EX-99.(C)(2) 4 d07246a2exv99wxcyx2y.txt APPRAISAL OF COOPER'S POND COOPER'S POND 6221 N DALE MABRY HWY TAMPA, FLORIDA MARKET VALUE - FEE SIMPLE ESTATE AS OF MAY 13, 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] JULY 9, 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: COOPER'S POND 6221 N DALE MABRY HWY TAMPA, HILLSBOROUGH COUNTY, FLORIDA In accordance with your authorization, we have completed the appraisal of the above-referenced 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 463 units with a total of 304,342 square feet of rentable area. The improvements were built in 1980. The improvements are situated on 25.75 acres. Overall, the improvements are in average condition. As of the date of this appraisal, the subject property is 94% 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 COOPER'S POND, TAMPA, FLORIDA 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 13, 2003 is: ($14,500,000) Respectfully submitted, AMERICAN APPRAISAL ASSOCIATES, INC. -s- Alice MacQueen July 9, 2003 Alice MacQueen #053272 Vice President, Real Estate Group Florida Certified General Real Estate Appraiser #RZ0002202 Report By: Alice MacQueen AMERICAN APPRAISAL ASSOCIATES, INC. TABLE OF CONTENTS PAGE 3 COOPER'S POND, TAMPA, FLORIDA 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........................................... 38
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 COOPER'S POND, TAMPA, FLORIDA EXECUTIVE SUMMARY PART ONE - PROPERTY DESCRIPTION PROPERTY NAME: Cooper's Pond LOCATION: 6221 N Dale Mabry Hwy Tampa, Florida 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 13, 2003 DATE OF REPORT: July 9, 2003 PHYSICAL DESCRIPTION - SITE & IMPROVEMENTS: SITE: Size: 25.75 acres, or 1,121,670 square feet Assessor Parcel No.: 029223-0000 Floodplain: Community Panel No. 120112-0195-C (See comments) Flood Zone X, an area outside the floodplain. Zoning: PD-H (Planned Development) BUILDING: No. of Units: 463 Units Total NRA: 304,342 Square Feet Average Unit Size: 657 Square Feet Apartment Density: 18.0 units per acre Year Built: 1980 UNIT MIX AND MARKET RENT: GROSS RENTAL INCOME PROJECTION Market Rent Square ------------------- Monthly Annual Unit Type Feet Per Unit Per SF Income Income -------------------------------------------------------------------------------------------- 1A10 - 1Br/1Ba 600 $515 $0.86 $ 88,580 $1,062,960 1B10 - 1Br/1Ba 615 $530 $0.86 $ 10,600 $ 127,200 1C10 - 1 Br/1Ba 726 $590 $0.81 $ 37,760 $ 453,120 2A20 - 2 Br/2Ba 810 $650 $0.80 $ 57,200 $ 686,400 2B20 - 2 Br/2Ba 886 $720 $0.81 $ 5,040 $ 60,480 2C20 - 2Br/2Ba 903 $775 $0.86 $ 24,800 $ 297,600 EA10 - Efficiency 450 $450 $1.00 $ 36,000 $ 432,000 -------- ---------- Total $259,980 $3,119,760 ======== ==========
OCCUPANCY: 94% ECONOMIC LIFE: 45 Years AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 5 COOPER'S POND, TAMPA, FLORIDA EFFECTIVE AGE: 23 Years REMAINING ECONOMIC LIFE: 22 Years SUBJECT PHOTOGRAPHS AND LOCATION MAP: SUBJECT PHOTOGRAPHS [PICTURE] [PICTURE] OFFICE CLUBHOUSE - FRONT VIEW OFFICE CLUBHOUSE - REAR VIEW AREA MAP [MAP] AMERICAN APPRAISAL ASSOCIATES, INC. EXECUTIVE SUMMARY PAGE 6 COOPER'S POND, TAMPA, FLORIDA 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 COOPER'S POND, TAMPA, FLORIDA PART TWO - ECONOMIC INDICATORS
Amount $/Unit ------ ------ INCOME CAPITALIZATION APPROACH DIRECT CAPITALIZATION Potential Rental Income $ 3,119,760 $ 6,738 Effective Gross Income $ 3,080,071 $ 6,652 Operating Expenses $ 1,505,964 $ 3,253 48.9% of EGI Net Operating Income: $ 1,458,357 $ 3,150 Capitalization Rate 10.00% DIRECT CAPITALIZATION VALUE $14,600,000 * $31,533 / UNIT DISCOUNTED CASH FLOW ANALYSIS: Holding Period 10 years 2002 Economic Vacancy 14% Stabilized Vacancy & Collection Loss: 15% Lease-up / Stabilization Period N/A Terminal Capitalization Rate 11.00% Discount Rate 13.00% Selling Costs 2.00% Growth Rates: Income 2.50% Expenses: 3.00% DISCOUNTED CASH FLOW VALUE $13,600,000 * $29,374 / UNIT RECONCILED INCOME CAPITALIZATION VALUE $14,500,000 $31,317 / UNIT SALES COMPARISON APPROACH PRICE PER UNIT: Range of Sales $/Unit (Unadjusted) $25,000 to $34,583 Range of Sales $/Unit (Adjusted) $27,239 to $32,840 VALUE INDICATION - PRICE PER UNIT $13,900,000 * $30,022 / UNIT EGIM ANALYSIS Range of EGIMs from Improved Sales 4.02 to 5.69 Selected EGIM for Subject 4.70 Subject's Projected EGI $3,080,071 EGIM ANALYSIS CONCLUSION $14,500,000 * $31,317 / UNIT NOI PER UNIT ANALYSIS CONCLUSION $13,900,000 * $30,022 / UNIT RECONCILED SALES COMPARISON VALUE $13,900,000 $30,022 / 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 COOPER'S POND, TAMPA, FLORIDA PART THREE - SUMMARY OF VALUE CONCLUSIONS SALES COMPARISON APPROACH: Price Per Unit $13,900,000 NOI Per Unit $13,900,000 EGIM Multiplier $14,500,000 INDICATED VALUE BY SALES COMPARISON $13,900,000 $30,022 / UNIT INCOME APPROACH: Direct Capitalization Method: $14,600,000 Discounted Cash Flow Method: $13,600,000 INDICATED VALUE BY THE INCOME APPROACH $14,500,000 $31,317 / UNIT RECONCILED OVERALL VALUE CONCLUSION: $14,500,000 $31,317 / UNIT
AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 9 COOPER'S POND, TAMPA, FLORIDA INTRODUCTION IDENTIFICATION OF THE SUBJECT The subject property is located at 6221 N Dale Mabry Hwy, Tampa, Hillsborough County, Florida. Tampa identifies it as 029223-0000. SCOPE OF THE ASSIGNMENT The property, neighborhood, and comparables were inspected by Alice MacQueen on May 13, 2003. Alice MacQueen performed the research, valuation analysis and wrote the report. Alice MacQueen has extensive experience in appraising similar properties and meets 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 13, 2003. The date of the report is July 9, 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 defined in The Dictionary of Real Estate Appraisal, 3rd ed. (Chicago: Appraisal Institute, 1993), as: AMERICAN APPRAISAL ASSOCIATES, INC. INTRODUCTION PAGE 10 COOPER'S POND, TAMPA, FLORIDA "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 Fund XVII. 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 COOPER'S POND, TAMPA, FLORIDA 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 Tampa, Florida. 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 - I-275 West - Anderson Road South - Dr. Martin Luther King Jr Blvd North - Busch Boulevard (Rt. 580) MAJOR EMPLOYERS Major employers in the subject's area include Hillsborough County School System, GTE Florida, Tampa International Airport, University of South Florida, City of Tampa, Publix, Tampa General Hospital, AT&T, Paradyne and Kash n' Karry Food Stores, Inc. As Florida's wealthiest market, Tampa Bay ranks 1st in effective buying income and 1st in retail sales. Housing is very affordable and household incomes are increasing. The cost of living is about 5% below the national average. Employment throughout the Bay Area is very diverse. The overall economic outlook for the area is considered 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 COOPER'S POND, TAMPA, FLORIDA NEIGHBORHOOD DEMOGRAPHICS
AREA -------------------------------------------- CATEGORY 1-Mi. RADIUS 3-Mi. RADIUS 5-Mi. RADIUS MSA ------------------------------------------------------------------------------------------ POPULATION TRENDS Current Population 15,973 95,011 279,469 2,442,120 5-Year Population 16,429 98,558 287,221 2,591,303 % Change CY-5Y 2.9% 3.7% 2.8% 6.1% Annual Change CY-5Y 0.6% 0.7% 0.6% 1.2% HOUSEHOLDS Current Households 6,042 39,430 113,376 1,029,700 5-Year Projected Households 6,141 40,743 116,943 1,095,882 % Change CY - 5Y 1.6% 3.3% 3.1% 6.4% Annual Change CY-5Y 0.3% 0.7% 0.6% 1.3% INCOME TRENDS Median Household Income $ 29,292 $ 31,369 $ 32,460 $ 35,241 Per Capita Income $ 15,615 $ 17,971 $ 19,429 $ 22,508 Average Household Income $ 40,831 $ 43,505 $ 47,882 $ 53,389
Source: Demographics Now The subject neighborhood's population is expected to show increases below that of the region. The immediate market offers inferior 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 43.56% 41.74% 38.20% 24.86% 5-Year Projected % Renting 41.65% 41.25% 37.73% 24.59% % of Households Owning 48.28% 49.10% 50.91% 60.90% 5-Year Projected % Owning 50.27% 49.82% 51.70% 61.88%
Source: Demographics Now AMERICAN APPRAISAL ASSOCIATES, INC. AREA ANALYSIS PAGE 13 COOPER'S POND, TAMPA, FLORIDA SURROUNDING IMPROVEMENTS The following uses surround the subject property: North - Lambright Avenue, improved with retail commercial uses and vacant land South - Idlewild Avenue, improved with very small old single family homes, condos and apartments East - Himes Avenue, single family homes transitions to commercial uses plus 7-11 convenience store West - Dale Mabry Hwy, improved with auto dealerships, furniture stores and other major commercial uses CONCLUSIONS The subject is well located within the city of Tampa. 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 favorable with a good economic base. AMERICAN APPRAISAL ASSOCIATES, INC. MARKET ANALYSIS PAGE 14 COOPER'S POND, TAMPA, FLORIDA MARKET ANALYSIS The subject property is located in the city of Tampa in Hillsborough County. The overall pace of development in the subject's market is more or less stable. There has been no new development in the subject's submarket during the past six months. Additionally, the new units that have been added to the area in recent years has been in the western section of the sub-market, to the west of Veteran's Expressway. The following table illustrates historical vacancy rates for the subject's market. HISTORICAL VACANCY RATE
Period Region Submarket --------------------------------- 3Q00 5.7% 5.4%t 1Q01 6.4% 7.2%t 3Q01 7.7% 5.9% 1Q02 9.1% 6.2% 3Q02 9.2% 7.2%
Source: Apartment Index Report, December 2002, by Carolinas Real Data Occupancy trends in the subject's market are decreasing. Historically speaking, the subject's submarket has out performed the overall market. Although the vacancy rate increased to 7.4% toward year-end 2002, the subject's submarket continued to have one of the lowest rates reported in the Bay Area. This increase in vacancy is attributed to a drop in absorption (-86 units) leaving the area with a total annual negative 2002 absorption of -176 units. Market rents in the subject's market have been following an increasing trend. The following table illustrates historical rental rates for the subject's market. HISTORICAL AVERAGE RENT
Period Region % Change Submarket % Change ---------------------------------------------------------- 3Q00 $675 - $682 - 1Q01 $689 2.1% $692 1.5% 3Q01 $703 2.0% $723 4.5% 1Q02 $725 3.1% $714 -1.2% 3Q02 $726 0.1% $715 0.1%
Source: Apartment Index Report, December 2002, by Carolinas Real Data The following table illustrates a summary of the subject's competitive set. AMERICAN APPRAISAL ASSOCIATES, INC. MARKET ANALYSIS PAGE 15 COOPER'S POND, TAMPA, FLORIDA COMPETITIVE PROPERTIES
No. Property Name Units Ocpy. Year Built Proximity to subject ------------------------------------------------------------------------------------------------- R-1 Ralston Place 200 95% 1978 1-mile southwest R-2 Park Place 120 95% 1984 0.2-mile southwest R-3 Hidden Lake 267 98% 1986 1-mile north R-4 Courtney Cove 324 91% 1983 1.5-mile southwest R-5 Countrywood Apartments 536 97% 1978 3-mile north Subject Cooper's Pond 463 94% 1980
Average rent in the subject's submarket stands at $715 with rents increasing only $1.00 for existing units between May and November 2002. This is down considerably from the increases seen during 2000 and 2001. It is believed to be attributed primarily to the increase in new units added to the Tampa Bay area over recent years, coupled with low interest rates and an increased desire in homeownership. These factors have resulted in slower absorption, higher vacancies, and minimal rent increases throughout the Tampa Bay Area. This trend will likely continue until such time as supply and demand equalizes and the market stabilizes. AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 16 COOPER'S POND, TAMPA, FLORIDA PROPERTY DESCRIPTION SITE ANALYSIS Site Area 25.75 acres, or 1,121,670 square feet Shape Irregular Topography Level Utilities All necessary utilities are available to the site. Soil Conditions Stable Easements Affecting Site None other than typical utility easements Overall Site Appeal Good Flood Zone: Community Panel 120112-0195-C, dated See comments Flood Zone Zone X Zoning PD-H, 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 --------------------------------------------------------------------------------------------------------------- 029223-0000 $2,778,000 $9,813,548 $12,591,548 0.01822 $229,371
IMPROVEMENT ANALYSIS Year Built 1980 Number of Units 463 Net Rentable Area 304,342 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, spa/jacuzzi, sand volleyball, tennis court, racquetball court, gym room, car wash, laundry room, freshwater lake, and parking area. Unit Amenities Individual unit amenities include a balcony, and washer dryer connection. Appliances available in each unit include a refrigerator, stove, dishwasher, water heater, garbage disposal, and oven. AMERICAN APPRAISAL ASSOCIATES, INC. PROPERTY DESCRIPTION PAGE 17 COOPER'S POND, TAMPA, FLORIDA Unit Mix:
Unit Area Unit Type Number of Units (Sq. Ft.) --------------------------------------------------------- 1A10 - 1Br/1Ba 172 600 1B10 - 1Br/1Ba 20 615 1C10 - 1 Br/1Ba 64 726 2A20 - 2 Br/2Ba 88 810 2B20 - 2 Br/2Ba 7 886 2C20 - 2Br/2Ba 32 903 EA10 - Efficiency 80 450
Overall Condition Average Effective Age 23 years Economic Life 45 years Remaining Economic Life 22 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 1980 and consist of a 463-unit multifamily project. The highest and best use as improved is for a 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 COOPER'S POND, TAMPA, FLORIDA 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 COOPER'S POND, TAMPA, FLORIDA 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 COOPER'S POND, TAMPA, FLORIDA 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 COOPER'S POND, TAMPA, FLORIDA SUMMARY OF COMPARABLE SALES -IMPROVED
COMPARABLE COMPARABLE DESCRIPTION SUBJECT I - 1 I - 2 -------------------------------------------------------------------------------------------------------------------------------- Property Name Cooper's Pond Country Crossing Ashley Square LOCATION: Address 6221 N Dale Mabry Hwy 7903 Holly Lea Court 5606 Josephine Court City, State Tampa, Florida Tampa, FL Tampa, FL County Hillsborough Hillsborough Hillsborough PHYSICAL CHARACTERISTICS: Net Rentable Area (SF) 304,342 204,335 198,528 Year Built 1980 1974 1970 Number of Units 463 232 188 Unit Mix: Type Total Type Total Type Total 1A10 - 1Br/1Ba 172 1Br/1BA 128 1Br/1BA 77 1B10 - 1Br/1Ba 20 2Br/2BA 74 2Br/2BA 88 1C10 - 1 Br/1Ba 64 3Br/2BA 30 3Br/2BA 23 2A20 - 2 Br/2Ba 88 2B20 - 2 Br/2Ba 7 2C20 - 2Br/2Ba 32 EA10 - Efficiency 80 Average Unit Size (SF) 657 881 1,056 Land Area (Acre) 25.7500 11.8800 9.4100 Density (Units/Acre) 18.0 19.5 20.0 Parking Ratio (Spaces/Unit) 0.00 Adequate Adequate Parking Type (Gr., Cov., etc.) Garage, Open Covered Open Open CONDITION: Good Fair Average APPEAL: Good Fair Average AMENITIES: Pool/Spa Yes/Yes Yes/No Yes/No Gym Room Yes Yes Yes Laundry Room Yes Yes Yes Secured Parking No No No Sport Courts No No No Washer/Dryer Connection Yes No No Other Other OCCUPANCY: 94% 90% 80% TRANSACTION DATA: Sale Date July, 2002 February, 2002 Sale Price ($) $5,800,000 $5,600,000 Grantor TCI Country Crossing, Inc. Davna Investments, Ltd Grantee Centurion Partners II, LLC Ashley Square Realty Corp Sale Documentation Doc# 11829-0478 Doc# 11405-0982 Verification CoStar Realty CoStar Realty Telephone Number ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF ---------- ------ ----- ---------- ------ ----- Potential Gross Income $1,604,832 $6,917 $7.85 $1,558,560 $8,290 $7.85 Vacancy/Credit Loss $ 160,483 $ 692 $0.79 $ 311,712 $1,658 $1.57 ---------- ------ ----- ---------- ------ ----- Effective Gross Income $1,444,349 $6,226 $7.07 $1,246,848 $6,632 $6.28 Operating Expenses $ 893,200 $3,850 $4.37 $ 718,724 $3,823 $3.62 ---------- ------ ----- ---------- ------ ----- Net Operating Income $ 551,149 $2,376 $2.70 $ 528,124 $2,809 $2.66 ---------- ------ ----- ---------- ------ ----- NOTES: Similar neighborhood. Located off Dale Mabry, Overall fair to avg condition very near subject. Small but overall inferior to the community w/limited land- subject scaping/curb appeal PRICE PER UNIT $25,000 $29,787 PRICE PER SQUARE FOOT $ 28.38 $ 28.21 EXPENSE RATIO 61.8% 57.6% EGIM 4.02 4.49 OVERALL CAP RATE 9.50% 9.43% Cap Rate based on Pro Forma or Actual Income? ACTUAL ACTUAL COMPARABLE COMPARABLE COMPARABLE DESCRIPTION I - 3 I - 4 I - 5 -------------------------------------------------------------------------------------------------------------------------------- Property Name Falls of Tampa Bay Horizon Park Swan Lake LOCATION: Address 4610 North Armenia Avenue 4900 N MacDill Avenue 3401 N. Lakeview Drive City, State Tampa, FL Tampa, FL Tampa, FL County Hillsborough Hillsborough Hillsborough PHYSICAL CHARACTERISTICS: Net Rentable Area (SF) 165,600 96,200 165,000 Year Built 1984 1976 1982 Number of Units 240 128 244 Unit Mix: Type Total Type Total Type Total 1Br/1BA 132 1Br/1BA 84 1Br/1BA 2Br/2BA 108 2Br/2BA 44 2Br/2BA 3Br/2BA 3Br/2BA Average Unit Size (SF) 690 752 676 Land Area (Acre) 5.0290 5.1300 14.0000 Density (Units/Acre) 47.7 25.0 17.4 Parking Ratio (Spaces/Unit) Adequate Adequate Adequate Parking Type (Gr., Cov., etc.) Open Open Open CONDITION: Average Average Average APPEAL: Average Average Average AMENITIES: Pool/Spa Yes/No Yes/No Yes/No Gym Room Yes Yes Yes Laundry Room Yes Yes Yes Secured Parking No No No Sport Courts No No No Washer/Dryer Connection No No No Other Other OCCUPANCY: 95% 93% Unknown TRANSACTION DATA: Sale Date December, 2001 June, 2000 December, 2000 Sale Price ($) $8,300,000 $3,550,000 $6,360,000 Grantor ERP Operating, LP Merecorp, Inc UNUM Life Insurance Company Grantee ADHI mantrha, LLC Horizon Pointe Realty Corp Swan Lake Investors, LLC Sale Documentation Doc# 11261-1133 Doc#10245-1621 Doc#10534-0403 Verification CoStar Realty CoStar Realty CoStar Realty/AAA Telephone Number ESTIMATED PRO-FORMA: Total $ $/Unit $/SF Total $ $/Unit $/SF Total $ $/Unit $/SF ---------- ------ ------ -------- ------ ----- ------- ------ ----- Potential Gross Income $1,781,856 $7,424 $10.76 $670,560 $5,239 $6.97 $0 $0 $0.00 Vacancy/Credit Loss $ 89,093 $ 371 $ 0.54 $ 46,939 $ 367 $0.49 $0 $0 $0.00 ---------- ------ ------ -------- ------ ----- -- -- ----- Effective Gross Income $1,692,763 $7,053 $10.22 $623,621 $4,872 $6.48 $0 $0 $0.00 Operating Expenses $ 840,000 $3,500 $ 5.07 $280,000 $2,188 $2.91 $0 $0 $0.00 ---------- ------ ------ -------- ------ ----- -- -- ----- Net Operating Income $ 852,763 $3,553 $ 5.15 $343,621 $2,685 $3.57 $0 $0 $0.00 NOTES: Good location/curb appeal. Similar neighborhood. Good location. Well-kept Higher density development Property is being property in superior with some covered parking. totally renovated. condition Fair condition Now a gated community PRICE PER UNIT $34,583 $27,734 $26,066 PRICE PER SQUARE FOOT $ 50.12 $ 36.90 $ 38.55 EXPENSE RATIO 49.6% 44.9% N/A EGIM 4.90 5.69 N/A OVERALL CAP RATE 10.27% 9.68% 0.00% Cap Rate based on Pro Forma or Actual Income? PRO FORMA ACTUAL UNKNOWN
AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 22 COOPER'S POND, TAMPA, FLORIDA IMPROVED SALES MAP [MAP] IMPROVED SALES ANALYSIS The improved sales indicate a sales price range from $25,000 to $34,583 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 $27,239 to $32,840 per unit with a mean or average adjusted price of $29,717 per unit. The median adjusted price is $30,433 per unit. Based on the following analysis, we have concluded to a value of $30,000 per unit, which results in an "as is" value of $13,900,000 (rounded after necessary adjustment, if any). AMERICAN APPRAISAL ASSOCIATES, INC. SALES COMPARISON APPROACH PAGE 23 COOPER'S POND, TAMPA, FLORIDA SALES ADJUSTMENT GRID
COMPARABLE COMPARABLE COMPARABLE DESCRIPTION SUBJECT I - 1 I - 2 I - 3 ------------------------------------------------------------------------------------------------------------------------------- Property Name Cooper's Pond Country Crossing Ashley Square Falls of Tampa Bay Address 6221 N Dale Mabry 7903 Holly Lea 5606 Josephine 4610 North Armenia Hwy Court Court Avenue City Tampa, Florida Tampa, FL Tampa, FL Tampa, FL Sale Date July, 2002 February, 2002 December, 2001 Sale Price ($) $5,800,000 $5,600,000 $8,300,000 Net Rentable Area (SF) 304,342 204,335 198,528 165,600 Number of Units 463 232 188 240 Price Per Unit $25,000 $29,787 $34,583 Year Built 1980 1974 1970 1984 Land Area (Acre) 25.7500 11.8800 9.4100 5.0290 VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION ADJ. DESCRIPTION ADJ. DESCRIPTION ADJ. Property Rights Conveyed Fee Simple Estate Fee Simple Estate 0% Fee Simple Estate 0% Fee Simple Estate 0% Financing Cash To Seller 0% Cash To Seller 0% Cash To Seller 0% Conditions of Sale Arm's Length 0% Arm's Length 0% Arm's Length 0% Date of Sale (Time) 07-2002 5% 02-2002 5% 12-2001 10% VALUE AFTER TRANS. ADJUST. ($/UNIT) $26,250 $31,277 $38,042 Location Comparable 0% Comparable 0% Comparable 0% Number of Units 463 232 -5% 188 -5% 240 -5% Quality / Appeal Good Comparable 0% Comparable 0% Comparable 0% Age / Condition 1980 1974 / Fair 10% 1970 / Average 10% 1984 / Average -15% Occupancy at Sale 94% 90% 0% 80% 5% 95% 0% Amenities Good Comparable 0% Comparable 0% Comparable 0% Average Unit Size (SF) 657 881 0% 1,056 -5% 690 0% PHYSICAL ADJUSTMENT 5% 5% -20% FINAL ADJUSTED VALUE $27,563 $32,840 $30,433 ($/UNIT) COMPARABLE COMPARABLE DESCRIPTION I - 4 I - 5 ----------------------------------------------------------------------------------- Property Name Horizon Park Swan Lake Address 4900 N MacDill 3401 N. Lakeview Avenue Drive City Tampa, FL Tampa, FL Sale Date June, 2000 December, 2000 Sale Price ($) $3,550,000 $6,360,000 Net Rentable Area (SF) 96,200 165,000 Number of Units 128 244 Price Per Unit $27,734 $26,066 Year Built 1976 1982 Land Area (Acre) 5.1300 14.0000 VALUE ADJUSTMENTS DESCRIPTION ADJ. DESCRIPTION ADJ. Property Rights Conveyed Fee Simple Estate 0% Fee Simple Estate 0% Financing Cash To Seller 0% Cash To Seller 0% Conditions of Sale Arm's Length 0% Arm's Length 0% Date of Sale (Time) 06-2000 10% 12-2000 10% VALUE AFTER TRANS. ADJUST. ($/UNIT) $30,508 $28,672 Location Comparable 0% Comparable 0% Number of Units 128 -5% 244 -5% Quality / Appeal Comparable 0% Comparable 0% Age / Condition 1976 / Average 5% 1982 / Average 0% Occupancy at Sale 93% 0% Unknown 0% Amenities Comparable 0% Comparable 0% Average Unit Size (SF) 752 0% 676 0% PHYSICAL ADJUSTMENT 0% -5% FINAL ADJUSTED VALUE $30,508 $27,239 ($/UNIT)
SUMMARY VALUE RANGE (PER UNIT) $27,239 TO $32,840 MEAN (PER UNIT) $29,717 MEDIAN (PER UNIT) $30,433 VALUE CONCLUSION (PER UNIT) $30,000
VALUE INDICATED BY SALES COMPARISON APPROACH $13,890,000 ROUNDED $13,900,000
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 COOPER'S POND, TAMPA, FLORIDA NOI PER UNIT COMPARISON
SALE PRICE NOI/ SUBJECT NOI COMPARABLE NO. OF ----------- ------------------------------- ADJUSTMENT INDICATED NO. UNITS PRICE/UNIT OAR NOI/UNIT SUBJ. NOI/UNIT FACTOR VALUE/UNIT ----------------------------------------------------------------------------------------------------------------------------- I-1 232 $5,800,000 9.50% $551,149 $ 1,458,357 1.326 $ 33,147 $ 25,000 $ 2,376 $ 3,150 I-2 188 $5,600,000 9.43% $528,124 $ 1,458,357 1.121 $ 33,399 $ 29,787 $ 2,809 $ 3,150 I-3 240 $8,300,000 10.27% $852,763 $ 1,458,357 0.886 $ 30,657 $ 34,583 $ 3,553 $ 3,150 I-4 128 $3,550,000 9.68% $343,621 $ 1,458,357 1.173 $ 32,541 $ 27,734 $ 2,685 $ 3,150 I-5 244 $6,360,000 0.00% $ 1,458,357 $ 26,066 $ 3,150
PRICE/UNIT
Low High Average Median $30,657 $33,399 $32,436 $32,844
VALUE ANALYSIS BASED ON COMPARABLES NOI PER UNIT Estimated Price Per Unit $ 30,000 Number of Units 463 Value Based on NOI Analysis $13,890,000 Rounded $13,900,000
The adjusted sales indicate a range of value between $30,657 and $33,399 per unit, with an average of $32,436 per unit. Based on the subject's competitive position within the improved sales, a value of $30,000 per unit is estimated. This indicates an "as is" market value of $13,900,000 (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 COOPER'S POND, TAMPA, FLORIDA EFFECTIVE GROSS INCOME MULTIPLIER COMPARISON
SALE PRICE COMPARABLE NO. OF ---------- EFFECTIVE OPERATING SUBJECT NO. UNITS PRICE/UNIT GROSS INCOME EXPENSE OER PROJECTED OER EGIM ------------------------------------------------------------------------------------------------------------------------ I-1 232 $5,800,000 $ 1,444,349 $ 893,200 61.84% 4.02 $ 25,000 I-2 188 $5,600,000 $ 1,246,848 $ 718,724 57.64% 4.49 $ 29,787 I-3 240 $8,300,000 $ 1,692,763 $ 840,000 49.62% 48.89% 4.90 $ 34,583 I-4 128 $3,550,000 $ 623,621 $ 280,000 44.90% 5.69 $ 27,734 I-5 244 $6,360,000 $ 26,066
EGIM
Low High Average Median 4.02 5.69 4.78 4.70
VALUE ANALYSIS BASED ON EGIM's OF COMPARABLE SALES Estimate EGIM 4.70 Subject EGI $ 3,080,071 Value Based on EGIM Analysis $14,476,334 Rounded $14,500,000 Value Per Unit $ 31,317
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 48.89% before reserves. The comparable sales indicate a range of expense ratios from 44.90% to 61.84%, while their EGIMs range from 4.02 to 5.69. Overall, we conclude to an EGIM of 4.70, which results in an "as is" value estimate in the EGIM Analysis of $14,500,000. 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 $13,900,000. Price Per Unit $13,900,000 NOI Per Unit $13,900,000 EGIM Analysis $14,500,000 Sales Comparison Conclusion $13,900,000
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 26 COOPER'S POND, TAMPA, FLORIDA 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 COOPER'S POND, TAMPA, FLORIDA 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 ------------------------------------------------------------------------------------ 1A10 - 1Br/1Ba 600 $ 526 $ 0.88 97.5% 1B10 - 1Br/1Ba 615 $ 548 $ 0.89 97.1% 1C10 - 1 Br/1Ba 726 $ 609 $ 0.84 95.0% 2A20 - 2 Br/2Ba 810 $ 689 $ 0.85 81.3% 2B20 - 2 Br/2Ba 886 $ 759 $ 0.86 95.5% 2C20 - 2Br/2Ba 903 $ 786 $ 0.87 95.0% EA10 - Efficiency 450 $ 461 $ 1.02 97.5%
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 28 COOPER'S POND, TAMPA, FLORIDA RENT ANALYSIS
COMPARABLE RENTS ---------------- R-1 R-2 R-3 R-4 R-5 -------------------------------------------------------- Ralston Hidden Courtney Countrywood Place Park Place Lake Cove Apartments -------------------------------------------------------- COMPARISON TO SUBJECT SUBJECT SUBJECT -------------------------------------------------------- SUBJECT UNIT ACTUAL ASKING Slightly Slightly DESCRIPTION TYPE RENT RENT Superior Superior Superior Superior Superior ----------------------------------------------------------------------------------------------------------------------- Monthly Rent 1A10 - 1Br/1Ba $ 526 $ 534 $ 505 $ 609 $ 539 $ 535 $ 480 Unit Area (SF) 600 600 600 626 650 600 600 Monthly Rent Per Sq. Ft. $ 0.88 $ 0.89 $ 0.84 $ 0.97 $ 0.83 $0.89 $0.80 Monthly Rent 1B10 - 1Br/1Ba $ 548 $ 544 $ 505 $ 609 $ 509 $ 550 $ 480 Unit Area (SF) 615 615 600 626 550 615 600 Monthly Rent Per Sq. Ft. $ 0.89 $ 0.88 $ 0.84 $ 0.97 $ 0.93 $0.89 $0.80 Monthly Rent 1C10 - 1 Br/1Ba $ 609 $ 659 $ 559 $ 729 $ 680 Unit Area (SF) 726 726 750 726 810 Monthly Rent Per Sq. Ft. $ 0.84 $ 0.91 $ 0.75 $1.00 $0.84 Monthly Rent 2A20 - 2 Br/2Ba $ 689 $ 697 $ 670 $ 645 $ 660 $ 680 Unit Area (SF) 810 810 810 710 810 810 Monthly Rent Per Sq. Ft. $ 0.85 $ 0.86 $ 0.83 $ 0.91 $0.81 $0.84 Monthly Rent 2B20 - 2 Br/2Ba $ 759 $ 779 $ 670 $ 775 $ 760 $ 680 Unit Area (SF) 886 886 810 990 885 810 Monthly Rent Per Sq. Ft. $ 0.86 $ 0.88 $ 0.83 $ 0.78 $0.86 $0.84 Monthly Rent 2C20 - 2Br/2Ba $ 786 $ 699 $ 775 $ 679 $ 700 $ 680 Unit Area (SF) 903 903 990 1,002 903 810 Monthly Rent Per Sq. Ft. $ 0.87 $ 0.77 $ 0.78 $ 0.68 $0.78 $0.84 Monthly Rent EA10 - $ 461 $ 469 $ 502 $ 585 $ 470 $ 530 Unit Area (SF) EFFICIENCY 450 450 450 570 450 450 Monthly Rent Per Sq. Ft. $ 1.02 $ 1.04 $ 1.12 $ 1.03 $1.04 $1.18 DESCRIPTION MIN MAX MEDIAN AVERAGE ----------------------------------------------------------------- Monthly Rent $ 480 $ 609 $ 535 $ 534 Unit Area (SF) 600 650 600 615 Monthly Rent Per Sq. Ft. $0.80 $ 0.97 $0.84 $0.87 Monthly Rent $ 480 $ 609 $ 509 $ 531 Unit Area (SF) 550 626 600 598 Monthly Rent Per Sq. Ft. $0.80 $ 0.97 $0.89 $0.89 Monthly Rent $ 559 $ 729 $ 680 $ 656 Unit Area (SF) 726 810 750 762 Monthly Rent Per Sq. Ft. $0.75 $ 1.00 $0.84 $0.86 Monthly Rent $ 645 $ 680 $ 665 $ 664 Unit Area (SF) 710 810 810 785 Monthly Rent Per Sq. Ft. $0.81 $ 0.91 $0.83 $0.85 Monthly Rent $ 670 $ 775 $ 720 $ 721 Unit Area (SF) 810 990 848 874 Monthly Rent Per Sq. Ft. $0.78 $ 0.86 $0.83 $0.83 Monthly Rent $ 679 $ 775 $ 690 $ 709 Unit Area (SF) 810 1,002 947 926 Monthly Rent Per Sq. Ft. $0.68 $ 0.84 $0.78 $0.77 Monthly Rent $ 470 $ 585 $ 516 $ 522 Unit Area (SF) 450 570 450 480 Monthly Rent Per Sq. Ft. $1.03 $ 1.18 $1.08 $1.09
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 ---------------------------------------------------------------------------------------------------------- 1A10 - 1Br/1Ba 172 600 $515 $0.86 $ 88,580 $1,062,960 1B10 - 1Br/1Ba 20 615 $530 $0.86 $ 10,600 $ 127,200 1C10 - 1 Br/1Ba 64 726 $590 $0.81 $ 37,760 $ 453,120 2A20 - 2 Br/2Ba 88 810 $650 $0.80 $ 57,200 $ 686,400 2B20 - 2 Br/2Ba 7 886 $720 $0.81 $ 5,040 $ 60,480 2C20 - 2Br/2Ba 32 903 $775 $0.86 $ 24,800 $ 297,600 EA10 - Efficiency 80 450 $450 $1.00 $ 36,000 $ 432,000 -------- ---------- Total $259,980 $3,119,760
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 29 COOPER'S POND, TAMPA, FLORIDA 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 30 COOPER'S POND, TAMPA, FLORIDA 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 $2,860,964 $ 6,179 $2,957,495 $ 6,388 $2,970,184 $ 6,415 Vacancy $ 98,214 $ 212 $ 132,352 $ 286 $ 185,567 $ 401 Credit Loss/Concessions $ 62,958 $ 136 $ 42,976 $ 93 $ 221,594 $ 479 ------------------------------------------------------------------------------------------- Subtotal $ 161,172 $ 348 $ 175,328 $ 379 $ 407,161 $ 879 Laundry Income $ 34,930 $ 75 $ 36,037 $ 78 $ 33,524 $ 72 Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Other Misc. Revenue $ 257,860 $ 557 $ 241,898 $ 522 $ 390,189 $ 843 ------------------------------------------------------------------------------------------- Subtotal Other Income $ 292,790 $ 632 $ 277,935 $ 600 $ 423,713 $ 915 ------------------------------------------------------------------------------------------- Effective Gross Income $2,992,582 $ 6,463 $3,060,102 $ 6,609 $2,986,736 $ 6,451 Operating Expenses Taxes $ 195,807 $ 423 $ 230,976 $ 499 $ 225,052 $ 486 Insurance $ 47,573 $ 103 $ 149,892 $ 324 $ 115,160 $ 249 Utilities $ 180,868 $ 391 $ 170,941 $ 369 $ 199,178 $ 430 Repair & Maintenance $ 70,645 $ 153 $ 49,514 $ 107 $ 31,525 $ 68 Cleaning $ 99,182 $ 214 $ 111,583 $ 241 $ 110,484 $ 239 Landscaping $ 150,750 $ 326 $ 157,894 $ 341 $ 197,480 $ 427 Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Marketing & Leasing $ 33,989 $ 73 $ 40,583 $ 88 $ 39,232 $ 85 General Administrative $ 375,879 $ 812 $ 386,722 $ 835 $ 315,932 $ 682 Management $ 150,532 $ 325 $ 164,252 $ 355 $ 149,048 $ 322 Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ------------------------------------------------------------------------------------------- Total Operating Expenses $1,305,225 $ 2,819 $1,462,357 $ 3,158 $1,383,091 $ 2,987 Reserves $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ------------------------------------------------------------------------------------------- Net Income $1,687,357 $ 3,644 $1,597,745 $ 3,451 $1,603,645 $ 3,464 FISCAL YEAR 2003 ANNUALIZED 2003 --------------------------- ---------------------------- MANAGEMENT BUDGET PROJECTION AAA PROJECTION --------------------------- ---------------------------- -------------------------------- DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT % ------------------------------------------------------------------------------------------------------------------------------------ Revenues Rental Income $3,042,000 $ 6,570 $3,013,812 $ 6,509 $3,119,760 $ 6,738 100.0% Vacancy $ 136,440 $ 295 $ 283,688 $ 613 $ 280,778 $ 606 9.0% Credit Loss/Concessions $ 186,600 $ 403 $ 279,112 $ 603 $ 187,186 $ 404 6.0% ----------------------------------------------------------------------------------------------- Subtotal $ 323,040 $ 698 $ 562,800 $ 1,216 $ 467,964 $ 1,011 15.0% Laundry Income $ 57,600 $ 124 $ 23,060 $ 50 $ 34,725 $ 75 1.1% Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 0.0% Other Misc. Revenue $ 315,600 $ 682 $ 400,856 $ 866 $ 393,550 $ 850 12.6% ----------------------------------------------------------------------------------------------- Subtotal Other Income $ 373,200 $ 806 $ 423,916 $ 916 $ 428,275 $ 925 13.7% ----------------------------------------------------------------------------------------------- Effective Gross Income $3,092,160 $ 6,679 $2,874,928 $ 6,209 $3,080,071 $ 6,652 100.0% Operating Expenses Taxes $ 290,912 $ 628 $ 291,396 $ 629 $ 291,690 $ 630 9.5% Insurance $ 112,695 $ 243 $ 111,168 $ 240 $ 113,435 $ 245 3.7% Utilities $ 188,400 $ 407 $ 244,352 $ 528 $ 219,925 $ 475 7.1% Repair & Maintenance $ 36,000 $ 78 $ 53,704 $ 116 $ 57,875 $ 125 1.9% Cleaning $ 114,000 $ 246 $ 113,652 $ 245 $ 113,435 $ 245 3.7% Landscaping $ 174,000 $ 376 $ 171,720 $ 371 $ 173,625 $ 375 5.6% Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 0.0% Marketing & Leasing $ 45,000 $ 97 $ 36,632 $ 79 $ 57,875 $ 125 1.9% General Administrative $ 333,900 $ 721 $ 304,404 $ 657 $ 324,100 $ 700 10.5% Management $ 155,688 $ 336 $ 145,568 $ 314 $ 154,004 $ 333 5.0% Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 0.0% ----------------------------------------------------------------------------------------------- Total Operating Expenses $1,450,595 $ 3,133 $1,472,596 $ 3,181 $1,505,964 $ 3,253 48.9% Reserves $ 0 $ 0 $ 0 $ 0 $ 115,750 $ 250 7.7% ----------------------------------------------------------------------------------------------- Net Income $1,641,565 $ 3,545 $1,402,332 $ 3,029 $1,458,357 $ 3,150 47.3%
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 15% based on the subject's historical performance, as well as the anticipated future market conditions. AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 31 COOPER'S POND, TAMPA, FLORIDA 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 32 COOPER'S POND, TAMPA, FLORIDA SUMMARY OF OVERALL CAPITALIZATION RATES
COMP. NO. SALE DATE OCCUP. PRICE/UNIT OAR -------------------------------------------------------------------------------- I-1 Jul-02 90% $25,000 9.50% I-2 Feb-02 80% $29,787 9.43% I-3 Dec-01 95% $34,583 10.27% I-4 Jun-00 93% $27,734 9.68% I-5 Dec-00 Unknown $26,066 NA High 10.27% Low 9.43% Average 9.72%
Based on this information, we have concluded the subject's overall capitalization rate should be 10.00%. 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 11.00%. 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 13.00%. 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 13.00% indicates a value of $13,600,000. In this instance, the reversion figure contributes AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 33 COOPER'S POND, TAMPA, FLORIDA approximately 34% 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 CAPITALIZATION APPROACH PAGE 34 COOPER'S POND, TAMPA, FLORIDA DISCOUNTED CASH FLOW ANALYSIS COOPER'S POND
YEAR APR-2004 APR-2005 APR-2006 APR-2007 APR-2008 APR-2009 FISCAL YEAR 1 2 3 4 5 6 ---------------------------------------------------------------------------------------------------------------------------------- REVENUE Base Rent $3,119,760 $3,197,754 $3,277,698 $3,359,640 $3,443,631 $3,529,722 Vacancy $ 280,778 $ 287,798 $ 294,993 $ 302,368 $ 309,927 $ 317,675 Credit Loss $ 187,186 $ 191,865 $ 196,662 $ 201,578 $ 206,618 $ 211,783 Concessions $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ---------------------------------------------------------------------------------------- Subtotal $ 467,964 $ 479,663 $ 491,655 $ 503,946 $ 516,545 $ 529,458 Laundry Income $ 34,725 $ 35,593 $ 36,483 $ 37,395 $ 38,330 $ 39,288 Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Other Misc. Revenue $ 393,550 $ 403,389 $ 413,473 $ 423,810 $ 434,406 $ 445,266 ---------------------------------------------------------------------------------------- Subtotal Other Income $ 428,275 $ 438,982 $ 449,956 $ 461,205 $ 472,735 $ 484,554 ---------------------------------------------------------------------------------------- EFFECTIVE GROSS INCOME $3,080,071 $3,157,073 $3,236,000 $3,316,900 $3,399,822 $3,484,818 OPERATING EXPENSES: Taxes $ 291,690 $ 300,441 $ 309,454 $ 318,738 $ 328,300 $ 338,149 Insurance $ 113,435 $ 116,838 $ 120,343 $ 123,953 $ 127,672 $ 131,502 Utilities $ 219,925 $ 226,523 $ 233,318 $ 240,318 $ 247,528 $ 254,953 Repair & Maintenance $ 57,875 $ 59,611 $ 61,400 $ 63,242 $ 65,139 $ 67,093 Cleaning $ 113,435 $ 116,838 $ 120,343 $ 123,953 $ 127,672 $ 131,502 Landscaping $ 173,625 $ 178,834 $ 184,199 $ 189,725 $ 195,416 $ 201,279 Security $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Marketing & Leasing $ 57,875 $ 59,611 $ 61,400 $ 63,242 $ 65,139 $ 67,093 General Administrative $ 324,100 $ 333,823 $ 343,838 $ 354,153 $ 364,777 $ 375,721 Management $ 154,004 $ 157,854 $ 161,800 $ 165,845 $ 169,991 $ 174,241 Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ---------------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES $1,505,964 $1,550,372 $1,596,094 $1,643,168 $1,691,634 $1,741,533 Reserves $ 115,750 $ 119,223 $ 122,799 $ 126,483 $ 130,278 $ 134,186 ---------------------------------------------------------------------------------------- NET OPERATING INCOME $1,458,357 $1,487,478 $1,517,106 $1,547,248 $1,577,910 $1,609,099 Operating Expense Ratio (% of EGI) 48.9% 49.1% 49.3 49.5% 49.8 50.0% Operating Expense Per Unit $ 3,253 $ 3,349 $ 3,447 $ 3,549 $ 3,654 $ 3,761 YEAR APR-2010 APR-2011 APR-2012 APR-2013 APR-2014 FISCAL YEAR 7 8 9 10 11 ------------------------------------------------------------------------------------------------------------------------ REVENUE Base Rent $3,617,965 $3,708,414 $3,801,125 $3,896,153 $3,993,557 Vacancy $ 325,617 $ 333,757 $ 342,101 $ 350,654 $ 359,420 Credit Loss $ 217,078 $ 222,505 $ 228,067 $ 233,769 $ 239,613 Concessions $ 0 $ 0 $ 0 $ 0 $ 0 ------------------------------------------------------------------------------ Subtotal $ 542,695 $ 556,262 $ 570,169 $ 584,423 $ 599,033 Laundry Income $ 40,270 $ 41,277 $ 42,309 $ 43,367 $ 44,451 Garage Revenue $ 0 $ 0 $ 0 $ 0 $ 0 Other Misc. Revenue $ 456,397 $ 467,807 $ 479,502 $ 491,490 $ 503,777 ------------------------------------------------------------------------------ Subtotal Other Income $ 496,668 $ 509,084 $ 521,812 $ 534,857 $ 548,228 ------------------------------------------------------------------------------ EFFECTIVE GROSS INCOME $3,571,938 $3,661,237 $3,752,767 $3,846,587 $3,942,751 OPERATING EXPENSES: Taxes $ 348,293 $ 358,742 $ 369,504 $ 380,589 $ 392,007 Insurance $ 135,447 $ 139,511 $ 143,696 $ 148,007 $ 152,447 Utilities $ 262,602 $ 270,480 $ 278,594 $ 286,952 $ 295,561 Repair & Maintenance $ 69,106 $ 71,179 $ 73,314 $ 75,514 $ 77,779 Cleaning $ 135,447 $ 139,511 $ 143,696 $ 148,007 $ 152,447 Landscaping $ 207,317 $ 213,537 $ 219,943 $ 226,541 $ 233,337 Security $ 0 $ 0 $ 0 $ 0 $ 0 Marketing & Leasing $ 69,106 $ 71,179 $ 73,314 $ 75,514 $ 77,779 General Administrative $ 386,992 $ 398,602 $ 410,560 $ 422,877 $ 435,563 Management $ 178,597 $ 183,062 $ 187,638 $ 192,329 $ 197,138 Miscellaneous $ 0 $ 0 $ 0 $ 0 $ 0 ------------------------------------------------------------------------------ TOTAL OPERATING EXPENSES $1,792,908 $1,845,802 $1,900,261 $1,956,330 $2,014,059 Reserves $ 138,212 $ 142,358 $ 146,629 $ 151,027 $ 155,558 ------------------------------------------------------------------------------ NET OPERATING INCOME $1,640,819 $1,673,077 $1,705,878 $1,739,229 $1,773,134 Operating Expense Ratio (% of EGI) 50.2% 50.4% 50.6% 50.9% 51.1% Operating Expense Per Unit $ 3,872 $ 3,987 $ 4,104 $ 4,225 $ 4,350
Estimated Stabilized NOI $ 1,458,357 Sales Expense Rate 2.00% Months to Stabilized 1 Discount Rate 13.00% Stabilized Occupancy 91.0% Terminal Cap Rate 11.00%
Gross Residual Sale Price $16,119,402 Deferred Maintenance $ 0 Less: Sales Expense $ 322,388 Add: Excess Land $ 0 ----------- Other Adjustments $ 0 Net Residual Sale Price $15,797,014 ----------- PV of Reversion $ 4,653,616 Value Indicated By "DCF" $13,608,066 Add: NPV of NOI $ 8,954,450 ----------- Rounded $13,600,000 PV Total $13,608,066
"DCF" VALUE SENSITIVITY TABLE
DISCOUNT RATE ----------------------------------------------------------------------------------------- TOTAL VALUE 12.50% 12.75% 13.00% 13.25% 13.50% ------------------------------------------------------------------------------------------------------------------------- 10.50% $14,252,129 $14,038,669 $13,829,667 $13,625,013 $13,424,603 10.75% $14,133,611 $13,922,752 $13,716,289 $13,514,114 $13,316,122 TERMINAL 11.00% $14,020,480 $13,812,105 $13,608,066 $13,408,256 $13,212,573 CAP RATE 11.25% $13,912,377 $13,706,375 $13,504,652 $13,307,103 $13,113,626 11.50% $13,808,974 $13,605,243 $13,405,735 $13,210,347 $13,018,980
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 35 COOPER'S POND, TAMPA, FLORIDA INCOME LOSS DURING LEASE-UP The subject is currently near or at a stabilized condition. Therefore, there is no income loss during lease-up at the subject property. CONCESSIONS Concessions have historically not been utilized at the subject property or in the subject's market. Therefore, no adjustment was included for concessions. 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 10.00% percent is applicable to the subject. The results of our direct capitalization analysis are as follows: AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 36 COOPER'S POND, TAMPA, FLORIDA COOPER'S POND
TOTAL PER Sq. Ft. PER UNIT % OF EGI --------------------------------------------------------------------------------------------------------------- REVENUE Base Rent $ 3,119,760 $ 10.25 $ 6,738 Less: Vacancy & Collection Loss 15.00% $ 467,964 $ 1.54 $ 1,011 Plus: Other Income Laundry Income $ 34,725 $ 0.11 $ 75 1.13% Garage Revenue $ 0 $ 0.00 $ 0 0.00% Other Misc. Revenue $ 393,550 $ 1.29 $ 850 12.78% --------------------------------------------------------------- Subtotal Other Income $ 428,275 $ 1.41 $ 925 13.90% EFFECTIVE GROSS INCOME $ 3,080,071 $ 10.12 $ 6,652 OPERATING EXPENSES: Taxes $ 291,690 $ 0.96 $ 630 9.47% Insurance $ 113,435 $ 0.37 $ 245 3.68% Utilities $ 219,925 $ 0.72 $ 475 7.14% Repair & Maintenance $ 57,875 $ 0.19 $ 125 1.88% Cleaning $ 113,435 $ 0.37 $ 245 3.68% Landscaping $ 173,625 $ 0.57 $ 375 5.64% Security $ 0 $ 0.00 $ 0 0.00% Marketing & Leasing $ 57,875 $ 0.19 $ 125 1.88% General Administrative $ 324,100 $ 1.06 $ 700 10.52% Management 5.00% $ 154,004 $ 0.51 $ 333 5.00% Miscellaneous $ 0 $ 0.00 $ 0 0.00% TOTAL OPERATING EXPENSES $ 1,505,964 $ 4.95 $ 3,253 48.89% Reserves $ 115,750 $ 0.38 $ 250 3.76% --------------------------------------------------------------- NET OPERATING INCOME $ 1,458,357 $ 4.79 $ 3,150 47.35% "GOING IN" CAPITALIZATION RATE 10.00% VALUE INDICATION $14,583,575 $ 47.92 $ 31,498 "AS IS" VALUE INDICATION (DIRECT CAPITALIZATION APPROACH) $14,583,575 ROUNDED $14,600,000 $ 47.97 $ 31,533
AMERICAN APPRAISAL ASSOCIATES, INC. INCOME CAPITALIZATION APPROACH PAGE 37 COOPER'S POND, TAMPA, FLORIDA DIRECT CAPITALIZATION VALUE SENSITIVITY TABLE
CAP RATE VALUE ROUNDED $/UNIT $/SF --------------------------------------------------------------------------------------------------- 9.25% $15,766,026 $15,800,000 $34,125 $51.92 9.50% $15,351,131 $15,400,000 $33,261 $50.60 9.75% $14,957,512 $15,000,000 $32,397 $49.29 10.00% $14,583,575 $14,600,000 $31,533 $47.97 10.25% $14,227,878 $14,200,000 $30,670 $46.66 10.50% $13,889,119 $13,900,000 $30,022 $45.67 10.75% $13,566,116 $13,600,000 $29,374 $44.69
CONCLUSION BY THE DIRECT CAPITALIZATION METHOD Applying the capitalization rate to our estimated NOI results in an estimated value of $14,600,000. 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 $13,600,000 Direct Capitalization Method $14,600,000
Giving consideration to the indicated values provided by both techniques, we have concluded the estimated value by the income capitalization approach to be $14,500,000. AMERICAN APPRAISAL ASSOCIATES, INC. RECONCILIATION AND CONCLUSION PAGE 38 COOPER'S POND, TAMPA, FLORIDA 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 $13,900,000 Income Approach $14,500,000 Reconciled Value $14,500,000
The Income 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 13, 2003 the market value of the fee simple estate in the property is: $14,500,000 AMERICAN APPRAISAL ASSOCIATES, INC. ADDENDA COOPER'S POND, TAMPA, FLORIDA ADDENDA AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A COOPER'S POND, TAMPA, FLORIDA EXHIBIT A SUBJECT PHOTOGRAPHS AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A COOPER'S POND, TAMPA, FLORIDA SUBJECT PHOTOGRAPHS [PICTURE] [PICTURE] OFFICE CLUBHOUSE - FRONT VIEW OFFICE CLUBHOUSE - REAR VIEW [PICTURE] [PICTURE] CLUBHOUSE - INTERIOR VIEW OF CLUBROOM CLUBHOUSE POOL AREA [PICTURE] [PICTURE] TYPICAL APARTMENT BUILDING- FRONT ANGLE VIEW TYPICAL APARTMENT BUILDING - REAR ANGLE VIEW AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT A COOPER'S POND, TAMPA, FLORIDA SUBJECT PHOTOGRAPHS [PICTURE] [PICTURE] INTERIOR VIEW - MODEL APARTMENT INTERIOR VIEW - MODEL APARTMENT [PICTURE] [PICTURE] 2ND CLUBHOUSE - EXTERIOR VIEW 2ND POOL VIEW [PICTURE] [PICTURE] LANDSCAPING VIEW (REAR OF 2ND CLUBHOUSE) TYPICAL WATER VIEWS AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B COOPER'S POND, TAMPA, FLORIDA EXHIBIT B SUMMARY OF RENT COMPARABLES AND PHOTOGRAPH OF COMPARABLES AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B COOPER'S POND, TAMPA, FLORIDA PHOTOGRAPHS OF COMPARABLE SALE PROPERTIES COMPARABLE I-1 COMPARABLE I-2 COMPARABLE I-3 COUNTRY CROSSING ASHLEY SQUARE FALLS OF TAMPA BAY 7903 Holly Lea Court 5606 Josephine Court 4610 North Armenia Avenue Tampa, FL Tampa, FL Tampa, FL [PICTURE] [PICTURE] [PICTURE] COMPARABLE I-4 COMPARABLE I-5 HORIZON PARK SWAN LAKE 4900 N MacDill Avenue 3401 N. Lakeview Drive Tampa, FL Tampa, FL [PICTURE] [PICTURE] AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B COOPER'S POND, TAMPA, FLORIDA SUMMARY OF COMPARABLE RENTAL PROPERTIES
COMPARABLE DESCRIPTION SUBJECT R - 1 --------------------------------------------------------------------------------------------------------------------------- Property Name Cooper's Pond Ralston Place Management Company Aimco Aimco LOCATION: Address 6221 N Dale Mabry Hwy 2803 W Sligh Avenue City, State Tampa, Florida Tampa, FL County Hillsborough Hillsborough Proximity to Subject 1-mile southwest PHYSICAL CHARACTERISTICS: Net Rentable Area (SF) 304,342 121,200 Year Built 1980 1978 Effective Age 23 25 Building Structure Type Wood/Stucco Wood Parking Type (Gr., Cov., etc.) Open Open Number of Units 463 200 Unit Mix: Type Unit Qty. Mo. Rent Type Unit Qty. Mo. 1 1A10 - 1Br/1Ba 600 172 $526 1 1Br/1Ba 600 112 $505 2 1B10 - 1Br/1Ba 615 20 $548 2 1Br/1Ba 600 112 $505 3 1C10 - 1 Br/1Ba 726 64 $609 4 2 Br/2Ba 810 40 $670 4 2A20 - 2 Br/2Ba 810 88 $689 5 2 Br/2Ba 810 40 $670 5 2B20 - 2 Br/2Ba 886 7 $759 7 1Br/1Ba-Studio 450 48 $502 6 2C20 - 2Br/2Ba 903 32 $786 7 EA10 - Efficiency 450 80 $461 Average Unit Size (SF) 657 627 Unit Breakdown: Efficiency 2-Bedroom Efficiency 2-Bedroom 1-Bedroom 3-Bedroom 1-Bedroom 3-Bedroom CONDITION: Average APPEAL: Average AMENITIES: Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling X Balcony W/D Connect. X Balcony X W/D Connect. Fireplace Other Fireplace Other Cable TV Ready Cable TV Ready Project Amenities X Swimming Pool X Swimming Pool X Spa/Jacuzzi X Car Wash Spa/Jacuzzi X Car Wash Basketball Court BBQ Equipment Basketball Court BBQ Equipment Volleyball Court Theater Room Volleyball Court Theater Room X Sand Volley Ball Meeting Hall Sand Volley Ball Meeting Hall X Tennis Court Secured Parking Tennis Court Secured Parking X Racquet Ball X Laundry Room Racquet Ball X Laundry Room Jogging Track Business Office Jogging Track Business Office X Gym Room X Freshwater Lake X Gym Room X Freshwater Lake OCCUPANCY: 94% 95% LEASING DATA: Available Leasing Terms 6 to 12 months 6 to 12 months Concessions Pet Deposit Yes Utilities Paid by Tenant: X Electric X Natural Gas X Electric X Natural Gas Water Trash Water Trash Confirmation Manager Leasing Agent Telephone Number 813-933-2449 813-933-2449 NOTES: Nearby property also managed by Aimco. Rents shown are base rate for unit type. Add up to $50/month to each unit type for premiums COMPARISON TO SUBJECT: Slightly Superior COMPARABLE COMPARABLE DESCRIPTION R - 2 R - 3 ------------------------------------------------------------------------------------------------------------------------------ Property Name Park Place Hidden Lake Management Company NPV Realty AIMCO LOCATION: Address 3132 W Lambright Street 2701 West Waters Avenue City, State Tampa, FL Tampa, FL County Hillsborough Hillsborough Proximity to Subject 0.2-mile southwest 1-mile north PHYSICAL CHARACTERISTICS: Net Rentable Area (SF) 89,640 199,983 Year Built 1984 1986 Effective Age 19 16 Building Structure Type Wood/stucco/brick Wood/stucco/brick Parking Type (Gr., Cov., etc.) Open Open Number of Units 120 267 Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo. 1 1 Br/1Ba 710 32 $645 1 1 Br/1Ba 650 64 $539 1 1Br/1Ba - Studio 570 48 $585 2 1Br/1Ba - Studio 550 64 $509 2 1Br/1Ba - Studio 570 48 $585 6 2 Br/2Ba 1,000 72 $679 2 1 Br/1Ba 710 32 $645 6 2 Br/2Ba 1,050 3 $679 5 2 Br/2Ba 990 40 $775 3 1 Br/1Ba 750 64 $559 6 2 Br/2Ba 990 40 $775 7 1Br/1Ba - Studio 570 48 $585 4 1 Br/1Ba 710 32 $645 Average Unit Size (SF) 717 749 Unit Breakdown: Efficiency 2-Bedroom Efficiency 2-Bedroom 1-Bedroom 3-Bedroom 1-Bedroom 3-Bedroom CONDITION: Slightly Superior Slightly Superior APPEAL: Good Slightly Superior AMENITIES: Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling X Balcony X W/D Connect. X Balcony W/D Connect. Fireplace X Other X Fireplace X Other Cable TV Ready WD in all units Cable TV Ready Screened Patios Project Amenities X Swimming Pool X Swimming Pool Spa/Jacuzzi Car Wash Spa/Jacuzzi Car Wash Basketball Court 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 X Secured Parking Tennis Court X Secured Parking Racquet Ball X Laundry Room Racquet Ball X Laundry Room Jogging Track Business Office Jogging Track Business Office X Gym Room X Freshwater Lake Gym Room X Freshwater Lake OCCUPANCY: 95% 98% LEASING DATA: Available Leasing Terms 6 to 13 months 6 to 12 months Concessions 1st & last mo free on 13 month lease $99 move-in special Pet Deposit Yes Yes Utilities Paid by Tenant: X Electric X Natural Gas X Electric X Natural Gas Water Trash Water Trash Confirmation Leasing Agent Leasing Agent Telephone Number 813-935-8953 813-932-9533 NOTES: Similar in terms of location. Superior in Very similar property in terms of location. terms of age and construction, gated Located off Waters Avenue, between Habana community, and washer dryers in all units. and Amenia. Overall average condition but superior to subject in terms of age and appeal Rents shown are base rate for unit type. Add Rents shown are base rate for unit type. Add up to $50/month to each unit type for up to $50/month to each unit type for premiums premiums COMPARISON TO SUBJECT: Superior Superior COMPARABLE COMPARABLE DESCRIPTION R - 4 R - 5 ----------------------------------------------------------------------------------------------------------------------------------- Property Name Courtney Cove Countrywood Apartments Management Company GMH Associates JMG Realty LOCATION: Address 5510 Himes Avenue 12101 Dale Mabry Hwy City, State Tampa, FL Tampa, FL County Hillsborough Hillsborough Proximity to Subject 1.5-mile southwest 3-mile north PHYSICAL CHARACTERISTICS: Net Rentable Area (SF) 224,856 336,608 Year Built 1983 1978 Effective Age 20 25 Building Structure Type Wood/stucco Wood/stucco Parking Type (Gr., Cov., etc.) Open Open Number of Units 324 536 Unit Mix: Type Unit Qty. Mo. Type Unit Qty. Mo. 1 1 Br/1Ba 600 107 $535 1 1 Br/1Ba 600 112 $480 7 1Br/1Ba - Studio 450 32 $470 7 1Br/1Ba - Studio 450 272 $530 4 2 Br/2Ba 810 96 $660 4 2 Br/2Ba 810 152 $680 2 1 Br/1Ba 615 21 $550 2 1 Br/1Ba 600 112 $480 3 1 Br/1Ba 726 32 $729 3 2 Br/2Ba 810 152 $680 5 2 Br/2Ba 885 4 $760 5 2 Br/2Ba 810 152 $680 6 2 Br/2Ba 903 32 $700 6 2 Br/2Ba 810 152 $680 Average Unit Size (SF) 694 679 Unit Breakdown: Efficiency 2-Bedroom Efficiency 2-Bedroom 1-Bedroom 3-Bedroom 1-Bedroom 3-Bedroom CONDITION: Average Average APPEAL: Average Average AMENITIES: Unit Amenities Attach. Garage Vaulted Ceiling Attach. Garage Vaulted Ceiling X Balcony W/D Connect. X Balcony W/D Connect. Fireplace Other Fireplace Other Cable TV Ready Cable TV Ready Project Amenities X Swimming Pool X Swimming Pool Spa/Jacuzzi Car Wash Spa/Jacuzzi Car Wash Basketball Court 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 X Secured Parking X Tennis Court Secured Parking Racquet Ball X Laundry Room Racquet Ball X Laundry Room Jogging Track Business Office Jogging Track Business Office X Gym Room X Freshwater Lake X Gym Room Freshwater Lake OCCUPANCY: 91% 97% LEASING DATA: Available Leasing Terms 6 to 12 months 6 to 12 months Concessions $99 move-in special plus 1st month free $600 off on 12 month lease for 1 BR unit Pet Deposit Yes Yes Utilities Paid by Tenant: X Electric X Natural Gas X Electric X Natural Gas Water Trash Water Trash Confirmation Leasing Agent Leasing Agent Telephone Number 813-879-1251 813-961-7932 NOTES: Very similar to subject property but considered Good location off Dale Mabry, near the subject to be in superior condition. Parking lot property. Superior in terms of location and recently resurfaced and buildings are freshly visibility, overall curb appeal painted. Rents shown are base rate for unit type. Add up Rents shown are base rate for unit type. Add to $50/month to each unit type for premiums up to $50/month to each unit type for premiums COMPARISON TO SUBJECT: Slightly Superior Superior
AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT B COOPER'S POND, TAMPA, FLORIDA PHOTOGRAPHS OF COMPARABLE RENT PROPERTIES COMPARABLE R-1 COMPARABLE R-2 COMPARABLE R-3 RALSTON PLACE PARK PLACE HIDDEN LAKE 2803 W Sligh Avenue 3132 W Lambright Street 2701 West Waters Avenue Tampa, FL Tampa.FL Tampa, FL [PICTURE] [PICTURE] [PICTURE] COMPARABLE R-4 COMPARABLE R-5 COURTNEY COVE COUNTRYWOOD APARTMENTS 5510 Himes Avenue 12101 Dale Mabry Hwy Tampa, FL Tampa, FL [PICTURE] [PICTURE] AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C COOPER'S POND, TAMPA, FLORIDA EXHIBIT C ASSUMPTIONS AND LIMITING CONDITIONS (3 PAGES) AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT C COOPER'S POND, TAMPA, FLORIDA 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 COOPER'S POND, TAMPA, FLORIDA 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 COOPER'S POND, TAMPA, FLORIDA 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 COOPER'S POND, TAMPA, FLORIDA 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 report analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and represent the impartial and 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 or bias with respect to the property that is the subject of this report and have no personal interest or bias with respect to the parties involved. The engagement of American Appraisal Associates, Inc., and myself personally in this assignment and compensation for American Appraisal Associates, Inc., are not contingent on the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. The analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice and the Principles of Appraisal Practice and Code of Ethics of the American Society of Appraisers. I have made an inspection of the real property that is the subject of this report. No one has provided me with significant real property appraisal assistance. -s- Alice MacQueen ------------------- Alice MacQueen Vice President, Real Estate Group Florida Certified General Real Estate Appraiser #RZ0002202 AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E COOPER'S POND, TAMPA, FLORIDA EXHIBIT E QUALIFICATIONS OF APPRAISER (2 PAGES) AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E COOPER'S POND, TAMPA, FLORIDA ALICE MACQUEEN VICE PRESIDENT AND PRINCIPAL, REAL ESTATE GROUP POSITION Alice MacQueen serves as a Vice President and Principal for the Dallas Real Estate Group of American Appraisal Associates, Inc. ("AAA"). EXPERIENCE Valuation Ms. MacQueen specializes in the appraisal of investment real estate and is annually involved in the valuation of several billion dollars of real property. The purposes of these valuations include allocation of purchase price, charitable donation, financing, purchase, sale, and syndication. She has also been involved in land planning analyses for major mixed-use developments. She has appraised various types of real estate including congregate care facilities, industrial properties, manufacturing facilities, office buildings, recreational subdivisions and planned unit developments, single- and multifamily residential properties, and shopping centers. Special-purpose properties she has appraised include campgrounds, churches, country clubs, golf courses, historic landmarks, proprietary cemeteries, and schools. In addition to market value opinions, Ms. MacQueen has provided feasibility and highest and best use studies. She has also been involved in several research projects, providing background studies involving major property tax appeal cases. These studies included the impact of inflation, rate of return considerations, sales-assessment ratio analyses, and the applicability of income capitalization to commercial and industrial properties. AMERICAN APPRAISAL ASSOCIATES, INC. EXHIBIT E COOPER'S POND, TAMPA, FLORIDA Ms. MacQueen has appraised real estate in 46 U.S. states, Mexico, and Puerto Rico. Business Ms. MacQueen joined AAA in 1983. She served as Regional Real Estate Director for the southeastern United States from 1987 to 1992 and as National Director of the Real Estate Valuation Group from 1992 through 1995, when she assumed her current position. Before joining the firm, she was involved in property management for five years and spent an additional five years as an appraiser, consultant, and research analyst. EDUCATION Realtors Institute of Virginia Greenbrier College for Women - Liberal Arts STATE CERTIFICATIONS State of Arizona, Certified General Real Estate Appraiser, #30987 State of Florida, Certified General Appraiser, #RZ0002202 State of Georgia, Certified General Real Property Appraiser, #239776 State of Minnesota, Certified General Real Property Appraiser, #AP-20144872 State of New Mexico, General Certified Appraiser, #001626-G State of Utah, State Certified General Appraiser, #CG00057001 PROFESSIONAL American Society of Appraisers, Candidate AFFILIATIONS AMERICAN APPRAISAL ASSOCIATES, INC. COOPER'S POND, TAMPA, FLORIDA GENERAL SERVICE CONDITIONS AMERICAN APPRAISAL ASSOCIATES, INC. COOPER'S POND, TAMPA, FLORIDA 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.