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Exhibit A
RIDIAM j& A& IPPRAISAL GROUP AN APPRAISAL REPORT OF THE PROPOSED RESIDENCES AT DR. KING BOULEVARD APARTMENTS, A RENT AND INCOME RESTRICTED COMPLEX TO BE LOCATED AT DR. KING BOULEVARD AND NW 15TH AVENUE, MIAMI, FLORIDA 33147 PREPARED FOR SELTZER MANAGEMENT GROUP, INC. AS AGENT FOR THE FLORIDA HOUSING FINANCE CORPORATION 17633 ASHELY DRIVE PANAMA CITY BEACH, FLORIDA 32413 ATTN: MR. JUSTIN COLES LOCATION COORDINATES LONGITUDE: -80.248385 LATITUDE: 25.845509 DATE OF VALUATION SEPTEMBER 10, 2019 DATE OF REPORT SEPTEMBER 11, 2019 MERIDIAN APPRAISAL GROUP, INC. ROBERT VON, PRESIDENT STATE -CERTIFIED GENERAL REAL ESTATE APPRAISER RZ 1604 MARK S. DAVIS, SENIOR APPRAISER STATE -CERTIFIED GENERAL REAL ESTATE APPRAISER RZ 1229 ERID1 1331 SUNDIAL PoINT WINTER SPRINGS, FLORIDA 32708708 M TEL 407.875.6933 APPRAISAL GRouPN FAx407.875.1061 September 11, 2019 Mr. Justin Coles Seltzer Management Group, Inc., as agent for the Florida Housing Finance Corporation 17633 Ashely Drive Panama City Beach, Florida 32413 Re: Appraisal of the 120 unit, rent and income restricted apartment complex, located at Dr. King Boulevard and NW 15" Avenue, Miami, Miami -Dade County, Florida 33147. Meridian File No: 19 -PIP Dear Mr. Coles: As requested, we have made the necessary investigations and analyses to appraise the proposed Residences at Dr. King Boulevard apartment complex. The property is currently vacant land. The improvements will consist of a 120 unit complex situated on two sites divided by Dr. King Boulevard totaling 1.006 acres. The seven -story building on the northern parcel will contain 60 units and the five -story building on the southern portion will also contain 60 units. The property will be considered a Class B improvement in the local area. The subject will set aside 20% (24) of the units for households earning 30% or less of the Area Median Income (AMI), 63% (75) of the units for households earning 60% or less of AMI, 8% (nine) of the units for households earning 80% or less of AMI and 10% (12) of the units at market rates. The subject will be restricted by the Housing Credit, HOME, SURTAX and Tax -Exempt Bond programs. The rent and income restrictions remain for at least 50 years from the placed in service date. The purpose of this appraisal was to estimate the market value of the leased fee interest in the subject property as restricted by the Housing Credit, HOME, SURTAX and Tax -Exempt Bond programs and the hypothetical values as if an un -restricted market rate property. We have provided the values of the property as is, as if complete and as if stabilized. The date of valuation is September 10, 2019. The date of completion is estimated at December 10, 2020, and the dates of stabilization are estimated to be March 10, 2021 (market) and March 10, 2021 (restricted). The intended use of this appraisal is for loan underwriting and/or credit decisions. The intended user of this report is Seltzer Management Group, Inc., as agent for the Florida Housing Finance Corporation, and CitiBank N.A., Freddie Mac, Miami -Dade County and the City of Miami. No other use or users are intended. "This report is for the use and benefit of and may be relied upon by, a. the Seller/Servicer, Freddie Mac and any successors and assigns ("Lender"); b. independent auditors, accountants, attorneys and other professionals acting on behalf of Lender; c. governmental agencies having regulatory authority over Lender; d. designated persons pursuant to an order or legal process of any court or governmental agency; e. prospective purchases of the Mortgage; and f. with respect to any debt (or portion thereof) and/or securities secured, directly or indirectly, by the Property which is the subject of this report, the following parties and their respective successors and assigns; — any placement agent or broker/dealer and any of their respective affiliates, agents and advisors; — any initial purchaser or subsequent hold of such debt and/or securities; MR. JUSTIN COLES SEPTEMBER 11, 2019 PAG 2 A M4R-014N VA A - — any Servicer or other agent acting on behalf of the holders of such debt and/or securities; — any indenture trustee; — any rating agency; and — any institutional provider from time to time of any liquidity facility or credit support for such financings In addition, this report, or reference to this report, may be included or quoted in any offering circular, information circular, offering memorandum, registration statement, private placement memorandum, prospects or sales brochure (in either electronic or hard copy format) in connection with securitization or transaction involving such debt (or portion thereof) and/or securities." The subject property is further described and identified by both legal and narrative descriptions within the text of the following appraisal report. Market value, fee simple interest, leased fee interest and other appraisal terms are defined within the text of the following appraisal report. General Assumptions and Limiting Conditions concerning the valuation of the subject property can be found following this section of the report. This is an Appraisal Report prepared under Standards Rule 2-2(a) and performed under Standard Rule 1 of the Uniform Standards of Professional Appraisal Practice (USPAP). We have formed the opinion that the market value of the fee simple interest in the subject site, as is, as vacant land, based on market conditions prevailing on September 10, 2019, was: ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS ($1,800,000)* We have formed the opinion that the hypothetical market value of the leased fee interest in the subject property as an un -restricted market rent property, as if complete, including $240,000 in personal property, based on market conditions prevailing on September 10, 2019, was: FOURTEEN MILLION ONE HUNDRED TWENTY THOUSAND DOLLARS ($14,120,000)* We have formed the opinion that the hypothetical market value of the leased fee interest in the subject property as an un -restricted market rent property, as if stabilized, including $240,000 in personal property based on market conditions prevailing on September 10, 2019, was: FOURTEEN MILLION THREE HUNDRED TEN THOUSAND DOLLARS We have formed the opinion that the hypothetical market value of the leased fee interest in the subject property, as restricted by the Housing Credit, HOME, SURTAX and Tax -Exempt Bond programs, as if complete, including $240,000 in personal property, and with market financing, based on market conditions prevailing on September 10, 2019, was: SEVEN MILLION EIGHT HUNDRED SIXTY THOUSAND DOLLARS ($7,860,000)* We have formed the opinion that the hypothetical market value of the leased fee interest in the subject property, as restricted by the Housing Credit, HOME, SURTAX and Tax -Exempt Bond programs, as if stabilized, including $240,000 in personal property, and with market financing, based on market conditions prevailing on September 10, 2019, was: MR. JUSTIN COLES SEPTEMBER 1112019 PAGE 3 EIGHT MILLION DOLLARS ($8,000,000)- * Please see the Extraordinary Assumptions and Hypothetical Conditions. MEB,014N The following report was prepared in conformity with the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. As such, it conforms to the Uniform Standards of Professional Appraisal Practice (USPAP) that became effective January 1, 2018. This report meets or exceeds the guidelines of Federal, Financial Institutions Reform, Recovery and Enforcement Act of 1989 (Title XI of FIRREA), as amended, as issued by the Office of the Comptroller of Currency, CitiBank, FreddieMac and Seltzer Management Group, Inc. appraisal guidelines. Based upon the steps and investigations taken to appraise the subject property, we are of the opinion we have complied with the Competency Provision of USPAP, as required by the FIRREA Act of 1989 and subsequent updates. This letter of transmittal precedes the appraisal report, further describing the subject property and containing the reasoning and pertinent data leading to the final value estimates. Respectfully submitted, Meridian Appraisal Group, Inc. Digitally signed by Robert Von, President Date: 2019.09.11 14:34:21 -04'00' Robert Von, President State -Certified General Real Estate Appraiser RZ 1604 Digitally signed by Mark S. Davis Date: 2019.09.11 14:35:22 -04'00' Mark S. Davis, Senior Appraiser State -Certified General Real Estate Appraiser RZ 1229 RV:MSD:dmh TABLE OF CONTENTS CERTIFICATION...................................................................................................................................... 1 EXECUTIVESUMMARY.......................................................................................................................... 3 GENERAL ASSUMPTIONS AND LIMITING CONDITIONS................................................................. 5 DEFINITION OF IMPORTANT TERMS.................................................................................................. 7 SUBJECTEXHIBITS.................................................................................................................................. 9 SUBJECTPHOTOGRAPHS.................................................................................................................... 12 SUBJECT PROPERTY DATA................................................................................................................. 14 REGIONALOVERVIEW......................................................................................................................... 19 APARTMENT MARKET OVERVIEW.................................................................................................... 29 NEIGHBORHOOD ANALYSIS............................................................................................................... 66 SITEEXHIBITS........................................................................................................................................ 68 SITEANALYSIS...................................................................................................................................... 72 IMPROVEMENTS EXHIBITS................................................................................................................. 74 IMPROVEMENT ANALYSIS.................................................................................................................. 87 HIGHEST AND BEST USE ANALYSIS.................................................................................................. 89 MARKETABILITY AND EXPOSURE PERIODS................................................................................... 91 VALUATIONPROCEDURE................................................................................................................... 92 COSTAPPROACH.................................................................................................................................. 94 SALES COMPARISON APPROACH.....................................................................................................110 INCOME CAPITALIZATION APPROACH...........................................................................................123 RECONCILIATION AND FINAL VALUE ESTIMATE (AS A MARKET RENTAL PROPERTY) ......148 SALES COMPARISON APPROACH.....................................................................................................151 INCOME CAPITALIZATION ANALYSIS.............................................................................................166 RECONCILIATION AND FINAL VALUE ESTIMATE (AS A RESTRICTED PROPERTY) ...............191 FAVORABLEFINANCING...................................................................................................................193 VALUATION OF SUBJECT'S HOUSING CREDITS.............................................................................196 ADDENDA APPRAISERS' QUALIFICATIONS ENGAGEMENT LETTER RENT AND INCOME LIMITS UTILITY ALLOWANCES DEVELOPER'S PRO -FORMA TAX CREDIT EQUITY SYNDICATION LETTER ACTUAL CASH VALUE 19 -PIP MERIDIAN APPRAISAL GROUP, INC. CERTIFICATION The undersigned appraisers hereby certify that to the best of their knowledge and belief: • the statements of fact contained in this appraisal report (upon which the analyses, opinion and conclusions expressed herein are based) are true and correct. • the analysis, opinions and conclusion in the report are limited only by the assumptions and limiting conditions and any extraordinary assumptions if any, set forth, and are the personal, unbiased professional analyses, opinions and conclusions of the appraisers. • the appraisers have no present or prospective interest in the subject property and have no personal bias with respect to the parties involved. • the appraisers' compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. • the reported analyses, opinions and conclusions were developed and this appraisal report has been prepared in conformity with the requirements of the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice, as promulgated by the Appraisal Standards Board of the Appraisal Foundation. The use of this report is subject to all regulations issued by the appropriate regulatory entities regarding the enactment of Title XI of the Financial Institution Reform, Recovery and Enforcement Act of 1989 (FIRREA). • we do not authorize the out -of -context quoting from or partial reprinting of this appraisal report and neither all nor part of this appraisal report shall be disseminated to the general public by the use of any public communications media without the prior written consent of the undersigned appraisers. • use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. • the undersigned President and Senior Appraiser certify that they have personally inspected the subject property and the comparables used within this report. • no one other than the undersigned prepared the personal unbiased professional analyses, conclusions and opinions concerning real estate that are set forth in this appraisal report unless and except as acknowledged in this report. • the appraisers have performed within the context of the competency provision of the Uniform Standards of Professional Appraisal Practice. • this appraisal assignment was not made, nor was the appraisal rendered, on the basis of a requested minimum valuation, specific valuation or an amount which would result in approval of a loan. • Robert Von, President, and Mark S. Davis, Senior Appraiser, have recently completed a market study for the subject property as the only services involving the subject property of this report within the three year period immediately preceding the acceptance of this assignment. Property Location The subject is located on the north and south sides of Dr. King Boulevard (NW 62nd Street) and the west side of NW 151 Avenue in Miami, Miami -Dade County Florida. Date of Valuation and Date of Report The date of valuation for the subject is as of September 10, 2019, our most recent date of inspection of the subject property. The date of this report is September 11, 2019. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. CERTIFICATION (CONT'D) Final Value Conclusions Value Estimated Interest Appraised Date of Value Estimated Value* Market Value of Subject Site, As Though Vacant Fee Simple September 10, 2019 $1,800,000* Hypothetical Market Value, As If Complete, Market Leased Fee September 10, 2019 $14,120,000* Hypothetical Market Value, As If Stabilized, Market Leased Fee September 10, 2019 $14,310,000* Hypothetical Market Value, As If Complete, As Restricted Leased Fee September 10, 2019 $7,860,000* Hypothetical Market Value, As If Stabilized, As Restricted Leased Fee September 10, 2019J $8,000,000* * Please see the Extraordinary Assumptions and Hypothetical Conditions. Certified by Meridian Appraisal Group, Inc. Digitally signed by Robert Von, President " Date: 2019.09.11 14:34:50 -04'00' Robert Von, President State -Certified General Real Estate Appraiser RZ 1604 Digitally signed by Mark S. Davis Date: 2019.09.1 1 14:35:51 -04'00' Mark S. Davis, Senior Appraiser State -Certified General Real Estate Appraiser RZ 1229 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 2 EXECUTIVE SUMMARY Location The subject is located on the north and south sides of Dr. King Boulevard (NW 62nd Street) and the west side of NW 15' Avenue in Miami, Miami -Dade County Florida. Type of Property The subject is a proposed 120 unit apartment complex. The subject will set aside 20% (24) of the units for households earning 30% or less of the Area Median Income (AMI), 63% (75) of the units for households earning 60% or less of AMI, 8% (nine) of the units for households earning 80% or less of AMI and 10% (12) of the units at market rates. Highest & Best Use The highest and best use "as vacant" is multi -family development. The proposed improvements consist of multi- family housing that is generally consistent with the ideal improvements. Site Description The subject site is irregular in shape being divided by Dr. King Boulevard and contains a total of 1.006 acres. The northern parcel will contain 0.531 acre or 23,146 square feet (after vacation and dedication of a portion of a 15' wide alleyway) and the southern parcel the southern parcel contains 0.475 acre or 20,675 square feet. The subject has frontage of 245' along the south side of Dr. King Boulevard (NW 62nd Street) and 100' along the west side of NW 15t' Street for the South Parcel and the North Parcel has 260' along the north side of Dr. King Boulevard and 140' of frontage along the west side of NW 15' Avenue; the North Parcel is also divided by a 15' wide alleyway formerly known as NW 141 Court that will be vacated and dedicated to the subject site. Note that Dr. King Boulevard (NW 62nd Street) is a four -lane, divided highway with landscaped medians and center turn lanes. The subject will have one access point to the North Parcel along the north side of Dr. King Boulevard at the alleyway and one access point to the South Parcel from the west side of NW 15' Avenue. We observed no apparent drainage problems when we inspected the subject, which appears to be located within Zone "X". Zone "X" is an area outside the 100 year flood plain; mandatory flood insurance purchase requirements do not appear to apply. It is zoned T6-8-0 & T4 -L, Suburban Transect Zone - Open and General Urban Transect Zone - Limited, by the City of Miami. The future land use designation is Mixed -Use. Based on these investigations, we are of the opinion that the subject site is suitable for multi -family development. Qualified Census Tract (QCT): Yes (15.01 & 19.03) Difficult to Develop Area (DDA): No (33147) Improvement Analysis The subject will consist of 120 apartment units within two, five and seven -story apartment buildings with 60 units in each building. The subject will set aside 20% (24) of the units for households earning 30% or less of the Area Median Income (AMI), 63% (75) of the units for households earning 60% or less of AMI, 8% (nine) of the units for households earning 80% or less of AMI and 10% (12) of the units at market rates. The subject will be restricted by the Housing Credit, HOME, SURTAX and Tax -Exempt Bond programs. The following is the subject's proposed unit mix. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. Unit Mlix vfiffi Set Asides Unit Type Set Aside # Of Units Unit Size (S.F.) Total S.F. 1/1 30% AMI 24 563 13,512 1/1 60% AMI 75 563 42,225 1/1 80% AMI 9 563 5,067 1/1 IMarket 1 121 5631 6,756 Total/Avg. 1 1 1201 563 67,560 19 -PIP MERIDIAN APPRAISAL GROUP, INC. EXECUTIVE SUMMARY (CONT'D) The total area within the units is 67,560 square feet, resulting in an average unit size of 563 square feet. The indicated density is 119.29 units per acre. Unit amenities will include refrigerator, range/oven, garbage disposal, dishwasher, ceiling fans, blinds, and washer -dryer hook-ups. The common amenities will include leasing offices, laundry in each building, community room and fitness center. Interest Appraised Fee Simple & Leased fee Estimated Exposure Period 12 months Date of Valuation and Date of Report The date of valuation for the subject is as of September 10, 2019, our most recent date of inspection of the subject property. The date of this report is September 11, 2019. Final Value Conclusions Value Estimated Interest Appraised Date of Value Estimated Value* Market Value of Subject Site, As Though Vacant Fee Simple September 10, 2019 $1,800,000* Hypothetical Market Value, As If Complete, Market Leased Fee September 10, 2019 $14,120,000* Hypothetical Market Value, As If Stabilized, Market Leased Fee September 10, 2019 $14,310,000* Hypothetical Market Value, As If Complete, As Restricted Leased Fee September 10, 2019 $7,860,000* Hypothetical Market Value, As If Stabilized, As Restricted Leased Fee September 10, 2019_L $8,000,000* * Please see the Extraordinary Assumptions and Hypothetical Conditions. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 4 GENERAL ASSUMPTIONS AND LIMITING CONDITIONS This appraisal report has been made with the following general assumptions: 1. The legal description used in this report is assumed to be correct. 2. The appraisers have made no survey of the property and no responsibility is assumed in connection with such matters. Sketches in this report are included only to assist the reader in visualizing the property. 3. No responsibility is assumed for matters of legal nature affecting title to the property nor is an opinion of title rendered. The title is assumed to be good and merchantable. 4. Information and data furnished by others is usually assumed to be true, correct and reliable. When such information and data appears to be dubious and when it is critical to the appraisal, a reasonable effort has been made to verify all such information; however, the appraiser assumes no responsibility for its accuracy. 5. All mortgages, liens, encumbrances, leases and servitude have been disregarded unless so specified within the report. The property is appraised as though under responsible ownership and competent management. 6. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures rendering it more or less valuable. No responsibility is assumed for such conditions or for engineering that may be required to discover them. 7. It is assumed that there is full compliance with all applicable federal, state and local environmental regulations and laws unless noncompliance is stated, defined and considered in the appraisal report. 8. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless nonconformity has been stated, defined and considered in the appraisal report. 9. It is assumed that all required licenses, consents or other legislative or administrative authority from any local, state or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based. 10. It is assumed that the utilization of the land and improvements will be within the boundaries or property lines or the property described and that there will be no encroachments or trespass unless noted within the report. 11. The dates of value to which the opinions in this report apply are reported herein. The appraiser assumes no responsibility for economic or physical factors occurring at some later dates that may affect the opinions stated herein. 12. Unless otherwise stated in the report, the existence of hazardous material, which may or may not be present on the property, was not observed by the appraisers. The appraisers have no knowledge of the existence of such materials on or in the property. The appraisers, however, are not qualified to detect such substances. The presence of substances such as asbestos, urea -formaldehyde foam insulation, or potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, of for any expertise or engineering knowledge required to discover them. The reader is urged to retain an expert in this field, if desired. This appraisal report has been made with the following general limiting conditions: The appraisers will not be required to give testimony or appear in court because of having made this appraisal, with reference to the property in question, unless arrangements have been previously made thereof. 2. Possession of the report, or copy thereof, does not carry with it the right of publication. It may not be used for any purposes by any person other than the party to whom it is addressed without written consent of the appraiser, and in any event only with proper written qualification and only in its entirety. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. GENERAL ASSUMPTIONS AND LIMITING CONDITIONS (CONVD) 3. The distribution of the total valuation in this report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for the land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. 4. No environmental impact studies were requested or made in conjunction with this appraisal, and the appraiser hereby reserves the right to alter, amend, revise, or rescind any of the value opinions based upon any subsequent environmental impact studies, research or investigation. 5. Neither all nor any part of the contents of this report, or copy thereof, shall be conveyed to the public through advertising, public relations, news, sales or any other media without written consent and approval of the appraisers. Nor shall the appraiser, firm or professional organization of which the appraiser is a member be identified without written consent of the appraisers. 6. Acceptance of and/or use of this appraisal report constitutes acceptance of the foregoing General Assumptions and General Limiting Conditions. Extraordinary Assumptions and Hypothetical Limiting Conditions This report has been made with the following Extraordinary Assumptions: We have assumed and our conclusions are based upon the assumption that the improvements will be constructed as presented in this report with completion in or about December 10, 2020. 2. We have assumed that the subject's site plan will be approved as discussed in this report. The proposed unit sizes and unit mix in this report are based on the plans provided by the developer and contained in the report. Some slight differences in unit sizes for the only unit type apparently due to the building designs; however, the layouts and sizes are fairly similar. With the information provided we were able to determine an overall unit mix by calculating the average unit sizes for use in this report. There are 23 different one -bedroom unit sizes ranging between 493 and 704 square feet with most between 536 and 582 square feet. The average size of the one -bedroom units is 563.49 square feet that we have rounded to 563 square feet. Due to rounding, the reported total square feet (67,560) is slightly lower than the actual figure (67,619). We have assumed that the unit mix and sizes in the summary, based on the plans provided by the developer, are accurate for the purposes of this report. 4. The subject site is in the legal process of obtaining abandoned right-of-way that will be part of the subject property and include easements for ground level use. The legal description on the survey provided and used in this report does not include this small strip of land and, further, it will reportedly have a ground level access easement for public use. We have included this area in the subject site for the purposes of this report and assume that it will be incorporated into the subject site legal description. This report has been made with the following Hypothetical Conditions: The subject will be restricted by Housing Credit, HOME, SURTAX and Tax -Exempt Bond programs. Therefore, operation solely as a market rate project is a hypothetical condition. 2. The subject is proposed, therefore, the as if complete and stabilized values are hypothetical conditions. Please be advised that use of the Extraordinary Assumptions and Hypothetical Conditions in this report might have affected the assignment results and the final opinions of value may have been affected by their use. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 6 DEFINITION OF IMPORTANT TERMS Market Value' The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is consummation of a sale as of a specified date and passing of title from seller to buyer under conditions whereby: • Buyer and seller are typically motivated; • Both parties are well informed or well advised and each acting in what they consider their own best interests; • A reasonable time is allowed for exposure in the open market; • Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and • The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. Highest and Best Use' The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility and maximum profitability. Alternatively, the probable use of land or improved property — specific with respect to the user and timing of the use — that is adequately supported and results in the highest present value. Fee Simple Interest' 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. Leased Fee Interese An ownership interest held by a landlord with the rights of use and occupancy conveyed by lease to others. The rights of the lessor (the fee simple owner) and the lessee are specified by contract terms contained within the lease. Leasehold Interests The interest held by the lessee (the tenant or renter) through a lease transferring the rights of use and occupancy for a stated term under certain conditions. Going -Concern Value' The market value of all the tangible and intangible assets of an established and operating business with an indefinite life, as if sold in aggregate; more accurately termed the market value of the going concern. The value of an operating business enterprise. Goodwill may be separately measured but is an integral component of going -concern value when it exists and is recognizable. "Bulk" Market Value' The value of multiple units, subdivided lots, or properties in a portfolio as though sold to a single buyer in one transaction. Sometimes called bulk sale value. In some appraisal circles, this value estimate is known as "Bulk" value — the value of a property sold in bulk to one investor who intends to undertake the sellout of the individual units to those who will ultimately use them. "Bulk" value appears to comply with the value requisites in the former Federal Home Loan Bank Board (FHLBB) Memorandum R -41c, Subtitle 15, Page 7. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. DEFINITION OF IMPORTANT TERMS (CONVD) "Report the market value to a single purchaser, as of the date of completion, for all properties, wherein a portion of the overall real property rights for physical assets would typically be sold to its ultimate users over some future period. Valuations involving such properties must fully reflect all appropriate deductions and discounts, as well as the anticipated cash flows to be derived from the disposition of the assets over time. Appropriate deductions and discounts are considered to be those which reflect all expenses associated with the disposition of the realty, as of the date of completion, as well as the cost of capital and entrepreneurial profit." The topic of "bulk" value is also consistent with the Interagency Appraisal and Evaluation Guidelines (December 2, 2010) requirement that an appraisal "must analyze and report appropriate deductions and discounts for proposed construction or renovation, partially leased buildings, non -market lease terms, and tract developments with unsold units". Liquidation Value' The most probable price that a specified interest in real property is likely to bring under the following conditions: • Consummation of a sale within a short time period (we would add: "within a severely limited future marketing period specified by the client"). • The property is subjected to market conditions prevailing as of the date of valuation. • Both the buyer and seller are acting prudently and knowledgeably. • The seller is under extreme compulsion to sell. • The buyer is typically motivated. • Both parties are acting in what they consider to be their best interests. • A normal marketing effort is not possible due to the brief exposure time. • Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto. • The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. Definition Sources 1 Title XI- Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), (Pub.L.No.101-73, Title XI, 103 Stat. 511(1989); 12 U.S.C. 3310, 3331-3351, as subsequently amended; Interagency Appraisal and Evaluation Guidelines dated December 2, 2010; The Appraisal of Real Estate, Appraisal Institute, 14th Edition, 2013, Page 59 2 The Appraisal of Real Estate, Appraisal Institute, 14' Edition, 2013, Page 333 3 The Dictionary of Real Estate Appraisal, Appraisal Institute, 5' Edition, 2010, Page 78 4 The Dictionary of Real Estate Appraisal, Appraisal Institute, 4t' Edition, 2002, Page 161. The Dictionary's 5' Edition definition of fee simple interest (Page 111) is "A freehold (ownership interest) where the possessory interest has been granted to another parry by creation of a landlord - tenant relationship (i.e. a lease)." While both are accurate, we consider the Dictionary's 4' Edition definition to be more descriptive and easily understood. 5 The Dictionary of Real Estate Appraisal, Appraisal Institute, 4' Edition, 2002, Page 162. The Dictionary's 5' Edition definition of leasehold interest (Page 111) is "The tenant's possessory interest created by a lease." While both are accurate, we consider the Dictionary's 4t' Edition definition to be more descriptive and easily understood. 6 The Dictionary of Real Estate Appraisal, Appraisal Institute, 5' Edition, 2010, Page 88 7 The Dictionary of Real Estate Appraisal, Appraisal Institute, 5' Edition, 2010, Page 24 8 The Dictionary of Real Estate Appraisal, Appraisal Institute, 5' Edition, 2010, Pages 115-116 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 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J� C W 66TH T= � l . 65TH ST = E1 x — r3N1 65TH ST HW 56TH ST ����L�� � �M1]YY � �Nenli Ghi = �dC 7 z z 54T H Sf Q _= 54TH ST D CC] Cal `a NW 63RD STlk f—� Subject Property a x� r 0,[J rn 62ND TER �n _ 1?, ^ r 7d�NLb�p ST ,ail ?� ILJI `LJI u CitteftY�r-i'4�ar Station I , on n mems NW 61ST 5T nny w , I~ N T I v � 0-Tli Nt^! 6[7TH ST NW GOTH ST Nyp 54TH Sr Ij} ++ �hrf 54TH ST Ad W Restair NW 58TH TER rn T+1W 58TH t� H 4 S GR z z x aT NW 58TH St D� NW 57tH 51 7V1N 57TH Sr '�� 4 j z �, STH 5-T ' D 'Pr ' L '' — NW 55TH TER '+ row 55TH � J �� I� El � 55THSr M 0.. . Enterprises Fi. Shan h 1 rn o rnantp� NW 5 64th a NW 54TH Sr z z :s j El 54th aya6ol iv ulsshlme Gars 4n _ Static Inc NW 53RD ST _r3W 53 D ST NW 53RD ST _— �— Fish NW 52ND ;{ { 441 s" —., �¢l Deco !]rive lC I. z rn z �NW_ 5G n SOTH.sr� 513TH ST CSW N �44THI SD 1t I Manar Park vr�ti ns �7 41 vrs Hadley Park F 0 40D sQQ 12Q4 15Q4 2000 t wood Farf ��.. .. - 19 -PIP MERIDIAN APPRAISAL GROUP, INC. a ow .M rh,i I ` 1. L1 ■ FLOOD MAP ALCMALIL Aft Flo �yP } I• ' N y a ♦ W1°35•.1 i j '� 'i1r "I sry[1i.31 P� �# -look IRA.w. .L 19—PIP MERIDIAN APPRAISAL GROUP, INC. 11 SUBJECT PHOTOGRAPHS NW 62ND STREET LOOKING WEST FROM NW 15TH NW 62ND STREET LOOKING EAST FROM NW 15TH AVENUE - SUBJECT ON LEFT AND RIGHT AVENUE 62ND STREET - SUBJECT ON LEFT NW 15TH AVENI JE LOOKING SOUTH FROM NW 62ND STREET - SUBJECT ON RIGHT NORTHERN PARCEL LOOKING WEST FROM NW SOUTHERN PARCEL LOOKING WEST FROM NW 62ND STREET 15TH AVENUE 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 12 SUBJECT PHOTOGRAPHS (CONT'D) 15' ALLEY ON NORTHERN PARCEL LOOKING NORTH FROM NW 62ND STREET NORTHERN PARCEL LOOKING NORTH FROM NW 62ND STREET SOUTHERN PARCEL LOOKING SOUTH FROM NW 62ND STREET NORTHERN PARCEL LOOKING NORTHWEST FROM NW 62ND STREET 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 13 }F. A f1- 5 -V y y#Yhk7i�Y.�,JL�.".'�tl� I' NORTHERN PARCEL LOOKING NORTH FROM NW 62ND STREET SOUTHERN PARCEL LOOKING SOUTH FROM NW 62ND STREET NORTHERN PARCEL LOOKING NORTHWEST FROM NW 62ND STREET 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 13 SUBJECT PROPERTY DATA Purpose and Date of Appraisal The purpose of this appraisal was to estimate the market value of the leased fee interest in the subject property. We have provided the value of the property as is, as if complete and as if stabilized. We have provided these values as restricted, and under the hypothetical condition as an un -restricted market property. The date of valuation is September 10, 2019. The projected date of completion is on or about December 10, 2020, the dates of stabilization are estimated to be in or about March 10, 2021 (market) and March 10, 2021 (restricted). The date of the appraisal is September 11, 2019. Intended Use and Users of Appraisal The intended use of this appraisal is for loan underwriting and/or credit decisions; this valuation assignment was developed consistent with the scope specified by Seltzer Management Group, Inc. The intended user of this report is Seltzer Management Group, Inc., as agent for the Florida Housing Finance Corporation, and CitiBank N.A., Freddie Mac, Miami -Dade County and the City of Miami. No other use or users are intended. Type The Residences at Dr. King Boulevard apartments will consist of 120 rental units. The subject will set aside 20% (24) of the units for households earning 30% or less of the Area Median Income (AMI), 63% (75) of the units for households earning 60% or less of AMI, 8% (nine) of the units for households earning 80% or less of AMI and 10% (12) of the units at market rates. The subject will be restricted by the Housing Credit, HOME, SURTAX and Tax -Exempt Bond programs. Location The subject is located on the north and south sides of Dr. King Boulevard (NW 62nd Street) and the west side of NW 15th Avenue in Miami, Miami -Dade County Florida. Scope of the Appraisal The scope of this appraisal included the analysis of market conditions for multi -family apartment buildings in the subject market. This analysis included investigations of existing and proposed developments that would impact upon the rental income/expenses of the subject property, as well as an analysis of comparable properties' income and expense histories. Comparable rental data was gathered from personal property inspections and telephone interviews. Additionally, we have analyzed data gathered from comparable apartment building sales that were obtained from the county tax rolls and from other Florida markets with sales of similar apartment projects. We also compiled data from local planning and zoning departments, county property appraisers' records, and other government departments. We have utilized the Sales Comparison Approach to value the land "as though vacant." We utilized the Sales Comparison and Income Approaches to value the subject as restricted and under the hypothetical condition as an un -restricted market property. The Cost Approach was only used under the hypothetical condition and was not applicable as restricted. Legal Description The legal description is as follows (see Extraordinary Assumptions): 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 14 SUBJECT PROPERTY DATA (CONT'D) South Parcel: North Parcel: PARCEL 7 LOTS 19 AND 20 IN BLOCK 11. ORANGE HEIGHTS, ACCORDING TO THE PLAT FHPFOF, A5 RECORDED IN PLAT BOOK 14, PAGE 62. OF THE PUEILIC RECORD'S OF MIAMI -FADE COUNTY, FLORIDA, LESS THE NORTH 30 FEET- TOGETHER WITH THE NORTH 112 OF ALLEY LYING SOUTH AND ADJACENT rO LOFS 19 AND 20 _WD ALLEY CLOSED PER ORDINANCE 13492. PARCEL 8 LOTS 21 rHROUGH 25 AND THE FEST 16 FF47 OF LOT 26 1,ES5 THE NORTH 36 FM OF ACL LOTS IN BLOCK I1, OF ORANGE EIEIGHrS, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT' BOOK 14, AT PAGE 62, OF THE PDXX RECORDS OF MIAMI-DADE COUNTY, FLORIDA; TOGETHER WITH THE NORTH 1112 OF ALLEY LYING SOUTH AND ALRIACENT TO LOTS 79 AND 20, SAID ALLEY CLOSED PER ORDINANCE 1344.2. PARCEL 9 LOTS 27 AND 28 AND THE EAST 9 FEET OF LOT 25, LESS THE NORTH 30 FEET OF ALL LOTS, IN BLOCK 11 OF ORANGE MEICHTS; ACCORDING TO THE PLAT THEREOF AS RECORDED IN FLAT BOOK 14, PAGE 62 OF THE PUBLIC RECORDS OF AdA MI -RADE COUNTY, FLORIDA, LESS THAT PORTION OF SAID LOT 28 WHICH LIES WITHIN THE EXTERNAL AREA FORMED BY A 25.00 FOOT RADIUS ARC CONCAVE TO THE SOUTHWEST; TANGENT TO THE EAST LINE OF LOT 28, AND TANGENT TO THE SOUTH LINE OF THE NORTH 30.00 FEET OF S41D BLOCK 11; TOGETHER MTH T1IE NORTH 112 OF ALLEY LYING SOUTH AND ADJACENT FO LOTS 27, 28 AND 26, SAID ALLEY CLOSED PER OR01NANCE 13492. THE ABOVE DESCRIBED LANDS FORM A SINGLE CONTICUOUS PARCEL, WITHOUT GAP, GORE HLA TUS OR OVERLAP. PARCEL 1 LOT 15, BLOCK 61 Of EA.5r LIBERTY CITY SECTION A, ACCORO7NG TO 7HE PLAT FHEREGF, AS RECORDER IN PLAF BOOK 39 PAGE 19 OF THE PUBLIC RECORDS OF MONI-DAOE COUNFr, FLOODA. PARCEL 2 LOTS I1, 12. 13, AND 14, OF BLOCK 6, OF EAST LIBERTY CITY SECTION A, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 39, AT PAGE 19, OF THE PUBLIC RECORDS OF MIAINI-DARE COUNTY. FLORIDA, PARCEL 3 LOT 9, IN BLOCK 6, OF EAST LIBERTY CITE; SECTION A, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN FLAT BOOK 39, AT PAGE 19, OF THE -USLIC RECORDS OF MAMI-RADE COUNTY FLOR10A, A.%K/A 1515 N.W. 52ND ST., ROW, FLORIDA. PARCEL 4 LOT 8, BLOCK 6, OF BASF LIBERTY CITY SECTION A, ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 39, AT PAGE 19, OF THE PUBLIC RECORDS OF Mr6AMI-awf_ COUNTY FLORL7A. PARCEL 5 LOT 7. BLOCK 6, OF EAST LIBERTY CITY SECTION A, ACCORDING TO THE PLAT FHEREOF, AS RECORDED IN PLAT BOOK 39, AT PAGE 19, OF THE PUBLIC RECORDS OF 1l MMII-RADE COUNTY, FLORIDA. PARCE4 B LOT 6, BLOCK 6, OF EAST USERTY CITY SIECRON A, ACCORDING TO TFIE PCA r THEREOF, AS RECORDED IN FIAT BOOK .3s AT PAGE Ts, OF THE PUBLIC RECORDS OF M1AM'I-DARE COUNTY FLORIDA. Property Rights Appraised The interest appraised in the property is the leased fee interest. The future leases on the subject property will not result in a leasehold value, so the value of the leased fee interest is estimated to be similar to the fee simple value estimate. Ownership and Three -Year History of Subject According to the Miami -Dade County Tax Rolls, the subject property is currently owned by City of Miami. The subject is currently under contract to Residences at Dr. King Boulevard, Ltd. via assignment from Atlantic 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 15 SUBJECT PROPERTY DATA (CONVD) Pacific Communities for a consideration of $155,621.12 plus some closing costs and extension fees to close on or by December 31, 2019; this contract is not considered to be at market levels. There have been no other transfers of the property within the last three years. Flood Zone According to the FEMA Flood Hazard Boundary Map, Community Panel 12086C -0303L dated September 11, 2009, the subject property appears to be located within Zone "X". Zone "X" is an area outside the 100 year flood plain; mandatory flood insurance purchase requirements do not appear to apply. Zoning/Future Land Use The subject property is zoned T6-8-0 & T4 -L, Suburban Transect Zone - Open and General Urban Transect Zone -Limited, by the City of Miami. The future land use designation is Mixed -Use. The subject appears to conform to the zoning requirements. Assessment and Taxes Current Taxes The subject's 2018 taxes are calculated as follows. Subject Property Parcel # 01-3114-035-2000; 2020 & 2030; 01- 3114-035- 027-1210, 1220, 1230, 1240, 1250 & 1290 Total Assessment $408,174 Exemption $408,174 Taxable Assessed Value $0 Current Year Milla e Rate 0.0209454 Current Year Gross Ad Valorem Taxes $0 Non Ad Valorem Taxes $0 Total Gross Taxes $0 Net Taxes w/4% Discount for paymcnt in November $0 Net Taxes Per Unit $0 Up to a 4% discount is available if taxes are paid in November, decreasing 1% per month. The current and previous years' taxes are paid; there are no delinquent taxes. Estimated Taxes as a Market Property All appraisals start with the definition of market value. The following definition of market value is from the Uniform Standards of Professional Appraisal Practice (USPAP): Market Value: a type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal. From 2018 Florida Statutes 193.1555 Beginning in the year following the year the property becomes eligible for assessment pursuant to this section, the property shall be reassessed annually on January 1. Any change resulting from such reassessment may not exceed 10 percent of the assessed value of the property for the prior year. Except as provided in this subsection, property assessed under this section shall be assessed at just value as of January 1 of the year following a qualifying improvement or change of ownership or control. In other words, properties that have a change in ownership or control can be assessed at full just value, while those that have not had a change in ownership or control are limited to a 10 percent increase. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 16 SUBJECT PROPERTY DATA (CONVD) Real Estate Tax Comparables Market value appraisals presume the transfer of the property appraised, therefore, real estate tax comparables are properties that sold in the year previous to the assessment. Properties that did not sell in the previous year are not real estate tax comparables for market value appraisals. In addition, there is no statutory reason that Property Appraisers should treat affordable housing projects any differently than market rate projects when it comes to real estate tax assessment following a sale. In Florida, real estate tax increases are capped at 10% annually for commercial properties. The one exception is if a property is sold in the previous tax year. The following chart summarizes the tax comparables: The assessed value is allowed to reflect full market value in the tax year following a sale. The chart above indicates a range of assessments following a sale of 77% to 80% and average 78%. Since we are valuing the subject in exchange, we have assumed a sale of the property at our appraised value. We have reconciled a ratio of about 78% for the subject property. This results in an estimated assessment of $93,000 per unit. The resulting tax estimate is shown below, including personal property. Subject's Estimated Taxes - Market Number of Units 120 Reconciled Assessment per Unit $93,000 Total Assessment $11,160,000 Milla e Rate 0.0209454 Market Tax Comparables Estimated Non Ad Valorem Taxes $0 Total Gross Taxes $233,751 No. Project Name County Year No. of 2018 Total 2017 Sale Assessed/ Built Units Assessment Price Sale Price 1 Rio Apartments Miami -Dade 1971 294 $33,193,000 $42,000,000 79% 2 Berkshire Coral Gable Miami -Dade 2015 276 $77,421,000 $100,000,000 77% 3 Milagro Coral Gables Miami -Dade 2013 237 $60,002,000 $78,150,000 771/0 4 Lago Paradiso/ Miami-Dade 1987 424 $49,075,538 $61,240,000 80% 5 1 Club Prado Miami -Dade 1 20161 196 1 $48,140,0001 $61,000,000 79% Averages 2000 285 $53,566,308 $68,478,000 78% The assessed value is allowed to reflect full market value in the tax year following a sale. The chart above indicates a range of assessments following a sale of 77% to 80% and average 78%. Since we are valuing the subject in exchange, we have assumed a sale of the property at our appraised value. We have reconciled a ratio of about 78% for the subject property. This results in an estimated assessment of $93,000 per unit. The resulting tax estimate is shown below, including personal property. Subject's Estimated Taxes - Market Number of Units 120 Reconciled Assessment per Unit $93,000 Total Assessment $11,160,000 Milla e Rate 0.0209454 Estimated Ad Valorem Taxes $233,751 Estimated Non Ad Valorem Taxes $0 Total Gross Taxes $233,751 Less: 4% Early Payment Discount $9,350 Plus: Personal Property Taxes $4,503 Total Real Estate and Personal Property Taxes $228,904 Total Real Estate and Personal Property Taxes/Unit $1,9081 Estimated Taxes as a Restricted Property Since we are valuing the subject in exchange, we have assumed a sale of the property at our appraised value. We have reconciled a ratio of about 78% for the subject property. We reconcile an assessment for the subject at $52,000 per unit. The resulting tax estimate is shown below, including personal property. Subject's Estimated Taxes - Restricted Number of Units 120 Reconciled Assessment per Unit $52,000 Total Assessment $6,240,000 Milla e Rate 0.0209454 Estimated Ad Valorem Taxes $130,699 Estimated Non Ad Valorem Taxes $0 Total Gross Taxes $130,699 Less: 4% Early Payment Discount $5,228 Plus: Personal Property Taxes $4,503 Total Real Estate and Personal Property Taxes 129,975 Total Real Estate and Personal Property Taxes/Unit $1,083 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 17 REGIONAL AREA MAP fJ Fort 0 en Murdock Pnrt Charlotte Palmdale Rr- 7B 93 H -i - Boca Grand ---- - ----- -------- ---+- La 72 Fort Myers Lehigh noes Pins kl-d1, Cap6_G C- 6 6 ral Sanibel Fort Myers Beach Estero ----I , Imin j �j - B nitaSprirligs— iniland --------------- ----------- - % - alm cilty-j P pPort Salerno a Hobe Sound Endi 'PDrtmavana 001al SPH1196 i&ld Beach Pomp no Beach T2mwac- k -Dakl nd Park BROWARDL Fo Lauderdale Holl cad + orka Not h Bay Village Mi i Mer Biscayne A11AN11 DADE, COUNTY mcrimond HeightS1 verrine i 1-, 1. South Nlomf ReigIM-- I f'Cutler Ridge Pilnceton,/ASoulds Br -d flril2gtead Rh -1 H-nq, F-- Biscsyna N Sh-k Everglades N S.1v 4 Bm Fla 'a, - "y Largo javernier MONROIECOUNTY 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 18 D 4Canal Point ; %.J no Beach Ye Its, KN rth Palm Beach 01 ewistonfl �Paholkee ' 710 Ri lem Beach -441 -westpalmBeac Jjjj p EWC111 9-A A, -Ealki C'O Clarke Shores F Elo, nton Reach D4 I.DL ay Beach Z7 SH o a Raton 001al SPH1196 i&ld Beach Pomp no Beach T2mwac- k -Dakl nd Park BROWARDL Fo Lauderdale Holl cad + orka Not h Bay Village Mi i Mer Biscayne A11AN11 DADE, COUNTY mcrimond HeightS1 verrine i 1-, 1. South Nlomf ReigIM-- I f'Cutler Ridge Pilnceton,/ASoulds Br -d flril2gtead Rh -1 H-nq, F-- Biscsyna N Sh-k Everglades N S.1v 4 Bm Fla 'a, - "y Largo javernier MONROIECOUNTY 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 18 REGIONAL OVERVIEW The subject property is located in Miami -Dade County in what we have defined as the South Florida Regional Area (region) in the southern portion of Florida. For purposes of our discussion, the South Florida Regional Area is defined to contain the Miami -Fort Lauderdale -Palm Beach CBSA (Broward County, Miami -Dade County and Palm Beach County) as defined by the US Census Bureau and also includes the Key West Micropolitan Statistics Area (Monroe County). Palm Beach County was created in 1909 and was named after its first settled community which was named Palm Beach due to the palm trees and beaches. Broward County was created in 1915 and was named after Napoleon Bonaparte Broward, Governor of Florida from 1905 to 1909. Dade County was created in 1836 under the Territorial Act of the United States and was named after Major Francis L. Dade, a soldier killed in 1835 in the Second Seminole War. When created it included Dade, Broward and Palm Beach Counties. It was renamed to Miami -Dade County in November 1997. Monroe County was created in 1823 and was named after James Monroe, the fifth President of the United States. These four counties encompass about 10,055 square miles of which 3,757 square miles are made up of water (37.36%) and 6,298 square miles are land area (83.51%). Palm Beach County encompasses 2,386 total square miles with 412 square miles of water (17.27%); Broward County encompasses 1,320 square miles with 114 square miles of water (8.66%); Miami -Dade County encompasses 2,431 square miles with 485 square miles of water (19.96%); and Monroe County encompasses 3,738 square miles with 2,745 square miles of water (73.43%) and the Florida Everglades National Park makes up a large majority of the county total land area. Demographics The South Florida Regional Area's total population increased 10.14% to 6,209,305 people over the last seven years. It is expected increase 6.68% to reach 6,623,809 people by 2022. The subject property is located in Miami - Dade County where the current population increased 10.26% to 2,752,656 over the last seven years and is expected to increase 6.71% over the next five years. The Miami -Dade County population growth rate (10.26%) exceeded the regional rate (10.14%), lagged the state rate (10.36%), and exceeded the national rate (5.31%) over the last seven years. The county's population growth rate (6.71%) is expected to exceed the regional rate (6.68%), exceed the state rate (6.65%), and exceed the national rate (3.77%) over the next five years. The South Florida Regional Area total households increased 9.63% to 2,335,462 over the last seven years. It is expected to increase 6.61% to reach 2,489,786 households by 2022. The subject property is located in Miami - Dade County where the total households increased 10.56% to 958,906 over the last seven years and are expected to increase 6.94% over the next five years. The Miami -Dade County total households growth rate (10.56%) exceeded the regional rate (9.63%), exceeded the state rate (10.14%), and exceeded the national rate (5.69%) 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 19 POPULATION 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Broward Miami -Dade Monroe Palm Beach County County County County Region 82010 Census 1,748,066 2,496,435 73,090 1,320,134 5,637,725 0 2017 Estimate 1,927,988 2,752,656 78,073 1,450,588 6,209,305 2022 Projection 2,057,925 2,937,399 82,262 1,546,223 6,623,809 11 The South Florida Regional Area total households increased 9.63% to 2,335,462 over the last seven years. It is expected to increase 6.61% to reach 2,489,786 households by 2022. The subject property is located in Miami - Dade County where the total households increased 10.56% to 958,906 over the last seven years and are expected to increase 6.94% over the next five years. The Miami -Dade County total households growth rate (10.56%) exceeded the regional rate (9.63%), exceeded the state rate (10.14%), and exceeded the national rate (5.69%) 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 19 REGIONAL OVERVIEW (CONVD) over the last seven years. The Miami -Dade County total households growth rate (6.94%) is expected to exceed the regional rate (6.61%), exceed the state rate (6.67%), and exceed the national rate (3.96%) over the next five years. HOUSEHOLDS 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 Broward Miami -Dade Monroe Palm Beach County County County County Regio`' ■ 2010 Census 686,047 867,352 32,629 544,227 2,130,255 ■ 2017 Estimate 747,887 958,906 35,293 593,376 2,335,462 2022 Projection 795,628 1,025,486 37,419 631,253 2,489,786 The South Florida Regional Area's average household size increased 0.38% to 2.62 people over the last seven years from 2.61 people in 2010. The region's average household size is expected to increase 0.38% to 2.63 persons per household over the next five years. Miami -Dade County has an average household size of 2.83 people which is higher the regional area (2.62), higher the State (2.49) and higher the National average (2.57). The average household size is expected to decline 0.35% over the next five years which is at slightly less pace than the regional area (-0.33%), and at a more rapid pace than the State (remain similar) and the Nation (0.00%). AVERAGE HOUSEHOLD SIZE 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Broward County Miami -Dade Monroe County Palm Beach Region County County ■ 2010 Census 2.52 2.83 2.18 2.39 2.61 ■ 2017 Estimate 2.56 2.83 2.15 2.41 2.62 2022 Projection 2.57 2.82 2.14 2.42 2.63 11 Employment The unemployment rate for the South Florida Regional Area as of June 2018 was 3.9%. The statewide unemployment rate was 3.9% while the national unemployment rate was 4.2%. The subject is located in Miami - Dade County and the June 2018 countywide unemployment rate was 4.1%. The tables below summarize 10 year unemployment rate trends and the one year unemployment trends for the counties making up the region, 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 20 REGIONAL OVERVIEW (CONVD) the region, the state and the nation. Miami -Dade County's unemployment rate is the second highest compared to the other counties in the region, is higher than the overall region, higher than the state, and lower than national unemployment rates. 10 YEAR UN EM PLOYM ENT RATE TREN DS 14 G 12 LU 0 10 a W z 8 H vZ 6; W a 4 2 Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -Broward County Miami -Dade County Monroe County _Palm Beach County -Region Florida -United States 1 YEAR UNEMPLOYMENT RATE TRENDS 5.5 0 5 �.. o Ja 4.5 7 4 W 3.5 U I= 3 a 2.5 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2017 2017 2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 2018 Broward County 4.1 4.1 3.9 3.3 3.3 3.6 3.4 3.8 3.5 3.5 3.2 3.2 3.7 Miami -Dade County 5.0 4.8 4.9 4.7 4.6 4.6 4.7 4.7 4.6 5.0 4.2 4.0 4.1 Monroe County 2.8 2.8 2.7 3.6 3.3 3.2 3.4 3.7 3.3 3.1 2.8 2.7 3.2 Palm Beach County 4.4 4.5 4.4 3.7 3.6 3.8 3.5 4.0 3.7 3.6 3.3 3.3 3.9 Region 4.5 4.5 4.4 4.0 3.9 4.1 4.0 4.3 4.0 4.1 3.7 3.5 3.9 Florida 4.4 4.4 4.3 3.7 3.6 3.8 3.7 4.1 3.8 3.8 3.4 3.4 3.9 United States 4.5 4.6 4.5 4.1 3.9 3.9 3.9 4.5 4.4 4.1 3.7 3.6 4.2 Employment had generally kept pace with population (labor force) growth from January 2004 to March of 2007, gradually bringing the unemployment rate down to around 3.3% which was a 10 year low for the region. Concurrent with the nationwide Great Recession commencing 4Q2007, however, the local unemployment rate rapidly increased to a 10 year high of 11.2% in August 2009. Since this point, the unemployment rate has since gradually declined dropping below 10% in February 2011, below 9% in November 2011, below 8% in October 2012, below 7% in October 2013, below 6% in October 2014, below 5% in February 2016 and finally below 4% in September 2017. The current unemployment rate for the region is 3.9% and for Miami -Dade County it is 4.1 %. The following table shows total labor force (the darker blue background), employment or the total number of employed people (light blue area in foreground). The light blue employed area covers the dark blue total labor force and the dark blue area that shows represents unemployed persons in the MSA. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 21 REGIONAL OVERVIEW (CONT'D) LABOR FORCE AND EMPLOYED 3,300,000 3,200,000 3,100,000 3,000,000 2,900,000 2,800,000 2,700,000 2,600,000 2,500,000 2,400,000 2,300,000 JUL JUL JUL JUL JUL JUL JUL JUL JUL JUL 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Labor Force pEmpIoyed The US Bureau of Labor Statistics shows that the South Florida Regional Area employment had grown from 2,518,711 jobs (January 2004) to 2,798,121 jobs (January 2008), for an average of about 69,853 new jobs per year over the four year period. The peak number of jobs was 2,812,854 in November 2007. During the following two years, from January 2008 to January 2010, 301,941 jobs were lost or about 150,971,300 jobs per year. It then took almost four years (to December 2013) to recover the number of jobs lost during the recession. Year - over -year job growth for the past 12 years has averaged 79,558 jobs per year and comparing June 2018 labor force reflects 38,827 more jobs than June 2017. JOBS GAINED/LOST FOR METRO AREA 130,000 r•r'e}rr�+r c „rrr�+c*}cckc +ice rrrr�+c tee? 4 80,000 �<e??<?ke?e��e?<?t. 30,000 -20,000 -70,000 .... c r'r r :Y';:2:::::2:Z:•::;::2:::2:2:2:::: :::::::2 ...... 2:'2:2:2:2::2::::2:2:2:2:�::�.:�.:�.: n..... : t: t: t: z: :: rit; t: t: t: nnnnn. nnnnnn nnnt: t: ' t: t: t: t:: z: nnnnnn: not 120,000 `;4,;4,;4,;4,;4,;4 ,4. 4,4,;4,;4,;4,;4. kK 4,;4,;4. 777, -170,000W1 �' ........ . ........., ......... ...,.,.:, -220,000, Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 12 Month Rolling Average Building Permits Multi family Permits The table below summarizes multi -family building permits issued by county for the South Florida Regional Area for the last 10 years. Multi -family permits peaked in 2005 and declined significantly through 2009. They 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 22 REGIONAL OVERVIEW (CONVD) have been on a gradual upward trend since 2009 with 2013 levels significantly higher than 2007 levels. However, 2014 saw decline but 2015 has recovered and exceeded the 2014 levels only to decline again in 2016. MULTI FAMILY BUILDING PERMITS -ANNUALLY 18,000 16,000 14,000 12,000 00 10,000 - 8,000 6,000 4,000 2,000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -Region 8,054 4,594 1,588 2,852 3,265 8,261 13,588 9,504 16,367 12,049 13,124 -Broward County 2,179 1,256 486 189 998 2,533 3,036 1,281 3,958 2,570 3,286 Miami -Dade County 4,836 2,388 771 2,262 1,656 3,250 8,050 5,654 9,817 6,444 8,269 Monroe County 10 45 2 146 36 89 36 36 59 12 56 -Palm Beach County 1,029 905 329 255 575 2,389 2,466 2,533 2,533 3,023 1,513 The following table summarizes multi -family building permits pulled for the South Florida Regional Area and for each county over the last 12 months. Note the trend line in black showing a peak in April for the region in terms of multi -family building permits over the last 12 months and Miami -Dade had the largest share of permits pulled. Miami -Dade County is the most active county in the region in multi -family building permits with an average of 998 units permitted per month over the past six months and 741 multi -family units permitted per month during the last year. The county's multi -family building permit activity represents approximately 91.8% of the region's total in the most recent month, and the most recent six month average was 26% higher compared to the last 12 month average. 2000 M U LTI FAM I LY BU I LD I NG PERMITS - Monthl 1800 1600 1400 1200 •••��•••...,• 1000 •••........... 800 600 Lad* 400 200 0 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2017 2017 2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 2018 ■ Region 1147 1166 942 829 1659 267 577 1899 366 1473 1618 770 1950 Broward County 451 251 124 105 861 63 63 464 22 156 294 118 60 0 Miami -Dade County 583 913 422 664 598 19 283 1390 170 856 1259 523 1790 Monroe County 0 2 0 0 0 0 0 0 0 0 5 0 0 Palm Beach County 113 0 396 60 200 185 231 45 174 461 60 129 100 Single Family Permits The table below summarizes single family building permits issued by county for the South Florida Regional Area for the last 10 years. Single family permits peaked in 2004 and declined significantly through 2009 reaching a 10 year low. They have been on a very gradual upward trend since 2009 with 2013 levels slightly lower than 2007 levels. In 2014 single family permits pulled declined only to go up in 2016 exceeding 2007 levels only to declined slightly again in 2016. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 23 REGIONAL OVERVIEW (CONVD) 8,000 SINGLE FAMILY BUILDINGPERMITS-ANNUALLY 7,000 6,000 5,000 4,000 3,000 2,000 - 1,000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Region 7,360 3,487 2,403 3,296 4,402 5,221 6,512 5,943 7,345 6,913 6,846 �Broward County 1,754 908 563 979 1,446 1,023 1,434 1,181 1,494 1,535 1,748 Miami -Dade County 3,246 1,086 624 941 962 1,819 2,266 2,077 2,800 2,873 2,285 Monroe County 259 215 114 125 99 132 143 152 203 208 191 Palm Beach County 2,101 1,278 1,102 1,251 1,895 2,247 2,669 2,533 2,848 2,297 2,622 The following table summarizes single family building permits pulled for the South Florida Regional Area and for each county over the last 12 months. Note the trend line in black showing a 12 month peak in June of 2017 for the region in terms of single family building permits. Miami -Dade County is the second most active county in the region in single family building permits with an average of 231 units permitted per month over the past six months and 192 single family units permitted per month during the last year. The county's single family building permit activity represents approximately 40.2% of the region's total in the most recent month, and the most recent six month average was 17% higher compared to the last 12 month average. 900 SINGLE FAMILY BUILDING PERMITS- MONTHLY 800 700 •••'•. 600 ... ............. •,,..•. 500 •••"••.. 400 .......••' 300 200 - 100 0 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2017 2017 2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 2018 ■ Region 706 712 606 406 502 380 435 577 601 625 588 606 781 ■ Broward County 221 217 153 59 119 113 66 99 151 89 83 118 159 ■ Miami -Dade County 239 178 186 133 145 138 139 179 222 200 221 248 314 ■ Monroe County 13 16 19 13 19 15 15 14 17 28 17 23 36 ■ Palm Beach County 233 301 248 201 219 114 215 285 211 308 267 217 272 Financial Indices The tables on the following page summarize five year trends in certain national tracked financial indices which tend to impact real estate and real estate investments. Many commercial lending institutions look at LIBOR and 10 Year Treasury Constant Maturity Rate returns in their underwriting. CPI trends can be important for commercial properties and lease structures. The 15 year and 30 year fixed rate mortgage rates have significant impact on residential development. And the health of the stock market also has significant impact on investments of all types. All of these factors can influence real estate investors, owners and lenders. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 24 REGIONAL OVERVIEW (CONVD) 2014 2015 2016 2017 201a Source: ward of Governors ar 1 he Fedetal Reserve Sy 51e m f 051 10 -Year Treasure Rate FRED� Cbrv.omer Price lades Mr All 1/rti.n Cen.umen: Jdl ltemr 2525 250A 247-5 245A 242-5 ry m � 240A 237.5 235.0 232.5 ZWjD 2014 2915 2016 2027 2018 Sources: BS. Bureau of Labor SEWhliai Consumer Price Index Change FRES V ■ — 1—.11 Land— Inl.rbank Ott.,M RaU {LIAGRl , bared an U S. Cells 22 2A IA `u 1.2 a 1� Yj OA 0,6 0 2 0-2 0,0 2914 2015 2016 2017 2018 Sourcen Benchmaltk AdmNnWralbnLlrntled (IBA) One Month Libor FRED c — D— J— lndatlrlal AL—q. 28,000 26:000 24,000 22,000 m 9 20,000 18,000 16:000 14= 2014 2015 2016 2017 Saurc e: S&P Dow .lanes IrWIC us= Dow Jones Industrial Average - F IF Year The current 15 year fixed mortgage rate is 4%; the 30 year fixed mortgage rate is 4.6%; LIBOR is 2.10%; the current 30 Year Treasury Constant is 2.9%; CPI is currently at 0.429; and the Dow Jones Industrial Average is currently at 25,188. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 25 REGIONAL OVERVIEW (CONVD) Transportation The region is served by three international airports, the Palm Beach International Airport located in Palm Beach County, Fort Lauderdale/Hollywood International Airport in Broward County and Miami International Airport in Miami -Dade County. The region also has three ports including the Port of Miami, the Port of Palm Beach and Port Everglades next to the Fort Lauderdale/Hollywood International Airport. Below is a brief description of each facility. Miami International Airport (MIA) is a 3,230 acre facility and is the second most active international passenger airport in the United States, the 10th most active airport in total passengers and the 3rd most active airport in cargo (mail and freight). MIA has four runways, a 8,600 foot grooved asphalt small aircraft runway, a 9,355 foot grooved asphalt runway for medium service commercial aircraft, a 10,500 foot grooved asphalt runway capable of handling any type of aircraft and a second 13,000 foot grooved asphalt runway also capable of handling any type of aircraft. Miami International Airport has three terminals totaling more than 7,000,000 square feet of space with more than 123 gates for international and domestic airlines. The facility has more than 3,400,000 square feet of warehouse and support space, parking for more than 9,000 cars and has 16 car rental agencies. The airport creates more than 50,800 direct jobs and an estimated 200,000 indirect jobs for the local economy and has an economic impact in excess of $6 billion dollars annually. Palm Beach International Airport (PBI) is a 2,120 acre facility serving the greater Palm Beach County Metropolitan area. The facility has one main terminal for domestic and international travel, totaling about 600,000 square feet of area under roof. The facility has three main runways, a 6,900 foot grooved asphalt runway, a 10,000 foot grooved asphalt runway and a 3,200 foot grooved asphalt runway. The airport handles about 5,600,000 domestic and international passengers per year and more than 5,000,000 pounds of cargo per year. The airport employs more than 3,000 direct and indirect jobs and creates more than $500,000,000 in annual revenue to the Palm Beach County area. The airport has been voted the third best airport in the US and the sixth best in the world by readers of Conde Nast. Fort Lauderdale/Hollywood International Airport (FLL) is a 1,380 acre facility serving the Broward County Metropolitan area. The facility has three terminals for domestic and/or international travel, totaling about 1,525,000 square feet of area under roof. The facility has three main runways, a 9,000 foot grooved asphalt runway, a 8,000 foot grooved asphalt runway and a 6,930 foot grooved asphalt runway. The airport handles about 24,000,000 domestic and international passengers per year and more than 171,890,000 pounds of cargo per year. The airport employs more than 28,100 direct and indirect jobs and creates more than $2.7 billion in annual revenue to the Broward County area. The airport is immediately adjacent to Port Everglades making it easy to fly into Fort Lauderdale and immediately embark one of the many cruise ships operating out of this port. The 8,000 ft. runway was completed in September 2014. There are planned renovations to three of its terminals scheduled to be completed in 2017. Five international gates are being built in Concourse A. Port Everglades is located on the eastern boundary of Broward County just east of the Fort Lauderdale/Hollywood International Airport and along the shoreline of the Atlantic Ocean. The facility encompasses about 2,190 total acres of which 1,742 acres are uplands and 448 acres are submerged lands. The port handles more than 4,000 ship calls per year, 3,500,000 cruise passengers per year and more than 23,000,000 tons of cargo annually. There are 12 cruise terminals with 250,000 square feet of terminal space and more than 8,000 feet of docking space for up to 10 cruise ships at one time. Port Everglade is one of the most active passenger ports in the county. More than 150 businesses operate out of the port and it is home for more than 10,000 port workers (individuals who have access to job sites within port gates). The port is estimated to have a $25 billion impact on the Miami -Fort Lauderdale -Pompano Beach area and it is estimated that the port impacts more than 50,000 jobs in the four surrounding counties. Port of Palm Beach is located on the eastern boundary of Palm Beach County along the shoreline of the Atlantic Ocean. The facility encompasses about 970 total acres of which 800 acres are uplands and 170 acres are submerged lands. The port handles more than 2,450 ship calls per year, 341,000 cruise passengers per year and more than 2,000,000 tons of cargo annually. There are two cruise terminals with more than 100,000 square feet of terminal space and more than 2,500 feet of docking space for up to four ships at one time. More than 45 businesses operate out of the port and it is home for more than 3,500 port workers (individuals who have access 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 26 REGIONAL OVERVIEW (CONT'D) to job sites within port gates). The port is estimated to have more than a $5 billion impact on the Miami -Fort Lauderdale -Pompano Beach area and it is estimated that the port impacts more than 10,000 jobs in the four surrounding counties. Port of Miami is located in Biscayne Bay in southeastern Miami -Dade County along the shoreline of the Atlantic Ocean on Dodge Island. The facility encompasses about 970 total acres of which 520 acres are uplands and 450 acres are submerged lands. The port handles more than 5,000 ship calls per year, 4,000,000 cruise passengers per year and more than 7,400,000 tons of cargo annually. There are eight cruise terminals with more than 350,000 square feet of terminal space and more than 10,000 feet of docking space for up to 10 cruise ships at one time. The Port of Miami Everglade is one of the most active passenger ports in the world. More than 250 businesses operate out of the port and it is home for more than 12,000 port workers (individuals who have access to job sites within port gates). The port is estimated to have more than a $25 billion impact on the Miami - Fort Lauderdale -Pompano Beach area and it is estimated that the port impacts more than 50,000 jobs in the four surrounding counties. Interstate -95 is a limited -access highway that travels 1,900 miles and is the longest north/south interstate highway in the country. It merges from US 1 in Miami and continues 1,900 miles and ends in Maine. The average daily traffic count for the highway is about 72,000 vehicles per day and can reach up to 300,000 per day. There is a three phase project currently under construction that will add two express toll lanes in each direction from the Golden Glades Interchange in Miami -Dade County to Broward Boulevard in Broward County. The tolls are determined by congestion pricing, which mean the toll changes based on how many people are in the lanes. The construction for phase one is done and phase two is scheduled to be finished in spring 2015. Phase three is scheduled to start in early 2016. Interstate 75 is a limited -access highway that travels 1,700 miles and is the second longest interstate highway in the country. It originates at the Hialeah -Miami Lakes border a few miles northwest of Miami and runs westward to the west coast of and then turns northward and continues to the Upper Peninsula of Michigan. There is planned construction to build two express toll lanes in each direction from just south of State Road 836 in Miami -Dade County to Interstate 595 in Broward County. The tolls are determined by congestion pricing, which mean the toll changes based on how many people are in the lanes. The construction began in early 2014 and is scheduled to be complete in 2019. Florida Turnpike is a limited -access toll road that travels 264 miles from the southern portion of Miami to the city of Wildwood in Sumter County. On average, 1.8 million people use the Florida Turnpike annually. There are several construction projects in the South Florida area. The first will be to implement all -electronic tolling at the Hollywood/Pines Boulevard exit and Griffin Road exit. There is also planned improvements to intersections at Northwest 199th Street/Dolphin Center and County Line Road. The Turnpike will be widened from six lanes to ten, sound walls will be constructed and express lanes will be added in Miami -Dade County from north of Sunset Drive to north of Bird Road. This is scheduled to be complete in 2018 and will cost $54.4 million. The Turnpike will also be widened from six lanes to ten, sound walls will be constructed and express lanes will be added from SW 216th St. to Eureka Dr. This is scheduled to be complete in summer of 2016 and will cost $40.9 million. Turnpike widening, express lanes and interchange improvements are also scheduled from north of Eureka Dr. to south of SW 104th Street. This is scheduled to be complete in late 2016 and will cost approximately $145.3 million. Summary The subject property is located in Miami -Dade County in what is considered the South Florida Regional Area (region) in the southern portion of Florida. The region has a total population of 6,209,305 people, 2,335,462 total households and has an average household size of 2.62 people. The unemployment rate for the region as of June 2018 was 3.9%, the statewide unemployment rate was 3.9% while the national unemployment rate was 4.2%. Multi -family permits were at a 10 -year low in 2009, but have been on a gradual upward trend since this point, in the last 12 months permits pulled have declined over the previous 12 months. Single family permits were also at a 10 -year low in 2009 but have been on an upward trend since this point and in the last 12 months permits pulled were slightly below the same period a year prior. The current 15 year fixed mortgage rate is 4%; the 30 year fixed mortgage rate is 4.6%; the current 30 Year Treasury Constant is 2.9%; LIBOR is 2.10%; CPI 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 27 REGIONAL OVERVIEW (CONT'D) is currently at 0.429; and the Dow Jones Industrial Average is currently at 25,188. The region is served by three international airports, the Miami International Airport located in Miami/Dade County, the Palm Beach International Airport located in Palm Beach County and the Fort Lauderdale/Hollywood International Airport located in Broward County. The region is also served by three deep water ports and a very good network of major highways providing easy access to and from the region. Conclusion Miami -Dade County is a fast growing area that has attracted numerous retirees and a large working age population. Transportation needs are provided by road, air, rail and water. In addition, the area has a strong cultural community. Housing development is present in both the single family and multi -family segments in response to increases in the population. Overall, the economic outlook for the region appears favorable into the foreseeable future and we anticipate that real estate values will remain stable, with increasing tendencies. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 28 APARTMENT MARKET OVERVIEW MAP 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 29 Pembroko Ho Iy d Pine a75� �.om. 4 �r n' i 19LIffer VlW u G fl . T yJrar Preserve Arco , �1i,irT each � Dora euen Kendall mt'Cta f� �•.il er JJ SI y � F d7 Na nja E�iayr Horne a Nabonaa ;irk rlor. -sl r u 10 ly [ rT) Gludes jiom—i I Prk North Key Largo i a Key Lorgo Q+ Key Large 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 29 12 Mo. delivered Units 6,854 12 Mo. Absorption Units 6,,072 Vacancy Rate 5.7% 12 Ma. Asking Rent Growth 2.4"bj/'JO' Apartment rents in the Miami metro increased by 2.4% year over year, and have posted an average annual gain of 2.3% over the past three years. Vacancies are currently at 5.7% and were above the cycle average. They have trended upwards and increased by over the past four quarters. There are 16,000 units currently underway, representing a 10% expansion of the existing inventory. Over the past three years, 15,980 units have delivered, or a cumulative inventory expansion of 12%. Sales activity was healthy over the past four quarters, registering at $$949,800,000, prolonging a multi-year stretch of limited investment. The average annual sales volume over the past five years has been $1.5 billion. Over the past year, employment gains were essentially in line with the five-year average: Total employment increased by 2.4%, or about 28,700 jobs. Over the past five years, employment has increased by 2.6% annually on average, compared to a 1.7% average increase nationally KEY INDICATORS Current Quarter Units Vacancy Rate Asking Rent Effective Rent Absorption Delivered Units Under Constr Units Units 4 & 5 Star 41,162 11.7% $2,120 $2,087 834 0 14,215 3 Star 33,115 3.9% $1,520 $1,509 60 0 1,675 1 & 2 Star 79,859 3.4% $1,125 $1,116 (23) 0 115 Market 154,136 5.7% $1,625 $1,606 871 0 16,005 Historical Forecast Annual Trends 12 Month Average Average peak When73.72% h When Vacancy Change (YOY) 0.2% 5.2% 8.1% 7.3% 2000 Q1 2006 Q2 Absorption Units 6,072 1,660 3,164 6,391 2019 Q2) 2007 Q2 Delivered Units 6,854 1,933 4,415 8,222 2019 Q248 2002 Q4 Demolished Units 114 274 303 1,082 2012 Q20 2002 Q4 Asking Rent Growth (YOY) 2.4% 2.0% 0.8% 7.3% 2007 Q1-6.0% 2009 Q2 Effective Rent Growth (YOY) 2.8% 2.0% 0.9% 7.3% 2007 Q1 -6.0% I 2009 Q2 1 Sales Volume I $911 M _ $622.8M N/A $1.7B 2016 Q4 _ $135.8M _ 2008 Q4 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. + R ■i� CoStar . Page 30 Vacan The vacancy rate is currently at 6.1%, and it has been on the rise since the beginning of the year. It is expected to continue rising at least until 2021. While demand has continued to be strong, the supply side is delivering more than the market can readily absorb, even in a good economy. As a result, vacancy rates are rising. Both construction and absorption are at the highest levels on record. Demand has been stronger than expected. The Miami apartment market absorbed close to 6,500 units over the past year, one of the strongest demand years on record. The second quarter of this year saw the strongest level of apartment absorption on record, with 31 move -ins per day, almost double those of the same quarter last year. The supply pipeline is very strong, with close to 100 apartment projects under construction, totaling close to 15,000 units. That is equivalent to 10% of current inventory, making Miami one of the top three most heavily supplied markets in the country. Another 250 proposed projects could break ground, as well, a prospect captured in our forecasting models for supply. Greater Downtown Miami, Miami Springs/Doral, and Coral Gables lead the activity with 5,500, 2,500, and 2,000 units under construction, respectively. These areas will likely face the largest shock in terms of vacancy rates. Based on the current construction pipeline, the two-year delivery cycle is forecast to reach peak in 20Q1. The peak will be close to four times the pre -crisis peak and 30% higher than the most recent peak reached in 17Q1. While demand is expected to remain strong, the rapid supply buildup will push the vacancy rate up. The forecast is calling for the vacancy rate to rise to 7.3% over the next year. Deliveries are expected to total 5,300 units over the next four quarters, while absorption is expected to reach 4,000 units over the same period. ABSORPTION, NET DELIVERIES & VACANCY 4;000 11 % Forecast 3.500 i 3.000 2,500 n a. 2,000 0 1,500 0 Q 1,000 500 2014 2015 2016 2017 201B 2019 2020 2021 2022 2023 ■ Absorption ■ Net Deliveries IVacancy United States Vacancy 10% 9% 8% 7% 6% 5% 4% 3% + 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. �St ��Lar " Page 31 Vacan VACANCY RATE 20% 18% 16% 14% 12% 14% 8% Cz OL 4% 2% 0% I Pr vno ncf 2014 2015 2036 2017 2018 2019 2020 2021 Miami 3 Star 0 Miami 4-5 Star L;! Miami United States VACANCY BY BEDROOM 10% 9% 8% 7% 6% 2022 2023 4% `-j- 3 °fo 2014 2015 2016 2017 2018 2019 Studio ■ t Bed ■ 2 Bed 3 Bed + 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. CoStarg Pa e 32 Rent The strong supply pipeline build up has caused Miami rent growth to decelerate consistently since early 2016. Annual rent growth declined from the high of 4% in 2013 and currently stands at 2.4%. This marks a positive change from the prior year. U.S. inflation is currently close to 2%. Miami rental rates currently stand at $1,630/unit. They face a continued downward tilt as more supply hits the market. Not every submarket in the metro saw slow rent growth. South Beach, Miami Gardens/Opa Locka, and Hialeah/Miami Lakes saw healthy rent growth in the range of 4% to 6%. These submarkets have seen low deliveries over the past year; however, they face construction pipelines that range between 3% and 7% of their respective inventory. Despite having the heaviest construction pipeline at 30% relative to its existing inventory, Downtown Miami saw its rent growth accelerate over the second quarter of the year and register at 3%. Construction in this submarket is heavily skewed towards higher end units, a factor that is pushing its rent growth up. Coral Gables and Miami Springs/Doral saw the weakest rent growth. Coral Gables has close to 2,000 units under construction, marking a 15% rise in its inventory. This drove rent growth into negative territory in the range of 1.5%. Miami Springs/Doral is also a heavily supplied submarket, with 750 units delivered over the past year and close to 2,500 units under construction. This dynamic has pushed rent growth close to zero in this submarket. In addition to supply pressure, rent growth in the Miami metro is hindered by lower incomes that make much of the new construction unaffordable to a large part of the population. Miami is the most expensive metro in Florida and one of the most expensive metros in the Southeast, a fact that further limits residents' buying power. Median household income for the Miami -Dade County is 20% below that of the U.S. average, while rents are 20% higher than the national average. This dynamic has resulted in Miami residents having the highest rent to income ratio in the country, at 31 %, more than 10% higher than the rest of the country. This tight spending buffer makes the supply pressure more pronounced on rent growth prospects, as residents have less disposable income to absorb rent rises. The good news is that Miami's median household income is rising faster than the rest of the country. In addition, rent rises in Miami now are slower than household income rises. This essentially translates into a gradual increase in buying power for Miami residents. However, even if the economy continues to perform at current levels, it will take another two decades to close the rent -to - income ratio with the rest of the country. Concessions have been steadily increasing over the past year, especially in areas with high levels of construction such as Downtown Miami. This situation, together with decelerating rent growth, will persist and get worse over the next three years as more supply hits the market. The forecast calls for rent growth of 1.8% over the next year. This marks another year of rent growth deceleration for the Miami apartment market. The longer term horizon forecast is grimmer, calling for a 0.5% rent growth by 2020, when much of the current under- construction product delivers. + 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. 4`kP CoStar g Pae 33 Rent DAILY ASKING RENT PER SF $1.90 $1.85 $1.80 $1.75 $1.70 2015 2018 2017 2018 2019 r ?Miami MARKET RENT PER UNIT & RENT GROWTH $1,700 6% ; Forecast r t $1,600 .... .... 5% r r $1,500 i 4% ei $1,400 _ ; - - r _ . - 3% $1,300 - 2% $1,200 1 % $1,100 i !0% 2014 2015 2018 2017 2018 2019 2020 2021 2022 2023 ■ Market Rent Growth Y/Y ■ Market Rent Per Unit ■ Effective Rent Per Unit United States Market Hent Per Unit + 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. �`� CoSt Lar " Page 34 MARKET RENT PER UNIT BY BEDROOM $2,400 _ _ ................... _ _ ................ . $2,200 $2,400 $1,800 $1,600 $1,400 $1,200 $1,000 - - - 2014 2015 2016 a Studio ■ 1 Bed 1110 2 Be 4 & 5 STAR EXPENSES PER SF (ANNUAL) Miami Multi -Family 2017 2418 2019 Bed 3 Bed Operating Expenses Capital Expenditures Market/Cluster Mgmt. Admin. Payroll Water Utilities Maint. Insurance Taxes Appliance Structural Other Total Miami $0.79 $0.63 $0.62 $0.64 $0.66 $0.61 $0.43 $0.42 $0.83 $0.66 $0.86 $0.82 $0.88 $1.00 $2.18 $1.58 $0.10 $0.10 $0.22 $0.22 $0. $0. Aventura Coral Gables $0.70 $0.52 $0.55 $0.43 $0.81 $0.80 $0.79 $1.94 $0.10 $0.19 $0. Downtown Miami $1.00 $0.46 $0.67 $0.41 $0.89 $0.24 $0.80 $2.81 $0.10 $0.22 $0. Hialeah/Miami Lakes $0.79 $0.53 $0.70 $0.44 $0.88 $0.82 $0.87 $2.22 $0.10 $0.22 $0. Homestead/South D... $0.79 $0.86 $0.70 $0.44 $0.88 $1.78 $0.87 $2.22 $0.10 $0.22 $0. Kendall $0.79 $0.99 $0.70 $0.44 $0.88 $1.66 $0.87 $2.22 $0.10 $0.22 $0. Little Havana $0.71 $0.60 $0.62 $0.42 $0.71 $0.69 $0.96 $1.85 $0.10 $0.22 $0. Miami Gardens/Opa... $0.63 $0.64 $0.61 $0.42 $0.66 $0.82 $1.00 $1.58 $0.10 $0.22 $0. Miami Springs/Doral $0.76 $0.55 $0.68 $0.44 $0.83 $0.82 $0.90 $2.09 $0.10 $0.22 $0. North Beach $0.79 $0.53 $0.70 $0.44 $0.88 $0.82 $0.87 $2.22 $0.10 $0.22 $0. North Miami Beach $0.63 $0.64 $0.61 $0.42 $0.66 $0.82 $1.00 $1.58 $0.10 $0.22 $0. South Beach $0.79 $0.53 $0.70 $0.44 $0.88 $0.82 $0.87 $2.22 $0.10 $0.22 $0. Expenses are estimated using NCREIF, IREM, and Costar data using the narrowest possible geographical definition from Zip Code to region. 85 $8.42 85 $7.53 83 $7.66 85 $8.45 85 $8.42 85 $9.71 85 $9.72 85 $7.73 85 $7.53 85 $8.24 85 $8.42 85 $7.53 85 $8.42 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. CoStar - Page e 35 Rent 3 STAR EXPENSES PER SF (ANNUAL) Operating Expenses Market / Cluster Mgmt. Admin, Payroll Water Utilities Capital Expenditures Maint. Insurance Taxes Appliance Structural Other Miami $0.54 $0.58 $0.33 $0.40 $0.66 $0.82 $0.65 $1.46 $0.09 1 $0.15 $0. Aventura $0.60 $0.63 $0.49 $0.42 $0.64 $0.80 $0.87 $1.55 $0.10 $0.19 $0. Coconut Grove $0.55 $0.51 $0.32 $0.42 $0.71 $0.77 $0.68 $1.52 $0.09 $0.15 $0. Coral Gables $0.55 $0.51 $0.32 $0.42 $0.71 $0.77 $0.68 $1.52 $0.09 $0.15 $0. Downtown Miami $0.54 $0.44 $0.32 $0.38 $0.71 $0.23 $0.65 $1.51 $0.09 $0.14 $0. Hialeah/Miami Lakes $0.54 $0.50 $0.32 $0.42 $0.70 $0.77 $0.65 $1.50 $0.09 $0.14 $0. Homestead/South D... $0.48 $0.82 $0.33 $0.37 $0.57 $1.70 $0.59 $1.06 $0.09 $0.15 $0. Kendall $0.52 $0.95 $0.32 $0.31 $0.52 $1.60 $0.64 $1.25 $0.09 $0.15 $0. Little Havana $0.55 $0.48 $0.32 $0.39 $0.69 $0.36 $0.68 $1.52 $0.09 $0.15 $0. Miami Gardens/Opa... $0.55 $0.59 $0.32 $0.42 $0.64 $0.75 $0.68 $1.52 $0.09 $0.15 $0. Miami Springs/Doral $0.55 $0.52 $0.34 $0.42 $0.70 $0.77 $0.65 $1.53 $0.09 $0.14 $0. Mid -Beach $0.52 $0.50 $0.32 $0.42 $0.70 $0.77 $0.62 $1.47 $0.09 $0.13 $0. North Beach $0.53 $0.50 $0.32 $0.42 $0.70 $0.77 $0.64 $1.49 $0.09 $0.14 $0. North Miami Beach $0.55 $0.61 $0.32 $0.42 $0.62 $0.76 $0.67 $1.52 $0.09 $0.15 $0. Outlying Miami -Dad... $0.47 $0.82 $0.32 $0.37 $0.56 $1.70 $0.58 $1.03 $0.09 $0.15 $0. South Beach $0.53 $0.50 $0.32 $0.42 $0.70 $0.77 $0.63 $1.48 $0.09 $0.14 $0. Westchester/Tamiami $0.55 $0.51 $0.32 $0.42 $0.71 $0.77 $0.68 $1.52 $0.09 $0.15 $0. Expenses are estimated using NCREIF, IREM, and Costar data using the narrowest possible geographical definition from Zip Code to region. 1 & 2 STAR EXPENSES PER SF (ANNUAL) 79 83 81 81 78 78 81 81 81 81 78 75 77 80 81 77 81 Operating Expenses Capital Expenditures Market / Cluster Mgmt. Admin. Payroll Water Utilities Maint. Insurance Taxes Appliance Structural Other Miami $0.44 $0.51 $0.31 $0.39 $0.64 $0.70 $0.43 $1.30 $0.07 $0.08 $0. Aventura $0.44 $0.60 $0.31 $0.40 $0.59 1 $0.74 $0.43 $1.33 $0.07 $0.08 $0. Coconut Grove $0.44 $0.48 $0.31 $0.40 $0.67 $0.73 $0.43 $1.33 $0.07 $0.08 $0. Coral Gables $0.44 $0.48 $0.31 $0.40 $0.67 $0.74 $0.43 $1.33 $0.07 $0.08 $0. Downtown Miami $0.44 $0.42 $0.31 $0.37 $0.67 $0.22 $0.43 $1.33 $0.07 $0.08 $0. Hialeah/Miami Lakes $0.44 $0.48 $0.31 $0.40 $0.67 $0.74 $0.43 $1.33 $0.07 $0.08 $0. Homestead/South D... $0.44 $0.60 $0.31 $0.35 $0.53 $1.04 $0.43 $0.98 $0.07 $0.08 $0. Kendall $0.45 $0.62 $0.31 $0.31 $0.52 $1.04 $0.45 $1.20 $0.07 $0.09 $0. Little Havana $0.44 $0.43 $0.31 $0.37 $0.66 $0.26 $0.43 $1.33 $0.07 $0.08 $0. Miami Gardens/Opa... $0.44 $0.59 $0.31 $0.40 $0.60 $0.73 $0.44 $1.33 $0.07 $0.08 $0. Miami Springs/Doral $0.45 $0.49 $0.31 $0.40 $0.67 $0.72 $0.46 $1.35 $0.07 $0.09 $0. Mid -Beach $0.44 $0.48 $0.31 $0.40 $0.67 $0.74 $0.43 $1.33 $0.07 $0.08 $0. North Beach $0.44 $0.48 $0.31 $0.40 $0.67 $0.74 $0.43 $1.33 $0.07 $0.08 $0. North Miami Beach $0.44 $0.60 $0.31 $0.40 $0.59 $0.73 $0.43 $1.33 $0.07 $0.08 $0. South Beach $0.44 $0.48 $0.31 $0.40 $0.67 $0.74 $0.43 $1.33 $0.07 $0.08 $0. Westchester/Tamiami $0.44 $0.50 $0.31 $0.38 $0.64 $0.78 $0.43 $1.30 $0.07 $0.08 $0. Expenses are estimated using NCREIF, IRF;M, and Costar data using the narrowest possible geographical definition from Zip Code to region. 58 57 57 57 57 57 57 60 57 58 60 57 57 57 57 57 Total $6.47 $7.12 $6.53 $6.53 $5.79 $6.41 $6.97 $7.16 $6.04 $6.52 $6.49 $6.29 $6.37 $6.51 $6.90 $6.35 $6.53 Total $5.45 $5.56 $5.51 $5.52 $4.91 $5.52 $5.40 $5.66 $4.95 $5.57 $5.61 $5.52 $5.52 $5.55 $5.52 $5.50 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. Costarg Page 36 nstruction The current level of apartment construction is the highest in the metro's history. There are currently close to 100 apartment projects under construction and 250 proposed projects in Miami. The total amount of apartments currently under construction is at 15,000 units, marking a 10% rise in the metro's inventory. This is one of the strongest construction pipelines in the country, relative to inventory. The bulk of the construction is concentrated in a handful of Miami's submarkets. The Greater Downtown Miami, Coral Gables, and Miami Springs/Doral submarkets account for two thirds of the construction activity. The Greater Downtown Miami area is the epicenter of the metro's apartment construction activity. This submarket is looking at a 30% rise in its existing inventory, with 5,600 apartments in the works. The Greater Downtown Miami submarket, including Midtown and the Wynwood, is popular with both younger high- earning professionals and foreign investors. Almost all of the development activity is this area involves higher -end product. The Coral Gables Submarket, located Southwest of Downtown Miami, is looking at a 25% increase in its inventory, with close to 2,000 apartments in the works. This is an area that is entirely driven by domestic demand and has income levels that are close to the metro's average. The Miami Springs/Doral Submarket, located Northwest of Downtown Miami, is looking at a 12.5% inventory increase, with 2,200 apartments in the works. This is also an area that is driven by domestic demand, and income levels are below the metro average. Two projects that are representative of Downtown Miami's transformation are Park Line and Luma. They will deliver a combined 1,250 apartments to this area. Park Line Miami, located in Downtown Miami, is the largest under -construction project in the metro. It is comprised of two residential towers and is scheduled to deliver 816 units in late 2019. MiamiCentral is a major transit oriented mixed- use project. A big part of the project, including the train station and the office component, delivered in 2018. The Park Line towers sit directly over the Virgin MiamiCentral train station, home to Brightline, a fast train service that connects the central business districts of South Florida's three counties. Luma is part of Miami Worldcenter, another major mixed- use development. It will deliver 434 units in 2021. Another residential tower, Caoba, is also part of the Miami Worldcenter development. It delivered 444 apartments in late 2018. Miami Worldcenter is located in the heart of Downtown Miami. Parts of it are currently under construction. Once completed, it will comprise six buildings that will take six full city blocks. In addition to the two residential towers, Luma and Caoba, the development also includes a 45- story, 600,000 SF office tower that will break ground later in 2019. It also includes an open air retail development, an 1,800 room Marriot Marquis hotel, and a full-sized convention center. Current construction starts point to the Miami metro supply pipeline remaining heavy for at least two more years. The current two year delivery cycle should peak in 20Q1. The peak will likely be close to four times higher than the pre -credit crisis peak and 30% higher than the most recent peak reached in 17Q1. + 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. 4`kP CoStar g Pae 37 Construction Miami Multi -Family DELIVERIES & DEMOLITIONS 5,000 4,000 N 3,000 C 7) 2,000 © 1,000 IC -1,000 Forecast r 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 n Deliveries ■ Demolished ■ Net Deliveries 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. + R ■i� CoStar " Page 38 Under Construction Properties Properties Units 65 15,746 UNDER CONSTRUCTION PROPERTIES UNDER CONSTRUCTION Percent of Inventory 10. 2% r,a:r cr -J, Und@r Constweb l Avg. No. Units 242 Property Name/Address Rating Units Stories Start Complete Developer/Owner 1 Park Line Miami * * * *, 816 24 Oct -2017 Oct -2019 Florida East Coast Industries, Inc. 600 NW 1st Ave Flagler Real Estate Services, LLC 2 Miami River Walk * * k 698 8 May -2019 Jan -2021 Mast Capital 1001 NW 7th St Mast Capital 3 Chiquita North * * 511 14 May -2018 Jan -2020 AMLI Residential Properties, LP 3000 NE 2nd Ave AMLI Management Company * 4 Lantower River Landing 507 5 Jul -2017 Jan -2020 UrbanX Group 1400 NW North River Dr 500 - Sep -2018 Sep -2019 Hellinger Penabad Companies Global City Development 5 Legion Park * * * * 6445 NE 7th Ave American Legion Post 29 6 The 449 22 Jun -2019 Jun -2021 Rilea Group, LLC * * * 8704 SW 72nd St Dadeland Apartments LLC *� * 7 Gio Midtown 447 32 Sep -2017 Dec -2019 Magellan Development Group, Ltd. 3101 NE 1st Ave Magellan Development Group, Ltd. 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. + ##,,,w��SLar " Page 39 t Under Construction Properties UNDER CONSTRUCTION Property Name/Address Rating Units Stories Start Complete Developer/Owner 8 Palmera * * * 440 - Mar -2018 Sep -2019 Lennar Multi -family Investors LLC 8560 NW 102th Ave Lennar 9 Miami Plaza * * 435 35 Feb -2019 May -2020 Melo Group 1502 NE Miami PI Melo Group 10 Gables Station # # 434 13 Jun -2018 Jul -2020 NP International 251 S Dixie Hwy NP International * * * * 11 LUMA 434 44 Apr -2019 Feb -2022 ZOM Living 150 SW 7th St * * * 422 25 Dec -2017 Oct -2019 Zom Holding Inc Mill Creek Residential Trust LLC 12 Modera Metro Dadeland... 8215 SW 72nd Ave 413 40 I Aug -2018 Jun -2020 Mill Creek Residential Trust LLC Falcone Group 13 Seventh Street Apartme... * * # * 697 N Miami Ave Falcone Group 14 Mareas at Botanica 408 1 I Mar -2019 Jun -2020 # * * 15520 SW 127th Ave Ram Realty *. * 15 Midtown 7 391 - Aug -2018 Feb -2020 Magellan Development Group, Ltd. 3001 NE 1st Ave Magellan Development Group, Ltd. 16 The Elan at Downtown D... * * * * 385 3 Sep -2018 Sep -2019 8500 NW 41 st St Greystar 17 6600 Main * * * 361 - Aug -2017 Oct -2019 The Graham Companies 6600 Main St The Graham Companies 18 Avalon Doral * * ,* 350 - Jun -2018 Apr -2020 Trammell Crow Residential Comp... 7905 NW 36th St AvalonBay Communities, Inc. 19 Soleste Twenty2 * * * 338 - Jun -2018 Oct -2019 Estate Investments Group 2201 Ludlam Rd 330 8 Jan -2018 Sep -2019 Estate Investments Group Estate Investments Group 20 Soleste Blue Lagoon * *, .� 5375 NW 7th St Estate Investments Group i 21#* The a Wave 321 50 Mar -2017 Nov -2019 Crescent Heights 659-737 Alton Rd Crescent Heights 22 Soleste Alameda * # * * 306 - Nov -2018 I Jan -2020 Estate Investments Group 6290-6320 SW 8th St Ro Ma Holdings No 2 Llc * # k 23 Grand Station 300 33 Jul -2019 Jul -2020 Grand Station Partners 240 N Miami Ave City Of Miami * 24 Modera Biscayne Bay 296 28 Jul -2019 Jul -2020 Mill Creek Residential Trust LLC 411 NE 21st St Mill Creek Residential Trust LLC 25 Maizon at Brickell * * 262 19 Jun -2017 Sep -2019 ZRS Management 221 SW 12th St ZRS Management 26 Capri Tower * * 259 16 Aug -2019 Dec -2020 Blue B Properties LLC 13899 Biscayne Blvd * * * * * 257 12 May -2019 May -2020 Blue B Properties LLC One Real Estate Investment 27 Wynwood Square 2201 N Miami Ave CIM Group LP 28 16975 NW 97th Ave # 245 - Oct -2018 Dec -2019 FCI Residential Corporation FCI Residential Corporation 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. R ,t� CoStar . Page 40 Miami Multi -Family Deal volume over the past year totaled $911,100,000. While it remains at a healthy level, it has declined by 50% from the prior year and 35% from the five-year annual average. Miami sales volume over the past year was the lowest out of South Florida's three counties. Broward and Palm Beach, despite being smaller markets than Miami, saw sales volume of $910 million and $1.6 billion, respectively. Market rent growth has decelerated, and vacancy rates crept up over the past year, causing buyers to become much more selective. They went after deals in submarkets that offer above-average rent growth and not much construction activity. Over the past couple of quarters, deal volume was more pronounced in lower income areas offering good next cycle development potential. Luxury asset sales dropped off notably over the same period. Many of these assets traded earlier in the cycle, and investors are wary of the heavy supply, which is heavily weighted toward higher quality product, on the way. While sales volume has declined, prices continue to rise. Overall metro prices per unit are currently at $210,000, marking a rise of 2% over the past year. This rounds up a 40% rise over the past five years. Appreciating prices continue to push cap rates to historic lows. Current cap rates are hovering around the 5.5% mark, remaining flat from the same time last year. The largest transaction of 2019 was the portfolio sale of two properties in Doral, Doral View and Town Fontainebleau Lakes. The seller, a venture between The Related Companies and Rockpoint Group LLC, sold two apartment communities totaling 720 units to The Blackstone Group L.P. for $210 million, or $290,000/unit. The median household income within a mile radius from the properties is $47,000, 15% below the Miami average. Private investors make up two-thirds of the activity, and they were mainly buyers over the past year, increasing their exposure by close to 10%. Institutional and private equity investors were net sellers, reducing their combined exposure by 20%. REITs were net buyers, increasing their exposure to the market by 10%. The forecast is calling for prices to rise by 2% over the next year and for cap rates to remain flat over the same period. SALES VOLUME & MARKET SALE PRICE PER UNIT $220.000 $200,000 c a`a $180.000 u CU U) $160,000 $140,000 $120,000 $100,000 $700 $600 $500 m 2014 2015 2015 2017 2018 2019 2020 2021 2022 2023 ■ Sales Volume ■ Miami PriceiUnit ■ United States Price/Unit $300 0 0 $200 $100 I + 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. CoStarg Pa e 41 Sales Past 12 Months Sale Comparables Avg. PricefUnit (thous.) Average Price (mil.) Average Vacancy at Sale 339 $175 $3,1 5,4% SALE COMPARABLE LOCATIONS �P nesne Hollywood Fr rima `• •:; .'.,:;t 3 T."f"r tlf �f/lV.ilrr FilalEO Ylfl&A 4' II Krtlar7n Sole Comparaulec SALE COMPARABLES SUMMARY STATISTICS Sales Attributes Sale Price Price Per Unit Low $140,000 $5,979 Average $3,070,777 $174,870 Median $910,000 $128,641 High $104,375,000 $862,500 Cap Rate Vacancy Rate at Sale Time Since Sale in Months Property Attributes 1.9% 6.1% 5.7% 16.8% 0% 5.4% 0% 6.6 6.5 Average Median 54.5% 12.0 High 0.3 Low Property Size in Units Number of Floors Average Unit SF 1 18 1 8 1 550 22 1 2 0 465 534 2,468 Year Built 1922 1958 1957 2018 Star Rating * * * * * * ` * * 2.2 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. kP t ##"'W��SLar " Page 42 Sales Past 12 Months RECENT SIGNIFICANT SALES Property Information Sale Information Property Name/Address Rating Yr Built Units Vacancy Sale Date Price Price/Unit Price/SF Doral View 2013 360 4.2% 5/21/2019 $104,375,000 $289,930 $244 901 NW 97th Ave Town Fontainebleau Lakes 2016 360 5.6% 5/21/2019 $104,375,000 $289,930 $238 * 1062 NW 87th Altis at Bonterra 2018 314 4.1% 8/15/2019 $90,000,000 $286,624 $225 * 3545 W 98th St Latitudes at the Moors 1989 358 5.6% 8/31/2018 $71,300,000 $199,162 $233 6200 NW 173rd St Pier 19 2011 199 10.6% 9/12/2018 $56,000,000 $281,407 $135 * * 1951 NW South River Dr Green Briar West 1971 332 0% 7/30/2019 $55,000,000 $165,662 $193 * * 9615 SW 24th St Modera Skylar 2014 167 s 9.7% 11/13/2018 $47,450,000 $284,131 $281 * * 1444 NW 14th Ave Parc Place Apartments 1972 234 4.3% 10/19/2018 $33,400,000 $142,735 $175 * * * 17600 NW 5th Ave New Castle Lake 1964 239 0.8% 4/12/2019 $23,311,000 $97,535 $108 1401 NW 103rd St Summer Grove Apartments 1973 116 1.7% 8/1/2019 $22,450,000 $193,534 $211 10331 SW 24th St 143 SW 9th St Prestige Biscayne 1968 1969 39 91 5.1% 26.4% 9/20/2018 6/3/2019 $14,500,000 $10,035,000 $371,794 $110,274 $511 $88 * * 12501-12525 NE 13th Ave Road Apartments 1965 54 5.6% 4/26/2019 $7,830,000 $145,000 $170 VRed ** * * 501 NW 57th Ave 1958 84 i 6.0% 7/31/2019 $7,560,000 $90,000 $150 St. George Apartments * 5200 NW 26th Ave House Apartments s VOleander # * 2007 42 2.4% 12/14/2018 $7,481,514 $178,131 $105 406 NW 22nd Ave y Mar Apartments 1949 72 3.3% 5/9/2019 $5,830,000 $80,972 $210 VRio 419-439 NW 8th St Waterview Apartments 1958 26 3.9% 7/3/2019 $5,677,011 $218,346 $378 7745 Harding Ave Aurora Apartments 2015 21 0% 3/15/2019 $5,500,000 $261,904 $127 900 SW 7th St Rue Vendome 1958 30 6.7% 12/5/2018 $5,250,000 $175,000 $208 V6905 * * 6905-6921 Rue Vendome Green Tree Apartments 1971 32 ° 0% 4/1/2019 $4,900,000 $153,125 $184 'G■V �� �C �, �C 1755 NE 164th St 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. R ,t� CoStar " Page 43 Miami -Dade is Florida's most populous county and also has the state's biggest economy. It has experienced favorable demographic and economic conditions over the past five years. Local economic, job, and demographic growth outpaced those of the U.S. across the board. The county's population has grown by more than 11% over the past decade, and it currently stands at 2,800,000. Miami's population growth over the past decade has been entirely driven by international immigration. Domestic migration has been negative, with one domestic migrant leaving Miami for every two international immigrants arriving in the metro. Miami has the highest natural increase rate for the period among South Florida Counties at close to 3%. Because of the reliance on international arrivals, Miami's County's population growth is at risk if any shifts in the current U.S. immigration policy occur. Miami's 1,200,000 person strong labor market is heavily weighted towards services, with just over 80% of the county's labor force in private service provision. Trade and transportation is by far the largest sector, with a quarter of the county's jobs. Business services and healthcare and education comprise 15% and 16% of the labor force respectively. The county's labor market grew by 12% over the past five years. The current unemployment rate for Miami is at 3%, more than a percent below the same time last year. Household income is one of the weakest links in Miami's economy. The region's median household income currently stands close to $53,000. This is the lowest out of South Florida's three counties and close to 20% below the average for the country. Miami's household income growth, though, is faster than the U.S. average. Incomes here have grown by close to 30% over the past five years and are forecast to increase by a further 25% over the next five years. However, with all other things being equal, it would take two more decades for Miami to catch up to the rest of the U.S. Strong population growth drove Miami's healthy household formation numbers. Households grew by close to 5%, the fastest growth rate out of the South Florida tri -county area over the past five years. This growth was also 1% above the average for the country. Much of what drove Miami's economy a decade ago came from links to Latin America. However, strong demographic growth, driven by international migration and favorable economic conditions, has shifted Miami's economic engine towards domestic growth. The challenge that Miami currently faces is to continue attracting investors, employers, and higher paying jobs to the area. So far, the city has shied away from offering economic incentives to companies relocating to Miami. This has put Miami at a disadvantage when competing with other cities in the Southeast. Attracting more high paid jobs to the area will help not only increase the size of the region's economy but also bridge its residents' income inequality gap. This is sorely needed and will be key in supporting commercial real estate growth prospects. More diverse and larger employers will improve Miami's economic base as well as help accelerate household income growth. The forecast calls for continued population growth for Miami -Dade County in the region of 1% per year over the next couple of years. This just below historical average population growth rates, and it accounts for a possible slowdown in international migration. Miami -Dade County's labor market is also forecast to grow at close to 3% over the next five years. This is four times lower than the growth the market experienced over the past five years. The decline in job growth does not necessarily spell bad economic news: It is more a reflection of the current labor market tight conditions as well as an increasingly aging population base. Fueled by population growth, household formation is forecast to remain strong over the next five years and match the 5% growth rate of the prior five-year period. + 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. t ##,,,w��SLar " Page 44 Econ MIAMI EMPLOYMENT BY INDUSTRY IN THOUSANDS Current Jobs Current Growth 10 Yr Historical 5 Yr Forecast NAICS Industry Jobs LQ Market us Market us Market us Manufacturing 41 0.4 -1.19% 1.30% 1.02% 0.93% -0.66% -0.02% Trade, Transportation and Utilities 304 1.3 1.62% 0.91% 2.09% 1.19% 0.57% 0.46% Retail Trade 149 1.2 -0.17% -0.06% 2.25% 0.87% 0.63% 0.37% Financial Activities 82 1.2 0.28% 0.95% 2.03% 1.03% 0.55% 0.34% Government 141 0.8 0.87% 0.45% -0.67% 0.01% 0.56% 0.76% Natural Resources, Mining and Construction 55 0.8 3.43% 2.96% 3.81% 2.24% 0.96% 0.22% Education and Health Services 193 1.0 3.18% 2.16% 2.19% 2.11% 0.35% 0.54% Professional and Business Services 188 1.1 3.85% 2.23% 4.07% 2.67% 1.19% 0.96% Information 20 0.9 0.42% -0.81% 0.81% 0.06% 0.43% 0.56% Leisure and Hospitality 148 1.1 1.83% 2.49% 3.53% 2.52% 0.50% 0.59% Other Services 55 1.1 3.86% 1.30% 2.30% 1.00% 0.61% 0.28% Total Employment1.0 YEAR OVER YEAR JOB GROWTH 4.0% 3.5% 3.0% 2-5% 2.0% 2.11% 1.53% 2.18% 1.47% i Forecast 0.60% 0.5401M Source: Oxford Economics LQ = Location Quotient i CJ0%n 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 ■ Miami United States Source: Oxford Economics 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. � � Costar Page 45 ro DEMOGRAPHIC TRENDS POPULATION GROWTH 1.096.....__....._...: _....... 10 -Year 1 -Year Forecast (5 Yrs) LABOR FORCE GROWTH 3 % ..... 296...- --,,.,._-............. ..... _......_._._.... 1 %-- _... ...... _- ...... _ 0% 1D -Year 1 -Year Forecast [5 Yrs} ear Change Current Level Current Change 10-Y Demographic Category Metro U.S. Metro U.S. Metro Population 2,783,125 329,306,688 0.8% 0.6% 1.2% Households 882,200 121,263,141 0.6% 0.5% 1.0% Median Household Income $53,305 $63,800 3.6% 3.3% 2.3% Labor Force 1,423,661 163,471,281 2.9% 1.0% 1.5% Unemployment 3.3% 3.6% -0.4% -0.3% -0.8% POPULATION GROWTH 1.096.....__....._...: _....... 10 -Year 1 -Year Forecast (5 Yrs) LABOR FORCE GROWTH 3 % ..... 296...- --,,.,._-............. ..... _......_._._.... 1 %-- _... ...... _- ...... _ 0% 1D -Year 1 -Year Forecast [5 Yrs} ear Change Forecast Change (5 Yrs) U.S. Metro U.S. 0.7% 1.0% 0.7% 0.6% 0.9% 0.6% 2.3% 4.2% 4.4% 0.6% 0.9% 0.6% -0.6% - - Source: Oxford Economics INCOME GROWTH 6% 2% ................._f 0%. 10 -Year 1 -Year Forecast [5 Yrs} Source: Oxford Economics 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. #� CoStr Page 46 MIAMI SUBMARKETS + 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. �`� CoSt Lar " Page 47 SUBMARKET INVENTORY No. Submarket Inventory 12 Month Deliveries Under Construction Bldgs Units % Market Rank Bldgs Units Percent Rank Bldgs Units Percent Rank 40 ') I AQ 4 AOL 41� n n noc n n noc 2 Coconut Grove 106 1,781 1.2% 14 1 10 0.6% 11 2 153 3 Coral Gables 8.6% 12 3 Coral Gables 319 7,283 4.7% 11 0 0 0% - 8 1,854 25.5% 3 4 Downtown Miami 512 20,844 13.5% 14 8 3,660 17.6% 6 18 5,518 26.5% 16 5 Hialeah/Miami Lakes 704 18,439 12.0% 2 1 39 0.2% 8 5 802 4.3% 8 6 Homestead/South Dade 183 8,449 5.5% 8 4 742 8.8% 4 6 1,050 12.4% 4 7 Kendall 84 14,074 9.1% 6 1 294 2.1% 6 3 1,046 7.4% 5 8 Little Havana 1,273 13,989 9.1% 7 3 423 3.0% 5 5 872 6.2% 7 9 Miami Gardens/Opa-Locka 495 14,770 9.6% 5 2 34 0.2% 9 4 970 6.6% 6 10 Miami Springs/Doral 334 17,078 11.1% 3 3 753 4.4% 2 9 2,143 12.5% 2 11 Mid -Beach 44 783 0.5% 15 0 0 0% - 0 0 0% - 12 North Beach 470 7,303 4.7% 10 1 6 0.1% 12 1 5 0.1% 13 13 North Miami Beach 742 16,577 10.8% 4 2 746 4.5% 3 3 781 4.7% 9 14 Outlying Miami -Dade Co... 2 530 0.3% 16 1 130 24.5% 7 2 490 92.5% 10 15 South Beach 369 7,365 4.8% 9 (2) 19 0.3% 10 1 321 4.4% 11 16 ' WestchesterlTamiami 38 2,617 1.7% 12 0 0 0% - 0 0 0% - SUBMARKET RENT Asking Rents Effective Rents No. Submarket Per Unit Per SF Rank Yr. Growth Per Unit Per SF Rank Yr. Growth Concession Rank 1 2 Aventura Coconut Grove $1,913 $1,467 $1.84 $2.01 8 5 2.7% 0.7% $1,905 $1,456 $1.83 $1.99 8 5 2.9% 1.3% 0.4% 0.7% 15 9 3 Coral Gables $1,997 $2.39 1 2.5% $1,965 $2.35 $2.32 1 2 3.2% 3.3% 1.6% 2 4 Downtown Miami $2,118 $2.35 2 2.4% $2,094 1.2% 5 5 Hialeah/Miami Lakes $1,418 $1.60 14 3.5% $1,405 $1.58 14 3.8% 0.9% 8 6 Homestead/South Dade $1,290 $1.42 16 2.7% $1,278 $1.40 16 2.4% 0.9% 6 7 Kendall $1,677 $1.82 10 2.5% $1,662 $1.81 10 3.1% 0.9% 7 8 Little Havana $1,296 $1.75 12 0.6% $1,287 $1.74 12 0.4% 0.7% 10 9 Miami Gardens/Opa-Locka $1,263 $1.54 15 4.5% $1,248 $1.52 15 4.4% 1.2% 4 10 Miami Springs/Doral $1,809 $1.90 6 0.6% $1,772 $1.86 6 1.1% 2.0% 11 Mid -Beach $1,515 $2.18 4 1.5% $1,508 $2.17 4 1.5% 0.4% 14 12 North Beach $1,388 $1.87 7 1.5% $1,381 $1.86 7 2.0% 0.5% 12 13 North Miami Beach $1,366 $1.67 13 3.0% $1,348 $1.64 13 3.1% 1.3% 3 14 Outlying Miami -Dade Co... $1,883 $1.77 11 -3.0% $1,871 $1.76 11 -3.6% 0.6% 11 15 South Beach $1,727 $2.26 3 4.6% $1,720 $2.25 3 4.6% 0.4% 16 16 Westchester/Tamiami $1,409 $1.83 9 1.4% $1,403 $1.82 9 2.1% 0.4% 13 8/23/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. CoStar Page 48 SUBMARKET VACANCY & ABSORPTION No. 1 Submarket Aventura Units 148 Vacancy Percent 6.9% Rank 14 I Units 10 12 Month Absorption % of Inv Rank 0.4% 13 Construct. Ratio - 2 Coconut Grove 116 6.5% 11 10 0.5% 12 1.0 3 Coral Gables 485 6.7% 13 175 2.4% 8 - 4 Downtown Miami 2,402 11.5% 16 3,180 15.3% 0.9 5 Hialeah/Miami Lakes 431 2.3% (29) -0.2% 16 - 6 Homestead/South Dade 729 8.6% 15 351 4.1% 5 2.1 7 Kendall 797 5.7% 10 314 2.2% 6 0.9 8 Little Havana 422 3.0% 4 412 2.9% 4 1.0 9 Miami Gardens/Opa-Locka 466 3.2% 5 280 1.9% 7 0.1 10 Miami Springs/Doral 1,126 6.6% 12 540 3.2% 3 1.4 11 Mid -Beach 23 2.9% 3 0 0% - - 12 North Beach 288 3.9% 7 12 0.2% 11 0.5 13 North Miami Beach 930 5.6% 9 651 3.9% 2 1.1 14 Outlying Miami -Dade Co... 20 3.8% 6 151 28.5% 9 - 15 South Beach 336 4.6% 8 3 0% 14 - 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 49 APARTMENT SUBMARKET OVERVIEW MAP i l4F �, Miraniat West Pari Pembroke a rP Park HF9�rtt�a�e Beach 0 Andpver Esw Avenl!W- _ t ntry Club °¢rrl'INarla-id ir, tEEc:,) Gardens R�I rth ring s =4I Cal each ,s Miami Lakes M f i4.)pa Lix-* spa -I ck o:�i f) , E�+n�u��w� 4� Airpart ,c I or N #i+ Miami Amelia I Par rk vvesivl w Bi gyne Park _. t' rf lb CL r. d 4'al{a1Aa'C][j(337 ,icah 9t dens Miami Shores Hialeah 'Fest Little silver f} 34 I ley Glodeview 95 66 z Mi i Miami spfi 5, �reaY�il.�alli{:� r�aa° M rt3R Sl l i Inturnatlonol Airp art kt N. ,rh�aDao iiia Art Mu eu n Miami 0 Iami I isrLE ►t,4wd,rd. FLAGA.Mi els C4. DT la ni r a. wl vwv St Miami 931) :esterii 4 , i Lk� h• Yr 1 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 50 12 Mo. Delivered Units 12 Mo. Absorption Units Vacancy Rate 12 Mo. Asking Rent Growth 31 271 3.2% 4.1% Apartment rents in the Miami Gardens/Opa-Locka submarket increased by 4.1% year -over -year, and have posted an average annual gain of 4.4% over the past three years. Vacancies were below the five-year cycle average of 4.6%, they currently register at 3.2%, declining by 2% over the past four quarters. There are about 970 units currently underway, representing a close to 10% expansion of the existing inventory. Over the past three years, 1,200 units have delivered, or a cumulative inventory expansion of 8%. Sales activity was very strong over the past four quarters, registering at $133,700,000, prolonging a multi-year stretch of good investment. The average annual sales volume over the past five years has been $80 million. Over the past year, employment gains were essentially in line with the five-year average. Total employment increased by 2.4%, or about 28,700 jobs. Over the past five years, employment has increased by 2.6% annually on average, compared to a 1.7% average increase nationally. KEY INDICATORS Current Quarter Units 4 & 5 Star 1,310 3 Star 4,280 1 & 2 Star 9,180 Submarket A 14,770 Vacancy Rate Asking Rent Annual Trends MMW- 12 Month Vacancy Change (YOY) -1.6% Absorption Units 271 Delivered Units 31 Demolished Units 0 Asking Rent Growth (YOY) 4.1% Effective Rent Growth (YOY) 4.0% Sales Volume $130 M Vacancy Rate Asking Rent Effective Rent Absorption Delivered Units Under Constr Units Units 5.3% $1,705 $1,618 10 0 862 3.0% $1,434 $1,429 4 0 108 2.9% $1,026 $1,021 (8) 0 0 3.2% $1,261 $1,246 6 0 970 Historical Forecast peak When Trough When Average Average 6.2% 6.2% 10.3% 2011 Q2 3.1% 2019 Q1 102 137 795 2017 Q3 (554) 2011 Q2 118 227 768 2017 Q3 i 0 2015 Q3 49 16 811 2012 Q1 0 2019 Q2 2.4% 1.5% 9.0% 2006 Q4 -3.9% 2008 Q4 2.4% 1.6% 9.0% 2006 Q4 -4.0% 2008 Q4 $47.3M N/A $155.8M 2017 Q2 $2.4M 2010 Q3 8/30/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. + R ■i� CoStar - Page 51 Vacan Fundamentals have recently recovered after a slowdown in new deliveries. The vacancy rate in this submarket is currently at 5.3%, flat from the prior year. The last major project was in early 2018, when the delivery of a new mid -rise, Modera Riverhouse delivered and brought 292 new units online. A steady wave of new deliveries through 2019 are expected to increase the vacancy rate, albeit it should remain at or below the metro average. A large portion of demand in this area comes from blue collar workers renting some of the cheapest units in the metro. Many of the people who make up the workforce in Miami proper live here for its central location and low rents. The median household income is the lowest in the metro, and the submarket also has the lowest percentage of people with bachelor's degrees, fewer than 10%, a percentage stagnant for the past five years. ABSORPTION, NET DELIVERIES & VACANCY 1.000 ........................ 600 a_ 400 N 200 01 0-1 a C -200 Eleff Forecast 10% 9% 8% 7% C v 6% v 5% 4% 3% -60a 12% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 ■ Absorption IN Net Deliveries ■ Vacancy Miami Vacancy + 8/30/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. CoStarg Pa e 52 Vacan VACANCY RATE 40% Forecast 35% 30% i 25% ' 20% i 15% 10% ' 5 °/'o - 'A 0% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Miami Gardens/Opa-Locke 3 Miami Gardens/Opa-Locka 4-5 ® Miami Gardens/Opa-Locke Miami Star Star 1%TW-Ra 4.114.1 DI I] K11113I 30% 25% 20% 15% 10% 5 % 0% 2014 2015 2016 2017 2018 2019E a Stud io R 1 Bed ■ 2 Bed 3 Bed + 8/30/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. CoStarg Pa e 53 107111M 1 Miami Gardens/Opa-Locks Multi -Family Asking rents in Miami Gardens/Opa-Locka are some of the lowest in Miami, at around $1,260/ month. While Miami Gardens/Opa-Locka has a larger than average portion of 1 & 2 Star properties, the area's affordability is consistent across all star ratings. This submarket has some of the most affordable 4 & 5 Star units in the metro, averaging less than $1,600/month, compared to the metro's average of over $2,000/month. Rent growth in Miami Gardens/Opa-Locka has been solid and exceeds the Miami metro average, at roughly 4.1%. However, stagnant, below average income could stunt rent growth despite generally low vacancies. DAILY ASKING RENT PER SF $1.60 ... $1.55 $1.50 $1.45 $1.40 $1.35 $1.30 $1.25 Ill 1111 11 I'll— 1111-111141-1 1111 ' 11 Il 11 1111111 P[ ljjjj�ll 2015 2016 2017 2018 2019 Miami Gardens?Opa-Locka + 8/30/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. CoStarg Pa e 54 107111M 1 Miami Gardens/Opa-Locks Multi -Family MARKET RENT PER UNIT & RENT GROWTH $1,700 8% Forecast $1,600 ' � 7% $1,500 i 6% $1,400 5% $1,300 4% G) $1,200 3 $1,100 2% $1,000 1110HOUL40 1 % $904 1 1 1 % 2014 2015 201E 2017 2018 2019 2020 2021 2022 2023 ■ Market Rent Growth Y/Y ■ Market rent Per Unit ■ Effective Hent Per Unit Miarni Market Rent Per Unit MARKET RENT PER UNIT BY BEDROOM $1,800 -. $1,600 $1,400 $1,200 $1,000 $800 $600 2014 2015 2016 2017 2018 2019 a Studio 0 1 Bed ■ 2 Bed 3 Bed + 8/30/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. CoStarg Pa e 55 Construction Miami Gardens/Opa-Locks Multi -Family Miami Gardens/Opa Locka has quickly become an active area for apartment construction. Close to 1,200 units have hit the submarket since 2015, and another 970 units are under construction. The last major delivery was in the first quarter of 2018 when the submarket delivered a mid -rise building called Modera River House with 292 units. The project is in Allapattah along the Miami River, near the Civic Center Metrorail stop. The River Landing project, one of the submarket's largest proposed properties, finally broke ground in late 2017 after contending with some legal issues that delayed the project. River landing will be a mixed-use property with over 500 apartments and 420,000 SF of retail, including an AMC theater. It will be near Miami's Health district, and should bring housing and retail to an area where many hospital employees work. DELIVERIES & DEMOLMONS 800 700 600 M 500 C Z) 400 to 4i 300 7 a 200 100 0 -100 Forecast 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 ■ Deliveries ■ Demolished ■ Net Deliveries Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. i CoStar 8/30/2019 Page 56 Construction •.. Ail -Time Annual Avg. Units Deliverer! Units Past 4 Qtrs Delivered Units Next 4 Ctrs Proposed Units Next 4 Qtrs 60 970 900 PAST 4 OUARTERS DELIVERIES. UNDER CONSTRUCTION. & PROPOSED Miramar wesI Park Pembroke `se O,A Park Hallandale Beach m42' Golden acact! rtsentu*e Gnumrx club ..I oius Sunny — C-0) _ �I Isle=s Peach E Palm Sprmn- NoMh ce Mrr mi NG'P, Q1eta ewer rD .Stale Park 1.02S CD Miami Lakes Iidul a rer Park nann M lam 1, 1311 Ha, mv, U Bns yne Park Sud'"ll L'J PAST & FUTURE DELIVERIES IN UNITS 1,000 ._------------------- --------------------------...---------- --------------- - 540 R1 Forecast 2017 2018 2019 2020 ■ Historical Deliveries Completed Past 4 Quarters ■ Underway Now ■ Proposed ASI -Time Average 8/30/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. + It; ■i� CoStar " Page 57 i 15 Hgleah Gardens Miami Shores"—� Hialeah f 0—North Bay NVt 741 S! wt1'?.§A 51 Medlar 9L Village Mlemi Bead) M.aml spring, —` Ooal Mlaml NWAl. V 'In PML.a.tlanal sI9 A,, Ova .:IxcePrYa[er r n 1.— ... Ci:rMe isle; rlcl c mple lea past GuaftelI / unde1 Cans UIJ[I 11 Pr ayomd Ha%lk Gwrlers PAST & FUTURE DELIVERIES IN UNITS 1,000 ._------------------- --------------------------...---------- --------------- - 540 R1 Forecast 2017 2018 2019 2020 ■ Historical Deliveries Completed Past 4 Quarters ■ Underway Now ■ Proposed ASI -Time Average 8/30/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. + It; ■i� CoStar " Page 57 Construction Property Name/Address 1 Center at Miami Gardens 19371 NW 27th Ave 2 Soleste Uptown 1033 Spring Garden Rd 3 1490 NW 20th St 4 Mosiac Apartments 13800 NW 22nd Ave 5 Villages of Miami Garder 3400 NW 191st St 6 3616 NW 20th Ave 7 2101 NW 36th St Rating Units Stories 272 - Developer/Owner JCC > 250 Ke . - erm . RECENT DELIVERIES 150 - Sep -2020 * >k 104 4 Property Name/Address Rating Units Stories Start Complete Developer/Owner 1 2301 NW 24th Ave * * 24 3 Mar -2017 Jun -2019 Sep -2019 Sep -2020 Y & T Management, Inc. Y & T Management, Inc. Aug -2019 Coinco Investment Co., Inc. 2 Enclave at Amelia * 22 - Mar -2017 Jul -2018 231 W 79th PI i Jmt Family Holdings Llc UNDER CONSTRUCTION Property Name/Address Rating Units Stories Start Complete Developer/Owner 1 Lantower River Landing * * * * * 507 I 5 Jul -2017 Jan -2020 UrbanX Group 1400 NW North River Dr 180 8 Jun -2018 Sep -2019 Hellinger Penabad Companies Atlantic I Pacific Companies 2 I Northside Transit Village... * * 3100 NW 77th St Miami -Dade Public Housing & Co... * * * 3 Las Vistas at Amelia 175 3 Aug -2018 Sep -2019 Prestige Builders Partners LLC 7925 W 2nd Ct Prestige Builders Partners LLC * * * 4 Sweet River Apartments 108 5 Aug -2018 Sep -2019 Oxford Partners 3623 NW 36th St Oxford Partners PROPOSED Property Name/Address 1 Center at Miami Gardens 19371 NW 27th Ave 2 Soleste Uptown 1033 Spring Garden Rd 3 1490 NW 20th St 4 Mosiac Apartments 13800 NW 22nd Ave 5 Villages of Miami Garder 3400 NW 191st St 6 3616 NW 20th Ave 7 2101 NW 36th St Rating Units Stories Start 272 - Developer/Owner JCC > 250 11 150 - Sep -2020 * >k 104 4 S ** 51 - Aug -2019 Aug -2020 43 5 �C** 30 - Start Complete Developer/Owner Sep -2019 Sep -2020 The Latigo Group The Latigo Group Sep -2019 Sep -2020 Estate Investments Group Aug -2019 Aug -2020 CFH Group CFH Group Aug -2019 Aug -2020 VRM Companies VRM Companies Sep -2019 Sep -2020 Sep -2019 Sep -2020 Y & T Management, Inc. Y & T Management, Inc. Aug -2019 Aug -2020 Phillip Sylvester Phillip Sylvester 8/30/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. 41110 R ,tw CoStar . Page 58 Miami Gardens/Opa-Locks Multi -Family Sales activity peaked in 2018, with sales volume and pricing reaching new highs. As prices continue to rise in Miami, many investors seem to be looking to less expensive submarkets such as Miami Gardens/Opa-Locka for entry into the market. Most of the investor interest has been driven by smaller, local buyers. Almost half of 2018 sales volume came from the sale of the 167 unit Modera Skyler, which traded to Rockwood Capital for $47.5 million, or about $280,769/unit. Another transaction occurred in October when the 234 unit Park Plaza Apartments sold for $33.4 million. SALES VOLUME & MARKET SALE PRICE PER UNIT $220,000 $200,000 $180,000 C `-' $160,000 a v $140,000 cl— $120,000 $100,000 $80,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 ■ Sales Volume 0 Miami Gardens/Ops-Locka Price/Unit E Miami Price/Unit $140 $120 $100 c $80 m $60 0 $40 N $20 $0 + 8/30/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. CoStarg Pa e 59 Sales Past 12 Months Miami Gardens/Opa-Locks Multi -Family Sale Comparables Avg. PriceWnit (thous.) 66 $12 SALE COMPARABLE LOCATIONS Average Price (mil.) $2,6 Average Vacancy at Sale 3,5% SALE COMPARABLES SUMMARY STATISTICS Sales Attributes Miramar.. Average Median ,! Req:anal pwa Sale Price $150,000 $2,649,971 tisrc"" Price Per Unit $12,500 $126,747 $85,625 $470,000 Cap Rate Golden Reach 8.6% �a 16.8% A Mu*a 0% co„ntry ctuh 0% vius Time Since Sale in Months CI 7.4 7.6 T 12.0 Property Attributes Low I isles Beach Palm Sprin g3 Property Size in Units 2 North M, am, 7 Noah 239 Number of Floors Beach 03ela, R,ver 2 20 2 tiro. Slate Palk g 437 1,055 GTl J 2018 Year Built 1925 1965 � a a�.lades M,a mi L- Haul over Pa+k Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. CQtarg 8/30/2019 Pa e 60 Norm M'am Berl Harhauf - Bisceyne Po rk SurN,* — e-' —.. 6`ri, frirl ij carysfen PAumi Silo r" Hialeah. �•."• ia:r.,. a El Pana! is •,y [si] Non Bay xw rarn sr ivo lam 5s modley C—) I village ? MJ am Bash Miami springs Gorol xn ♦lusr rr^+'�m 3r internallonol 'C■r A,roa r! Q SweMwater n Mlamr Miami Beach Fontainebleau — .. Gpdge 1y 6; , Sole Comparables SALE COMPARABLES SUMMARY STATISTICS Sales Attributes Low Average Median High Sale Price $150,000 $2,649,971 $520,000 $47,450,000 Price Per Unit $12,500 $126,747 $85,625 $470,000 Cap Rate 4.5% 8.6% 7.4% 16.8% Vacancy Rate at Sale 0% 3.5% 0% 9.7% Time Since Sale in Months 1.0 7.4 7.6 12.0 Property Attributes Low Average Median High Property Size in Units 2 21 7 239 Number of Floors 1 2 20 2 Average Unit SF 0 437 1,055 580 1960 2018 Year Built 1925 1965 Star Rating **lir*> *** 2.2 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. CQtarg 8/30/2019 Pa e 60 Sales Past • Miami Gardens/Opa-Locks Multi -Family RECENT SIGNIFICANT SALES 8/30/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. R ,t� CoStar " Page 61 Property Information Sale Information Property Name/Address Rating Yr Built Units Vacancy Sale Date Price Price/Unit Price/SF Modera Skylar# 2014 167 9.7% 11/13/2018 $47,450,000 $284,131 $281 1444 NW 14th Ave Parc Place Apartments 1972 234 4.3% 10/19/2018 $33,400,000 $142,735 $175 * * 17600 NW 5th Ave New Castle Lake 1964 239 0.8% 4/12/2019 $23,311,000 $97,535 $108 * * * 1401 NW 103rd St St. George Apartments 1958 84 6.0% 7/31/2019 $7,560,000 $90,000 $150 5200 NW 26th Ave 700 NW North River Dr 5101-5131 NW 24th Ave 7920-7945 NW 36th Ct 720 NW 61st St 745 NW 58th St 1033-1057 Spring Garden Rd ALSO Includes 3475 NW 35t... 1949 1953 1956 � 2007 1966 1956 1958 4 I 16 16 22 17 11 13 0% 6.3% 0% 4.6% 0% 4.6% 0% 3/27/2019 _ 12/31/2018 6/20/2019 6/7/2019 5/14/2019 1/31/2019 4/30/2019 $1,880,000 $1,665,000 $1,504,000 $1,500,000 $1,325,000 $1,231,714 $1,225,000 $470,000 $104,062 $94,000 $68,181 $77,941 $111,974 $94,230 $414 $258 $231 $91 $100 $164 $178 �.•�..�. * .* 3525 NW 35th Ave 1530 NW 35th St 825 NW 70th St NW 22nd Ave 6820 NW 17th Ave* NW 61st St 1331 Sharazad Blvd, Opa Lo... 1974 1957 1984 1958 1960 1952 10 14 6 22 12 8 0% 0% 0% 9.1% 0% 0% 3/12/2019 4/30/2019 2/14/2019 12/3/2018 10/26/2018 12/14/2018 $1,150,000 $1,100,000 $1,050,000 $1,000,000 $920,000 $765,000 $115,000 $78,571 $175,000 $45,454 $76,666 $95,625 $151 $189 $166 $107 $128 $227 V2930 * * V746 # * * 1301-1331 Sharazad Blvd 1972 1957 6 22 0% 0% 8/31/2018 11/2/2018 $750,000 $740,700 $125,000 $33,668 $127 $71 1867 NW 35th St Liberty City - 12th St 6040 NW 12th Ave 1961 NW 24th Ct 1925 6 1 0% F2/8/2019 $700,000 $116,666 $122 * 8/30/2019 Copyrighted report licensed to Meridian Appraisal Group, Inc. - 59871. R ,t� CoStar " Page 61 APARTMENT MARKET OVERVIEW (CONT'D) Planned and New Apartment Development Florida Housing Finance Corporation We have also considered the applications submitted to the Florida Housing Finance Corporation for funding. While there have been many more applications submitted for funding, we have only reported the projects approved for funding. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 62 Development on Street Demographic RFA # Name of DevelopmentAddress Scattered Site 1: 5900 NW 611 Ave, Miami, FL 33127; 651 NW 58' St, Miami, FL 33127; On NW 60' St, 2017-107 Edison Gardens southwest of the intersection of NW Family 60th St and NW 6' Ave, Miami, FL 33127. Scattered Site 2: 670 NW 58' St, Miami, FL 33127. NE 3rd Ave, SE of the intersection of NE 3rd Ave and NE 41h St., Florida City, FL; NE 3rd Ave, SE of the 2017-107 Ambar Key intersection of NE 3rd Ave. and NE Family 94 New 2nd Terr, Florida City, FL; and NE 3rd Ave, SE of the intersection of NE 3rd Ave and NE 2nd St, Florida City, FL. South side of SW 214' St, southwest 2017-108 Sierra Bay of the intersection of SW 214th St and Elderly 140 New SW 1171h Ct, Miami -Dade County Water's Edge Northwest Corner of SW 1091 Ave 2017-108 Apartments & SW 2141 St, Miami -Dade County Family 128 New Approx. 700' north of NW 7' St and 2017-108 Brisas del Rio 400' west of NW 13' Ave, Miami, Elderly 167 New Apartments Florida 2017-108 Citadelle Village 181 NE 82nd St Miami, FL 33138 Family 96 New NE corner of SW 2681 Stand 142nd 2017-108 Woodland Grove Ave Miami -Dade FL 33032 Family 190 Ne�,N NE corner of SW 267' St and 142nd 2017-108 Harbour S rin s Ave, Miami -Dade, FL 33032 Family 190 New 1170 NW 79' St and adjacent land 2017-109 Sunset Pointe approximately 150' southeast of the Family 136 New intersection of NW 791 St and NW 121 Ave, Miami -Dade County On NW 62nd St, at the intersection of NW 62nd St and NW 151 Ave; on Residences at Dr. King NW 62nd St, approx. 170' west of the 2017-112 Boulevard intersection of NW 62nd St and NW Family 120 New 15' Ave; on NW 15' Ave, at the intersection of NW 62nd St and NW 15' Ave, Miami 321 East Davis Pkwy, Florida City, 2017-112 Cordova Estates FL 33034 Family 160 New Paradise Lakes SW 881h St, SW 881h St and SW 1691h 2017-112 Apartments Ct, Miami -Dade County Famil 76 New Father Marquess -Barry NW 3rd Ave, NW 3rd Ave and NW 2018-102 Apartments 171h St, Miami Elderly 50 New On SW 193rd Ave, northeast of the 2018-104 Casa Juarez intersection of SW 193rd Ave and SW Farmworker 32 New 382nd Terr, Miami -Dade County, FL Platform 3750 at Frankie 2018-107 Shannon Rolle Center 3750 South Dixie Hwy, Miami Family 96 New 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 62 APARTMENT MARKET OVERVIEW (CONT'D) The projects were approved under the following RFA's. RFA # Description Development oa,pTotal 2017 -108 SAIL Financing of Affordable Multi -family Housing Developments to be used in conjunction with Tax - Exempt Bonds and Non -Competitive Housing Credits RFA # Name of DevelopmentAddress 2017-112 Housing Credit Financing for Affordable Housing Developments Located in Miami -Dade County 2018-102 , 2018-104 SAIL Financing to Preserve Farmworker and Commercial Fishing Worker Housing 2018-107 Housing Credit and SAIL Financing for Affordable Housing for Hurricane Recovery in Monroe County 2018 -108 SAIL Financing of Affordable Multi -family Housing Developments to be used in conjunction with Tax - Exempt Bonds and Non -Competitive Housing Credits 2018-111 Housing Credit Financing for Affordable Housing Developments Located in Miami -Dade County 8301 NW 27" Ave, Miami -Dade SAIL Financing for the Construction of Workforce Housing 2018-116 SAIL Financing of Affordable Multi -family Housing Developments to be Used in Conjunction with Tax -Exempt Bonds and Non -Competitive Housing Credits 2018-108 Northside Commons County Disability 80 New 2018-111 Lucida 15800 NW 77th Ct, Miami Lakes Family 108 New On the North side of SW 264th St, Cannery Row at approximately 200' west of the 2018-111 intersection of SW 264 St and Old Elderly 112 New Redlands Crossing Dixie Hwy, Miami -Dade County, FL On NW 551h St, northwest of the intersection of NW 55th St and NW 27th Ave, unincorporated Miami - 2018 -111 Las Brisas Trace Dade County; and on NW 54" St, Elderly 119 New northeast of the intersection of NW 541h St and NW 251h Ave, unincorporated Miami -Dade County NW 181h Ave, intersection of NW 2018-114 Brisas del Este Phase 291h St and NW 18th Ave, Miami, Family 120 New Two Florida Liberty Square Phase 1201 NW 65' St, Miami, Florida 2018-114 Three 33147 Family 192 New NW 51h Ave, southeast of the 2018-114 Solimar intersection of NW 5th Ave and NW Family 180 New 12th St, Florida City 1177 NW 76th St, Miami -Dade 2018-116 Sunset Pointe II County Family 96 New The projects were approved under the following RFA's. RFA # Description 2017-107 SAIL Financing for the Construction of Workforce Housing 2017 -108 SAIL Financing of Affordable Multi -family Housing Developments to be used in conjunction with Tax - Exempt Bonds and Non -Competitive Housing Credits 2017-109 Develo ment Viability Loan Funding 2017-112 Housing Credit Financing for Affordable Housing Developments Located in Miami -Dade County 2018-102 Housing Credit Financing to Provide Affordable Multi -family Rental Housing that is a Part of Local Revitalization Initiatives 2018-104 SAIL Financing to Preserve Farmworker and Commercial Fishing Worker Housing 2018-107 Housing Credit and SAIL Financing for Affordable Housing for Hurricane Recovery in Monroe County 2018 -108 SAIL Financing of Affordable Multi -family Housing Developments to be used in conjunction with Tax - Exempt Bonds and Non -Competitive Housing Credits 2018-111 Housing Credit Financing for Affordable Housing Developments Located in Miami -Dade County 2018-114 SAIL Financing for the Construction of Workforce Housing 2018-116 SAIL Financing of Affordable Multi -family Housing Developments to be Used in Conjunction with Tax -Exempt Bonds and Non -Competitive Housing Credits Conclusion The apartment market within Miami -Dade County consists of a wide variety of unit types ranging from older subsidized housing, older market rate projects, newer affordable projects and new luxury market rate projects. The subject is located in the Miami Gardens/Opa-Locka submarket which is one of 16 submarkets in Miami - Dade County. Vacancy rates in Miami -Dade County are slightly higher than the average of the past five years due to the high number of recent completions, however, the Miami Gardens/Opa-Locka sub -market has added a limited number of new units come on-line in the past year. Rental rates in the county and sub -market have steadily increased over the past five years. The Miami Gardens/Opa-Locka submarket has the 5' largest inventory in Miami -Dade County, the 9' highest number of deliveries in the past 12 months, the 5' most units under construction, the 51h lowest vacancy rates, the 71 highest average absorption rate and the 151 highest (2 n1 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 63 APARTMENT MARKET OVERVIEW (CONT'D) lowest) average rental rates. Overall, the Miami Gardens/Opa-Locka submarket is a secondary apartment location in Miami -Dade County that is currently experiencing slow but positive growth. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 64 NEIGHBORHOOD ANALYSIS Introduction A neighborhood is defined in terms of common characteristics, trends and groupings of similar or complementary land uses. For the purposes of this report, we have considered the subject neighborhood to be the area delineated by the following boundaries: Northern Boundary NW 103rd Street State Road 932 Southern Boundary Airport Expressway State Road 112 Western Boundary NW 271 Avenue Eastern Boundary U.S. Highway 1 General The defined neighborhood is located in the city of Miami and the subject's immediate neighborhood is identified as Liberty City to the west of Interstate 95 and Little Haiti to the east of Interstate 95. Liberty City (or Model City) is predominately an established low income residential area with commercial uses along major roadways. The Little Haiti neighborhood is a growing Haitian community that is characterized by a large number of churches and historic sites. Given the older age of the general improvements in the area, there is a push towards maintaining the existing structures. The neighborhood is heavily developed with industrial and commercial uses, as well as support facilities such as Miami Dade Community College. There are several elementary schools in the neighborhood, two middle schools and Edison Senior High. Employment opportunities are generally limited to the surrounding neighborhood uses, local commercial businesses, national businesses along U.S. Highway 1 and NW 7' Avenue (U.S. Highway 441). The subject's proximity to an Interstate 95 interchange also allows for easy access to many other employment opportunities outside the neighborhood. The heart of Little Haiti is a commercial stretch of NE 2nd Avenue that extends north of NE 54th Street to NE 62nd Street. This area is improved with a variety of supporting neighborhood uses, primarily local businesses such as food, variety and hair and beauty supply stores. There are several transportation arterials in the neighborhood, including Interstate 95, State Road 826 and State Road 836, which help to provide easy access to almost all areas of Miami -Dade County. The neighborhood is within 15 minute drive of the Miami International Airport to the southwest and Miami Beaches to the east and Downtown Miami/Brickell area to the southeast. The Brickell Avenue area of Miami is a leading hub of international banking and commerce, with branch offices or regional headquarters for many of the world's leading financial institutions. Portions of the subject neighborhood are within the Florida East Coast (FEC) Corridor Strategic Redevelopment Plan. This plan has focused on facilitating economic revitalization opportunities within the corridor and its surrounding neighborhoods. Within the Little Haiti area, the focus is to create an authentic mixed-use neighborhood incorporating retail development, light manufacturing, housing and active recreation within the context of the existing Haitian community. Particular concentration would be given to NE 2nd Avenue between NE 58' Street and 62nd Street. Access Primary roadways servicing this neighborhood are Interstate 95, State Road 826, State Road 836 and 79th Street. Interstate 95 is a limited access highway that begins just south of the subject neighborhood and extends north through the state of Florida along the east coast. This is an eight -lane roadway through Miami and often becomes heavily congested during business hours. There is an interchange at 69' Street, about two blocks east of the subject. State Road 836 is a limited access toll road that extends west from the intersection of Interstate 95 and Interstate 395 to the Florida Turnpike, approximately 13 miles to the west. This is a heavily traveled toll road that is a primary access route to Miami International Airport and the Florida Turnpike. The Palmetto Expressway (State Road 826) is also accessed from this arterial, which helps to provide quick access to the North Miami -Dade County neighborhoods. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 66 NEIGHBORHOOD ANALYSIS (CONT'D) State Road 826 (Palmetto Expressway) is a limited access road that extends north from Kendall to the north side of Miami Lakes. At this point, the expressway turns due east and terminates at the Florida Turnpike. State Road 826, east of the turnpike, is a regular arterial known as NE 1631 Street, which continues east and terminates at the Florida Coastline. This is a heavily traveled expressway that provides access to many areas of Miami -Dade County. 79'h Street is a six -lane divided east/west roadway that extends west from Biscayne Bay to the Hialeah Race Track. This road is also known as State Road 934 in the subject neighborhood. West of the Hialeah Race Track, State Road 934 is identified as W 21" Street and terminates at the Palmetto Expressway. In the subject neighborhood, this road is developed with several commercial uses, primarily local businesses with a few national users. Surrounding Uses As mentioned, the subject neighborhood is an older area of Miami and is heavily built-up. Employment centers in the neighborhood include the local commercial business owners and industrial users in the neighborhood. This area is heavily developed and the surrounding uses are as follows: Adjacent East West North South Commercial/Retail/ Water Treatment Facility/ Single family/ Industrial/ Office/Single Subject Small Office/Sin e familySchools/ Single familySmall Office family Visibility The subject is located on the south side of NW 69t' Street, west of U.S. Highway 441 and Interstate 95 in the Liberty City/Little Haiti area of the city of Miami. Access is from NW 69t' Street and NW 67t' Street. Visibility is average to good. Conclusion The subject neighborhood is an older area of Miami and is significantly built-up. The neighborhood is the Liberty City/Little Haiti area, which is one of the lower income areas in the County. There are many necessary supporting commercial services for residential development and several employment centers are within proximity to the subject. There is minimal multi -family development (excluding public housing) in the neighborhood, but demand for affordable housing in the area is high, suggesting that the subject project should receive market acceptance as a multi -family location. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 67 NORTH PARCEL SURVEY 2► Lor :R Lot 19 for le Lot 17 IL Ipw u0f4 it (_547 sj n) i Iz 14 NW OW Iq Wm j coy pI tot 740r.a tot s ; im r Vre+ I C6� 3ippeS � f i•Y Ar w MID rdsr J I =tr T f ?AN-0-24r�! * Fast tfi?r� 0rF—XWf(JN A= o- 4 !� aw Oft�• { 9N - R �d R+,' fi k' g'f7qmw aw Raw JEW f 2 P. er Cmayy st �f 6 i3 # CU. � `� u - _ Rt 1p rCres.re ila kFr?j 5, CAM wkas r�1e -. -'Awyc 2► Lor :R Lot 19 for le Lot 17 IL Ipw u0f4 it (_547 sj n) i Iz 14 NW OW Iq Wm j coy pI tot 740r.a tot s ; im r Vre+ I C6� 3ippeS � f i•Y Ar w MID rdsr J I =tr T f ?AN-0-24r�! * o- 4 !� aw Oft�• { 9N - R �d R+,' fi k' g'f7qmw aw Raw JEW f 2 P. er Cmayy st �.�. _ �f 6 i3 # CU. � `� u - _ 1p ila . �-% l+ -. -'Awyc C4WAY SRwf . A/� r� Ir cam Ij}'�Y affrm ;F=07 FrS cumin yy �'j {�J pfd fJ'��}ff�f%}T',f al �7� L_F_ �[ 1 4! l l Yl�2J P .h. al!x rYlS'0 ".Fur 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 68 SOUTH PARCEL SURVEY t GOO? op STREET r AWW-46-W 69((m) =00 R +yr 0`2 cw SMTP. fie' mus A A- Ff� V955_r mwm irr er I a aw a, � CommPW ohm r i 35° 0;?AN1 E J WITS () , 0/!S aoa ok y (P.6. 14, PG. 62) p Dazs o` a=+ ae v# P' 65 5q. Nary FMA a� � t I 1, �{ Fj' iii L�i4F,IM�.ik 'f f'9 i.J l L'l iYV.W 1 ^5 AS QX&QhM MIS S r�y J` O a�'ui 97Jf 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 69 NORTH BUILDING SITE PLAN '1 N. -0-•f NO :*w • =.•... :s'sii iii:. 's:; s w"i::i:* :'tor i*:!7 :►+'`�.i a� ..... .. V.. —00 Y: n...V f 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 70 SOUTH BUILDING SITE PLAN N.W. 62ND STREET (PRINCIPAL FRONTAGE) 6 ---------------------- -------------------- ---------------------- t- r IY�ff l.�s 1tid V-& hVA i7LYC3s LAWBCAPE AIWA- �_ _ _ e _ _ _ _ _ _ LANCI".APE AREA='� _ 19;~+rL PI['.AK�ITILul T ffft ^PIE i ��il�#hili► r�4 #�* • �*�� � f� F f f 4 rt+*,�li!# +i*!!��# � *#� �`�: ,� : * _ ;'�i�!_i6 I xr mAcK SITE PLAN 3CALL 111 -1 . ^_ LLQ Lu z z LLQ {fj 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 71 i st.wr -0i7�E8 IN Y �. Ji i ��il�#hili► r�4 #�* • �*�� � f� F f f 4 rt+*,�li!# +i*!!��# � *#� �`�: ,� : * _ ;'�i�!_i6 I xr mAcK SITE PLAN 3CALL 111 -1 . ^_ LLQ Lu z z LLQ {fj 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 71 SITE ANALYSIS Location The subject is located on the north and south sides of Dr. King Boulevard (NW 62nd Street) and the west side of NW 15' Avenue in Miami, Miami -Dade County Florida. Access/Exposure The site has one access point to the North Parcel along the north side of Dr. King Boulevard at the alleyway and one access point to the South Parcel from the west side of NW 15th Avenue. No other access is available or necessary. The site has average to good exposure. Area and Dimensions According to the survey provided, the subject site contains about 43,821 square feet, or 1.006 acres. The northern parcel will contain 0.531 acre or 23,146 square feet (after vacation and dedication of a portion of a 15' wide alleyway) and the southern parcel the southern parcel contains 0.475 acre or 20,675 square feet. The site is irregular in shape with frontage of 245' along the south side of Dr. King Boulevard (NW 62nd Street) and 100' along the west side of NW 15t' Street for the South Parcel and the North Parcel has 260' along the north side of Dr. King Boulevard and 140' of frontage along the west side of NW 15t' Avenue; the North Parcel is also divided by a 15' wide alleyway formerly known as NW 14' Court that will be vacated and dedicated to the subject site. Note that Dr. King Boulevard (NW 62nd Street) is a four -lane, divided highway with landscaped medians and center turn lanes. Topography and Drainage The subject's topography appears to be near road grade of adjacent roadways. Drainage appears to be adequate. We observed no apparent drainage problems when we inspected the subject site. However, we assume no responsibility for hidden or unapparent conditions beyond our expertise as appraisers. Soil Conditions/ Types A visual inspection by the appraisers of the soil revealed no apparent adverse conditions. We assume no responsibility for hidden or unapparent conditions beyond our expertise as appraisers. Utilities and Services The following utilities providers serve the subject site. Water and sewer are extended to the site. Water Miami -Dade County Sewer Miami -Dade County Electricity Florida Power & Light Telephone BellSouth Police City of Miami Fire/Rescue CityofMiami Easements and Encroachments We are not aware of any atypical easements or encroachments encumbering the subject that would impede development. The survey indicates drainage, public utility, and sanitary sewer easements. We reserve the right to revise our report accordingly should it be found that any atypical easements or encroachments exist on the subject site. Hazardous or Toxic Materials No hazardous or toxic materials were observed and none came to our attention during our physical property inspection. Please refer to Item 12 of the "General Assumptions" of this report for a full disclaimer. We were provided with Phase I and Phase II Environmental Site Assessments for the subject site prepared by Hydrolic Associates USA, Inc. dated April 11 and 23, 2018, respectively. The assessments revealed no evidence of recognized environmental conditions in connection with the property. Surrounding Land Uses To the north is single family, to the south is multi -family, to the east is multi -family and to the west is single family and multi -family. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 72 SITE ANALYSIS (CONT'D) Conclusion The subject site is of a size and configuration that appears to be suited for a variety of developments, including rental apartments. However, the project has a four -lane, divided highway running between the two building sites. Overall, exposure and access were considered average to good for multi -family purposes and the location of the site is central to neighborhood shopping, employment and educational facilities. All necessary utilities and services are available to the site to support the proposed development. Based on these investigations, we are of the opinion that the subject site is adequate for apartment development. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 73 NORTH BUILDING GROUND FLOOR PLAN a -43c c .� i r9 } 1 IN w F •� A 6I .-___-__- - .____ _.___-__--._a__-____.___._____.___. 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W ■ 4 81 ® A N I I I i iwl 1 } I I C .......... x T w H r� 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 79 SOUTH BUILDING 2ND THRU 5TH FLOOR PLAN 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 80 �r•� 74d •5 7#•'� I 1 A5 ar rl 1 LL - SES s_:l BECK i BED 7aL — I BED 1 LCE® Iefa Ef Sl -J :i r. ... .e:17A' 7F e-!iF FI.o ` +'1J Sr Se.r7F b a� I 1 mC I LLCG 1 Lr:: F*m A WFG I A`.G � I � � I I ZND-STH LEVIEL PLAN 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 80 NORTH BUILDING SOUTH ELEVATION RENDERING 'm12 on IN 0 d 6 l it - � �, � � � - � �� � », � � rr r 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 81 NORTH BUILDING NORTH ELEVATION RENDERING NORTH ELEVATION MME "I 4T 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 82 NORTH BUILDING EAST ELEVATION RENDERING t �• Rgs7 Ira a€aax E[ t.W-4' 6LrRra ft" I ri EAST ELEVATION SCALE" "-1 -W 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 83 SOUTH BUILDING NORTH ELEVATION RENDERING 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 84 SOUTH BUILDING EAST ELEVATION RENDERING I T CCi I UTF RfHFtocs HFfl¢ r I IPI I 1� ��j LL4 Fil'�i kG pL[34�C - _ 1 s I �Gfl r "GUN6 Fk(X EAST ELEVATION 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 85 IMPROVEMENT ANALYSIS The following data is based on the preceding site plan and floor plans, and information provided by the developer. Type and Size The subject will consist of 120 apartment units within two, five and seven -story apartment buildings with garage parking. The seven -story building on the northern parcel will contain 60 units and the five -story building on the southern portion will also contain 60 units. The two parcels are separated by a four -lane, divided highway with most of the parking contained in the northern building and the amenities contained in the southern building. The subject will set aside 20% (24) of the units for households earning 30% or less of the Area Median Income (AMI), 63% (75) of the units for households earning 60% or less of AMI, 8% (nine) of the units for households earning 80% or less of AMI and 10% (12) of the units at market rates. The subject will be restricted by the Housing Credit, HOME, SURTAX and Tax -Exempt Bond programs. The following is the subject's unit mix. The total rentable area within the units is 67,560 square feet, resulting in an average unit size of 563 square feet. The indicated density is 119.29 units per acre. Common amenities will include leasing offices, laundry in each building, community room and fitness center. Unit amenities will include refrigerator, range/oven, garbage disposal, dishwasher, ceiling fans, blinds, and washer -dryer hook-ups. Construction Details Based upon information provided by the subject developer and typical apartment projects, the subject's construction details are as follows: Exterior Walls: Windows: Roof: Partitions: Party Wall: Lighting: Heat & Air Conditioning: Flooring: Laundry: Other: Concrete Block with Stucco Aluminum Sash Single Pane Steel Trusses Gypsum Board Gypsum Board Compact Fluorescent Package Heating and Cooling System Ceramic Tile Common Laundry Room(s) Wired for cable/internet General Layout and Efficiency The subject's design is fair but inconsistent with other properties with family (general population) demographic commitments. This is not a typical layout due to the improvements being separated by a four -lane road. The northern parcel will have 112 parking spaces on the lower three floors while the southern parcel will have 20 parking spaces on the ground floor which is not adequate for that building; this condition will require a large number of tenants to cross a major street (there is a lighted intersection) every day. Further, the amenities are all located in the southern building including the leasing offices except there will be a laundry in both buildings. Again, this is an inconvenience to some tenants. The subject's unit mix is also not typical of family properties, 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 87 Unit Mlix with Set Asides Unit Type Set Aside # Of Units Unit Size (S.F.) Total S.F. 1/1 30% AMI 24 563 13,512 1/1 60% AMI 75 563 42,225 1/1 80% AMI 9 563 5,067 1/1 IMarket 1 121 5631 6,756 Total/Avg. 1 1 1201 563 67,560 The total rentable area within the units is 67,560 square feet, resulting in an average unit size of 563 square feet. The indicated density is 119.29 units per acre. Common amenities will include leasing offices, laundry in each building, community room and fitness center. Unit amenities will include refrigerator, range/oven, garbage disposal, dishwasher, ceiling fans, blinds, and washer -dryer hook-ups. Construction Details Based upon information provided by the subject developer and typical apartment projects, the subject's construction details are as follows: Exterior Walls: Windows: Roof: Partitions: Party Wall: Lighting: Heat & Air Conditioning: Flooring: Laundry: Other: Concrete Block with Stucco Aluminum Sash Single Pane Steel Trusses Gypsum Board Gypsum Board Compact Fluorescent Package Heating and Cooling System Ceramic Tile Common Laundry Room(s) Wired for cable/internet General Layout and Efficiency The subject's design is fair but inconsistent with other properties with family (general population) demographic commitments. This is not a typical layout due to the improvements being separated by a four -lane road. The northern parcel will have 112 parking spaces on the lower three floors while the southern parcel will have 20 parking spaces on the ground floor which is not adequate for that building; this condition will require a large number of tenants to cross a major street (there is a lighted intersection) every day. Further, the amenities are all located in the southern building including the leasing offices except there will be a laundry in both buildings. Again, this is an inconvenience to some tenants. The subject's unit mix is also not typical of family properties, 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 87 IMPROVEMENT ANALYSIS (CONVD) as it includes only one -bedroom unit types. The subject's parking meets zoning requirements. The subject's general design is fair and inconsistent with newer affordable properties in the county. Age and General Condition The physical condition of the improvements will be new upon completion. The economic life of the improvements is estimated at 55 years. Construction Quality We estimate that the subject apartment buildings will be of average to good quality, Class C multi -family buildings per the Marshall Valuation Service definition. Interior finish will be of average to good quality. Site Improvements The property will have concrete curbs, gutters and sidewalks, asphalt paved parking and interior streets, landscaping with irrigation, site lighting and signage. All utility services are extended to the site and should adequately service the subject. A total of 132 parking spaces (about 1.10 spaces per unit) will be provided. A total of 132 parking spaces (about 1.10 spaces per unit) will be provided. Parking is not convenient to all tenants (see the General Layout and Efficiency discussion above). Zoning requires 131 spaces for the subject with a general population demographic. The subject meets this requirement, but is less than market standards. We have assumed that the subject's site plan will be approved. Personal Property Personal property typically included in apartment projects consists of the appliances in each unit, mini -blinds and/or vertical blinds in each unit, clubhouse/common area furnishings and equipment, and other similar items. We estimate a contributory value of the personal property of $240,000. Resident Programs The following resident programs have been committed to by the developer: 1. Employment Assistance 2. Financial Management Program 3. Homeownership Opportunity Conclusion Based on discussions with the developer (see Extraordinary Assumptions), we are of the opinion that the proposed improvements are adequately suited for their proposed use as apartments. However, the uneven parking and amenities arrangements will cause some inconveniences for tenants. However, based on our review of the area and interviews with leasing agents and potential tenants, the property should be accepted within the market. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 88 HIGHEST AND BEST USE ANALYSIS In order for a property to be at its highest and best use, it must be reasonably probable, legally permissible, physically possible, financially feasible and maximally productive. Consideration must be given to the individual characteristics of the land such as size, shape, accessibility, location and availability of necessary utilities. Specific attention must be directed toward the legal and permissible use and any probable modifications of that use. Finally, consideration must be given to the surrounding land uses and the current and future demand for property in the real estate market. An analysis of the highest and best use of any property actually involves two separate studies: 1. an analysis of the site as if vacant and ready to be put to its highest and best use and, 2. an analysis of the property as proposed to be improved. As Vacant Legally Permissible Uses The first step in the highest and best use is to determine the legally permissible land uses considering the present zoning. The subject property is zoned T6-8-0 & T4 -L, Suburban Transect Zone - Open and General Urban Transect Zone -Limited, by the City of Miami. The future land use designation is Mixed -Use. The zoning and future land use allows a variety of uses including multi -family. Considering the surrounding uses, multi -family is the most compatible use. Physically Possible Uses The subject site is of a size and configuration that appears to be suited for a variety of developments, including rental apartments. However, the project has a four -lane, divided highway running between the two building sites. Overall, exposure and access were considered average to good for multi -family purposes and the location of the site is central to neighborhood shopping, employment and educational facilities. All necessary utilities and services are available to the site to support the proposed development. Based on these investigations, we are of the opinion that the subject site is adequate for apartment development. Based on these investigations, we are of the opinion that the subject site is suitable for apartment development. Logical and Economically Feasible Uses Based on development costs for currently proposed apartment projects and attainable rents, new construction would likely be possible at the subject location. Given the previous information, and relying upon data presented in the Neighborhood Data, Apartment Market Overview and Income Capitalization Approach sections of this report, we are of the opinion that the highest and best economic use of the subject property would be for development of a rental community of average to good quality. Miami -Dade County is a fast growing area that has attracted numerous retirees and a large working age population. Transportation needs are provided by road, air, rail and water. In addition, the area has a strong cultural community. Housing development is present in both the single family and multi -family segments in response to increases in the population. Overall, the economic outlook for the region appears favorable into the foreseeable future and we anticipate that real estate values will remain stable, with increasing tendencies. The apartment market within Miami -Dade County consists of a wide variety of unit types ranging from older subsidized housing, older market rate projects, newer affordable projects and new luxury market rate projects. The subject is located in the Miami Gardens/Opa-Locka submarket which is one of 16 submarkets in Miami - Dade County. Vacancy rates in Miami -Dade County are slightly higher than the average of the past five years due to the high number of recent completions, however, the Miami Gardens/Opa-Locka sub -market has added a limited number of new units come on-line in the past year. Rental rates in the county and sub -market have steadily increased over the past five years. The Miami Gardens/Opa-Locka submarket has the 5th largest inventory in Miami -Dade County, the 91 highest number of deliveries in the past 12 months, the 51 most units under construction, the 51h lowest vacancy rates, the 71 highest average absorption rate and the 151 highest (2"d 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 89 HIGHEST AND BEST USE ANALYSIS (CONVD) lowest) average rental rates. Overall, the Miami Gardens/Opa-Locka submarket is a secondary apartment location in Miami -Dade County that is currently experiencing slow but positive growth. The subject neighborhood is an older area of Miami and is significantly built-up. The neighborhood is the Liberty City/Little Haiti area, which is one of the lower income areas in the County. There are many necessary supporting commercial services for residential development and several employment centers are within proximity to the subject. There is minimal multi -family development (excluding public housing) in the neighborhood, but demand for affordable housing in the area is high, suggesting that the subject project should receive market acceptance as a multi -family location. Occupancy rates in the projects are strong and the subject property is well located for an average to good quality project, due to the character of the neighborhood, transportation linkages and employment opportunities in the region. Alternative uses are for -sale single family product and for -sale multi -family product. However, multi- family rental is the most likely. Conclusion — "As Vacant" The highest and best use as vacant is for multi -family rental development in conformance with zoning and future land use regulations. Highest and Best Use — As Proposed As discussed in the Improvement Data section, the subject improvements will consist of a 120 unit rental community with a mix of all one -bedroom units. Based on discussions with the developer (see Extraordinary Assumptions), we are of the opinion that the proposed improvements are adequately suited for their proposed use as apartments. However, the uneven parking and amenities arrangements will cause some inconveniences for tenants. However, based on our review of the area and interviews with leasing agents and potential tenants, the property should be accepted within the market. The subject will offer typical unit features of similar quality finish as compared to the other market rate and restricted comparables. The subject will have similar project amenities compared to the competition. However, the parking and amenities arrangements will inconvenience some tenants due to having a major roadway between the two buildings. The subject will set aside 20% (24) of the units for households earning 30% or less of the Area Median Income (AMI), 63% (75) of the units for households earning 60% or less of AMI, 8% (nine) of the units for households earning 80% or less of AMI and 10% (12) of the units at market rates. The proposed improvements are physically well-suited for their intended use. The improvements appear to comply with zoning. We have assumed that the site and building plans will be approved as described herein. As discussed on the preceding page, the affordable apartment market in Miami -Dade County appears to be stabilized. Over the long-term, market conditions in Miami -Dade County and the subject's market area are expected to be good. The subject is expected to generate a positive net operating income. Therefore, we conclude that the subject improvements are generally consistent with the highest and best use of the site as if vacant. Conclusion — Highest and Best Use As Proposed The highest and best use as proposed is for use as a multi -family rental community. The subject as proposed to be improved has an atypical unit mix but should be well accepted in the market. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 90 MARKETABILITY AND EXPOSURE PERIODS Introduction During the course of our research for this appraisal assignment we spoke with several real estate professionals involved in marketing and sales of rental projects similar to the subject improvements in order to understand the marketability of the subject property. We also surveyed representatives of various financial institutions to obtain their current lending criteria for properties similar to the subject structure. The information gained from these conversations is summarized below: 1. Who would be the typical purchaser of a property like the subject property? The most likely purchasers of the subject as developed would be a regional or national investor. 2. What would be a typical selling commission? A typical commission for this type of property would be between 2% to 4%. As the dollar amount of the transaction increases, the commission would decrease correspondingly. 3. What would be the expected marketing and exposure periods? An exposure period of 12 months from open to close would be typical. A marketing period of six to 12 months would be typical. 4. What type of lending criteria would be typical for the subject property? Typical permanent loan parameters for good quality projects are: an interest rate ranging from 200 to 350+ basis points above five to 10 year treasuries, a loan to value ratio of 80% to 90%; a 15-18 year balloon and a 30 to 35 year amortization period. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 91 VALUATION PROCEDURE The valuation of real estate lends itself to the application of the three traditional approaches to value: the Cost Approach, the Income Approach and the Sales Comparison Approach. The Cost Approach analyzes the relationship between value and cost as perceived by the investor. By applying this technique, the appraiser tends to estimate the difference in worth to a buyer between the property being appraised and a newly constructed site with similar utility. The application of this approach involves estimating a number of individual components such as land value, reproduction or replacement costs, entrepreneurial profit, and accrued depreciation. This technique is most applicable when appraising relatively new construction with a limited amount of accrued depreciation; however, it is also useful (but less effective) when appraising older structures. The Cost Approach is applied, as the subject is proposed. The Sales Comparison Approach involves a detailed analysis and comparison of similar properties that recently sold in a similar or competitive market. When reduced to an appropriate unit of comparison, these transactions can be adjusted for pertinent differences such as time, market conditions, financing, location and/or physical characteristics. If a sufficient number of sales are available, the resulting value indication is a reflection of the price a buyer is willing to pay for a property exhibiting characteristics similar to the subject. The interpretation of a number of indications of market price should lead to a logical estimate of market value. The Income Approach is based on the premise that a prudent investor would pay no more for the subject property than for another investment with similar risk and return characteristics. Since the value of an investment can be considered equal to the present worth of anticipated future benefits in the form of dollar income or amenities, this approach estimates the present value of the net income that the property is capable of producing. This amount is capitalized at a rate reflecting risk to the investor and the amount of income necessary to support debt service for the mortgage requirement. The Cost Approach, Sales Comparison and Income approaches to value were used to value the subject as a market rental project. As restricted, the Cost Approach is unreliable and was not developed. We have provided a value of the subject site as is. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 92 VALUATION AS A MARKET RENTAL PROPERTY COST APPROACH The Cost Approach is based upon the principle of substitution, in that an investor would not pay more for an improved property than to purchase a site and construct similar improvements on it. It involves the estimation of the reproduction or replacement cost new of the improvements to which is added an estimate of land value. In this instance, the improvements are efficiently designed and we have used the reproduction cost. Reproduction cost is the cost to produce an exact replica of the subject property while the replacement cost model is an estimate of the cost to produce a substitute property with comparable utility. Reproduction cost is most valid when analyzing newer improvements that have experienced little loss in value through normal wear and tear and other forms of depreciation. Therefore, the Cost Approach to value attempts to estimate the current market value of property through a process in which the appraiser estimates the reproduction costs of all improvements and then deducts the total estimated loss in value (depreciation) for the improvements. The steps in this approach are outlined below: Step 1 Estimate the current market value of the site. The site is valued as if vacant and free to be utilized in a capacity representing its Highest and Best Use. This step is accomplished through the analysis of recent sales and listings of comparable sites. Step 2 Estimate the reproduction cost new of the subject improvements. This step results in the appraisers' estimate of the total cost of replacing a structure similar to the subject improvements. The reproduction cost estimate associated with this appraisal utilizes the estimated cost per square foot. This method of estimating a cost factor is fully described later in this report. Step 3 Estimate the total accrued depreciation or loss in value that the subject improvements may have incurred due to physical, functional, or economic factors, which would negatively influence the value of the property. Step 4 Deduct the total estimated depreciation (Step 3) from the reproduction cost estimate (Step 2) and add the current value estimate from the site (Step 1). The resulting figure represents the appraisers' estimate of the current market value of the subject improvements via the Cost Approach. Land Value Estimate In order to estimate the value of the subject site, we have used the Sales Comparison Approach, which directly compares the subject site to sales of similar sites that have occurred within the subject region. The reliability of this technique is dependent upon the degree of comparability of each sale to the subject, market conditions at the time of sale, verification of pertinent data and the absence of unusual conditions that influence the sale. A detailed discussion of each comparable sale is presented on the following pages, along with a location map indicating their proximity to the subject site. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 94 Pennsuco i LAND SALES MAP Land Sale No. 2 Medley 27 ■Ysrginia Garden's 112 —Doral ■ Land Listing No. 5 822 I �$ 3S5 Fountain • Sweetwateraa Ta mla W, g73 IV91 } Un� _ . Kendale 1. NSunset • The Halnmocic • I ■ ■ • ,Three I Lakes Richmond Hrefights Gauntry Walk ■ Palmetto Estates ■ ♦Palmetto Bay West rune East Perrin South iiami Heights Perrine 1 Quail Heigh utler Ridge Land Sale U.. 3 Burrs Stri Lakes by the Bay �Mac'sFiekl �;/tonrinoe � mss v Land sale N.. a Naranja • 1 Dade Leisure city County -Homestead • Regional 21 Homestir Reserve se Bal Harbour • lviewf lVort�rMtamt— Land S.I. ". 1gne Park Surtside ■ —ALP!newood— G M is in vShores • r ■ Ell Portal A t _ saa m Ideveew North Bay Village. f nsuille Su bj—t Property LPO ami beach Miami I�1rrgrnra Key The Barrack; f y� Pennsuco i LAND SALES MAP Land Sale No. 2 Medley 27 ■Ysrginia Garden's 112 —Doral ■ Land Listing No. 5 822 I �$ 3S5 Fountain • Sweetwateraa Ta mla W, g73 IV91 } Un� _ . Kendale 1. NSunset • The Halnmocic • I ■ ■ • ,Three I Lakes Richmond Hrefights Gauntry Walk ■ Palmetto Estates ■ ♦Palmetto Bay West rune East Perrin South iiami Heights Perrine 1 Quail Heigh utler Ridge Land Sale U.. 3 Burrs Stri Lakes by the Bay �Mac'sFiekl �;/tonrinoe � mss v Land sale N.. a Naranja • 1 Dade Leisure city County -Homestead • Regional 21 Homestir Reserve se Bal Harbour • lviewf lVort�rMtamt— Land S.I. ". 1gne Park Surtside ■ —ALP!newood— G M is in vShores • r ■ Ell Portal A t _ saa m Ideveew North Bay Village. f nsuille Su bj—t Property LPO ami beach Miami I�1rrgrnra Key The Barrack; Historic State Park i Crandon P rk Key Biscene Caoe Florida State $Fsctr}'�ra $try 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 95 i 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 95 LOCATIoN DATA Record Number. Property Name. Address. Long/Lat: MSA: Location: Tax Parcel No.: SALES DATA Sale Date. Sale Price Grantor. Grantee: OR Book/Page: Property Rights: Conditions of Sale: Financing: Verification: Three Year History: SITE DATA Property Use: Specific Use. Primary Frontage. Second Frontage: Amenity Frontage. Access/Exposure: Topography: Shape: Zoning: ANALYSIS Price/Gross Acre. Price/ Usable Acre. Price/ Unit. LAND SALE 1 1377 Westview 12300 Block of NW 27th Avenue (SR 9/SR 817) Miami, Miami -Dade County FL 33032 W80.242622 /N25.886861 Miami -Fort Lauderdale -Pompano Beach NE/C NW 27th Ave. & NW 123rd St. 30-2127-025-0011 July 12, 2019 $1,350,000 Zeus 1 LLC Group 10 OPZ Miramar, LLC 31544/1190 Fee Simple Typical Cash Public Records and Evan Kristol Broker w/M & M (954-463-2400) by Mark Davis, September 5, 2019. No recorded arm's length sales over the previous three years. Multi -family Land Workforce Housing Apartments 290' NW 27th Avenue 273' NW 123rd Street None Average/Good Level Rectangular NCUAD-MC, Mixed Use $738,957 $738,955 $12,736 Gross Acres. Gross SF.• Usable Acres: Usable SF.• Units. Density: Utilities: Retention: Price/ Gross SF.• Price/ Usable SF.• 1.827 79,580 1.827 79,580 106 58.02 per gross acre To site Off-site $16.96 $16.96 COMMENTS: The site is proposed for a 106 unit affordable/workforce housing apartment project that is the maximum number of units allowed by zoning. The site has frontage along the east side of NW 27th Ave. (SR 9/SR 817) just north of Gratigny Parkway (SR 924). The asking price was $1,500,000. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 96 LOCATIoN DATA Record Number. Property Name. Address. Long/Lat. MSA: Location: Tax Parcel No.: SALES DATA Sale Date. Sale Price Adjusted Sale Price. Grantor. Grantee: OR Book/Page: Property Rights: Conditions of Sale: Financing: Verification: Three Year History: SITE DATA Property Use. Specific Use. Primary Frontage. Second Frontage: Amenity Frontage. Access/Exposure: Topography: Shape: Zoning: LAND SALE 2 1011 Bridge Crossings site 2701/2765 E. 11th Avenue Hialeah, Miami -Dade County FL 33013 W80.260025 /N25.847517 Miami -Fort Lauderdale -Pompano Beach NE/C E. 11th Ave & E. 27th St. 04-3108-001-9890 August 04, 2017 $1,275,000 $1,275,000 A & B 2701 Investment, LLC MBM Developments Group, Corp. 30647/3530 Fee Simple Market Typical Cash to Seller Public Records, CoStar, and Sales Brochure by Mark Davis, December 22, 2017. No prior arm's length transactions over last five years. Mixed Use Gross Acres. Mixed Use Gross SF.• 220' East 11th Ave. Usable Acres: 100' East 27th St. Usable SF.• None Units. Average/Average Density: Level, at road grade Utilities: Rectangular Retention: TOD- Transit Oriented Development, Mixed Use ANALYSIS Price/Gross Acre. $2,488,533 Price/Usable Acre. $2,488,529 Adj. Price/Gross AC. $2,488,533 Adj. Price/Usable: $2,488,529 Price/Unit: $17,230 Adj. Price/ Unit. $17,230 Price/ Gross SF.• Price/ Usable SF.• Adj. Price/Gross SF.• Adj. Price/ Usable SF.• 0.512 22,318 0.512 22,318 74 144.43 per gross acre All available On-site $57.13 $57.13 $57.13 $57.13 COMMENTS: The Bridge Crossings market rate apartment project is proposed for the site. This project will have 74 units in one, seven - story building including 51 one -BR units, 23 two-bedroom units, structured parking with 94 spaces and 1,100 SF of retail space on the ground floor. The site is located in an industrial area that is located near a train station and being transitioned to a residential area. The older warehouse improvements did not contribute value to the site and will be razed. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 97 LOCATION DATA Record Number: Property Name: Address: Long/Lat. MSA: Location: Tax Parcel No.: SALES DATA Sale Date: Sale Price Adjusted Sale Price. Grantor. Grantee: OR Book/Page: Property Rights: Conditions of Sale: Financing: Verification: Three Year History: SITE DATA Property Use: Specific Use: Primary Frontage: Second Frontage: Amenity Frontage: Access/Exposure: Topography: Shape: Zoning: ANALYSIS Price/Gross Acre: Price/ Usable Acre: Adj. Price/Gross AC. Adj. Price/ Usable: Price/ Unit. Adj. Price/ Unit. LAND SALE 3 1204 Silver Creek 11855 SW 216th Street Goulds, Miami -Dade County FL 33177 W80.383410/N25.567175 Miami -Fort Lauderdale -Pompano Beach N/S SW 216th Street just west of US Hwy. 1 30-6912-000-0260 November 30, 2018 $1,500,000 $1 500 000 Samjack Blackstone, LLC GM Silver Creek, Ltd (Green Mills) 31243/723 Fee Simple Typical Cash Public Records and Mitch Rosenstein for grantee by Mark Davis, September 12, 2018. No recorded sales over the previous three years. Multi -family Land Affordable Apartments 135' SW 216th Street 135' SW 214th Street None Average/Good Level Irregular GCUC, Mixed Use $721,154 $721,152 $721,154 $721,152 $16,667 $16,667 Gross Acres: 2.080 Gross SF: 90,605 Usable Acres: 2.080 Usable SF: 90,605 Units: 90 Density: 43.27 per gross acre Utilities: To site Retention: Off-site Price/ Gross SF. • $16.56 Price/Usable SE. • $16.56 Adj. Price/Gross SF: $16.56 Adj. Price/ Usable SF: $16.56 COMMENTS: The site is proposed for a 90 unit affordable apartment project for the general population (families) to be known as Fair Oaks. The contract was contingent upon obtaining tax credits. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 98 LOCATIoN DATA Record Number. Property Name. Address. Long/Lat. MSA: Location. Tax Parcel No.: SALES DATA Sale Date. Sale Price Adjusted Sale Price. Grantor. Grantee: OR Book/Page: Property Rights: Conditions of Sale: Financing: Verification: Three Year History: LAND SALE 4 938 Verbena 28140 South Dixie Highway Naranja, Miami -Dade County FL 33033 W80.442239/N25.504202 Miami -Fort Lauderdale -Pompano Beach NW/S U.S. Highway 1 and SE/S South Miami -Dade Busway/Old Dixie Highway 30-7904-000-0231 September 27, 2018 $1,750,000 $1,750,000 Bushhog Homestead, LLC Verbena, LLC 31159/738 Fee simple Typical Cash to seller 3 mile Med Home Value $171,844 Public Records and David Deutch for grantee; contract (305-854-7100) by Mark Davis, August 25, 2017. No arm's length sales over previous three years. SITE DATA Property Use., Multi -family Land Gross Acres. 2.400 Specific Use. Affordable Apartment Gross SF. • 104,544 Primary Frontage. 429' US Hwy. 1 Usable Acres: 2.400 Second Frontage: 429' Busway Usable SF. • 104,544 Amenity Frontage. None Units. 110 Access/Exposure: Average/Good Density: 45.83 per gross acre Topography: Flat Utilities: To site Shape: Rectangular Retention: Off-site Zoning: UC -MC, Mixed Use ANALYSIS Price/Gross Acre. Price/ Usable Acre. Adj. Price/Gross AC. Adj. Price/ Usable: Price/ Unit: Adj. Price/ Unit. $729,167 $729,167 $729,167 $729,167 $15,909 $15,909 Price/ Gross SF. $16.74 Price/ Usable SF. $16.74 Adj. Price/Gross SF. • $16.74 Adj. Price/ Usable SF. • $16.74 COMMENTS: This site is proposed for the 110 unit affordable apartment project to be known as Verbena. The contract was originally scheduled to close by September 30, 2017 but was extended several times. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 99 LOCATIoN DATA Record Number. Property Name. Address. Long/Lat: MSA: Location: Tax Parcel No.: SALES DATA Survey Date: Asking Price Adjusted Sale Price. Grantor. Grantee: OR Book/Page: Property Rights: Conditions of Sale: Financing: Verification: Three Year History: SITE DATA Property Use. Specific Use. Primary Frontage. Second Frontage: Amenity Frontage. Access/Exposure: Topography: Shape: Zoning: ANAI.YsIs Price/Gross Acre. Price/ Usable Acre. Adj. Price/Gross AC. Adj. Price/ Usable: Price/ Unit. Adj. Price/ Unit. LAND LISTING 5 1378 2479 NW 36th Street Site 2479 NW 36th St., 3460 NW 37th St. & 2480 NW 38th St Miami, Miami -Dade County FL 33032 W80.237800/N25.809861 Miami -Fort Lauderdale -Pompano Beach E/S NW 27th Ave. & NW 123rd St. 013122-038-0120 & 0010 September 5, 2019 $7,500,000 $7,500,000 Zeus 1 LLC Group 10 OPZ Miramar, LLC 31544/1190 Fee Simple Typical Cash Public Records and Markos Bertolotti Broker w/Faust Comm. Realty (305-961-1179) by Mark Davis, September 5, 2019. No recorded arm's length sales over the previous three years. Mixed -Use Land Multi -family 640' NW 36th Street 560' NW 25th Ave. None Average/Good Level Irregular T6-8-0, Mixed Use $1,837,785 $1,837,785 $1,837,785 $1,837,785 $16,667 $16,667 Gross Acres. Gross SF.• Usable Acres: Usable SF.• Units. Density: Utilities: Retention: Price/ Gross SF.• Price/ Usable SF.• Adj. Price/Gross SF.• Adj. Price/ Usable SF.• 4.081 177,777 4.081 177,777 450 110.26 per gross acre To site Off-site $42.19 $42.19 $42.19 $42.19 COMMENTS: This property contains two sites located along the east side of NW 25th Ave. and separated by NW 37th St.; the southern site has frontage along the north side of NW 36th St. The zoning allows for a wide range of uses including up to 450 multi -family units (110 units/acre); the site is being marketed primarily as a multi -family site. The sites are currently improved with some small older building used for automotive repair and vehicle storage with minimal projected demolition costs. The site was on the market for $6,600,000 in 2018, but was increased to $7,500,000 late last year. Also, an offer of $6,500,000 was reportedly not accepted in 2018. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 100 •" _- + . i� � -M� tom+ '��p �FJ-� R Dili ��:�lA1,� September 5, 2019 $7,500,000 $7,500,000 Zeus 1 LLC Group 10 OPZ Miramar, LLC 31544/1190 Fee Simple Typical Cash Public Records and Markos Bertolotti Broker w/Faust Comm. Realty (305-961-1179) by Mark Davis, September 5, 2019. No recorded arm's length sales over the previous three years. Mixed -Use Land Multi -family 640' NW 36th Street 560' NW 25th Ave. None Average/Good Level Irregular T6-8-0, Mixed Use $1,837,785 $1,837,785 $1,837,785 $1,837,785 $16,667 $16,667 Gross Acres. Gross SF.• Usable Acres: Usable SF.• Units. Density: Utilities: Retention: Price/ Gross SF.• Price/ Usable SF.• Adj. Price/Gross SF.• Adj. Price/ Usable SF.• 4.081 177,777 4.081 177,777 450 110.26 per gross acre To site Off-site $42.19 $42.19 $42.19 $42.19 COMMENTS: This property contains two sites located along the east side of NW 25th Ave. and separated by NW 37th St.; the southern site has frontage along the north side of NW 36th St. The zoning allows for a wide range of uses including up to 450 multi -family units (110 units/acre); the site is being marketed primarily as a multi -family site. The sites are currently improved with some small older building used for automotive repair and vehicle storage with minimal projected demolition costs. The site was on the market for $6,600,000 in 2018, but was increased to $7,500,000 late last year. Also, an offer of $6,500,000 was reportedly not accepted in 2018. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 100 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 101 LAND SALE SUNMARY Subject Property Residences at Dr. King Boulevard Land Sale 1 Westview Land Sale 2 Bridge Crossings Land Sale 3 Silver Creek Land Sale 4 Verbena Land Listing 5 NW 36th Street Site Miami Miami Hialeah Goulds Naranja Miami Sale Date current contract Jul -19 Aug -17 Nov -18 Sep -18 Sep -1 9 Sale Price $55,621 $1,350,000 $1,275,000 $1,500,000 $1,750,000 $7,500,000 Land Size Gross Acres 1.01 1.83 0.51 2.08 2.40 4.08 No. of Units 120 106 74 90 110 450 Zoning T6-8-0 & T4 -L NCUAD-MC TOD GCUC UC -MC T6-8-0 Frontage/Exposure Average/Good Average/Good Average/Average Average/Good Average/Good Average/Good Sale Price/Acre n/a $738,916 $2,490,234 $721,154 $729,167 $1,837,785 Sale Price/Unit n/a $12,736 $17,230 $16,667 $15,909 $16,667 Property Rights Conveyed Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Financing Cash Cash Cash Cash Cash Cash Conditions of Sale Typical Typical- Typical- Typical Typical- Typical Market Conditions 0% 0% 0% 0% 0% -5% Adjusted Price/Unit 1 $0 $12,7361 $17,2301 $16,6671 $15,9091 $15,833 Location 0% -5% -5% -5% -5% Physical 0% 0% 0% 0% 0% Size 0% 0% 0% 0% 0% Zoning 0% 0% 0% 0% 0% Other 0% 0% 0% 0% 0% Net Adjustment 0% -5% -5% -5% -5% Indicated Price /Unit $12,7361 $16,3681 $15,8331 $15,1141 $15,04 Conclusion: 120 Subject Units @ $15,000 Value As Is $1,800,000 $1,800,000 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 101 COST APPROACH (CONVD) Adjustments Typically, land sales adjustments are based on direct, paired sales analysis where possible. However, exact mathematically extracted adjustments are not readily available due to the variety of differences between the sales. Therefore, the following adjustments were based primarily on the experience and judgment of the appraiser. Property Rights Conveyed All of the transactions involved the sale of the fee simple interest; therefore, no adjustments are required for property rights conveyed. Financing All of the sales involved direct payment of cash to seller, or cash equivalent mortgage terms, so no adjustments are applied for financing. Condition of Sale Land Sale Nos. 1 through 4 reportedly involved typically motivated buyers and sellers, so no adjustments are necessary. Land Listing No. 5 was adjusted downward 5% to reflect its condition as a listing and recognizing the tendency of listings to sell for less than the asking price. Market Conditions This adjustment is often necessary to older sales in order to reflect current market conditions. In most Florida markets demand spiked for multi -family land about six to seven years ago. After this time period demand moderated due to saturation in the multi -family for -sale market and the economic recession. Market conditions have improved for apartments and demand has improved for multi -family land. In order to recognize current market trends we have only used recent sales and contracts. The closed sales we used for this analysis range in age from August 2017 to September 2019. Demand and sale prices have been relatively stable over the time frame of the sales and are reflective of current market conditions; therefore, no adjustments are applied. Location Location adjustments take into consideration road frontage (visibility/exposure), access and surrounding developments, etc. The subject is located in a mixed-use area with close proximity to commercial services and transportation linkages. The subject site has average exposure for multi -family use. The subject is located in Miami. In addition, we have looked at median household incomes within a three-mile ring of each of the land sales and the subject property. The subject's three-mile median income is $29,634. The average median income for the land sales is $36,424. The subject's three-mile median home value is $207,332. The average three-mile median home value for the land sales is $206,675. Sale No. Project Median Income Med. Home Value Subject Residences at Dr. King Boulevard $29,634 $207,332 1 Westview $34,220 $192,421 2 Bridge Crossings $28,993 $212,825 3 Silver Creek $49,0501 $224,017 4 Verbena $42,7091 $195,434 5 2479 NW 36th Street Site $27,1481 $208,680 Land Sale No. 1 is located in the Westview area just north of the subject neighborhood with is similar to the subject's location and did not require and adjustment. Land Sale No. 2 is located in Hialeah just west of the subject neighborhood in a lightly superior area and has been adjusted downward. Land Sale No. 3 is located in Goulds which is a more remote location but is a new growth area with similar exposure, and is considered a slightly superior location overall and was adjusted downward. Land Sale No. 4 is located in Naranja which is a more remote location but is a new growth area with similar exposure, and is considered a slightly superior location overall and was adjusted downward. Land Sale No. 5 is located in Miami just south of the subject 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 102 COST APPROACH (CONVD) neighborhood with better exposure, and overall is considered to be superior to the subject and was adjusted downward. Physical The comparable sites are considered reasonably similar physically as compared to the subject. Since we have analyzed the land sales on a per unit basis, the developable area of the site is primarily considered. Thus, deductions for wetlands, etc. are not necessary. The subject and the comparables are reasonably similar requiring no adjustment. Size (Number of Units) The subject property is proposed to be developed with 120 units. The sales ranged from 74 to 450 units and average 166 units. There does not appear to be a correlation with the number of units and price per unit. We have made no adjustment for number of units. Zoning All of the sales either had zoning designations that allowed multi -family development at the time of contract or were contingent upon rezoning approval. Therefore, all of the sales are considered to be similar to the subject in regards to zoning. Other The subject does not have amenity frontage or access to shared amenities. Land Sale #3 has frontage on Lake Shadows and was adjusted downward. The other comparable sites do not have lake -frontage or access to amenities; therefore, are similar to the subject in this regard and are not adjusted. Other Land Contracts Several projects, including the subject, applied for funding in Miami -Dade County for Housing Credits or funding from the Florida Housing Finance Corporation. The following chart summarizes the land contracts from Miami -Dade County as well as a few from neighboring or similar Counties: Project Name County Demo Units Price Price/Unit Northside Commons Miami -Dade Disabled 80 $2,000,000 $25,000 Casa Juarez Miami -Dade Farmworkers 32 $540,000 $16,875 Healthcare Sr. Housing Miami -Dade Elderly 76 $1,900,000 $25,000 Paradise Lakes Miami -Dade Family 76 $2,800,000 $36,842 Casaluna Miami -Dade Family 79 $2,500,000 $31 646 Cordova Estates Miami -Dade Family 160 $1,300,000 $8 125 Las Brisas Estates Miami -Dade Family 110 $4,200,000 $38,182 Redland Oaks Miami -Dade Family 110 $3,960,000, $36,000 Average I I 1 90 $27,209 Value Conclusion of Subject Site as Vacant Land The sales reflect adjusted value indications of $12,736 to $16,368 per unit with an average of $15,019 per unit. We have reconciled at $15,000 per unit, or $1,800,000* (rd.). * Please see the Extraordinary Assumptions and Hypothetical Conditions. Reproduction Cost New Estimate In order to estimate the reproduction cost of the improvements, we have considered the subject's actual development costs, the cost of similar projects and the cost indicated using the Marshall Valuation Service cost manual. Cost Estimate via Marshall Valuation Service The subject's apartment buildings are Class C, average to good quality, High Rise Apartments, as classified by the cost manual. According to Section 11, Page 18 of the Marshall Valuation Service (MVS) cost manual, the base reproduction cost new estimate for average and good quality multiple residence construction is $98.50 and 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 103 COST APPROACH (CONVD) $129.00 per square foot. Taking into account the subject's characteristics, we have reconciled at a base cost of $113.75 per square foot for the subject property. We estimate interior corridor space at $45.00 per square foot. The refinements applied and resulting cost estimate are shown in the following table. The indicated apartment buildings cost is $8,180,000 (rd.). According to Section 11, Page 30 of the Marshall Valuation Service cost manual, the base reproduction cost new estimate for average and good quality clubhouse construction is $105.00 and $146.00 per square foot. Taking into account the subject's characteristics, we have reconciled at a base cost of $125.50 per square foot for the subject property. The refinements applied and resulting cost estimate for the clubhouse space are shown in the following table. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 104 Calculator Cost Form For the Marshall Valuation Service Calculator Cost Method Square Foot Subscriber: Meridian Appraisal Group Date: Sep -19 Name of Project: Residences at Dr. King Boulev: Location Miami -Dade Climate: Mild Region: Eastern Occupancy Multiple Residences Buildings Class and Quality Class C Average To Good Number of Stories five and seven Height Per Story 8 Average Floor Area (SF) (NRA) 67,560 Number of units 120 Marshall Valuation Service Section - Page Base SF Cost $113.75 11-18 Square Foot Refinements: Heating, Ventilation and Cooling $0.00 12-18 Sprinklers $2.25 12-30 Miscellaneous $0.00 Subtotal $116.00 Height and Size Refinements: Number of Stories Multiplier 1.010 12-16 Height Per Story Multiplier 1.000 Floor Area - Units Multiplier 1.000 Combined Multipliers 1.010 Refined Square Foot Cost $117.16 Current Cost Multiplier 1.03 99-3 Local Cost Multiplier 0.95 99-7 Subtotal Square Foot Cost $114.64 Total Square Footage 67,560 Cost Subtotal $7,745,150 SF - Other Cost/SF Elevators Included Interior Corridors, BOH $438,750 9,750 $45.00 Cost Subtotal $8,183,900 Rounded $8,180,000 The indicated apartment buildings cost is $8,180,000 (rd.). According to Section 11, Page 30 of the Marshall Valuation Service cost manual, the base reproduction cost new estimate for average and good quality clubhouse construction is $105.00 and $146.00 per square foot. Taking into account the subject's characteristics, we have reconciled at a base cost of $125.50 per square foot for the subject property. The refinements applied and resulting cost estimate for the clubhouse space are shown in the following table. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 104 COST APPROACH (CONT'D) Calculator Cost Form For the Marshall Valuation Square Foot Subscriber: Meridian Appraisal Group Date: Sep -19 Name of Project: Residences at Dr. King Boulevar Location: Miami -Dade Climate: Mild Region: Eastern Occupancy Clubhouse Buildings Class and Quality Class C average to good Number of Stories 1 Height Per Story 8 Average Floor Area (SF) (HVAC area) 6,361 ,Average Perimer LF Typical Marshall Valuation Service Section - Page Base SF Cost $125.50 11-30 Square Foot Refinements: Heating, Ventilation and Cooling $0.00 Sprinklers $2.25 12-30 Miscellaneous $0.00 Subtotal $127.75 Height and SizeRefnements: Number of Stories Multiplier 1.000 12-10 Height Per Story Multiplier 1.000 Floor Area - Units Multiplier 1.000 Combined Multipliers 1.000 Refined Square Foot Cost $127.75 Current Cost Multiplier 1.03 99-3 Local Cost Multiplier 0.95 99-7 Subtotal Square Foot Cost $125.00 Total Square Footage 6,361 Cost Subtotal $795,146 $93.75 Plus: Non -A/C area $0.00 0 SF Cost Subtotal $795,146 Rounded $800,000 We have also estimated the cost of site improvements, which will consist of 132 surface parking spaces, recreational amenities, interior roadways, sidewalks, landscaping and signage. Parking Spaces 132 $12,500 $1,650,000 Interior roads $100,000 Recreation $0 Sidewalks, signage, landscaping $150,000 Total $1,900,000 Impact fees are estimated at $1,020,000. In the Improvement Data section we estimated the cost new FF&E for the units and common areas at $240,000. Indirect costs are estimated as follows: 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 105 COST APPROACH (CONT'D) Real Estate Taxes/Insurance $150,000 Professional Fees $250,000 Marketing/Advertising $50,000 Finance Charges $200,000 Impact Fees $1,020,000 Contingency $200,000 Indirect Costs Total $1,870,000 Next we considered the developer's profit as if the subject were a market rate development. This incentive is defined as "a market derived figure that represents the amount an entrepreneur expects to receive in addition to cost." For investment properties, the entrepreneurial profit is usually measured from the time the conceptual plans originate through the site's acquisition and construction of the project to a point at which the developer is relieved of his market obligation. Past experience with properties like the subject and discussions with market participants indicated profit targets typically range from 6% to 15% with smaller projects typically falling toward the high end of the range. We have estimated an entrepreneur's incentive of 10% of the reconciled cost for the subject property, or $2,180,000. Summing the cost estimates of the apartment building, clubhouse, site improvements, FF&E, indirect costs, and entrepreneurial profit indicates a cost to construct via the (MVS) as summarized below: Item Cost Estimate Apartment Building 67,560 SF (NRA) $8,180,000 Clubhouse $800,000 Site Improvements $1,900,000 Furniture, Fixtures and Equipment $240,000 Indirect Costs $1,870,000 Development Cost Subtotal $12,9901000 Add Reconciled Profit(includes land) $2,180,000 Indicated Cost Marshall Valuation Service $15,170,000 Indicated Cost Per Unit $1261417 Indicated Cost Per S.F. $224.54 Cost Comparables In addition to the costs indicated by the Marshall Valuation Service, we have considered the overall costs of similar projects, as summarized below. The cost comparables are two or three-story garden -style buildings without elevators and mid to high-rise projects with elevators and exclude land costs, any fees associated with Housing Credit or Bond Financed properties and include developer profit. The MVS cost estimate was $126,417 per unit or $224.54 per square foot. The cost comparables range from $126,441 to $263,753, with an average of $184,830 per unit. The higher end of the range is set by townhouse and high-rise projects. Per square foot costs range from $117.12 to $263.67, with an average of $183.80. The cost estimate prepared with the Marshall Valuation Service falls within the range of the cost comparables. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 106 COST APPROACH (CONT'D) Developer's Adjusted Pro forma. The Developer Pro forma indicates total costs of $36,604,585 (including land). We have deducted the land costs, FHFC specific costs, profit differential, and operating costs or reserves from the developer's budget to arrive at a cost estimate as a market rate development as presented below: 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 107 COST COMPAKABLES ProjectLocationCost Unit Mix Cost/Unit Cost/SF NRA Orange County $23,266,249 2/2 72 $204,089.90 $117.12 Garden 3/2 24 3 -story 3/2 18 Total 114 Stair Access Orange County $32,492,997 1/1 18 $182,545 $163.56 Garden 2/1 11 3 -story 2/2 12 3/2 126 4/3 11 Total 178 Stair Access Manatee County $15,462,761 1/1 36 $214,761 $263.67 Mid -rise 2/2 36 4 -story Total 72 Elevator Access Orange County $13,483,495 1/1 6 $192,621 $167.83 Garden 2/2 18 3 -story 3/2 35 Stair Access 4/3 11 Total 70 Bay County $12,183,744 2/2 46 $156,202 $141.30 Garden 3/2 26 3 -story 4/2 6 Total 78 Stair Access Bay County $13,171,934 1/1 14 $143,173 $132.56 Garden 2/2 60 3 -story 3/2 18 Total 92 Stair Access Polk County $15,805,792 1/1 32 $164,644 $185.92 Garden 2/2 52 4 -story 3/2 12 Total 96 Elevator Access Hardee County $9,360,771 1/1 16 $146,262 $168.31 Garden 2/2 32 2 -story 3/2 16 Total 64 Sumter County $4,927,115 2/1.5 14 $246,356 $217.05 TH 3/2 6 2 -story Total 20 Dade County $15,931,512 1/1 27 $126,441 $152.41 Mid -rise 2/2 61 4 -story 3/2 35 4/2 3 Total 126 Elevator Access Dade County $22,155,233 1/1 10 $263,753 $262.05 Mid -Rise 2/2 53 6 -story 3/2 21 Total 84 Elevator Access Dade County $23,909,764 1/1 25 $177,109 $233.79 High-rise 2/2 98 13 -story 3/2 12 Total 135 Note: Costs indicated include entrepreneur's profit of 10% to 15%. Developer's Adjusted Pro forma. The Developer Pro forma indicates total costs of $36,604,585 (including land). We have deducted the land costs, FHFC specific costs, profit differential, and operating costs or reserves from the developer's budget to arrive at a cost estimate as a market rate development as presented below: 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 107 COST APPROACH (CONT'D) Total Cost Including Land and Acquisitions $36,604,585 Less: Land Cost -$155,621 Less: FHFC Fees -$346,778 Less: Profit Differential Developer Fee (Subject -Affordable) $4,861,939 Developer Fee (Market Estimate) $2,180,000 $2,681,939 -$2,681,939 Total as a Market Rate Project $33,420,247 120 Per Unit $278,502 67,560 Per SF $494.68 Based on the pro forma costs minus the costs associated with a project with Housing Credits, the total reproduction cost new is $33,420,247 or $278,502 per unit, which is significantly higher than the cost indicated using the Marshall Valuation Service. We have given consideration to the Marshall Valuation Service estimate, the cost comparables, and the developer's cost estimate. Total Construction Cost New — Reconciled We have reconciled at a total construction cost new of $20,000,000 or $166,667 per unit. Total Reproduction Cost New We have added the developer's profit. This incentive is defined as "a market derived figure that represents the amount an entrepreneur expects to receive in addition to cost." For investment properties, the entrepreneurial profit is usually measured from the time the conceptual plans originate through the site's acquisition and construction of the project to a point at which the developer is relieved of his market obligation. Past experience with properties like the subject and discussions with market participants indicated profit targets typically range from 6% to 15% with smaller projects typically falling toward the high end of the range. We have estimated an entrepreneur's incentive of 10% for the subject property. Adding a developer's profit of $2,180,000 indicates total Reproduction Cost New of $22,180,000 or $184,833 per unit. Accrued Depreciation The next step was to estimate accrued depreciation, separated into three basic forms: physical, functional and external obsolescence. Physical depreciation could be further divided into two sub -categories, physical curable (deferred maintenance) and physical incurable depreciation. First, we will consider all forms of curable depreciation that must be accomplished before accurately measuring incurable depreciation. Physical Curable depreciation (deferred maintenance) includes all items of maintenance that should be accomplished on the date of appraisal to maximize profits or minimize losses that would result if the property were sold. The measure of this element of accrued depreciation is the cost of restoring an item to new or nearly new condition, i.e., the cost to cure. The subject improvements will be in new condition; we have estimated that no deferred maintenance is present. Incurable Short -Lived depreciation includes all natural aging and wear and tear of the components of the improvements, which if repaired as of the date of appraisal, would not add greater value than the cost to repair or replace the item. A short-lived item is a component that is expected to have a remaining economic life that is shorter than the remaining economic life of the structure. Such items include parking areas, roof covers, floor coverings, appliances, HVAC, etc. The subject will be new and we estimate no accrued depreciation for incurable short-lived items. Incurable Long -Lived depreciation is generally regarded as the bone structure of the buildings and includes all items not treated as short-lived. Functional Obsolescence can result from poor building design, apartment floor plan or inadequate building construction/materials. Functional obsolescence can be curable or incurable. To be curable, the cost of 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 108 COST APPROACH (CONVD) replacing the outmoded or unacceptable aspect must be the same as or less than the anticipated increase in value. The subject's improvements will be efficient and functional for their intended purpose. Therefore, no functional obsolescence is indicated. External Obsolescence results from forces outside the property boundaries affecting its value at any given time. These forces may include a depressed market, oversupply, general economic conditions, etc. Comparison of the subject's value by the Cost Approach ($23,980,000) to that of the Income ($14,120,000) and Sales Comparison Approaches ($14,090,000) indicates that development of the subject complex (as a market rate project without government subsidies) does not offer sufficient profit to the developer, suggesting that external obsolescence is present in the amount of $9,860,000. Total Accrued Depreciation The subject has accrued depreciation in the form of external obsolescence. Value Conclusion — As If Complete The contributory value for the improvements has been estimated at $12,320,000. To this amount is added the land value estimate of $1,800,000 to arrive at the hypothetical market value estimate as if complete by the Cost Approach of $14,120,000*. Value Conclusion — As If Stabilized The value attributable to the lease -up was estimated in the Income Capitalization Approach to be $190,000. We have added the estimated value of the lease -up to the as if complete estimate indicating a hypothetical market value estimate as if stabilized by the Cost Approach of $14,310,000*. * Please see the Extraordinary Assumptions and Hypothetical Conditions. AL CONSTRUCTION COSTS -RECONCILED Entrepreneurial Profit (includes land) TAL REPRODUCTION COST NEW CRUED DEPRECIATION Deferred Maintenance Physical Short Lived Physical Long Lived Functional Obsolescence External Obsolescence Total Depreciation NTRIBUTORY VALUE OF IMPROVEMENTS AND VALUE STIMATED VALUE AS IF COMPLETE STIMATED LEASE -UP COSTS STIMATED VALUE AS IF STABILIZED Total $/UNIT $20,000,000 $166,667 10% $2,180,000 $18,167 $22,180,000 $184,833 $0 $0 $0 $0 $9,860,000 $82,167 $9,860,000 $82,167 $12,320,000 $102,667 $1,800,000 $15,000 $14,120,000 $117,667 $190,000 $1,583 $14,310,000 $119,250 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 109 SALES COMPARISON APPROACH The Sales Comparison Approach is a technique wherein a property is valued by comparison to similar properties that have recently sold in the marketplace. The Sales Comparison Approach is based upon the principle of substitution, which states that the value of a property tends to be fixed to the cost of acquiring an equally desirable substitute property with the same or similar utility. The Sales Comparison Approach begins with a search for sales of similar properties in the area. We reviewed recent sales in the Miami -Fort Lauderdale -Pompano Beach MSA. As will be discussed in the Income Capitalization Approach, capitalization rates have been stable over the time period covered by the sales. Factors of comparison considered during the search are project type, quality of construction, age, condition, location, rental rates and any other physical or economic characteristics that may affect the property's value. Because like units must be compared, each transaction should be analyzed in terms of appropriate units of comparison. The units of comparison selected depend on the individual appraisal problem. The sale properties have been compared to the subject by allocating the sale price to the price per unit. The market gives most consideration to this unit of comparison. The dates of sale range from June 2018 to May 2019. Adjustments have been made to each property, in order to make comparisons between the sales and the subject. In the following section, we briefly discuss each sale and explain the adjustment process. Detailed descriptions of each sale follow, along with an explanation of the adjustments and a summary chart. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 110 IMPROVED SALES MAP $`o — `f' Lauderdale -by -the -Sea / North Andrews Gardens s7m Lauderhill / j Dalstand Park 'SidLauder ale Lakes Wi on Manors + Su S38 Sunny Lake 845 91 11 h. ---- - 8B9 Plantation Bir SP ♦ WeStoll"`4� SMelr Park 42 • 842 Fort Lauderdale = 738 sa3 = = 6roadvieew Park 441 r ' Pine Island Ridge-__1� s4 } , I Fern rest Village rFort 1 Jahn U LIE[LauderdaledH wand ac Da ' Intl &eac SP � �SouthwestRanche VueondTth roily ++I, Dania � x4s 822 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 111 Pe[nbroke Pines Edge 824 S23 Miramar 441 Hallandale 817 -- ---- - ------------------- - - I $� Andover - - Golden Beach s54 21 s90 untry club Miamr rdens I Scott Lake jius Miami Beach Carol City ♦North � - 82e• nark Place Park theta see 2T Miami Lakes • Oya L ka Golden Glades oleta River SP M4pa`Locka oleta PennsuW` 918 919 River SP No h Miami Bat Harbour 959 924{ ' —W,, wl Bay Harbor Islands s23c2yne Pinewood Park •Surfside Hiateah_Gardens 817 /f Miami Shores Hialeah f11�ff z1 ♦ • ' EI Portal West Lillie River North bay Village Medley 27 Wadevieev Subjert Property Miami Springs Brownsvill 8iscc re B Doral S28 ,}I�1-�t} Virginia CarLlens 112 27 4 Mia Beach .'inbecil ♦Miami •Sweetwater 959 West 1.liami 98S 441 90 41 Miami ` 1 Tam�aml _ 41 Lombardy II 7�'w%�estc�er a1T �`1 Univers Park 21 CdrarTerrac rat abler C-1 �{ 913 irrJrnra iCey 1711 Ludlam 0 1 2 3 4 5 E Olympia Heiglits Barnacle Historic SP 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 111 LOCATION DATA Record Number. Market Type: Property Name: Address: Long/Lat MSA: Location: Tax Parcel No.: SALES DATA Sale Date Sale Price: Grantor. Grantee: OR Book/Page: Property Rights: Conditions of Sale: Financing: Verification: Three Year History: SITE DATA Acres: Square Feet. Main Frontage. Amenity Frontage. Zoning: Land Use: Density: Utilities Included in Rent. Project Amenities. IMPROVED MARKET SALE 1 588 Market Sunny Lake 2360 NW 56th Avenue Lauderhill, Broward County FL 33313 W80.264560/N26.175600 Miami -Fort Lauderdale - Pompano Beach SE/C NW 56th Ave. & NW 25th St. 49-41-26-15-0010 May 3, 2019 $59,000,000 TMIF Glen, LLC The Glen Apartments Holdings, LLC 115791332 Leased Fee Market Typical Cash to Seller Public Records and Jo Rousseau Broker w/HFF (305-532-2352) by Mark Davis June 21, 2019. No sales over previous three years. 26.470 1,153,033 2,400' NW 56th Ave. None RM -18 Multi -family 15.30 units per gross acre Trash Collection, Pest Control Outdoor Tennis, Laundry, Clubhouse, Exercise Fitness, Outdoor Pools (1), Business Center, Car Wash, Playground EVIPROVEMENT DATA Number of Units: 405 Year Built: 1988 Apartment Type. Garden Ave. Unit Size. 976 SF No. of Stories. 2 No. of Buildings: 26 Parking: 900 surf Construction: Wood e spaces Frame/Vinyl Siding & Stucco Unit Amenities. Washer/Dryer, Ceiling Fans, Icemakers, Patios/Balconies, Dishwasher, Disposal FINANCIAL DATA NOL• $2,950,000 Price/ Unit: $145,679 ANALYSIS Occupancy at Sale: 97% Capitalization Rate: Unit Type Number of Units Size (SF) I Rent er Month I Monthl Rent/SF 1/1 96 719 $1,225 $1.70 2/1 52 954 $1,350 $1.42 2/2 208 1,065 $1,520 $1.43 3/2 49 1,129 $1,600 $1.42 FINANCIAL DATA NOL• $2,950,000 Price/ Unit: $145,679 ANALYSIS Occupancy at Sale: 97% Capitalization Rate: 5.00% NOlper Unit. $7,284 Price/NetSF.• $149.19 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 112 IMPROVED MARKET SALE 1 (CONT'D) COMMENTS The property was built in 1989 and was renovated in 2009; the project was in average to good condition at the time of sale. Project formerly known as the Villas at Lauderhill. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 113 LOCATION DATA Record Number. Market Type: Property Name: Address: Long/Lat MSA: Location: Tax Parcel No.: SALES DATA Sale Date Sale Price: Grantor. Grantee: OR Book/Page: Property Rights: Conditions of Sale: Financing: Verification: Three Year History: SITE DATA Acres: Square Feet. Main Frontage. Amenity Frontage. Zoning: Land Use: Density: Utilities Included in Rent. Project Amenities. IMPROVED MARKET SALE 2 595 Market Edge Apartments 1850-1870 SW 68th Avenue Miramar, Broward County FL 33314 W80.223700/N25.994160 Miami -Fort Lauderdale - Pompano Beach NW/C SW 67th Ave. & SW 41st Ct. 50-41-27-01-0191 & 50-41-27- 01-0210 February 22, 2019 $9,000,000 Megacow, LLC Edge Apartments, LLC 115633630 Leased Fee Market Typical Cash to Seller Public Records and Derek Gibbs Broker w/Marcus & Millichap (954-245-3448) by Mark Davis September 5, 2019. No sales over previous three years. 2.200 95,832 650' SW 67th Ave None RAC -TC Multi -family 54.9 units per gross acre Trash Collection, Pest Control HVIPROVEMENT DATA Number of Units: 76 Year Built: 1970 Apartment Type. Garden Ave. Unit Size. 674 SF No. of Stories. 2 No. of Buildings: 4 Parking: 109 surface spaces Construction: CBS Laundry, Clubhouse, Outdoor Unit Amenities. Microwaves, Patios/Balconies, Pools (1) Range/Oven, Refrigerator FINANCIAL DATA 1 PGI. Unit Type Number of Units Size (SF) I Rent er Month I Monthl Rent/SF Studio 2 500 $913 $1.83 1/1 57 630 $1,025 $1.63 2/1 17 840 $1,300 $1.55 FINANCIAL DATA ANALYSIS PGI. $1,005,507 Occupancy at Sale: 96% Vacancy: $49,404 Capitalization Rate: 5.77% EGI.• $956,103 NOlper Unit. $6,833 Expenses. $436,803 Expensesper Unit. $5,747 NOL• $519,300 EGIM.• 9.41 Price/Unit. $118,421 Price/NetSF.• $175.82 Adj. Price/ Unit. $118,421 Adj. Price/ Net SF. • $175.82 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 114 IMPROVED MARKET SALE 2 (CONT'D) COMAMNTS The property was built in 1973 and 1975 and was in average to good condition; the sellers had completed renovations on 68 units, painted the exterior, put on a new roof and mansard and new perimeter/security fence before the sale. Interior unit renovations included new tile flooring, paint, cabinets, countertops and appliances. Project formerly known as Bentley Apartments and Willowbrook Apartments; is now known as Edge Apartments. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 115 LOCATION DATA Record Number: Market Type: Property Name. Address. Long/Lat. MSA: Location: Tax Parcel No.: SALES DATA Sale Date Sale Price: Grantor. Grantee: OR Book/Page: Property Rights: Conditions of Sale: Financing: Verification: Three Year History: SITE DATA Acres: Square Feet. Main Frontage. Amenity Frontage. Zoning: Land Use: Density: Utilities Included in Rent. Project Amenities. IMPROVED MARKET SALE 3 594 Market Vue on 67th 4199 SW 67th Avenue Davie, Broward County FL 33314 W80.237220/N26.070200 Miami -Fort Lauderdale - Pompano Beach NW/C SW 67th Ave. & SW 41st Ct. 50-41-27-01-0191 & 50-41-27- 01-0210 T mo IN ittn IM Bl J� October 31, 2018 $20,000,000 Scadia Enterprises N.V. Bala Scandia, LLC 115419511 & 11549509 Leased Fee Market Typical Cash to Seller Public Records and Derek Gibbs Boker w/ Marcus & Millichap (954-245-3448) by Mark Davis September 5, 2019. No sales over previous three years. 3.240 141,134 650'SW 67th Ave. RAC -TC Multi -family 54.9 units per gross acre Trash Collection, Pest Control HVIPROVEMENT DATA Number of Units: 178 Year Built: 1973 Apartment Type. Garden Ave. Unit Size. 1,049 SF No. of Stories. 2 No. of Buildings: 6 Parking: 160 surface spaces Construction: CBS Laundry, Clubhouse, Outdoor Unit Amenities. Microwaves, Patios/Balconies, Pools (1) Range/Oven, Refrigerator 1 Unit Type Number of Units Size (SF) Rent per Month Monthly Rent/SF 1/1 45 700 $975 $1.39 2/2 133 950 $1,375 $1.45 FINANCIAL DATA NOL• $1,050,000 Price/ Unit. $112,360 ANALYSIS Occupancy at Sale: 96% Capitalization Rate: 5.25% NOlper Unit. $5,899 Price/Net SF. • $107.07 The property was built in 1973 and 1975 and was in fair to average condition; the new owners are renovating the property. Project formerly known as Bala Gardens and Marlboro Estates. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 116 LOCATION DATA Record Number. Market Type: Property Name. Address. Long/Lat. MSA: Location. Tax Parcel No.. SALES DATA Sale Date Days on Market. Sale Price: Grantor. Grantee: OR Book/Page: Property Rights: Conditions of Sale: Financing: Verification: Three Year History: SITE DATA Acres: Square Feet. Main Frontage. Amenity Frontage. Zoning: Land Use: Density: Utilities Included in Rent. Project Amenities. IMPROVED MARKET SALE 4 519 Market Park Plaza 17600 NW 5th Avenue Miami Gardens, Miami -Dade County FL 33169 W80.209890/N25.9358 70 Miami -Fort Lauderdale - Pompano Beach SW/C NW 177th St. & NW 5th Ave. 34-2112-029-0010 __tom►. � �r October 19, 2018 60 days $33,400,000 Park Plaza Apartment Holdings LLC EB Park Plaza LP 31193-3456 Fee Simple Arm's Length Cash to Seller Public Records and Tal Frydman Broker w/Berkadia (561-609-4015) by Mark Davis November 19, 2018. No other transactions occurred over the previous three years. 8.000 348,480 610' NW 177th Street None Multi -family Multi -family 29.3 units per gross acre Water, Trash Collection, Sewer, Pest Laundry, Clubhouse, Exercise Fitness, Business Center, Picnic Area, Elevators EVOROVEMENT DATA Number of Units: 234 Year Built: 1972 Apartment Type. Mid -rise Ave. Unit Size. 738 SF No. of Stories. 3 No. of Buildings: 13 Parking: 300 surface spaces; 1.3 sp/unit Construction: CCB UnitAmenities. Microwaves, Ceiling Fans, Icemakers, Dishwasher, Blinds FINANCIAL DATA NOL• $1,870,400 Price/ Unit. $142,735 ANALYSIS 1 95% Capitalization Rate: Unit Type Number of Units Size (SF) I Rent per Month f Monthly Rent/SF 1/1 126 625 $1,199 $1.92 2/1 89 800 $1,399 $1.75 3/2 19 1,200 $1,699 $1.42 FINANCIAL DATA NOL• $1,870,400 Price/ Unit. $142,735 ANALYSIS Occupancy at Sale: 95% Capitalization Rate: 5.60% NOlper Unit. $7,993 Price /Net SF. • $193.34 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 117 IMPROVED MARKET SALE 4 (CONT'D) COMNMNTS Project purchased for continued use as rental apartments. Financials based on actual Trailing -3 months annualized income/expenses adjusted for increased real estate taxes and reserves ($250/unit). Project was renovated in 2011 and partially upgraded in 2017/2018 including granite countertops, ceramic tile floors and new appliances. The buyer is proposing to complete renovations and upgrades. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 118 LOCATION DATA Record Number. Market Type: Property Name. Address. Long/Lat. MSA: Location: Tax Parcel No.: SALES DATA Sale Date Sale Price: Grantor. Grantee: OR Book/Page: Property Rights: Conditions of Sale: Financing: Verification: Three Year History: SITE DATA Acres: Square Feet. Main Frontage. Amenity Frontage. Zoning: Land Use: Density: Utilities in Rent. Project Amenities. IMPROVED MARKET SALE 5 515 Market Lombardy 2110 SW 3rd Avenue Miami, Miami -Dade County FL 33129 W80.204555/N25.758310 Miami -Fort Lauderdale - Pompano Beach SW/C SW 3rd Ave. & SW 21st Road 01-4138-001-1260 June 21, 2018 $12,825,000 Dalton Properties, Inc. TMC Apartments, LLC 31037/4059 Leased fee Typical, Arm's Length Cash to seller Public Records and Costar by Mark Davis October 15, 2018. No transfers in the three years prior to this sale. 1 Unit Type Number of Units Size (SF) Rent per Month Monthly Rent/SF 1/1 2 633 $1,450 $2.29 2/2 86 914 $1,818 $1.99 FINANCIAL DATA NOI.• $769,500 Price/Unit. $145,739 ANALYSIS EVIPROVEMENT DATA 0.810 Number of Units: 88 35,284 Year Built: 1994 280' SW 3rd Avenue Apartment Type. Mid -rise None Ave. Unit Size. 908 SF T6-8 O No. of Stories. 8 Multi -family No. of Buildings: 1 108.6 units per gross acre Parking: Adequate; some covered Trash Collection Construction: Concrete Block Elevator, Gated Entry Unit Amenities. Microwaves, Washer/Dryer, Patios/Balconies, Blinds, Dishwasher 1 Unit Type Number of Units Size (SF) Rent per Month Monthly Rent/SF 1/1 2 633 $1,450 $2.29 2/2 86 914 $1,818 $1.99 FINANCIAL DATA NOI.• $769,500 Price/Unit. $145,739 ANALYSIS Occupancy at Sale: 94% Capitalization Rate: 6.00% NOlper Unit. $8,744 Price/Net SF. • $160.57 COMMENTS The above financial information was provided by CoStar via reported contact with the buyer. we were unable to reach either the seller or the buyer for further confirmation 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 119 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 120 IMPROVED SALES ANALYSIS-NL4,RKEr Subject Improved Sale 1 Improved Sale 2 Improved Sale 3 Improved Sale 4 Improved Sale 5 Residences at Dr. King Property Boulevard Sunny Lake Edge Apartments Vue on 67th Park Plaza Lombard City Miami Lauderhill Miramar Davie Miami Gardens Miami County Miami-Dade Broward Broward Broward Miami-Dade Miami-Dade Date N/A May-19 Feb-19 Oct-18 Oct-18 Jun-18 Adjusted Price N/A $59,000,000 $9,000,000 $20,000,000 $33,400,000 $12,825,000 Size: Units 120 405 76 178 234 88 Rentable SF 67,560 395,473 51,190 186,800 172,750 79,870 Avg. Unit Size (SF) 563 976 674 1,049 738 908 Year Built 2020 1988 1970 1973 1972 1994 Unit Mix 1B 1,2&3BR 0,1&2BR 1&2BR 1,2&3BR 1&2B Net Income Multiplier (NIM) 19.96 20.00 17.33 19.05 17.86 16.67 NOI/Unit $5,961 $7,284 $6,833 $5,899 $7,993 $8,744 NOI/SF $10.59 $7.46 $10.14 $5.62 $10.83 $9.63 Occupancy at Sale 94% 97% 96% 96% 95% 94% Capitalization Rate 5.00% 5.00% 5.77% 5.25% 5.60% 6.00% Price/SF N/A $149.19 $175.82 $107.07 $193.34 $160.57 Price/Unit N/A $145,6791 $118,421 $112,3601 $142,7351 $145,739 Adjustments - Transaction Characteristics Property Rights Leased Fee Leased Fee Leased Fee Leased Fee Leased Fee Leased Fee Financing Conventional Conventional Conventional Conventional Conventional Conventional Conditions of Sale Arm's Length Arm's Length Arm's Length Arm's Length Arm's Length Arm's Length Market Conditions Current Current Current Current Current Current Adjusted $/Unit N/A $145,679 $118,421 $112,360 $142,735 $145,739 Adjustments - Property Characteristics Location Fair -5% -5% -5% -5% -10% No. of Units 120 0% 0% 0% 0% 0% Age/Quality/Cond. $2,020 5% 10% 20% 5% 5% Avg. Unit Size (SF) 563 -10% 0% -10% -5% -10% Unit Mix 1 BR -10% -5% -5% -10% -5% Concluded Adj./Unit -20% 0% 0% -15% -20% Adjusted $/Unit $116,5431 $118,421 $112,3601 $121,3251 $116,591 Indicated Value Range/Unit Minimum $112,360 Maximum $121,325 Average $117,048 Conclusion Per Dwelling Unit 120 $119,000 $14,280,000 Implied Value/SF $211.37 Value Conclusion As If Stabilized Rounded to $14,280,000 Less: Lease-Up Cost $190,000 Value Conclusion As If Complete $14,090,000 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 120 SALES COMPARISON APPROACH (CONVD) ADJUSTMENTS Typically, sales adjustments are based on direct, paired sales analysis where possible. However, exact mathematically extracted adjustments are not readily available due to the variety of differences between the sales. Therefore, the following adjustments were based primarily on the experience and judgment of the appraisers. Property Rights Conveyed All of the transactions involved the sale of the leased fee interest, subject to short-term leases; therefore, no adjustments are required for property rights conveyed. Financing All of the sales involved direct payment of cash to seller, or cash equivalent mortgage terms, so no adjustments are applied for financing. Condition of Sale All of the sales reportedly involved typically motivated buyers and sellers, so no adjustments are necessary. Market Conditions This adjustment is often necessary to older sales in order to reflect current market conditions. All of the sales occurred since June 2018, over which time market conditions have been stable. No adjustment is considered necessary. Location The subject neighborhood is an older area of Miami and is significantly built-up. The neighborhood is the Liberty City/Little Haiti area, which is one of the lower income areas in the County. There are many necessary supporting commercial services for residential development and several employment centers are within proximity to the subject. There is minimal multi -family development (excluding public housing) in the neighborhood, but demand for affordable housing in the area is high, suggesting that the subject project should receive market acceptance as a multi -family location. All of the sales have superior locations and are adjusted downward. Size/Number of Units Typically, a unit price of a smaller property tends to be higher than the unit price of a larger one due to the greater ability of a purchaser to afford the smaller property. The subject has 120 units. The sales range in size from 76 to 405 and average 196 units. We have made upward adjustments to the sales which are significantly larger than the subject and downward adjustments to the projects that are significantly smaller than the subject. Age/Quality/Condition The subject is an average to good quality property, built in 2020 and in average condition. The sales range in year built from 1970 to 1994 and have an average year built of 1979. We have made positive adjustment for the older projects and negative adjustments to the newer projects. Average Unit Size The subject's average unit size is 563 square feet. The sales range in average unit size from 674 to 1,049 square feet and average 869 square feet. We have made positive adjustment to the projects with small average unit sizes and negative adjustments to the projects with larger average unit sizes. Unit Mix The subject offers a mix of only one -bedroom units. Larger unit types can command higher rents and more diverse unit types typically maintain higher occupancy rates; we also considered the affect on rental income by the number of units allocated to each unit type. Most apartments offer predominantly one and two-bedroom units, and typically some three-bedroom units with occasional studio units. All of the sales have superior unit mixes and are adjusted downward. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 121 SALES COMPARISON APPROACH (CONVD) Hypothetical Value Conclusion As If Stabilized After applying adjustments, the improved sales reflect values of $112,360 to $121,325 per unit, with an average of $117,048. We conclude a value of $119,000 per unit for the subject. The subject has 120 units, so the hypothetical market value estimate, as if stabilized, is $14,280,000* (rd.). The data provided for the comparable sales offers net income multipliers ranging from 16.67 to 20.00. The implied NIM for the subject's value conclusion on a dwelling unit basis is 19.96, which is within the range indicated by the sales. Hypothetical Value Conclusion As If Complete We have estimated the rent loss at $190,000; subtracting the rent loss from the as if stabilized value conclusion results in a hypothetical market value estimate as if complete of $14,090,000. * Please see the Extraordinary Assumptions and Hypothetical Conditions. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 122 INCOME CAPITALIZATION APPROACH The Income Capitalization Approach is based upon the premise that a prudent investor would pay no more for the subject property than for another investment with similar risk and return characteristics. The value of an investment is considered equal to the present worth of anticipated future benefits. The methodology of this approach is to estimate the gross income a property is capable of producing in the current market and then subtract all vacancy and operating expenses. The resulting net operating income is then translated into value using either direct capitalization or yield capitalization (Discounted Cash Flow Analysis). In the case of the subject property, only direct capitalization is applied. Direct capitalization of a projected net operating income stream is applied to estimate the market value of the subject property as though stabilized. The annual stabilized net operating income is divided by a market derived overall capitalization rate to indicate a value estimate. Market Rental Rate Estimate The subject's location in Miami has an ample supply of market rate apartments. We included six properties that are in the Competitive Market Area. Occupancy - Markct Comps City Apartment Project Type I #Unitsl Year Built I Occupancy #Occupied Stabilized Projects Miami Biscayne Apartments Market 402 1985 97% 390 Miami Gardens Parc Place Market 234 1972 98% 229 Miami Gardens Spring Lake Club Market 108 1971 100°/% 108 Miami Park Place by the Bay Market 463 1990 97% 449 Miami Horizons North Market 276 1984 93% 257 Miami Blue Riviera Market 310 1986 100% 310 Projects in Lease -up, Under Construction, Confidential, or Unwilling to Participate in Survey N/A Total Units 1,793 1,743 Less: Confidential Occupancy or Unstabilized Occupancies 0 0 Total Stabilized Units Responding to Survey 1,793 1,743 Overall Occupancy Rate (Stabilized Projects) 1,793 97% 1,743 Average Project Size 299 Average Year Built 1981 Source: Meridian Appraisal Group, Inc. field survey Sep -19 Note: The year built for projects with multiple phases is the date of the first phase. The date of rehabilitated projects is the original year built. All of comparables are operating at stabilized occupancy ranging from 93% to 100%, with a weighted average of 97%. The comparables listed above are analyzed in the following estimation of the subject's market rents. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 123 MARKET RENT COMPARABLES MAP WITH FIVE AND EIGHT -MILE RINGS 5 �I i 21 --- -- ----------------------- e� �Countn! iYub Blue Riviera n a Faul • l • 61ympia ;EXPyF i Lk apa Locka Spring Lake Club 13 ialea Mia mi Dw Andover 954 Horizons North 91 Norlandy5 �JJIus ami 9A Mi — SnLGP�! 441 Scott Lake � North Pvliami Beac Caro! Ctly Perk plaza° OU feta S2C b' - gig-11,NNfjI'S _BLV Bunche Par rF 1 Oleta �r Goldin Glades River OP.; LG '932 M �H West Little River aF] 934 . subject property+ rginia Gardens Miami � 6isca ark Biscayne Apartments Peck PI.- by the Bay Bm' In oleta River SP PY stand i R GLER 5T 4 9 9es 441 Coral Gables C; RAL_WAY 817 913 '1"grnla Kly i,,ma Beach BIRD RD '.type. The Barnacle Historic State Park 0 1 2 3 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 124 SUBJECT PROPERTY - MARKET RENTS LOCATION DATA Record Number. 2080 Market Type. Mixed Income Property Name. Residences at Dr. King Blvd. Address. Dr. King Boulevard Condition: Miami, Miami -Dade County Date Surveyed. FL 33147 Long/Lat. W80.483850/N25.845510 MSA: Miami -Fort Lauderdale - Number of Buildings. Pompano Beach Tax ParcelNo.: 01-3114-035-2000; 2020 & 2030; Garages. 01-3114-035- 027-1210, 1220, Occupancy 1230, 1240, 1250 & 1290 PROPERTY DATA Apartment Type. Mid -rise Construction Type: CCB Year Built: 2020 Number of Units: 120 Condition: Good Date Surveyed. September 5, 2019 Surveyed by: Mark Davis Number of Stories. 5&7 Number of Buildings. 2 Parking: 132 spaces Garages. None Occupancy Proposed Concessions. None Rental Premiums: None Utilities Included. Trash Collection, Pest Control Project Amenities. Exercise Fitness, Clubhouse, Laundry Unit Features: Ceiling Fans, Blinds, Dishwasher, Disposal, W/d Hook-ups COMMENTS This is a proposed affordable apartment project for the general population (family) with income and rent restrictions on 108 units and the remaining 12 units being un -restricted. The above rental rates were estimated by the appraisers. The above unit size reflects an average for the 23 similar one -bedroom floor plans. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 125 MARKET RENT COMPARABLE 1 LOCATIoN DATA Record Number. 196 Market Type: Market Property Name. Biscayne Apartments Address. 1550 NE 123rd Street er Month Miami, Miami -Dade County Studio FL 33161 Long/Lat. W80.167590/N25.888710 MSA: Miami -Fort Lauderdale - 118 Pompano Beach Tax Parcel No.: 06-2229-083-0050 et al Phone No. 786-217-6719 PROPERTY DATA $1,270 Apartment Type. Mid -rise Construction Type: CCB YearBuilt. 1985 Number of Units: 402 Condition: Good Date Surveyed. August 30, 2019 (786-217-6719) Surveyed by: Mark Davis Number of Stories. 5 Number of Buildings. 6 Parking: Adequate Garages. None Occupancy 97% Concessions. 396 units for taxes Rental Premiums: None Utilities Included. Trash Collection, Pest Control Project Amenities. Outdoor Pools (2), Exercise Fitness, Clubhouse, Laundry, Outdoor Tennis, Spa, Racquetball, Picnic Area Unit Features: Patios/balconies, Ceiling Fans, Dishwasher, Blinds COMMENTS This property has an agreement with a condominium building to share some amenities. There is a laundry on every floor. The project was renovating unit interiors as they turnover from late 2017 when the clubhouse and building exteriors were renovated to mid -2019 when the last units were renovated. Rates change daily using the YieldStar program. Property previously known as Watermarke at Biscayne and Avesta Biscayne. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 126 11 1 Unit Type Number of Units Size (SF)Rent er Month M2agjLy Rent Per SF Studio 6 550 $1,171 $2.13 1/1 118 750 $1,170 $1.56 1/1 118 775 $1,270 $1.64 2/2 80 949 $1,663 $1.75 2/2 80 951 $1,691 $1.78 Averages 402 834 $1)401 $1.68 COMMENTS This property has an agreement with a condominium building to share some amenities. There is a laundry on every floor. The project was renovating unit interiors as they turnover from late 2017 when the clubhouse and building exteriors were renovated to mid -2019 when the last units were renovated. Rates change daily using the YieldStar program. Property previously known as Watermarke at Biscayne and Avesta Biscayne. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 126 LOCATIoN DATA Record Number. Market Type: Property Name. Address. Long/Lat. MSA: Tax Parcel No.: Phone No. PROPERTY DATA Apartment Type. Construction Type: Year Built: Number of Units: Condition: Date Surveyed. Surveyed by: Number of Stories. Number of Buildings. Parking: Garages. Occupancy Concessions. Rental Premiums: Utilities Included. Project Amenities. MARKET RENT COMPARABLE 2 207 Market Parc Place 17600 NW 5th Ave. Miami Gardens, Miami -Dade County FL 33169 W80.209810/N25.935970 Miami -Fort Lauderdale - Pompano Beach 34-2112-029-0010 305-652-7858 Mid -rise CCB 1972 234 Average to Good August 30, 2019 (305-652-7858) Mark Davis 3 13 Adequate None 98% None None Water, Trash Collection, Sewer, Pest Control Exercise Fitness, Clubhouse, Unit Features. Laundry, Picnic Area Ceiling Fans, Blinds COMMENTS This is an older project that was renovated in 2018 including unit interiors, building exterior and amenities. One elevator per building. Formerly known as Park Plaza. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 127 Unit Type Number of Units Size (SF) Rent per Month Monthly Rent Per SF 1/1 126 625 $1,299 $2.08 2/1 89 800 $1,499 $1.87 3/2 19 1,200 $1,699 $1.42 Averages 234 738 $1)408 $1.91 COMMENTS This is an older project that was renovated in 2018 including unit interiors, building exterior and amenities. One elevator per building. Formerly known as Park Plaza. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 127 LOCATIoN DATA Record Number. Market Type: Property Name. Address. Long/Lat. MSA: Tax Parcel No.: Phone No. PROPERTY DATA Apartment Type. Construction Type: Year Built: Number of Units: Condition: Date Surveyed. Surveyed by: Number of Stories. Number of Buildings. Parking: Garages. Occupancy Concessions. Rental Premiums: Utilities Included. Project Amenities. MARKET RENT COMPARABLE 3 208 Market Spring Lake Club 5400 NW 159th St. Miami Gardens, Miami -Dade County FL 33014 W80.289470/N25.917230 Miami -Fort Lauderdale - Pompano Beach 34-2118-003-0010 305-624-3095 Mid -rise CCB 1971 108 Fair to Average August 30, 2019 (305-624-3095) Mark Davis 4 1 Adequate None 100% None None Water, Trash Collection, Sewer, Pest Control Outdoor Pools (1), Laundry, Unit Features. Lake Front, Boat Ramp Dishwasher, Blinds COMMENTS This is an older project that has been adequately maintained and is in fair to average condition. There are two elevators at each end of the building. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 128 1 Unit Type Number of Units Size (SF) Rent er Month MonthlRent Per SF 'Studio 8 550 $950 $1.73 1/1 28 750 $1,150 $1.53 2/1 40 766 $1,250 $1.63 2/2 8 845 $1,350 $1.60 2/2 8 946 $1,350 $1.43 2/2 8 1,046 $1,350 $1.29 2/2 2 1,083 $1,500 $1.39 3/2 6 1,200 $1,600 $1.33 Averages 108 816 $1)248 $1.53 COMMENTS This is an older project that has been adequately maintained and is in fair to average condition. There are two elevators at each end of the building. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 128 LOCATIoN DATA Record Number. Market Type: Property Name. Address. Long/Lat. MSA: Tax Parcel No.: Phone No. PROPERTY DATA Apartment Type. Construction Type: Year Built: Number of Units: Condition: Date Surveyed. Surveyed by: Number of Stories. Number of Buildings. Parking: Garages. Occupancy Concessions. Rental Premiums: Utilities Included. Project Amenities. MARKET RENT COMPARABLE 4 27 Market Park Place by the Bay 915 NW 1st Avenue Miami, Miami -Dade County FL 33136 W80.195450/N25.783340 Miami -Fort Lauderdale - Pompano Beach 01-0102-040-1020 305-530-1646 High-rise Concrete 1990 463 Average August 30, 2019 (305-530-1646) Mark Davis 30 1 Adequate None 97% None None Water, Trash Collection, Sewer, Pest Control Outdoor Pool, Exercise Fitness, Unit Features. Clubhouse, Laundry, Spa, Picnic Area Patios/balconies COMMENTS Units on 17th floor and above receive a $150 premium. This project has 10 different floor plans that are similar in size and the above unit sizes are averages for each unit type; a specific unit mix was not available, except by unit type. Rental rates are also quoted by unit type. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 129 Unit Type Number of Units Size (SF)Rent er Month Moag!Ly Rent Per SF 1/1 154 657 $1,325 $2.02 2/2 284 827 $1,560 $1.89 3/2 25 1,230 $2,155 $1.75 Averages 463 792 1 $1 5-1-4-F $1.91 COMMENTS Units on 17th floor and above receive a $150 premium. This project has 10 different floor plans that are similar in size and the above unit sizes are averages for each unit type; a specific unit mix was not available, except by unit type. Rental rates are also quoted by unit type. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 129 MARKET RENT COMPARABLE 5 LOCATIoN DATA Record Number. 530 Market Type: Market Property Name. Horizons North Address. 665 Ives Dairy Road Rent per Month Miami, Miami -Dade County 111.5 FL 33179 Long/Lat. W80.188880/N25.961300 MSA: Miami -Fort Lauderdale - 108 Pompano Beach Tax Parcel No.: 30-1231-014-0010 Phone No. 305-652-1258 PROPERTY DATA $1,424 Apartment Type. Mid -rise Construction Type: CCB Year Built: 1984 Number of Units: 276 Condition: Average Date Surveyed. August 30, 2019 (305-652-1258) Surveyed by: Mark Davis Number of Stories. 4 Number of Buildings: 3 Parking: Adequate Garages. None Occupancy 93% Concessions. None Rental Premiums: None Utilities Included. Trash Collection, Pest Control Project Amenities. Outdoor Pools (1), Exercise Fitness, Clubhouse, Laundry, Picnic Area, Spa, Sauna Unit Features: Patios/balconies, Ceiling Fans, Blinds COMMENTS The trash is $25 per month and included above. The Penthouse units include washer/dryers and fireplaces. Two elevators per building. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 130 1 Unit Type Number of Units Size (SF) Rent per Month Monthly Rent Per SF 111.5 24 690 $1,290 $1.87 2/2 108 955 $1,424 $1.49 2/2/den 100 1,015 $1,424 $1.40 3/2 32 1,015 $1,474 $1.45 'Penthouse 1/1 4 1,222 $1,530 $1.25 'Penthouse 2/2 4 1,476 $1,799 $1.22 'Penthouse 3/2 4 1,482 $1,875 $1.27 Averages 276 980 $1,432 COMMENTS The trash is $25 per month and included above. The Penthouse units include washer/dryers and fireplaces. Two elevators per building. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 130 MARKET RENT COMPARABLE 6 LOCATIoN DATA Record Number. 423 Market Type: Market Property Name. Blue Riviera Address. 111 NW 97th Avenue er Month Miami, Miami -Dade County 1/1 FL 33130 Long/Lat. W80.351930/N25.771340 MSA: Miami -Fort Lauderdale - 102 Pompano Beach Tax Parcel No.: 30-4004-009-0020 Phone No. 305-559-8920 PROPERTY DATA $1,360 Apartment Type. Low -Rise Construction Type: CCB Year Built.• 1986 Number of Units: 310 Condition: Average to Good Date Surveyed. August 30, 2019 (305-559-8920) Surveyed by: Mark Davis Number of Stories. 4 Number of Buildings. 4 Parking: unknown Garages. None Occupancy 100% Concessions. None Rental Premiums: None Utilities Included. Trash Collection, Pest Control Project Amenities. Outdoor Pools (1), Exercise Fitness, Clubhouse, Laundry Unit Features: Patios/balconies, Ceiling Fans, Dishwasher COMMENTS This project has been adequately maintained and is in average to good condition. On-site parking. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 131 1 Unit Type Number of Units Size (SF)Rent er Month Moag!Ly Rent Per SF 1/1 113 671 $1,090 $1.62 2/1 102 819 $1,290 $1.58 2/2 95 838 $1,360 $1.62 Averages 310 771 $1,239 COMMENTS This project has been adequately maintained and is in average to good condition. On-site parking. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 131 INCOME CAPITALIZATION APPROACH (CONVD) Rental Rate Analysis The following market rate analysis assumes that all of the units in the complex are leased at market rates without maximum income restrictions (exclusively market rate project). The comparables were adjusted for the utilities and services provided in the rental rates and we have also considered adjustments for location/quality/amenities in our rental rate conclusions. We have also taken into consideration the market trend of smaller units leasing for a higher per square foot rate than their larger counterparts. Adjustments We have compared each of the comparables to the subject and have made quantitative adjustments for utilities/services included in the rental rates, unit sizes and the number of bathrooms. Adjustments for water, sewer and trash expenses were obtained from the local Housing Authority's utility allowance chart. Washer/dryer, number of baths, and square foot adjustments were derived from appraisers' experience and judgment. vater (w) 1 BR $5 washer/dryer $45 ewer (s) 1 BR $8 square foot (sf) $0.75 alarm (a) $20 cable (basic) (c) $60 trash (t) $37 Adjustments were also applied for concessions based on the actual dollar amount, if offered. Qualitative adjustments for location, quality, condition and amenities were considered in our rental rate conclusions. Biscayne Apartments was built in 1985 but fairly recently renovated, is located in North Miami, in a slightly superior area, and was in slightly inferior condition; it was considered similar overall and not adjusted. Parc Place was built in 1972 but fairly recently renovated, is located in Miami Gardens, in a similar area, is older with superior amenities and considered overall similar; it was not adjusted. Spring Lake Club was built in 1971 is located in Miami Gardens, a slightly superior area and was of similar quality with superior amenities, but inferior location; it was similar overall and not adjusted. Park Place by the Bay was built in 1990 is located just northwest of Downtown Miami, a slightly superior area with superior amenities but inferior condition; it was similar overall and not adjusted. Horizons North was built in 1984 is located in North Miami, a slightly superior area, was older and in inferior condition with similar amenities; it was similar overall and not adjusted. Blue Riviera was built in 1986 is located in West Miami, a superior location, of similar quality and in inferior condition with similar amenities; it was similar overall and not adjusted. One -Bedroom Analysis The comparables indicate adjusted rents (after deducting for concessions) of $997 to $1,242, with an average of $1,132. The comparable units analyzed range in size from 625 square feet to 775 square feet with an average unit size of 695. The subject's unit size of 563 square is below the range of the comparables, and below the average. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 132 INCOME CAPITALIZATION APPROACH (CONVD) Based upon this analysis, we estimate a current market rent for the subject's one -bedroom units as follows: Market Rental Rate Conclusions The market rent estimates are summarized in the following table: Therefore, the subject's potential gross income as an exclusively market rate project, excluding rent premiums, is estimated at $1,584,000. Other Income Washer/Dryer Income The subject developer offers washer/dryer appliances to rent to tenants. We project a participation rate of 20% and a monthly premium of $45.00, or $12,960 annually. Rental Premiums At many apartments and rental projects, rental premiums are paid tenants for features such as top floor, conservation area frontage, water frontage, etc. At the estimated market rents, we expect no additional premiums. Ancillary Income Apartments typically earn additional income in the form of vending income, late charges, pet deposits, forfeited security deposits, etc. Market data indicates a typical ancillary income range of about 2% to 5% of the gross rental income. Actual ancillary income was estimated in the developer pro forma at $22,344 ($15.52 per unit). We estimate ancillary income at $20.00 per unit per month, or $28,800 annually. This is about 1.8% of the potential gross rental income. Subtotal The total for all of the Other Income categories is $41,760. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 133 One -Bedroom Comparables 'Adj. # Complex Name Unit Type Street Rent Util./Services Net Adj. Rent Size/SF Adj. Rent/SF St. Rent/SF 1 Biscayne Apartments 1/1 $1,270 t,p -$159 $1,111 775 $1.43 $1.64 2 Parc Place 1/1 $1,299 w,s,t,p -$60 $1,240 625 $1.98 $2.08 3 Spring Lake Club 1/1 $1,150 w,s,t,p -$153 $997 750 $1.33 $1.53 4 Park Place by the Bay 1/1 $1,325 w,s,t,p -$84 $1,242 657 $1.89 $2.02 5 Horizons North 1/1.5 $1,290 t,p -$95 $1,195 690 $1.73 $1.87 6 Blue Riviera 1/1 $1,090 t -$81 $1,009 671 $1.50 $1.62 Average $1,237 -$105 $1,132 695 $1.65 $1.79 Residences at Dr. King BouleN 1/1 t, $1,100 563 $1.95 Adjustment Summary (1 BR) Lo cation W/D/Cable /Quality # Complex Name Util./Services Water Sewer Trash / Alarm /Other SF Total 1 Biscayne Apartments t,p $0 $0 $0 $0 $0 -$159 -$159 2 Parc Place w,s,t,p -$5 -$8 $0 $0 $0 -$47 -$60 3 Spring Lake Club w,s,t,p -$5 -$8 $0 $0 $0 -$140 -$153 4 Park Place by the Bay w,s,t,p -$5 -$8 $0 $0 $0 -$71 -$84 5 Horizons North t,p $0 $0 $0 $0 $0 -$95 -$95 6 Blue Riviera t $0 $0 $0 $0 $0 -$81 -$81 Average -$5 -$8 $0 $0 $0 -$99 -$105 Based upon this analysis, we estimate a current market rent for the subject's one -bedroom units as follows: Market Rental Rate Conclusions The market rent estimates are summarized in the following table: Therefore, the subject's potential gross income as an exclusively market rate project, excluding rent premiums, is estimated at $1,584,000. Other Income Washer/Dryer Income The subject developer offers washer/dryer appliances to rent to tenants. We project a participation rate of 20% and a monthly premium of $45.00, or $12,960 annually. Rental Premiums At many apartments and rental projects, rental premiums are paid tenants for features such as top floor, conservation area frontage, water frontage, etc. At the estimated market rents, we expect no additional premiums. Ancillary Income Apartments typically earn additional income in the form of vending income, late charges, pet deposits, forfeited security deposits, etc. Market data indicates a typical ancillary income range of about 2% to 5% of the gross rental income. Actual ancillary income was estimated in the developer pro forma at $22,344 ($15.52 per unit). We estimate ancillary income at $20.00 per unit per month, or $28,800 annually. This is about 1.8% of the potential gross rental income. Subtotal The total for all of the Other Income categories is $41,760. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 133 INCOME CAPITALIZATION APPROACH (CONVD) Potential Gross Income Potential gross income is the sum of the gross rental income, washer and dryer income, cable television income, rental premiums and ancillary income, or $1,625,760. Vacancy and Collection Loss Potential gross income considers that the property is 100% occupied and assumes all rents are actually collected. However, almost all income producing properties experience some tenant turnover and collection loss. The following chart summarizes the occupancy rate for the comparable projects. Occupancy City Apartment Project Type I # Units Year Built I Occupancy #Occupied Stabilized Projects Miami Biscayne Apartments Market 402 1985 97% 390 Miami Gardens Parc Place Market 234 1972 98% 229 Miami Gardens Spring Lake Club Market 108 1971 100% 108 Miami Park Place by the Bay Market 463 1990 97% 449 Miami Horizons North Market 276 1984 93% 257 Miami Blue Riviera Market 310 1986 100% 310 Projects in Lease -up, Under Construction, Confidential, or Unwilling to Participatein Survey N/A Total Units 1,793 1,743 Less: Confidential Occupancy or Unstabilized Occupancies 0 0 Total Stabilized Units Responding to Survey 1,793 1,743 Overall Occupancy Rate (Stabilized Projects) 1,793 97% 1,743 Average Project Size 299 Average Year Built 1981 Source: Meridian Appraisal Group, Inc. field survey Sep -19 Note: The year built for projects with multiple phases is the date of the first phase. The date of rehabilitated projects is the original year built. At the projected rental rates, we estimate an average vacancy rate for the subject of 5.00%. There will also be some collection loss and occasional concessions, estimated at 1.00%. We, therefore, estimate the vacancy and collection loss at 6.00% of the potential gross income, or $97,546. Effective Gross Income Subtracting the vacancy and collection loss from the potential gross income estimate results in an effective gross income of $1,528,214. Operating Expenses Operating expenses are deducted from the effective gross income, resulting in a stabilized net operating income. The subject's operating expenses are based on expenses for apartment complexes in Florida (summarized at the end of this section) and the Developer Pro forma. We also considered expenses from the Institute of Real Estate Management (IREM). The subject's stabilized operating expenses are estimated as follows. Real Estate and Personal Property Taxes As discussed in the Assessment and Taxes section, the real estate taxes are estimated at $1,908 per unit, or $228,904 annually, which includes personal property taxes. Insurance The indications we have relied upon are summarized as follows: 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 134 INCOME CAPITALIZATION APPROACH (CONVD) We have given weight to all of the data and have concluded on an expense of $500 per unit, or $60,000 annually. Water and Sewer The subject includes trash and pest control in the base rent. The indications we have relied upon are summarized as follows: Water and Sewer Electric Source Low High Average Market Rate Comps $423 $566 $476 Restricted Comps $374 $642 $497 IREM (Miami - High Rise — Built 1978 to present) $786 Developer Pro forma $538 We have given weight to all of the data and have concluded on an expense of $500 per unit, or $60,000 annually. Water and Sewer The subject includes trash and pest control in the base rent. The indications we have relied upon are summarized as follows: The IREM indication includes water and sewer costs for all common area and all units. The Developer Pro forma does not break-out the individual utilities' expenses to make the same comparison. We have concluded on an expense of $150 per unit, or $18,000 annually. Electric and Gas The subject has landlord -paid electric for the common areas. Tenants pay electric and gas expenses for the occupied apartments. Similarly, the expense comparables include these expenses for common areas only. The indications we have relied upon are summarized as follows: Water and Sewer Electric Source Low High Averaged Market Rate Comps $145 $853 $441 Restricted Comps $172 $604 $328 IREM (Miami - High Rise — Built 1978 to present) $0 Developer Pro forma $565 The IREM indication includes water and sewer costs for all common area and all units. The Developer Pro forma does not break-out the individual utilities' expenses to make the same comparison. We have concluded on an expense of $150 per unit, or $18,000 annually. Electric and Gas The subject has landlord -paid electric for the common areas. Tenants pay electric and gas expenses for the occupied apartments. Similarly, the expense comparables include these expenses for common areas only. The indications we have relied upon are summarized as follows: The IREM expense includes electrical and gas cost for common area only and does not include any units. The Developer Pro forma does not break out the electric and gas expense from total utilities. We have given weight to all of the data and have concluded on an expense of $250 per unit, or $30,000 annually. Garbage Service The subject has landlord -paid trash removal expenses. The indications we have relied upon are summarized as follows: M Source Low Electric and Gas $265 $176 Source Low High Average Market Rate Comps Developer Pro forma $124 $372 $217 Restricted Comps $189 $358 $238 IREM(Miami - High Rise — Built 1978 to resent $536 Developer Pro forma Incl. Above The IREM expense includes electrical and gas cost for common area only and does not include any units. The Developer Pro forma does not break out the electric and gas expense from total utilities. We have given weight to all of the data and have concluded on an expense of $250 per unit, or $30,000 annually. Garbage Service The subject has landlord -paid trash removal expenses. The indications we have relied upon are summarized as follows: M Source Low High Average Market Rate Comps $109 $265 $176 Restricted Comps $72 $690 $259 IREM(Miami - High Rise — Built 1978 to resent) N/A Developer Pro forma Incl. Above 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 135 INCOME CAPITALIZATION APPROACH (CONVD) The Developer Pro forma does not break out the garbage service expense from total utilities. Note that one of the restricted expense comparables had an exceptionally high garbage service expense ($690 per unit) last year that skewed the average somewhat and was not considered typical. We have concluded on an expense of $125 per unit, or $15,000 annually. The developer pro forma estimates total utilities at $565 per unit and our estimate for total utilities is $525 per unit. Cable Service The subject will not offer bulk cable to the tenants. Repairs and Maintenance The subject will experience repairs and maintenance expenses for basic upkeep. Items such as appliance repairs are not refurbishment expenses, but are normal maintenance for an operating apartment complex. The property will also experience replacement expenses for items such as air conditioners, appliances, and carpeting, but these expenses are considered separately. The repairs and maintenance category does not include grounds maintenance, or maintenance payroll, but does include turnover costs of painting and decorating. The indications we have relied upon are summarized as follows: The Developer Pro forma includes grounds maintenance and contract services in the repairs and maintenance category that we have considered separately below. We have given consideration to all of the data and concluded on an expense of $400 per unit, or $48,000 annually. Grounds Maintenance Some of the comparables combine contract services such as pest control with the grounds maintenance. The indications we have relied upon are summarized as follows: Repairs and Maintenance Source Low High Average Market Rate Comps $196 $574 $396 Restricted Comps $282 $642 $440 IREM(Miami - High Rise — Built 1978 to resent $355 Developer Pro forma Built 1978 to present) $777 The Developer Pro forma includes grounds maintenance and contract services in the repairs and maintenance category that we have considered separately below. We have given consideration to all of the data and concluded on an expense of $400 per unit, or $48,000 annually. Grounds Maintenance Some of the comparables combine contract services such as pest control with the grounds maintenance. The indications we have relied upon are summarized as follows: We have concluded on an expense of $150 per unit, or $18,000 annually. Contract Services Some of the comparables combine contract services such as pest control with the grounds maintenance. The indications we have relied upon are summarized as follows: Contract Source Grounds Maintenance Average] Source Low I High Average Market Rate Comps $409 $728 $518 Restricted Comps $113 $289 $172 IREM (Miami - High Rise — Built 1978 to present) $66 Developer Pro forma Incl. Above We have concluded on an expense of $150 per unit, or $18,000 annually. Contract Services Some of the comparables combine contract services such as pest control with the grounds maintenance. The indications we have relied upon are summarized as follows: 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 136 Contract Source Low High Average] Market Rate Comps Incl. Above Incl. Above Incl. Above Restricted Comps $189 $574 $400 IREM iami - High Rise — Built 1978 to resent $1,108 Developer Pro forma Incl. Above 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 136 INCOME CAPITALIZATION APPROACH (CONVD) This expense includes pest control, fire protection and occasional repairs and maintenance items such as air- conditioning maintenance service, appliance repairs, pressure washing and carpet cleaning. We have given weight to all of the data and have concluded on an expense of $250 per unit, or $30,000 annually. The Developer Pro forma estimates total repairs and maintenance including grounds maintenance and contract services at $777 per unit. We have estimated total repairs and maintenance including grounds maintenance and contract services at $800 per unit. Security The subject will have manned security. The indications we have relied upon are summarized as follows: We place most weight on the pro forma and have concluded on an expense of $450 per unit, or $54,000 annually. Reserves (Allowance for Replacement of Short -Lived Items) This expense category is a sinking fund used to annualize expenses for periodic replacement of appliances, air conditioning units, carpeting, resealing of parking areas, etc. Items related to tenant turnover, such as repainting, have already been accounted for. In actual practice, few apartment owners maintain reserve accounts; however, it is prudent appraisal and underwriting practice to consider the replacement allowance. Reserve requirements range from $100 to as high as $400 per unit annually, although most are between $200 and $300 per unit. The market rate expense comparables indicate $0 to $507 per unit. The Developer Pro forma estimate was $300 per unit. We conclude an expense of $300 per unit, or $36,000. Management Fee The management fee estimate is an allocation of a fee to the management company and does not include salaries and commissions for on-site office personnel. Management fees are typically considered on a percentage of the effective gross income basis. Based on our conversation with several management companies, larger projects tend to cost less on a percentage basis than smaller projects, with a typical range of 3% to 6% of the effective gross income. The indications we have relied upon are summarized in the following chart. Source Low I High Average Market Rate Comps Incl. Above Incl. Above Incl. Above Restricted Comps $207 $237 $222 IREM(Miami - High Rise — Built 1978 to resent $49 Developer Pro forma $483 We place most weight on the pro forma and have concluded on an expense of $450 per unit, or $54,000 annually. Reserves (Allowance for Replacement of Short -Lived Items) This expense category is a sinking fund used to annualize expenses for periodic replacement of appliances, air conditioning units, carpeting, resealing of parking areas, etc. Items related to tenant turnover, such as repainting, have already been accounted for. In actual practice, few apartment owners maintain reserve accounts; however, it is prudent appraisal and underwriting practice to consider the replacement allowance. Reserve requirements range from $100 to as high as $400 per unit annually, although most are between $200 and $300 per unit. The market rate expense comparables indicate $0 to $507 per unit. The Developer Pro forma estimate was $300 per unit. We conclude an expense of $300 per unit, or $36,000. Management Fee The management fee estimate is an allocation of a fee to the management company and does not include salaries and commissions for on-site office personnel. Management fees are typically considered on a percentage of the effective gross income basis. Based on our conversation with several management companies, larger projects tend to cost less on a percentage basis than smaller projects, with a typical range of 3% to 6% of the effective gross income. The indications we have relied upon are summarized in the following chart. Considering the subject's projected income level, we conclude an expense of 4.25% of EGI, or $64,949 annually, which equates to $541 per unit. Salaries and Payroll (On -Site Staff) This expense category includes the salaries for both office (management and leasing) and maintenance personnel, along with payroll expenses such as FICA, unemployment tax, workers' compensation, and health insurance. The indications we have relied upon are summarized in the following chart. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 137 Management Source Low High Average Market Rate Comps $246 $619 $460 Restricted Comps $351 $719 $561 IREM(Miami - High Rise — Built 1978 to resent $739 Developer Pro forma $559 Considering the subject's projected income level, we conclude an expense of 4.25% of EGI, or $64,949 annually, which equates to $541 per unit. Salaries and Payroll (On -Site Staff) This expense category includes the salaries for both office (management and leasing) and maintenance personnel, along with payroll expenses such as FICA, unemployment tax, workers' compensation, and health insurance. The indications we have relied upon are summarized in the following chart. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 137 INCOME CAPITALIZATION APPROACH (CONVD) We have given weight to all of the data and conclude an expense at $1,250 per unit, or $150,000 annually. Administrative and Office Expenses This expense includes office supplies, telephone service for the office, postage, licenses, permits, etc. We included professional service fees such as legal and accounting fees in this category. The indications we have relied upon are summarized in the following chart. Total Expenses Salaries and Payroll Source Source Low High Avera e Market Rate Comps $961 $1,526 $1,226 Restricted Comps $942 $1,823 $1,294 IREM (Miami - High Rise — Built 1978 to present) $892 Developer Pro forma $1,250 We have given weight to all of the data and conclude an expense at $1,250 per unit, or $150,000 annually. Administrative and Office Expenses This expense includes office supplies, telephone service for the office, postage, licenses, permits, etc. We included professional service fees such as legal and accounting fees in this category. The indications we have relied upon are summarized in the following chart. IREM includes marketing within this category. Market rent properties typically have lower administrative costs than restricted properties. We place most weight on the expense comparables and conclude an administrative expense of $300 per unit, or $36,000 annually. Advertising and Promotion The indications we have relied upon are summarized in the chart which follows. Total Expenses Source Administrative I-ligh Average Source Low High Average Market Rate Comps $125 $713 $335 Restricted Comps $241 $895 $554 IREM(Miami - High Rise — Built 1978 to resent) $433 Developer Pro forma $0 $450 IREM includes marketing within this category. Market rent properties typically have lower administrative costs than restricted properties. We place most weight on the expense comparables and conclude an administrative expense of $300 per unit, or $36,000 annually. Advertising and Promotion The indications we have relied upon are summarized in the chart which follows. Market rent properties typically have higher advertising cost than restricted properties. The subject is located in a competitive neighborhood and needs a marketing effort to maintain stabilized occupancy. We place most weight on the expense comparables and estimate an expense of $200 per unit annually or $24,000. Total Expenses Total operating expenses are estimated at $812,853, which equates to $6,774 per unit and $12.03 per square foot annually. Total Expenses Source Advertising nd Promotion I-ligh Average Source Low High Average Market Rate Com s $117 $425 $232 Restricted Comps $7 $86 $40 IREM(Miami - High Rise — Built 1978 to resent N/A Developer Pro forma $0 Market rent properties typically have higher advertising cost than restricted properties. The subject is located in a competitive neighborhood and needs a marketing effort to maintain stabilized occupancy. We place most weight on the expense comparables and estimate an expense of $200 per unit annually or $24,000. Total Expenses Total operating expenses are estimated at $812,853, which equates to $6,774 per unit and $12.03 per square foot annually. The subject's estimated expenses are within the range of the comparable properties and supportive of the Developer Pro forma, adjusted for real estate taxes. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 138 Total Expenses Source Low I-ligh Average Market Rate Comps $5,159 $8,212 $6,903 Restricted Comps $4,659 $6,294 $5,671 IREM(Miami - High Rise — Built 1978 to resent) $9,268 Developer Pro forma $5,722 The subject's estimated expenses are within the range of the comparable properties and supportive of the Developer Pro forma, adjusted for real estate taxes. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 138 INCOME CAPITALIZATION APPROACH (CONVD) All five market rate expense comparables provide expense ratios; they are 45%, 32%, 45%, 73% and 38%; the subject's ratio of 54% is within the range. Excluding taxes and reserves, the expense comparables indicate a range of $3,494 to $5,552 with an average of $4,477 per unit; the subject's estimated expenses excluding these items are $4,566 per unit, which is within the range. The expense comparables indicate expense ratios of 22% and 46% with an average of 30% excluding taxes and reserves; the subject's ratio of 36% is within the range and considered reasonable. Net Operating Income The estimated expenses are deducted from the effective gross income, resulting in a net operating income of $715,361. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 139 SUBJECT • E AND EXPENSES Developer Pro Forma. Rental Income $1,138,932 $9,491 Ancillary Income $22,344 $186 $15.52 W/D Income $12,996 $108 Vac/Coll. Loss -$56,947 - 475 Total Income $1,117,325 $9,311 OPERATING EXPENSES /UNIT $/S.F. R.E. & Personal Prop. Taxes $96,000 $800 $1.42 Insurance $64,560 $538 $0.96 Water and Sewer (Utilities) $67,800 $565 $1.00 Electric and Gas Incl. Above. Incl. Above Incl. Above Garbage Incl. Above. Incl. Above Incl. Above Cable $0 $0 $0.00 Repairs and Maintenance $93,240 $777 $1.38 Grounds Maintenance Incl. Above. Incl. Above Incl. Above Contract Services Incl. Above. Incl. Above Incl. Above Security $57,960 $483 $0.86 Reserves $36,000 $300 $0.53 Management $67,040 $559 $0.99 6.00% of EGI Salaries and Payroll $150,000 $1,250 $2.22 Administrative $54,000 $450 $0.80 Advertising $0 $0 $0.00 TOTAL EXPENSES $6861600 $5,722 $10.16 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 140 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 141 EXPENSE COMPARABLES - MARKET PROPERTIES Comparable 1 Comparable 2 Comparable 3 Comparable 4 Comparable 5 LOCATION (County) B ---d Miami -Dade Palm Beach Orange Bro-d YEAR BUILT 1986 2018 2004 2017 1985 NUMBER OF UNITS 280 216 214 272 300 AVERAGE UNIT SIZE 837 910 1,190 1,066 761 12 -MONTH TRAILING DATA August 2019 (T12) June 19 (T-6 Annualized) March 2019 (T-12) March 2019 (T-12) February 2019 (T-12) OPERATING EXPENSES /UNIT $/S.F. /UNIT $/S.F. /UNIT $/S.F. /UNIT $/S.F. /UNIT $/S.F. R.E. & Personal Prop. Taxes $720,200 $2,572 $3.07 $250,200 $1,158 $1.27 $504,921 $2,359 $1.98 $681,648 $2,506 $2.35 $757,933 $2,526 $3.32 Insurance $126,469 $452 $0.54 $91,437 $423 $0.47 $121,132 $566 $0.48 $133,844 $492 $0.46 $134,425 $448 $0.59 Water and Sewer $238,917 9853 $1.02 $31,297 $145 $0.16 $164,078 $767 $0.64 $80,260 $295 $0.28 $43,372 $145 $0.19 Electric and Gas $43,692 $156 $0.19 $26,872 $124 $0.14 $54,227 $253 $0.21 $101,050 $372 $0.35 $53,395 $178 $0.23 Garbage $74,335 $265 $0.32 $23,450 $109 $0.12 $29,431 $138 $0.12 $48,268 $177 $0.17 $57,398 $191 $0.25 Cable $0 $0.00 $0 $0 $0.00 $0 $0 $0.00 $0 $0 $0.00 $0 $0 $0.00 Repairs and Maintenance $111,132 $397 $0.47 $42,426 $196 $0.22 $122,747 $574 $0.48 $90,889 $334 $0.31 $143,541 $478 $0.63 (includes redecoration) Grounds and Contract Services $203,975 $728 $0.87 $117,581 $544 $0.60 $101,321 $473 $0.40 $118,096 $434 $0.41 $122,726 $409 $0.54 Reserves $0 $0.00 $109,514 $507 $0.56 $64,200 $300 $0.25 $54,400 $200 $0.19 $0 $0.00 Management $131,425 $469 $0.56 $103,933 $481 $0.53 $132,561 $619 $0.52 $66,778 $246 $0.23 $144,640 $482 $0.63 2.78% ofEGI 2.99% ofEGI 3.41% ofEGI 2.45% ofEGI 3.01% ofEGI Salaries and Payroll $350,283 $1,251 $1.49 $265,563 $1,229 $1.35 $326,570 $1,526 $1.28 $316,650 $1,164 $1.09 $288,358 $961 $1.26 Administrative $88,627 $317 $0.38 $26,988 $125 $0.14 $70,845 $331 $0.28 $194,065 $713 $0.67 $57,267 $191 $0.25 Advertising $46,926 $168 $0.20 $25,166 $117 $0.13 $65,302 $305 $0.26 $115,478 $425 $0.40 $44,130 $147 $0.19 TOTAL EXPENSES $2,135,981 $7629 $9.12 $1,114,427 $5159 $5.67 $1,757,335 $8212 $6.90 $2,001,426 $7358 $6.90 $1,847,185 $6157 $8.09 Operating Expense Ratio 30% 22% 31% 46% 23% Utilities Included Water, Sewer, Trash, Pest Control Trash, Pest Control Water, Sewer, Trash, Pest Control Trash, Pest Control Trash, Pest Control 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 141 INCOME CAPITALIZATION APPROACH (CONVD) Capitalization The final step in the direct capitalization technique is to divide the net operating income estimate by a market derived overall rate of return (OAR), or capitalization rate. The overall capitalization rate is estimated by several methods. The best method is by analysis of rates reflected by comparable sale properties. Extraction From Sales The comparable improved sales included in this appraisal provide good indications of an overall capitalization rate for the subject property. The capitalization rate indications reflect deductions for an allowance for replacement of short-lived items (reserves for replacement), so the rate indications are consistent with the analysis of the subject property. The capitalization rate indications are as follows: Sale # Property County Sale Date • ' 1 Surety Lake Broward May -19 5.00% 2 Edge Apartments Broward Feb -19 5.77% 3 Vue on 67th Broward Oct -18 5.25% 4 Park Plaza Miami -Dade Oct -18 5.60% 5 Lombardy Miami -Dade Jun -18 6.00% Average Overall Rate 5.52% The sales reflect overall capitalization rates of 5.00% to 6.00% with an average of 5.52%. All of the comparables were purchased for continued apartment use (no condominium conversion sales or fractured condominiums). We estimate that the subject's rate should be within the range. The data used for the extraction of the rates from the sales is considered reliable and the best overall rate indications available. Therefore, the comparable improved sales provide a reliable indication of an overall capitalization rate for the subject. Investor Surveys PwC Real Estate Investor Survey The 2019Q2 PwC Real Estate Investor Survey for the national apartment market indicated a 11 basis point increase in the overall average cap rate to 5.14% from the prior survey indication of 5.03% and is lower than the 5.26% indication from the same quarter in the prior year. Overall Cap Rate Trends - National Apartment Market 8.82% 9.50% 9.00% 8.50% 8.00% a 7.50% Q 7.00% 6.50% W 5.45% 5.39% 6.00% v 5.40% 5... 5.14%5.50% Q 5.00% 4.50% 4.00% I'D" 11 11 1o- 111 0 ° 0ati0 �otititia °tio-�titio- 101110-ybo-,ba °y5o-titilo- °10o-yC�o-Y1o-y�o- yb&11 yyo- ,LOOO.0O.y0.tiO.ti0.0y.tiy ,ti0 .LO .LO .y0 .ti0 .ti0 .ti0 .LO .ti0 .LO .y0 .ti0 .ti0 .LO .LO .ti0 .ti0 Source: PwC Real Estate Investor Survey The survey indicated that national apartment market had discount rates that ranged from 5.25% to 10.00% with an average of 7.11% which is the same compared to the prior quarter and down nine basis points compared to 7.38% in the same quarter in the prior year. The survey indicated that the national apartment market rental rates changed by a 0.0% to a 4.00% increase with an average of a 2.50% increase. While operating expenses changed with a range of 2.00% to 4.00% with an average of 2.90% which is 10 basis points which is the same as the previous quarter. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 142 INCOME CAPITALIZATION APPROACH (CONVD) ARA Newmark The ARA US Multihousing Market Overview for 2019Q2 indicated that capitalization rates nationally dropped to 5.39% over the previous quarter, which is nine basis points over the prior year. Capitalization rates in major markets were 67 basis points lower than the national average at 4.7% which is two basis points higher than the prior quarter. Realty Rates The Realty Rates 2019Q2 Investor Survey indicated Surveyed Rates for Garden/Suburban Townhouses nationally of 4.51% to 11.60% with an average of 7.75%. The Equity Dividend Rate ranged from 6.29% to 13.94% with an average of 9.73%. The Debt Coverage Ratio ranged from 1.10 to 1.61 with an average of 1.31. IRR Annual Multi family Report The IRR 2018 Annual Multi -family Report for the national apartment market indicated overall average cap rates for Class A Urban projects of 5.27%, Class B Urban projects of 6.14%, Class A Suburban projects of 5.45%, and Class B Suburban projects of 6.31%. The South Region apartment market that includes the states in the southeastern portion of the country indicated overall average cap rates for Class A Urban projects of 5.41%, Class B Urban projects of 6.27%, Class A Suburban projects of 5.61%, and Class B Suburban projects of 6.50%. Band of Investment A third method of extracting an overall capitalization rate is by application of the Band of Investment technique. This method involves the calculation of a weighted average capitalization rate based on the mortgage constant (mortgage capitalization rate) and the equity dividend rate (equity capitalization rate). The application of this technique requires the estimation of certain rates and ratios applicable to the mortgage and equity positions. We have estimated the subject's permanent financing rate based on our conversations with Barry Krinsky with Citibank, Tammy Haylock-Moore with JPMorgan Chase and Mike Marra with Wells Fargo. The typical term is five to 10 years, with the rate tied to the corresponding T -Bill rate. The spread between the T -Bill rate and the interest rate ranges from 300 to 400 basis points for Class "A" and 350 to 450+ for Class "B" and lower. The key variables are the location and quality of the product and the financial strength of the developer. The 10 year T -Bill rate is around 1.5%. The typical loan -to -value ratio is 75%, with about one point charged for loan origination. Loan amortization periods for properties like the subject have typically been about 25 years, with balloon payments in five to 10 years. We conclude a mortgage interest rate of 4.75%, a loan -to -value ratio (M) of 80%, amortization period of 30 years and a balloon payment in five years. These conclusions result in a mortgage constant (Rm) of 6.26%. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 143 INCOME CAPITALIZATION APPROACH (CONVD) The second component of the Band of Investment analysis is the estimation of the equity dividend rate for the subject. Primary consideration was given to an investor survey for the estimation of the equity dividend rate. Recent investor surveys indicate equity capitalization rates ranging from 7.50% to 10.50%. We have concluded an equity capitalization rate (Re) of 7.00% for the 20% equity position. Variables. D OF INVESTMENT METHOD - Interest Rate (i) . 4.75% -Loan Ratio (M) . . . . . . . . . . . . . . . . 80% - Equity Ratio (M-1) . . . . . . . . . . . . . . . 20% - Loan Amortization . . . . . . . . . . . . . . . 30 - Term (Balloon Payment) . . . . . . . . . . . . . 5 - Points Paid . . . . . . . . . . . . . . . . . . . 1 - Payments per Year . . . . . . . . . . . . . . . 12 - Mortgage Constant Factor (Rm) . . . . . . . . 6.26% - Debt Coverage Ratio 1 (DCRI) . . . . . . . . 1.20 - Equity Return Requirement (Re) . . . . . . . . 7.00% The mortgage and equity position conclusions for the subject property are considered to be reasonable estimates. An investor's financial position can substantially influence financing terms and investors have varying yield expectations. Based on the parameters concluded above, we calculated an indication of an overall capitalization rate by the Band of Investment technique as follows: Debt Coverage Ratio Another indication of a capitalization rate is derived by application of the Debt Coverage Ratio Formula. Market data indicates lenders typically require debt coverage ratios ranging from 1.10 to 1.35 for a property like the subject. The lenders surveyed by the Appraisal Institute Research Department indicate an average debt coverage ratio of 1.35 for loans of $5 million to $9.999 million. Loans for older properties are typically higher than the average; therefore, we conclude a debt coverage ratio of 1.20. An overall capitalization rate by the Debt Coverage Ratio Formula is calculated as follows: COVERAGEDEBT • METHOD DCR Loan Ratio Mortgage Constant Overall Rate Debt Coverage Ratio 1.20 x (M) 0.80 x (Rm) 6.26% = 6.01% Conclusion of Overall Capitalization Rate The sales reflect overall capitalization rates of 5.00% to 6.00% with an average of 5.52%. The comparable improved sales provide the most meaningful capitalization rate indications for the subject property. The Band of Investment analysis indicates a capitalization rate of 6.41%, while the Debt Coverage Formula indicates 6.01%. These mathematically derived rates provide only fair indications of an overall capitalization rate for the subject property. The investor surveys indicate a range of average rates from 4.70% to 5.39% and provide support for the rate indications by the comparable improved sales. We conclude an overall capitalization rate for the stabilized income of 5.00% for the subject property. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 144 D OF INVESTMENT METHOD Loan / Equity Ratio Rate of Return Weighted Rate Mortgage Requirement (M) 0.80 x (Rm) 6.26% = 5.01% Equity Requirement (M-1) 0.20 x (Re) 7.00% = 1.40% Overall Capitalization Rate Indication 6.41% Debt Coverage Ratio Another indication of a capitalization rate is derived by application of the Debt Coverage Ratio Formula. Market data indicates lenders typically require debt coverage ratios ranging from 1.10 to 1.35 for a property like the subject. The lenders surveyed by the Appraisal Institute Research Department indicate an average debt coverage ratio of 1.35 for loans of $5 million to $9.999 million. Loans for older properties are typically higher than the average; therefore, we conclude a debt coverage ratio of 1.20. An overall capitalization rate by the Debt Coverage Ratio Formula is calculated as follows: COVERAGEDEBT • METHOD DCR Loan Ratio Mortgage Constant Overall Rate Debt Coverage Ratio 1.20 x (M) 0.80 x (Rm) 6.26% = 6.01% Conclusion of Overall Capitalization Rate The sales reflect overall capitalization rates of 5.00% to 6.00% with an average of 5.52%. The comparable improved sales provide the most meaningful capitalization rate indications for the subject property. The Band of Investment analysis indicates a capitalization rate of 6.41%, while the Debt Coverage Formula indicates 6.01%. These mathematically derived rates provide only fair indications of an overall capitalization rate for the subject property. The investor surveys indicate a range of average rates from 4.70% to 5.39% and provide support for the rate indications by the comparable improved sales. We conclude an overall capitalization rate for the stabilized income of 5.00% for the subject property. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 144 INCOME CAPITALIZATION APPROACH (CONVD) Value Conclusion Via Income Approach — As If Stabilized Dividing the subject property's estimated net operating income of $715,361 by the estimated overall capitalization rate results in a hypothetical market value estimate as if stabilized by the Income Approach of $14,310,000* (rd.). Value Conclusion Via Income Approach — As If Complete As discussed in the apartment Market Overview section of this report, the demand for apartment units in Miami -Dade County appears to be strong at this time based on the increasing rental rates and low vacancy rates. We spoke with leasing agents and reviewed CoStar occupancy reports to obtain absorption rate comparables summarized as follows. Average Monthly Absorption in Profiled Properties (Nflami-Dade County) Complex Name Complex Type Avg. # of Units Absorbed Per Month Units Remaining to be Leased to Reach Stabilized Occupancy (Includes Units Under Construction and Complete) Altis at Bonterra Market 17 Stabilized Casa Vera Phase II Market 38 Stabilized Heights at Coral Town Park Market 19 Stabilized Alcazar Village Phase I Market 34 Stabilized South Pointe Market 29 Stabilized Village at Princeton Groves Market 216 Stabilized Red Road Commons Market 25 Stabilized Brickell First Market 33 Stabilized Modera Miramar Market 25 Stabilized Atlantic Doral Market 21 Stabilized Park at Kendall Market 30 Stabilized Landings at Coral Town Park Market 26 Stabilized Source: Field Survey by Meridian Appraisal Group, Inc. Altis at Bonterra has 314 units located just southwest of Miami Lakes in Hialeah which began delivering its first buildings in October 2017 and then delivered one or two buildings per month over the next several months with some delays; this project achieved stabilized occupancy (95% - 298 units) in April 2019 (18 months) indicating an average absorption rate of 16.6 units per month. Casa Vera Phase II is a recently built market rate property located in the Kendall area that began delivering units in October 2017 and was completed in January 2018 achieving 100% (150 units) by February 2018 indicating an average absorption rate of 38 units per month. Alcazar Village Phase I is another recently built market rate property located in south Miami -Dade County that began delivering units in April 2018 achieving stabilized occupancy of 95% (205 units) by October 15, 2018 indicating an average absorption rate of 34 units per month. Phase II with 72 units is under construction and will be completed in July 2019 and is projected to be 100% pre -leased upon completion based on the current waiting list. The Heights at Coral Town Park is a rent comparable that began delivering units in January 2018, was completed in May 2018 and achieved 93% occupancy (167 units) in September 2018 indicating and average absorption rate of 18.6 units per month. In garden and villa -style projects absorption occurs over the course of construction and tenants move into individual buildings as they are completed. The construction schedule for this product type and any delays between buildings impacts the absorption rate. Again, typically, a leasing office is opened up on site or a phone number is advertised approximately three months before the first units are available. The pre -leasing thus provides enough tenants to occupy the first building when completed and this continues as buildings are completed; individual buildings receive Certificates of Occupancy (COs) and tenants are moved into individual buildings as they are completed. With garden and villa -style products, a significant number of units are typically leased by completion. Low-rise, mid -rise and high-rise projects typically receive one CO for the entire building or project and absorption does not start until all units are complete. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 145 INCOME CAPITALIZATION APPROACH (CONVD) The subject will have two buildings. The first units are expected to be complete in or about December 10, 2020 and all buildings are expected to be complete in or about December 10, 2020. The market rate comparables indicate a range of 19 to 216 units per month. The subject property has 120 proposed units for the general population (families). Due to the limited number of new projects coming on line at the same time and the relatively small size of the subject, we project that the subject will likely be at or near 100% pre -leased upon completion of construction. Since the subject has only two proposed buildings that will come on-line at approximately the same time, we project that it will take approximately three months to get everybody moved -in. Therefore, we estimate an average absorption rate of approximately 40 units per month to achieve stabilized occupancy upon completion. The stabilized occupancy for the subject is estimated at 95% (114 units) and since all of the units are contained in two buildings projected to be delivered at approximately the same time, the occupancy upon completion is estimated at 0% indicating that approximately 114 units will need to be occupied upon completion in order to achieve stabilized occupancy; this is projected to require approximately three months. The average market rental rate is $1,100 per unit. Assuming a straight-line lease -up, we have estimated the rent loss using the following calculation: ((114 x $1,100) x 3)/2 = $188,100 which we have rounded to $190,000. We have estimated the rent loss at $190,000. Subtracting the rent loss from the as if stabilized value conclusion results in a hypothetical market value estimate as if complete by the Income Approach of $14,120,000*. * Please see the Extraordinary Assumptions and Hypothetical Conditions. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 146 ]INCOME APPROACH Market Rate PROPERTY ID: # Of Units Unit Type Unit Size Rent Total Rent Residences at Dr. King Boulevard 120 1/1 563 $1,100 $1,584,000 Miami TOTAL 120 67,560 $1,100 $1,584,000 GROSS POTENTIAL RENTS $1,584,000 AVG. UNIT SIZE: 563 OTHER INCOME AVG. INC PER UNIT $1,100 Washer/Dryer 20% $45.00 per month $12,960 Cable Income 0% $0.00 per month $0 Valet Trash 0% $0.00 per month $0 Water/Sewer Reimbursement 0% $0.00 per month $0 Ancillary Income 100% $20.00 per month $28,800 TOTAL OTHER INCOME $41,760 GROSS ANNUAL INCOME $1,625,760 LESS COLLECTION LOSS 1.00% $16,258 LESS VACANCY LOSS 5.00% $81,288 % OF $ PER $ PER TOTAL VACANCY & COLL. LOSS 6.00% $97,546 EGI UNIT S.F. EFFECTIVE GROSS INCOME $1,528,214 100.00% $12,735 $22.62 LESS OPERATING EXPENSES FIXED EXPENSES R.E. & Personal Property Taxes $1,908 PER UNIT $228,904 14.98% $1,908 $3.39 Insurance $500 PER UNIT $60,000 3.93% $500 $0.89 SUBTOTAL - FIXED EXPENSES $2,408 PER UNIT $288,904 18.90% $2,408 $4.28 Water and Sewer $150 PER UNIT $18,000 1.18% $150 $0.27 Electric and Gas $250 PER UNIT $30,000 1.96% $250 $0.44 Garbage $125 PER UNIT $15,000 0.98% $125 $0.22 Cable $0 PER UNIT $0 0.00% $0 $0.00 SUBTOTAL - UTILITIES $525 PER UNIT $63,000 4.12% $525 $0.93 Repairs and Maintenance $400 PER UNIT $48,000 3.14% $400 $0.71 Grounds Maintenance $150 PER UNIT $18,000 1.18% $150 $0.27 Contract Services $250 PER UNIT $30,000 1.96% $250 $0.44 Security $450 PER UNIT $54,000 3.53% $450 $0.80 Reserves for Replacements $300 PER UNIT $36,000 2.36% $300 $0.53 SUBTOTAL - MAINTENANCE $1,550 PER UNIT $186,000 12.17% $1,550 $2.75 Management 4.25% OF EGI $64,949 4.25% $541 $0.96 Salaries and Payroll $1,250 PER UNIT $150,000 9.82% $1,250 $2.22 Administrative $300 PER UNIT $36,000 2.36% $300 $0.53 Advertising $200 PER UNIT $24,000 1.57% $200 $0.36 SUBTOTAL - MANAGEMENT/OFFICE $2,291 PER UNIT $274,949 17.99% $2,291 $4.07 TOTAL EXPENSES $812,853 53.19% $6,774 $12.03 NET OPERATING INCOME $715,361 46.81% $5,961 $10.59 CAPITALIZED AT 5.00% $14,307,220 AS IF STABILIZED VALUE BY INCOME APPROACH $14,310,000 $119,250 $211.81 LESS RENT LOSS DURING LEASE -UP $190,000 AS IF COMPLETE VALUE BY INCOME APPROACH $14,120,000 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 147 RECONCILIATION AND FINAL VALUE ESTIMATE (AS A MARKET RENTAL PROPERTY) The purpose of this appraisal was to estimate the hypothetical market value of the leased fee interest in the subject property as of the effective date of appraisal in the as if complete and as if stabilized conditions. The value indications by the three traditional approaches to value are as follows: As If Complete As If Stabifized Cost Approach $14,120,000* $14,310,000* Sales Comparison Aroach $14,090,000* $14,280,000* Income Capitalization Approach $14,120,000* $14,310,000* The Cost Approach is not considered to provide a meaningful indication of the market value of the subject property. Due to the current costs of construction and land costs, and the attainable market rate rental rates in the market, it may not be financially feasible to construct an apartment project of a similar quality in the subject location. This approach has been given no weight in our conclusions. The Income Approach reflects the value of the subject property based upon its estimated income producing capabilities, with consideration given to current investment requirements. The data applied in this approach, including rental rates, occupancy levels, operating expenses, and rates of return, was adequately supported from market data. Rental properties are developed and purchased to serve as income investment properties. An investor who would purchase the subject property would perform direct capitalization and yield capitalization analyses, if lease -up were involved. Market participants make decisions to buy and sell based on these capitalization analyses. Therefore, the Income Approach is based on reliable market data, and this approach is the most market-oriented approach to value. The Income Approach is considered to provide the best indication of market value for the subject property, so this approach is given the most emphasis in the reconciliation of the final value estimate. The Sales Comparison Approach is a process by which recent sales of similar properties are compared to the subject property and adjusted for conditions of sale and differences in property characteristics. Adequate comparable improved sale properties were found and applied to the valuation of the subject property. An investor considering the purchase of a rental project complex would research the market for similar properties available for sale and would compare the properties based primarily upon their income producing capabilities. Therefore, the Sales Comparison Approach mirrors the activities of market participants, and there was sufficient data available for use as comparable sales. However, the comparisons and the final decision to purchase would primarily be based on analysis of the economics of leasing the properties. The Sales Comparison Approach is an important source of overall capitalization rate data applied to the Income Capitalization Approach. The Sales Comparison Approach is estimated to provide meaningful indications of the market value of the subject property and is given secondary consideration in the reconciliation of the final value estimate. In conclusion, we have given the most consideration to the value indications reflected by the Income Capitalization Approach. The Sales Comparison Approach provides good support for the Income Capitalization Approach. The Cost Approach was not applicable. The Sales Comparison Approach was the only relevant approach for the valuation of the vacant land. We have formed the opinion that the market value of the fee simple interest in the subject site, as is, as vacant land, based on market conditions prevailing on September 10, 2019, was: ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS ($1,800,000)* We have formed the opinion that the hypothetical market value of the leased fee interest in the subject property as an un -restricted market rent property, as if complete, including $240,000 in personal property, based on market conditions prevailing on September 10, 2019, was: 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 148 RECONCILIATION AND FINAL VALUE ESTIMATE (CONVD) FOURTEEN MILLION ONE HUNDRED TWENTY THOUSAND DOLLARS ($14,120,000)* We have formed the opinion that the hypothetical market value of the leased fee interest in the subject property as an un -restricted market rent property, as if stabilized, including $240,000 in personal property based on market conditions prevailing on September 10, 2019, was: FOURTEEN MILLION THREE HUNDRED TEN THOUSAND DOLLARS $14,3101000 * Please see the Extraordinary Assumptions and Hypothetical Conditions. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 149 VALUATION SUBJECT TO INCOME AND RENT RESTRICTIONS SALES COMPARISON APPROACH The Sales Comparison Approach is a technique wherein a property is valued by comparison to similar properties that have recently sold in the marketplace. The Sales Comparison Approach is based upon the principle of substitution, which states that the value of a property tends to be fixed to the cost of acquiring an equally desirable substitute property with the same or similar utility. The Sales Comparison Approach begins with a search for sales of similar properties in the area. We reviewed recent sales of affordable properties throughout Florida. As will be discussed in the Income Capitalization Approach, capitalization rates have been stable over the time period covered by the sales. Factors of comparison considered during the search are project type, quality of construction, age, condition, location, rental rates and any other physical or economic characteristics that may affect the property's value. Because like units must be compared, each transaction should be analyzed in terms of appropriate units of comparison. The units of comparison selected depend on the individual appraisal problem. The sale properties have been compared to the subject by allocating the sale price to the price per unit. The market gives most consideration to this unit of comparison. The dates of sale range from December 2017 to April 2019. Adjustments have been made to each property, in order to make comparisons between the sales and the subject. In the following section, we briefly discuss each sale and explain the adjustment process. Detailed descriptions of each sale follow, along with an explanation of the adjustments and a summary chart. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 151 IMPROVED SALES MAP P2 27 W.a uch ula rssrm rr ra 54 Seb ng - 91 s Fort Pierce Gardner Take ss, -- -------- -----------a isrnl�w u: Port Saint Lucie er -041 Arcadia Brighton {3keechodee Jensen Beach °i -----------I Stuart 711Palm M 31 Grand Court P4 rt+Salerno Fort i}gden I yk orthPort -�---- ---- •--- Hohe�Sound�' Murdock Port Charlotte2tilndiantown PorSMayaca. - ---- Engl_ 17 Palmdale Jupiter Ok.�aclwfres ? 1. 7s t anal Point Juno ache 93 Moore Hav2rn P_ahokee La M n --- ---___-•� Clewiston II Roca - ---- ---------i----- -- l 7s � � 441 West Palm Beach, �Sauth Bay Belke Glade Fort Myers lehigh Acres Lake Waith P_ I Cape Corgi Boynton Beach lmmoka 12e sort � 1 Bonita Springs C Boca IatOtl --- ------------------------- Deerfield, Beach, Na P_ Sunniland Noah's L-arvding ' . - Porn no -Beach North Lauderdale ' S45 Napl s 84 Fort Lauderdale rdeIiosa P�arik 41 olly vHcrania Hood MarcoMand F _ - _ _ - _ - _ - Pembroke Pines29 _ Big Cypress NatIUnaI o Luka Preserve Subjed Property Pa Everglades -City. Hiaileah 41 aleah key, Biscayne Richmond Heights 'Pzr't'i r� e South Miami H I g . cutler Ridge Homestead Colony ceton Goulds Homestead Biscayne NP S11-* Everglades NR Ri—IR II Rn_ i — ` Tfhlr—r- Bq T¢e Rnw- f! Flamingo ,�Ney Largo F70nda mi $� 4 6 12 18 24 30 36 A,lslamorada 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 152 LOCATION DATA Record Number. Market Type: Property Name: Address: Long/Lat. MSA: Location: Tax Parcel No.: SALES DATA Sale Date Sale Price: Adjusted Sale Price: Grantor. Grantee: OR Book/Page: Property Rights: Conditions of Sale: Financing: Verification: Three Year History: SITE DATA Acres: Square Feet. Main Frontage: Amenity Frontage: Zoning: Land Use: Density: Utilities Included in Rent. Project Amenities: IMPROVED RESTRICTED SALE 1 576 Affordable Riverwalk II 301 SE 6th Avenue Homestead, Miami -Dade County FL 33030 W80.468190/N25.467290 Miami -Fort Lauderdale - Pompano Beach E/S SE 6th Ave. at SE 3rd St. 10-7918-001-0130 April 10, 2019 $12,000,000 $12,000,000 YTech-112 Units Homestead Investments, LLC Riverwalk II LLC 31407/4741 Leased Fee Arm's Length Cash to Seller Public Records and Deme Mekras, Broker w/MSP Group (756-671-0149) by Mark Davis. June 21, 2019. No sales previous three years 8.190 96,800 660' SE 6th Avenue None R-3 Low -Medium Density Residential Irregular Water, Trash Collection, Sewer, pest control Laundry, Exercise Fitness, Outdoor Pools (1), Playground IMPROVEMENT DATA Number of Units: 112 Year Built. 1995 Apartment Type: Garden Ave. Unit Size: 864 SF No. of Stories: 2 No. of Buildings: 7 Parking: Adequate Construction: Concrete Block UnitAmenities: Patios/Balconies, Blinds, Disposal, Dishwasher FINANCIAL DATA 1 Unit Type Number of Units Size (SF) I Rent per Month I Monthly Rent/SF 1/1-60% 28 650 2/2-60% 48 850 3/2-60% 36 1,050 FINANCIAL DATA ANALYSIS PGI. • $1,347,805 Occupancy at Sale: 97% Vacancy: $37,554 Capitalization Rate: 6.57% EGI.• $1,310,251 NOlper Unit. $7,039 Expenses: $521,830 Expenses per Unit. $4,659 NOL• $788,421 EGIM. 9.16 Price/Unit: $107,143 Price /NetSF. $36.11 Adj. Price/ Unit. $107,143 Adj. Price/ Net SF: $36.11 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 153 IMPROVED RESTRICTED SALE 1 (CONT'D) COMNMNTS Project purchased for continued use as an affordable apartment project. Financial information based on actual 2018 year-end income and expenses adjusted for increase in real estate taxes and includes reserves of $250 per unit. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 154 LOCATION DATA Record Number. Market Type: Property Name: Address: Long/Lat. MSA: Location: Tax Parcel No.: SALES DATA Sale Date Sale Price: Adjusted Sale Price: Grantor. Grantee: OR Book/Page: Property Rights: Conditions of Sale: Financing: Verification: Three Year History: SITE DATA Acres: Square Feet. Main Frontage: Amenity Frontage: Zoning: Land Use: Density: Utilities Included in Rent. Project Amenities: IMPROVED RESTRICTED SALE 2 577 Affordable Santa Clara II 1250 NW 21st Street Miami, Miami -Dade County FL 33142 W80.216590/N25.795660 Miami -Fort Lauderdale - Pompano Beach 01-0100-000-0026 & 01-3126- 085-0010 February 5, 2018 $18,200,000 $18,200,000 Santa Clara Apartments, Ltd. Santa Clara Apartments I, LLC 31274/4560 Leased Fee Arm's Length Transferred ground lease Cash to Seller Public Records and Evan Kristol, Broker w/Marcus & Millichap (954-463-2400) by Mark Davis. June 21, 2019. No sales previous three years. 3.290 143,312 300' NW 13th Avenue None T6 -8-O Institutional Irregular Trash Collection, pest control IMPROVEMENT DATA Number of Units: 204 Year Built. 2005 Apartment Type: High-rise Ave. Unit Size: 832 SF No. of Stories: 16 No. of Buildings: 1 Parking: Adequate Construction: Concrete Block Laundry, Exercise Fitness, UnitAmenities: Ceiling Fans, Blinds, Disposal, Playground, Business Center Dishwasher, Washer/Dryer Hook-ups FINANCIAL DATA NOL• $1,175,720 Price/ Unit. $89,216 Adj. Price/ Unit. $89,216 ANALYSIS 1 Unit Type Number of Units Size (SF) Rent per Month Monthly Rent/SF 1/1-30% 6 608 1/1-60% 42 608 2/2-30% 19 888 2/2-60% 125 888 3/2-30% 2 1,057 3/2-60% 10 1,057 FINANCIAL DATA NOL• $1,175,720 Price/ Unit. $89,216 Adj. Price/ Unit. $89,216 ANALYSIS Occupancy at Sale: 98% Capitalization Rate: 6.46% NOlper Unit. $5,763 Price /Net SF: $107.22 Adj. Price/ Net SF: $107.22 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 155 IMPROVED RESTRICTED SALE 2 (CONT'D) COMMENTS Project purchased for continued use as an affordable apartment project. Financial information based on 12 month - trailing income and expenses adjusted for increase in real estate taxes and includes reserves of $250 per unit. Property was not exposed to the market and sold to the owner of Phase I; both properties are subject to a ground lease on a Metro Dade Transit site adjoining a train station. Bottom four floors are a parking garage and upper 12 floors are apartments. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 156 LOCATION DATA Record Number. Market Type: Property Name. Address. Long/Lat. MSA: Location: Tax Parcel No.: SALES DATA Sale Date Sale Price: Adjusted Sale Price: Grantor. Grantee: OR Book/Page: Property Rights: Conditions of Sale: Financing: Verification: Three Year History: SITE DATA Acres: Square Feet. Main Frontage. Amenity Frontage. Zoning: Land Use. Density: Utilities Included in Rent. Project Amenities. IMPROVED RESTRICTED SALE 3 573 Affordable Grand Court North Port 5203 Greenwood Ave North Port, Sarasota County FL 34287 W82.222323/N27.041888 North Port -Bradenton -Sarasota South side of Greenwood Avenue, west of South Sumter Boulevard 0999001040 IMM -17. - rn :mr -1 mu l::1 I:I lal lea ee.rr.�: feel lowi August 15, 2018 Closed $11,000,000 $11,000,000 Grand Port North Port Associates, Ltd. FF North Port, LLC 2018109869 Leased Fee Arm's Length Cash to Seller Public Records and Kevin I. Morris (954-652-4626) by Ken Terrell. June 20, 2019 No other transactions in prior three years. 8.584 373,934 1,397' Greenwood Avenue Cocoplum Waterway (Canal - 150ft Wide) RMF High Density Residential 14.9 Water, Trash Collection, Sewer, Pest Control Clubhouse, Exercise Fitness, Outdoor Pools (1), Playground, Car Wash, Business Center IMPROVEMENT DATA Number of Units: 128 Year Built: 2005 Apartment Type. Garden Ave. Unit Size. 890 SF No. of Stories. 3 No. of Buildings: 5 Parking: 248 Spaces, 1.94 Spaces/Unit Construction: Wood Frame with Stucco/Siding Unit Amenities. Ceiling Fans, Vaulted Ceilings, Washer/Dryer Connections, Dishwasher, Disposal FINANCIAL DATA ANALYSIS NOL• $635,800 Occupancy at Sale: 98% Capitalization Rate: 5.78% Price/ Unit. $85,938 NOlper Unit. $4,967 Adj. Price/ Unit: $85,938 Price/NetSF.• $96.52 Adj. Price/ Net SF. • $96.52 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 157 1 Unit Type Number of Units Size (SF) I Rent er Month I Monthl Rent/SF 1/1-60% 12 676 $735 $1.09 1/1-60% 24 685 $735 $1.07 2/2-60% 60 918 $881 $0.96 3/2-60% 32 1,073 $1,020 $0.95 FINANCIAL DATA ANALYSIS NOL• $635,800 Occupancy at Sale: 98% Capitalization Rate: 5.78% Price/ Unit. $85,938 NOlper Unit. $4,967 Adj. Price/ Unit: $85,938 Price/NetSF.• $96.52 Adj. Price/ Net SF. • $96.52 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 157 IMPROVED RESTRICTED SALE 3 (CONT'D) COMNMNTS 100% at 60% AMI. Additional amenities include a wading pool. Units have outside storage and ceramic tile flooring in the kitchens, bathrooms and foyers. Approximately two years after closing, the buyer intends to apply for LIHTC to make renovations and add value to the property. The sale was not listed. The broker presented it to the buyer. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 158 LOCATION DATA Record Number. Market Type: Property Name. Address. Long/Lat. MSA: Location: Tax Parcel No.: SALES DATA Sale Date Sale Price: Adjusted Sale Price: Grantor. Grantee: OR Book/Page: Property Rights: Conditions of Sale: Financing: Verification: Three Year History: SITE DATA Acres: Square Feet. Main Frontage: Amenity Frontage: Zoning: Land Use. Density: Utilities Included in Rent. Project Amenities. IMPROVED RESTRICTED SALE 4 506 Affordable Noah's Landing 10555 Noah's Circle Naples, Collier County FL 34116 W81.690624/N26.166689 Naples -Fort Myers -Punta Gorda Northwest quadrant of Collier Boulevard and Magnolia Pond Drive 63935000028, -329, and -345 September 29, 2018 $25,000,000 $25,000,000 Vestcor Fund XV, Ltd. SREIT Noah's Landing, L.L.C. 5561/2184 Leased Fee Arm's Length Cash to Seller Public Records and Steve Moore, Grantor (904 288-7779) by Robert Von. September 20, 2018 No sales previous three years. 15.450 673,002 Noah's Way None PUD Apartments 17.1 units/acre Water, Trash Collection, Sewer, Pest Control Laundry, Clubhouse, Exercise Fitness, Outdoor Pools (1), Tot Lot, Car Wash, Business Center IMPROVEMENT DATA Number of Units: 264 Year Built: 2002 Apartment Type. Garden Ave. Unit Size. 826 SF No. of Stories. 3 No. of Buildings: 11 Parking: 387 open spaces, 1.5/unit Construction: Concrete Block Unit Amenities. Ceiling Fans, Patios/Balconies, Washer/Dryer Hookups, Storage, Tile Throughout FINANCIAL DATA NOI.• $1,316,935 Price/Unit. $94,697 Adj. Price/ Unit. $94,697 ANALYSIS Occupancy at Sale: 100% Capitalization Rate: Unit Type Number of Units Size (SF) I Rent per Month I MonthlyRent/SF 1/1-60% 158 704 $783 $1.11 2/2-60% 70 925 $936 $1.01 3/2-60% 36 1,167 $1,072 $0.92 FINANCIAL DATA NOI.• $1,316,935 Price/Unit. $94,697 Adj. Price/ Unit. $94,697 ANALYSIS Occupancy at Sale: 100% Capitalization Rate: 5.27% NOlper Unit. $4,988 Price/Net SF. • $114.68 Adj. Price/ Net SF. • $114.68 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 159 IMPROVED RESTRICTED SALE 4 (CONT'D) COIVIlVMNTS Seller is Vestcor and buyer is Starwood. Sale was part of a portfolio of four properties, two in Jacksonville and two in Naples, with a total of 1,150 units for a total of $99,625,000. All are operating under Land Use Restriction Agreements. We were provided with an allocated purchase price for this property. The documentary stamps for the transaction indicate a sale price of $30,000,000, which is likely due to a re -allocation of the overall sale price among the portfolio properties. We relied on the price provided by the verifying source. The real estate taxes were adjusted based on an assumed assessment at 60% of the sale price and a 50% real estate tax abatement per recent statute. The bulk purchase precludes the property appraiser from using the allocated purchase price in the re -assessment. The buyer purchased "in-place" income which included some Section 8 voucher holders paying rents above Housing Credit maximum rents. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 160 LOCATION DATA Record Number. Market Type: Property Name: Address: Long/Lat. MSA: Location: Tax Parcel No.: SALES DATA Sale Date Days on Market. Sale Price: Adjusted Sale Price: Grantor. Grantee. OR Book/Page: Property Rights: Conditions of Sale: Financing: Verification: Three Year History: SITE DATA Acres: Square Feet. Main Frontage: Amenity Frontage: Zoning: Land Use: Density: Utilities Included in Rent. Project Amenities. IMPROVED RESTRICTED SALE 5 445 Affordable Homestead Colony 800 East Mowry Drive Homestead, Miami -Dade County FL 33030 W80.464900/N25.469130 Miami -Fort Lauderdale - Pompano Beach 10-7918-001-0100 December 28, 2017 $36,642,600 $36,642,600 Homestead Colony, Ltd. Partnership SPT Dolphin Homestead Colony LLC 30822-1331 Leased Fee Arm's Length Cash to Seller Public Records and Andres Panza, Grantee (202 470-1548) by Robert Von. November 9, 2017. No sales previous three years. 19.940 868,586 1,354' East Mowry Drive None R-3 Low -Medium Density Residential Mostly rectangular Trash Collection, pest control RVOROVEMENT DATA Number of Units: 312 Year Built: 1995 Apartment Type. Garden Ave. Unit Size. 1,065 SF No. of Stories. 3 No. of Buildings: 13 Parking: 634 open spaces, 2.0/unit Construction: Concrete Block Sports Court, Laundry, Unit Amenities. Clubhouse, Exercise Fitness, Outdoor Pools (1), picnic tables, grills Icemakers, Patios/Balconies, Washer/Dryer hook-ups, blinds, outside storage 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 161 Unit Type Number of Units Size (SF) I Rent per Month I Monthly Rent/SF 2/2-50% 63 931 $722 $0.78 2/2-60% 93 931 $892 $0.96 3/2-50% 62 1,199 $833 $0.69 3/2-60% 94 1,199 $1,030 $0.86 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 161 IMPROVED RESTRICTED SALE 5 (CONT'D) FINANCIAL DATA ANALYSIS EGL• $3,224,201 Occupancy at Sale: 99% Expenses: $1,328,335 Capitalization Rate: 5.17% NOL• $1,895,866 NOlper Unit. $6,076 Expenses per Unit. $4,257 Price/ Unit. $117,444 EGIM. 11.36 Adj. Price/ Unit. $117,444 Price /NetSF. $110.28 Adj. Price/ Net SF: $110.28 COMNMNTS Homestead Colony is under contract as part of a 27 project portfolio. The reported sale price for the portfolio is $577,000,000. We were provided with the allocated purchase price for the subject, which is shown above. The recorded sale price was $34,347,800; the price was changed to facilitate financing. Twenty-six of the projects are located in Florida and one in Texas. All, like the subject are operating under Land Use Restriction Agreements. Actual buyer is Starwood. The real estate taxes were adjusted based on an assumed 60% of sale price assessment and a 50% real estate tax abatement per recent statute. The bulk purchase precludes the property appraiser from using the allocated purchase price in the re -assessment. The buy purchased "in-place" income which included 36 section 8 vouchers. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 162 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 163 IINAPROVED Subject Improved Sale I Improved Sale 2 Improved Sale 3 Improved Sale 4 Improved Sale 5 Residences at Dr. King Property Boulevard Riverwalk II Santa Clara II 3rand Court North Port Noah's Landing Homestead Colon City Miami Homestead Miami North Port Naples Homestead County Miami-Dade Miami-Dade Miami-Dade Sarasota Collier Miami-Dade HUD Median Income $54,900 $54,900 $54,900 $70,900 $78,300 $54,900 Date N/A Apr-19 Feb-18 Aug-18 Sep-18 Dec-17 Adjusted Price N/A $12,000,000 $18,200,000 $11,000,000 $25,000,000 $36,642,600 Size: Units 120 112 204 128 264 312 Rentable SF 67,560 96,800 169,740 113,968 217,994 332,280 Avg. Unit Size (SF) 563 864 832 890 826 1,065 Year Built 2020 1995 2005 2005 2002 1995 Unit Mix 1B 1,2&3BR 1,2&3BR 1&2BR 1,2&3BR 2&3BR Set Asides 30%, 60%, 80% & Market 60% 30% & 60% 60% 60% 50% & 60% Net Income Multiplier (NIM 18.27 15.22 15.48 17.30 18.98 19.33 NOI/Unit $3,667 $7,039 $5,763 $4,967 $4,988 $6,076 NOI/SF $6.51 $8.14 $6.93 $5.58 $6.04 $5.71 Occupancy at Sale 96% 97% 98% 98% 100% 99% Capitalization Rate 5.50% 6.57% 6.46% 5.78% 5.27% 5.17% Price/SF N/A $123.97 $107.22 $96.52 $114.68 $110.28 Price/Unit N/A $107,143 $89,216 $85,938 $94,697 $117,444 Adjustments - Transaction Characteristics Property Rights Leased Fee Leased Fee Leased Fee Leased Fee Leased Fee Leased Fee Financing Conventional Conventional Conventional Conventional Conventional Conventional Conditions of Sale Arm's Length Arm's Length Arm's Length Arm's Length Arm's Length Arm's Length Market Conditions Current Current Current Current Current Current Adjusted $/Unit N/A $107,143 $89,216 $85,938 $94,6971 $117,444 Adjustments - Property Characteristics Location Fair 0% 0% -5% -5% 0% No. of Units 120 0% 0% 0% 0% 0% Age/Quality/Cond. $2,020 10% 5% 5% 5% 10% Avg. Unit Size (SF) 563 -10% -10% -10% -10% -15% Unit Mix 1 BR -35% -30% -20% -25% -40% Set Asides 0% 5% 0% 0% 0% Concluded Adj. /Unit -35% -30% -30% -35% -45% Adjusted$/Unit 1 $69,643 $62,451 $60,156 $61,553 $64,594 Indicated Value Range/Unit Minimum $60,156 Maximum $69,643 Average $63,679 Conclusion Per Dwelling Unit 120 $67,000 $8,040,000 Implied Value/S.F. $119.01 Value Conclusion As If Stabilized Rounded to $8,040,000 Less: Lease-Up Cost $140,000 Value ConclusionAs If Complete $7,900,000 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 163 SALES COMPARISON APPROACH (CONVD) ADJUSTMENTS Typically, sales adjustments are based on direct, paired sales analysis where possible. However, exact mathematically extracted adjustments are not readily available due to the variety of differences between the sales. Therefore, the following adjustments were based primarily on the experience and judgment of the appraisers. Property Rights Conveyed All of the transactions involved the sale of the leased fee interest, subject to short-term leases; therefore, no adjustments are required for property rights conveyed. Financing All of the sales involved direct payment of cash to seller, or cash equivalent mortgage terms, so no adjustments are applied for financing. Condition of Sale All of the sales reportedly involved typically motivated buyers and sellers, so no adjustments are necessary. Market Conditions This adjustment is often necessary to older sales in order to reflect current market conditions. All of the sales occurred since December 2017, over which time market conditions have been stable. No adjustment is considered necessary. Location The subject neighborhood is an older area of Miami and is significantly built-up. The neighborhood is the Liberty City/Little Haiti area, which is one of the lower income areas in the County. There are many necessary supporting commercial services for residential development and several employment centers are within proximity to the subject. There is minimal multi -family development (excluding public housing) in the neighborhood, but demand for affordable housing in the area is high, suggesting that the subject project should receive market acceptance as a multi -family location. We have also considered the median incomes in addition to the physical location factors. Property ,n Income Subject $54,900 Riverwalk II $54,900 Santa Clara 11 $54,900 Grand Court North Port $70,900 Noah's Landing $78,300 Homestead Colony $54,900 The HUD median incomes range from $54,900 to $78,300 and average $62,780. Size/Number of Units Typically, a unit price of a smaller property tends to be higher than the unit price of a larger one due to the greater ability of a purchaser to afford the smaller property. The subject has 120 units. The sales range in size from 112 to 312 and average 204. We have made negative adjustments to the smaller projects and positive adjustments to the larger projects. Age/Quality/Condition The subject is an average to good quality property, built in 2020 and in average condition. The sales range in year built from 1995 to 2005 and average 2000. The quality of all of the comparables are similar and the condition of all the comparables are inferior and they were adjusted upward. Average Unit Size The subject's average unit size is 563 square feet. The sales range in average unit size from 826 to 1,065 and average 895. We have adjusted the projects with smaller average unit sizes upwards and adjusted the projects with larger average unit sizes downward. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 164 SALES COMPARISON APPROACH (CONVD) Unit Mix The subject offers a mix of only one -bedroom units. Larger unit types can command higher rents and more diverse unit types typically maintain higher occupancy rates; we also considered the affect on rental income by the number of units allocated to each unit type. Most apartments offer predominantly one and two-bedroom units, and typically some three-bedroom units with occasional studio units. All of the sales have superior unit mixes and are adjusted downward. Set Asides The subject will set aside 20% (24) of the units for households earning 30% or less of the Area Median Income (AMI), 63% (75) of the units for households earning 60% or less of AMI, 8% (nine) of the units for households earning 80% or less of AMI and 10% (12) of the units at market rates. Improved Sale No. 2 had an inferior set- aside structure compared to the subject and was adjusted upward. The other sales had similar overall average set -asides and did not require an adjustment. Value Conclusion — As If Stabilized After applying adjustments, the improved sales reflect values of to $60,156 to $69,643 per unit, with an average of $63,679. We conclude a value of $67,000 per unit for the subject. The subject has 120 units, so the market value estimate as is/stabilized by the dwelling unit analysis is $8,040,000* (rd.). The comparable sales have NOI multipliers of 15.22 to 19.33. The implied NIM based on the subject's value conclusion is 18.27, which is within the range indicated by the sales. Value Conclusion — As If Complete In the Income Approach we estimated a rent loss of $140,000 prior to reaching stabilized occupancy. Subtracting the estimated rent loss from the as if stabilized value conclusion results in a hypothetical market value estimate as if complete via the Sales Comparison Approach of $7,900,000*. * Please see the Extraordinary Assumptions and Hypothetical Conditions. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 165 INCOME CAPITALIZATION ANALYSIS We have estimated the value of the subject property as an affordable project with rent and income restrictions. The subject will set aside 20% (24) of the units for households earning 30% or less of the Area Median Income (AMI), 63% (75) of the units for households earning 60% or less of AMI, 8% (nine) of the units for households earning 80% or less of AMI and 10% (12) of the units at market rates. Direct capitalization of a projected net operating income stream is applied to estimate the market value of the subject property as though stabilized. The annual stabilized net operating income is divided by a market derived overall capitalization rate to indicate a value estimate. For this analysis, we considered both seasonal and cyclical influences on income and expenses. Restricted Rental Rate Analysis We have chosen the following comparable properties for the estimation of attainable restricted rents. •Comps City Apartment Project Type I # Units I Year Built I Occupancy #Occupied Stabilized Projects Miami The Villages I Restricted 150 2017 100% 150 Miami Audrey M. Edmonson Transit Village Restricted 76 2015 100% 76 Miami Seventh Avenue Transit Village II Restricted 100 2017 100% 100 Miami Northpark at Scott Carver Restricted 177 2012 96% 170 Miami Corinthian Restricted 126 2007 100% 126 Miami Hibiscus Pointe Restricted 212 2004 99% 210 Projects in Lease -up, Under Construction, Confidential, or Unwilling to Participate in Survey N/A Total Units 841 832 Less: Confidential Occupancy or Unstabilized Occupancies 0 0 Total Stabilized Units Responding to Survey 841 832 Overall Occupancy Rate (Stabilized Projects) 841 99% 832 Average Project Size 140 Average Year Built 2012 Source: Meridian Appraisal Group, Inc. field survey Sep -19 Note: The year built for projects with multiple phases is the date of the first phase. The date of rehabilitated projects is the original year built. The restricted rate projects are 96% to 100% occupied, with a weighted average of 99%; all are stabilized. Detailed write-ups of the comparable restricted rate rental projects used in the analyses follow. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 166 tESTRICTED RENT COMPARABLES MAP WITH ONE -MILE RING Z,thia - 7 NW 77TH TER II II NhNII ', �o ST fTil ST 17 z�ir 1 11. rrtir; Es- s 9 M'V 55TH ST . NW SETH ST _ ST NW 87TH ST _ ''HII --- 87T11 NW 85TH STREET RD - H HW NW 86TH TER NW SGTH ST 5T as H — 71� imp a o NW 33RD TER 4p n l J �N=3RD s - Ia, L u. ,Jz ¢I� =�'y Hihis Pointe - ij� ��� ;< II u}� 1934 ==m yy m 934 NW 78TH 1I, ©II 1 NW 7TfH TIER I U p'IINtnWESi 4-pl - - .. -- v 77TH ST p = !� W k77TH, TER z- w JER STII In= `I—c im Y �_� w 441 - -_ rForth perk at Scott t:arver �. - 1- •' �Z 7; 7 _.. ..mil. � d_._.:Z__ry--rtiti�-�-r�-r-.��4 4 r 1 ~yl II y Y 0 _ 4 NW 71 ST:ST z�m :m fiB rn 2 Z TH .E� NW 69 :. ,I -R N4N 69 Tj—Ft ST rIl IV514 69TH ST Th. Villages ST:' NW 68TH TTER N W 6� _R „�_ _ _� �_ _ FYILl I- 4 6 ST 1u I JN3r� rM 66rn�TH 5 T� L - I`z *z �zz�y��IYY� _ NW 65TH .-1 r1'i aj=moi-C 7th Ave. Trsnait Vlllsge II 'rn ¢ Ned 52Nq ST'_ IJblerty-Sglrare 441 = ST rn senje�t Property JTH Si z � y 58TH - z lfjvv!! r _ M NW 58tH G C z z :5-- NW 57TH z NW 56TH ST m J TER T �'—jl N_95THTETER IV WJ 551Yi,� _ Il NW 55TI H. z NW 54THUL �NW 54TH ST cI IsI z NW 53R ST�L� h Sheet D ST PL � --_ arm Park Manor Park Park .w Ilaayvis4�. Park ft 1 0 600 1200 1800 2400 3000 12` -- 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 167 SUBJECT PROPERTY - RESTRICTED LOCATION DATA Record Number. 2080 Market Type. Mixed Income Property Name. Residences at Dr. King Blvd. Address. Dr. King Boulevard Condition: Miami, Miami -Dade County Date Surveyed. FL 33147 Long/Lat. W80.483850/N25.845510 MSA: Miami -Fort Lauderdale - Number of Buildings. Pompano Beach Tax ParcelNo.: 01-3114-035-2000; 2020 & 2030; Garages. 01-3114-035- 027-1210, 1220, Occupancy 1230, 1240, 1250 & 1290 PROPERTY DATA Apartment Type. Mid -rise Construction Type: CCB Year Built: 2020 Number of Units: 120 Condition: Good Date Surveyed. September 5, 2019 Surveyed by: Mark Davis Number of Stories. 5&7 Number of Buildings. 2 Parking: 132 spaces Garages. None Occupancy Proposed Concessions. None Rental Premiums: None Utilities Included. Trash Collection, Pest Control Project Amenities. Exercise Fitness, Clubhouse, 563 Laundry Unit Features: Ceiling Fans, Blinds, Dishwasher, Disposal, W/d Hook-ups COMMENTS This is a proposed affordable apartment project for the general population (family) with income and rent restrictions on 108 units and the remaining 12 units being un -restricted. The above rental rates were estimated by the appraisers at the maximum 2019 levels. The above unit size reflects an average for the 23 similar one -bedroom floor plans. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 168 iiiii,,Illlllll IN! 11111 111k 111111111 nit Type Number of Unit Size (SFA Rent per MontN Monthly Rent Per SF1 Utilities Allowance 1/1-30% 24 563 $394 $0.7 $82 1/1-60% 75 563 $871 $1.55 $82 1/1-80% 9 563 $1,100 $1.95 $82 1/1 - Market 12 563 $1,100 $1.95 $82 [Averages 1201 563 $8161 $1.4 COMMENTS This is a proposed affordable apartment project for the general population (family) with income and rent restrictions on 108 units and the remaining 12 units being un -restricted. The above rental rates were estimated by the appraisers at the maximum 2019 levels. The above unit size reflects an average for the 23 similar one -bedroom floor plans. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 168 LOCATION DATA Record Number: Market Type: Property Name: Address: Long/Lat. MSA: Tax Parcel No.: PROPERTY DATA Apartment Type: Construction Type: Year Built: Number of Units: Condition: Date Surveyed. Surveyed by: Number of Stories: Number of Buildings: Parking: Garages: Occupancy Concessions: Rental Premiums: Utilities Included. Project Amenities: RESTRICTED RENT COMPARABLE 1 536 Affordable The Villages I 773 NW 67th Street Miami, Miami -Dade County FL 33150 W80.209400/N25.836100 Miami -Fort Lauderdale - Pompano Beach 01-3114-010-0020 iviiu-rise CCB 2017 150 Good August 30, 2019 (786-310-7281) Mark Davis 8 2 Good None 100% None None Water, Trash Collection, Sewer, Pest Control Outdoor Pools (1), Exercise Unit Features: Fitness, Clubhouse, Laundry, Playground, Picnic Area, Library Patios/balconies, Ceiling Fans, Microwaves, Washer/dryer Hook- ups, Dishwasher, Blinds fUrrur, ■r n n n n ■® ■ n n e■ n - i� ® ® l!1ME ■ ■■ 1/1-33% 1 723 $465 $0.6 � � ■■ ■ n n n n ,��d;,,an $57 1/1-60% ,0. 723 $894 $1.2 $57 2/2-33% 5 1,076 $560 $0.52 $67 2/2-50% 4 1,076 $884 iviiu-rise CCB 2017 150 Good August 30, 2019 (786-310-7281) Mark Davis 8 2 Good None 100% None None Water, Trash Collection, Sewer, Pest Control Outdoor Pools (1), Exercise Unit Features: Fitness, Clubhouse, Laundry, Playground, Picnic Area, Library Patios/balconies, Ceiling Fans, Microwaves, Washer/dryer Hook- ups, Dishwasher, Blinds COMMENTS The above rental rates are at the 2019 maximum rates. The above unit sizes are averages for each unit type. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 169 fUrrur, nit Type I Number of Unit4 Size (SFJ Rent per MontN Monthly Rent Per SF1 Utilities Allowance 1/1-33% 1 723 $465 $0.6 $57 111-50% 1 723 $735 $1.02 $57 1/1-60% 2 723 $894 $1.2 $57 2/2-33% 5 1,076 $560 $0.52 $67 2/2-50% 4 1,076 $884 $0.82 $67 2/2-60% 79 1,076 $1,075 $1.0 $67 3/2-33% 2 1,196 $648 $0.5 $75 3/2-50% 4 1,196 $1,023 $0.8 $75 3/2-60% 52 1,196,$1,243 $1.04,$75 [Averages 150 1 113 $1)0951 $0.9 COMMENTS The above rental rates are at the 2019 maximum rates. The above unit sizes are averages for each unit type. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 169 LOCATIoN DATA Record Number. Market Type: Property Name. Address. Long/Lat. MSA: Tax Parcel No.. PROPERTY DATA Apartment Type. Construction Type: Year Built. Number of Units: Condition: Date Surveyed. Surveyed by: Number of Stories. Number of Buildings. Parking: Garages. Occupancy Concessions. Rental Premiums: Utilities Included. Project Amenities: RESTRICTED RENT COMPARABLE 2 1261 Affordable Audrey M. Edmonson Transit Village 6175 NW 6th Court Miami, Miami -Dade County FL 33127 W80.207700/N25.8315 30 Miami -Fort Lauderdale - Pompano Beach 01-3113-040-0730; 0770; 0790; 0800 & 0880 High-rise CCB 2015 76 Good August 28, 2019 (305-783-3768) Mark Davis 9 1 81 spaces Parking Garage 100% None None Water, Trash Collection, Sewer, Pest Control Outdoor Pools (1), Exercise Unit Features: Fitness, Clubhouse, Laundry, Computer Room/library Patios/balconies, Ceiling Fans, Microwaves, Washer/dryer Hook- ups, Blinds, Dishwasher, Disposal COMMENTS This is an affordable general population apartment project with income and rent restrictions. The above affordable rental rates are at the 2019 maximum rates. This project is formerly known as Seventh Avenue Transit Village L This is the first of two phases. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 170 1 nit Type I Number of Unit4 Size (SFJ Rent per MontN Monthly Rent Per S Utilities Allowance 1/1-30% 2 72 $405 $0.56 $71 1/1-60% 9 72 $882 $1.23 $71 2/2-30% 6 95 $485 $0.51 $87 2/2-60% 35 95 $1,057 $1.10 $87 3/2-30% 4 1,057 $559 $0.53 $101 3/2-60% 201 1,051 $1,2201 $1.15 $101 [Averages 1 761 95 $9911 $1.0 COMMENTS This is an affordable general population apartment project with income and rent restrictions. The above affordable rental rates are at the 2019 maximum rates. This project is formerly known as Seventh Avenue Transit Village L This is the first of two phases. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 170 RESTRICTED RENT COMPARABLE 3 LOCATION DATA Record Number. 1220 Market Type: Affordable Property Name. Seventh Avenue Transit Village Number of Units: II Address. 668 NW 62nd Street Date Surveyed. Miami, Miami -Dade County Surveyed by: FL 33127 Long/Lat. W80.208080/N25.831980 MSA: Miami -Fort Lauderdale - Parking: Pompano Beach Tax Parcel No.: 01-3113-106-0010 PROPERTY DATA Apartment Type. High-rise Construction Type: CCB Year Built. 2017 Number of Units: 100 Condition: Good Date Surveyed. August 28, 2019 (305-783-3768) Surveyed by: Mark Davis Number of Stories. 9 Number of Buildings. 1 Parking: 120 spaces Garages. Parking garage Occupancy 100% Concessions. None Rental Premiums: Washer/Dryer - $40 Utilities Included. Trash Collection, Pest Control Project Amenities: Outdoor Pools (1), Exercise Fitness, Clubhouse, Laundry, Computer Room/library Unit Features. Patios/balconies, Ceiling Fans, Microwaves, Washer/dryer Hook- ups, Blinds, Dishwasher, Disposal [Unit Type I Number of Units Size (SFA Rent per Month Monthly Rent Per SFJ Utilities Allowance�l 11/1-33% 1 101 652 $4571 $0.70 $67 11/1-60% 1 901 652 $8861 $1.36 $67 I[Averages 1 1001 652 $8431 $1.2 COMMENTS This is an affordable apartment project with income and rent restrictions. The project opened at the end of August 2017 and was 100% preleased getting everybody moved in within one month. The above rental rates are at the 2019 maximum levels. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 171 LOCATIoN DATA Record Number. Market Type: Property Name. Address. Long/Lat. MSA: Tax Parcel No.: PROPERTY DATA Apartment Type. Construction Type: Year Built. Number of Units: Condition: Date Surveyed. Surveyed by: Number of Stories. Number of Buildings. Parking: Garages. Occupancy Concessions. Rental Premiums: Utilities Included. Project Amenities. RESTRICTED RENT COMPARABLE 4 1686 Affordable Northpark at Scott Carver 2341 NW 74th Street Miami, Miami -Dade County FL 33147 W80.235680/N25.842030 Miami -Fort Lauderdale - Pompano Beach 30-3110-079-0010 et al Garden CCB 2012 177 Average to good August 28, 2019 (305-826-9160) Mark Davis 1,2 &3 29 Adequate None 96% None None Water, Trash Collection, Sewer, Pest Control Outdoor Pools (1), Exercise Unit Features. Fitness, Clubhouse, Laundry, Sports Court, Tot Lot, Picnic, WiFi, Business Center Patios/balconies, Ceiling Fans, Washer/dryer, Microwaves, W/D Hook-ups, Dishwasher, Blinds, Disposal COMMENTS Project has a total of 354 units including 177 Public Housing units, 107 affordable units (60% AMI) and 70 market rate units. The Public Housing units have rental rates based on 30% of the tenant's income with the rest being subsidized. The 60% units are currently 96% occupied (100% pre -leased) and the market rate units are at 97% occupied. The above rates are at the 2019 max rates. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 172 IL'ouguyl�, nit Type I Number of Unit4 Size (SFA Rent per MontN Monthly Rent Per S Utilities Allowance 1/1 - Mkt. 8 68 $1,372 $2.01 $76 1/1-60% 25 68 $877 $1.28 $76 /1 - Mkt. 31 890 $1,497 $1.68 $108 2/1-60% 50 890 $1,036 $1.16 $108 /1.5 - Mkt. 15 97 $1,497 $1.53 $108 2/1.5-60% 23 97 $1,036 $1.06 $108 3/2 - Mkt. 2 1,224 $1,809 $1.48 $145 3/2-60% 1 1,224 $1,176 $0.96 $145 3/2.5 - Mkt. 14 1,298 $1,809,$1.39 $145 3/2.5-60% 8 1,298 $1,1761 $0.91 $145 [Averages 1 1771 926 $1)2261 $1.3 COMMENTS Project has a total of 354 units including 177 Public Housing units, 107 affordable units (60% AMI) and 70 market rate units. The Public Housing units have rental rates based on 30% of the tenant's income with the rest being subsidized. The 60% units are currently 96% occupied (100% pre -leased) and the market rate units are at 97% occupied. The above rates are at the 2019 max rates. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 172 LOCATIoN DATA Record Number: Market Type: Property Name: Address: Long/Lat. MSA: Tax Parcel No.: PROPERTY DATA Apartment Type: Construction Type: Year Built: Number of Units: Condition: Date Surveyed: Surveyed by: Number of Stories: Number of Buildings. Parking: Garages: Occupancy Concessions: Rental Premiums: Utilities Included: Project Amenities: RESTRICTED RENT COMPARABLE 5 753 Affordable Corinthian 7705 NW 22nd Avenue Miami, Miami -Dade County FL 33147 W80.232590/N25.845110 Miami -Fort Lauderdale - Pompano Beach 30-3110-077-0010 Garden CCB 2007 FV IIIIhdN�" '1b 'lll' SII Ilkll'' '\. 126 Average August 28, 2019 (305-693-0088) Mark Davis 3 3 Adequate None 100% None Washer/Dryer - $65 Water, Trash Collection, Sewer, Pest Control Outdoor Pools (1), Exercise Unit Features: Fitness, Clubhouse, Laundry, Playground, Picnic Area, Gated Patios/balconies, Ceiling Fans, Washer/ dryer Hook-ups, Dishwasher, Blinds, Disposal COMMENTS 85% of the total units are restricted at the 60% AMI. The above current rental rates are at the 2019 maximum levels. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 173 INIGUyl nit Type Number of Uni Size (SFJ Rent per MontN Monthly Rent Per SFJ Utilities Allowance 1/1-30% 4 630 $412 $0.65 $64 1/1-60% 23 630 $889 $1.41 $64 2/2-30% 9 78 $502 $0.64 $70 2/2-60% 52 78 $1,074 $1.37 $70 3/2-30% 5 1,037 $588 $0.57 $72 3/2-60% 30 1,037 $1,249 $1.20 $72 4/2-30% 1 1,155 $659 $0.57 $78 4/2-60% 2 1,155 $1,396 $1.21 $78 [Averages 1261 830 $1)0031 $1.21 COMMENTS 85% of the total units are restricted at the 60% AMI. The above current rental rates are at the 2019 maximum levels. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 173 LOCATIoN DATA Record Number. Market Type: Property Name. Address. Long/Lat. MSA: Tax Parcel No.: PROPERTY DATA Apartment Type. Construction Type: Year Built. Number of Units: Condition: Date Surveyed. Surveyed by: Number of Stories. Number of Buildings. Parking: Garages. Occupancy Concessions. Rental Premiums: Utilities Included. Project Amenities. RESTRICTED RENT COMPARABLE 6 1046 Affordable Hibiscus Pointe 1320 NW 79th Street Miami, Miami -Dade County FL 33147 W80.218750/N25.845520 Miami -Fort Lauderdale - Pompano Beach 30-3111-064-0010 Garden CCB 2004 212 Average August 28, 2019 (305-835-9627) Mark Davis 3 9 Adequate None 99% None Washer/Dryer - $39 (1/1) & $45 Water, Trash Collection, Sewer, Pest Control Outdoor Pools (1), Exercise Unit Features. Fitness, Clubhouse, Laundry, Playground, Gated Patios/balconies, Ceiling Fans, Washer/ dryer Hook-ups, Dishwasher, Blinds, Disposal COMMENTS 100% of the total units are restricted at the 60% AMI. The above current rental rates are all at the 2019 maximum levels. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 174 INIGUyl nit Type I Number of Unit4 Size (SFJ Rent per MontN Monthly Rent Per SFJ Utilities Allowance 1/1-60% 661 700 $8931 $1.28 $60 2/2-60% 801 92 $1,0741 $1.16 $70 3/2-60% 661 1,15 $1,2411 $1.08 $80 [Averages 1 2121 926 $1)0701 $1.1 COMMENTS 100% of the total units are restricted at the 60% AMI. The above current rental rates are all at the 2019 maximum levels. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 174 INCOME CAPITALIZATION ANALYSIS (CONVD) Rental Rate Analysis Area Median Income (AMI) The Housing Credit maximum rental rates are based on the area's median income and are gross rental rates, thus including an allowance for utilities. The 2019 Area Median Income for the subject's MSA is $54,900. This level is higher than the prior year's indication of $52,300, resulting in an increase in the maximum allowable rental rates for 2019. The 2018 Area Median Income for the subject's MSA ($52,300) was higher than the 2016 AMI of $48,100, the 2015 AMI of $49,900, the 2014 AMI of $48,400, the 2013 AMI of $49,000 and the 2012 level of $52,600. Note that although the 2016 AMI decreased from 2015, the 2016 maximum allowable rental rates increased slightly from 2015. These are adjusted figures subject to annual caps and other factors as determined and calculated by HUD. The maximum allowable rental rates peaked in 2010 and then steadily decreased in 2011, 2012 and 2013 before increasing in 2014 (but not back up to the 2010 levels) before decreasing slightly in 2015. The 2016 maximum allowable rental rates increased for the first time to levels slightly higher than the 2010 maximum rates. The 2017 AMI was higher than the 2016 AMI and resulted in an increase in the rental rates. All six comparable projects have increased their rental rates to the new 2019 maximum allowable rents. Maximum Gross Restricted Rental Rates The 2019 Housing Credit Maximum Restricted Rental Rates for the subject's set asides are summarized as follows: The maximum rental rates are gross rental rates, thus include an allowance for utilities. Utilities Allowances The subject will include trash and pest control expenses in the rental rates. We have calculated the utilities allowances for the subject property using a chart from the local Housing Authority, included in the Addenda. The utilities allowances are deducted from the maximum gross rental rates in order to determine the maximum net rental rates as restricted by the Housing Credit program. Maximum Allowable Net Rent Calculations The following chart illustrates the 2019 maximum net rent calculations for the subject property. Adjustments The impact of utilities included in the rents is inherent in the utilities allowances, which are added to the net rents of the comparables. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 175 Maximum Allowed Net Rent Calculations Unit Type Set Aside # Of Units Gross Rent U/A Net Rent 1/1 30% AMI 24 $476 $82 $394 1/1 60% AMI 75 $953 $82 $871 1/1 80%AMI 9 $1271 $82 $1189 1/1 Market 12 $1:1001 $1100 Total/Avg. 120 $896 $74 $822 Adjustments The impact of utilities included in the rents is inherent in the utilities allowances, which are added to the net rents of the comparables. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 175 INCOME CAPITALIZATION ANALYSIS (CONVD) Within restricted rate projects, we have found that rental rates are less sensitive to the size of the units than they are to the overall appeal of the complex. Thus, no adjustment is made for size and less consideration has been given to the rental rate per square foot. However, we have found that projects with larger units in similar areas typically are more capable of commanding the maximum rental rates and have higher occupancy rates. Similarly, the number of bathrooms in the units is not typically an adjustment, but can impact marketability and occupancy. In the analysis, we considered the occupancy rates in the comparable complexes in order to assess the market's acceptance of the project's rental rates. One -Bedroom Analysis — 60% AMI t Complex Name Unit Type Set Aside Net Rent U/A Gross Rent U/Services Size/SF Net Rent/S 1 The Villages I 1/1-60% 60% AMI $894 $57 $951 w,s,t,p 723 $1.2 2 Audrey M. Edmonson Transit Vi] 1/1-60% 60 % AMI $882 $71 $953 w,s,t,p 720 $1.2 3 Seventh Avenue Transit Village 11 1/1-60% 60% AMI $886 $67 $953 t,p 652 $1.3 4 Northpark at Scott Carver 1/1-60% 60% AMI $877 $76 $953 w,s,t,p,w/d 684 $1.2 5 Corinthian 1/1-60% 60% AMI $889 $64 $953 w,s,t,p 630 $1.4 6 Hibiscus Pointe 1/1-60% 60% AMI $893 $60 $953 w,s,t,p 700 $1.2 Average $887 $66 $953 685 $1.3 2019 Max 60% AMI Gross Rent $953 Residences at Dr. King Boulevar 1/1 30% AMI $394 $82 $476 t,p 563 $0.7 Residences at Dr. King Boulevar 1/1 60% AMI $871 $82 $953 t,p 563 $1.5 Based upon this analysis, we estimate that the subject will attain a gross rent of $953; deducting $82 for the utilities allowance results in a restricted rent for the subject's one -bedroom units as follows: Our estimate is equal to the 2019 maximum allowable rent. Subject Units Set Aside for Tenants with Incomes Below 60% AMI The subject will have 20% of its units (24 units) set aside for tenants with incomes at or below 60% of the Area Median Income (AMI). Some of the comparables offer units at set asides below the 50% AMI level; all are reported to have rents at the maximum set aside rates. We estimate that the subject's units will achieve the maximum allowable rents, also. Subject Units Set Aside for Tenants with Incomes Above 60% AMI The subject will have nine units set aside for tenants with incomes above 60% of the AMI. We estimated the market rents for the subject in a previous section. The subject will utilize one set asides above 60% AMI at the 80% AMI. As the set aside increases, the variance between the affordable rents and market rents decreases and at some point, market rents may be less than the affordable rental rate. The following analysis compares the market rental rates to the affordable rental rates for the set aside above 60%. Market vs. 80% AMI The subject will have 7.5% of its units (nine) set aside for tenants with incomes at or below 70% of the AMI. The following chart compares the market rent and the maximum allowable net 80% AMI rent for the subject property: 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 176 INCOME CAPITALIZATION ANALYSIS (CONVD) The maximum net (gross rent less utility allowance) 80% AMI rents are 8% below the estimated attainable market rents at the maximum allowed 80% AMI level. However, the 80% income band has a favorable demographic profile making affordable units available to potential tenants that were previously over qualified at the higher AMI levels. Therefore, we estimate that the subject will not be able to attain the maximum 80% AMI rents. Potential Gross Rental Income As Restricted Therefore the subject's estimated potential gross income as restricted is estimated at $1,174,572. Potential Base Rental Unit Type Set Aside No. Units $/Month Total Annual Rent 1/1 30% AMI 24 $394 $113,472 1/1 60% AMI 75 $871 $783,900 1/1 80% AMI 9 $1,100 $118,800 1/1 1 Market 12 $1,1001 $158,400 Total/Avg. 120 $816 $11174,572 Other Income Washer/Dryer Income The subject developer will offer full-size washer/dryer appliances to rent to tenants. We project a participation rate of 20% and a monthly premium of $45.00, or $12,960 annually. Rental Premiums At many apartments and rental projects, rental premiums are paid tenants for features such as top floor, conservation area frontage, water frontage, etc. As restricted, we expect no additional premiums. Ancillary Income Apartments typically earn additional income in the form of vending income, late charges, pet deposits, forfeited security deposits, etc. Market data indicates a typical ancillary income range of about 2% to 5% of the gross rental income. We estimate ancillary income at $20.00 per unit per month, or $28,800 annually. This is about 2.5% of the potential gross rental income. Subtotal of Other Income The total for all of the Other Income categories is $41,760. Potential Gross Income Potential gross income is estimated at $1,216,332. Vacancy and Collection Loss The following summarizes the occupancy data for the comparables. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 177 INCOME CAPITALIZATION ANALYSIS (CONVD) # Units I Year Built Stabilized Projects Miami The Villages I Restricted 150 2017 100% 150 Miami Audrey M. Edmonson Transit Village Restricted 76 2015 100% 76 Miami Seventh Avenue Transit Village II Restricted 100 2017 100% 100 Miami Northpark at Scott Carver Restricted 177 2012 96% 170 Miami Corinthian Restricted 126 2007 100% 126 Miami Hibiscus Pointe Restricted 212 2004 99% 210 Projects in Lease -up, Under Construction, Confidential, or Unwilling to Participate in Survey N/A Total Units 841 ess: Confidential Occupancy or Unstabilized Occupancies 0 otal Stabilized Units Responding to Survey 841 Overall Occupancy Rate (Stabilized Projects) 841 Average Project Size 140 99% 832 (Source: Meridian Appraisal Group, Inc. field survey Sep -19 Note: The year built for projects with multiple phases is the date of the first phase. The date of rehabilitated projects is the original vear built. The restricted rate projects are 96% to 100% occupied, with a weighted average of 99%; all are stabilized. We estimate an average occupancy rate for the subject over the holding period, at the projected attainable rents, of 96.0%. We estimate vacancy at 4.00% and collection loss at 1.00%. Total vacancy and collection is estimated at $60,817. Effective Gross Income Subtracting the vacancy and collection loss from the potential gross income estimate results in an effective gross income of $1,155,515. Operating Expenses Operating expenses are deducted from the effective gross income, resulting in a stabilized net operating income. Some expenses will change from our estimates based upon the subject's operation as a market rental property, as explained below. We have also relied on operating information from other restricted rent projects (presented at the end of this section) and IREM's indications for affordable apartments. Real Estate and Personal Property Taxes As discussed in the "Assessment and Taxes" section, unit, or $129,975 annually. we estimate taxes, as a restricted project, at $1,083 per Insurance The indications we have relied upon are summarized as follows: We have considered all of the data and have concluded on an expense of $500 per unit, or $60,000 annually. Water and Sewer The subject will include summarized as follows: trash and pest control in the base rent. The indications we have relied upon are 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 178 Source Low Hi h Average Restricted Comps $374 $642 $497 IREM Section 42 — Region 4 $254 Developer Pro forma $538 We have considered all of the data and have concluded on an expense of $500 per unit, or $60,000 annually. Water and Sewer The subject will include summarized as follows: trash and pest control in the base rent. The indications we have relied upon are 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 178 INCOME CAPITALIZATION ANALYSIS (CONVD) The IREM indication includes water and sewer costs for all common area and all units. The pro forma includes all utilities. The Developer Pro forma does not break-out the individual utilities' expense categories. We have considered all of the data and have concluded on an expense of $150 per unit, or $18,000 annually. Electric and Gas The subject has landlord -paid electric for the common areas. Tenants pay electric and gas expenses for the occupied apartments. Similarly, the expense comparables include these expenses for common areas only. The indications we have relied upon are summarized as follows: M Water and Sewer Source Low High Average Restricted Comps $172 $604 $328 IREM (Section 42 — Region 4) $499 Developer Pro forma $565 The IREM indication includes water and sewer costs for all common area and all units. The pro forma includes all utilities. The Developer Pro forma does not break-out the individual utilities' expense categories. We have considered all of the data and have concluded on an expense of $150 per unit, or $18,000 annually. Electric and Gas The subject has landlord -paid electric for the common areas. Tenants pay electric and gas expenses for the occupied apartments. Similarly, the expense comparables include these expenses for common areas only. The indications we have relied upon are summarized as follows: The IREM expense includes electrical and gas cost for common area only and does not include any units. The Developer Pro forma does not break out the electric and gas expense from total utilities. We have considered all of the data and have concluded on an expense of $250 per unit, or $30,000 annually. Garbage Service The subject will have landlord -paid trash removal expenses. The indications we have relied upon are summarized as follows: M Electric and Gas Source Low High Average Restricted Comps $189 $358 $238 IREM Section 42 — Region 4 $186 Developer Pro forma Incl. Above The IREM expense includes electrical and gas cost for common area only and does not include any units. The Developer Pro forma does not break out the electric and gas expense from total utilities. We have considered all of the data and have concluded on an expense of $250 per unit, or $30,000 annually. Garbage Service The subject will have landlord -paid trash removal expenses. The indications we have relied upon are summarized as follows: The Developer Pro forma does not break out the garbage service expense from total utilities. Note that one of the restricted expense comparables had an exceptionally high garbage service expense ($690 per unit) last year that skewed the average somewhat and was not considered typical. We have considered all of the data and have concluded on an expense of $125 per unit, or $15,000 annually. The developer pro forma estimates total utilities at $565 per unit and our estimate for total utilities is $525 per unit. Cable Service The subject will not offer bulk cable to the tenants. Repairs and Maintenance The subject will experience repairs and maintenance expenses for basic upkeep. Items such as appliance repairs are not refurbishment expenses, but are normal maintenance for an operating apartment complex. The property will also experience replacement expenses for items such as air conditioners, appliances, and carpeting, but these expenses are considered separately. The repairs and maintenance category does not include grounds maintenance, or maintenance payroll, but does include turnover costs of painting and decorating. The indications we have relied upon are summarized as follows: 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 179 M Source Low I-Iigh Average Restricted Comps $72 $690 $259 IREM Section 42 — Region 4) N/A Developer Pro forma Incl. Above The Developer Pro forma does not break out the garbage service expense from total utilities. Note that one of the restricted expense comparables had an exceptionally high garbage service expense ($690 per unit) last year that skewed the average somewhat and was not considered typical. We have considered all of the data and have concluded on an expense of $125 per unit, or $15,000 annually. The developer pro forma estimates total utilities at $565 per unit and our estimate for total utilities is $525 per unit. Cable Service The subject will not offer bulk cable to the tenants. Repairs and Maintenance The subject will experience repairs and maintenance expenses for basic upkeep. Items such as appliance repairs are not refurbishment expenses, but are normal maintenance for an operating apartment complex. The property will also experience replacement expenses for items such as air conditioners, appliances, and carpeting, but these expenses are considered separately. The repairs and maintenance category does not include grounds maintenance, or maintenance payroll, but does include turnover costs of painting and decorating. The indications we have relied upon are summarized as follows: 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 179 INCOME CAPITALIZATION ANALYSIS (CONVD) Repairs and Maintenance Source Low High Avera e Restricted Comps $282 $642 $440 IREM Section 42 — Region 4 $606 Developer Pro forma $777 The Developer Pro forma includes grounds maintenance and contract services in the repairs and maintenance category that we have considered separately below. We have given consideration to all of the data and concluded on an expense of $400 per unit, or $48,000 annually. Grounds Maintenance Some of the comparables combine contract services such as pest control with the grounds maintenance. The indications we have relied upon are summarized as follows: We have considered all of the data and have concluded on an expense of $150 per unit, or $18,000 annually. Contract Services Some of the comparables combine contract services such as pest control with the grounds maintenance. The indications we have relied upon are summarized as follows: Contract Grounds Source Low High Average Restricted Comps $113 $289 $172 IREM Section 42 — Region 4) $264 Developer Pro forma Incl. Above We have considered all of the data and have concluded on an expense of $150 per unit, or $18,000 annually. Contract Services Some of the comparables combine contract services such as pest control with the grounds maintenance. The indications we have relied upon are summarized as follows: This expense includes pest control, fire protection and occasional repairs and maintenance items such as air- conditioning maintenance service, appliance repairs, pressure washing and carpet cleaning. We have considered all of the data and have concluded on an expense of $250 per unit, or $30,000 annually. The Developer Pro forma estimates total repairs and maintenance including grounds maintenance and contract services at $777 per unit. We have estimated total repairs and maintenance including grounds maintenance and contract services at $800 per unit. Security The subject will have manned security. The indications we have relied upon are summarized as follows: Contract High Average Source Low High Average Restricted Comps $189 $574 $400 IREM Section 42 — Region 4) $223 Developer Pro forma Incl. Above This expense includes pest control, fire protection and occasional repairs and maintenance items such as air- conditioning maintenance service, appliance repairs, pressure washing and carpet cleaning. We have considered all of the data and have concluded on an expense of $250 per unit, or $30,000 annually. The Developer Pro forma estimates total repairs and maintenance including grounds maintenance and contract services at $777 per unit. We have estimated total repairs and maintenance including grounds maintenance and contract services at $800 per unit. Security The subject will have manned security. The indications we have relied upon are summarized as follows: We have considered all of the data and have concluded on an expense of $450 per unit, or $54,000 annually. Reserves (Allowance for Replacement of Short -Lived Items) This expense category is a sinking fund used to annualize expenses for periodic replacement of appliances, air conditioning units, carpeting, resealing of parking areas, etc. Items related to tenant turnover, such as 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 180 Source Low High Average Restricted Comps $207 $237 $222 IREM Section 42 — Region 4 $50 Developer Pro forma $483 We have considered all of the data and have concluded on an expense of $450 per unit, or $54,000 annually. Reserves (Allowance for Replacement of Short -Lived Items) This expense category is a sinking fund used to annualize expenses for periodic replacement of appliances, air conditioning units, carpeting, resealing of parking areas, etc. Items related to tenant turnover, such as 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 180 INCOME CAPITALIZATION ANALYSIS (CONVD) repainting, have already been accounted for. In actual practice, few apartment owners maintain reserve accounts; however, it is prudent appraisal and underwriting practice to consider the replacement allowance. Reserve requirements range from $100 to as high as $400 per unit annually, although most are between $200 and $300 per unit. The market rate expense comparables indicate $0 to $507. The restricted expense comparables indicate $0, $507, $300, $200, and $0 per unit. The Developer's Pro forma estimate is for $300 per unit. We conclude an expense of $300 per unit, or $36,000 annually. Management Fee The management fee estimate is an allocation of a fee to the management company and does not include salaries and commissions for on-site office personnel. Management fees are typically considered on a percentage of the effective gross income basis. Based on our conversation with several management companies, larger projects tend to cost less on a percentage basis than smaller projects, with a typical range of 3% to 6% of the effective gross income. The indications we have relied upon are summarized in the following chart. Considering the subject's projected income level, we conclude an expense of 5.75% of EGI, or $66,442 annually, which equates to $554 per unit. Salaries and Payroll (On -Site Staff) This expense category includes the salaries for both office (management and leasing) and maintenance personnel, along with payroll expenses such as FICA, unemployment tax, workers' compensation, and health insurance. The indications we have relied upon are summarized in the following chart. Management Salaries and Payroll Source Low High Average Restricted Comps $351 $719 $561 IREM Section 42 — Region 4) $429 Developer Pro forma $559 Considering the subject's projected income level, we conclude an expense of 5.75% of EGI, or $66,442 annually, which equates to $554 per unit. Salaries and Payroll (On -Site Staff) This expense category includes the salaries for both office (management and leasing) and maintenance personnel, along with payroll expenses such as FICA, unemployment tax, workers' compensation, and health insurance. The indications we have relied upon are summarized in the following chart. We have considered all of the data and conclude an expense at $1,250 per unit, or $150,000 annually. Administrative and Office Expenses This expense includes office supplies, telephone service for the office, postage, licenses, permits, etc. We included professional service fees such as legal and accounting fees in this category. The indications we have relied upon are summarized in the following chart. Administrative Source Low Hi Salaries and Payroll Source Low High Average Restricted Comps $942 $1,823 $1,294 IREM Section 42 — Region 4 $1,183 Developer Pro forma $1,250 We have considered all of the data and conclude an expense at $1,250 per unit, or $150,000 annually. Administrative and Office Expenses This expense includes office supplies, telephone service for the office, postage, licenses, permits, etc. We included professional service fees such as legal and accounting fees in this category. The indications we have relied upon are summarized in the following chart. Administrative Source Low Hi Average Restricted Comps $241 $895 $554 IREM Section 42 — Region 4 $521 Developer Pro forma $450 IREM includes marketing within this category. Restricted properties typically have higher administrative costs than market properties. We have considered all of the data and conclude an administrative expense of $450 per unit, or $54,000 annually. Advertising and Promotion The indications we have relied upon are summarized in the chart which follows. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 181 INCOME CAPITALIZATION ANALYSIS (CONVD) The subject is located in a competitive neighborhood and needs a marketing effort to maintain stabilized occupancy. We have considered all of the data and estimate an expense of $50 per unit annually or $6,000. Total Expenses Total operating expenses are estimated at $715,417, which equates to $5,962 per unit and $10.59 per square foot annually. Total Expenses Advertising and Promotion Source Low High Average Restricted Comps $7 $86 $40 IREM Section 42 — Region 4 Included Above Developer Pro forma $0 The subject is located in a competitive neighborhood and needs a marketing effort to maintain stabilized occupancy. We have considered all of the data and estimate an expense of $50 per unit annually or $6,000. Total Expenses Total operating expenses are estimated at $715,417, which equates to $5,962 per unit and $10.59 per square foot annually. The subject's estimated expenses are within the range of the comparable properties and supportive of the Developer Pro forma adjusted for real estate taxes. All five market rate expense comparables provide expense ratios; they are 40%, 46%, 61%, 51% and 61%; the subject's ratio of 64% is just above the range due to the unit mix having only one -bedroom units. Excluding taxes and reserves, the expense comparables indicate a range of $3,818 to $5,404 with an average of $4,629 per unit; the subject's estimated expenses excluding these items are $4,579 per unit, which is within the range. The expense comparables indicate expense ratios of 33% and 52% with an average of 42% excluding taxes and reserves; the subject's ratio based on appraisers' estimates of 48% is within the range, and considered reasonable. Net Operating Income The expense estimate was deducted from the effective gross income, resulting in a net operating income of $440,099. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 182 Total Expenses Source Low I High Average Restricted Comps T $4,659 1 $6,294 $5,671 IREM Section 42 — Region 4 $5,116 Developer Pro forma $5,722 The subject's estimated expenses are within the range of the comparable properties and supportive of the Developer Pro forma adjusted for real estate taxes. All five market rate expense comparables provide expense ratios; they are 40%, 46%, 61%, 51% and 61%; the subject's ratio of 64% is just above the range due to the unit mix having only one -bedroom units. Excluding taxes and reserves, the expense comparables indicate a range of $3,818 to $5,404 with an average of $4,629 per unit; the subject's estimated expenses excluding these items are $4,579 per unit, which is within the range. The expense comparables indicate expense ratios of 33% and 52% with an average of 42% excluding taxes and reserves; the subject's ratio based on appraisers' estimates of 48% is within the range, and considered reasonable. Net Operating Income The expense estimate was deducted from the effective gross income, resulting in a net operating income of $440,099. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 182 Rental Income $1,138,932 $9,491 Ancillary Income $22,344 $186 $15.52 W/D Income $12,996 $108 Vac/Coll. Loss -$56,947 - 475 Total Income $1,117,325 $9,311 OPERATING EXPENSES /UNIT $/S.F. R.E. & Personal Prop. Taxes $96,000 $800 $1.42 Insurance $64,560 $538 $0.96 Water and Sewer (Utilities) $67,800 $565 $1.00 Electric and Gas Incl. Above. Incl. Above Incl. Above Garbage Incl. Above. Incl. Above Incl. Above Cable $0 $0 $0.00 Repairs and Maintenance $93,240 $777 $1.38 Grounds Maintenance Incl. Above. Incl. Above Incl. Above Contract Services Incl. Above. Incl. Above Incl. Above Security $57,960 $483 $0.86 Reserves $36,000 $300 $0.53 Management $67,040 $559 $0.99 6.00% of EGI Salaries and Payroll $150,000 $1,250 $2.22 Administrative $54,000 $450 $0.80 Advertising $0 $0 $0.00 TOTAL EXPENSES 1 $6861600 $5,722 $10.16 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 183 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 184 EXPENSE COWARABLES RESTRICTED PROPERTIES Comparable 1 Comparable 2 Comparable 3 Comparable 4Comparable 5 LOCATION (County) Miami -Dade Miami -Dade Miami -Dade Miami -Dade Miami -Dade YEAR BUILT 1994 2016 2009 2009 2017 NUMBER OF UNITS 112 84 55 132 100 AVERAGE UNIT SIZE 857 1,007 618 818 652 YEAR ENDING Mar -19 T-12 Dec -18 Dec -18 Dec -18 Dec -18 OPERATING EXPENSES /UNIT $/S.F. /UNIT $/S.F. /UNIT $/S.F. /UNIT $/S.F. /UNIT $/S.F. R.E. & Personal Prop. Taxes $66,184 $591 $0.69 $93,045 $1,108 $1.10 $32,444 $590 $0.96 $100,040 $758 $0.93 $66,202 $662 $1.02 Insurance $64,081 $572 $0.67 $42,901 $511 $0.51 $20,550 $374 $0.60 $51,114 $387 $0.47 $64,184 $642 $0.98 Water and Sewer $19,268 $172 $0.20 $20,671 $246 $0.24 $11,326 $206 $0.33 $54,497 $413 $0.51 $60,418 $604 $0.93 Electric and Gas $21,178 $189 $0.22 $30,039 $358 $0.36 $10,856 $197 $0.32 $27,595 $209 $0.26 $0 $0.00 Garbage $77,277 $690 $0.80 $11,226 $134 $0.13 $3,982 $72 $0.12 $18,213 $138 $0.17 $0 $0.00 Cable $0 $0.00 $0 $0.00 $0 $0.00 $0 $0 $0.00 $0 $0.00 Redecoration $7,545 $67 $0 $0 $0 $0 $0 $0 $0 $0 $0 Repairs and Maintenance $35,839 $320 $0.37 $23,705 $282 $0.28 $27,667 $503 $0.81 $59,766 $453 $0.55 $64,178 $642 $0.98 Grounds Maintenance $0 $0 $0.00 $9,600 $114 $0.11 $15,890 $289 $0.47 $14,956 $113 $0.14 $0 $0.00 Contract Services $21,182 $189 $0.22 $31,452 $374 $0.37 $25,437 $462 $0.75 $75,720 $574 $0.70 $0 $0.00 Security $0 $0 $0.00 $0 $0.00 $0 $0 $0.00 $31,322 $237 $0.29 $20,672 $207 $0.32 Reserves $28,000 $250 $0.29 $0 $0.00 $16,500 $300 $0.49 $86,400 $655 $0.80 $30,000 $300 $0.46 Management $39,308 $351 $0.41 $60,406 $719 $0.71 $30,000 $545 $0.88 $83,159 $630 $0.77 $55,710 $557 $0.85 3.0% ofEGI 5.72% ofEGI 5.28% ofEGI 5.35% ofEGI 6.00% ofEGI Salaries and Payroll $114,960 $1,026 $1.20 $122,156 $1,454 $1.44 $100,258 $1,823 $2.95 $124,349 $942 $1.15 $122,500 $1,225 $1.88 Administrative $27,008 $241 $0.28 $38,080 $453 $0.45 $49,225 $895 $1.45 $56,165 $425 $0.52 $75,465 $755 $1.16 Advertisin $0 $0 $0.00 $626 $7 $0.01 $2,016 $37 $0.06 $4,003 $30 $0.04 $8 608 $86 $0.13 T OTAL EXPENSES $521,830 $4,659 $5.44 $483,906 $5,761 $5.72 $346,152 $6,294 $10.19 $787,298 $5,964 $7.30 $567,937 $5,679 $8.71 Operating Expense Ratio 33% 37% 52% 39% 51% Water/Sewer Included? Yes Yes Yes Yes No 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 184 INCOME CAPITALIZATION ANALYSIS (CONVD) Capitalization The final step in the direct capitalization technique is to divide the net operating income estimate by a market derived overall rate of return (OAR), or capitalization rate. The overall capitalization rate is estimated by several methods. The best method is by analysis of rates reflected by comparable sale properties. Extraction From Sales The comparable improved sales included in this appraisal provide good indications of an overall capitalization rate for the subject property. The capitalization rate indications reflect deductions for an allowance for replacement of short-lived items (reserves for replacement), so the rate indications are consistent with the analysis of the subject property. The capitalization rate indications are as follows: Sale # Property County Sale Date • ' 1 Riverwalk II Miami -Dade A r-19 6.57% 2 Santa Clara II Miami -Dade Feb -18 6.46% 3 Grand Court North Port Sarasota Aug -18 5.78% 4 Noah's Landing Collier Sep -18 5.27% 5 Homestead Colony Miami -Dade Dec -17 5.17% Average Overall Rate 5.85% The sales reflect overall capitalization rates of 5.17% to 6.57% with an average of 5.85%. All of the comparables were purchased for continued apartment use (no condominium conversion sales or fractured condominiums). We estimate that the subject's rate should be within the range. The data used for the extraction of the rates from the sales is considered reliable and the best overall rate indications available. All of the sales had significant amounts of time remaining on the Land Use Restriction Agreements. Therefore, the comparable improved sales provide a reliable indication of an overall capitalization rate for the subject. Investor Surveys PWC Real Estate Investor Survey The 2019Q2 PwC Real Estate Investor Survey for the national apartment market indicated a 11 basis point increase in the overall average cap rate to 5.14% from the prior survey indication of 5.03% and is lower than the 5.26% indication from the same quarter in the prior year. Overall Cap Rate Trends - National Apartment Market 9.50% 8.82% 9.00% 8.03% 8.50% 8.00% a 7.50% Q 7.00% 4.6.50% � 5 83°�••. 5.73% 5.80% 5.45% 5.39% 6.00% 2 5.40% a) 5.33% 5,14%5,50% Q 5.00% 4.00% vo-titio-ti0y0 0 �tiOtilc10,111 Oti0titio- 11 0y� 0ybo-ba°y101ti�F ,LOOO.0O.y0_tip _tip ti.01tiL,10o-ti yC�o-° y�o-tiy�o- °ybo-tiyWo- °y�o- ti .ti0 .LO .y0 .ti0 .ti0 .LO .LO .ti0 .ti0 Source: PwC Real Estate Investor Survey The survey indicated that national apartment market had discount rates that ranged from 5.25% to 10.00% with an average of 7.11% which is the same compared to the prior quarter and down nine basis points compared to 7.38% in the same quarter in the prior year. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 185 INCOME CAPITALIZATION ANALYSIS (CONVD) The survey indicated that the national apartment market rental rates changed by a 0.0% to a 4.00% increase with an average of a 2.50% increase. While operating expenses changed with a range of 2.00% to 4.00% with an average of 2.90% which is 10 basis points which is the same as the previous quarter. ARA Newmark The ARA US Multihousing Market Overview for 2019Q2 indicated that capitalization rates nationally dropped to 5.39% over the previous quarter, which is nine basis points over the prior year. Capitalization rates in major markets were 67 basis points lower than the national average at 4.7% which is two basis points higher than the prior quarter. Realty Rates The Realty Rates 2019Q2 Investor Survey indicated Surveyed Rates for Garden/Suburban Townhouses nationally of 4.51% to 11.60% with an average of 7.75%. The Equity Dividend Rate ranged from 6.29% to 13.94% with an average of 9.73%. The Debt Coverage Ratio ranged from 1.10 to 1.61 with an average of 1.31. IRR Annual Multi family Report The IRR 2018 Annual Multi -family Report for the national apartment market indicated overall average cap rates for Class A Urban projects of 5.27%, Class B Urban projects of 6.14%, Class A Suburban projects of 5.45%, and Class B Suburban projects of 6.31%. The South Region apartment market that includes the states in the southeastern portion of the country indicated overall average cap rates for Class A Urban projects of 5.41%, Class B Urban projects of 6.27%, Class A Suburban projects of 5.61%, and Class B Suburban projects of 6.50%. Band of Investment A third method of extracting an overall capitalization rate is by application of the Band of Investment technique. This method involves the calculation of a weighted average capitalization rate based on the mortgage constant (mortgage capitalization rate) and the equity dividend rate (equity capitalization rate). The application of this technique requires the estimation of certain rates and ratios applicable to the mortgage and equity positions. We have estimated the subject's permanent financing rate based on our conversations with Barry Krinsky with Citibank, Tammy Haylock-Moore with JPMorgan Chase and Mike Marra with Wells Fargo. The typical term is five to 10 years, with the rate tied to the corresponding T -Bill rate. The spread between the T -Bill rate and the interest rate ranges from 300 to 400 basis points for Class "A" and 350 to 450+ for Class "B" and lower. The key variables are the location and quality of the product and the financial strength of the developer. The 10 year T -Bill rate is around 1.5%. The typical loan -to -value ratio is 75%, with about one point charged for loan origination. Loan amortization periods for properties like the subject have typically been about 25 years, with balloon payments in five to 10 years. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 186 INCOME CAPITALIZATION ANALYSIS (CONVD) We conclude a mortgage interest rate of 4.75%, a loan -to -value ratio (M) of 80%, amortization period of 30 years and a balloon payment in five years. These conclusions result in a mortgage constant (Rm) of 6.26%. The second component of the Band of Investment analysis is the estimation of the equity dividend rate for the subject. Primary consideration was given to an investor survey for the estimation of the equity dividend rate. Recent investor surveys indicate equity capitalization rates ranging from 7.50% to 10.50%. We have concluded an equity capitalization rate (Re) of 7.00%% for the 20% equity position. Variables. - Interest Rate (i) . 4.75% -Loan Ratio (M) . . . . . . . . . . . . . . . . 80% - Equity Ratio (M-1) . . . . . . . . . . . . . . . 20% - Loan Amortization . . . . . . . . . . . . . . . 30 - Term (Balloon Payment) . . . . . . . . . . . . . 5 - Points Paid . . . . . . . . . . . . . . . . . . . 1 - Payments per Year . . . . . . . . . . . . . . . 12 - Mortgage Constant Factor (Rm) . . . . . . . . 6.26% - Debt Coverage Ratio 1 (DCRI) . . . . . . . . 1.20 - Equity Return Requirement (Re) . . . . . . . . 7.00% The mortgage and equity position conclusions for the subject property are considered to be reasonable estimates. An investor's financial position can substantially influence financing terms and investors have varying yield expectations. Based on the parameters concluded above, we calculated an indication of an overall capitalization rate by the Band of Investment technique as follows: D OF INVESTMENT METHOD Loan / Equity Ratio Rate of Return Weighted Rate Mortgage Requirement (M) 0.80 x (Rm) 6.26% = 5.01% Equity Requirement (M-1) 0.20 x (Re) 7.00% = 1.40% Overall Capitalization Rate Indication 6.41% Debt Coverage Ratio Another indication of a capitalization rate is derived by application of the Debt Coverage Ratio Formula. Market data indicates lenders typically require debt coverage ratios ranging from 1.10 to 1.35 for a property like the subject. The lenders surveyed by the Appraisal Institute Research Department indicate an average debt coverage ratio of 1.35 for loans of $5 million to $9.999 million. Loans for older properties are typically higher than the average; therefore, we conclude a debt coverage ratio of 1.20. An overall capitalization rate by the Debt Coverage Ratio Formula is calculated as follows: COVERAGEDEBT • METHOD DCR Loan Ratio Mortgage Constant Overall Rate Debt Coverage Ratio 1.20 x (M) 0.80 x (Rm) 6.26% = 6.01% Conclusion of Overall Capitalization Rate The sales reflect overall capitalization rates of 5.17% to 6.57% with an average of 5.85%. The comparable improved sales provide the most meaningful capitalization rate indications for the subject property. The Band of Investment analysis indicates a capitalization rate of 6.41%, while the Debt Coverage Formula indicates 6.01%. These mathematically derived rates provide only fair indications of an overall capitalization rate for the subject property. The investor surveys indicate a range of overall rates from 4.70% to 5.39% and provide support for the rate indications by the comparable improved sales. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 187 INCOME CAPITALIZATION ANALYSIS (CONVD) We concluded an overall rate for the subject as a market rate property of 5.00%. Restricted properties typically have higher overall rates due to the increased risk from limitations on cash flow. The spread between market and restricted rate properties is dependent on factors such as the amount of time remaining on the restrictions and the suitability of the location of the property for a market rate development. The subject will have 50 years remaining on its restrictions when placed in service, and it has a secondary location for new market rate development. We conclude an overall capitalization rate for the stabilized income of 5.50% for the subject property. Value Conclusion Via Income Approach —As If Stabilized Dividing the subject property's estimated net operating income by the estimated overall capitalization rate results in a hypothetical market value estimate as if stabilized as a restricted project by Direct Income Capitalization of $8,000,000* (rd.). Value Conclusion Via Income Approach — As If Complete As discussed in the apartment Market Overview section of this report, the demand for apartment units in Miami -Dade County appears to be strong at this time based on the increasing rental rates and low vacancy rates. We spoke with leasing agents and reviewed FHFC occupancy reports to obtain absorption rate comparables summarized as follows. Average Monthly Absorption in Profiled Properties (Miami -Dade County) Complex Name Complex Type Avg. # of Units Absorbed Per Month Units Remaining to be Leased to Reach Stabilized Occupancy (Includes Units Under Construction and Com Tete) Marcia Gardens Affordable 45 Stabilized Martin Fine Villas Affordable 52 Stabilized 7t' Avenue Transit Village II Affordable 100 Stabilized Audrey M. Edmonson Transit Village Affordable 76 Stabilized Pinnacle Heights Affordable 107 Stabilized Courtside Affordable 84 Stabilized Plaza at the Lyric Affordable 79 Stabilized Northside Transit Village I Affordable 50 Stabilized Keys Crossing Affordable 50 Stabilized Coquina Place Affordable 22 Stabilized Orchid Estates Affordable 35 Stabilized Villa Capri Affordable 72 Stabilized Magnolia Landing Affordable 50 Stabilized Woodside Oaks Affordable 33 Stabilized Circle Creek Affordable 33 Stabilized HR= High Rise Source: Field Survey by Meridian Appraisal Group, Inc. These projects have recently leased up at rates ranging between 22 and 107 units per month. Marcia Gardens is the most recently completed elderly project located in south Miami -Dade County; this project delivered both buildings in mid-July 2018 and was 100% occupied by mid-October 2018 indicating an average absorption rate of 44.6 units per month. Martin Fine Villas, another similar new elderly project located next to the subject near downtown Miami, is an affordable project that was 100% pre -leased and had everybody moved in within about eight weeks. Northside Transit Village I is an affordable project that was 100% pre -leased and had everybody moved in within about six weeks. Pinnacle Heights is located northwest of downtown Miami on NW 36' Street; this affordable project came on line in January 2018, was 100% pre -leased and had everybody moved in within four weeks. Courtside is located just north of downtown Miami, is a recent (October 2016) affordable project that was 100% pre -leased and had everybody moved in within three weeks. Plaza at the Lyric is also located just north of downtown Miami, near Courtside, is an affordable project that was nearly 100% pre -leased when it opened in mid-April 2016 and had everybody moved by early May 2016. 7t' Avenue Transit Village II has 100 units completed in September 2017, is located just north of Downtown Miami and was 100% pre -leased with all the tenants moving in within about one month; note that this project has a general population (family) demographic, but has a large number of elderly tenants. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 188 INCOME CAPITALIZATION ANALYSIS (CONVD) The subject will be facing limited new affordable competition during lease -up within three miles. Further, the nearest existing projects are at or near 100% occupied. In garden and villa -style projects absorption occurs over the course of construction and tenants move into individual buildings as they are completed. The construction schedule for this product type and any delays between buildings impacts the absorption rate. Again, typically, a leasing office is opened up on site or a phone number is advertised approximately three months before the first units are available. The pre -leasing thus provides enough tenants to occupy the first building when completed and this continues as buildings are completed; individual buildings receive Certificates of Occupancy (COs) and tenants are moved into individual buildings as they are completed. With garden and villa -style products, a significant number of units are typically leased by completion. Low-rise, mid -rise and high-rise projects typically receive one CO for the entire building or project and absorption does not start until all units are complete. The subject property has 120 proposed units for the general population (families). Due to the limited number of new projects coming on line at the same time and the relatively small size of the subject, we project that the subject will likely be at or near 100% pre -leased upon completion of construction. Since the subject has only two proposed buildings that will come on-line at approximately the same time, we project that it will take approximately three months to get everybody moved -in. Therefore, we estimate an average absorption rate of approximately 40 units per month to achieve stabilized occupancy upon completion. The stabilized occupancy for the subject is estimated at 96% (115 units) and since all of the units are contained in one -building to be delivered at once, the occupancy upon completion is estimated at 0% indicating that approximately 115 units will need to be occupied upon completion in order to achieve stabilized occupancy; this is projected to require approximately three months. The average market rental rate is $816 per unit. Assuming a straight-line lease -up, we have estimated the rent loss using the following calculation: ((l 15 x $816) x 3)/2 = $140,760 which we have rounded to $140,000. Subtracting the estimated rent loss from the as if stabilized value indicates a hypothetical market value estimate as if complete as a restricted project by Direct Income Capitalization of $7,860,000*. * Please see the Extraordinary Assumptions and Hypothetical Conditions. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 189 TY ID: s at Dr. King Boulevard TOTAL GROSS POTENTIAL RENTS OTHER INCOME Washer/Dryer 20% $45.00 Cable Income 0% $0.00 Valet Trash 0% $0.00 Water/Sewer Reimbursement 0% $0.00 Ancillary Income 100% $20.00 TOTAL OTHER INCOME Market 563 LESS COLLECTION LOSS 1.00% LESS VACANCY LOSS 4.00% TOTAL VACANCY & COLL. LOSS 5.00% EFFECTIVE GROSS INCOME LESS OPERATING EXPENSES FIXED EXPENSES Restricted $12,960 # Of Units Unit T 24 1/1 75 1/1 9 1/1 12 1/1 120 563 $1,174,572 per month $12,960 per month $0 per month $0 per month $0 per month $28,800 $41,760 $1,216,332 $12,163 $48,653 $60,817 $1,155,515 Set Aside Unit Size Rent Total Rent 30% AMI 563 $394 $113,472 60% AMI 563 $871 $783,90C 80% AMI 563 $1,100 $118,80C Market 563 $1,100 $158,40C $18,000 67,560 $816 $1,174,572 Electric and Gas AVG. UNIT SIZE: 563 2.60% AVG. INC PER UNIT $81E % OF $ PER $ 100.00% $9,629 $17.1C R.E. & Personal Property Taxes $1,083 PER UNIT $129,975 11.25% $1,083 $1.92 Insurance $500 PER UNIT $60,000 5.19% $500 $0.89 SUBTOTAL - FIXED EXPENSES $1,583 PER UNIT $189,975 16.44% $1,583 $2.81 Water and Sewer $150 PER UNIT $18,000 1.56% $150 $0.27 Electric and Gas $250 PER UNIT $30,000 2.60% $250 $0.44 Garbage $125 PER UNIT $15,000 1.30% $125 $0.22 Cable $0 PER UNIT $0 0.00% $0 $0.00 SUBTOTAL -UTILITIES $525 PER UNIT $63,000 5.45% $525 $0.93 Repairs and Maintenance $400 PER UNIT $48,000 4.15% $400 $0.71 Grounds Maintenance $150 PER UNIT $18,000 1.56% $150 $0.27 Contract Services $250 PER UNIT $30,000 2.60% $250 $0.44 Security $450 PER UNIT $54,000 4.67% $450 $0.80 Reserves for Replacements $300 PER UNIT $36,000 3.12% $300 $0.53 SUBTOTAL -MAINTENANCE $1,550 PER UNIT $186,000 16.10% $1,550 $2.75 Management 5.75% OF EGI $66,442 5.75% $554 $0.98 Salaries and Payroll $1,250 PER UNIT $150,000 12.98% $1,250 $2.22 Administrative $450 PER UNIT $54,000 4.67% $450 $0.80 Advertising $50 PER UNIT $6,000 0.52% $50 $0.09 SUBTOTAL - MANAGEMENT/OFFICE $2,304 PER UNIT $276,442 23.92% $2,304 $4.09 TOTAL EXPENSES $715,417 61.91% $5,962 $10.59 NET OPERATING INCOME $440,099 38.09% $3,667 $6.51 CAPITALIZED AT 5.50% $8,001,794 AS IF STABILIZED VALUE BY INCOME APPROACH $8,000,000 $66,667 $118.41 LESS RENT LOSS DURING LEASE -UP $140,000 AS IF COMPLETE VALUE BY INCOME APPROACH $7,860,000 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 190 RECONCILIATION AND FINAL VALUE ESTIMATE (AS A RESTRICTED PROPERTY) The purpose of this appraisal was to estimate the hypothetical market value of the leased fee interest in the subject property as of the effective date of appraisal as if complete, as if stabilized, upon completion and upon stabilization. The value indications are as follows: The Cost Approach was not applied to the subject property as restricted. The Income Approach reflects the value of the subject property based upon its estimated income producing capabilities, with consideration given to current investment requirements. The data applied in this approach, including rental rates, occupancy levels, operating expenses, and rates of return, was adequately supported from market data. Rental properties are developed and purchased to serve as income investment properties. An investor who would purchase the subject property would perform direct capitalization and yield capitalization analyses, if lease -up were involved. Market participants make decisions to buy and sell based on these capitalization analyses. Therefore, the Income Approach is based on reliable market data, and this approach is the most market-oriented approach to value. The Income Approach is considered to provide the best indication of market value for the subject property, so this approach is given the most emphasis in the reconciliation of the final value estimate. The Sales Comparison Approach is a process by which recent sales of similar properties are compared to the subject property and adjusted for conditions of sale and differences in property characteristics. Adequate comparable improved sale properties were found and applied to the valuation of the subject property. An investor considering the purchase of a rental project complex would research the market for similar properties available for sale and would compare the properties based primarily upon their income producing capabilities. Therefore, the Sales Comparison Approach mirrors the activities of market participants, and there was sufficient data available for use as comparable sales. However, the comparisons and the final decision to purchase would primarily be based on analysis of the economics of leasing the properties. The Sales Comparison Approach is an important source of overall capitalization rate data applied to the Income Capitalization Approach. The Sales Comparison Approach is estimated to provide meaningful indications of the market value of the subject property and is given secondary consideration in the reconciliation of the final value estimate. In conclusion, we have given the most consideration to the value indications reflected by the Income Capitalization Approach. The Sales Comparison Approach provides good support for the Income Capitalization Approach. The Cost Approach was not applicable. We have formed the opinion that the hypothetical market value of the leased fee interest in the subject property, as restricted by the Housing Credit, HOME, SURTAX and Tax -Exempt Bond programs, as if complete, including $240,000 in personal property, and with market financing, based on market conditions prevailing on September 10, 2019, was: SEVEN MILLION EIGHT HUNDRED SIXTY THOUSAND DOLLARS ($7,860,000)* We have formed the opinion that the hypothetical market value of the leased fee interest in the subject property, as restricted by the Housing Credit, HOME, SURTAX and Tax -Exempt Bond programs, as if stabilized, including $240,000 in personal property, and with market financing, based on market conditions prevailing on September 10, 2019, was: 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 191 As If Complete As If Stabilized Cost Approach N/A N/A Sales Comparison Approach $7,900,000* $8,040,000* Income Capitalization Approach $7,860,000* $8,000,000* The Cost Approach was not applied to the subject property as restricted. The Income Approach reflects the value of the subject property based upon its estimated income producing capabilities, with consideration given to current investment requirements. The data applied in this approach, including rental rates, occupancy levels, operating expenses, and rates of return, was adequately supported from market data. Rental properties are developed and purchased to serve as income investment properties. An investor who would purchase the subject property would perform direct capitalization and yield capitalization analyses, if lease -up were involved. Market participants make decisions to buy and sell based on these capitalization analyses. Therefore, the Income Approach is based on reliable market data, and this approach is the most market-oriented approach to value. The Income Approach is considered to provide the best indication of market value for the subject property, so this approach is given the most emphasis in the reconciliation of the final value estimate. The Sales Comparison Approach is a process by which recent sales of similar properties are compared to the subject property and adjusted for conditions of sale and differences in property characteristics. Adequate comparable improved sale properties were found and applied to the valuation of the subject property. An investor considering the purchase of a rental project complex would research the market for similar properties available for sale and would compare the properties based primarily upon their income producing capabilities. Therefore, the Sales Comparison Approach mirrors the activities of market participants, and there was sufficient data available for use as comparable sales. However, the comparisons and the final decision to purchase would primarily be based on analysis of the economics of leasing the properties. The Sales Comparison Approach is an important source of overall capitalization rate data applied to the Income Capitalization Approach. The Sales Comparison Approach is estimated to provide meaningful indications of the market value of the subject property and is given secondary consideration in the reconciliation of the final value estimate. In conclusion, we have given the most consideration to the value indications reflected by the Income Capitalization Approach. The Sales Comparison Approach provides good support for the Income Capitalization Approach. The Cost Approach was not applicable. We have formed the opinion that the hypothetical market value of the leased fee interest in the subject property, as restricted by the Housing Credit, HOME, SURTAX and Tax -Exempt Bond programs, as if complete, including $240,000 in personal property, and with market financing, based on market conditions prevailing on September 10, 2019, was: SEVEN MILLION EIGHT HUNDRED SIXTY THOUSAND DOLLARS ($7,860,000)* We have formed the opinion that the hypothetical market value of the leased fee interest in the subject property, as restricted by the Housing Credit, HOME, SURTAX and Tax -Exempt Bond programs, as if stabilized, including $240,000 in personal property, and with market financing, based on market conditions prevailing on September 10, 2019, was: 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 191 RECONCILIATION AND FINAL VALUE ESTIMATE (CONVD) EIGHT MILLION DOLLARS ($8,000,000)- 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 192 FAVORABLE FINANCING Favorable (below market) financing has been made available to this specific property in the form of a SAIL loan from the Florida Housing Finance Corporation. The State Apartment Incentive Loan program (SAIL) provides low-interest loans on a competitive basis to affordable housing developers each year. This money often serves to bridge the gap between the development's primary financing and the total cost of the development. Developments that use housing credits in conjunction with this program may use a minimum set-aside of 40% of the units for residents earning 60% of the area median income. Loan interest rates are set at zero percent for those developments that maintain 80% of their occupancy for farmworkers, commercial fishing workers or homeless people. The interest rates are set at one percent for all other developments. Loans are issued for a maximum of 15 years unless housing credit syndication requirements or FannieMae requirements dictate longer terms or if the Corporation's encumbrance is subordinate to the lien of another mortgage, in which case the term may be made coterminous with the longest term of the superior loan. In most cases, the SAIL loan cannot exceed 25% of the total development cost and can be used in conjunction with other state and federal programs. As requested by the client, the value of this favorable, property specific financing has been estimated using a present value calculation, which quantifies the difference between the favorable rate being provided to the developer and the market rate presently available from conventional sources. This analysis assumes that the favorable financing, as described herein and as provided by the client, is available to remain with the property for the full term stated below and that, if necessary, the mortgagee will allow the property to be transferred subject to the mortgage. The amount and terms of the favorable financing are as follows. Although the property may have additional financing, as directed by the client, only the favorable financing is considered in the analysis. Source Amount Rate Term 1 Tax -Exempt Bonds $2,000,000 1.50% 30 Year Term, 30 Year -amortizing, interest only 2 SURTAX $2,053,447 1.50% 30 Year Term, 30 Year -amortizing, interest only 3 HOME $1,790,057 1.50% 30 Year Term, 30, interest onl Tax -Exempt Bonds Loan Presently, conventional financing would be available to this property at approximately 4.75% or a fixed rate mortgage, with a loan to value ratio of 80%, payments based on a 30 year amortization schedule and a balloon payment in five years. The market financing is amortized over 30 years but is only for a five year term before the loan comes due or has to be refinanced. The subject favorable financing is for 30 years, so we need to make the interest rates comparable. To do this we have compared the five year treasury rates (this are currently 1.35%) with 20 year treasury rates (which are currently 1.77%) which reflects a 0.42% difference for the 15 year difference in the reported treasury terms. Since the proposed terms is 30 years and the current market terms are five years, there is a difference of 25 years. The market rate was adjusted by 0.75%. This reflects an equivalent 30 year rate for the market financing of 5.50% For the conventional financing, the mortgage constant at 5.50% amortized over 30 years is 0.068135 reflecting annual debt service on $2,000,000 of $136,269 or a monthly payment of $11,356. For the subject we have assumed that the loan is also amortized over 30 years so we can compare the subject favorable financing to the market typical financing. The mortgage constant at 1.50% amortized over 30 years is 0.041414 reflecting annual debt service on $2,000,000 of $82,829 or a monthly payment of $6,902. When comparing two properties, which are otherwise comparable, and one has favorable financing and the other does not, the measure between the two would be represented by discounting the debt service difference using the market financing rate as compared to the favorable financing rate. The value of the subject's favorable financing associated with the Tax -Exempt Bonds loan is calculated as follows: Present Value of monthly debt service payments discounted to yield based on 4.75% for 30 year term (the length of the first mortgage) at a monthly saving of $4,453 is $853,714. The present value of the remaining balance at the end of the term is $0. Therefore the present value of the favorable financing from the Tax -Exempt Bonds loan is $853,714. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 193 FAVORABLE FINANCING (CONVD) SURTAX Loan Presently, conventional financing would be available to this property at approximately 4.75% or a fixed rate mortgage, with a loan to value ratio of 80%, payments based on a 30 year amortization schedule and a balloon payment in five years. The market financing is amortized over 30 years but is only for a five year term before the loan comes due or has to be refinanced. The subject favorable financing is for 30 years, so we need to make the interest rates comparable. To do this we have compared the five year treasury rates (this are currently 1.35%) with 20 year treasury rates (which are currently 1.77%) which reflects a 0.42% difference for the 15 year difference in the reported treasury terms. Since the proposed terms is 30 years and the current market terms are five years, there is a difference of 25 years. The market rate was adjusted by 0.75%. This reflects an equivalent 30 year rate for the market financing of 5.50% For the conventional financing, the mortgage constant at 5.50% amortized over 30 years is 0.068135 reflecting annual debt service on $2,053,447 of $139,911 or a monthly payment of $11,659. For the subject we have assumed that the loan is also amortized over 30 years so we can compare the subject favorable financing to the market typical financing. The mortgage constant at 1.50% amortized over 30 years is 0.041414 reflecting annual debt service on $2,053,447 of $85,042 or a monthly payment of $7,087. When comparing two properties, which are otherwise comparable, and one has favorable financing and the other does not, the measure between the two would be represented by discounting the debt service difference using the market financing rate as compared to the favorable financing rate. The value of the subject's favorable financing associated with the SURTAX loan is calculated as follows: Present Value of monthly debt service payments discounted to yield based on 4.75% for 30 year term (the length of the first mortgage) at a monthly saving of $4,572 is $876,528. The present value of the remaining balance at the end of the term is $0. Therefore, the present value of the SURTAX loan is $876,528. HOME Loan We have utilized the same methodology above for this loan as well. The present value of the HOME Loan is $764,098. Conclusion The following chart summarizes the value of the favorable financing: Investment Value Calculations Loan 1 Loan 2 Loan 3 Loan Source Tax -Exempt Bonds SURTAX HOME Loan Amount $2,000,000 $2,053,447 $1,790,057 Market Mortgage Constant 0.068135 0.068135 0.068135 Annual Debt Service $136,269 $139,911 $121,965 Monthly Debt Service $11,356 $11,659 $10,164 Loan Amount $2,000,000 $2,053,447 $1,790,057 Favorable Mortgage Constant 0.041414 0.041414 0.041414 Annual Debt Service $82,829 $85,042 $74,134 Monthly Debt Service $6,902 $7,087 $6,178 Monthly Savings $4,453 $4,572 $3,986 Present Value of Monthly Savings $853,714 $876,528 $764,098 PV Rem. Balance Difference $0 $0 $0 Total $853,714 $876,528 $764,098 Loan 1 $853,714 Loan 2 $876,528 Loan 3 $764,098 Subtotal $2,494,340 Rounded $2,490,000 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 194 FAVORABLE FINANCING (CONVD) Summary The present value of the favorable financing from the mortgages is added together to reflect a total benefit of $2,490,000 (rd.) to the subject due to favorable financing. The stabilized restricted value is $8,000,000, adding the value of the favorable financing results in a stabilized value, as restricted with favorable financing of $10,490,000. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 195 VALUATION OF SUBJECT'S HOUSING CREDITS Details regarding the subject's Housing Credits are from a commitment letter from Wells Fargo Community Lending and Investment. Project Total Housing Credits Commitment Date Syndication Rate ResidencesC• • $24,480,0551 • 11 The total tax credits available of $24,360,700 multiplied by 99.99% indicates available tax credits of $24,358,264; multiplying this figure by $1.005 per dollar (100.5%) indicates a net capital contribution of $24,480,055. We have estimated the subject's syndication rate as if negotiated in the current environment. The table below summarizes the ratios of Housing Credit syndication rates for properties that applied in recent years. Project County Commitment Date Syndication Rate Woodland Grove Miami -Dade August 19, 2019 94.75% Lucida Miami -Dade July 12, 2019 94.75% Colonnade Park Citrus May 21, 2019 94.725% Regency Gardens Rehab Broward March 20, 2019 91.0% Lofts at Brooklyn Duval March 18, 2019 96.0% Sabal Park Homeless Hillsborough February 20, 2019 92.0% Fair Oaks Miami -Dade November 15, 2018 98.5% Cathedral Townhouse (Elderly, HAP, Rehab) Duval November 15, 2018 97.0% Eagle Ride Pinellas November 8, 2018 95.5% Verbena Miami -Dade September 27, 2018 98.0% Pendana at West Lake Senior Residences Orange September 24, 2018 100.0% Mary Bethune (Elderly, HAP, Rehab Hillsborough September 6, 2018 100.0% Silver Creek Miami -Dade July 10, 2018 98.0% Providence Reserve Seniors(Elderly) Polk June 22, 2018 100.0% Suncrest Court Broward June 18, 2018 97.5% Lofts at Jefferson Station Duval June 14, 2018 96.0% Osprey Pointe HAP, Rehab Brevard Aril 18, 2018 93.0% Saratoga Crossings I Broward March 2, 2018 99.0% Saratoga Crossings II Broward March 2, 2018 98.0% Lake Pointe Miami -Dade February 7, 2018 99.5% Marian Towers Miami -Dade February 7, 2018 101% We place most weight on the subject's agreement and conclude a rate for the subject of 100.5%, however, we are not experts in this matter. 19 -PIP MERIDIAN APPRAISAL GROUP, INC. 196 ADDENDA APPRAISERS' QUALIFICATIONS AVA MERIDIAN QUALIFICATIONS OF ROBERT VON, PRESIDENT BUSINESS ADDRESS Meridian Appraisal Group, Inc. 1331 Sundial Point Winter Springs, Florida 32708 Phone: 407.637.8705 Fax: 407.875.1061 E-mail: rvongmeridianag com FORMAL EDUCATION California State University, Northridge May 1986, Bachelor of Science in Business Administration, Real Estate Finance REAL ESTATE EDUCATION Has completed course work for admission to the Appraisal Institute and all necessary for State -Certification and continuing education. A partial list of course work is as follows: Course/Seminars/Continuing Education • Real Estate Appraisal Principles • Basic Valuation Procedures • Standards of Professional Practice — Part A • Standards of Professional Practice — Part B • Capitalization Theory and Techniques — Part A • Capitalization Theory and Techniques — Part B • Highest and Best Use and Market Analysis • Appraising Troubled Properties • Advanced Applications • USPAP Update • MAP Valuation Training for Third Party Appraisers EXPERIENCE 2007 — Present Meridian Appraisal Group, Inc. President and Principal Responsible for the acquisition, co-ordination and review of appraisal assignments on real property. Also responsible for the preparation of appraisal assignments on various real property with specialization in multi -family apartments and A&D projects throughout Florida. Have completed over 1,000 affordable apartment projects for all demographic categories throughout the state of Florida. January 2004 — 2007 Realvest Appraisal Services, Inc. President and Principal June 1998 — 2003 Realvest Appraisal Services, Inc. Vice President and Principal Responsible for the acquisition, co-ordination and review of appraisal assignments on real property. Also responsible for the preparation of appraisal assignments on various real property with specialization in multi -family apartments and A&D projects throughout Florida. 1994-1998 Pardue, Heid, Church, Smith & Waller, Inc. Commercial Manager and Commercial Real Estate Analyst Responsible for the preparation and review of appraisal assignments on various real property including vacant land, subdivisions, retail centers, office buildings, apartments, industrial properties and special use properties. QUALIFICATIONS OF ROBERT VON, PRESIDENT (CONT'D) 1993-1994 Barnett Banks, Inc. Review Appraiser Responsible for reviewing reports for Special Assets and Corporate and Commercial Real Estate Department. Performed all appraisal reviews for the CFCRC, a consortium of 12 lending institutions. 1986-1993 HomeFed Bank, FSB Senior Review Appraiser Responsible for the ordering and review of full narrative appraisal reports for the entire east coast portfolio. Assignments completed in 14 states and the District of Columbia CERTIFICATIONS & LICENSES State -Certified General Real Estate Appraiser RZ 1604 Orlando Chamber of Commerce — Member Downtown Orlando Partnership — Member PROFESSIONAL AFFILIATIONS Board of Directors — Florida Housing Coalition s RICK SCOTT, GOVERNOR JONATHAN ZACHEM, SECRETARY dopr STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION FLORIDA REAL ESTATE APPRAISAL BD THE CERTIFIED GENERAL APPRAISER HEREIN IS CERTIFIED UNDER THE PROVISIONS OF CHAPTER 475, FLORIDA STATUTES 4NN%"' RD ER,�ROSER-i 1331 SUNDIAL POINT WINTER SPRINGS FL 3270"` ExPIRATIciW VEkAB R 30, 2020 Always verify licenses online at MyFloridaLicense.com a. o Do not alter this document in any form. I. This is your license. It is unlawful for anyone other than the licensee to use this document. �' Ertl AIFA MERIDIAN QUALIFICATIONS OF MARK S. DAVIS, SENIOR APPRAISER BUSINESS ADDRESS Meridian Appraisal Group, Inc. 1331 Sundial Point Winter Springs, Florida 32708 Phone: 407.637.8706 Fax: 407.875.1061 E-mail: mdavisnmeridianag com FORMAL EDUCATION University of Florida, July 1982 Bachelor of Science in Business Administration, Risk Management REAL ESTATE EDUCATION Has completed all courses necessary for State -Certification and continuing education. A partial list of course work is as follows: Course/Seminars/Continuing Education • Basic Appraisal Principles, Methods and Techniques • Standards of Professional Practice — Part A • Standards of Professional Practice — Part B • Capitalization A & B • Case Studies in Real Estate Valuation • Report Writing and Analysis • Federal Home Loan Bank Board — R -41C • USPAP Update • MAP Valuation Training for Third Party Appraisers EXPERIENCE 2007 — Present Meridian Appraisal Group, Inc. Senior Appraiser Responsible for the preparation of appraisal assignments on various real property including vacant land, subdivisions, retail centers, office buildings, apartments, industrial properties, mobile and recreational vehicle parks and special use properties. Have completed over 500 affordable apartment projects for all demographic categories throughout the state of Florida. 1991-2007 Realvest Appraisal Services, Inc. Senior Appraiser Responsible for the preparation of appraisal assignments on various real property including vacant land, subdivisions, retail centers, office buildings, apartments, industrial properties, mobile and recreational vehicle parks and special use properties. 1983-1990 Pardue, Heid, Church, Smith and Waller, Inc. Commercial Appraiser Responsible for the preparation of appraisal assignments for the firm on various real property. 1982-1983 Stanfield and Associates, Inc. Commercial Appraiser Responsible for the preparation of appraisal assignments for the firm on various real property. QUALIFICATIONS OF MARK S. DAVIS, SENIOR APPRAISER (CONT'D) CERTIFICATIONS & LICENSES State -Certified General Real Estate Appraiser RZ 1229 _.,.. RfCK SCOTT, GOVERNOR JONATHAN 7ACHEM, SECRETARY d b STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION FLORIDA REAL ESTATE APPRAISAL BD THE CERTIFIED GENERAL APPRAISER HEREIN IS CERTIFIED UNDER THE PROVISIONS OF CHAPTER 475, FLORIDA STATUTES DAVIS, MARKS 1331 SUNDIAL POINT WINTER SPRINGS FL 32708 EXPIRATION BATE: NOVEMBER 30, 2020 Always verify licenses online at MyFloridaLicense.com I o '� ` Do not after this document in any form. This is your license. it is unlawful for anyone other than the licensee to use this document. ENGAGEMENT LETTER SELTZER MANAGEMENT GROUP, INC. August 21, 2019 Pll_\ :m Ih I_1I Mr. Robert Von Meridian Appraisal Group, Inc. 1331 Sundial Point Winter Springs, FL 32708 17633 ASHLEY DRIVE PANAMA CITY BEACH, FL 32413 TEL: (850) 233-3616 FAX: (850) 233-1429 Re Residences at Dr. King Boulevard RFA 2017-112 / 2018-088C (9% Housing Credits) Dear Mr. Von: Please prepare a fully documented narrative appraisal for the above -referenced property. I have attached to this letter information regarding the Low -Income Housing Tax Credits Program (HC) Funding for this property and the associated rent restrictions. Please contact me if there is any additional information you require for this appraisal. Please add Seltzer Management Group, Inc. as agent for Florida Housing Finance Authority and Seltzer Management Group, Inc. as an intended user of the appraisal. Please be advised that Seltzer Management Group, Inc. will rely upon this appraisal in rendering a decision on financing. Please adhere to the following requirements for the appraisal: 1 _ The objective is to record your opinion of the estimated "market value" of the property in a sufficiently descriptive manner to enable the reader to understand the estimate and the rationale for the estimate. The definition of "market value" is the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably, and assuming that the price is not affected by undue stimulus. Implicit in this assumption is the consummation of the sale of a specified date and the passing of title from seller to buyer under conditions whereby: a) Buyer and seller are typically motivated; b) Both parties are well informed or well-advised, and each is acting in what he considers his own best interest; c) A reasonable time is allowed for exposure in the open market; d) Payment is made in terms of cash and U.S. dollars, or in terms of financial arrangements comparable thereto; e) The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone not associated with the sale. 2. The appraisal should estimate the appraised value of the property based on the following: Mr. Robert Von, Meridian August 21, 2019 Page 2 a) The "as is" value of the proposed development site with a separate value for the land, if applicable. b) The value of the development as completed using the income, rent, demographic, and occupancy restrictions required under the State Apartment Incentive Loan and the Low Income Housing Tax Credit Program ("HC" or "Housing Credit") utilizing a capitalization rate equal to the mortgage constant for the MMRB loan, if any. The value of the Housing Credits should be calculated separately, and should not be added to this value of the property. c) The value of the development as stabilized using the income, rent, demographic, and occupancy restrictions required under the HC Program utilizing a capitalization rate equal to the mortgage constant for the MMRB loan. The value of the Housing Credits should be calculated separately, and should not be added to this value of the property. d) The value as completed, using market rents for all units, as if there were no income, rent or occupancy restrictions on the development, utilizing a market capitalization rate. e) The value as stabilized, using market rents for all units, as if there were no income, rent or occupancy restrictions on the development, utilizing a market capitalization rate. Note: There may be no difference in rents between income restricted units and market rate units. 3. The appraisal should follow a reasonable valuation method, which addresses all recognized approaches to market value, unless the appraiser fully explains and documents the elimination of an approach. 4. The appraisal must conform to the Uniform Standards of Professional Appraisal Practice ("USPAP") adopted by the Appraisal Standards Board of the Appraisal Foundation, except that the Departure Provision, permitting an appraiser to deviate from the USPAP Standards, shall not apply. 5. The appraisal must disclose steps, if any, that were taken to comply with the Competency Provision of the USPAP. 6. The appraisal should include a market study prepared by the appraiser to cover, at a minimum, a discussion of the following items: a) Comments on historic and current occupancy levels, trends and rental rates for the subject primary market area ("PMA") and sub -market and whether or not the occupancy levels are expected to change. b) Status, extent, and impact of present competition in the market, including any properties under construction or rehabilitation, properties for which permits have been issued, and properties in the planning stages in the market area, if they are likely to impact the subject property_ c) Marketability of the subject to the target population (low income, elderly) and appropriateness of the development's demographic, size and design for the subject market. 7. The appraisal must report and analyze sales data on previous sales of other properties in the market area for the three years preceding the date on which the appraisal was prepared. Comparable sales should utilize time periods no longer than these, and, if possible, should reflect sales within the previous six months. Mr. Robert Von, Meridian August 21, 2019 Page 3 Under the income approach, the appraisal should analyze comparable operating expenses in determining operating expenses. Operating expenses should be detailed and address, at a minimum, the following: a) Real estate taxes and other taxes b) Insurance c) Licenses d) Operations expenses (fuel, water, sewer, electricity, and trash removal for the complex) e) Building maintenance f) Interior and exterior decorating (cleaning and painting of apartments and buildings) g) Supplies h) Pool maintenance i) Parking area maintenance j) Grounds keeping k) Non-resident management fees 1) Office payroll m) Maintenance payroll n) Leasing and advertising o) Telephone p) Legal and audit fees q) Leased equipment r) General and administrative s) Replacement reserves The appraiser should also estimate an initial deposit and an annual deposit to the replacement reserve, based upon the consideration given to deterioration of the property during the mortgage term. The minimum annual reserve for replacement is $300 per unit per year, and must be increased if determined necessary. Additionally, when estimating the value of the development in each of the "income and rent restrictions" scenarios, the appraiser must include the ongoing cost of the required resident programs in the property's operating expenses. The appraiser should contact the underwriter to verify the required resident programs and discuss the estimated costs of these programs. 9. Analyze and report a reasonable marketing period for the subject property. 10. Analyze and report on current market conditions and trends that will affect projected income to the extent that they affect the value of the subject property. 11. Analyze and report appropriate deductions and discounts for any proposed construction, or any completed properties that are partially leased or leased at other than market rents at the date of the appraisal. 12. Potential comparable developments that were investigated but excluded must be listed with information indicating why they were excluded from the analysis. Additionally, information must be provided on any development that is included in the analysis that is geographically outside of the subject's PMA or sub -market. 13. In addition to the certification required by the USPAP, an additional statement must be included as follows: "This appraisal was not made, nor was the appraisal rendered on the basis of a requested minimum valuation, specific valuation, or an amount which would result in approval of a loan." Mr. Robert Von, Meridian August 21, 2019 Page 4 14. The appraisal must include sufficient supporting documentation with all pertinent information reported so that the appraiser's logic, reasoning, judgment, and analysis in arriving at a conclusion will indicate to the reader the reasonableness of the value reported. 15. The appraisal must include a legal description of the real estate being appraised, in addition to the description required by the USPAP. 16. The appraisal must identify and separately value any personal property, fixtures, or intangible items that are not real property but are included in the appraisal, and discuss the impact of their inclusion or exclusion on the estimate of the market value. 17. The appraisal must follow a reasonable valuation method that addresses the direct sales comparison, the income, and the cost approaches to market value, and reconcile those approaches. 18. If information required or deemed pertinent to the completion of the appraisal is unavailable, that fact shall be disclosed and explained in the appraisal 19. All assumptions and projections should be supported and should conform to current market conditions. In the case of income property, the capitalization rate, discount rate, revenues, expenses, vacancy rates, financing terms, and absorption rate should be reasonable and well documented. Absorption rate for the subject necessary to reach 92% occupancy beginning with the first certificate of occupancy. If the primary method to achieve an occupancy rate of at least 92% is by providing rent concessions, then the expected occupancy rate without rent concessions must be indicated. Absorption should be itemized in the table of contents, with the projected stabilization date made clear in the discussion. 20. The appraisal should document and explain how discount and capitalization rates are used in generating present value estimates, where derived. 21. The appraisal should take into consideration and make provisions for all appropriate deductions and discounts for any development type property. 22. The complete narrative appraisal should be signed, dated, and returned to: Keith Whitaker Credit Underwriter Seltzer Management Group, Inc., as Agent for Florida Housing Finance Corporation You may contact the developer for development specific information such as descriptions of the property, plans, specifications, proposed rents, etc. Any information regarding the terms and restrictions of the proposed financing or the scope of the appraisal must come from my office. Your contact with the developer should be limited to gathering information necessary for the appraisal. This arrangement is solely to expedite your information -gathering process, and is not intended to authorize any relationship, contractual or otherwise, between your firm and the developer regarding this development. This engagement letter does not authorize you to certify the appraisal to the developer, or to provide the developer with a copy of all or any part of this appraisal without my express written consent. It is understood and agreed by you, SMG, and the borrower that the requested appraisal is being ordered by, and shall be provided to SMG. It is our understanding that the assignment will be completed and delivered no later than 4 weeks assuming that all requested information is received by you in a timely manner, and that the fee for this appraisal will be $5,500. This fee will be paid by SMG upon completion and satisfactory review of the appraisal with respect to compliance with the requirements requested by SMG in this agreement. Mr. Robert Von, Meridian August 21, 2019 Page 5 Time is of the essence for this assignment. If the completed appraisal is not delivered to SMG by the deadline date above, a $50 per business day late penalty will be deducted from the appraisal fee. Extensions of the deadline may be obtained by requesting an extension in writing prior to the deadline. Extensions will be granted for circumstances beyond your control (such as failure by the borrower or SMG to provide information required for the appraisal). Please forward one electronic copy via e-mail or on disk of the appraisal to my attention at SMG, along with a copy of this letter signed by you. My e-mail address is frank@seltzermanagement.com. I look forward to working with you. Sincerely, SELTZER MANAGEMENT GROUP, INC. ? 4�4�_ Justin Coles Associate Credit Underwriter Enclosures The terms of this engagement letter for the appraisal of Residences at Dr. King Boulevard are agreed and acknowledged by: Name:/v— Typed Name: Title: Date: D ' 2 RENT & INCOME LIMITS Note: The general hold harmless provisions of IRC Section 142(d)(2)(E) mean that projects with at least one building placed in service on or before the end of the 45 -day transition period for newly -released limits use whichever limits are greater, the current -year limits or the limits in use the preceding year. HUD release: 4/24/2019 2019 Income Limits and Rent Limits Implement on or before 6/7/2019 Florida Housing Finance Corporation Effective: 4/24/2019 Multifamily Rental Programs (except HOME and SHIP) and CWHIP Homeownership Program FHFC Posted: 5/2/2019 Florida Housing Finance Corporation (FHFC) income and rent limits are based upon figures provided by the United States Department of Housing and Urban Development (HUD) and are subject to change. Updated schedules will be provided when changes occur. Percentage Income Limit by Number of Persons in Household Rent Limit by Number of Bedrooms in Unit County (Metro) Category 1 2 3 4 5 6 7 8 9 10 0 1 2 3 1 4 1 5 Martin County 20% 9,020 10,320 11,600 12,880 13,920 14,960 15,980 17,020 18,032 19,062 225 241 290 335 374 412 (Port Saint Lucie MSA) 25% 11,275 12,900 14,500 16,100 17,400 18,700 19,975 21,275 22,540 23,828 281 302 362 418 467 515 28% 12,628 14,448 16,240 18,032 19,488 20,944 22,372 23,828 25,245 26,687 315 338 406 469 523 577 30% 13,530 15,480 17,400 19,320 20,880 22,440 23,970 25,530 27,048 28,594 338 362 435 502 561 618 33% 14,883 17,028 19,140 21,252 22,968 24,684 26,367 28,083 29,753 31,453 372 398 478 552 617 680 35% 15,785 18,060 20,300 22,540 24,360 26,180 27,965 29,785 31,556 33,359 394 423 507 586 654 721 40% 18,040 20,640 23,200 25,760 27,840 29,920 31,960 34,040 36,064 38,125 451 483 580 670 748 825 45% 20,295 23,220 26,100 28,980 31,320 33,660 35,955 38,295 40,572 42,890 507 543 652 753 1 841 928 50% 22,550 25,800 29,000 32,200 34,800 37,400 39,950 42,550 45,080 47,656 563 604 725 837 935 1,031 60% 27,060 30,960 34,800 38,640 41,760 44,880 47,940 51,060 54,096 57,187 676 725 870 1,005 1,122 1,237 70% 31,570 36,120 40,600 45,080 48,720 52,360 55,930 59,570 63,112 66,718 789 846 1,015 1,172 1,309 1,443 Median: 59,500 80% 36,080 41,280 46,400 1 51,520 55,680 59,840 63,920 68,080 72,128 76,250 902 967 1,160 1,340 1,496 1,650 120% 54,120 61,920 69,600 77,280 83,520 89,760 95,880 102,120 108,192 114,374 1,353 1,450 1,740 2,010 2,244 2,475 140% 1 63,140 1 72,240 J 81,200 90,160 1 97,440 1 104,720 111,860 119,140 1 126,224 1 133,437 1,578 11,692 12,030 12,345 12,618 12,887 Miami -Dade County 20% 11,860 13,560 15,260 16,940 18,300 19,660 21,020 22,380 23,716 25,071 296 317 381 440 491 542 (Miami -Miami Beach- 25% 14,825 16,950 19,075 21,175 22,875 24,575 26,275 27,975 29,645 31,339 370 397 476 550 614 678 Kendall HMFA; 28% 16,604 18,984 21,364 23,716 25,620 27,524 29,428 31,332 33,202 35,100 415 444 534 616 688 759 Miami -Fort Lauderdale- 30% 17,790 20,340 22,890 25,410 27,450 29,490 31,530 33,570 35,574 37,607 444 476 572 660 737 813 33% 19,569 22,374 32,439 34,683 36,927 39,131 41,367 West Palm Beach MSA) 25,179 27,951 30,195 489 524 629 726 810 895 35% 20,755 23,730 26,705 29,645 32,025 34,405 36,785 39,165 41,503 43,875 518 556 667 770 860 949 40% 23,720 27,120 30,520 33,880 36,600 39,320 42,040 44,760 47,432 50,142 593 635 763 881 983 1,085 45% 26,685 30,510 34,335 _ 38,115 41,175 44,235 1 47,295 50,355 53,361 56,410 667 714 858 991 1,105 1,220 50% 29,650 33,900 42,350 45,750 49,150 52,550 55,950 59,290 62,678 741 794 953 1,101 1,228 1,356 38,150 60% 35,580 40,680 45,780 50,820 54,900 58,980 63,060 67,140 71,148 75,214 889 953 1,144 1,321 1,474 1,627 70% 41,510 47,460 53,410 59,290 64,050 68,810 73,570 78,330 83,006 87,749 1,037 1,112 1,335 1,541 1,720 1,898 Median: 54,900 80% 47,440 54,240 61,040 67,760 73,200 78,640 84,080 89,520 94,864 100,285 1,186 1,271 1,526 1,762 1,966 2,170 120% 71,160 81,360 91,560 101,640 109,800 117,960 126,120 134,280 142,296 150,427 1,779 1,906 2,289 2,643y 2,949 3,255 140% 83,020 94,920 1106,820 1 118,580 128,100 137,620 1 147,140 156,660 166,012 1751498 2,075 2,224 2,670 3,083 3,4403,797 Florida Housing Finance Corporation (FHFC) income and rent limits are based upon figures provided by the United States Department of Housing and Urban Development (HUD) and are subject to change. Updated schedules will be provided when changes occur. UTILITY ALLOWANCES Allowances for Tenant -Furnished Utilities And U.S. Department of Housing Other Services and Urban Development Office of Public and Indian Housing Locality: Date: Apartment With 5 or More Units; High Rise (1 or 2 exposed walls) Miami -Dade County, FL (Exc. Homestead) 1/1/2019 Utility or Service Monthly Dollar Allowances; Number of Bedrooms 0 BR 1 BR 2 BR 3 BR 4 BR 5 BR 6 BR 7 BR 8 BR Address of Unit Heating a Natural Gas $1 $1 $1 $1 $2 $2 $2 $3 $3 b Electric Resistance $1 si IV $1 $1 $2 $3 $3 $4 $4 c. Heat Pump $0 $0 $0 $1 $1 $1 $1 $1 d Propane/LPG $1 $2 $3 $3 $4 $5 $6 $6 $7 Cooking a. Natural Gas $5 $8 $10 $11 $13 $15 $16 $18 b Electric $5 ///$6 Lam' $10 $11 $13 $15 $16 $18 c Propane/LPG $11 $ 14 $18 $21 $25 $28 $31 $35 $39 Other Electric/Lighting $24 r $31 $38 $45 $52 $59 $66 $74 $83 Air Conditioning $7 1 $40 $55 $70 $78 $88 $98 Water Heating a Natural Gas $8 tis $23 $30 $38 $46 $52 $58 $64 b. Electric $6 $13 520 $27 $34 $41 $46 $51 $57 c Propane/LPG $17 $33 $50 $67 $83 $100 $112 $125 $140 Water a. Miami $455 S11 $24 $37 $51 $57 $64 $71 b. Hialeah $11 14 $19 $27 $35 $44 $49 $55 $62 G Opa Locke $13 $17 $24 $37 $50 $93 $104 $116 $130 d. Other (average) $9 $12 $18 $29 $41 $63 $71 $79 $88 Sewer a Miami $7 $8 $44 $67 $90 $101 $113 $126 b Hialeah $18 5 $37 $56 $75 $96 $108 $120 $134 c Opa Lock_a $33 $39 $50 $72 $95 $147 $165 $184 $206 Range/Microwave $7 $7 $7 $7 $7 $7 $8 $9 $10 Refrigerator $7 $7 $7 $7 $7 $7 $8 $9 $10 Gas Fixed Charge Add for any use of natural gas $14 $14 $14 _ $14 $14 $14 $16 $18 $20 Trash a1 Miami City $32 $32 $32 $32 $32 $32 $36 $40 $45 a2. Unincorporated Dade County $39 $39 $39 $39 $39 $39 $44 $49 $55 b Hialeah $30 $30 $30 $30 $30 $30 $34 $38 $42 c Opa Locke $0 So $0 so $0 $0 $0 $0 $0 Actual Family Allowances To be used by the family to compute allowance. Monthly Complete below for the actual unit rented Utility Or Service Cost Name of Family Heating Cooking _ Other Electric Air Conditioninng Address of Unit Water Heating Water & Sewer Trash Collection Range/Microwave Ref+igeralor Number of Bedrooms Gas fixed charge Total S woke i It using sepuc sewer system, suDstract charge IDuno In sneet ti_Water sewer Note 2 1 using gas for any purpose, add gas fixed charge DEVELOPER' S PRO -FORMA Residences at Dr. King Boulevard - Miami, FL Project Setup Project Name Date MM Elapsed Cumulative Residences at Dr. King Boulevard Gty Months Miami County, State Oct -19 Miami -Dade County, FL State First Unit Occupied FL Ownership Entity 14 Residences at Dr. King Boulevard, Ltd. Development Manager 4 Greg Griffith Develo ent Accountant Janelle Brennen Bond Deal No 10% Credit Rate 9.00% 100.0% Building Type High Rise 9 Project Type New Construction 80% Qualifying Program 40%@60% 100,980 of Affordable Housing Units 90.0% Utili[ Allowance Amount Sq. Ft. 1 Bedroom 77.00 1 566 Timing Date MM Elapsed Cumulative Predevelopment Start Date Jun -18 Months Months Closing Date Oct -19 VL I 0.0% First Unit Occupied Dec 20 14 14 Last Unit Occupied Apr -21 4 18 Permanent Loan Closing Date Aug -21 4 22 Credit Daiwa Schedule 2020 $0 2021 $2,232,841 2022 $2,435,826 IL-ease-up Information # of Occupancies upon initial C/O 40 #of Occupa nci per Month 20 Time %Units %SF %Income ELI 20.0% 20% 10% VL I 0.0% 0% 0% LI 70.0% 70% 78% WKFC 0.0% 0% 0% MKT 10.0% 10% 12% Total 100.0% 100.0% 100.0% Rent Schedule # of Units Unit Type VLI/LI/MKT Unit Sq. Ft. Rent Limit 2019 Actual Rent Net Rent Total Rent Annual Rent P.S.F. 1 Bedroom 24 ELI 566 30% $476.00 $399 114,912 $0.70 1 Bedroom 75 LI 566 60% $953.00 $876 788,400 $1.55 1 Bedroom 9 LI 566 80% $1,01200 935 100,980 1.65 1 Bedroom 12 MIR 566 140% $935.00 $935 134,640 $1.65 Total/Average 120 b('910 1.14x K911 1,138,932 $1.40 Operating Expenses - Miami Dade Total Per Unit P.S.F. rentable Administrative 54,000 450 $0.80 Management Fee I of EGI) 67,040 559 $0.99 Utilities 67,800 565 $1.00 Payroll, Taxes 8 Benefits 150,000 1,250 $2.21 R & M 93,240 777 $1.37 Insurance 64,560 538 $0.95 Real Estate Taxes 96,000 800 $1.41 Security 57,960 483 $0.85 Replacement Reserves 36 000 300 $0.53 Total 686,600 5,722 Senior Debt Service Coverege 1.51x Total Debt Service Covera a 1.14x Other Income Per Unit Per Annum Laundry Income 114 12,996 Cable Income 11 1,254 Parking Income - - Other Income 185 21,090 Total Otherincome 310 35,340 Residences at Dr King_CUR Debt Debt Assumptions Permanent First Mortgage Unspecifed $5,250,000 4.15% Yes 420 216 $23,720 $284,645 1.25x 1.50x 1.51x 1.25x 1.25x 1.60x 1.00% Construction Loan Unspecifed $24,050,000 5.22% No 360 30 $104,618 $1,255,410 1.15x 1.50x 0.75% Forever Bond City of Miami $2,000,000 1.50% No 360 360 $2,500 $30,000 1.10x 1.35x 1.37x 1.45x 1.00% SURTAX Miami -Dade County $2,053,447 1.50% No 360 360 $2,567 $30,802 1.10x 1.60x 1.25x 1.10x 1.60x 1.32x 0.00% County HOME (Reallocated) Miami -Dade County $938,963 1.50% No 360 360 $1,174 $14,084 1.10x 1.60x 1.20x 1.10x 1.60x 1.27x 0.00% Perm Rate Buildup Constr Rate Buildup 10 -Year Treasury bill yield 1.54% 10 -yr Treasury 30 -day LIBOR 2.17% LIBOR Spread 2.41% Spread 2.05% Undenvritin Cushion 0.20% Undenvritin Cushion 0.00% Rate 4.15% Interest Reserve 1.00% Rate 5.22% 8/30/2019 10:51 PM 2 of 6 Residences at Dr. King Boulevard - Miami, FL Sources & Uses Permanent Phase Sources Ref. Total % Per Unit Permanent First Mortgage Hard Construction Costs 5,250,000 14.34% 43,750 Construction Loan Public Art Fee - 0.00% - Forever Bond Recreational/Owner Items 2,000,000 5.46% 16,667 SURTAX Hard Cost Contingency 2,053,447 5.61% 17,112 County HOME (Reallocated) Construction Interest Expense 938,963 2.57% 7,825 County HOME (2019) Permanent Loan Origination Fee 851,094 2.33% 7,092 Limited Partner Equity Permanent Loan Closing Costs 24,480,055 66.88% 204,000 Deferred Develo er Fee Construction Loan Origination Fee 1,031,026 2.82% 8,592 Total Sources Construction Loan Closing Costs 36,604,585 100.00% 305,038 Permanent Phase Uses Total % Per Unit Hard Construction Costs 23,250,590 63.52% 193,755 Public Art Fee 353,770 0.97% 2,948 Recreational/Owner Items 310,500 0.85% 2,588 Hard Cost Contingency 5.0% 1,162,530 3.18% 9,688 Construction Interest Expense 1,655,495 4.52% 13,796 Permanent Loan Origination Fee 52,500 0.14% 438 Permanent Loan Closing Costs 53,000 0.14% 442 Construction Loan Origination Fee 180,375 0.49% 1,503 Construction Loan Closing Costs 82,500 0.23% 688 Other Loan Closing Costs 90,000 0.25% 750 Accounting Fees 40,000 0.11% 333 Appraisal 12,770 0.03% 106 Architect Fee - Design 845,000 2.31% 7,042 Architect Fee - Supervision 150,000 0.41% 1,250 Builder's Risk Insurance 70,000 0.19% 583 Building Permit 2.7% 632,816 1.73% 5,273 P&P Bond 171,589 0.47% 1,430 Credit Underwriting Fee 14,230 0.04% 119 Engineering Fee 15,500 0.04% 129 Environmental Report 6,225 0.02% 52 FHFC Administrative Fees 133,984 0.37% 1,117 FHFC Application Fees 3,000 0.01% 25 FHFC Compliance Mon. Fee 209,794 0.57% 1,748 Impact Fees 191,721 0.52% 1,598 Inspection Fees 453,600 1.24% 3,780 Insurance - Property/Liability 66,000 0.18% 550 Legal Fees - Partnership 250,000 0.68% 2,083 Legal Fees - Other 76,777 0.21% 640 Market Study 5,500 0.02% 46 Property Taxes 118,018 0.32% 983 Soil Test Report 12,700 0.03% 106 Survey (Including As -Built) 59,275 0.16% 494 Title Insurance & Recording 279,042 0.76% 2,325 Utility Connection Fee 129,771 0.35% 1,081 Soft Cost Contingency 5.0% 197,366 0.54% 1,645 Sub -Total 31,335,938 Miscellaneous Reserves 3 months 251,088 0.69% 2,092 Land, To Be Acquired 155,621 0.43% 1,297 Developer's Admin. & Overhead 4.0% 1,247,219 3.41% 10,393 Developer's Profit 11.5% 3,614,720 9.88%1 30,123 Total Project Cost 36,604,585 100.00% 305,038 8/30/2019 10:51 PM 3 of 6 Residences at Dr. King Boulevard - Miami, FL Eligible Basis/Tax Credit Calculation Residences at Dr. King Boulevard - Miami Eligible Basis/Tax Credit Calculation Tax Credit Calculation Proforma County Miami -Dade County, FL DDA or OCT 39,139,062 Enter Geographic Cap Eligible Eligible 2,436,070 Maximum Request per unit Eligible Costs Costs Ineligible Eligible Costs Column1 Total Costs % Applicable Cap New/Rehab Acquisition Costs Hard Construction Costs 23,250,590 96% 22,320,566 - 930,024 Public Art Fee 353,770 100% 353,770 - - Recreational/Owner Items 310,500 100% 310,500 - - Hard Cost Contingency 1,162,530 100% 1,162,530 9 Construction Interest Expense 1,655,495 62% 1,018,502 - 636,992 Permanent Loan Origination Fee 52,500 0% - - 52,500 Permanent Loan Closing Costs 53,000 0% - - 53,000 Construction Loan Origination Fee 180,375 100% 180,375 - - Construction Loan Closing Costs 82,500 100% 82,500 - - Other Loan Closing Costs 90,000 0% 90,000 Accounting Fees 40,000 100% 40,000 - - Appraisal 12,770 100% 12,770 - - Architect Fee - Design 845,000 100% 845,000 - - Architect Fee - Supervision 150,000 100% 150,000 - - Builders Risk Insurance 70,000 100% 70,000 - - Building Permit 632,816 100% 632,816 - - P&P Bond 171,589 100% 171,589 - - Credit Underwriting Fee 14,230 0% - - 14,230 Engineering Fee 15,500 100% 15,500 - - Environmental Report 6,225 100% 6,225 - - FHFC Administrative Fees 133,984 0% - - 133,984 FHFC Application Fees 3,000 0% - - 3,000 FHFC Compliance Mon. Fee 209,794 0% - - 209,794 Impact Fees 191,721 100% 191,721 - - Inspection Fees 453,600 100% 453,600 - - Insurance - Property/Liability 66,000 50% 33,000 - 33,000 Legal Fees - Partnership 250,000 0% - - 250,000 Legal Fees- Other 76,777 60% 46,066 - 30,711 Market Study 5,500 100% 5,500 - - Property Taxes 118,018 100% 118,018 - - Soil Test Report 12,700 100% 12,700 - - Survey (Including As-Buiit) 59,275 100% 59,275 - - Title Insurance & Recording 279,042 7% 19,932 - 259,110 Utility Connection Fee 129,771 100% 129,771 - - Soft Cost Contingency 197,366 75% 148,024 49,341 Sub -Total 31,335,938 91% 28,590,251 2,745,687 Miscellaneous Reserves 251,088 0% - - 251,088 Land, To Be Acquired 155,621 0% 155,621 Developers Admin. & Overhead 1,247,219 100% 1,247,219 - - Developers Profit 3,614,720 100% 3,614,720 Total Cost 36,604,585 91% 33,452,190 3,152,395 Residences at Dr. King Boulevard - Miami Eligible Basis/Tax Credit Calculation Tax Credit Calculation - County Miami -Dade County, FL DDA or OCT 39,139,062 Yes Geographic Cap edit % Rehab & New Construction (enter here) 2,436,070 Maximum Request per unit 3.20% 500,000 Per Unit Cap inual Credits @ Maximum 60,000,000 Applicable Cap 2,436,070 2,436,070 LI HTC 9% OR 4% Syndicated To LP (Enter % -->) 9% gible Basis (Acquisition) - ,plicable % 90.00% salified Basis (Rehab & New Construction) 39,139,062 ialitied Basis (Acquisition) - edit % Rehab & New Construction (enter here) 9.00% edit % Acquisition (enter here) 3.20% inual Credits 3,522,516 inual Credits @ Maximum 2,436,070 inual Credits Per Unit Override 20,301 2,436,070 Igregate Credits (10 Years) 24,360,700 Syndicated To LP (Enter % -->) 99.99% ice Per Credit 1.005 Excess Eligible Basis 10,317,622 Tax Credit Equity Pay -in Enter % % Pa -in E ui in $ Payment Date Elapsed Months Cumulative Months Draw # Closing Equity 0% 15.00% 3,670,904 10/01/19 Equity at 25.00% 25% 0.00% - 02/01/20 4 4 5 Equity at 50.00% 50% 0.00% - 05/01/20 3 7 8 Equity at 75.00% 75% 0.00% - 07/01/20 2 9 10 Equity at 99.99% 100% 35.00% 8,568,019 11/01/20 4 13 14 StabilizationE Equity &8609 50.00% 12,241,132 08/01/21 9 22 23 Total 100% 24,480,055 8/30/2019 10:51 PM 4 of 6 Residences at Dr. King Boulevard - Miami, FL U/W Operating Statement Income: Year 1 Per Unit Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Net Rental Income 1,138,932 9,491 1,161,711 1,184,945 1,208,644 1,232,817 1,257,473 1,282,622 1,308,275 1,334,440 1,361,129 1,388,352 1,416,119 1,444,441 1,473,330 1,502,797 Reserve For Vacancy 5.0% (56,947) 475 (58,086) (59,247) (60,432) (61,641) (62,874) (64,131) (65,414) (66,722) (68,056) (69,418) (70,806) (72,222) (73,666) (75,140) Laundry Income 12,996 108 13,386 13,787 14,201 14,627 15,066 15,518 15,983 16,463 16,957 17,466 17,990 18,529 19,085 19,658 Cable Income 1,254 10 1,292 1,330 1,370 1,411 1,454 1,497 1,542 1,589 1,636 1,685 1,736 1,788 1,842 1,897 Other Income 21,090 176 21,723 22,374 23,046 23,737 24,449 25,183 25,938 26,716 27,518 28,343 29,193 30,069 30,971 31,901 Total Income 1,117,325 9,311 1,140,025 1,163,190 1,186,829 1,210,951 1,235,568 1,260,689 1,286,325 1,312,486 1,339,183 1,366,428 1,394,232 1,422,605 1,451,561 1,481,112 Expenses: Year 1 Per Unit Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Administrative 54,000 450 55,620 57,289 59,007 60,777 62,601 64,479 66,413 68,406 70,458 72,571 74,749 76,991 79,301 81,680 Management Fee (% of EGI) 6.0% 67,040 559 68,402 69,791 71,210 72,657 74,134 75,641 77,179 78,749 80,351 81,986 83,654 85,356 87,094 88,867 Utilities 67,800 565 69,834 71,929 74,087 76,309 78,599 80,957 83,385 85,887 88,464 91,118 93,851 96,667 99,567 102,554 Payroll, Taxes & Benefits 150,000 1,250 154,500 159,135 163,909 168,826 173,891 179,108 184,481 190,016 195,716 201,587 207,635 213,864 220,280 226,888 R & M 93,240 777 96,037 98,918 101,886 104,942 108,091 111,333 114,673 118,114 121,657 125,307 129,066 132,938 136,926 141,034 Insurance 64,560 538 66,497 68,492 70,546 72,663 74,843 77,088 79,401 81,783 84,236 86,763 89,366 92,047 94,809 97,653 Real Estate Taxes" 96,000 800 98,880 101,846 104,902 108,049 111,290 114,629 118,068 121,610 125,258 129,016 132,886 136,873 140,979 145,209 Replacement Reserves 57,960 483 59,699 61,490 63,334 65,234 67,192 69,207 71,283 73,422 75,625 77,893 80,230 82,637 85,116 87,670 Security 36,000 300 37,080 38,192 39,338 40,518 41,734 42,986 44,275 45,604 46,972 48,381 49,832 51,327 52,867 54,453 Total Expenses 686,600 5,722 706,548 727,083 748,220 769,977 792,374 815,428 839,160 863,589 888,736 914,623 941,270 968,701 996,938 1,026,007 Net Operating Income 430,726 3,589 433,477 436,107 438,609 440,974 443,194 445,261 447,165 448,897 450,447 451,806 452,962 453,905 454,623 455,105 Debt Service: Year 1 Per Unit Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Permanent First Mortgage Service 284,645 2,372 284,645 284,645 284,645 284,645 284,645 284,645 284,645 284,645 284,645 284,645 284,645 284,645 284,645 284,645 Asset Management Fee 3% 5,000 42 5,150 5,305 5,464 5,628 5,796 5,970 6,149 6,334 6,524 6,720 6,921 7,129 7,343 7,563 Deferred Developer Fee 141,081 1,176 121,993 146,158 148,501 150,702 152,753 154,646 15,192 0 0 0 0 0 0 0 Forever Bond Service 30,000 250 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 SURTAX Service 30,802 257 30,802 30,802 30,802 30,802 30,802 30,802 30,802 30,802 30,802 30,802 30,802 30,802 30,802 30,802 County HOME (Reallocated) Service 14,084 117 14,084 14,084 14,084 14,084 14,084 14,084 14,084 14,084 14,084 14,084 14,084 14,084 14,084 14,084 Total Debt Service 518,378 4,320 499,440 523,760 526,261 528,627 530,847 532,913 393,639 378,631 378,821 379,017 379,218 379,426 379,640 379,860 Distributable Cashflow 0 0 0 0 0 0 0 0 80,377 97,117 98,477 99,640 100,594 101,330 101,834 102,096 Beginning DDF 0% 1,031,026 8,592 889,945 767,952 621,794 473,293 322,591 169,838 15,192 0 0 0 0 0 0 0 DDF Repayment 141,081 1,176 121,993 146,158 148,501 150,702 152,753 154,646 15,192 0 0 0 0 0 0 0 Ending DDF 889,945 7,416 767,952 621,794 473,293 322,591 169,838 15,192 0 0 0 0 0 0 0 0 Debt Service Coverage: Permanent First Mortgage Service 1.51x 1.52x 1.53x 1.54x 1.55x 1.56x 1.56x 1.57x 1.58x 1.58x 1.59x 1.59x 1.59x 1.60x 1.60x Forever Bond 1.37x 1.38x 1.39x 1.39x 1.40x 1.41x 1.42x 1.42x 1.43x 1.43x 1.44x 1.44x 1.44x 1.44x 1.45x SURTAX 1.25x 1.25x 1.26x 1.27x 1.28x 1.28x 1.29x 1.29x 1.30x 1.30x 1.31x 1.31x 1.31x 1.32x 1.32x County HOME (Reallocated) 1.20x 1.21x 1.21x 1.22x 1.23x 1.23x 1.24x 1.24x 1.25x 1.25x 1.26x 1.26x 1.26x 1.26x 1.27x County HOME (2019) 1.14x 1.15x 1.15x 1.16x 1.17x 1.17x 1.18x 1.18x 1.19x 1.19x 1.19x 1.19x 1.20x 1.20x 1.20x 8/30/2019 10:51 PM 5 of 6 R..id-... at D,. King Bou .—d PROJECTIONS TAX CREDIT EQUITY SYNDICATION LETTER Wells Fargo Community Lending and Investment 3011 South College Street Charlotte, NC 28288 Mail Code: DI 053-170 744383.9524 Wells Fargo Coxanivaiaty Lending and Investment August 13, 2019 Mr. Kenneth Naylor Atlantic Pacific Companies 1425 Kane Concourse, Suite 215 Bay Harbor, Florida 33154 CC: Howard Cohen Greg Griffith Re: The Residences at Dr. King Boulevard Miami, FL Dear Mr. Naylor: Thank you for giving Wells Fargo Community Lending and Investment the opportunity to become your partner in The Residences at Dr. King Boulevard and to continue to grow our relationship with you. This term sheet is based upon our prior term sheets and specific transaction underwriting detailed in this term sheet and in our corresponding financial projections. This term sheet does not limit the terms and provisions that will be set forth in the Partnership Agreement. Sincerely, Neal C. Deaton Senior Vice President Regional LIHTC Equity Manager Wells Fargo Community Lending & Investment 301 South College Street, 17th Floor Charlotte, NC 28288 1 MAC D1053-170 Office: 704-383-9524 1 Mobile: 704-458-1633 neat. deaton@weIIsfargo.com The Residences at Dr. King Boulevard August 13, 2011 Welly I=axga Cninmunity Lending and investment Investment Entity: Residences at Dr. King Boulevard, Ltd., a Florida Limited Partnership (the "Partnership"), with APC Residences at Dr. King Boulevard, LLC, a single purpose, bankruptcy remote entity, as Managing General Partner with a 0.0049% ownership interest in the Partnership, with MLK 62"d Street Apartments, LLC as Administrative General Partner with a 0.0051 %ownership interest in the Partnership, and Wells Fargo Community Lending and Investment ("Wells Fargo"), its affiliate or designee, as Limited Partner, with a 99.99% ownership interest in the Partnership. Project Namel Description: Project Based Subsidies: Tax Credits Available Net Credit Price to Partnership: Net Capital Contribution: The Residences at Dr. King Boulevard is a new construction apartment development consisting of two (2) buildings (BINS) that will provide 108 units of affordable housing. The site is located at the 1500 &. 1501 NW 62nd Street, Miami, FL. The unit mix consists of the following: # Units Sq. Ft. Unit Type % AMI Rent 24 566 1 13D/ 1 BA 30.00% 399 75 566 1 BD/ 1 SA 60.00% 876 9 566 1 BD/ 1 BA 80.00% 935 12 566 1 BD f 1 BA - Workforce Market 935 120 This term sheet assumes no project -based rental subsidies. $24,358,264 ($24,360,700 x 99.99%) $1,005 $24,480,055 Page 2 of 15 The Residences at Dr. King Boulevard August 13, 2019 Wells Fargo Community Lending and Investment Net Investor Par In Capital Contrib_ g ion # 1; $3,706,467 (15.14%) at Partnership Closing, anticipated November 01, 2019, advanced at closing based upon the approved closing draw schedule, and any remaining funding to be advanced based on percentage of completion under a construction loan format (approved draws), allocated as follows: * $ 1,956,467 to pay Construction and other development costs, $ 1,750,000 to pay Developer Fees. (This Developer Fee payment will not be released until the Miami Forever Bond Documents are approved by Wells Fargo and executed.) Capital Contribution #'2: $8,679,834 (35.46%) provided that the construction loan is not in default, these amounts will be paid upon the latter of (i) Temporary Certificate of Occupancy for 100% of the units in the property, (ii) lien free construction completion of the property, performed substantially in accordance with the plans and specifications, in a workmanlike manner, and as approved by Wells Fargo, (iii) receipt and approval of an As Built Survey, (iv) receipt and approval of As -Built Plans, or (v) the subject is placed in service by 12/31/20 or FHFC refreshes the credits, allocated as follows: • $ 7,400,000 to pay down the construction loan, • $ 1,279,834 to pay Developer Fees. Capital Contribution #3: $11,743,755 (47.97%) upon the occurrence of, (i) Final Certificate of Occupancy for 100% of the units in the property permanent loan closing/conversion, (ii) the attainment of a Debt Service Coverage Ratio ("DSCR") of not less than either (a) 3.15 to 1.00 at the time of conversion, or (b) projected to be less than 1.15 to 1.00 in any year of the initial Compliance Period, based on the underwriting parameters, and rates set forth in item #10 on page 11 ofthis terns sheet, (iii) 100% qualified occupancy, (iv) Draft Cost Certification for the Property from the Accountants setting forth the eligible basis and the total available Tax Credits, (v) receipt of the tenant file audit from the Accountants, allocated as follows: • $ 10,490,650 to pay-off the construction loan, • $ 1,000,000 to pay Developer Fees, • $ 253,105 to fund the budgeted Operating Reserve. Capital Contribution #4: $350,000 (1.431.0) upon receipt of IRS Form(s) 8609, Final Cost Certification, and (a) receipt of Investor K-1 and. Partnership Tax Return which includes first year LIHTC delivery for each IRS Form(s) 8609 or (b) Accountant certification of first year LIHTC delivery for each IRS Form(s) 8609 received allocated as follows: • $ 350,000 to pay Developer Fees. Please note that all dates arefluid uid and will be adjusted proportionally (moved forward or backward) based on the actual closing date provided there is sufficient time (in Wells Fargo `s sole discretion) to complete construction prior to the required Placed -iia -,service date. Page 3 of 15 'The Residences at Dr. king Boulevard August 13, 2019 ® Wells Fargo Community Lending and hivestment Developer Fees: Developer Fees are estimated at $4,915,909 of which $536,075 are projected to be deferred. Deferred Developer Fees shall accrue interest at AFR and be paid as a priority distribution from available cash flow as described in the "Cash Flow Split' section of this term sheet. The Managing General Partner agrees to make a special capital contribution to the Partnership, equal to any unpaid balance of the deferred portion of the Developer Fees (to the extent required to preserve the L1HTC allocation), if such portion has not been fully paid within 15 years from the date of Certificate of Occupancy issuance. Please note that up to $750, 000 of Developer Fee may he used for cost overruns (increasing Deferred Developer Fee), however no Developer Fee will be advanced earlier than described in this Terre Sheet. Guarantors: The obligations of the General Partners as set forth in the Partnership Agreement, including but not limited to those described below, shall be guaranteed by the entities) receiving the Developer Fee, Howard D. Cohen and Howard D. Cohen Revocable Trust U/A/D 4/6/1993. Obligations of the Managing General Partner and Guarantors) Development Completion Guaranty_ The Managing General Partner will guarantee completion of construction of the Project substantially in accordance with pians and specifications approved. by Wells Fargo, which includes, without limitation, a guaranty (i) to pay any amounts needed in excess of the construction loan and other available proceeds (less up to $750,000 in Deferred Developer Fees) to complete the improvements, (ii) of all amounts necessary to achieve permanent loan closing, and (iii) to provide unlimited operating deficit loans to the Partnership until all conditions of Capital Contribution #3 have been satisfied. The Managing General Partner will provide copies of each draw request, change orders and all supporting documentation to the Investor Limited Partner simultaneously with submissions to the construction lender. The Investor Limited Partner shall have the right to approve change orders in excess of $100,000 individually and $250,000 in the aggregate. The construction contract shall be a Fixed price contract, either a guaranteed maximum contract or a stipulated sum. The General Construction Contract shall be bonded, a Letter of Credit provided i/a/o 10°/a of the General Construction Contract amount, or Major Subcontracts signed and bonded on or before closing. The development budget will include adequate reserves for construction contingencies, expected to be at least five percent (5%) of the General Construction Contract held outside of the General Construction Contract (including all hard costs, general requirements, overhead and profit). Oneraling Deficit Guaranty_: The Managing General Partner agrees to provide unlimited operating deficit loans to the Partnership until the conditions of Capital Contribution 43 have been satisfied. Page 4 of 15 The Residences at Dr. Icing Boulevard August 13, 201.9 Wells Fargo Community Lending and Investment After the conditions of Capital Contribution #3 have been satisfied, (i) the Operating Reserve may be used to fund Operating Deficits (operating expenses, debt service obligations, or other expenses of the Partnership approved by the Partners), and (ii) the operating deficit guarantee will be reduced to $560,000 for at least 36 -months. At the end of the 36 -month period, the Operating Deficit Guaranty will be released, provided (i) the Operating Reserve is fully funded in the amount of $253,105, and (ii) the project averages 1.15 DSCR or better for the last 12 months of the 36 -month period, or any subsequent 12 -month period, measured on an annual basis. The release criteria will be attested to, and documented by the Partnership Accountants, based on audited numbers, and delivered to Wells Fargo or its successors. Tax Credit Adjusters: The Managing General Partner and the Guarantors will indemnify the investor Limited Partner for any reduction, recapture, or late delivery of the Low Income Housing Tax Credits ("LIHTC") in amounts described below. The Partnership Agreement contains Credit Adjuster provisions designed to preserve the Investor Limited Partner's yield in the event any expected Credits are not delivered as projected, as well as an upward credit adjusters for increased Credits for additional basis capped at $1,000,040 and an upward credit adjuster for delivering credits faster (leasing faster for example) capped at $350,000. The projected aggregate LIHTC at equity closing will be determined by the projected qualified basis of the Partnership multiplied by the published applicable percentage for the 70%present value credit for the rehab costs and the 30%present value credit for the acquisition costs or the credit lock rate with the Agency/Authority. This terve sheet assumes a fixed 9.00% rate for the 70% present value tax credit rate. If an event occurs which affects the delivery of Federal aggregate LIHTC (e.g., shortage in basis in accountants final cost certification, or shortage in amount of LIHTC's allocated by the Agency/Authority in IRS Forms 8609'), then the Partnership Agreement will provide for a return of capital to the Investor Limited Partner in an amount equal to the net credit price to the Partnership ($1.045) times the difference between (i) the projected aggregate LIHTC's, less (ii) the adjusted aggregate LIHTC's. The Partnership Agreement will provide a similar calculation for any increases to aggregate LIHTC's. If an event occurs, which affects the timing and delivery of Federal LIHTC (e.g., lease up slower than projected) allocable to the Investor Limited Partner in years 2021, then the Partnership Agreement will provide for a return of such capital, to the Investor Limited Partner in an amount equal to the net credit price ($1.005) times the difference between (i) the shortfall in projected current year LIHTC's less (ii) the net present value of the shortfall in projected current year LIHTC's for a t0 year period at a discount rate of 5.00%. The Partnership Agreement will provide a similar calculation for any increases in LIHTC's delivered in years 2020 or 2021 over amounts projected. There may be adjustment events occurring during the compliance period not considered or described in the aforementioned paragraphs. In the event that the Page 5 of 15 The Residences at Ur. King Boulevard August 13, 2019 Wells Fango Community Lenciuig and investment actual amount of tax credits claimed by the Investor Limited Partner, is less than the amount specified, then the Managing General Partner shall reimburse the Investor Limited Partner, on a dollar for dollar basis, for each lost dollar of Credit's plus any resulting penalties, taxes due, or tax consequences. Similarly, if there is a recapture of Credit's (except from the sale or transfer of the Investor Limited Partner's interest in the Partnership), the Managing General Partner shall indemnify the Investor Limited Partner against any tax credit recapture liability incurred (including interest, penalties, tax effects, or and any reasonable related legal or accounting costs). In addition, to the extent any Tax Credit Adjuster owed to the investor Limited Partner is solely attributable to a Change in Law then such portion of the credit adjuster distribution or credit adjuster payment shall only be payable to the Investor Limited Partner from available Cash Flow and Net Proceeds upon sale or refinancing, in each case as a first priority distribution. Repurchase Obligation. The Managing General Partner will be obligated to repurchase the Investor Limited Partner's interest in the Partnership should the project fail to meet certain legal and operational performance criteria as outlined in the Partnership Agreement. The amount of the purchase price shall equal, as of the actual date of purchase, the sum of: a) the aggregate amount of Capital Contributions and advances made by the Investor Limited Partner to the Partnership (less Credits previously allocated to the Investor Limited Partner prior to such purchase, but only to the extent that such Credits are not subject to recapture under the Code), plus b) an amount of interest equal to 8% per annum thereon from the date of any Capital Contribution until the date of the Investor Limited Partner's receipt of the Buyout Price, plus c) the legal, accounting and internal costs incurred by the Investor Limited Partner in connection with its investment in the Partnership capped. at $100,000, plus d) the amount of any interest and penalties imposed on the Investor Limited Partner as a result of such purchase or its prior claiming of Credits with respect to the Partnership, plus e) an amount that, on an After -Tax Basis, equals all transfer taxes or similar assessments incurred by the Investor Limited Partner in connection with its investment in the Partnership or the sale of its Interest pursuant to this Agreement, such amounts representing the parties' good faitb estimate of damages incurred by the Investor Limited Partner. Incentive Leasing Fee: From the Closing Date to the earlier of (1) Permanent Loan Conversion and (2) 36 months after the Closing Date, if no money is owed to the Limited Partner per the LPA, Cash Flow shall be payable to the Administrative General Partner and Managing General Partner(25%/751/9) as an Incentive Leasing Fee. LP Asset _-Ugmi. Fees: An annual cumulative fee of $5,000, increasing at 3% per annum, payable to Wells Fargo, commencing on the date Capital Contribution #3 is funded. Page 6 of 15 The Residences at Dr. Ding Boulevard August 13, 2013 Wells Fargo Cornmw4ity Lending and Luvestment Cush Flow Split: Cash Flow to the Partnership shall be distributed as follows: A. To Limited Partner in payment of any amounts due as a result of any unpaid Credit Adjuster Amount. B. To Limited Partner in payment of LP Asset Management Fees or any unpaid C. Asset Management Fees. C_ To the payment of any Loans provided by the Investor Limited Partner, D. To repay the General Partner Development Loans, with any such payments to be applied first to accrued but unpaid interest and then to principal and then to repay any amounts then owed with respect to the Deferred. Developer Fee, with any such payments to be applied first to accrued but unpaid interest and then to principal, E. To replenish operating reserves if below the budgeted $253,105. F. To the payment of any Deferred Management Fees and then to General G. Partner Operating Deficit Loans. G. To repay Soft Debt, as required. H. 10% to the Limited Partner - 1. 75% to the Managing General Partner and 25% to the Administrative General Partner, Residual Split: Any gain upon sale or refinancing shall be distributed as follows: A. To Limited Partner in payment of any amounts due because the Actual Credit is less than the Projected Credit, or there has been a recapture of Credit. B. To Limited Partner for payment of any unpaid Asset Management Fees, C. To the payment of any Loans provided by the Investor Limited Partner, D. To the Limited Partner for payment of any exit taxes. E. To repay the General Partner Development Loans, with any such payments to be applied first to accrued but unpaid interest and then to principal and then to repay any amounts then owed with respect to the Deferred Developer Fee, with any such payments to be applied first to accrued but unpaid interest and then to principal; F. Unless the initial compliance period has expired, to the Operating Reserve until the balance in the Operating Reserve equals $253,105. G. To the payment of any Deferred Management Fees and then to Managing General Partner Operating Deficit Loans. H. To repay Soft Debt, as required. 1. Of the remaining balance, ten percent (10%) shall be distributed to the Limited Partner, J. Disposition Distribution to the Managing General Partner equal to 6% of Gross Sales Proceeds less 3rd party brokerage or marketing fees.. K. 75% to the Managing General Partner and 25% to the Administrative General Partner. The Partners agree that liquidation distributions will be made in accordance with the positive balances in their respective capital accounts, after taking into account all adjustments to capital accounts for the year. The Partners further agree that (i) capital profits will be allocated in a manner to achieve, to the maximum extent possible, the Page: 7 of 15 The Residences at Dr. King Boulevard August 13, 2019 Wells Fargo Community Lendisxg and Investment Partners' intended distributions of sale or refinancing proceeds as described above and (ii) the allocation provisions in the partnership agreement will be amended, with the Limited Partner's consent, which shall not be unreasonably withheld if the General Partners has provided a tax opinion stating that the amended allocations will comply with the Treasury Regulations, to the extent necessary and permissible to achieve the Partners' intended distributions of sale or refinancing proceeds as described above. Righr of First RefusaI/ Purchase Option: At any time beginning on the first day of the first year following the last year of the Credit Period, and continuing until 24 months after the end of the initial compliance period, (the "Put Option Period"), the Investor Limited Partner shall have the right to require that, upon provision of 30 days' written notice, the Administrative General Partner (or its designee) purchase the entire interest of the Investor Limited Partner for a purchase price equal to $100 (the "Put Option'}. If the Limited Partner does not exercise the put Option during the "Put Option Period", then, at the end of the initial compliance period, and ending two years atter the expiration of the initial compliance period, the Administrative General Partner, if it is a qualified purchaser, shall have the right, with Investor Limited Partner consent, to purchase the apartment complex and all related assets and reserves consistent with the terms of Internal Revenue Service Code Section 42(i)(7), and for a price equal to the sum of (i) all outstanding Partnership debt, including Limited Partner loans, (ii) any taxes owed by the Investor Limited Partner from the sale, and (iii) any unpaid portion of any Credit Adjuster payments plus interest due and Owing to the Investor Limited Partner. Additionally, at the end of'the initial compliance period, and ending two years after the expiration of the initial compliance period, the Managing General Partner shall have an option to purchase either the (i) Partnership's Assets, or (ii) the Investor Limited Partner's interest in the Partnership (the "FMV Options") for an amount equal to the sum of ail amounts owed to the Investor Limited Partner under the Partnership Agreement and associated documents, plus (A) in the case of a sale of the Partnerships Assets, the greater of (i) the fair market value of the apartment complex (fair market value to be determined by mutual agreement of the parties and by taking into account any affordability restrictions applicable to the apartment complex) minus ordinary and reasonable costs of sale actually incurred or (ii) one dollar $ 1.00 plus (a) the amount of outstanding Partnership debt plus (b) the amount which, if the Partnership were liquidated, would be sufficient to distribute to the Investor Limited Partner an after-tax amount equal to the transfer and other taxes incurred by the Investor Limited Partner upon disposition, plus (c) any unpaid portion of any Credit Adjuster payments plus interest due and owing to the Investor Limited Partner and (B) in the case of a sale of the Investor Limited Partner's Interest, the fair market value of such interest as determined by a qualified appraiser plus any amount owed to in the Investor Limited Partner. Nore: The fair market value of the Apartment Complex or 1 LP interest, as applicable shall be determined by mutual agreement of the parties or, in the absence of such agreement. the General Partner and Wells Fargo shall select a mutually acceptable appraiser who shall determine the fair market value of the Apartment Complex. In the event the parties are unable to agree upon an appraiser, each party shall select an appraiser. if the difference between the two appraisals is within ten percent (I OOAf of the lower Page 8 of 15 The Residences at Dr. King Boulevard August 13, 2019 Wells Fargo Community Lending and Investment of the two appraisals, the fair market value shall be the average ofthe two appraisals. If the difference between the two appraisals is greater than ten percent (14%) of the lower of the two appraisals, then the two appraisers shall jointly select a third appraiser. if the two appraisers are unable to jointly select a third appraiser, either the General Partner or Wells Fargo may, upon written notice to the other, request that the appointment be made by the American Arbitration Association or its designee. The appraisals shall take into account any title restrictions and the requirement that the Apartment Complex remain dedicated for the use of low-income households pursuant to any restrictions under any loan agreements or regulatory agreements. ifthe third appraisal is less than either of the first two, then fair market value shall be the average of the two lowest appraisals. If the third appraisal is greater than the first two, then fair market value shall be the average of the two highest appraisals. If the third appraisal falls between the previous two appraisals, the fair market value shall be the value established by the third appraisal. The General Partner and the Investor limited Partner shall share the cost equally ofany appraiserjointly selected or shall pay the costs of the appraiser they each select and shall share the cost equally of any third appraiser. Any appraiser selected pursuant to this section shal I be an MAI appraiser with at least five years of experience in valuing income -restricted multifamily rental property. Replacement Reser ,es: The Partnership will establish a minimum reserve of $300 per unit per annum, increasing 3%annually, and beginning at the earlier of, permanent loan conversion, or 36 months after equity closing to be held and administered by Wells Fargo, Operating Reserves: The Partnership will fund an Operating Reserve of $253,105 to be held and administered by Wells Fargo. Any withdrawal from the Wells Fargo Operating Reserve shall require the signatures of both the General Partner and the Limited Partner (not to unreasonably be withheld) and shall be made to pay only operating expenses, debt service obligations, or other expenses of the Partnership as approved by the Limited Partner, in the event that there are operating deficits- The funding will occur at permanent loan conversion (Capital Contribution #3), as described in the "Net Investor Pay In" section of this term sheet. The Wells Fargo Operating Reserve shall be used to pay Operating Deficits prior to the General Partner's obligation to fund Operating Deficits through Operating Deficit Loans Reporting Requirements. Among other reporting requirements to the Limited Partner (i) the Managing General Partner will have at least 75 days, after the end of the Partnership taxable year, to provide all Schedules K-1 for the Partnership, and (ii) during the lease -up period, the Managing General Partner will have at least 30 days after the end of each month, to provide (a) Partnership income and expenses for the month, and (b) copies of the rent rolls - Other Notes and Conditions: Wells Fargo reserves the right to adjust pricing and/or Capital Contributions herein based on Wells Fargo's due diligence, which includes verification of the following information: 1) The Managing General Partner trust have firth commitment(s) for construction and f=d-rate permanent financing with terms, conditions and lender(s) acceptable to Wells Fargo. The amount(s) assumed for this term sheet are as follows: Fuge 9 of 15 The Residences at Dr. King Boulevard August 13, 2019 Wells Fargo Community Lending and Investment • $20,750,000 Construction Loan from Wells Fargo, The loan will have a variable rate of interest, an initial term of at least 30 months, one 6 -month extension option, and be repaid from equity and permanent proceeds. [$5,250,0001 Permanent Loan from Citi. This term sheet assumes that the loan will bear a fixed interest rate of approximately [4.35%], with a [35] -year amortization period, and a [16] -year maturity. • [52,053,4471 Surtax Construction/Permanent Loan. This term sheet assumes that the loan will bear a fixed simple interest rate of approximately [1.50%], with a [30] -year amortization period, and a [30] -year maturity, and require payment from available cash flow only. [5938,9631 County HOME (Reallocation) ConstructionlPermanent Loan. This term sheet assumes that the loan will bear a fixed simple interest rate of approximately [1.50°/x], with a [301 -year amortization period, and a [301 -year maturity, and require payment from available cash flow only_ • [$851,4941 County HOME 2019 Construction/Permanent Loan. This term sheet assumes that the loan will bear a fixed simple interest rate of approximately 11,50°/a], with a [30] -year amortization period, and a[30] -year maturity, and require payment from available cash flow only. • [$2,000,0001 Miami Forever Construction/Permanent Loan. This term sheet assumes that the loan will bear a fixed simple interest rate of approximately [1.50%], with a [30] -year amortization period, and a [30] -year maturity, and require payment from available cash flow only. 2) Wells Fargo will request Development Team Profiles demonstrating the experience and expertise of the General Partner(s), Guarantor(s), Contractor and Management Agent, and information sufficient to perform a management Partnership review (marketing plan, etc.). We will also request the personal and/or corporate financial statements, tax returns, real estate schedules, cash flow schedules, and background checks on the General Partner(s), general contractor, and guarantor(s). We will require accurate construction and development budgets. An equity closing will also be contingent upon receipt, review and approval of environmental, geotechnical, structural, and geological reports, site inspection, appraisal, market study, Final Plans &. Specifications, fixed price construction contract, contractor bonding, cash flow projections if applicable, and all leases. Wells Fargo shall also request such other documents, instruments and certificates including, without limitation, opinions and other assurances, as Wells Fargo or their respective counsel may reasonably require. 3) The Investor Limited Partner will engage an inspecting engineer to review the project plans and specifications prior to Partnership close. Wells Fargo debt and equity will rely on the same inspecting engineer to conduct their review. The cost of this service will be paid by the Partnership. The costs of inspections on monthly draws will also be paid by the Partnership, and will be capped at a TBD contracted amount. Wells Fargo will pay for the plan and cost review_ 4) The General Construction Contract shall be bonded, a Letter of Credit provided ila/o 10°/a of the General Construction Contract amount, or Major Subcontracts signed and bonded on or before closing. Page 10 of 15 'The Residences at Dr. Icing Boulevard August 13, 2019 WeI13 Fargo Community Lending and Investment 5) The Development Budget will include hard cost construction contingencies of at least 5% of the General Construction Contract, The aforementioned hard cost construction contingency will be budgeted separate and apart from any amounts included in the General Construction Contract. 6) Wells Fargo approves APCM as Management Company. 7) The Accountants for the Partnership shall be either CohnReznick, Novogradac, Tidwell or another accounting flan approved by Wells Fargo, The Accountants shall prepare tax and financial reports as set forth in the Partnership Agreement, including the final cost certification. 8) The Capital Contributions are based on a projected Credit allocation to the Wells Fargo Partner as follows: Year Federal Low Income Housigg Tax Credits 2020 0 2021 2,232,841 2022 2,435,826 2023 21435,826 2024 2,435,826 2025 2,435,826 2026 2,435,826 2027 2,435,826 2028 2,435,826 2029 2,435,826 2030 2,435,826 2031 202,985 Totals 524,358,260 *.Assumes 420(1) election in 2020. The credit allocutions were derived based upon the fallowing lease up schedule. Month Year LIHTC Units Rented Market Units Rented TOTAL UNITS RENTED December 2020 24 12 36 January 2021 24 0 24 February 2021 24 0 24 March 2021 24 0 24 Aril 2021 12 0 12 Total Units 108 1 12 120 9) The Partnership Agreement will contain provisions requiring Investor approval to convert to permanent financing based on the following conditions: Page 11 of 15 The Residences at Dr. ]King Boulevard August 13, 2019 Wells Fargo Cornmunity Leiiding and Investment a) Subject to final underwriting: i. The size of the permanent debt, which requires must -pay periodic payments, may not be in excess of [$5,250,000]. ii. The annually required must -pay debt service on the property may not be in excess of [$292,716]. iii. The annualized 'Debt Service Coverage Ratio must not be either (a) less than 1.15 to 1.00 at the time of conversion, or (b) projected to be less than 1.15 to 1.00 in any year of the initial Compliance Period, based on the underwriting parameters, and rates of escalation, as set forth below. b) Subject to final underwriting, the loan terms for the permanent financing described above, are expected to have the following terms: i. (Citi Permanent Loanl — bear an interest rate of [4.36%] and loan amortization of [420] months. c) Subject to final underwriting, rents will assume to escalate at 2% per year, d) Subject to final underwriting, at the time of conversion, the underwritten rents will be based on actual rents received from tenants in occupancy under signed leases, after giving effect to any rent concessions by spreading the amount of such concessions evenly over the term of the lease, e) Rents for units having rental subsidies of any kind will be assumed to be the lesser of permissible rents under the subject subsidy and permissible rents under Section 42 of the Cade, however, Rents from rent subsidies received from a HAP contract with a term of at least 15 years will be assumed to be the Rents received from the HAP Contract, f) Subject to final underwriting, Other Income will be the lesser of (i) $30,757 ($32,376 less 5.0% vacancy)*, or (ii) actual other income, g) Subject to final underwriting, vacancies will be assumed to be the greater of (i) 5.0% or (ii) actual vacancy, h) Subject to final underwriting, annual operating expenses will be underwritten at the greater of (i) actual annual operating expenses (estimated at conversion), or (ii) $6,000 per unit per annum ("PUPA"), inclusive of replacement reserves of $300 PUPA, i) Subject to final underwriting, expenses will assume to escalate at the rate of 3% per year. 10) If the project has soft debt financing, Wells Fargo will require a residual analysis that shows that any soft debt financing will be repaid at the end ofthe respective soft debt term. 11) Transactional structure, including cash flow allocations, residual splits, special allocation of losses, economic substance and tax allocations are subject to approval by legal counsel. 12) The following dates were assumed for this term sheet: Partnership Closing .................................................. ....................11 /01/2019 Certificate of Occupancy.....................„............................................11/01/2020 Start of lease up.......... . ................................................................... 11/01/2020 Penn Loan Conversion/Stabilization .... ............................................0810112021 Page 12 of 15 The Residences at Dr. King Boulevard August 13, 2019 Wells Faxgo Community Lending and Investment 13) Prior to closing the equity transaction, Wells Fargo will receive, review, and accept, a letter from the Partnership Accountants, or other acceptable third party, stating which site work costs are includable in eligible basis. 14) To help fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person or corporation who opens an account and/or enters into a business relationship. 15) The General Partner will cause the Partnership to elect under Code Section 1630)(7)(B) to be an "electing real property trade or business," with the result that the Partnership will not be subject to the business interest deduction limit under Code Section 1630)(1), the project will be subject to the alternative depreciation system (depreciation of each building over 30 years rather than 27.5 years), and the Administrative General Partner will NOT be required to make [an election to be treated as a corporation or] a Code Sec. 168(h)(6)(F) elections to avoid treatment as a tax-exempt entity. No Bonus Depreciation will be assumed for Sitework or Personal Property. 16) In the event of an impasse between the GP Members the decision of AP shall control, subject to any right of the Investor Limited Partner to Consent. 17) The: AP Guarantors shall maintain minimum Liquidity of $2,500,000 and a minimum Tangible Net Worth of $15,000,004 throughout the compliance period. 18) The General Partner plans to elect the income averaging method for the satisfaction of the minimum set-aside requirements of Section 42, as enacted by the Consolidated Appropriations Act of 2018. The planned unit elections are outlined in the Rent Table of this term sheet and must be approved by FL Housing and Lenders before closing. The Limited Partner will require modifications to the Project Documents to address risks associated with compliance. Furthermore, it is required that AP remain as Compliance Manager throughout the 15 -year compliance period unless withdrawal or replacement is approved by the Limited Partner. Due Diligence Process: When Wells Fargo has received an executed copy of their proposal, a Due Diligence Period will begin. The Due Diligence Period will be the greater of (i) a period of 30 business days, or (ii) a period which allows Wells Fargo at least 30 days after receipt of the last major/critical due diligence item to perform their review (as tracked by Wells Fargo's Due Diligence Checklist), during which time the Limited Partner will conduct a Due Diligence review and negotiate with the General Partner, in good faith, the open terms, if any, of their proposal. The Due Diligence review may include such matters as the verification of factual representations made by the General Partner; a review of the Project documents; site visit; and an evaluation of the General Partner's financial capacity to perform under The terms and conditions of this proposal and the Partnership Agreement; the experience and expertise of the General Partner, Guarantor(s), Contractor and Page 13 of 15 The Residences at Dr. King. Boulevard August 13, 2019 Wells Fargo Coimmuizity Lending and Investment Management Agent; the project area market; the construction schedule; the residual potential of the property, and other relevant factors. The review will also include a plan cost review. If the permanent lender does not require this, then cost of such review will be the responsibility of the Partnership. In addition, the costs of inspections on monthly draws will be the cost of the Partnership if not available from the permanent lender. Prior to the termination of the Due Diligence Period, Wells Fargo will approve ("Approval"), approve with conditions, or reject the terms and structure of the proposed investment. Upon Approval, both parties will reaffirm their intent to enter into the Partnership Agreement upon the terms specified in this proposal. Legal, Closing, and Other E:rpense: If Wells Fargo reaffirms their proposal prior to the termination of the Due Diligence Period, but, the General Partner has offered the interest to another purchaser, the General Partner will be responsible for reimbursing Wells Fargo for all third party costs incurred in conducting the Due Diligence Review, including, but not limited to, legal fees, a market study, an appraisal, a background investigation and site visits. Not a Binding Contract: The purpose of this Term Sheet is to generally describe an investment Wells Fargo is considering. This Term Sheet is not a commitment to invest nor a commitment to be bound by the terms proposed herein, and no commitment to invest wi[1 exist prior to the negotiation and execution of a mutually satisfactory Operating Agreement or Partnership Agreement. Except with respect to confidentiality provisions and reimbursement obligations contained herein, it is expressly understood and the parties expressly agree that this Term Sheet does not create a legally binding agreement as to any of the parties. In addition, the terms contained herein are subject to change upon the completion of the Bank's due diligence, and as may be required pursuant to the Bank's applicable investment criteria, credit policies, or underwriting standards as may be in effect from time to time, along with other factors relevant to making an investment decision. Pricing and other financial terms are based on the tax and other laws in effect as of the date hereof. Thus, any proposed or actual modifications to federal or state laws, including, but not limited to, changes to federal and state tax laws, rules and regulations, may result in changes to the prices and terms reflected in this term sheet. Except with regard to the confidentiality obligations, this Term Sheet does not survive Closing of the transaction. This Term Sheet shall not limit or modify in any way the terms and conditions ultimately contained in a Partnership Agreement or related agreements. Confidentialiti% The recipient of this Term Sheet agrees to keep all terms of this Term Sheet confidential, and shall not disclose the terms of this Term Sheet to any third party other than their attorneys, accountants, lenders, State Agencies or tax advisors, who must in turn treat that disclosure as confidential. Notwithstanding the foregoing, nothing contained herein shall be deemed to limit, in any way, the disclosure of the tax treatment or tax structure of the transaction to third parties. Page 14 of 15 `The Residences at Dr.. King Boulevard August 13, 2019 Wells Fargo Community Lending and Investment Expiration; This Term Sheet must be executed and returned no later than August 31, 2019 or the proposal will expire. Agreed and Accepted this By: Date i�-13-1q The purpose of this Term Sheet is to generally describe an investment the investment Limited Partner is considering. These terms artsuttj"I to change upon the completion of the Investor Limited Partner's Due Diligence, and as may he required pursuant to the investor Limited Partner's app ties ble inVestment criteria, credit policies, or underwriting standards asmay he in effect from time tot ime, along with other facto M relcvanIto making an investment decision. These terms may not be changed or otherwise modified orally. 'this Term Sheet does not survive Closing of the transaction. This correspondence is not a commitment to invest. and no commitment to invest willexisl prior Ia the negotiation and cvee ution afa mutually satisfactory Partnership Agreement. Page IS of 15 ACTUAL CASH VALUE Actual Cash Value Calculation* Property Name: Residences at Dr. King Blvd. North Building Street Address: NW/C Dr. King Blvd. & NW 15th Ave. City, County, State, Zip' I Miami Miami -Dade I Floirda 33147 BASE COST BUILDING Main Structure $113.75 PSF Sprinkler $2.25 Other $0.00 Adjustments and/or Multipliers 0.9883 TOTAL BASE COST PER SQ. FT $114.64 Building Area Square Footage 33,780 SF REPLACEMENT COST NEW APARTMENT UNITS $3,872,539 OTHER COSTS Elevators Included Soft Costs $935,000 Personal Property/Appliances/Office FF & E $120,000 Balconies, Corridors, Common Areas, etc. (Multi -family only) $219,375 TOTAL OTHER COSTS $1,274,375 TOTAL BUILDING REPLACEMENT COST NEW Total Replacement Cost New $3,872,539 Plus Other Costs $1,274,375 Total Building Replacement Cost New $5,146,914 LESS DEPRECIATION Total Accrued Depreciation (New) $0 ACTUAL CASH VALUE BUILDING $5,146,914 DIVIDED BY NUMBER OF FLOORS 7 ACV PER FLOOR $735,273 ROUNDED TO $740,000 1( Base Cost includes Contractor's overhead & profit- taken from Marshall & Swift) *We are not experts in cost estimating. This appraisal report was prepared for the intended use of financing purposes and the "actual cash value" should not be relied upon for insurance purposes. We recommend that a qualified cost estimator be used for an accurate "actual cash value" estimate Actual Cash Value Calculation* Property Name: Residences at Dr. King Blvd. South Building Street Address: SW/C Dr. King Blvd. & NW 15th Ave. City, County, State, Zip: Miami Miami -Dade IFloirda 33147 BASE COST BUILDING Main Structure Sprinkler Other Adjustments and/or Multipliers TOTAL BASE COST PER SQ. FT Building Area Square Footage REPLACEMENT COST NEW APARTMENT UNITS OTHER COSTS $113.75 PSF $2.25 $0.00 0.9883 $114.64 33,780 SF $3,872,539 Elevators Included Soft Costs $935,000 Personal Property/Appliances/Office FF & E $120,000 Balconies, Corridors, Common Areas, etc. (Multi -family only) $1,019,375 TOTAL OTHER COSTS $2,074,375 TOTAL BUILDING REPLACEMENT COST NEW Total Replacement Cost New Plus Other Costs Total Building Replacement Cost New LESS DEPRECIATION Total Accrued Depreciation (New) ACTUAL CASH VALUE BUILDING DIVIDED BY NUMBER OF FLOORS ACV PER FLOOR ROUNDED TO $3,872,539 $2,074,375 $5,946,914 $0 $5,946,914 5 $1,189,383 $1,190,000 1( Base Cost includes Contractor's overhead & profit- taken from Marshall & Swift) *We are not experts in cost estimating. This appraisal report was prepared for the intended use of financing purposes and the "actual cash value" should not be relied upon for insurance purposes. We recommend that a qualified cost estimator be used for an accurate "actual cash value" estimate.