARABLE COMPARABLE COMPARABLE DESCRIPTION I - 3 I - 4 I - 5 ----------- ---------- ---------- ---------- Property Name Copper Mill Madison at Forest Glen Silver Oaks LOCATION: Address 6860 Bebout Drive 4236 Austell Road 3640 Peachtree Corners Circle City, State Norcross, GA Austell, GA Norcross, GA County Gwinnett Cobb Gwinnett PHYSICAL CHARACTERISTICS: Net Rentable Area (SF) 263,028 290,700 115,400 Year Built 1970 1986 1975 Number of Units 320 264 108 Unit Mix: Type Total Type Total Type Total 1Br/1Ba 166 1Br/1Ba 60 1Br/1Ba 48 2Br/2Ba 128 2Br/2Ba 204 2Br/2Ba 60 3Br/2Ba 26 3Br/2Ba 3Br/2Ba Average Unit Size (SF) 822 1,101 1,069 Land Area (Acre) 20.7600 26.4000 12.5500 Density (Units/Acre) 15.4 10.0 8.6 Parking Ratio (Spaces/Unit) N/A 2.00 1.96 Parking Type (Gr., Cov., etc.) Open Open Open CONDITION: Good Good Good APPEAL: Fair Good Good AMENITIES: Pool/Spa Yes/Yes Yes/Yes Yes/Yes Gym Room Yes Yes Yes Laundry Room Yes Yes Yes Secured Parking Yes Yes Yes Sport Courts Yes Yes Yes Washer/Dryer Connection Yes Yes Yes Other Other OCCUPANCY: 90% 93% 92% TRANSACTION DATA: Sale Date October, 2001 February, 2002 August, 2001 Sale Price ($) $14,500,000 $13,810,000 $5,250,000 Grantor Atlanta Ridgecrest (LP) Lincoln Walden Atlanta Pineland Woods (LP) Grantee Dunwoody Forest Assoc. Forest Glen Apartments DR Sanctuary (LLC) Sale Documentation Book 24867, Page 0047 Book 13501, Page 2716 Book 24316, Page 0045 Verification AAA Files, Comps Inc. AAA Files, Comps Inc. AAA Files, Comps Inc. Telephone Number ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF Total $ $/Unit $/SF -------------------------------------------------------------------------------------------------------------------------- Potential Gross Income $2,715,660 $8,486 $10.32 $2,513,592 $9,521 $8.65 N/A Vacancy/Credit Loss $ 271,566 $ 849 $ 1.03 $ 175,951 $ 666 $0.61 N/A ----------------------------------------------------------------------------------------- Effective Gross Income $2,444,094 $7,638 $ 9.29 $2,337,641 $8,855 $8.04 $938,880 $8,693 $8.14 Operating Expenses $1,056,562 $3,302 $ 4.02 $1,003,200 $3,800 $3.45 $368,093 $3,408 $3.19 ----------------------------------------------------------------------------------------- Net Operating Income $1,387,532 $4,336 $ 5.28 $1,334,441 $5,055 $4.59 $570,787 $5,285 $4.95 ----------------------------------------------------------------------------------------- NOTES: None None None PRICE PER UNIT $45,313 $52,311 $48,611 PRICE PER SQUARE FOOT $ 55.13 $ 47.51 $ 45.49 EXPENSE RATIO 43.2% 42.9% 39.2% EGIM 5.93 5.91 5.59 OVERALL CAP RATE 9.57% 9.66% 10.87% Cap Rate based on Pro Forma or Actual Income? PRO FORMA PRO FORMA ACTUAL
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 22 PLANTATION CREEK, ATLANTA, GEORGIA IMPROVED SALES MAP [MAP] IMPROVED SALES ANALYSIS The improved sales indicate a sales price range from $45,313 to $52,311 per unit. Adjustments have been made to the sales to reflect differences in location, age/condition and quality/appeal. Generally speaking, larger properties typically have a lower price per unit when compared to smaller properties, all else being equal. Similarly, those projects with a higher average unit size will generally have a higher price per unit. After appropriate adjustments are made, the improved sales demonstrate an adjusted range for the subject from $44,464 to $49,844 per unit with a mean or average adjusted price of $47,282 per unit. The median adjusted price is $47,500 per unit. Based on the following analysis, we have concluded to a value of $47,500 per unit, which results in an "as is" value of $22,700,000 (rounded after necessary adjustment, if any). AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 23 PLANTATION CREEK, ATLANTA, GEORGIA SALES ADJUSTMENT GRID
COMPARABLE COMPARABLE COMPARABLE COMPARABLE COMPARABLE DESCRIPTION SUBJECT I - 1 I - 2 I - 3 I - 4 I - 5 -------------- ------------ ----------------- --------------------- ------------------- ------------------- ------------------- Property Name Plantation Cumberland Concord Crossing Copper Mill Madison at Silver Oaks Creek Pines Forest Glen Address 6925 Roswell 3339 Seven 2935 Old Concord 6860 Bebout 4236 Austell 3640 Peachtree Road Pines Court Road SE Drive Road Corners Circle City Atlanta, Atlanta, GA Smyrna, GA Norcross, GA Austell, GA Norcross, GA Georgia Sale Date March, 2003 July, 2002 October, 2001 February, 2002 August, 2001 Sale Price ($) $10,800,000 $9,200,000 $14,500,000 $13,810,000 $5,250,000 Net Rentable Area 550,360 185,246 207,460 263,028 290,700 115,400 (SF) Number of Units 484 216 190 320 264 108 Price Per Unit $ 50,000 $ 48,421 $ 45,313 $ 52,311 $ 48,611 Year Built 1976 1973 1975 1970 1986 1975 Land Area (Acre) 34.9600 13.6000 15.7800 20.7600 26.4000 12.5500 VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION ADJ. DESCRIPTION ADJ. DESCRIPTION ADJ. DESCRIPTION ADJ. DESCRIPTION ADJ. Property Rights Fee Simple Fee Simple 0% Fee Simple 0% Fee Simple 0% Fee Simple 0% Fee Simple 0% Conveyed Estate Estate Estate Estate Estate Estate Financing Cash To 0% Cash To Seller 0% Cash To Seller 0% Cash To Seller 0% Cash To Seller 0% Seller Conditions of Sale Arm's Length 0% Arm's Length 0% Arm's Length 0% Arm's Length 0% Arm's Length 0% Date of Sale 03-2003 0% 07-2002 0% 10-2001 0% 02-2002 0% 08-2001 0% (Time) VALUE AFTER $50,000 $48,421 $45,313 $52,311 $48,611 TRANS. ADJUST. ($/UNIT) Location Superior -5% Comparable 0% Comparable 0% Comparable 0% Comparable 0% Number of Units 484 216 -5% 190 0% 320 0% 264 -5% 108 -5% Quality / Appeal Good Comparable 0% Comparable 0% Comparable 0% Comparable 0% Comparable 0% Age / Condition 1976 1973 / Good 0% 1975 / Good 0% 1970 / Good 5% 1986 / Good -10% 1975 / Good 0% Occupancy at Sale 98% 90% 0% 91% 0% 90% 0% 93% 0% 92% 0% Amenities Good Comparable 0% Comparable 0% Comparable 0% Comparable 0% Comparable 0% Average Unit Size 1,137 858 5% 1,092 0% 822 5% 1,101 0% 1,069 0% (SF) PHYSICAL -5% 0% 10% -15% -5% ADJUSTMENT FINAL ADJUSTED $47,500 $48,421 $49,844 $44,464 $46,181 VALUE ($/UNIT)
SUMMARY VALUE RANGE (PER UNIT) $44,464 TO $49,844 MEAN (PER UNIT) $47,282 MEDIAN (PER UNIT) $47,500 VALUE CONCLUSION (PER UNIT) $47,500
VALUE OF IMPROVEMENT & MAIN SITE $ 22,990,000 PV OF CONCESSIONS -$ 327,000 VALUE INDICATED BY SALES COMPARISON APPROACH $ 22,663,000 ROUNDED $ 22,700,000
NET OPERATING INCOME (NOI) ANALYSIS We have also conducted a net operating income (NOI) comparison analysis. The NOI effectively takes into account the various physical, location, and operating aspects of the sale. When the subject's NOI is compared to the sale NOI, a percent adjustment can be arrived at. The following table illustrates this analysis. AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 24 PLANTATION CREEK, ATLANTA, GEORGIA NOI PER UNIT COMPARISON
COMPARABLE NO. OF SALE PRICE NOI/ SUBJECT NOI ADJUSTMENT INDICATED NO. UNITS PRICE/UNIT OAR NOI/UNIT SUBJ. NOI/UNIT FACTOR VALUE/UNIT ---------- ------ ------------ ------ ---------- -------------- ---------- ---------- I-1 216 $10,800,000 8.33% $ 900,072 $1,990,613 0.987 $ 49,350 $ 50,000 $ 4,167 $ 4,113 I-2 190 $ 9,200,000 8.85% $ 814,195 $1,990,613 0.960 $ 46,473 $ 48,421 $ 4,285 $ 4,113 I-3 320 $14,500,000 9.57% $1,387,532 $1,990,613 0.949 $ 42,980 $ 45,313 $ 4,336 $ 4,113 I-4 264 $13,810,000 9.66% $1,334,441 $1,990,613 0.814 $ 42,563 $ 52,311 $ 5,055 $ 4,113 I-5 108 $ 5,250,000 10.87% $ 570,787 $1,990,613 0.778 $ 37,829 $ 48,611 $ 5,285 $ 4,113
PRICE/UNIT ---------- Low High Average Median $37,829 $49,350 $ 43,839 $42,980
VALUE ANALYSIS BASED ON COMPARABLES NOI PER UNIT ------------------------------------------------ Estimated Price Per Unit $ 45,000 Number of Units 484 Value $21,780,000 PV of Concessions -$ 327,000 ----------- Value Based on NOI Analysis $21,453,000 Rounded $21,500,000
The adjusted sales indicate a range of value between $37,829 and $49,350 per unit, with an average of $43,839 per unit. Based on the subject's competitive position within the improved sales, a value of $45,000 per unit is estimated. This indicates an "as is" market value of $21,500,000 (rounded after necessary adjustment, if any) for the NOI Per Unit Analysis. EFFECTIVE GROSS INCOME MULTIPLIER (EGIM) ANALYSIS The effective gross income multiplier (EGIM) is derived by dividing the sales price by the total effective gross income. The following table illustrates the EGIMs for the comparable improved sales. AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 25 PLANTATION CREEK, ATLANTA, GEORGIA EFFECTIVE GROSS INCOME MULTIPLIER COMPARISON
COMPARABLE NO. OF SALE PRICE EFFECTIVE OPERATING SUBJECT NO. UNITS PRICE/UNIT GROSS INCOME EXPENSE OER PROJECTED OER EGIM ---------- ------ ---------- ------------ --------- --- ------------- ---- I-1 216 $10,800,000 $1,677,672 $ 777,600 46.35% 6.44 $ 50,000 I-2 190 $ 9,200,000 $1,441,195 $ 627,000 43.51% 6.38 $ 48,421 I-3 320 $14,500,000 $2,444,094 $1,056,562 43.23% 5.93 46.18% $ 45,313 I-4 264 $13,810,000 $2,337,641 $1,003,200 42.92% 5.91 $ 52,311 I-5 108 $ 5,250,000 $ 938,880 $ 368,093 39.21% 5.59 $ 48,611
EGIM ---- LOW HIGH AVERAGE MEDIAN ---- ---- ------- ------ 5.59 6.44 6.05 5.93
VALUE ANALYSIS BASED ON EGIM'S OF COMPARABLE SALES -------------------------------------------------- Estimate EGIM 6.10 Subject EGI $ 3,923,374 Value $23,932,580 PV of Concessions -$ 327,000 ------------ Value Based on EGIM Analysis $23,605,580 Rounded $23,600,000 Value Per Unit $ 48,760
There is an inverse relationship, which generally holds among EGIMs and operating expenses. Properties, which have higher expense ratios, typically sell for relatively less and therefore produce a lower EGIM. As will be illustrated in the Income Capitalization Approach of this report, the subject's operating expense ratio (OER) is estimated at 46.18% before reserves. The comparable sales indicate a range of expense ratios from 39.21% to 46.35%, while their EGIMs range from 5.59 to 6.44. Overall, we conclude to an EGIM of 6.10, which results in an "as is" value estimate in the EGIM Analysis of $23,600,000. SALES COMPARISON CONCLUSION The three valuation methods in the Sales Comparison Approach are shown below. The overall value via the Sales Comparison Approach is estimated at $22,500,000. Price Per Unit $22,700,000 NOI Per Unit $21,500,000 EGIM Analysis $23,600,000 Sales Comparison Conclusion $22,500,000
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 26 PLANTATION CREEK, ATLANTA, GEORGIA INCOME CAPITALIZATION APPROACH The income capitalization approach is based on the premise that value is created by the expectation of future benefits. We estimated the present value of those benefits to derive an indication of the amount that a prudent, informed purchaser-investor would pay for the right to receive them as of the date of value. This approach requires an estimate of the NOI of a property. The estimated NOI is then converted to a value indication by use of either the direct capitalization or the discounted cash flow analysis (yield capitalization). Direct capitalization uses a single year's stabilized NOI as a basis for a value indication by dividing the income by a capitalization rate. The rate chosen accounts for a recapture of the investment by the investor and should reflect all factors that influence the value of the property, such as tenant quality, property condition, neighborhood change, market trends, interest rates, and inflation. The rate may be extracted from local market transactions or, when transaction evidence is lacking, obtained from trade sources. A discounted cash flow analysis focuses on the operating cash flows expected from the property and the proceeds of a hypothetical sale at the end of a holding period (the reversion). The cash flows and reversion are discounted to their present values using a market-derived discount rate and are added together to obtain a value indication. Because benefits to be received in the future are worth less than the same benefits received in the present, this method weights income in the early years more heavily than the income and the sale proceeds to be received later. The strength of the discounted cash flow method is its ability to recognize variations in projected net income, such as those caused by inflation, stepped leases, neighborhood change, or tenant turnover. Its weakness is that it requires many judgments regarding the actions of likely buyers and sellers of the property in the future. In some situations, both methods yield a similar result. The discounted cash flow method is typically more appropriate for the analysis of investment properties with multiple or long-term leases, particularly leases with cancellation clauses or renewal options. It is especially useful for multi-tenant properties in volatile markets. The direct capitalization AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 27 PLANTATION CREEK, ATLANTA, GEORGIA method is normally more appropriate for properties with relatively stable operating histories and expectations. A pro forma analysis for the first year of the investment is made to estimate a reasonable potential net operating income for the Subject Property. Such an analysis entails an estimate of the gross income the property should command in the marketplace. From this total gross income must be deducted an allowance for vacancy/collection loss and operating expenses as dictated by general market conditions and the overall character of the subject's tenancy and leased income to arrive at a projected estimate of net operating income. Conversion of the net operating income to an indication of value is accomplished by the process of capitalization, as derived primarily from market data. MARKET RENT ANALYSIS In order to determine a market rental rate for the subject, a survey of competing apartment communities was performed. This survey was displayed previously in the market analysis section of the report. Detailed information pertaining to each of the comparable rental communities, along with photographs, is presented in the Addenda of this report. The following charts display the subject's current asking and actual rent rates as well as a comparison with the previous referenced comparable rental properties. SUMMARY OF ACTUAL AVERAGE RENTS
AVERAGE UNIT AREA ----------------- UNIT TYPE (SQ. FT.) PER UNIT PER SF %OCCUPIED ------------- --------- -------- ------ ---------- 1Br/1Ba-1A10 810 $616 $0.76 95.0% 2Br/1Ba-2A10 1080 $700 $0.65 100.0% 2Br/2Ba-2A2 1100 $714 $0.65 99.0% 2Br/2.5Ba-2A25 1380 $852 $0.62 100.0% 2Br/2Ba-2B2 1300 $754 $0.58 99.0% 3Br/2Ba-3A2 1500 $839 $0.56 98.0%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 28 PLANTATION CREEK, ATLANTA, GEORGIA RENT ANALYSIS
COMPARABLE RENTS --------------------------------------------------------------- R-1 R-2 R-3 R-4 R-5 --------------------------------------------------------------- The Magnolia at The Cliffs Stonecourt Sandy Greystone Morgan of of Sandy Springs Apartments Falls Dunwoody Springs --------------------------------------------------------------- COMPARISON TO SUBJECT SUBJECT SUBJECT --------------------------------------------------------------- SUBJECT UNIT ACTUAL ASKING Slightly Slightly DESCRIPTION TYPE RENT RENT Similar Inferior Superior Inferior Inferior ------------------------ ---------------- ------- ------- ------------- ---------- ---------- --------- ---------- Monthly Rent 1Br/1Ba - 1A10 $ 616 $ 699 $ 780 $ 744 $ 738 $ 703 $ 751 Unit Area (SF) 810 810 854 900 747 771 750 Monthly Rent Per Sq. Ft. $ 0.76 $ 0.86 $ 0.91 $ 0.83 $ 0.99 $ 0.91 $ 1.00 Monthly Rent 2Br/1Ba - 2A10 $ 700 $ 799 $ 975 $ 861 $ 780 $ 745 $ 846 Unit Area (SF) 1,080 1,080 1,142 1,000 906 950 1,050 Monthly Rent Per Sq. Ft. $ 0.65 $ 0.74 $ 0.85 $ 0.86 $ 0.86 $ 0.78 $ 0.81 Monthly Rent 2Br/2Ba -2A2 $ 714 $ 829 $ 975 $ 861 $ 868 $ 825 $ 903 Unit Area (SF) 1,100 1,100 1,142 1,000 1,097 1,105 1,200 Monthly Rent Per Sq. Ft. $ 0.65 $ 0.75 $ 0.85 $ 0.86 $ 0.79 $ 0.75 $ 0.75 Monthly Rent 2Br/2.5Ba-2A25 $ 852 $ 999 $ 950 $ 861 $ 933 $ 840 $ 956 Unit Area (SF) 1,380 1,380 1,350 1,000 1,250 1,155 1,300 Monthly Rent Per Sq. Ft. $ 0.62 $ 0.72 $ 0.70 $ 0.86 $ 0.75 $ 0.73 $ 0.74 Monthly Rent 2Br/2Ba - 2B2 $ 754 $ 849 $ 980 $ 861 $ 860 $ 825 $ 956 Unit Area (SF) 1,300 1,300 1,350 1,000 1,190 1,105 1,300 Monthly Rent Per Sq. Ft. $ 0.58 $ 0.65 $ 0.73 $ 0.86 $ 0.72 $ 0.75 $ 0.74 Monthly Rent 3Br/2Ba - 3A2 $ 839 $ 1,029 $ 1,040 $ 999 $1,048 $ 975 $1,218 Unit Area (SF) 1,500 1,500 1,530 1,200 1,300 1,305 1,600 Monthly Rent Per Sq. Ft. $ 0.56 $ 0.69 $ 0.68 $ 0.83 $ 0.81 $ 0.75 $ 0.76 DESCRIPTION MIN MAX MEDIAN AVERAGE ------------------------ ------ ------ ------ ------- Monthly Rent $ 703 $ 780 $ 744 $ 743 Unit Area (SF) 747 900 771 804 Monthly Rent Per Sq. Ft. $ 0.83 $ 1.00 $ 0.91 $ 0.93 Monthly Rent $ 745 $ 975 $ 846 $ 841 Unit Area (SF) 906 1,142 1,000 1,010 Monthly Rent Per Sq. Ft. $ 0.78 $ 0.86 $ 0.85 $ 0.83 Monthly Rent $ 825 $ 975 $ 868 $ 886 Unit Area (SF) 1,000 1,200 1,105 1,109 Monthly Rent Per Sq. Ft. $ 0.75 $ 0.86 $ 0.79 $ 0.80 Monthly Rent $ 840 $ 956 $ 933 $ 908 Unit Area (SF) 1,000 1,350 1,250 1,211 Monthly Rent Per Sq. Ft. $ 0.70 $ 0.86 $ 0.74 $ 0.75 Monthly Rent $ 825 $ 980 $ 861 $ 896 Unit Area (SF) 1,000 1,350 1,190 1,189 Monthly Rent Per Sq. Ft. $ 0.72 $ 0.86 $ 0.74 $ 0.76 Monthly Rent $ 975 $1,218 $1,040 $1,056 Unit Area (SF) 1,200 1,600 1,305 1,387 Monthly Rent Per Sq. Ft. $ 0.68 $ 0.83 $ 0.76 $ 0.77
CONCLUDED MARKET RENTAL RATES AND TERMS Based on this analysis above, the subject's concluded market rental rates and gross rental income is calculated as follows: GROSS RENTAL INCOME PROJECTION
Market Rent Unit Area ------------------- Monthly Annual Unit Type Number of Units (Sq. Ft.) Per Unit Per SF Income Income -------------- --------------- --------- -------- ------ -------- ---------- 1Br/1Ba-1A10 124 810 $616 $0.76 $ 76,384 $ 916,608 2Br/1Ba-2A10 80 1,080 $700 $0.65 $ 56,000 $ 672,000 2Br/2Ba-2A2 70 1,100 $714 $0.65 $ 49,980 $ 599,760 2Br/2.5Ba-2A25 24 1,380 $852 $0.62 $ 20,448 $ 245,376 2Br/2Ba-2B2 128 1,300 $754 $0.58 $ 96,512 $1,158,144 3Br/2Ba-3A2 58 1,500 $839 $0.56 $ 48,662 $ 583,944 Total $347,986 $4,175,832
PRO FORMA ANALYSIS For purposes of this appraisal, we were provided with income and expense data for the subject property. A summary of this data is presented on the following page. AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 29 PLANTATION CREEK, ATLANTA, GEORGIA SUMMARY OF HISTORICAL INCOME & EXPENSES
FISCAL YEAR 2000 FISCAL YEAR 2001 FISCAL YEAR 2002 ----------------------- ---------------------- ----------------------- ACTUAL ACTUAL ACTUAL ----------------------- ---------------------- ----------------------- DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT ----------- ---------- -------- ---------- -------- ---------- ---------- Revenues Rental Income $4,647,424 $9,602 $4,819,248 $9,957 $4,395,964 $9,083 Vacancy $ 339,212 $ 701 $ 501,295 $1,036 $ 724,795 $1,498 Credit Loss/Concessions $ 206,229 $ 426 $ 548,383 $1,133 $ 574,550 $1,187 Subtotal $ 545,441 $1,127 $1,049,678 $2,169 $1,299,345 $2,685 Laundry Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Other Misc. Revenue $ 190,385 $ 393 $ 287,330 $ 594 $ 363,885 $ 752 Subtotal Other Income $ 190,385 $ 393 $ 287,330 $ 594 $ 363,885 $ 752 Effective Gross Income $4,292,368 $8,869 $4,056,900 $8,382 $3,460,504 $7,150 Operating Expenses Taxes $ 400,231 $ 827 $ 392,022 $ 810 $ 363,573 $ 751 Insurance $ 54,477 $ 113 $ 87,614 $ 181 $ 94,128 $ 194 Utilities $ 296,931 $ 613 $ 300,564 $ 621 $ 365,512 $ 755 Repair & Maintenance $ 61,038 $ 126 $ 61,468 $ 127 $ 214,206 $ 443 Cleaning $ 94,184 $ 195 $ 117,903 $ 244 $ 218,210 $ 451 Landscaping $ 41,739 $ 86 $ 64,362 $ 133 $ 97,031 $ 200 Security $ 25,936 $ 54 $ 37,811 $ 78 $ 33,408 $ 69 Marketing & Leasing $ 69,691 $ 144 $ 70,572 $ 146 $ 111,711 $ 231 General Administrative $ 407,840 $ 843 $ 417,324 $ 862 $ 431,597 $ 892 Management $ 221,893 $ 458 $ 211,739 $ 437 $ 191,108 $ 395 Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Total Operating Expenses $1,673,960 $3,459 $1,761,379 $3,639 $2,120,484 $4,381 Reserves $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Net Income $2,618,408 $5,410 $2,295,521 $4,743 $1,340,020 $2,769 FISCAL YEAR 2003 ANNUALIZED 2003 ---------------------- ----------------------- MANAGEMENT BUDGET PROJECTION AAA PROJECTION ---------------------- ----------------------- --------------------------------- DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT % ----------- ---------- -------- ---------- -------- ---------- -------- ------ Revenues Rental Income $4,195,000 $8,667 $3,982,676 $8,229 $4,175,832 $8,628 100.0% Vacancy $ 634,000 $1,310 $ 552,092 $1,141 $ 375,825 $ 776 9.0% Credit Loss/Concessions $ 244,800 $ 506 $ 339,268 $ 701 $ 167,033 $ 345 4.0% Subtotal $ 878,800 $1,816 $ 891,360 $1,842 $ 542,858 $1,122 13.0% Laundry Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 0.0% Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 0.0% Other Misc. Revenue $ 261,600 $ 540 $ 357,432 $ 738 $ 290,400 $ 600 7.0% Subtotal Other Income $ 261,600 $ 540 $ 357,432 $ 738 $ 290,400 $ 600 7.0% Effective Gross Income $3,577,800 $7,392 $3,448,748 $7,126 $3,923,374 $8,106 100.0% Operating Expenses Taxes $ 381,488 $ 788 $ 372,692 $ 770 $ 381,392 $ 788 9.7% Insurance $ 99,274 $ 205 $ 97,480 $ 201 $ 99,220 $ 205 2.5% Utilities $ 362,000 $ 748 $ 439,776 $ 909 $ 363,000 $ 750 9.3% Repair & Maintenance $ 138,000 $ 285 $ 88,252 $ 182 $ 84,700 $ 175 2.2% Cleaning $ 175,000 $ 362 $ 219,552 $ 454 $ 145,200 $ 300 3.7% Landscaping $ 189,500 $ 392 $ 81,972 $ 169 $ 82,280 $ 170 2.1% Security $ 0 $ 0 $ 16,080 $ 33 $ 24,200 $ 50 0.6% Marketing & Leasing $ 102,400 $ 212 $ 52,196 $ 108 $ 72,600 $ 150 1.9% General Administrative $ 354,504 $ 732 $ 409,056 $ 845 $ 363,000 $ 750 9.3% Management $ 202,780 $ 419 $ 149,956 $ 310 $ 196,169 $ 405 5.0% Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 0.0% Total Operating Expenses $2,004,946 $4,142 $1,927,012 $3,981 $1,811,761 $3,743 46.2% Reserves $ 0 $ 0 $ 0 $ 0 $ 121,000 $ 250 6.7% Net Income $1,572,854 $3,250 $1,521,736 $3,144 $1,990,613 $4,113 50.7%
REVENUES AND EXPENSES The subject's revenue and expense projections are displayed on the previous chart. Rental income is based on the market analysis previously discussed. Other income consists of forfeited deposits, laundry income, late rent payments, month to month fees, pet fees, vending machine revenue, etc. We forecasted the property's annual operating expenses after reviewing its historical performance at the subject property. We analyzed each item of expense and attempted to forecast amounts a typical informed investor would consider reasonable. VACANCY AND COLLECTION LOSS An investor is primarily interested in the annual revenue an income property is likely to produce over a specified period of time, rather than the income it could produce if it were always 100% occupied and all tenants were paying their rent in full and on time. An investor normally expects some income loss as tenants vacate, fail to pay rent, or pay their rent late. We have projected a stabilized vacancy and collection loss rate of 13% based on the subject's historical performance, as well as the anticipated future market conditions. AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 30 PLANTATION CREEK, ATLANTA, GEORGIA RESERVES FOR REPLACEMENT "Reserves for replacements" is a contingency account allocated to the expenses of the property to provide for replacement of short-lived items and for unforeseen necessary capital expenditures. We have utilized the Korpacz Real Estate Investor Survey of the national apartment market, which reports a range of replacement reserves between $150 and $400 per unit. For purposes of this analysis, we have included an allowance of $250 per unit for reserves for replacement. CAPITAL EXPENDITURES Capital expenditures represent expenses for immediate repair or replacement of items that have average to long lives. Based on our inspection of the property as well as discussions with property management personnel, there are no major items remaining in need of repair or replacement that would require an expense beyond our reserves for replacement. Therefore an allowance of $250 per unit should be satisfactory in our reserves for replacement to cover future capital expenditures. DISCOUNTED CASH FLOW ANALYSIS As the subject is a multi-tenant income property, the Discounted Cash Flow Method is considered appropriate. This method is especially meaningful in that it isolates the timing of the annual cash flows and discounts them, along with the expected equity reversion, to a present value. The present value of the cash flow is added to the present value of the reversion, resulting in a total property value. INVESTMENT CRITERIA Appropriate investment criteria will be derived for the subject based upon analysis of comparable sales and a survey of real estate investors. The following table summarizes the findings of Korpacz National Investor Survey for the most recent period. KORPACZ NATIONAL INVESTOR SURVEY 1ST QUARTER 2003 NATIONAL APARTMENT MARKET
CAPITALIZATION RATES ------------------------------------------------ GOING-IN TERMINAL ------------------- ------------------- LOW HIGH LOW HIGH ----- ------ ----- ------ RANGE 6.00% 10.00% 7.00% 10.00% AVERAGE 8.14% 8.47%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 31 PLANTATION CREEK, ATLANTA, GEORGIA SUMMARY OF OVERALL CAPITALIZATION RATES
COMP. NO. SALE DATE OCCUP. PRICE/UNIT OAR --------- --------- ------ ---------- --- I-1 Mar-03 90% $ 50,000 8.33% I-2 Jul-02 91% $ 48,421 8.85% I-3 Oct-01 90% $ 45,313 9.57% I-4 Feb-02 93% $ 52,311 9.66% I-5 Aug-01 92% $ 48,611 10.87% High 10.87% Low 8.33% Average 9.46%
Based on this information, we have concluded the subject's overall capitalization rate should be 9.00%. The terminal capitalization rate is applied to the net operating income estimated for the year following the end of the holding period. Based on the concluded overall capitalization rate, the age of the property and the surveyed information, we have concluded the subject's terminal capitalization rate to be 9.50%. Finally, the subject's discount rate or yield rate is estimated based on the previous investor survey and an examination of returns available on alternative investments in the market. Based on this analysis, the subject's discount rate is estimated to be 11.00%. HOLDING PERIOD The survey of investors indicates that most investors are completing either 10-year cash flows or extending the analysis to the end of the lease if it is more than 10-years. A 10-year period has been used in the analysis of the subject with the eleventh year stabilized NOI used to determine the reversion. SELLING COSTS Sales of similar size properties are typically accomplished with the aid of a broker and will also incur legal and other transaction related cost. Based on our survey of brokers and a review of institutional investor projections, an allowance of 2.00% of the sale amount is applied. DISCOUNTED CASH FLOW CONCLUSION Discounting the annual cash flows and the equity reversion at the selected rate of 11.00% indicates a value of $22,200,000. In this instance, the reversion figure contributes AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 32 PLANTATION CREEK, ATLANTA, GEORGIA approximately 41% of the total value. Investors surveyed for this assignment indicated they would prefer to have the cash flow contribute anywhere from 50% to 60%. Overall, the blend seems reasonable. The cash flow and pricing matrix are located on the following pages. AMERICAN APPRAISAL ASSOCIATES, INC. INCOME APPROACH PAGE 33 PLANTATION CREEK, ATLANTA, GEORGIA DISCOUNTED CASH FLOW ANALYSIS PLANTATION CREEK
YEAR APR-2004 APR-2005 APR-2006 APR-2007 APR-2008 APR-2009 FISCAL YEAR 1 2 3 4 5 6 ----------------------------------------------------------------------------------------------------------------------- REVENUE Base Rent $4,175,832 $4,175,832 $4,301,107 $4,430,140 $4,563,044 $4,699,936 Vacancy $ 375,825 $ 375,825 $ 387,100 $ 398,713 $ 410,674 $ 422,994 Credit Loss $ 167,033 $ 167,033 $ 172,044 $ 177,206 $ 182,522 $ 187,997 Concessions $ 250,550 $ 125,275 $ 0 $ 0 $ 0 $ 0 -------------------------------------------------------------------------------- Subtotal $ 793,408 $ 668,133 $ 559,144 $ 575,918 $ 593,196 $ 610,992 Laundry Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Other Misc. Revenue $ 290,400 $ 290,400 $ 299,112 $ 308,085 $ 317,328 $ 326,848 -------------------------------------------------------------------------------- Subtotal Other Income $ 290,400 $ 290,400 $ 299,112 $ 308,085 $ 317,328 $ 326,848 -------------------------------------------------------------------------------- EFFECTIVE GROSS INCOME $3,672,824 $3,798,099 $4,041,075 $4,162,307 $4,287,177 $4,415,792 OPERATING EXPENSES: Taxes $ 381,392 $ 392,834 $ 404,619 $ 416,757 $ 429,260 $ 442,138 Insurance $ 99,220 $ 102,197 $ 105,262 $ 108,420 $ 111,673 $ 115,023 Utilities $ 363,000 $ 373,890 $ 385,107 $ 396,660 $ 408,560 $ 420,816 Repair & Maintenance $ 84,700 $ 87,241 $ 89,858 $ 92,554 $ 95,331 $ 98,191 Cleaning $ 145,200 $ 149,556 $ 154,043 $ 158,664 $ 163,424 $ 168,327 Landscaping $ 82,280 $ 84,748 $ 87,291 $ 89,910 $ 92,607 $ 95,385 Security $ 24,200 $ 24,926 $ 25,674 $ 26,444 $ 27,237 $ 28,054 Marketing & Leasing $ 72,600 $ 74,778 $ 77,021 $ 79,332 $ 81,712 $ 84,163 General Administrative $ 363,000 $ 373,890 $ 385,107 $ 396,660 $ 408,560 $ 420,816 Management $ 183,641 $ 189,905 $ 202,054 $ 208,115 $ 214,359 $ 220,790 Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 -------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES $1,799,233 $1,853,965 $1,916,035 $1,973,516 $2,032,722 $2,093,704 Reserves $ 121,000 $ 124,630 $ 128,369 $ 132,220 $ 136,187 $ 140,272 -------------------------------------------------------------------------------- NET OPERATING INCOME $1,752,591 $1,819,504 $1,996,671 $2,056,571 $2,118,268 $2,181,816 ================================================================================ Operating Expense Ratio (% of EGI) 49.0% 48.8% 47.4% 47.4% 47.4% 47.4% Operating Expense Per Unit $ 3,717 $ 3,831 $ 3,959 $ 4,078 $ 4,200 $ 4,326 YEAR APR-2010 APR-2011 APR-2012 APR-2013 APR-2014 FISCAL YEAR 7 8 9 10 11 --------------------------------------------------------------------------------------------------------- REVENUE Base Rent $4,840,934 $4,986,162 $5,135,747 $5,289,819 $5,448,514 Vacancy $ 435,684 $ 448,755 $ 462,217 $ 476,084 $ 490,366 Credit Loss $ 193,637 $ 199,446 $ 205,430 $ 211,593 $ 217,941 Concessions $ 0 $ 0 $ 0 $ 0 $ 0 ------------------------------------------------------------------ Subtotal $ 629,321 $ 648,201 $ 667,647 $ 687,676 $ 708,307 Laundry Income $ 0 $ 0 $ 0 $ 0 $ 0 Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 Other Misc. Revenue $ 336,653 $ 346,753 $ 357,155 $ 367,870 $ 378,906 ------------------------------------------------------------------ Subtotal Other Income $ 336,653 $ 346,753 $ 357,155 $ 367,870 $ 378,906 ------------------------------------------------------------------ EFFECTIVE GROSS INCOME $4,548,266 $4,684,714 $4,825,255 $4,970,013 $5,119,113 OPERATING EXPENSES: Taxes $ 455,402 $ 469,064 $ 483,136 $ 497,630 $ 512,559 Insurance $ 118,474 $ 122,028 $ 125,689 $ 129,460 $ 133,343 Utilities $ 433,441 $ 446,444 $ 459,838 $ 473,633 $ 487,842 Repair & Maintenance $ 101,136 $ 104,170 $ 107,295 $ 110,514 $ 113,830 Cleaning $ 173,376 $ 178,578 $ 183,935 $ 189,453 $ 195,137 Landscaping $ 98,247 $ 101,194 $ 104,230 $ 107,357 $ 110,577 Security $ 28,896 $ 29,763 $ 30,656 $ 31,576 $ 32,523 Marketing & Leasing $ 86,688 $ 89,289 $ 91,968 $ 94,727 $ 97,568 General Administrative $ 433,441 $ 446,444 $ 459,838 $ 473,633 $ 487,842 Management $ 227,413 $ 234,236 $ 241,263 $ 248,501 $ 255,956 Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 ------------------------------------------------------------------ TOTAL OPERATING EXPENSES $2,156,515 $2,221,210 $2,287,846 $2,356,482 $2,427,176 Reserves $ 144,480 $ 148,815 $ 153,279 $ 157,878 $ 162,614 ------------------------------------------------------------------ NET OPERATING INCOME $2,247,271 $2,314,689 $2,384,129 $2,455,653 $2,529,323 ================================================================== Operating Expense Ratio (% of EGI) 47.4% 47.4% 47.4% 47.4% 47.4% Operating Expense Per Unit $ 4,456 $ 4,589 $ 4,727 $ 4,869 $ 5,015
Estimated Stabilized NOI $1,990,613 Sales Expense Rate 2.00% Months to Stabilized 1 Discount Rate 11.00% Stabilized Occupancy 91.0% Terminal Cap Rate 9.50%
Gross Residual Sale Price $26,624,452 Deferred Maintenance $ 0 Less: Sales Expense $ 532,489 Add: Excess Land $ 0 ----------- Net Residual Sale Price $26,091,962 Other Adjustments $ 0 ----------- PV of Reversion $ 9,189,184 Value Indicated By "DCF" $22,169,289 Add: NPV of NOI $12,980,105 Rounded $22,200,000 =========== PV Total $22,169,289
"DCF" VALUE SENSITIVITY TABLE
DISCOUNT RATE ------------------------------------------------------------------------------------------- TOTAL VALUE 10.50% 10.75% 11.00% 11.25% 11.50% --------------------------------------------------------------------------------------------------------------- 9.00% $23,444,751 $23,058,039 $22,679,800 $22,309,820 $21,947,893 9.25% $23,170,491 $22,789,907 $22,417,646 $22,053,498 $21,697,260 TERMINAL CAP RATE 9.50% $22,910,665 $22,535,887 $22,169,289 $21,810,667 $21,459,819 9.75% $22,664,164 $22,294,894 $21,933,669 $21,580,289 $21,234,554 10.00% $22,429,987 $22,065,950 $21,709,830 $21,361,429 $21,020,552
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME APPROACH PAGE 34 PLANTATION CREEK, ATLANTA, GEORGIA INCOME LOSS DURING LEASE-UP The subject is currently near or at stabilized condition. Therefore, there is no income loss during lease-up at the subject property. CONCESSIONS Due to softness in the market, concessions have been utilized at the subject property and within the market. Based on our discussions with the subject's property manager and those at competing properties, these concessions are expected to continue in the near term until the market returns to a stabilized level. Concessions have been included as a line item deduction within the discounted cash flow analysis. The present value of these concessions equates to $327,000 (rounded). This amount has been deducted from the Direct Capitalization analysis, as well as the Sales Comparison Approach value. DIRECT CAPITALIZATION METHOD After having projected the income and expenses for the property, the next step in the valuation process is to capitalize the net income into an estimate of value. The selected overall capitalization rate ("OAR") covers both return on and return of capital. It is the overall rate of return an investor expects. After considering the market transactions and the investor surveys, we previously conclude that an overall rate of 9.00% percent is applicable to the subject. The results of our direct capitalization analysis are as follows: AMERICAN APPRAISAL ASSOCIATES, INC. INCOME APPROACH PAGE 35 PLANTATION CREEK, ATLANTA, GEORGIA PLANTATION CREEK
TOTAL PER SQ.FT. PER UNIT %OF EGI ------------------------------------------------------------------------------------------------------------ REVENUE Base Rent $ 4,175,832 $ 7.59 $ 8,628 Less: Vacancy & Collection Loss 13.00% $ 542,858 $ 0.99 $ 1,122 Plus: Other Income Laundry Income $ 0 $ 0.00 $ 0 0.00% Garage Revenue $ 0 $ 0.00 $ 0 0.00% Other Misc. Revenue $ 290,400 $ 0.53 $ 600 7.40% ----------- ------------ ----------- --------- Subtotal Other Income $ 290,400 $ 0.53 $ 600 7.40% EFFECTIVE GROSS INCOME $ 3,923,374 $ 7.13 $ 8,106 OPERATING EXPENSES: Taxes $ 381,392 $ 0.69 $ 788 9.72% Insurance $ 99,220 $ 0.18 $ 205 2.53% Utilities $ 363,000 $ 0.66 $ 750 9.25% Repair & Maintenance $ 84,700 $ 0.15 $ 175 2.16% Cleaning $ 145,200 $ 0.26 $ 300 3.70% Landscaping $ 82,280 $ 0.15 $ 170 2.10% Security $ 24,200 $ 0.04 $ 50 0.62% Marketing & Leasing $ 72,600 $ 0.13 $ 150 1.85% General Administrative $ 363,000 $ 0.66 $ 750 9.25% Management 5.00% $ 196,169 $ 0.36 $ 405 5.00% Miscellaneous $ 0 $ 0.00 $ 0 0.00% TOTAL OPERATING EXPENSES $ 1,811,761 $ 3.29 $ 3,743 46.18% Reserves $ 121,000 $ 0.22 $ 250 3.08% ----------- ------------ ----------- --------- NET OPERATING INCOME $ 1,990,613 $ 3.62 $ 4,113 50.74% =========== ============ =========== ========= "GOING IN" CAPITALIZATION RATE 9.00% VALUE INDICATION $22,117,924 $ 40.19 $ 45,698 PV OF CONCESSIONS ($ 327,000) "AS IS" VALUE INDICATION (DIRECT CAPITALIZATION APPROACH) $21,790,924 ROUNDED $21,800,000 $ 39.61 $ 45,041
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME APPROACH PAGE 36 PLANTATION CREEK, ATLANTA, GEORGIA
DIRECT CAPITALIZATION VALUE SENSITIVITY TABLE -------------------------------------------------------------------------- CAP RATE VALUE ROUNDED $/UNIT $/SF -------------------------------------------------------------------------- 8.25% $23,801,644 $23,800,000 $49,174 $43.24 8.50% $23,091,978 $23,100,000 $47,727 $41.97 8.75% $22,422,865 $22,400,000 $46,281 $40.70 9.00% $21,790,924 $21,800,000 $45,041 $39.61 9.25% $21,193,142 $21,200,000 $43,802 $38.52 9.50% $20,626,823 $20,600,000 $42,562 $37.43 9.75% $20,089,545 $20,100,000 $41,529 $36.52
CONCLUSION BY THE DIRECT CAPITALIZATION METHOD Applying the capitalization rate to our estimated NOI results in an estimated value of $21,800,000. CORRELATION AND CONCLUSION BY THE INCOME APPROACH The two methods used to estimate the market value of the subject property by the income approach resulted in the following indications of value: Discounted Cash Flow Analysis $22,200,000 Direct Capitalization Method $21,800,000
Giving consideration to the indicated values provided by both techniques, we have concluded the estimated value by the income capitalization approach to be $22,000,000. AMERICAN APPRAISAL ASSOCIATES, INC. RECONCILIATION AND CONCLUSION PAGE 37 PLANTATION CREEK, ATLANTA, GEORGIA RECONCILIATION AND CONCLUSION This appraisal was made to express an opinion as of the Market Value of the fee simple estate in the property. AS IS MARKET VALUE OF THE FEE SIMPLE ESTATE Cost Approach Not Utilized Sales Comparison Approach $22,500,000 Income Approach $22,000,000 Reconciled Value $22,300,000
The Direct Capitalization Method is considered a reliable indicator of value. Income and expenses were estimated and projected based on historical operating statements and market oriented expenses. This method is primarily used by investors in their underwriting analysis. Furthermore, there was good support for an overall rate in the Direct Capitalization Method. The Sales Comparison Approach to value supported the value conclusion by the Income Approach and was given secondary consideration. Investment-grade, income-producing properties such as the subject are not typically traded based on cost. Therefore, the Cost Approach has not been considered in our valuation. FINAL VALUE - FEE SIMPLE ESTATE Based on the investigation and premise outlined, it is our opinion that as of May 22, 2003 the market value of the fee simple estate in the property is: $22,300,000 AMERICAN APPRAISAL ASSOCIATES, INC. ADDENDA PLANTATION CREEK, ATLANTA, GEORGIA ADDENDA AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A PLANTATION CREEK, ATLANTA, GEORGIA EXHIBIT A SUBJECT PHOTOGRAPHS AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A PLANTATION CREEK, ATLANTA, GEORGIA SUBJECT PHOTOGRAPHS [PICTURE] [PICTURE] EXTERIOR - TYPICAL APARTMENT BUILDING LEASING OFFICE [PICTURE] [PICTURE] EXTERIOR - TYPICAL APARTMENT BUILDING EXTERIOR - TYPICAL APARTMENT BUILDING [PICTURE] [PICTURE] INTERIOR - APARTMENT UNIT INTERIOR - APARTMENT UNIT AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B PLANTATION CREEK, ATLANTA, GEORGIA EXHIBIT B SUMMARY OF RENT COMPARABLES AND PHOTOGRAPH OF COMPARABLES AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B PLANTATION CREEK, ATLANTA, GEORGIA PHOTOGRAPHS OF COMPARABLE SALE PROPERTIES COMPARABLE I-1 COMPARABLE I-2 COMPARABLE I-3 CUMBERLAND PINES CONCORD CROSSING COPPER MILL 3339 Seven Pines Court 2935 Old Concord Road SE 6860 Bebout Drive Atlanta, GA Smyrna, GA Norcross, GA [PICTURE] [PICTURE] [PICTURE] COMPARABLE I-4 COMPARABLE I-5 MADISON AT FOREST GLEN SILVER OAKS 4236 Austell Road 3640 Peachtree Corners Circle Austell, GA Norcross, GA [PICTURE] [PICTURE] AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B PLANTATION CREEK, ATLANTA, GEORGIA SUMMARY OF COMPARABLE RENTAL PROPERTIES
COMPARABLE DESCRIPTION SUBJECT R - 1 ----------- ------- ---------- Property Name Plantation Creek The Magnolia at Sandy Springs Management Company AIMCO Capreit LOCATION: Address 6925 Roswell Road 7100 Roswell Road City, State Atlanta, Georgia Atlanta, GA County Fulton Fulton Proximity to Subject 1-mile north of subject PHYSICAL CHARACTERISTICS: Net Rentable Area (SF) 550,360 N/A Year Built 1976 1980 Effective Age 20 23 Building Structure Type Brick & wood siding walls; asphalt shingle roof Wood and stucco walls; asphalt shingle roof Parking Type (Gr., Cov., etc.) Garage, Open Covered Open Number of Units 484 268 Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo. 1 1Br/1Ba - 1A10 810 124 $616 1 1BD/1BH - Heather 854 $ 780 2 2Br/1Ba - 2A10 1,080 80 $700 2 2BD/2BH - Iris 1,142 $ 975 3 2Br/2Ba -2A2 1,100 70 $714 3 2BD/2BH - Iris 1,142 $ 975 4 2Br/2.5Ba-2A25 1,380 24 $852 4 2BD/2BH - Laurel 1,350 $ 950 5 2Br/2Ba - 2B2 1,300 128 $754 5 2BD/2BH - Laurel 1,350 $ 950 6 3Br/2Ba - 3A2 1,500 58 $839 5 2BD/2BH - Lily 1,350 $1,010 6 3BD/2BH-Magnolia 1,530 $1,040 Average Unit Size (SF) 1,137 Unit Breakdown: Efficiency 0% 2-Bedroom 39% Efficiency 0% 2-Bedroom 0% 1-Bedroom 61% 3-Bedroom 0% 1-Bedroom 0% 3-Bedroom 0% CONDITION: Good Good APPEAL: Fair Good AMENITIES: Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling X Balcony X W/D Connect. X Balcony X W/D Connect. Fireplace X Alarm System X Fireplace Alarm System X Cable TV Ready X Cable TV Ready Project Amenities X Swimming Pool X Swimming Pool Spa/Jacuzzi X Car Wash Spa/Jacuzzi X Car Wash Basketball Court X BBQ Equipment Basketball Court BBQ Equipment Volleyball Court Theater Room Volleyball Court Theater Room Sand Volley Ball Meeting Hall Sand Volley Ball Meeting Hall X Tennis Court Secured Parking X Tennis Court X Secured Parking Racquet Ball X Laundry Room Racquet Ball X Laundry Room Jogging Track Business Office Jogging Track X Business Office Gym Room X Picnic Area X Gym Room Picnic Area OCCUPANCY: 98% 93% LEASING DATA: Available Leasing Terms 6 to 15 Months 6 to 24 Months Concessions 1 - 1 1/2 Months Free Up to 1 Month Free Pet Deposit $300 - $500 $350 - $500 Utilities Paid by Tenant: X Electric X Natural Gas X Electric X Natural Gas X Water Trash X Water Trash Confirmation May 1, 2003; Joseph Beard (Property Manager) May 22, 2003; Carl Vitner, Service Manager Telephone Number (972)234-1231 770-393-9999 NOTES: COMPARISON TO SUBJECT: Similar COMPARABLE COMPARABLE DESCRIPTION R - 2 R - 3 ----------- ---------- ---------- Property Name Greystone Apartments Morgan Falls Management Company Equity Residential LBK Management LOCATION: Address 6940 Roswell Road 7600 Roswell Road City, State Atlanta, GA Atlanta, GA County Fulton Fulton Proximity to Subject Directly across the street 3-miles north of the subject PHYSICAL CHARACTERISTICS: Net Rentable Area (SF) N/A N/A Year Built 1965 1986, 1991 Effective Age 28 16 Building Structure Type Wood and brick walls; asphalt shingle roof Wood siding walls; asphalt shingle roof Parking Type (Gr., Cov., etc.) Open Open Number of Units 150 972 Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo. 1 1BD/1BH 900 $744 1 1BD/1BH - A 565 $ 668 2 2BD/1.5BH 1,000 $861 1 1BD/1BH - A-1 745 $ 738 3 2BD/1.5BH 1,000 $861 1 1BD/1BH - A-S 800 $ 773 4 2BD/1.5BH 1,000 $861 1 1BD/1BH -A-M 878 $ 773 5 2BD/1.5BH 1,000 $861 2 2BD/1BH - B 906 $ 780 6 3BD/1.5BH 1,200 $999 3 2BD/2BH - B-1 1,077 $ 848 3 2BD/2BH - B-2 1,116 $ 888 5 2BD/2BH - B-2M 1,190 $ 860 4 2BD/2BH - B-3 1,250 $ 933 6 2BD/2BH - B-2 1,300 $1,048 Average Unit Size (SF) Unit Breakdown: Efficiency 0% 2-Bedroom 0% Efficiency 0% 2-Bedroom 0% 1-Bedroom 0% 3-Bedroom 0% 1-Bedroom 0% 3-Bedroom 0% CONDITION: Good Very Good APPEAL: Fair Very Good AMENITIES: Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage X Vaulted Ceiling X Balcony X W/D Connect. X Balcony X W/D Connect. Fireplace X Alarm System X Fireplace Alarm System X Cable TV Ready X Cable TV Ready Project Amenities X Swimming Pool X Swimming Pool Spa/Jacuzzi Car Wash X Spa/Jacuzzi Car Wash Basketball Court BBQ Equipment Basketball Court X BBQ Equipment Volleyball Court Theater Room Volleyball Court Theater Room Sand Volley Ball Meeting Hall X Sand Volley Ball Meeting Hall Tennis Court Secured Parking X Tennis Court X Secured Parking Racquet Ball X Laundry Room X Racquet Ball X Laundry Room Jogging Track Business Office X Jogging Track X Business Office Gym Room X Picnic Area X Gym Room X Picnic Area OCCUPANCY: 78% 85% LEASING DATA: Available Leasing Terms 6 to 14 Months 6 to 12 Months Concessions Up to $200 per month discount $116 - $201 off per month Pet Deposit $200 $350 - $500 Utilities Paid by Tenant: X Electric Natural Gas X Electric X Natural Gas X Water Trash X Water Trash Confirmation May 22, 2003; Shawn Phillips, Leasing May 2, 2003; Amanda Westbrook, Leasing Consultant Telephone Number 770-396-1222 770-396-0222 NOTES: Older community with inferior appeal and Modern garden style apartment complex amenities COMPARISON TO SUBJECT: Inferior Superior COMPARABLE COMPARABLE DESCRIPTION R - 4 R - 5 ----------- ---------- ---------- Property Name The Cliffs of Dunwoody Stonecourt of Sandy Springs Management Company AMD Management GJMG Realty LOCATION: Address 7275 Roswell Road 6980 Roswell Road City, State Atlanta, GA Atlanta, GA County Fulton Fulton Proximity to Subject 2-miles north of subject Directly across the street PHYSICAL CHARACTERISTICS: Net Rentable Area (SF) N/A N/A Year Built 1969 1973 Effective Age 34 30 Building Structure Type Wood and brick walls; asphalt shingle roof Brick siding walls; asphalt and wood shingle roof Parking Type (Gr., Cov., etc.) Garage Open Number of Units 419 147 Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo. 1 1BD/1BH - A-1 612 $670 1 1BD/1BH-C'bridge 600 $ 713 1 1BD/1BH - A-2 950 $745 1 1BD/1.5BH-C'bury 900 $ 788 1 1BD/1BH - A-3 750 $695 2 1BD/1.5BH-C'bury 900 $ 788 2 2BD/1BH - B-1 950 $745 2 2BD/1BH-Oxford 1,200 $ 903 2 2BD/1BH - B-2 950 $745 3 2BD/1BH-Oxford 1,200 $ 903 3 2BD/2BH - B-3 1,105 $825 4 2BD/1BH-Oxford 1,200 $ 903 4 2BD/2BH - B-4 1,155 $840 5 2BD/1BH-Oxford 1,200 $ 903 5 2BD/2BH - B-5 1,105 $825 4 2BD/1.5BH-Hunt'n 1,400 $1,008 6 3BD/2BH - C-1 1,305 $975 5 2BD/1.5BH-Hunt'n 1,400 $1,008 6 3BD/2.5BH-Buck'm 1,600 $1,218 Average Unit Size (SF) Unit Breakdown: Efficiency 0% 2-Bedroom 0% Efficiency 0% 2-Bedroom 0% 1-Bedroom 0% 3-Bedroom 0% 1-Bedroom 0% 3-Bedroom 0% CONDITION: Good Good APPEAL: Fair Fair AMENITIES: Unit Amenities Attach. Garage X Vaulted Ceiling Attach. Garage Vaulted Ceiling Balcony X W/D Connect. X Balcony X W/D Connect. X Fireplace Alarm System Fireplace Alarm System X Cable TV Ready X Cable TV Ready Project Amenities X Swimming Pool X Swimming Pool Spa/Jacuzzi Car Wash Spa/Jacuzzi Car Wash Basketball Court X BBQ Equipment Basketball Court BBQ Equipment Volleyball Court Theater Room Volleyball Court Theater Room Sand Volley Ball Meeting Hall Sand Volley Ball Meeting Hall Tennis Court Secured Parking Tennis Court X Secured Parking Racquet Ball X Laundry Room Racquet Ball X Laundry Room Jogging Track X Business Office Jogging Track X Business Office X Gym Room X Picnic Area X Gym Room Picnic Area OCCUPANCY: 77% 92% LEASING DATA: Available Leasing Terms 6 to 12 Months 6 to 12 Months Concessions 2 months free 2 Months Free Pet Deposit $250 - $450 200 - $300 Utilities Paid by Tenant: X Electric X Natural Gas X Electric X Natural Gas X Water Trash X Water Trash Confirmation May 22, 2003; Holly Caine, Assistant May 22, 2003; April McPherson, Assistant Manager Manager Telephone Number 770-393-0550 770-393-3723 NOTES: Older facility located north of the Older complex with inferior amenities. subject COMPARISON TO SUBJECT: Slightly Inferior Slightly Inferior
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B PLANTATION CREEK, ATLANTA, GEORGIA PHOTOGRAPHS OF COMPARABLE RENT PROPERTIES COMPARABLE R-1 THE MAGNOLIA AT SANDY SPRINGS 7100 Roswell Road Atlanta, GA [PICTURE] COMPARABLE R-2 GREYSTONE APARTMENTS 6940 Roswell Road Atlanta, GA [PICTURE] COMPARABLE R-3 MORGAN FALLS 7600 Roswell Road Atlanta, GA [PICTURE] COMPARABLE R-4 THE CLIFFS OF DUNWOODY 7275 Roswell Road Atlanta, GA [PICTURE] COMPARABLE R-5 STONECOURT OF SANDY SPRINGS 6980 Roswell Road Atlanta, GA [PICTURE] AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C PLANTATION CREEK, ATLANTA, GEORGIA EXHIBIT C ASSUMPTIONS AND LIMITING CONDITIONS (3 PAGES) AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C PLANTATION CREEK, ATLANTA, GEORGIA No responsibility is assumed for matters legal in nature. No investigation has been made of the title to or any liabilities against the property appraised. In this appraisal, it is presumed that, unless otherwise noted, the owner's claim is valid, the property rights are good and marketable, and there are no encumbrances which cannot be cleared through normal processes. To the best of our knowledge, all data set forth in this report are true and accurate. Although gathered from reliable sources, no guarantee is made nor liability assumed for the accuracy of any data, opinions, or estimates identified as being furnished by others which have been used in formulating this analysis. Land areas and descriptions used in this appraisal were obtained from public records and have not been verified by legal counsel or a licensed surveyor. No soil analysis or geological studies were ordered or made in conjunction with this report, nor were any water, oil, gas, or other subsurface mineral and use rights or conditions investigated. Substances such as asbestos, urea-formaldehyde foam insulation, other chemicals, toxic wastes, or other potentially hazardous materials could, if present, adversely affect the value of the property. Unless otherwise stated in this report, the existence of hazardous substance, which may or may not be present on or in the property, was not considered by the appraiser in the development of the conclusion of value. The stated value estimate is predicated on the assumption that there is no material on or in the property that would cause such a loss in value. No responsibility is assumed for any such conditions, and the client has been advised that the appraiser is not qualified to detect such substances, quantify the impact on values, or develop the remedial cost. No environmental impact study has been ordered or made. Full compliance with applicable federal, state, and local environmental regulations and laws is assumed unless otherwise stated, defined, and considered in the report. It is also assumed that all required licenses, consents, or other legislative or administrative authority from any local, state, or national government or private entity organization either have been or can be obtained or renewed for any use which the report covers. AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C PLANTATION CREEK, ATLANTA, GEORGIA It is assumed that all applicable zoning and use regulations and restrictions have been complied with unless a nonconformity has been stated, defined, and considered in the appraisal report. Further, it is assumed that the utilization of the land and improvements is within the boundaries of the property described and that no encroachment or trespass exists unless noted in the report. The Americans with Disabilities Act ("ADA") became effective January 26, 1992. We have not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property together with a detailed analysis of the requirements of the ADA could reveal that the property is not in compliance with one or more of the requirements of the act. If so, this fact could have a negative effect on the value of the property. Since we have no direct evidence relating to this issue, we did not consider the possible noncompliance with the requirements of ADA in estimating the value of the property. We have made a physical inspection of the property and noted visible physical defects, if any, in our report. This inspection was made by individuals generally familiar with real estate and building construction. However, these individuals are not architectural or structural engineers who would have detailed knowledge of building design and structural integrity. Accordingly, we do not opine on, nor are we responsible for, the structural integrity of the property including its conformity to specific governmental code requirements, such as fire, building and safety, earthquake, and occupancy, or any physical defects which were not readily apparent to the appraiser during the inspection. The value or values presented in this report are based upon the premises outlined herein and are valid only for the purpose or purposes stated. The date of value to which the conclusions and opinions expressed apply is set forth in this report. The value opinion herein rendered is based on the status of the national business economy and the purchasing power of the U.S. dollar as of that date. Testimony or attendance in court or at any other hearing is not required by reason of this appraisal unless arrangements are previously made within a reasonable time in advance for AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C PLANTATION CREEK, ATLANTA, GEORGIA such testimony, and then such testimony shall be at American Appraisal Associates, Inc.'s, prevailing per diem for the individuals involved. Possession of this report or any copy thereof does not carry with it the right of publication. No portion of this report (especially any conclusion to use, the identity of the appraiser or the firm with which the appraiser is connected, or any reference to the American Society of Appraisers or the designations awarded by this organization) shall be disseminated to the public through prospectus, advertising, public relations, news, or any other means of communication without the written consent and approval of American Appraisal Associates, Inc. AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT D PLANTATION CREEK, ATLANTA, GEORGIA EXHIBIT D CERTIFICATE OF APPRAISER (1 PAGE) AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT D CERTIFICATE OF APPRAISER I certify that, to the best of my knowledge and belief: The statements of fact contained in this report are true and correct. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and represent the unbiased professional analyses, opinions, and conclusions of American Appraisal Associates, Inc. American Appraisal Associates, Inc. and I personally, have no present or prospective interest in the property that is the subject of this report and have no personal interest or bias with respect to the parties involved. Compensation for American Appraisal Associates, Inc. is not contingent on an action or event resulting from the analyses, opinions, or conclusions in, or the use of, this report. The analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Uniform Standards of Professional Appraisal Practice and the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. I personally did not inspect the subject property. Steven M. Zenkovich, ASA provided significant real property appraisal assistance in the preparation of this report. I am currently in compliance with the Appraisal Institutes continuing education requirements. -s- Michael Bates ------------------------------------ Michael Bates, MAI Assistant Manager, Real Estate Group State of Georgia, Certified General Real Property Appraiser #CG00685 AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E PLANTATION CREEK, ATLANTA, GEORGIA EXHIBIT E QUALIFICATIONS OF APPRAISER (3 PAGES) AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E PLANTATION CREEK, ATLANTA, GEORGIA MICHAEL P. BATES, MAI DIRECTOR - HEALTHCARE REAL ESTATE AND ASSISTANT MANAGER, REAL ESTATE GROUP POSITION Michael P. Bates is the Assistant Manager of the Atlanta Real Estate Group of American Appraisal Associates, Inc. ("AAA"). He shares responsibility for the management, quality control, and review of commercial real estate assignments principally in the southeast United States. Mr. Bates is also the national Director - Healthcare Real Estate for AAA and is responsible for the management and valuation process for specialty health care facility assignments. EXPERIENCE Valuation Mr. Bates has 17 years of commercial appraisal experience. He has performed appraisals in 43 states and Canada, and he is currently a certified general appraiser in 21 states. Court Mr. Bates has been accepted as an expert witness and given testimony in federal bankruptcy court in Delaware. He has prepared many other appraisals that were submitted as expert evidence to federal bankruptcy court, but those cases were settled prior to testimony being required. Mr. Bates has testified in property tax appeal cases in California, Missouri, and Texas, and his hospital appraisals have been submitted in tax appeal cases in Pennsylvania, South Carolina, and South Dakota. Business Mr. Bates joined AAA in 1997. Prior to joining AAA, he was president of his own valuation company and was previously a vice president for both Gulf/Atlantic Valuation Services, Inc., and Valuation Counselors. Prior to gaining his appraisal experience, Mr. Bates worked seven years in commercial mortgage financing. AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E PLANTATION CREEK, ATLANTA, GEORGIA EDUCATION University of Tennessee - Knoxville Master of Business Administration - Finance and Management Bachelor of Science - Marketing STATE State of Alabama, Certified General Real Property CERTIFICATIONS Appraiser, #G00503 State of Arizona, Certified General Real Estate Appraiser, #31067 State of Arkansas, State Certified General Appraiser, #CG1414N State of California, Certified General Real Estate Appraiser, #AG026120 State of Colorado, Certified General Appraiser, #CG40023849 State of Delaware, Certified General Appraiser, #X1-0000352 State of Florida, Certified General Appraiser, #0002494 State of Georgia, Certified General Real Property Appraiser, #CG00685 State of Illinois, State Certified General Real Estate Appraiser, #153001243 State of Maryland, Certified General Real Estate Appraiser, #10814 State of Michigan, Certified General Appraiser, #1201069262 State of Mississippi, State Certified General Real Estate Appraiser, #GA-629 State of New Jersey, General Appraiser, #42KG00195600 State of New York, Real Estate General Appraiser, #46000041317 State of North Carolina, Certified General Real Estate Appraiser, #A4095 Commonwealth of Pennsylvania, Certified General Appraiser, #GA001817R State of South Carolina, Certified Real Estate Appraiser, #CG3059 State of Tennessee, Certified General Real Estate Appraiser, AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E PLANTATION CREEK, ATLANTA, GEORGIA #00051881 State of Texas, State Certified General Real Estate Appraiser, #TX-1328483-G Commonwealth of Virginia, Certified General Real Estate Appraiser, #4001005254 State of Washington, Certified General Real Estate Appraiser, #1100998 PROFESSIONAL Appraisal Institute, MAI Designated Member AFFILIATIONS VALUATION AND Appraisal Institute SPECIAL All required courses COURSES Standards of Professional Practice, Parts A and B The Appraiser as an Expert Witness: Preparation and Testimony Litigation Appraising: Specialized Topics and Applications Separating Real and Personal Property from Intangible Business Assets Specialty Courses Hotel/Motel Valuation and Investment Seminar Valuation of Special-Purpose Properties AMERICAN APPRAISAL ASSOCIATES, INC. PLANTATION CREEK, ATLANTA, GEORGIA GENERAL SERVICE CONDITIONS AMERICAN APPRAISAL ASSOCIATES, INC. PLANTATION CREEK, ATLANTA, GEORGIA GENERAL SERVICE CONDITIONS The services(s) provided by AAA will be performed in accordance with professional appraisal standards. Our compensation is not contingent in any way upon our conclusions of value. We assume, without independent verification, the accuracy of all data provided to us. We will act as an independent contractor and reserve the right to use subcontractors. All files, workpapers or documents developed by us during the course of the engagement will be our property. We will retain this data for at least five years. Our report is to be used only for the specific purpose stated herein; and any other use is invalid. No reliance may be made by any third party without our prior written consent. You may show our report in its entirety to those third parties who need to review the information contained herein. No one should rely on our report as a substitute for their own due diligence. We understand that our reports will be described in public tender offer documents distributed to limited partners. We reserve the right to review the public tender offer documents prior to their issuance to confirm that disclosures of facts from the current appraisals are accurate. No reference to our name or our report, in whole or in part, in any other SEC filing or private placement memorandum you prepare and/or distribute to third parties may be made without our prior written consent. The Tender Offer Partnerships, as that term is defined in the Settlement Agreement, agree to indemnify and hold us harmless against and from any and all losses, claims, actions, damages, expenses or liabilities, including reasonable attorneys' fees, to which we may become subject in connection with this engagement except where such losses, claims, actions, damages, expenses or liabilities, including reasonable attorney's fees, arise or result from AAA's misconduct, bad faith or negligence. Co-Clients will not be liable for any of our acts or omissions. AAA is an equal opportunity employer.