Loading...
HomeMy WebLinkAboutexhibits 6THE INCOME CAPITALIZATION APPROACH TO VALUE -- Continued — Comparable Rental Apartment One Address: 1601 N.W. 62nd Street Miami, Florida Type: 2-story rental apartment building Year Built: 1953 Condition: Average No. of Units: 28 Rental Rates: Unit Rental Typ Rate 1 BR-1 BATH $325 Lease Terms: Month -to -month Occupancy: 100% Comments: This property was sold for $320,000 or .$11,400/unit in January 2001, with a Potential Gross Income Multiplier of 2.93. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 35 - THE INCOME CAPITALIZATION APPROACH TO VALUE -- Continued -- Comparable Rental Apartment Two Address: 1575 N.W. 59th Street Miami, Florida Type: 2-story rental apartment building Year Built: 1962 Condition: Average No. of Units: 11 Rental Rates: Unit Rental Type Efficiency $250 1 BR-1 BATH $285-$300 Lease Terms: Month -to -month Occupancy: 81.8% Comments: This property was sold for $98,500 or $9,000/unit in November 2000, with a Potential Gross Income Multiplier of 2.59. J.H. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 36 - THE INCOME CAPITALIZATION APPROACH TO VALUE -- Continued -- Comparable Rental Apartment Three Address: 1251 N.W. 59th Street Miami, Florida Type: 2-story rental apartment building Year Built: 1965 Condition: Average No. of Units: 4 Rental Rates: Unit Rental TYPe Rate 2 BR-1 BATH $450 Lease Terms: Month -to -month Occupancy: 100% Comments: This property was sold for $115,000 or .$28,800/unit in December 2000, with a Potential Gross Income Multiplier of 5.32. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 37 - THE INCOME CAPITALIZATION APPROACH TO VALUE -- Continued -- Comparable Rental Apartment Four Address: 1255 N.W. 58th Street and 1256 N.W. 58th Terrace Miami, Florida TyPe: 3-story rental apartment building Year Built: 1959 Condition: average No. of Units: 36 Rental Rates: Unit Rental Type Rate Efficiency $210 1 BR-1 BATH $285 2 BR-1 BATH $315 Lease Terms: Month -to -month Occupancy: 94.4% Comments: The property consists of two L-shaped three-story 18-unit CBS apartment buildings which were built in 1959, and contains a total adjusted building area of 15,896 SF, as per the Public Records of Miami -Dade County, Florida. The 36-unit building contain a total Gross Building Area of 18,390 SF and the unit mix is comprised of two efficiency, twenty-one one bedroom - one bathroom and thirteen two bedroom -one bathroom units. The unit features include window/wall-mounted A/C units and on -site parking. The property appears to be adequately maintained, with no signs of notable deferred maintenance. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 38 - THE INCOME CAPITALIZATION APPROACH TO VALUE -- Continued -- Comparable Rectal Apartment Five Address: 6091 N.W. 15th Avenue Miami, Florida Type: 2-story rental apartment building Year Built: 1957 Condition: Average No. of Units: 15 Rental Rates: Unit Rental Type Rate 1 BR-1 BATH $225 2 BR-1 BATH $285 3 BR-2 BATH $450 Lease Terms: Month -to -month Occupancy: 95% Comments: This U-shaped two-story 15-unit CBS apartment building was built in 1957, and contains an adjusted building area of 7,414 SF, as per the Public Records of Miami -Dade County, Florida. The building contains a Gross Building Area of 7,800 SF and the unit mix is comprised of eight one bedroom -one bathroom, six two bedroom -one bathroom and one three bedroom -two bathroom units. The unit features include window/wall- mounted A/C units; security entrance and on -site parking. The property appears to be adequately maintained, with no signs of notable deferred maintenance. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 39 - . „r hr THE INCOME CAPITALIZATION APPROACH TO VALUE -- Continued -- Comparable Rental Apartment Six Address: 1520 N.W. 61st Street Miami, Florida Type: 3-story rental apartment building Year Built: 1957 Condition: Average No. of Units: 18 Rental Rates: Unit Rental "km 1 BR-1 BATH $325 2 BR-1 BATH $425 Lease Terms: Month -to -month Occupancy: 100% Comments: This L-shaped three-story 18-unit CBS apartment building was built in 1957, and contains an adjusted building area of 8,164 SF, as per the Public Records of Miami -Dade County, Florida. The building contains a Gross Building Area of 8,829 SF and the unit mix is comprised of twelve one bedroom -one bathroom and six two bedroom -one bathroom units. The unit features include window/wall,-mounted A/C units; security entrance and on -site parking. Piirsuant to its purchase in March 1999, the property has reportedly undergone a rehabilitation program at a cost of $20,000. The property appears to be adequately maintained, with no signs 'of notable deferred maintenance. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 40 - • THE INCOME CAPITALIZATION APPROACH TO VALUE -- Continued — SUMMARY OF RENTAL RATES FOR RENTAL APARTMENTS Total Monthly Year Built/ No. of Unit Rent AMre;la 4 1pangc Condition Units Txlle Mange 1) 1601 N.W. 62nd Street 100.0% 1953 28 1 / 1 $325 $325 . Miami, Florida Average 2) 1575 N.W. 59th Street 81.8% 1962 9 Efficiency $250 $250 Miami, Florida Average 2 1 / 1 $285 $300 3) 1251 N.W. 59th Street 100.0% 1965 4 2 / 1 $450 $450 Miami, Florida Average 4) 1255 N.W. 58th Street & 94.4% 1959 2 Efficiency $210 $210 1256 N.W. 58th Terrace Average 21 1 / 1 $285 $285 Miami, Florida 13 2 / 1 $315 $315 5) 6091 N.W. 15th Avenue 95.0% 1957 8 1 / 1 $225 $225 Miami, Florida Average 6 2 / 1 $285 $285 1 3 / 2 $450 $450 6) 1520 N.W. 61 st Street Miami, Florida 100.0% 1957 12 1/1 $325 $325 Average 6 2 / 1 $425 $425 Low t3igh Efficiency $210 $250 1/1 $225 $325 2 / 1 $285 $450• 3/2 $450 $450 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 THE INCOME CAPITALIZATION APPROACH TO VALUE -- Continued -- MARKET RENTAL RATE ANALYSIS AND CONCLUSIONS A survey of comparable rental apartments was made in order to analyze the existing rents at the subject property, and to provide an indication of market rental rates and occupancy levels which would be applicable to the subject property in a continued rental use. The comparable rental apartments are located within the subject neighborhood, and were considered somewhat similar to the subject properties in terms of condition, appeal, age, amenities, parking and location. The unadjusted monthly rental rates within the competitive facilities were: $210 to $250 for efficiency apartments; $225 to $325 for one bedroom -one bathroom apartments; $285 to $450 for two bedroom -one bathroom apartments; and $450 for three bedroom -two bathroom apartments. ESTIMATE OF GROSS INCOME The preceding market analysis of rental apartment facilities has served as a basis to project the rental rates applicable to the subject properties, and to estimate the potential rental income. ANCILLARY INCOME The ancillary income typically includes coin -operated laundry income, key deposits, late rent fees, forfeited deposits, etc. There was no ancillary income applicable to the subject properties. VACANCY AND COLLECTION LOSS We have estimated the vacancy and collection loss factor at 7.5% (an average of approximately four weeks per year vacancy, tenant turn -over or collection loss at a stabilized operation). OPERATING EXPENSES The landlord is responsible for real estate taxes, insurance, management, common area electricity (if applicable), water and sewer; gas (if applicable), waste removal, repairs and maintenance, legal and professional fees, miscellaneous expenses, and reserves for replacement. We have interviewed the property owners, reviewed the operating expenses at the subject properties, and analyzed the operating expense data on a per unit and per square foot basis. The following is an explanation of the estimated operating expenses under typical stabilized operations. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 42 - THE INCOME CAPITALIZATION APPROACH TO VALUE -- Continued -- PROPERTY ONE (1250 N.W. 62nd Street, Miami) Gross Income The Potential Gross Income was estimated at $104,040, with an Effective Gross Income of $96,240. Operating Expenses After a 4.0% discount for prompt payment, the real estate taxes are estimated at $8,230. The insurance expense was estimated to be $4,725. Management reflects the cost of overseeing and coordinating the operations at the rental apartment facility during the projected holding period. The management fee (as well as a unit allowance for an on -site manager) is estimated to be $7,570 or 7.9% of the effective gross rental income. The subject apartment units are individually metered for electricity. The expense for the common area electricity was estimated to be $600. The water and sewer expense was estimated to be $11,400. The gas expense was estimated to be $2,040. The waste removal expense was estimated to be $2,040. The repairs, maintenance and contract services was estimated to be $5,400 (excluding reserves for replacement of short-lived items). Based on the size of the property, the legal and professional fees were estimated to be $2,025. The miscellaneous expenses were estimated to be $25/unit or $675. The landlord would be responsible for the replacement of short-lived items which were estimated to be $3,460. Refer to the facing page. Net Operating Income The total operating expenses were estimated to be $48,165 or $1,784/unit or 50.0% of the effective gross income. The net operating income before debt service was estimated to be $48,075 or $1,781/unit or 50.0% of the effective gross income. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 43 - THE INCOME CAPITALIZATION APPROACH TO VALUE -- Continued -- PROPERTY TWO (1251 N.W. 59th Street, Miami) Gross Income The Potential Gross Income was estimated at $22,800, with an Effective Gross Income of $21,090. Operating Expenses After a 4.0% discount for prompt payment, the real estate taxes are estimated at $2,200. The insurance expense was estimated to be $430. Management reflects the cost of overseeing and coordinating the operations at the rental apartment facility during the projected holding period. The management fee is estimated to be 4.0% of the effective gross rental income or $840. The subject apartment units are individually metered for electricity. The expense for the common area electricity was estimated to be $240. The water and sewer expense was estimated at $900. The waste removal expense was estimated to be $750. The gas expense was estimated to be none. The repairs, maintenance and contract services was estimated to be $1,000 (excluding reserves for replacement of short-lived items). Based on the size of the property, the legal and professional fees were estimated to be $400. The miscellaneous expenses were estimated to be $25/unit or $100. The landlord would be responsible for the replacement of short-lived items which were estimated to be $760. Refer to the facing page. Net Operating Income The total operating expenses were estimated to be $7,620 or $1,905/unit or 36.1 % of the effective gross income. The net operating income before debt service was estimated to be $13,470 or $3,368/unit or 63.9% of the effective gross income. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 -44- THE INCOME CAPITALIZATION APPROACH TO VALUE -- Continued -- PROPERTY THREE (1275 N.W. 59th Street, Miami) Gross Income The Potential Gross Income was estimated at $22,800, with an Effective Gross Income of $21,090. Operating Expenses After a 4.0% discount for prompt payment, the real estate taxes are estimated at $2,200. The insurance expense was estimated to be $430. Management reflects the cost of overseeing and coordinating the operations at the rental apartment facility during the projected holding period. The management fee is estimated to be 4.0% of the effective gross rental income or $840. The subject apartment units are individually metered for electricity. The expense for the common area electricity was estimated to be $240. The water and sewer expense was estimated at $900. The waste removal expense was estimated to be $750. The gas expense was estimated to be none. The repairs, maintenance and contract services was estimated to be $1,000 (excluding reserves for replacement of short-lived items). Based on the size of the property, the legal and professional fees were estimated to be $400. The miscellaneous expenses were estimated to be $251unit or $100. The landlord would be responsible for the replacement of short-lived items which were estimated to be $760. Refer to the facing page. Net Operating Income The total operating expenses were estimated to be $7,620 or $1,905/unit or 36.1 % of the effective gross income. The net operating income before debt service was estimated to be $13,470 or $3,368/unit or 63.9% of the effective gross income. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 45 - THE INCOME CAPITALIZATION APPROACH TO VALUE -- Continued -- PROPERTY FOUR (1260 N.W. 59th Street, Miami) Gross Income The Potential Gross Income was estimated at $22,800, with an Effective Gross Income of $21,090. Operating Expenses After a 4.0% discount for prompt payment, the real estate taxes are estimated at $2,290.. The insurance expense was estimated to be $430. Management reflects the cost of overseeing and coordinating the operations at the rental apartment facility during the projected holding period. The management fee is estimated to be 4.0% of the effective gross rental income or $840. The subject apartment units are individually metered for electricity. The expense for the common area electricity was estimated to be $240. The water and sewer expense was estimated at $900. The waste removal expense was estimated to be $750. The gas expense was estimated to be none. The repairs, maintenance and contract services was estimated to be $1,000 (excluding reserves for replacement of short-lived items). Based on the size of the property, the legal and professional fees were estimated to be $400. The miscellaneous expenses were estimated to be $25/unit or $100. The landlord would be responsible for the replacement of short-lived items which were estimated to be $760. Refer to the facing page. Net Operating Income The total operating expenses were estimated to be $7,710 or $1,928/unit or 36.6% of the effective gross income. The net operating income before debt service was estimated to be $13,380 or $3,345/unit or 63.4% of the effective gross income. J.S. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Greve, Florida 33133 - 46 - THE INCOME CAPITALIZATION APPROACH TO VALUE -- Continued -- PROPERTY FIVE (1254 N.W. 59th Street, Miami) Gross Income The Potential Gross Income was estimated at $22,800, with an Effective Gross Income of $21,090. Operating Expenses After a 4.0% discount for prompt payment, the real estate taxes are estimated at $2,210. The insurance expense was estimated to be $430. Management reflects the cost of overseeing and coordinating the operations at the rental apartment facility during the projected holding period. The management fee is estimated to be 4.0% of the effective gross rental income or $840. The subject apartment units are individually metered for electricity. The expense for the common area electricity was estimated to be $240. The water and sewer expense was estimated at $900. The waste removal expense was estimated to be $750. The gas expense was estimated to be none. The repairs, maintenance and contract services was estimated to be $1,000 (excluding reserves for replacement of short-lived items). Based on the size of the property, the legal and professional fees were estimated to be $400. The miscellaneous expenses were estimated to be $25/unit or $100. The landlord would be responsible for the replacement of short-lived items which were estimated to be $760. Refer to the facing page. Net Operating Income The total operating expenses were estimated to be $7,630 or $1,908/.unit or 36.2 % of the effective gross income. The net operating income before debt service was estimated to be $13,460 or $3,365/unit or 63.8% of the effective gross income. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 47 - THE INCOME CAPITALIZATION APPROACH TO VALUE — Continued -- PROPERTY SIX (1231 N.W. 61st Street, Miami) Gross Income The Potential Gross Income was estimated at $92,880, with an Effective Gross Income of $85,910. Operating Expenses After a 4.0% discount for prompt payment, the real estate taxes are estimated at $7,090. The insurance expense was estimated to be $4,200. Management reflects the cost of overseeing and coordinating the operations at the rental apartment facility during the projected holding period. The management fee (as well as a unit allowance for an on -site manager) is estimated to be $7,160 or 8.3 % of the effective gross rental income. The subject apartment units are individually metered for electricity. The expense for the common area electricity was estimated to be $600. The water and sewer expense was estimated at $9,600. The gas expense was estimated to be $1,800. The waste removal expense was estimated to be $2,040. The repairs, maintenance and contract services was estimated to be $4,800 (excluding reserves for replacement of short-lived items). Based on the size of the property, the legal and professional fees were estimated to be $1,800. The miscellaneous expenses were estimated to be $25/unit or $600. The landlord would be responsible for the replacement of short-lived items which were estimated to be $2,970. Refer to the facing page. Nei Qnerating Income The total operating expenses were estimated to be $42,660 or $1,778/unit or 49.7% of the effective gross income. The net operating income before debt service was estimated to be $43,250 or $1,802/unit or 50.3% of the effective gross income. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 s Coconut Grove, Florida 33133 -48- THE INCOME CAPITALIZATION APPROACH TO VALUE -- Continued -- PROPERTY SEVEN (1202 N.W. 61st Street, Miami) Gross Income The Potential Gross Income was estimated at $21,600, with an Effective Gross Income of $19,980. Operating Expenses After a 4.0% discount for prompt payment, the real estate taxes are estimated at $3,200: The insurance expense was estimated to be $430. Management reflects the cost of overseeing and coordinating the operations at the rental apartment facility during the projected holding period. The management fee is estimated to be 4.0% of the effective gross rental income or $800. The subject apartment units are individually metered for electricity. The expense for the common area electricity was estimated to be $240. The water and sewer expense was estimated to be $900. The gas expense was estimated to be none. The waste removal expense was estimated to be $750. The repairs, maintenance and contract services was estimated to be $1,000 (excluding reserves for replacement of short-lived items). Based on the size of the property, the legal and professional fees were estimated to be $400. The miscellaneous expenses were estimated to be $25/unit or $100. The landlord would be responsible for the replacement of short-lived items which were estimated to be $800. Refer to the facing page. NELOggrating_Inows The total operating expenses were estimated to be $8,620 or $2,155/unit or 43.1 % of the effective gross income. The net operating income before debt service was estimated to be $11,360 or $2,840/unit or 56.9% of the effective gross income. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 49 - THE INCOME CAPITALIZATION APPROACH TO VALUE PROPERTY EIGHT (1613 N.W. 54th Street, Miami) Gross Income -- Continued -- Property Eight is utilized as a 16-room rooming/boarding house, with weekly rates ranging from $65 to $85. The Potential Gross Income was estimated at $58,240, with an Effective Gross Income of $37,860, reflecting an annual occupancy rate of 65.0 % . Operating Expenses After a 4.0% discount for prompt payment, the real estate taxes are estimated at $2,800. The insurance expense was estimated to be $800. Management reflects the cost of overseeing and coordinating the operations at the 16=unit rooming house which is rented on a weekly basis. The management fee is estimated to be 10.0% of the effective gross rental income or $3,790. Reported to be $200/month, the expense for electricity was estimated to be $2,400. Reported to be $300/quarter, the water and sewer expense was estimated to be $1,200. The waste removal expense was estimated to be $750. The repairs, maintenance and contract services was estimated to be $3,200 (excluding reserves for replacement of short-lived items). Based on the size of the property, the legal and professional fees were estimated to be $1,500. The miscellaneous expenses were estimated to be $25/unit or $500. The landlord would be responsible for the replacement of short-lived items which were estimated to be $2,190. Refer to the facing page. Net Operating Income The total operating expenses were estimated to be $19,130 or $1,196/unit or 50.5 % of the effective gross income. The net operating income before debt service was estimated to be $18,730 or $1,171/unit or 49.5% of the effective gross income. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 THE INCOME CAPITALIZATION APPROACH TO VALUE -- Continued — RATES OF RETURN An investor's expected return consists of (1) full recovery of the amount invested or the return of capital aid (2) a profit or return on capital. Rates of return can be categorized either as yield rates or income rates. The interest rate, discount rate, internal rate of return and equity yield rate are yield rates. The overall capitalization rate and equity dividend rate are income rates. The Discount Rate is a rate of return on capital used to discount future payments or receipts to present value and represents the annual rate of return necessary to attract investment capital. Discount rates are influenced by many considerations, including degree of risk, market attitudes with respect to future inflation, prospective rate of return earned by comparable investments and supply/demand for mortgage funds. We have reviewed rate of return data which is considered indicative of alternative investment vehicles available in the capital markets. Rate selection requires appraisal judgment and knowledge concerning prevailing market attitudes and prevailing economic indicators. According to the most recent survey of real estate portfolio managers as provided by the Valuation Magazine published by the Appraisal Institute, the discount rates for rental apartments ranged from 9.75% to 15.00% in the 1st Quarter of 2001, with an average of 11.41%. The overall capitalization rates ranged from 7.0% to 10.0% in the 1st quarter of 2001, with an average of 8.58 % . The residual capitalization rates ranged from 7.5% to 10.75% in the 1st quarter of 2001, with an average of 9.07 % . The discount rates for rental apartments ranged from 10.00% to 15.00% in the 4th Quarter of 2000, with an average of 11.41 %. The overall capitalization rates ranged from 7.0% to 9.5% in the 4th quarter of 2000, with an average of 8.57 % . The residual capitalization rates ranged from 7.5% to 10.5% in the 4th quarter of 2000, with an average of 9.04%. The discount rates for rental apartments ranged from 10.00% to 15.00% in the 3rd Quarter of 2000, with an average of 11.45 %. The overall capitalization rates ranged from 7.0% to 9.0% in the 3rd quarter of 2000, with an average of 8. b3 % . The residual capitalization rates ranged from 7.5% to 10.5 % in the 3rd quarter of 2000, with an average of 9.1 %. The discount rates for rental apartments ranged from 10.00% to 15.00% in the 2nd quarter of 2000, with an average of 11.50 % . The overall capitalization rates ranged from 7.50% to 11.0% in the 2nd quarter of 2000, with an average of 8.82 % . The residual capitalization rates ranged from 8,00% to 10.50% in the 2nd quarter of 2000, with an average of 9.19%. The discount rates for rental apartments ranged from 10.00% to 15.00% in the 1st quarter of 2000, with an average of 11.50%. The overall capitalization rates ranged from 7.50% to 11.0% in the 1st quarter of 2000, with an average of 8.83%. The residual capitalization rates ranged from 8.00% to 10.50% in the 1st quarter of 2000, with an average of 9.21 %. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 THE INCOME CAPITALIZATION APPROACH TO VALUE -- Continued — Direct Capitalization Method The estimated of the Market Value of the subject properties were provided by utilizing the Direct Capitalization Method which converts an estimate of a single year's income expectancy into an indication of value either by dividing the income estimate by an appropriate income rate or by multiplying the income estimate by an appropriate factor. The rate or factor selected represents the relationship between income and value observed in the market and is derived through comparable sales analysis. The Net Operating Income utilized within the Direct Capitalization method was based upon the estimates of the Year One Gross Rental Income, less vacancy and collection loss, fixed and variable operating expenses, as well as the estimated reserves. The derivation of an Overall Rate via derivation from comparable sales is the preferred technique of deriving a capitalization rate and requires that sufficient recent sales information on comparable properties is available. The comparable properties used should reflect risk, income and expenses, location and physical characteristics similar to that of the subject properties. In Direct Capitalization Method, no precise allocation is made between the return on and return of capital because this method does not simulate investor assumptions and forecasts concerning holding periods, income patterns or value changes in the original investment. Under this capitalization method a satisfactory rate of return for the investor and recapture of the capital invested is considered implicit within the rate used due to the fact that it is derived from similar investment properties. Based on the preceding analysis and taking into account the age, condition, location and rates of return required by investors purchasing this type of properties, as well as the net operating income ratio and gross income multiplier of comparable sales, a "going -in" capitalization rate of 11.0% at Properties Two, Three, Four, Five and Seven which are four-plex properties; 12.0% at Properties One and Six which are operated as rental apartment facilities; and 13.0% at Property Eight which is operated as a rooming house would reflect investor expectations within the subject competitive market, J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 THE INCOME CAPITALIZATION APPROACH TO VALUE Direct Capitalization Method - Continued Based on the estimated Net Operating Income and the above capitalization rate, the Matt Value of the subject properties utilizing the Direct Capitalization Method was as follows: Net Operating Income / Overall Rate = Value Estimate Property 1: $48,075 NOI / .12 = $400,625 Market Value of the Fee Simple Interest in Property 1 in "as is" Condition (Rounded) $400,600 Property 2: $13,470 NOI / .11 = $122,455 Market Value of the Fee Simple Interest in Property 2 in "as is" Condition (Rounded) Property 3: $13,470 NOI / .11 Market Value of the Fee Simple Interest in Property 3 in "as is" Condition (Rounded) Property 4: $13,380 NOI / .11 = Market Value of the Fee Simple Interest in Property 4 in "as is" Condition (Rounded) Property 5: $13,460 NOI / .11 = Market Value of the Fee Simple Interest in Property 5 in "as is" Condition (Rounded) Property 6: $43,250 NOI / .12 Market Value of the Fee Simple Interest in Property 6 in "as is" Condition (Rounded) $122,500 $122,455 $122,500 $121,636 $121,600 $122,364 $122,400 $360,417 $360,400 -- Continued -- J.S. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 THE INCOME CAPITALIZATION APPROACH TO VALUE -• Continued -- Direct Capitalization Method - Continued Property 7: $11,360 NOI / .11 = $103,273 ..r Market Value of the Fee Simple Interest in Property 7 in "as is" Condition (Rounded) $103,300 Property 8: $18,730 NOI / .13 = $144,077 Market Value of the Fee Simple Interest in Property 8 in "as is" Condition (Rounded) $144,100 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 Sd.. THE SALES COMPARISON APPROACH INTRODUCTION The Sales Comparison Approach to Value is based on the principle of substitution; that is, when a property is replaceable in the market, its value tends to be set at the cost of acquiring an equally desirable substitute property assuming no costly delay in making the substitution. The Sales Comparison Approach to Value is based on a comparison between recently sold similar properties in the subject neighborhood and the subject properties. These comparable sales are then adjusted for the differences between them and the subject properties, utilizing the Potential Gross Income Multiplier and price/SF (for the smaller' four-plex and rooming house facilities) and price/unit (for the larger rental apartment buildings) methods of comparison. . M e J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 55 - THE SALES COMPARISON APPROACH -- Continued -- be e Address: 1601 N.W. 62nd Street, Miami, Florida Legal Description: Lots 2, 3, 4 and 5, Block 6, East Liberty City Section A, as recorded in PIat Book 39, Page 19 of the Public Records of Miami -Dade County, Florida Grantee: GND Property Management, Inc. Grantor: Dalea Apartment, Inc. O.R. Book/Page: 19451/1628 Total Number of Units: 28 Adjusted Building Area: 10,428 SF Building Type: 2-story Site Size: 13,600 SF Zoning: R-3 Medium Density Multi -Family Residential District Year Built: 1953 Condition: Average Land -to -Building Ratio: 1.30:1 Date of Sale: January 5, 2001 Sale Price: $320,000 Financing: $72,000 purchase money mortgage at 10% for fifteen years Cash Equivalent Sale Price: $320,000 Cash Equivalent Sale Price/SF: $30.69 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33I33 �r. THE SALES COMPARISON APPROACH Comparable Sale Number Ope (Continued) Cash Equivalent Sale Price/Unit: $11,400 Potential Gross Income Multiplier: 2.93 SALE PRICE PER UNIT TYPE Unit Indicated Type -Sale BR -BA Price/Unit 28 x 1-1 $11,400 — Continued -- J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 57 - THE SALES COMPARISON APPROACH -- Continued -- Comparable Sale Number Two Address: 1575 N.W. 59th Street, Miami, Florida Legal Description: Grantee: Lots 25 and 26, Block 13, Orange Heights, as recorded in Plat Book 14, Page 62 of the Public Records of Miami -Dade County, Florida Willie Bryant Grantor: Leonzie Jones O.R. Book/Page: 19380/1780 Total Number of Units: 11 Adjusted Building Area: 5,950 SF Building Type: 2-story Site Size: 10,600 SF Zoning: R-3 Medium Density Multi -Family Residential District Year Built: 1962 Condition: Average Land -to -Building Ratio: 1.78 :1 Date of Sale: November 14, 2000 Sale Price: $98,500 Financing: Cash to the seller Cash Equivalent Sale Price: $98,500 Cash Equivalent Sale Price/SF: $16.55 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 THE SALES COMPARISON APPROACH Comparable Sale Number Two (Continued) Cash Equivalent Sale Price/Unit: $9,000 Potential Gross Income Multiplier: 2.59 SALE PRICE PER UNIT TYPE Unit Indicated Type Sale BR -BA Price/Unit 2 x Efficiency $7,800 9 x 1-1 $9,200 -- Continued — J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 59 - THE SALES COMPARISON APPROACH Comparable Sale Number Three •-,Mr -- Continued -- Address: 1251 N.W. 59th Street, Miami, Florida Legal Description: Lots 23, Block 6, Orchard Villa Extension, as recorded in Plat Book 17, Page 55 of the Public Records of Miami -Dade County, Florida Grantee: John and Gwendolyn Johnson Grantor: Heavenly Properties, Inc. O.R. Book/Page: 19405/197 Total Number of Units: 4 Adjusted Building Area: 2,779 SF Building Type: 2-story Site Size: 5,300 SF Zoning: R-3 Medium Density Multi -Family Residential District Year Built: 1965 Condition: Average Land -to -Building Ratio: 1.91:1 Date of Sale: December 8, 2000 Sale Price: $115,000 Financing: Cash to the seller Cash Equivalent Sale Price: $115,000 Cash Equivalent Sale Price/SF: $41.38 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 THE SALES COMPARISON APPROACH Comparable Sale Number Three (Continued) Cash Equivalent Sale Price/Unit: $28,800 Potential Gross Income Multiplier: 5.32 SALE PRICE PER UNIT TYPE Unit Indicated Type Sale BR -BA Price/Unit 4 x 2-1 $28,800 -- Continued -- • J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 61 - THE SALES COMPARISON APPROACH -- Continued -- Comparable Sale Number Four Address: 1251 N.W. 61st Street, Miami, Florida Legal Description: Lot 34, Block 2, Orchard Villa Extension, as recorded in Plat Book 17, Page 55 of the Public Records of Miami -Dade County, Florida Grantee: Cardenal Coleman, Sr. Grantor: Gateway Real Estate, Inc. O.R. Book/Page: 19346/126 Total Number of Units: 4 Adjusted Building Area: 2,781 SF Building Type: 2-story Site Size: 5,300 SF Zoning: R-3 Medium Density Multi -Family Residential District Year Built: 1964 Condition: Average Land -to -Building Ratio: 1.91:1 Date of Sale: October 18, 2000 Sale Price: $118,000 Financing: Cash to the seller Cash Equivalent Sale Price: $118,000 Cash Equivalent Sale Price/SF: $42.43 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 62 - THE SALES COMPARISON APPROACH Comparable Sale Number Four (Continued) Cash Equivalent Sale Price/Unit: $29,500 Potential Gross Income Multiplier: 5.99 SALE PRICE PER UNIT TYPE Unit Indicated_ Type Sale BR -BA Price/Unit 4 x 2-1 $29,500 -- Continued -- J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 63 - THE SALES COMPARISON APPROACH -- Continued -- Coinparable Sale Number Five Address: 6301 N.W. 17th Avenue, Miami, Florida Legal Description: Lot 3, less the southern five feet for street, Jenkins Addition to Liberty City, as recorded in Plat Book 39, Page 10 of the Public Records of Miami -Dade County, Florida Grantee: Harvell CastIeberr Grantor: Rogers Jones, Jr. O.R. Book/Page: 19206/4422 Total Number of Units: 4 Adjusted Building Area: 2,003 SF Building Type: 2-story Site Size: 3,600 SF Zoning: R-3 Medium Density Multi -Family Residential District Year Built: 1942 Condition: Average Land -to -Building Ratio: 1.80:1 Date of Sale: June 26, 2000 Sale Price: $90,000 Financing: Cash to the seller Cash Equivalent Sale Price: $90,000 Cash Equivalent Sale Price/SF: $44.93 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 THE SALES COMPARISON APPROACH Comparable Sale Number Five (Continued) Cash Equivalent Sale Price/Unit: $22,500 Potential Gross Income Multiplier: 4.69 SALE PRICE PER UNIT TYPE Unit . Indicated Type Sale BR -BA Price/Unit 4 x 2-1 $22,500 -- Continued -- J.S. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 65 - THE SALES COMPARISON APPROACH -- Continued -- Comparable Sale Number Six Address: 5842 N.W. 12th Avenue, Miami, Florida Legal Description: Lots 15 and 16, Block 7, Orchard Villa Extension, as recorded in Plat Book 17, Page 55 of the Public Records of Miami -Dade County, Florida Grantee: Mario and Theresa Forrester Grantor: Joyce O. Jackson Walker O.R. Book/Page: 19092/1003 Total Number of Units: 4 Adjusted Building Area: 3,019 SF Building Type: 2-story Site Size: 6,150 SF Zoning: R-3 Medium Density Multi -Family Residential District Year Built: 1968 Condition: Average Land -to -Building Ratio: 2.04:1 Date of Sale: April 19, 2000 Sale Price: $115,000 Financing: Cash to the seller Cash Equivalent Sale Price: $115,000 Cash Equivalent Sale Price/SF: $38.09 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 THE SALES COMPARISON APPROACH Comparable Sale Number Six (C9ntinuedl Cash Equivalent Sale Price/Unit: $28,800 Potential Gross Income Multiplier: 6.39 SALE PRICE PER UNIT TYPE Unit - Indicated Type Sale BR -BA Price/Unit 4 x 2-1 $28,800 -- Continued -- J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 67 - THE SALES COMPARISON APPROACH Comparable Sale Number Seven Address: 1299 N.W. 60th Street, Miami, Florida -- Continued -- Legal Description: Lots 25 to 28, Block 3, Orchard Villa Extension, as recorded in Plat Book 17, Page 55 of the Public Records of Miami -Dade County, Florida Grantee: Robert Simpson Grantor: Evelyn J. House. . O.R. Book/Page: 18414/2709 Total Number of Units: 12 Adjusted Building Area: 8,820 SF Building Type: 2-story Site Size: 21,200 SF Zoning: R-3 Medium Density Multi -Family Residential District Year Built: 1960 Condition: Average Land -to -Building Ratio: 2.40:1 Date of Sale: September 25, 1998 Sale Price: $175,000 Financing: Cash to the seller Cash Equivalent Sale Price: $175,000 Cash Equivalent Sale Price/SF: $19.84 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 68 - THE SALES COMPARISON APPROACH Comparable Sale Number Seven (Continued) Cash Equivalent Sale Price/Unit: $14,600 Potential Gross Income Multiplier: 3.35 SALE PRICE PER UNIT TYPE Unit Indicated Type Sale BR -BA Price/Unit 6 x 1-1 $13,100 6 x 2-1 $16,100 -- Continued -- J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3I21 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 69 - THE SALES COMPARISON APPROACH -- Continued -- Comparable Sale Number Eight Address: 816-818 S.W. 1st Street, Miami, Florida Legal Description: Lot 3, less the northern ten feet for street, Block 1, Brickells Riverview, as recorded in Plat Book 5, Page 43 of the Public Records of Miami -Dade County, Florida Grantee: Cirys Investments, Inc. Grantor: Yolanda C. Perez O.R. Book/Page: 17516/514 Total Number of Units: 26 Adjusted Building Area: 5,455 SF Building Type: 2-story Site Size: 7,000 SF Zoning: C-1 Restricted Commercial District Year Built: 1927 Condition: Average Land -to -Building Ratio: 1.28:1 Date of Sale: January 14, 1997 Sale Price: $230,000 Financing: $210,000 purchase money mortgage at 10.0% Cash Equivalent Sale Price: $230,000 Cash Equivalent Sale Price/SF: $42.16 Cash Equivalent Sale Price/Unit: $8,800 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 o Coconut Grove, Florida 33133 - 70 - Note: THE SALES COMPARISON APPROACH Comparable Sale Number Eft (Continued) Potential Gross Income Multiplier: 3.81 SALE PRICE PER UNIT TYPE Unit Indicated Type Sale BR -BA Price/Unit 26 x Rooms $8,800 The property has been currently on the market for sale for $260,000, reflecting an asking price of $10,000 per room for this 26-room boarding house with seven bathrooms. -- Continued -- J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 -7I - THE SALES COMPARISON APPROACH Comparable Listing For Sale Number Nine Address: 542 North Miami Avenue, Miami, Florida Legal Description: Northern 50 feet of Lots 1 and 2, Block 64, Miami North, as recorded in Plat Book B, Page 41 of the Public Records of Miami -Dade County, Florida Grantee: 532-538 North Miami Avenue LLC . •'Grantor: Charitable Elvera O.R. Book/Page: 19552/25 Total Number of Units: 23 Adjusted Building Area: 10,375 SF Building Type: 2-story Site Size: 5,000 SF Zoning: C-1 Restricted Commercial District Year Built: 1920 Condition: Average Land -to -Building Ratio: .48:1 Date of Sale: March 15, 2001 Sale Price: $412,000 Financing: Cash to the seller Cash Equivalent Sale Price: $412,000 Cash Equivalent Sale Price/SF: $39.71 Cash Equivalent Sale Price/Unit: $15,800 -- Continued -- J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 72- 1 THE SALES COMPARISON APPROACH Comparable Sale Number Nine (Continued) SALE PRICE PER UNIT TYPE Unit Indicated Type Sale BR -BA Price/Unit 23 x Rooms $15, 800 -- Continued - J.B, ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 73 - THE SALES COMPARISON APPROACH -- Continued -- Comparable Listing For Sale Number Ten Address: 1259 N.W. 58th Terrace, Miami, Florida Legal Description: Lot 24, Block 7, Orchard Villa Extension, as recorded in Plat Book 17, Page 55 of the Public Records of Miami -Dade County, Florida Owner: Home Equity Mortgage Corporation Total Number of -Units: 6 Adjusted Building Area: 2,976 SF Building Type: 2-story Site Size: 5,300 SF Zoning: R-3 Medium Density Multi -Family Residential District Year Built: 1959 Condition: Average Land -to -Building Ratio: 1.78:1 Asking Price: $99,900 Asking Price/SF: $33.57 Asking Price/Unit: $16,700 Potential Gross Income Multiplier: 5.05 SALE PRICE PER UNIT TYPE Unit Indicated Type Sale .OR -BA Price/Upit 6 x 1-1 $16,700 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 ' Coconut Grove, Florida 33133 - 74 - THE SALES COMPARISON APPROACH Comparable Listing For Sale Number Eleven Address: Legal Description: Owner: Total Number of Units: Adjusted Building Area: Building Type: Site Size: Zoning: Year Built: Condition: -- Continued -- 1245 N.W. 58th Terrace and 1238 N.W. 58th Street, Miami, Florida Lots 7, 8, 21 and 22, Block 10, Orchard Villa Extension, as recorded in Plat Book 17, Page 55 of the Public Records of Miami -Dade County, Florida Jerry Evans and Scott Evans 24 11,908 SF 2-story 21,200 SF R-3 Medium Density Multi -Family Residential District 1964 • Average Land -to -Building Ratio: 1.78:1 Asking Price: Asking Price/SF: Asking Price/Unit: Potential Gross Income Multiplier: $295,000 $24.77 $12,300 3.72 SALE PRICE PER UNIT TYPE Unit Type BR -BA 4 x Efficiency 20 x 1-1 Indicated Sale Price/Unit $11,200 $12,500 J.S. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 75 - THE SALES COMPARLSON APPROACH Comparable Listing For Sale Number Twelve Address: 1231 N.W. blst Street, Miami, Florida Legal Description: -- Continued -- Lots 31 and 32, Block 2, Orchard Villa Extension, as recorded in Plat Book 17, Page 55 of the Public Records of Miami -Dade County, Florida Owner: Model City Investment Corporation Total Number of Units: 24 --- Adjusted Building Area: 10,308 SF Building Type: 3-story Site Size: 10,600 SF Zoning: R-3 Medium Density Multi -Family Residential District Year Built: 1959 Condition: Average Land -to -Building Ratio: 1.03:1 Asking Price: $329,000 Asking Price/SF: $31.92 Asking Price/Unit: $13,700 Potential Gross Income Multiplier: 3.54 SALE PRICE PER UNIT TYPE Unit Indicated Type Sale BR -BA price/Unit 21 x 1-1 $13,200 3 x 2-1 $17,400 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 76 - THE SALES COMPARISON APPROACH Comparable Listing For Sale Number Thirtr.en Address: 1190 N.W. 67th Street, Miami, Florida Legal Description: -- Continued -- Lots 26 and 27, Block 1, Woodmere, as recorded in Plat Book 14, Page 11 of the Public Records of Miami -Dade County, Florida Owner: Royce and Rosa Moore Total Number of Units: 12 Adjusted Building Area: 4,788 SF Building Type: 2-story Site Size: 8,950 SF Zoning: R-3 Medium Density Multi -Family Residential District Year Built: 1957 Condition: Average Land -to -Building Ratio: 1.87:1 Asking Price: $174,900 Asking Price/SF: $36.53 Asking Price/Unit: $14,600 Potential Gross Income Multiplier: 3.98 SALE PRICE PER 1JITIT TYPE Unit Indicated Type Sale BR -BA Price/Unit 12 x 1-1 $14,600 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3 121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 77 - w N CL Sr R 0 03 "D ttiT a Flo" 'C tva � ela 0 O O r.r • ]n w • •1 G ▪ r W W Cash Equivakra Sale Price Cash Equivalent Sate Pnre/5F 530.69 116.55 Sot 39 Cash Equindent 542,43 344.93 936.09 Sale Pricer 179_84 112.16 f39.71 539..57 52477 S31.92 538.53 Unadjusted Sale INIAwn•wl 311.400 2e,8 PncalUnd 00 59,000 f00 129,500 522,500 pe 128.800 114,600 fe,800 S17.500 f1fi.700 312,300 RoanaerglhrUnit_ f13.T00 SH,600 ts Eltioienq f7,300 - - 2 B� Bea 311.400 f9.29t - - - $t,t00 f17.900 2 HRlt.S Bear $2t,a00 f2t,S00 313,100 , 111.260 2 BAR Bak - - - 522.500 3211600 310100 111,700 $12,500 s13 3eo s149t4 38R11 Bath - - - - -•117•a89 3 BRF2 Bath - - • Gross Inssma Melliplkr• SUMMARY OF MULTI -FAIRLY RENTAL APARTMENT SALES SateOm UN Sale Sak Sale bra DIEM�ilr EbR SW Saliz Salta teSaleSate _ EIB01 No Listing Listing Ladles Address 1601 htW 1575 N.W. 1251 N.W. 1251 N.W, 6901 H.W. 10 Eleven Twelve TtraYaS 82rM Street 59M Steel 591h N W. 6131 Strad 17ar 1 M W. 156 Aware 1299 H.W. 018 S.W. 542 Nall Walla Miami Miami Miami Miami B0M Miami 141Sneet Miami Ague 81h T N.W. 1245 N.W. N89r 1411 N.W. 1190 N.W. Mime yly Miury Miami Sell Terrace SL i 1236 N.W. 41a131Yea1 17t1 1. Miami 5801 Termee Building Wane Wend Type 2,S1prY 2-Story z-Srrry 2•sloy 2-Story 2S �'"" Bwldvq Ara (SF) (1) 10,42e 2' 2•Stary 2-Story 5,950 2,779 2.781 2,003 3,019 2-Story z-seq 3'S1o7 2-Slirry 795 Site Area (5F) 13.600 10.600 5,300 5.300 3,600 6,620 0455 10,376 2.976 man 10.308 4,r99 6,150 21,2txi 7,000 Land.lo-guyyry Ratio 1.30 5.000 5,300 21.200 10.e00 1.7a 1.91 L81 1.80 2.04 6.950 2.40 1.28 0.48 Dcmiq {L1riIs/Auej 89.7 45.2 1.78 1.76 1.03 1 h 32-9 32 P 48.4 28 3 24.7 Number d Units 28 111618 2004 49.3 INN Mic 4 4 4 12 493 98.4 Se.1 25 23 Rooming Lines 6 24 24 1i Elkiancy 21 8R/1 anon 28 9 - 26 23 1 BR11-5 Bali - 6 4._ 2 BR/1 Ba31 - 2 BR11.5 Bach 4 4 4 4 ti ▪ - 6 20 21 12 2 BR/2 Bath - - 3 BR/Bath - - - 3 3 8R12 Balk - - Soaring AnalUni115F) 372 541 695 695 Year Built 1953 501 755 735 210 45e 1954 1962 1965 1942 1968 lobo 1927 1920 4� 490 399 1959 1964 Condition Avenge C 1 AverageAverageR.3 • Average Average Average q 19591957 Average Average Average Average Average Aver Average Average R-3 R-3 R-3 G1 _ Date of Sale 1/5t2001 11/14/2000 12r82000 C 1 R-3 R i0116f2000 6/262000 R-3 3 R-3 Consideration 3120.000 S95,500 4/92000 9/25/1998 1/14r1997 3r15)2031 Lnkd Rte 3115,000 3116,000 S90,p00 4skd Listed listed 1115,000 f175,000 5230.000 Financing $72,000 f412,007 PMM the Seta the Seller Carat to Cash m Cash to Cash m Cash to 559• 5295.000 S321.000 f174,t00 1Ae Seller the Seller ere Seger the Seller 3210.000 PlAL7 Cash lc Listed at Mcrtlet the Seller Lls4d �� Lif1W 5324.000 098,500 5115,000 3156,000 f90,000 5115,000 $175,000 $230,000 1412,000 199.900 5295.000 3329,000 1174600 2.93 2311 5.32 (11' Adjuseed building area sr modelled by the Public Records of Mimi -Dade County, Flaide 5.99 4.66 f.311 3.35 3.91 5.65 3.72 334 3.95 THE SALES COMPARISON APPROACH ANALYSIS OF COMPARABLE SALES The Sales Comparison Approach to Value is based upon a comparison between recently sold properties in the subject neighborhood and the subject properties. The comparable sales, as well as three listings have been analyzed on the basis of the Potential Gross Income MuItipIier and price/SF (for the smaller four-plex and rooming house facilities) and price/unit (for the larger rental apartment buildings) methods of comparison. The following discussion illustrates the basis for our adjustments in the comparable sales analysis. Financing The sales represent "arm's length" transactions with typical terms of purchase. The purchase money and conventional mortgages involved in the comparable sales were at market interest rates and terms at the time of sale, thereby requiring no adjustment for financing. Time of S e -- Continued -- The current listings, as well as the comparable apartment sales under analysis have occurred between January 1997 (currently listed for sale) and January 2001, and reflect current market conditions in the subject area. Accordingly, no quantitative time adjustment was required. Age/Condition The comparable properties were built between 1920 and 1968, and are in average condition. The subject properties were built between 1927 and 1979, and are in average condition. With the exception of Properties One and Six which have been renovated at a total reported cost of $125,000 in recent years, the comparable sales were similar to the subject properties in terms of condition and appeal. Lac do Investors in this type of income producing property, such as rental apartment buildings, typically pay a sales price based upon certain investment criteria. In the analysis of the comparable sales, location is not considered as critical as the net income flow. The comparable rental apartment sales are located within the same neighborhood, and were considered similar to the subject properties in terms of overall Location. The rooming house sales were located closer to the downtown Miami area; however, they were similar to Property Eight in terms of overall locational and demographical characteristics. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 79 - THE SALES COMPARISON APPROACH ANALYSIS OF COMPARABLE SALES - Continued Unit Mix and Size -- Continued -- The comparable rental apartment sales have been analyzed relative to their unit mix. The respective unit types command different rental rates and account for different portions of the income stream and therefore, have an affect on the purchase price associated with income generation potential. Investors purchasing income producing apartment facilities would typically pay more for those buildings which contain greater numbers of two - bedroom and three -bedroom units, as compared to the smaller efficiency and one - bedroom units. Potential Gross Income Multiplier Method An analysis of the Potential Gross Rental Income and resultant Potential Gross Rental Income Multiplier was utilized in order to estimate the Market Value. The comparable sales reflected Potential Gross Rental Income Multipliers of 2.93, 2.59, 5.32 (four-plex), 5.99 (four-plex), 4.69 (four-plex), 6.39 (four-plex), 3.35, 3.81 (effective gross income multiplier for a rooming house), 5.05, 3.72, 3.54 and 3.98. Based on the preceding analysis, a Potential Gross Rental Income Multiplier (PGIM) of 3.50 to 3.75 is reasonable for the subject properties which are utilized as rental apartment buildings; a Potential Gross Rental Income Multiplier (PGIM) of 5.50 is reasonable for the 4-unit Properties 2, 3, 4, 5 and 7; and an Effective Gross Rental Income Multiplier (EGIM) of 3.75 to 4.00 is reasonable for the 16-room boarding house at Property Eight. We have utilized the effective gross income multiplier for Property Eight due to the typically higher vacancy rates experienced in a weekly rented motel/boarding house use, as compared to a typical rental apartment use. Therefore: Potential Gross Income (PGI) x PGIM = Value Estimate Property 1: $104,040 PGI x 3.50 = $364,140 $104,040 PGI x 3.75 = $390,150 Market Value of the Fee Simple Interest in Property 1 in "as is" Condition (Rounded) $375,000 Property 2: $22,800 PGI x 5.50 = $125,400 Market Value of the Fee Simple Interest in Property 2 in "as is" Condition (Rounded) $125,400 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 80 - THE SALES COMPARISON APPROACH -- Continued -- Potential Gross Income Multiplier Method - Continued Property 3: $22,800 PGI x 5.50 = $125,400 Market Value of the Fee Simple Interest in Property 3 in "as is" Condition (Rounded) $125,400 Property 4: $22,800 PGI x 5.50 = $125,400 Market Value of the Fee Simple Interest in Property 4 in "as is" Condition (Rounded) $125,400 Property 5: $22,800 PGI x 5.50 = $125,400 Market Value of the Fee Simple Interest in Property 5 in "as is" Condition (Rounded) $125,400 Property 6: $92,880 PGI x 3.50 = $325,080 $92,880 PGI x 3.75 = $348,300 Market Value of the Fee Simple Interest in Property 6 in "as is" Condition (Rounded) $335,000 Property 7: $21,600 PGI x 5.50 = $118,800 Market Value of the Fee Simple Interest in Property 7 in "as is" Condition (Rounded) $118,800 Property 8: $37,860 EGI x 3.75 = $141,975 $37,860 EGI x 4.00 = $151,440 Market Value of the Fee Simple Interest in Property 8 in "as is" Condition (Rounded) $145,000 J.B. ALHALR & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 81 - THE SALES COMPARISON APPROACH -- Continued -- Price/Unit Method Analysis of sale price/unit has also been utilized to estimate Market Value. The comparable sales reflect sale price/unit of: - $8,800 (now asking $10,000) and $15,800 per room for boarding houses; - $7,800 and $11,200 (asking price) for efficiency units; - $11,400, $9,200, $13,100, $16,700 (asking price), $12,500 (asking price), $13,200 (asking price) and $14,600 (asking price) for one bedroom -one bathroom units; and - $28,800, $29,500, $22,500 and $28,800 for two bedroom -one bathroom units within four-plex buildings; and sale price/SF of _$41.38, $42.43, $44.93 and $38.09; - $16,100 and $17,400 (asking price) for two bedroom -one bathroom units within larger rental apartment buildings. Based on the preceding market analysis, $9,000 for efficiency units, $12,500 for one - bedroom units and $17,500 for two -bedroom units would be reasonable for the upgraded Properties 1 and 6. In addition, $42.50/SF and $27,500 for two -bedroom units at four- plex buildings would be reasonable for Properties 2, 3, 4, 5 and 7; while $9,000 per room would be reasonable for the 16-room boarding house at Property 8. Property 1: $12,500 x 24 + $17,500 x 3 = $352,500 Market Value of the Fee Simple Interest in Property 1 in "as is" Condition (Rounded) $352,500 Property 2: $27,500 x 4 = $110,000 $42.50/SF x 2,779 SF = $118,108 Property 3: Market Value of the Fee Simple Interest in Property 2 in "as is" Condition (Rounded) $114,000 $27,500 x 4 = $110,000 $42.50/SF x 2,762 SF = $117,385 Market Value of the Fee Simple Interest in Property 3 in "as is" Condition (Rounded) $114,000 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite Z00 • Coconut Grove, Florida 33133 - 82 - THE SALES COMPARISON APPROACH -- Continued — Price/Unit Method - Continued Property 4: $27,500 x 4 = $42.50/SF x 2,762 SF = Property 5: Market Value of the Fee Simple Interest in Property 4 in "as is" Condition (Rounded) $27,500 x 4 = $42.50/SF x 2,853 SF Market Value of the Fee Simple Interest in Property 5 in "as is" Condition (Rounded) $110,000 $117,385 $114,000 $110,000 $121,253 $115,000 Property 6: $12,500 x 21 + $17,500 x 3 = $315,000 Market Value of the Fee Simple Interest in Property 6 in "as is" Condition (Rounded) $315,000 Property 7: $27,500 x 4 = $110,000 $42.50/SF x 3,232 SF = $137,360 Market Value of the Fee Simple Interest in Property 7 in "as is" Condition (Rounded) $123,500 Property 8: $9,000 x 16 = $144,000 Market Value of the Fee Simple Interest in Property 8 in "as is" Condition (Rounded) $144,000 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 ' Coconut Grove, Florida 33133 - 83 - THE SALES COMPARISON APPROACH -- Continued -- RECONCILIATION Value Via Value Via Reconciled G.I.M Metjgd Price/Unit Value Property 1 $375,000 $352,500 $360,000 Property 2 $125,400 $114,000 $120,000 Property 3 $125,400 $114,000 $120,000 Property 4 $125,400 $114,000 $120,000 Property 5 $125,400 $115,000 $120,000 Property 6 $335,000 $315,000 $325,000 Property 7 $118,800 $123,500 $120,000 Property 8 $145,000 $144,000 $144,500 J.S. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 84 - THE SALES COMPARISON APPROACH LAND VALUATION In order to estimate the value of Site Nine, the land is analyzed as if vacant and available to be put to its Highest and Best Use. There are several different techniques which can be utilized in the valuation of land. The technique selected must relate to the specific factors inherent in the appraisal problem at hand. The land valuation technique selected must reflect the prudent and rationale behavior of the most probable, typically informed purchaser/investor. In addition, the availability of reliable and verified market data further leads to the selection of the applicable land valuation technique. 1. The Sales Comparison Approach analyzes the sales of similar vacant parcels of land with comparison and adjustment made from these sales to Site Nine. 2. The Abstraction Method analyzes the sales of improved properties with an allocation made between land and improvement value. The indicated allocation may establish a typical ratio of land value to total value or to derive from the portion of the sales price allocated to land an estimate of land value for use as a comparable land sale. 3. The Cost of Development Method provides an estimate of the value of undeveloped land based upon the creation of a platted subdivision, development and sale of said parcel. The method assumes that the most probable purchaser of the land would be a developer/investor who plans to dispose of the developed sites at a profit. The costs of development are subtracted from the estimated proceeds of sale resulting in a net income projection which is discounted over the market absorption period. 4. The Land Residual Method treats the net income available to support the investment in the site as a residual. The income required to cover the investment in new improvements that represent the Highest and Best Use of the site is deducted from the Net Operating Income resulting in an estimate of the net income to the land which is then capitalized to estimate the land value. The Sales Comparison Approach has been selected to estimate the Market Value of the subject sites. This method is based on the principle of substitution which states that a prudent purchaser/investor would pay ,no more for a given site than the cost of acquiring an alternative site with the same utility. The Sales Comparison Approach is based on a comparison between recently sold sites and Site Nine, utilizing the price per square foot of buildable area unit of comparison. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 85 - rr' THE SALES COMPARISON APPROACH TO VALUE -- Continued -- LAND VALUATION - Continued Cpmparable Land Sale One Location: 1336 N.W. 45th Street, Miami, Florida Legal Description: Lot 5, Block 14, North Miami Estates, as recorded in Plat Book 5, Page 48 of the Public Records of Miami - Dade County, Florida Folio No: Grantee: Grantor: O.R. Book/Page: Site Size: Zoning: Floor Area Ratio: Maximum Buildable Area: Date of Sale: Consideration: Financing: Cash Equivalent Sale Price: Cash Equivalent Sale Price/SF of Site Area: Cash Equivalent Sale Price/SF of Buildable Area: 01-3123-037-0890 Joe T. Jones, Sr. Billy J. Lewis 19454/3787 5,000 SF (.11 acre) R-2 City of Miami - Medium Density Multi -Family Residential District .60 3,000 SF January 12, 2001 $8,000 Cash to the seller $8,000 $1.60 $2.67 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 86 - THE SALES COMPARISON APPROACH TO VALUE -- Continued -- LAND VALUATION - Continued Comparable Land Sale Two Location: 6700 N.W. 23rd Place, Miami -Dade County, Florida Legal Description: Lot 7, Block 3, Northwest Highlands, as recorded in Plat Book 22, Page 23 of the Public Records of Miami -Dade County, Florida Grantee: Peaceful Zion Missionary Baptist Church Grantor: Jensie Dorsey O.R. Book/Page: 19128/3669 Site Size: 4,964 SF (.11 acre) Zoning: RU-2 Miami -Dade County - Two -Family Residential District Floor Area Ratio: .60 Maximum Buildable Area: 2,978 SF Date of Sale: March 12, 2000 Consideration: $7,500 Financing: Cash to the seller Cash Equivalent Sale Price: $7,500 Cash Equivalent Sale Price/SF of Site Area: $1.51 Cash Equivalent Sale Price/SF of Buildable Area: $2.52 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 87 - THE SALES COMPARISON APPROACH TO VALUE -- Continued -- LAND VALUATION - Continued Comparable Land Sale Three Location: 1529-1547 N.W. 69th Street, Miami, Florida Legal Description: Lot 12 and 15, Block 6, North Liberty City, as recorded in Plat Book 39, Page 77 of the Public Records of Miami -Dade County, Florida Folio No: 01-3114-015-0890 and -0920 _. Grantee: Mount Olive Primitive Baptist Church Grantor: County of Miami -Dade O.R. Book/Page: 18998/3158 Site Size: 6,000 SF (.14 acre) Zoning: R-2 City of Miami - Medium Density Multi -Family Residential District Floor Area Ratio: .60 Maximum Buildable Area: 3,600 SF Date of Sale: February 25, 2000 Consideration: $8,000 Financing: Cash to the seller Cash Equivalent Sale Price: $8,000 Cash Equivalent Sale Price/SF of Site Area: $1.33 Cash Equivalent Sale Price/SF of Buildable Area: $2.22 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 88 - THE SALES COMPARISON APPROACH TO VALUE -- Continued — LAND VALUATION - Continued comparable Land Sale Four Location: 1442 N.W. 58th Terrace, Miami, Florida Legal Description: Lot 19, Block 6, Orange Heights, as recorded in Plat Book 14, Page 62 of the Public Records of Miami - Dade County, Florida Folio No: 01-3114-0-15-0920 Grantee: New Jerusalem in Its Power Holiness Grantor: County of Miami -Dade O.R. Book./Page: 18958/1308 Site Size: 5,300 SF (.12 acre) Zoning: R-2 City of Miami - Medium Density Multi -Family Residential District Floor Area Ratio: .60 Maximum Buildable Area: 3,180 SF Date of Sale: January 24, 2000 Consideration: $11,000 Financing: Cash to the seller Cash Equivalent Sale Price: $11,000 Cash Equivalent Sale Price/SF of Site Area: $2.08 Cash Equivalent Sale Price/SF of Buildable Area: $3.46 J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 89 - THE SALES COMPARISON APPROACH TO VALUE -- Continued -- LAND VALUATION - Continued Address Folio No Site Size (SF) Site Size (Acre) Zoning Floor Area Ratio (FAR) Buildable Area Date of Sale Consideration Financing Sale Price Sale Price/SF Sale Price/SF of Base Buildable Area COMPARABLE VACANT RESIDENTIAL LAND SALES Land Sale 1 Land Sale 2 Land Sale 3 Land Sale 4 1336 N.W. 6700 N.W. - 1529-1547 N.W. 1442 W.W. 45th Street 23rd Place 69th Street 58th Terrace Miami Miami -Dade Co. Miami Miami 01-3123-037-0890 30-3115-036-0261 01-3114-015-0890 01-3114-035-0920 01-3114-015-0920 5,000 4,964 6,000 5,300 0.11 0.11 0.14 0.12 R-2 RU-2 R-2 R-2 0.60 0.60 0.60 0.60 3,000 2.978 3,600 3,180 1 / 12/2001 3/12/2000 2/25/2000 1/24/2000 $8,000 $7,500 $8,000 $11,000 Cash to the Seller Cash to the Seller Cash to the Seller Cash to the Seller $8,000 $7,500 $8,000 $11,000 $1.60 $1.51 $1.33 $2.08 $2.67 $2.52 $2.22 $3.46 .f+ .I.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 90 - THE SALES COMPARISON APPROACH TO VALUE -- Continued -- ANALYSIS OF COMPARABLE LAND SALES The comparable land sales are considered similar to Site Nine in terms of zoning, location, physical characteristics, topography and buildable utility. The sales represent bona -fide "arm's length" transactions which represent prevailing market values. Our analysis has taken into account those differentials relative to financing, time of sale, location, size, zoning and developmental potential of the sites as they compare to Site Nine. Fin&ncing The comparable land sales are "cash to the seller" transactions and therefore, no adjustment for favorable financing was required. Time The comparable sales have occurred between January 2000 and January 2001, and are considered to reflect the prevailing market conditions in the subject area and no time adjustment was applied. Location The comparable land sales were considered similar to Site Nine in terms of location. Size / Scale The comparable land sales range from 4,964 SF to 6,000 SF, while Site Nine has 5,300 SF, thereby not requiring a significant size/scale adjustment. Zoning. Floor Area Ratio (FAR) and Developmental Potential Site Nine is zoned as R-3 Residential Districts. The comparable land sales are located within RU-2 and R-2 multi -family residential districts and were analyzed subject to their Floor Area Ratio (FAR) and resultant buildable area. The size and configuration of Site Nine and the comparable sales as it relates to their development potential were also taken into account. Summary and Land Value Correlation Prior to the adjustments discussed herein, the sale price per square foot of land area for the comparable land sales were $1.60, $1.51, $1.33 and $2.0$; sir an average of $1.63. Prior to the adjustments discussed herein, the sale price per square foot of buildable area for the comparable land sales were $2.67, $2.52, $2.22 and $3.46, or an average of $2.72. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 91 - THE SALES COMPARISON APPROACH TO VALUE — Continued -- Summary and Land Value Correlation - Continued Based on the preceding analysis, $2.25 to $2.50 per square foot of buildable area is a reasonable value range for Site Nine: Sit : 3,975 SF x $2.25/SF = $8,944 3,975 SF x $2.50/SF = $9,938 Reconciled Market Value of Site Nine (Rounded) $9,500 . J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 92 - THE SALES COMPARISON APPROACH LAND VALUATION In order to estimate the value of Sites Ten and Eleven, the land is analyzed as if vacant and available to be put to its Highest and Best Use. There are several different techniques which can be utilized in the valuation of land. The technique selected must relate to the specific factors inherent in the appraisal problem at hand. The land valuation technique selected must reflect the prudent and rationale behavior of the most probable, typically informed purchaser/investor. In addition, the availability of reliable and verified market data further leads to the selection of the applicable land valuation technique. 1. The Sales Comparison Approach analyzes the sales of similar vacant parcels of land with comparison and adjustment made from these sales to Sites Ten and Eleven. 2. The Abstraction Method analyzes the sales of improved properties with an allocation made between land and improvement value. The indicated allocation may establish a typical ratio of land value to total value or to derive from the portion of the sales price allocated to land an estimate of land value for use as a comparable land sale. 3. The Cost of Development Method provides an estimate of the value of undeveloped land based upon the creation of a platted subdivision, development and sale of said parcel. The method assumes that the most probable purchaser of the land would be a developer/investor who plans to dispose of the developed sites at a profit. The costs of development are subtracted from the estimated proceeds of sale resulting in a net income projection which is discounted over the market absorption period. 4. The Land Residual Method treats the net income available to support the investment in the site as a residual. The income required to cover the investment in new improvements that represent the Highest and Best Use of the site is deducted from the Net Operating Income resulting in an estimate of the net income to the land which is then capitalized to estimate the land value. The Sales Comparison Approach has been selected to estimate the Market Value of the subject sites. This method is based on the principle of substitution which states that a prudent purchaser/investor would pay no more for a given site than the cost of acquiring an alternative site with the same utility. The Sales Comparison Approach is based on a comparison between recently sold sites and Sites Ten and Eleven, utilizing the price per square foot of buildable area unit of comparison. J.B. ALHALE & ASSOCIATES, INC. Real Estate Appraisers and Consultants 3121 Commodore Plaza, Suite 200 • Coconut Grove, Florida 33133 - 93 -