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OFFICE CONDOMINIUM UNITS
APPRAISAL REPORT
LOCATED AT:
UNITS 100, 101, 103, 104, 105, 106, 107, 108, 109, 110, 111,
113, 114, 116, 117, 202, 203, 304, 320, 370, 380 & 390 THE
LAKES FRONTAGE CENTER CONDOMINIUM
14100 PALMETTO FRONTAGE ROAD MIAMI LAKES, FLORIDA 33016
PREPARED FOR:
EASTERN NATIONAL BANK 799 BRICKELL PLAZA, 10TH FLOOR
MIAMI, FLORIDA 33131
AS OF:
AUGUST 22, 2011
PREPARED BY:
QUINLIVAN APPRAISAL, P.A.
7300 NORTH KENDALL DRIVE - SUITE 530 MIAMI, FLORIDA 33156
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QUINLIVAN APPRAISALA PROFESSIONAL ASSOCIATION
7300 NORTH KENDALL DRIVE, SUITE 530 MIAMI, FLORIDA 33156
J. Mark Quinlivan, MAI State Certified General Appraiser RZ
000112
Telephone (305) 663-6611 Fax (305) 670-4330 [email protected]
Thomas F. Magenheimer, MAI State Certified General Appraiser RZ
000553
August 24, 2011 Marianella Lozada-Duque Eastern National Bank
799 Brickell Plaza, 10th Floor Miami, Florida 33131 Dear Ms.
Lozada-Duque: In accordance with your request and authorization, I
have prepared this Appraisal Report covering the following
described property:
Units 100, 101, 103, 104, 105, 106, 107, 108, 109, 110, 111,
113, 114, 116, 117, 202, 203, 304, 320, 370, 380 & 390 of The
Lakes Frontage Center Condominium located at 14100 Palmetto
Frontage Road, Miami Lakes, Florida
The purpose of this Appraisal is to estimate the As Is Market
Value of the subject units as of the market conditions existing on
August 22, 2011, being one of the dates of personal inspection. The
Appraisal Report that follows sets forth the identification of the
property, the assumptions and limiting conditions, pertinent facts
about the area and the subject property, comparable data, the
results of the investigations and analyses, and the reasoning
leading to the conclusions set forth. This report was prepared in
accordance with the requirements of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 (FIRREA) relating to
appraisal standards as enumerated in Title 12, Code of Federal
Regulation, Part 34 (12CFR34) and in compliance with the most
current Uniform Standards of Professional Appraisal Practice
(USPAP) as adopted by the Appraisal Standards Board of the
Appraisal Foundation.
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Marianella Lozada-Duque August 24, 2011 Page 2 Based on the
inspection of the property and the investigation and analyses
undertaken, I have formed the opinion that the subject units had an
As Is Market Value based upon the market conditions prevalent on
August 22, 2011, as follows:
TWO MILLION SIX HUNDRED FIFTY THOUSAND DOLLARS
($2,650,000) Respectfully submitted,
J. Mark Quinlivan, MAI State-Certified General Appraiser
Certification Number: RZ0000112
Brian M. Quinlivan Registered Trainee Appraiser License Number:
RI19051 JMQ/rp (11-063U)
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T A B L E O F C O N T E N T S
PAGE COVER PAGE TRANSMITTAL LETTER TABLE OF CONTENTS
CERTIFICATION OF VALUE
....................................................................................................
1 SUMMARY OF SALIENT FACTS AND
CONCLUSIONS.................................................. 3
INTRODUCTION
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21 INTRODUCTION
...................................................................................................................
22 IDENTIFICATION OF THE
PROPERTY...........................................................................
22 LOCATION
.............................................................................................................................
22 PURPOSE AND DATE OF APPRAISAL
.............................................................................
22 INTENDED USE AND INTENDED USER OF
APPRAISAL............................................. 22 LEGAL
DESCRIPTION.........................................................................................................
22 PROPERTY RIGHTS APPRAISED
.....................................................................................
22 DEFINITION OF MARKET VALUE
...................................................................................
23 ASSESSMENT AND TAXES
2010......................................................................................
24 OWNER OF RECORD AND ADDRESS
..............................................................................
25 FIVE-YEAR HISTORY OF TITLE
......................................................................................
25
SCOPE OF THE APPRAISAL
...................................................................................................
26 LOCATION ANALYSIS
..............................................................................................................
29
COUNTY
DATA......................................................................................................................
30 NEIGHBORHOOD
DATA.....................................................................................................
39
SITE DATA
..................................................................................................................................
42 ZONING
.......................................................................................................................................
45 HIGHEST AND BEST USE
.......................................................................................................
48 DESCRIPTION OF IMPROVEMENTS
....................................................................................
52 THE APPRAISAL
PROCESS.....................................................................................................
58 INCOME
APPROACH................................................................................................................
61 SALES COMPARISON APPROACH
........................................................................................
67 RECONCILIATION AND VALUE CONCLUSION
.................................................................
85 ADDENDA
...................................................................................................................................
88
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ASSUMPTIONS AND LIMITING CONDITIONS QUALIFICATIONS CLIENT LIST
ENGAGEMENT LETTER RENT ROLL / EXPENSES
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CERTIFICATION OF VALUE
The undersigned hereby certifies that, to the best of my
knowledge and belief: (A) The statements of fact contained in the
report are true and correct. (B) The reported analyses, opinions
and conclusions are limited only by the
assumptions and limiting conditions set forth, and are our
personal, unbiased professional analyses, opinions and
conclusions.
(C) I have no present or prospective interest in the property
that is the subject
of this report, and we have no personal interest or bias with
respect to the parties involved.
(D) I have no bias with respect to the property that is the
subject of this report
or to the parties involved with this assignment. (E) My
engagement in this assignment is not contingent upon developing
or
reporting predetermined results. (F) The appraisers compensation
for completing this assignment 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 directly related to the
intended use of this appraisal. Furthermore, the appraisal
assignment is not based on a requested minimum valuation, a
specific valuation or the approval of a loan.
(G) The appraisers analyses, opinions and conclusions are
developed, and
this report is prepared, in conformity with the Uniform
Standards of Professional Appraisal Practice, and the requirements
of the State of Florida for state-certified appraisers.
(H) Use of this report is subject to the requirements of the
State of Florida
relating to review by the Real Estate Appraisal Subcommittee of
the Florida Real Estate Commission.
(I) Brian Quinlivan has made a personal inspection of the
property that is the
subject of this report. (J) No one provided professional
assistance to the persons signing this
report.
QUINLIVAN APPRAISAL 1
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(K) The reported analyses, opinions, and conclusions are
developed, and this
report is prepared, in conformity with the requirements of the
Code of Professional Ethics and the Standards of Professional
Appraisal Practice of the Appraisal Institute.
(L) The use of this report is subject to the requirements of the
Appraisal
Institute relating to review by its duly authorized
representatives. (M) The appraiser has not performed any services
on the subject property
within the past three years. As of the date of this report, J.
Mark Quinlivan has completed the requirements under the continuing
education program for The Appraisal Institute. Based on the
inspection of the property and the investigation and analyses
undertaken, subject to the assumptions and limiting conditions set
forth in the Addendum of this report, I have formed the opinion, as
of August 22, 2011 the subject units had an As Is Market Value
of:
TWO MILLION SIX HUNDRED FIFTY THOUSAND DOLLARS
($2,650,000)
J. MARK QUINLIVAN, MAI STATE CERTIFIED GENERAL APPRAISER
CERTIFICATION NUMBER: RZ0000112
BRIAN M. QUINLIVAN REGISTERED TRAINEE APPRAISER
LICENSE NUMBER: RI 19051
QUINLIVAN APPRAISAL 2
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QUINLIVAN APPRAISAL 3
SUMMARY OF SALIENT FACTS AND CONCLUSIONS Type Report
Self-contained Purpose of Appraisal As Is Market Value Property
Rights Appraised Fee Simple Location 14100 Palmetto Frontage
Road
Miami Lakes, Florida Legal Description Units 100, 101, 103, 104,
105, 106, 107, 108, 109,
110, 111, 113, 114, 116, 117, 202, 203, 304, 320, 370, 380 &
390 and a combined 64.528% interest in the common elements, The
Lakes Frontage Center Condominium, OR Book 24401, Page 4031, Public
Records of Miami-Dade County, Florida.
Age 1983 Zoning IU-C, Industrial Conditional Highest and Best
Use Existing office condominium use Indications of Value: Cost
Approach Not Applicable Income Approach $2,210,000 Sales Comparison
Approach (Gross Value) $3,320,000 As Is Market Value $2,650,000
Date of Value Estimate August 22, 2011 Date of Inspection August
22, 2011 Date of Report August 24, 2011 Remarks The subject units
are located in a 30-unit office
condominium building known as The Lakes Frontage Center
Condominium.
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14100 PALMETTO FRONTAGE ROAD
LOOKING NORTHEASTERLY ON PALMETTO FRONTAGE ROAD- SUBJECT
BUILDING TO LEFT
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SUBJECT BUILDING
LOOKING NORTHWESTERLY ALONG NW 80 AVENUE- SUBJECT BUILDING TO
RIGHT
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INTRODUCTION
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QUINLIVAN APPRAISAL 22
INTRODUCTION IDENTIFICATION OF THE PROPERTY Twenty-two office
condominium units located within the Lakes Frontage Center
Condominium.
LOCATION 14100 Palmetto Frontage Road Miami Lakes, Florida.
PURPOSE AND DATE OF APPRAISAL The purpose of this Appraisal is
to estimate the As Is Market Value of the subject units as of the
market conditions existing on August 22, 2011, being one of the
dates of personal inspection.
INTENDED USE AND INTENDED USER OF APPRAISAL The intended use of
this appraisal is to assist the client in loan underwriting and/or
credit decisions. The intended user is Eastern National Bank.
LEGAL DESCRIPTION Units 100, 101, 103, 104, 105, 106, 107, 108,
109, 110, 111, 113, 114, 116, 117, 202, 203, 304, 320, 370, 380
& 390 and a combined 64.528% interest in the common elements,
The Lakes Frontage Center Condominium, OR Book 24401, Page 4031,
Public Records of Miami-Dade County, Florida. PROPERTY RIGHTS
APPRAISED The property is appraised in fee simple: a fee without
limitations to any particular class of heirs or restrictions, but
subject to the limitations of eminent domain, escheat, police power
and taxation, as well as utility easements of record.
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QUINLIVAN APPRAISAL 23
DEFINITION OF MARKET VALUE Market Value means 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 and knowledgeably, and assuming the
price is not affected by undue stimulus. Implicit in this
definition is the consummation of a sale as of a specified date and
the passing of title from seller to buyer under conditions
whereby:
(1) buyer and seller are typically motivated; (2) both parties
are well informed or well advised and acting in what
they consider their own best interest; (3) a reasonable time is
allowed for exposure to the open market; (4) payment is made in
terms of cash in U.S. dollars or in terms of
financial arrangements comparable thereto; and (5) the price
represents a normal consideration for the property sold
unaffected by special or creative financing or sales concessions
granted by anyone associated with the sale.
(Source: USPAP 2010-2011 Edition)
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QUINLIVAN APPRAISAL 24
ASSESSMENT AND TAXES 2010 The subject property is assessed under
the jurisdiction of the Town of Miami Lakes, Florida. The
assessment for the property is established each year as of January
1st by the Miami-Dade County Property Appraiser's Office at 100% of
"Just Value." Just Value has been equated to Market Value less
closing costs. While the State of Florida requires real estate to
be assessed at 100% of Just Value, in reality the ratio of the
assessed value to sales price is generally below 100%.
Folio No. Unit Assessed Value Millage Rate Tax Amount
32-2015-045-0010 100 $203,070 0.0205295 $4,168.93 32-2015-045-0020
101 $168,270 0.0205295 $3,454.50 32-2015-045-0040 103 $77,380
0.0205295 $1,588.57 32-2015-045-0050 104 $36,010 0.0205295 $739.27
32-2015-045-0060 105 $164,120 0.0205295 $3,369.30 32-2015-045-0070
106 $169,480 0.0205295 $3,479.34 32-2015-045-0080 107 $266,250
0.0205295 $5,465.98 32-2015-045-0090 108 $133,300 0.0205295
$2,736.58 32-2015-045-0100 109 $151,650 0.0205295 $3,113.30
32-2015-045-0110 110 $205,490 0.0205295 $4,218.61 32-2015-045-0120
111 $122,910 0.0205295 $2,523.28 32-2015-045-0140 113 $59,900
0.0205295 $1,229.72 32-2015-045-0150 114 $65,780 0.0205295
$1,350.43 32-2015-045-0160 116 $34,100 0.0205295 $700.06
32-2015-045-0170 117 $60,250 0.0205295 $1,236.90 32-2015-045-0200
202 $63,360 0.0205295 $1,300.75 32-2015-045-0210 203 $175,360
0.0205295 $3,600.05 32-2015-045-0250 304 $293,260 0.0205295
$6,020.48 32-2015-045-0270 320 $204,100 0.0205295 $4,190.07
32-2015-045-0280 370 $309,190 0.0205295 $6,347.52 32-2015-045-0290
380 $249,120 0.0205295 $5,114.31 32-2015-045-0300 390 $282,700
0.0205295 $5,803.69 $3,495,050 $71,751.63
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QUINLIVAN APPRAISAL 25
OWNER OF RECORD AND ADDRESS Palmetto Road Frontage, LLC 14100
Palmetto Frontage Road, #101 Miami Lakes, FL 33016-1557
FIVE-YEAR HISTORY OF TITLE According to the Public Records of
Miami-Dade County, there have been no sale transactions of the
subject units within the past three years.
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SCOPE OF THE APPRAISAL
QUINLIVAN APPRAISAL 26
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QUINLIVAN APPRAISAL 27
SCOPE OF THE APPRAISAL The scope of the assignment relates to
the extent and manner in which research is conducted, data is
gathered and analysis is applied, all based upon the following
problem-identifying factors stated elsewhere in this report. This
appraisal of the subject has been presented in the form of a
Self-contained Appraisal Report, which is intended to comply with
the reporting requirements set forth under Standards Rule 2-2 (a)
of the USPAP. Data related to the subject property was derived from
various sources including but not limited to the Miami-Dade County
Property Appraisers Office, Miami-Dade County plats as compiled by
First American Real Estate Solutions, Inc., FEMA flood zone maps,
Land Development Regulations of the Town of Miami Lakes,
condominium documents and tax roll information provided by ISCNET.
Comparable sale sources include First American Real Estate
Solutions, Inc., an on-line computer service provided by First
American Real Estate Solutions (ISC Division), Board of Realtors
Multiple Listing Services, Miami-Dade County Property Appraisers
Office and LoopNet. Sales prices are typically confirmed with a
party to the transaction, i.e., buyer, seller, real estate agent or
attorney to the transaction. A search for office condominium units
within the subject market area was conducted. The initial sales
period researched was from January of 2009 through the date of
valuation. The sales all have similar improvements and highest and
best uses as the subject property. Several other sales were
considered, but were not included because there was too wide a
difference in physical factors, location and time.
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QUINLIVAN APPRAISAL 28
ESTIMATED MARKETING PERIOD The estimated value of the subject is
predicated upon a normal marketing period. A normal marketing
period is generally defined as the most probable amount of time
necessary to expose and actively market a property on the open
market to achieve a sale. Implicit in this definition are the
following assumptions:
(A) The property will be actively exposed and aggressively
marketed to potential purchasers through marketing channels
commonly used by sellers and buyers of similar type properties.
(B) The property will be offered at a price reflecting the most
probable markup
over market value used by sellers of similar type
properties.
(C) A sale will be consummated under the terms and conditions of
the definition of Market Value required by the regulation.
In order to estimate the marketability of this property, sales
activity in this market area is reviewed over the past three years,
multiple listings are reviewed and real estate brokers operating in
the area are interviewed. Based on the above sources, the marketing
period for the subject property is estimated to be less than twelve
months. ESTIMATED EXPOSURE TIME Exposure time is defined as the
estimated length of time the property interest being appraised
would have offered on the market prior to the hypothetical
consummation of a sale at market value on the effective date of the
appraisal; a retrospective estimate based upon an analysis of past
events assuming a competitive and open market. The overall concept
of reasonable exposure encompasses not only adequate, sufficient
and reasonable time but also adequate, sufficient and reasonable
effort. In estimating a reasonable exposure time for the subject
property, the appraisers have taken the following steps:
Discussion with buyers, sellers, brokers and/or review of
multiple listings of commercial condominium units in the area
related to historic marketing periods.
Based on the above sources, exposure time is estimated to have
been twelve months for the subject property.
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LOCATION ANALYSIS
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QUINLIVAN APPRAISAL 30
COUNTY DATA Miami-Dade County - Location and Size Miami-Dade
County, which comprises the metropolitan area of Miami, is situated
on the southeast tip of the state of Florida. It is bordered on the
east by the Atlantic Ocean, on the west by Monroe and Collier
Counties, on the north by Broward County, and on the south by
Monroe County (the Florida Keys). Miami-Dade County, the largest
county in area and population in the state of Florida, covers an
area of 2,054 square miles with an altitude ranging from sea level
to 25 feet. Water covers 354 square miles of the County. Although
the County is relatively large, approximately half of the total
area is comprised of the Everglades, which is a natural area that
will not be developed. Therefore, only the eastern section of
Miami-Dade County encompasses the area which is currently developed
or available for future development. Miami-Dade County's location,
its southern latitude and proximity to the Gulf Stream provide for
mild winters and pleasant summers. Population The state of Florida
has increased rapidly in population from 9,740,000 in 1980 to
12,937,926 in 1990 and 15,982,378 in 2000. The 2009 population of
Florida was estimated at 18,537,969. Florida is expected to add an
average of only about 209,000 residents a year between 2007 and
2010, compared with annual increases of about 418,000 people
between 2002 and 2006. Miami-Dade County's population increased
from 1,626,000 in 1980 to 1,937,094 in 1990, reflecting an average
annual compounded growth rate of 1.77%, compared with 2.88% for the
state of Florida. By 2000, Miami-Dade County's population increased
to approximately 2,253,362 and in 2008 it is estimated at
2,398,245. The population is estimated to grow to 2,560,000 by the
Year 2010. Miami-Dade County's population growth during the last
four decades has been dramatic especially in relation to national
trends. From 1950 to 1990 the United States population increased by
60% while the population of Miami-Dade County has almost quadrupled
from 495,084 to 1,937,000. During this period, the state of Florida
was elevated from the 20th most populous state to the 4th in 1990
and continues to be the fourth most populous state. During the
1960s, the major increase in Miami-Dade County's population was due
to the large immigration of Cubans. Today, Cuban and other Spanish
speaking people comprise approximately 62% of Miami-Dade County's
population. The increase in Hispanic population has had favorable
effects on the local economy and has helped to create a
multi-national cultural environment in the area.
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QUINLIVAN APPRAISAL 31
The overall population of Miami-Dade County is well dispersed
throughout the entire area, yet has several key areas of
concentration. During the 1960s, several sub-areas accounted for
approximately 70% of the growth. These areas include Hialeah,
northern Miami-Dade County, the Beach area, the Miami River area,
the area southwest of Miami International Airport, as well as the
Kendall and Cutler Ridge areas. In the first half of the 1970s,
population growth continued in an uneven fashion especially in the
urban fringes. Since 1970, approximately three-fourths of the total
population growth for the County has occurred in the unincorporated
areas. The older centrally located cities such as Miami, Miami
Beach and Coral Gables have grown at modest rates from 1970 to
1990. Unincorporated Miami-Dade County has evidenced the most rapid
growth which continues to occur in areas in northeast Miami-Dade
County (Aventura), as well as the currently expanding southwest
area, especially in sections of Flagler Street, S.W. 8th Street,
North Kendall Drive and Homestead. Population trends indicate that
most of the population growth in Miami-Dade County between 2010 and
2015 will occur in outlying areas such as North Miami Beach, the
Kendall area west of the Florida Turnpike, the S.W. 8th Street area
west of the Florida Turnpike, the Hialeah-Miami Lakes area, as well
as those areas both east and west of U.S. Highway 1 between Cutler
Ridge and Florida City. Employment Trends The dominant
characteristic of Miami-Dade County is that it is primarily trade
and service based. Personal, business and repair services have had
a substantial increase in importance in the economic base over the
last decade. The major sectors of the economy include services,
wholesale and retail trade, transportation, communications, public
utilities, government and manufacturing. The most dominant
industries which form the County's economic base are construction
and tourism. Tourism is Miami-Dade County's biggest industry with
an estimated 12.1 million visitors in 2008 contributing to more
than 50 percent of the area's economy. Aviation and related
industries are responsible for another large segment of the
economy. The largest employer in Miami-Dade County is the
Miami-Dade County School Board, followed by Miami-Dade County,
Federal Government, State of Florida, Jackson Health System,
American Airlines, University of Miami, Baptist Health Systems of
South Florida, AT&T, and Florida Power and Light. Assuming
additional importance is the growing prominence of Miami-Dade
County as a center for international trade, finance and tourism.
The establishment of Miami as the "Gateway of the Americas" should
provide the area with a much needed degree of economic
diversification. This should enable Miami-Dade County to weather
slowdowns in the national economy by an increase of trade through
the Port of Miami, growth of international arrivals at the airport,
the Free Trade Zone, and the substantial foreign investment in the
local economy, particularly in real estate.
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QUINLIVAN APPRAISAL 32
In December of 2009, Floridas unemployment rate was 11.8
percent, up from 3.6 percent in 2006. The unemployment rate for
Miami-Dade County was 11.3 percent, up from 3.8 percent in
2007.
T A B L E 1
ESTIMATES OF MIAMI-DADE COUNTY TOURIST TRENDS
INTERNATIONAL DOMESTIC TOTAL
2005 5,248,380 6,053,220 11,301,600
2006 5,322,200 6,262,800 11,585,000
2007 5,492,900 6,473,000 11,965,900
2008 6,169,043 6,662,546 12,831,589
2009 5,684,400 6,251,564 11,935,964
2010 6,060,100 6,544,000 12,604,100
Source: Greater Miami Convention and Visitors Bureau, Tourism
Facts and Figures Figures for 2010 indicate 12,604,100 overnight
visitors came to Miami-Dade County, a 5.6% increase from 2009.
Table 2 shows that the bulk of international visitors to Miami-Dade
County originate from Central and South American Countries (52.2%),
followed by European Countries (23.5%) and Canada (9.9%). England
and Germany accounted for the largest proportion of European
visitors. In 2010 there were a total of 4,334,004 passengers
passing through the Port of Miami and approximately 17,985,000
arriving through Miami International Airport. During 2010, the
number of Port of Miami passengers increased 9.3% from 2009 and
2.7% from 2008. During 2010 the passengers arriving at the airport
increased 5.7% from 2009 and 5.5% from 2008. The arrivals at the
airport are fairly evenly distributed between international and
domestic passengers. In 2010, domestic passengers totaled 9,432,074
and international passengers totaled 8,552,895.
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QUINLIVAN APPRAISAL 33
T A B L E 2
ESTIMATES OF INTERNATIONAL VISITORS BY REGION
REGION 2006 2007 2008 2009
EUROPEAN COUNTRIES 23.0% 23.6% 23.5% 22.5%
CARIBBEAN COUNTRIES 12.5% 12.4% 12.1% 12.0%
CENTRAL AMERICAN COUNTRIES
9.4% 9.3% 9.3% 9.1%
SOUTH AMERICAN COUNTRIES
42.8% 42.3% 42.9% 44.9%
CANADA 9.9% 10.1% 9.9% 9.5%
OTHER COUNTRIES 2.4% 2.3% 2.3% 2.0
TOTAL 100% 100% 100% 100%
Source: Greater Miami Convention and Visitors Bureau, Tourism
Facts and Figures There are approximately 50,000 motel and hotel
rooms in 470 lodging facilities in Greater Miami and the Beaches.
The area had an occupancy rate of 74.5 percent as of January 2011,
down 0.8% from January 2010. The difference between the 2010 and
2011 hotel occupancy figures may be skewed by the presence of the
Super Bowl in South Florida in 2010. The airport area had the
highest occupancy rate as of January 2011 at around 85%. Average
room rate for hotel rooms in Miami-Dade County was $171.51 in
January of 2011, up from $164.88 in January of 2010. The average
room rate for the same period in 2008 was $146.54. Therefore, the
average hotel room rates in 2011 indicate an increase of 4.0% over
the 2010 rate and an increase of 17.0% over the 2008 rate. The
first in a series of new luxury properties opened in February 2004
when the 380-room Ritz Carlton opened in Miami Beach. In May of
2005, the 210-room Le Meridian opened in Sunny Isles Beach. Three
other new hotels with a total of 271 rooms opened in Miami Beach
during 2005. In 2009, 11 new hotels with 2,054 rooms were completed
with the largest being the Epic Hotel in downtown Miami. Miami-Dade
Financial Resources Over the course of the last decade, Greater
Miami has evolved into a major international financial center.
Domestic and international businesses find convenient access to a
full array of services provided by locally-based state and national
commercial banks, savings and loan associations, foreign banks,
non-depository credit institutions, securities and commodities
brokers and insurance companies.
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QUINLIVAN APPRAISAL 34
Greater Miami has the largest concentration of domestic and
international banks south of New York City. With more than 90
percent of the state's foreign banks operating offices in Miami,
this market dominates international banking in Florida. Overall,
about 150 domestic banks, foreign banks and Edge Act banks operate
in Greater Miami. The greatest concentration is located along
Brickell Avenue in downtown Miami. Transportation Miami-Dade County
has an extensive expressway system with access to all points in the
County. However, due to the rapidly increasing population, some of
the expressways, especially Interstate 95, are becoming
overburdened. In 1985 Miami-Dade County completed a 20.5 mile
elevated rapid transit system. This system originally extended
southward from downtown Miami to Dadeland, paralleling U.S. Highway
1 and northwesterly from downtown Miami to Hialeah. Recently, the
system was extended about a mile from Hialeah to the Palmetto
Expressway at NW 74th Street. In conjunction with this system,
there is a Downtown People Mover Automated Transit system which
encircles the central business district of Miami and extends south
to the Brickell area and north to the Omni area. Miami-Dade County
is served by the CSX and Florida East Coast Railroads for freight
and Amtrak Rail, Greyhound and Trailways Interstate bus lines for
passenger service. Miami International Airport, one of the nation's
largest and busiest, had approximately 35.7 million arrivals and
departures in 2010. The airport is currently undergoing a $5.4
billion expansion. A South Terminal has recently been completed and
a North Terminal is under construction and a fourth runway is
planned. Miami has become a port of embarkation for airlines and
ships bound for Central and South American Countries. The Port of
Miami, besides being the largest passenger port in the nation, is
also important as a cargo center with a 2009 annual tonnage of
approximately 6.83 million down from 7.43 million in 2008. The
ports traditional customer base has been Europe, China, Latin
America and the Caribbean, accounting for 65% of the ports total
volume. Miami's comprehensive transportation system and its
strategic location have enabled it to become an important
international transportation center, providing commercial access to
Latin America and the Caribbean. Government Miami-Dade County is
comprised of unincorporated areas, as well as 36 municipalities,
the largest of which is the city of Miami.
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QUINLIVAN APPRAISAL 35
Miami-Dade County is governed under a modified two-tier
metropolitan government. The purpose of this type government was to
establish one governing body for the county, and to establish one
supply of services such as fire, police, etc. for the county. The
upper tier is the County, which provides broad "regional" or county
functions, such as metropolitan planning, welfare, health and
transit services. The thirty-six municipalities represent the lower
tier of government, providing a varying array of services within
their jurisdictional boundaries. The County also maintains lower
tier functions, such as the provision of municipal-type services,
including police and fire, to the unincorporated areas and certain
municipalities on a negotiated basis. The County operates under the
Commission-Manager form of government. Legislative and
policy-making authority is vested in the elected thirteen-member
Board of County Commissioners; the Commission appointed County
Manager is the chief administrator. Miami-Dade County has operated
under the metropolitan form of government since 1957, when the Home
Rule Charter was passed by the local electorate. Prior to Home
Rule, the County had to rely on the State Legislature for the
enactment of its laws. County government had not been able to
respond to the tremendous demand for municipal services in this
rapidly urbanizing area, which is larger than the State of Rhode
Island or Delaware. The need to combine services duplicated by the
County and numerous cities was also clearly evident. The Charter
permitted the limited County government to reorganize into a
general purpose "municipal-type" government capable of performing
the full range of public functions into an area wide operation.
Real Estate At the end of 2010, the Miami-Dade County Office Market
contained approximately 81 million square feet of office space.
Approximately 28.8% of this space is located in the Miami central
business district and adjacent Brickell Avenue and 20% in the
Airport West area. The vacancy rate of office buildings in
Miami-Dade County was flat during 2010 at about 15%, but up from
11.3% in 2007 to 10.8% in 2008. However, during 2010 office
inventory grew by about 800,000 square feet, most of which was in
the Brickell Avenue market area. The total new offices under
construction totals about 1,213 million square feet. Again, most of
the new office construction is concentrated in the Brickell Avenue
market area. Other market areas with new construction of office
space include Coral Gables and Central Miami. Asking rental rates
have been declining in 2010 with the average county lease rate
falling below $30 per square foot for the first time since 2006.
Office rental rates in new buildings typically range from $26.00 to
$40.00 per square foot. The low end of the range is for office
space in the suburban markets. The upper end of the range is for
first class office space in Downtown Miami, Brickell Avenue,
Coconut Grove and Coral Gables.
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QUINLIVAN APPRAISAL 36
The Greater Miami Industrial Market, as of the end of 2010,
consisted of approximately 178.7 million square feet of industrial
space and approximately 16.1 million square feet of flex space. The
approximate percentage location of this space is as follows:
MARKET AREA % OF TOTAL MARKET SPACE
AIRPORT WEST 29.6%
HIALEAH 25.6% MEDLEY 16.7% MIAMI LAKES 3.3% NORTHEAST DADE
4.8%
NORTHCENTRAL DADE 14.9% SOUTH DADE 5.1%
TOTAL 100% The county's vacancy rate for the overall Miami-Dade
County industrial market for the end of 2010 was 10%. Airport West,
the largest industrial area, had a vacancy rate of 10.9% as of the
end of 2010. Industrial rental rates generally average $7.50 per
square foot, down 11% on an average of $8.00 per square foot at the
end of 2009. No new industrial space is expected to be constructed
during much of 2011. For the month of fourth quarter of 2010 there
were 842 building permits issued in Miami-Dade County, compared to
398 permits issued in the fourth quarter of 2009. The increase in
new permits issued between the same quarter of 2009 to 2010 is
approximately 3.8 times. The total number of permits issued in 2010
amounted to 2,297. This is in contrast to the 1,150 permits issued
in 2009. Miami-Dades single-family home sales increased 11.1% in
the fourth quarter of 2010 in comparison with the fourth quarter of
2009. A total of 200 new homes were reported sold in the fourth
quarter of 2010. In the fourth quarter of 2010, the median sales
price for single-family units was $206,578, down 24.9% from the
year earlier. Existing condo sales showed gains of 25.8% in
December 2009 over the units sold in November 2009. The median
sales price for condos decreased slightly by 0.5% during the same
period. During the last 12 months, condo sales increased 49.6%.
Over the same period, the average sales price was $142,650; a year
ago, it was $239,367 for a 40.4% decline. Reinhold P. Wolff
Quarterly Housing Report shows a vacancy rate of 2.8% for rental
apartment buildings in the First Quarter of 2011, lower than the
5.8% rate of the first quarter of 2010. The vacancy rate had been
declining steadily since 2006 due to the reduction of inventory
caused by the large amount of condominium conversions. Since 2007
many ownership housing units, including both condominiums and
single family houses, were placed into the rental market by
developers and individual owners.
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QUINLIVAN APPRAISAL 37
The condominium apartment market is currently experiencing an
all-time high inventory for new units. High-rise condominium towers
have been recently completed in the traditional condominium
locations such as Brickell Avenue, Coral Gables, Aventura and the
Miami beaches, as well as areas with no existing high-rise
condominiums, such as the central business district of Miami, the
Edgewater, Little Havana and Shenandoah neighborhoods of the city
of Miami. Additionally, many existing rental apartment projects
have been converted to condominiums. Sales of new condominiums
peaked in the second quarter of 2005 with 14,700 units sold during
the first six months of 2005. New condominium sales during 2010
totaled 3,700 units, down 19% from the 4,556 units sold during
2009. The new condominium apartment market is in a largely
oversupply condition. The Miami-Dade County retail market contains
approximately 59.5 million square feet in buildings over 20,000
square feet. The major retail markets in Miami-Dade County include
Hialeah, Coral Gables/South Miami-Dade, Aventura and Kendall.
Rental rates typically range from $20.00 to $45.00 per square foot
with rates in the $80 to $120 per square foot on South Beach. The
overall Miami-Dade County vacancy rate for 2010 was approximately
5.8%. The total net absorption of new retail space was only about
39,400 square feet during 2010. Very little, if any, significant
sized retail space is expected to be constructed during 2011.
Conclusions In the future, one of the principal growth areas for
Miami-Dade County is expected to be the international sector.
Miami-Dade County, because of its geographic location and excellent
transportation facilities, is well-suited to attract both business
individuals and tourists from Latin America. It is already one of
the principal shopping markets for Central and South Americans
visiting the United States and one of the principal export points
for goods and services destined for Latin America. The existence of
major financial institutions, retail outlets, corporations and
other business entities, coupled with its geographic location,
transportation systems and planned international trade centers give
Miami-Dade County an excellent opportunity for continued growth as
an international center. During 2010 all segments of the commercial
real estate market will continue to experience increasing vacancy
rates and decreasing rental rates. With decreasing sale prices for
both single family residences ad condominium apartment units, sales
activity is expected to rise during 2011.
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LOCATION MAP
QUINLIVAN APPRAISAL 38
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QUINLIVAN APPRAISAL 39
NEIGHBORHOOD DATA The subject site is located within the Town of
Miami Lakes, approximately fourteen miles northwest of the Central
Business District of Miami. The subject property may further be
identified as being located on the northwesterly corner of Palmetto
Frontage Road and N.W. 80th Avenue, one block west of the Palmetto
Expressway. The boundaries of the subject neighborhood are
generally delineated as N.W. 138th Street to the south, The
Palmetto Expressway (S.R. 826) to the north, Interstate 75 to the
west and N.W. 57th Avenue to the east. This area encompasses
approximately six square miles. Miami Lakes, a residential
community in northwest Miami-Dade County at the bend in the
Palmetto Expressway, is located between N.W. 57th Avenue to the
east and N.W. 87th Avenue to the west, and the Palmetto Expressway
to the north, and NW 138th Street to the south. This community
began development in the 1960s and is almost totally developed
today with a combination of single family residences, town houses,
rental apartment buildings, condominium apartment buildings,
warehouses, retail stores and offices. The residences generally
range in price from $500,000 to $1,000,000. The Town of Miami Lakes
was incorporated in 2000 as the 31st municipality in Miami-Dade
County. Miami Lakes was a master planned community developed in the
1960s by the Graham family. The original master plan was over 3,000
acres in size that would allow over 30 years of growth. As its name
implies, the town has 23 lakes within its boundaries. The Town
currently has over 27,000 residents. The Town has a council-manger
form of government with an elected mayor and town council. The
majority of Miami Lakes area (approximately four sections) is
located east of the Palmetto Expressway. The section located west
of the Palmetto Expressway, north and east of Interstate 75 and
south of N.W. 154th Street is the most recently developed section
of Miami Lakes. The easterly portion of this section is primarily
zoned for industrial/office use and has been developed almost
exclusively with low and mid-rise office buildings. The buildings
are primarily owned by the Graham Companies, the developer of Miami
Lakes. Tenants in these buildings include State Farm, American
Express, Kislak Bank, Ikon Office Solutions, Attorneys, Insurance
Company, Minolta, Keen Battle Mead Insurance and American
Healthcare services. The westerly half of this section has been
developed with single family residences, townhouses and condominium
apartments. These properties were developed from the mid-1980s to
the late 1990s. The Palmetto Expressway extends westerly from the
Golden Glades Interchange (intersection of I-95, Florida Turnpike
and US 441) to N.W. 77th Avenue, thence southerly to US Highway 1
at S.W. 104th Street in South Miami-Dade County. Interstate I-75
connects to the Palmetto Expressway at N.W. 138th Street.
Interstate 75 extends northerly to Ft. Lauderdale at S.R. 84
(I-595) and then extends west to Naples and the West Coast of
Florida. I-75 provides the subject neighborhood with good access to
the southern and western regions of Broward County.
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QUINLIVAN APPRAISAL 40
The subject property is located in commerce park located between
the Palmetto Expressway on the east, N.W. 154th Street to the
north, Interstate 75 to the south, and N.W. 82nd Avenue to the
west. The district is mostly improved with one- to four-story
office buildings and one-story flex space buildings. The commerce
park has some vacant land available for development. In summary,
the subject property is located in a commercial district on the
east side of Miami Lakes. Miami Lakes is a relatively strong
suburban office/industrial market because of its good access via
the Palmetto Expressway and I-75, and its proximity to the Miami
International Airport. The Palmetto Expressway and I-75 link the
subject neighborhood with both Miami and Ft. Lauderdale.
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NEIGHBORHOOD MAP
QUINLIVAN APPRAISAL 41
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SITE DATA
QUINLIVAN APPRAISAL 42
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QUINLIVAN APPRAISAL 43
SITE DATA Dimensions and Shape: The site is mostly rectangular
in shape. The site fronts 195 feet, more or less, along the
northwesterly side of Palmetto Frontage Road and approximately 340
feet along the northeasterly side of N.W. 80 Avenue. Source:
Condominium Documents Area: 66,300 square feet (approximate)
Source: Condominium Documents Topography and Drainage: The site is
level and approximately at street grade. Flood Zone: Map No.
12086C0114L (Effective September 11, 2009)
"AE" Base flood elevation determined- 6 feet Soil and Subsoil:
The immediate area of the subject site appears to have no unusual
soil or subsoil conditions. Unusual conditions would be brought out
by test borings. Utilities: Water: Miami-Dade Water & Sewer
Department Sewer: Miami-Dade Water & Sewer Department
Electricity: Florida Power & Light Company Telephone: AT &
T Street Improvements: Palmetto Frontage Road is asphalt paved with
a dedicated width of 50 feet. Palmetto Frontage Road has one
northerly bound lane and one southerly bound lane in the vicinity
of the subject.
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SITE MAP
QUINLIVAN APPRAISAL 44
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ZONING
QUINLIVAN APPRAISAL 45
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QUINLIVAN APPRAISAL 46
ZONING Under Ordinance of the Town of Miami Lakes
Classification: IU-C Industrial Conditional Intent: The IU-C
District shall be applied only to those lands that appropriately
may be used and utilized for the development, construction, and
operation of large industrial projects and industrial park
development of the nature, type and character with the public
health, safety, comfort, convenience and the general welfare of the
county. Permitted uses include utility plants and substations such
as, but not limited to, sewage, water, power, communications and
gas and every use permitted in the IU-1 and IU-3 districts such as
aircraft hangars, bakeries, auto painting, bottling plants,
breweries, cold storage warehouses, food packing, furniture
manufacturing, garages, lumber yards, office buildings, banks, boat
repairs, hotels, radio stations, limited retail, millwork,
showrooms, parking lots, storage warehouses, welding shops and
textile mills, animal reduction plants, cement plants, blooming
mills, distilleries, foundries, paper mills, and stockyards.
Development Standards
Minimum Street Frontage: 330 feet
Minimum Lot Depth: 330 feet
Minimum Land Size: 10 acres; credit for right-of-way
Building Setbacks:
Front 25 feet, sites up to 2 acres net
2 acres or greater, 15% of lesser dimension of property; maximum
50 feet, minimum 25 feet
Side 10 feet from interior side lines
25 feet from side property line abutting a highway
right-of-way
Rear 20 feet from residential district
5 feet from industrial or business district, properties with
open wall None, industrial or business district - properties with
closed wall.
Minimum setback on through lot, same as for front setback
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QUINLIVAN APPRAISAL 47
Minimum Landscaped Open Space: 20% of net land area
Minimum Greenbelt Areas Abutting Right-of-Ways or Residential
Districts 8 feet for sites up to 3 acres(net)
10 feet for sites over 3 acres (net) Minimum Offstreet Parking
Space: Industrial Area: Single Tenant Building 1 per 1,000, up to
10,000 square feet; then 1
per 2,000 square feet. Multi-tenant Building 1 per 1,000 square
feet, min. of 2 per bay. Office Area: 1 per 300 square feet of
gross building area
allocated for offices. Open Lot or Walled-In Uses: 2 for each
5,000 square feet of lot area or 15
spaces per 2 employees, whichever is greater; these must be no
more than 1,500 feet from the use.
Wholesale Showrooms: 1 for each 600 square feet of showroom
Building Height: No building shall be of a height greater than the
width of the widest street upon which such buildings abuts.
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HIGHEST AND BEST USE
QUINLIVAN APPRAISAL 48
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QUINLIVAN APPRAISAL 49
HIGHEST AND BEST USE Fundamental to the concept of value is the
theory of highest and best use. Land is valued as if vacant and
available for its highest and best use. The Appraisal Institute in
The Appraisal of Real Estate, Thirteenth Edition, defines highest
and best use as follows: The reasonably probable and legal use of
vacant land or an improved property, which is physically possible,
appropriately supported, financially feasible, and results in the
highest value. Land has limited value unless there is a present or
anticipated use for it; the amount of value depends on the nature
of the land's anticipated use, according to the concept of surplus
productivity. Among all reasonable, alternative uses, the use that
yields the highest present land value, after payments are made for
labor, capital, and coordination, is generally regarded as the
highest and best use of the land as though vacant. The highest and
best use of a property as improved refers to the optimal use that
could be made of the property including all existing structures.
The implication is that the existing improvement should be
renovated or retained as so long as it continues to contribute to
the total market value of the property, or until the return from a
new improvement would more than offset the cost of demolishing the
existing building and constructing a new one. In estimating the
highest and best use there are essentially four stages of analysis:
1. Possible Use. What uses of the site being appraised are
physically possible? 2. Permissible Use (Legal) What uses are
permitted by Zoning and Deed
Restriction, if any? 3. Feasible Use. Which possible and
permissible uses will produce a net return to
the owner of the site? 4. Maximally Productive. Among feasible
uses, which use will produce the highest
net return to the owner of the site? The highest and best use of
the land (or site), if vacant and available for use, may be
different from the highest and best use of the improved property.
This is true when the improvements are not an appropriate use, but
make a contribution to the total property value in excess of the
value of the site. The following four-point test is required in
estimating the Highest and Best Use. The use must be legal. The use
must be probable, not speculative or conjectural. There must be a
profitable demand for such use and it must return to the land the
highest net return for the longest period of time.
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QUINLIVAN APPRAISAL 50
These tests have been applied to the subject property. In
arriving at the estimate of Highest and Best Use, the subject site
is analyzed as vacant and available for development and as
developed. Possible Use The site fronts 195 feet, more or less,
along the northwesterly side of Palmetto Frontage Road and
approximately 340 feet along the northeasterly side of N.W. 80
Avenue. Therefore, the site has adequate access and exposure on two
neighborhood traffic arteries. The subject site is mostly
rectangular, with sufficient street frontage and depth for
functional utility. All necessary utility services are available
along existing street right-of-ways. The site is filled to street
grade and does not appear to have any drainage or subsoil
deficiencies. The subject site is 66,300 square feet in size which
equates to 1.52 acres. The size of the subject site would allow a
medium to large scale use. The physical characteristics of the
subject site would not restrict any use of the site. Permissible
Use Permissible or legal uses are those uses which are permitted by
zoning or deed restrictions. There are presently no known private
deed restrictions of record. The site is zoned for industrial
usage. The zoning of the site permits office and industrial uses.
Feasible Use/Maximally Productive Use The physical characteristics
and zoning of the subject property permit a wide range of potential
uses. The possible and permissible uses of the subject site include
offices, warehouses, showrooms and bank branches. The site is a
corner location with frontage on two traffic arteries. The site has
adequate access and exposure. Similar sites in the vicinity of the
subject site are improved with office buildings and commercial
condominiums. Based on an analysis of the subject site, the highest
and best use of the site is estimated to be for office usage.
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QUINLIVAN APPRAISAL 51
Highest and Best Use as Improved The site is improved with a
three-story office condominium building. The building was
constructed in 1983 but was renovated when converted to condominium
usage. The building is in good condition. The value indication of
the property as a rental at stabilized occupancy is estimated in
the Income Approach at $2,210,000. The As Is value indication based
on a discounted sellout of the condominium units is estimated in
the Sales Comparison Approach at $2,650,000. Since the value
indication by the Income Approach is significantly less than the
value indication by the Sales Comparison Approach, the operation of
the property as a rental is indicated not to be the highest and
best use of the property. However, due to the presently soft market
conditions for commercial condominium units, the immediate sell off
of the individual units is probably not feasible. Based on the
above analysis, the highest and best use of the property as
improved is considered to be for an interim operation as a rental
and eventual sellout of the individual condominium units when
market conditions improve.
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DESCRIPTION OF IMPROVEMENTS
QUINLIVAN APPRAISAL 52
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QUINLIVAN APPRAISAL 53
DESCRIPTION OF IMPROVEMENTS Age and Condition According to the
Public Records of Miami-Dade County, the building improvements were
originally constructed in 1983 but was recently renovated and
converted to condominium use. From a personal inspection of the
property, the improvements appear to be in good condition.
Description The subject units are located in a 30-unit office
condominium building known as The Lakes Frontage Center
Condominium. With the exception of Unit 106, the subject units are
fully built out. Unit 106 is mostly complete but would require a
cost estimate of $10.00 per square foot to complete. Unit Sizes
Unit Size (Net SF) Unit Size (Net SF) 100 1,173 113 346 101 972
114 380 103 447 116 197 104 208 117 348 105 948 202 366 106 979 203
1,013 107 1,538 304 1,694 108 770 320 1,179 109 876 370 1,786 110
1,187 380 1,439 111 710 390 1,633
The combined size of the units is 20,189 net square feet.
(Source: Condominium Documents) Details of Construction Foundation:
Poured concrete spread footings in excavation trench Exterior
Walls: 8 concrete block stuccoed and painted Windows: Fixed glass
in aluminum frame Roof: Flat, built-up composition Interior Walls:
Drywall-painted
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QUINLIVAN APPRAISAL 54
Ceilings: Acoustical tile Floors: Carpet, wood and tile
Lighting: Fluorescent Equipment and Fixtures Central air
conditioning Site Improvements Landscaping Asphalt paved
parking
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FIRST FLOOR PLAN
QUINLIVAN APPRAISAL 55
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SECOND FLOOR PLAN
QUINLIVAN APPRAISAL 56
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THIRD FLOOR PLAN
QUINLIVAN APPRAISAL 57
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THE APPRAISAL PROCESS
QUINLIVAN APPRAISAL 58
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QUINLIVAN APPRAISAL 59
THE APPRAISAL PROCESS The appraisal of real estate is generally
valuated by means of one or more of the following approaches:
(1) The Cost Approach (2) The Income Approach (3) The Sales
Comparison Approach
The Cost Approach In the Cost Approach, land and building are
valued as though they are separate entities. The land value is
first estimated as if vacant. Then, by consulting various cost
services, local building contractors and knowledge of construction
costs, the replacement cost new of the building is estimated.
Accrued depreciation from all sources including physical
deterioration, functional and economic obsolescence must be
deducted from this cost. The estimated land value is then added to
the depreciated cost of the building to give the "depreciated
replacement cost" of the property. The Cost Approach is based on
the premise that the value of a commodity tends to be set by the
cost of acquiring an equally desirable substitute. Applied to real
estate, the assumption is that a person would not likely pay more
for a property than it would cost him to acquire a suitable site
and place an equally desirable building upon it. Costs would
include direct cost of construction, indirect costs such as
financing costs, land and developer/builder's profit. The subject
units are located in an office condominium building on a single
site with common parking facilities. The Cost Approach typically is
not applicable to individual units in condominium properties where
there are multiple units with multiple ownership of the common
elements. Therefore, the Cost Approach would have no applicability
in this situation and was not utilized. Income Approach The Income
Approach is based on the premise that the value of a property may
be determined by the amount of net income it can reasonably produce
over its remaining economic life. The rationale of the approach is
that the present worth of a future income stream is equivalent to
the value of the property which produces that income. Four basic
steps comprise the Income Approach: (1) Estimate the reasonable
expectable annual gross income the
property will likely produce.
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QUINLIVAN APPRAISAL 60
(2) Deduct an allowance for vacancy and collection loss to
arrive
at the effective gross income. (3) Deduct the annual expense of
operation from the effective
gross income to arrive at the annual net income. (4) Capitalize
the annual net income into an indication of value. In this section
of the report, a comprehensive market rent survey is conducted in
order to estimate the Market Rent for the subject property and to
estimate a stabilized occupancy rate. The operating expenses are
estimated based on the actual operation of the subject and the
operation of comparable office buildings. The Sales Comparison
Approach The Sales Comparison Approach is an attempt to measure the
reactions of typical buyers and sellers. In this approach, a direct
comparison is made between the property being appraised and
comparable properties, which have sold recently. These sales are
compared for degrees of comparability such as location, size, age,
zoning, time, the conditions of sale, financing and other pertinent
data, which would affect value. Adjustments are made for these
factors in order to arrive at a reliable estimate of value. In this
report, sales of office condominium units within the subject
development and competitive locations are gathered and analyzed.
Reconciliation After applying the three approaches, three separate
indications of value are available for analysis. The indicated
values obtained from each approach are correlated into one final
conclusion of value. Usually one approach will be considered more
significant than the rest, either because of the reliability of the
data, or because of the type of property involved. Reconciliation
is the process by which each approach is objectively weighed
according to its importance.
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INCOME APPROACH
QUINLIVAN APPRAISAL 61
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QUINLIVAN APPRAISAL 62
INCOME APPROACH TO VALUE (At Stabilization) This approach to
value is a technique in which the anticipated net income is
processed to indicate the capital amount of the investment which
produces the net income. The capital amount, called the capitalized
value, in effect, is the sum of the anticipated annual rents less
the loss of interest until the time of collection. Income Potential
Gross Annual Income 20,189 Square Feet x $22.50/SF $454,253 LESS:
Vacancy & Collection Loss @ 7.5% -$ 34,069Effective Gross
Annual Income $420,184 Operating Expenses Management @ 4% $16,807
RE Taxes (Less 4% Discount) $68,882 Maintenance $157,772 Total
Operating Expenses $243,461 -$243,461 Net Operating Income
$176,723
$176,723 Capitalized @ 8.00% $2,209,038
Value Indication by Income Approach (Rd) $2,210,000
Typically, these units are owner-occupied and not purchased by
investors as income property. This is evidenced by the difference
in value between operating the property as a rental and the value
by Sales Comparison Approach.
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QUINLIVAN APPRAISAL 63
CONTRACT RENT ANALYSIS A rent roll of the property was provided
by the property owner. A copy of the rent roll is contained in the
addendum of this report. Currently 15 of the 22 units are occupied
at a rental rate ranging from $11.59 to $24.12 with an average rent
of approximately $22.50. The larger units rent at a lower price per
square foot. MARKET RENT ANALYSIS The market rent of the subject
building is estimated based on a survey of competitive office
properties in the subject market area. A summary of the comparable
rentals is as follows:
No. Address Size (S.F.) Age Rental Rate Per S.F.
1 14160 Palmetto Frontage Rd
1,961 575
1985 $16.83 $16.59
2 7759 NW 146 St 1,230 2000 $22.44-$25.00 3 14333 NW 78 Ave
1,085 2005 $19.92* 4 14411 Commerce
Way 1,622 1987 $18.00*
*Asking rate Comparable Rentals 1, 3 and 4 are the rental rates
before expenses. Comparable Rental 2 has similar lease terms as the
subject units. . Based on an analysis of the contract rental rates
as well as comparable rental rates, it is the appraisers opinion
that the contract rent is indicative of market rent.
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QUINLIVAN APPRAISAL 64
Vacancy and Collection Loss A vacancy and collection loss
allowance is a reduction in potential rental income due to space
not leased or rents not collected. This allowance is generally
expressed as a percentage of Potential Gross Income. As of the date
of valuation, 15 of the 22 subject units were occupied indicating a
vacancy rate of 31.8%. The CB Richard Ellis Office Market Report
Miami-Dade County- Second Quarter 2011 indicates a countywide
vacancy rate of 16.8% for office properties and 27.4% in the
subject market area. Historically, the vacancy rates in the subject
market area have been well below 10%. Based on the above, a
stabilized vacancy and collection loss allowance of 7.5% is
considered applicable for the subject. Operating Expense Analysis
The expenses are based on expense information obtained from the
actual operation of the subject building, from operating expenses
of similar buildings and from a review of published studies. The
property owner provided the operating expenses from January of 2010
to June of 2011. A copy of the operating expenses is contained in
the addenda. Management is based on 4% of Effective Gross Annual
Income. This item would cover salary and administrative cost for
rent collection and record keeping of the subject property. Real
Estate Taxes are estimated based on 2010 real estate taxes for the
property less a 4% discount for early payment. Maintenance Fees are
based on the actual condominium maintenance fees. This expense
covers the remaining costs to operate the units such as utilities,
insurance, maintenance and reserves for replacement. The indicated
operating expense ratio is 57.9%, very high for an income producing
property.
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QUINLIVAN APPRAISAL 65
SELECTION OF CAPITALIZATION RATE Capitalization is a process
which translates an income projection into an indication of value.
The connecting link is a rate which reflects the return necessary
to attract investment capital. Hence, the selection of an
appropriate rate represents a critical factor in the capitalization
process.
OVERALL RATES FROM MARKET SALES OF OFFICE PROPERTIES
N0. LOCATION DATE PRICE OVERALL RATE
1 8500 SW 117 Ave, Miami-Dade Co. 7/08 $26,800,000 7.4%
2 355 Alhambra Cir, Coral Gables 7/08 $87,300,000 7.1%
3 1500 Monza Ave, Coral Gables 4/09 $8,500,000 7.2%
4 1790 Coral Way, Miami 6/09 $3,425,000 8.2%
5 2850 Douglas Rd, Coral Gables 8/09 $4,250,000 8.6%
6 5820 Blue Lagoon Dr, Miami-Dade Co 9/09 $6,950,000 7.3%
7 20880 West Dixie Hwy, Miami-Dade Co. 1/10 $3,750,000 8.4%
8 4155 SW 130 Ave., Miami-Dade Co. 8/10 $3,950,000 7.5% OVERALL
RATE BY BAND OF INVESTMENT THEORY The overall rate developed by
application of the Band of Investment Theory is a synthesis of
mortgage debt service and anticipated cash flow to equity which
market data discloses as applicable to comparable properties. The
rate developed is a weighted average, the weighing being for the
respective portions of the value represented by the mortgage and
equity positions, or Band of Investment. Cash Flow Weighted Source
of Capital Portion Rate Average Mortgage Loan 0.75 x 0.078792 =
0.0591 Equity Funds 0.25 x 0.8 = 0.0200 0.0791 OR Overall Rate
7.91%
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QUINLIVAN APPRAISAL 66
From discussions with lending institutions, an investor survey
from Realty Rates.com First Quarter 2011 and from an analysis of
comparable sales, it is determined the most favorable rate and
likely terms available to the subject property would be a mortgage
at a loan-to-value ratio of 75% and at an interest rate of 5.7%
with an amortization period of 25 years and a term of five to ten
years. A cash flow rate of 8.0% is estimated to be sufficient to
attract equity funds to this type of investment. Overall Rates From
Investor Surveys The Realty Rates.com Investor Survey First Quarter
2011 indicates overall rates for of suburban office buildings
ranging from 5.61% to 11.94%, with the average being 9.41%. The
Korpacz Price Waterhouse Coopers Investor Survey- Fourth Quarter
2010 indicates overall rates for office buildings ranging from
7.00% to 13.0%, with the average being 9.39%. Overall Rate
Conclusion The rates utilized in the Band of Investment are based
on rates derived from surveys of large multiple tenant office
buildings bought and sold for their income potential. Similarly,
the overall rates from the investor survey are for large multiple
tenant office buildings bought and sold for their income potential.
The overall rates from comparable sales are given primary emphasis
in the final analysis since the rates are abstracted from actual
sales of buildings in Miami-Dade County. The overall rates from
comparable sales range from 7.1% to 8.6%. Based on the above
sources, with the overall rates abstracted from the market sales
given primary emphasis in the final analysis, a capitalization rate
of 8.0% is considered appropriate for the subject property.
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SALES COMPARISON APPROACH
QUINLIVAN APPRAISAL 67
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QUINLIVAN APPRAISAL 68
SALES COMPARISON APPROACH TO VALUE This approach to value is a
technique in which the Market Value estimate is predicated upon
prices paid in actual market transactions of similar properties.
These similar, or comparable, transactions (sales) are adjusted to
indicate a value to the subject. The Sales Comparison Approach is a
process of analyzing sales of similar recently sold properties in
order to derive an indication of the most probable sales price of
the property being appraised. The reliability of this approach is
dependent upon the availability of comparable sales data, the
verification of the sales data, the degree of comparability and the
absence of non-typical conditions affecting the sale. The following
page contains a summary of sales of similar properties, which have
recently sold. Several other sales are considered, but are not
included because there is too wide a difference in physical
factors, location and time. The sales are analyzed based on a sale
price per square foot of adjusted building area. In comparing the
sales to the subject, consideration is given to factors of time,
location, physical characteristics and terms and conditions of the
sale. A profile and photograph of the comparable condominium
buildings, a summary of comparable office condo sales, a sales map
and a value conclusion follows herein.
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QUINLIVAN APPRAISAL 69
PARK WEST PROFESSIONAL CENTER ADDRESS: 7767 N.W. 146 Street
Miami-Lakes, Florida LOCATION: 7 blocks northeast of the subject
property NUMBER OF UNITS: 44 BUILDING AGE: 2001 BUILDING CONDITION:
Good RECENT SALES/LISTINGS:
Date of Sale Sale Price Unit Number Unit Size (S.F.) Price
(S.F.)
10/2009 $210,000 ED-2 1,051 $199.80 REMARKS: The building is in
good condition.
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PARK WEST
PROFESSIONAL CENTER
QUINLIVAN APPRAISAL 70
-
QUINLIVAN APPRAISAL 71
JCMH CONDOMINIUM ADDRESS: 814 Ponce de Leon Boulevard Coral
Gables, Florida LOCATION: 2 blocks northeast of the subject
property NUMBER OF UNITS: 16 BUILDING AGE: 2005 BUILDING CONDITION:
Good RECENT SALES/LISTINGS:
Date of Sale Sale Price Unit Number Unit Size (S.F.) Price
(S.F.)
7/2010 $152,500 1 1,085 $140.55 1/2011 $180,000 12 1,085
$165.90
REMARKS: The building is in good condition.
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QUINLIVAN APPRAISAL 72
JCMH CONDOMINIUM
-
SUMMARY OF COMPARABLE OFFICE CONDOMINIUMS
No. Date Name Address Unit Location AgeUnit Size Sale Price
Price/SF
1 10/2009 Park West Professional Center 7767 N.W. 146 St. ED-2 7
blocks NE 2001 1,051 $210,000 $199.802 7/2010 J C M H Condominium
14329 N.W. 78 Ave. 1 2 blocks NE 2005 1,085 $152,500 $140.553
1/2011 J C M H Condominium 14351 N.W. 78 Ave. 12 2 blocks NE 2005
1,085 $180,000 $165.90
4 Listing Lakes Frontage Center Condo.14100 Palmetto Frontage
Rd. N/A
Subject Building 1983 751 $150,000* $199.73*
5 Listing Lakes Frontage Center Condo.14100 Palmetto Frontage
Rd. N/A Subject units 1983 20,189 $4,500,000* $223.69*
Subject Unit Lakes Frontage Center Condo.14100 Palmetto Frontage
Rd.
1983 20,189
*Asking price
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SALES MAP
QUINLIVAN APPRAISAL 74
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QUINLIVAN APPRAISAL 75
ANALYSIS OF SALES The unit prices of the closed sales range from
$140.55 to $199.80 per square foot and range in time from October
of 2009 to January of 2011. The prices per square foot are based on
the unit sizes reported on the tax roll of the Miami-Dade County
Property Appraisers Office. The size of the subject unit based on
the tax roll is 6,640 square feet. For purposes of direct
comparison with the comparable sale properties, the size of the
subject unit reported in the county tax roll is utilized in this
analysis. In comparing the sale properties to the subject units,
consideration was given to time of sale, location, age/condition of
the building, and tenant improvements. Park West Professional
Center The unit price of Sale 1 occurring in the Park West
Professional Center, $199.80 per square foot, is considered an
upper limit of value of the subject units. Sale 1 requires a
downward adjustment for the declining market conditions in this
market area since October of 2009. JCMH Condominium The unit prices
of the sales that occurred in the JCMH Condominium range in unit
price from $140.55 to $165.90. Sales 2 and 3 have the same buyer
but different sellers. The seller of Sale 2 is a financial
institution and the unit appears to have sold for below market
value (approximately 15%) when compared to the identical Sale 3
unit. The subject building was constructed in 1983 but was
renovated when converted to condominium usage. The sales and
subject units are similar in condition. A summary of adjustments is
as follows: Sale 1 Sale 2 Sale 3 Unit Price $199.80 $140.55 $165.90
Market Conditions -15% = = Age/Building Condition = = = Unit Size =
= = Other = +15% = Total Adjustments -15% = = Adjusted Unit Price
$169.83 $161.63 $165.90
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QUINLIVAN APPRAISAL 76
Sale 4 is a current listing for one unit in the subject building
based on gross size. Sale 5 is a current listing for the subject
units. No difference in unit price is evidenced by these listings
for purchasing in bulk. As stated previously, with the exception of
Unit 106, the subject units are fully built out. Unit 106 is mostly
complete but would require a cost estimate of $10.00 per square
foot to complete. This cost estimate equates to $9,790. Conclusion
Gross Sellout Value The adjusted unit prices range from $161.63 to
$169.83. Based on a careful analysis of the unit sales, it is
estimated that the subject units have a value as follows:
Size (NSF) Price/SF Estimated Value 20,189 SF $165.00 $3,331,185
LESS: Cost to Complete Unit 106 $9,790 $3,321,395 Gross Value by
Sales Comparison Approach (Rd) $3,320,000
The indicated average unit price of the subject units based on
the Gross Sellout Value is approximately $150,909 per unit.
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QUINLIVAN APPRAISAL 77
AS IS MARKET VALUE Converting the Gross Sellout Value to an as
is Market Value requires a discounting process to account for
selling expenses and holding costs, if any, sell all of the units
over an absorption period. The discounting process can be performed
in several methods. The first method would be a discounted sellout
analysis. First, an absorption period is estimated for the unsold
units. Estimated sales expenses and holding costs are then deducted
from the gross sales proceeds to derive net sales proceeds. A
discount rate is then applied to the net sales proceeds to reflect
a return on debt and equity capital. A second method is to abstract
a discount from sales of bulk inventories of condominium units. The
discounting process is performed based on a matched pair analysis
of bulk sales of commercial condominium units to sales of
individual commercial condominium units in the same project or
comparable projects. The estimated bulk sale adjustment is then
applied to the estimated gross sellout value to indicate the as is
value of the property. The following pages contain three case
studies of comparisons of bulk sales and individual sales of
commercial condominium units. The unit prices of the comparable
units are discounted to the unit price of the bulk sales.
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SUMMARY OF BULK COMMERCIAL CONDOMINIUM SALES
Name Bldg. Unit Unit Sale Sale Price Discount
No. Location Age No. Sq. Ft. Date Recordation Price Per Sq. Ft.
Percentage
1 1600 Ponce Office Condo 2008 1001 972 Sep-09 27001/3049
$522,500 $537.55 5.61% 1600 Ponce de Leon Blvd
1002 1,149 Sep-09 $612,549 $533.11 4.83%
Coral Gables
1003 1,447 Sep-09 27014/317
$783,600 $541.53 6.31%1004 876 Sep-09 $504,400 $575.80
11.88%1005 876 Sep-09 27001/2919 $519,900 $593.49 14.51%1006 1,447
Sep-09 27024/2195 $862,000 $595.72 14.83%1007 1,149 Sep-09
27029/3438 $687,600 $598.43 15.22%1008 972 Sep-09 27024/2280
$517,300 $532.20 4.66%1101, 1102, 1103 & 1104
4,444 Jul-10 27366/1928 $2,294,100 $516.22 1.71%
904 876 Aug-10 27410/3702 $400,000 $456.62 -11.12%905 876 Nov-10
27497/4103 $400,000 $456.62 -11.12%801, 802, 803, 804, 18,620
Mar-11 27634/3362 $9,447,400 $507.38 805, 806, 807, 808, 906, 907,
908, 1202, 1203, 1206, 1207& 1208
2 Merrick View 2008 130 1,013 12/09 27111/3943 $315,000 $310.96
5.76% 135 San Lorenzo Ave
840 1,868 12/09 27111/4394 $640,900 $343.09 14.59%
Coral Gables
140, 150, 160, 170, 8,190 Apr-10 27255/4700 $2,400,000 $293.04
770 & 780
790 2,135 8/10 27381/4771 $693,900 $325.01 9.84%550 2,135 11/10
27485/2621
$788,400 $369.27 20.64%
540 2,342 11/10 27486/466 $831,900 $355.21 17.50%850 1,836 12/10
27523/4691
$718,900 $391.56 25.16%
530
1,317
1/11
27545/341
$442,200
$335.76
12.72%
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3 Colorama 20021B, 2B, 3B, 4B, 5B,
6B, 8,344 Jul-10 27367/3430 $550,000 $65.92 2445 W. 80 St
7B & 8B
Hialeah 2157 W. 73 St 1985 3 2,629 Mar-10 27228/3832 $200,000
$76.07 13.35% 7760 W. 20 Ave 1986 12 2,290 May-10 27281/721
$200,000 $87.34 24.52% 7600 W. 20 Ave 2003 224 1,004 Dec-10
27691/2943 $80,000 $79.68 17.27% 2271 W. 80 St 2005 A-1 1,426
Apr-11 27667/1993 $106,000 $74.33 11.32% 2231 W. 80 St 2005 D-4
1,300 Jun-11 27756/2055 $100,000 $76.92 14.30% 8000 W. 24 Ave 2002
E-3 1,020 Jun-11 27762/2644 $65,800 $64.51 -2.19% 8055 W. 23
Ave
2002
B-1
1,499 Jun-11
27732/646
$125,000
$83.39 20.95%
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QUINLIVAN APPRAISAL 80
BULK SALE ANALYSIS In Case Study 1, 16 units were purchased in
bulk in March of 2011 at a unit price of $507.38 per square foot.
Four units sold together in July of 2010 at a unit price of
$516.22. The remaining sales were of individual units within the
same building ranging from $456.62 to $598.43 per square foot.
Excluding the two sales that sold below the cost of the bulk sale,
the indicated discount rates from this case study range from 1.71%
to 15.22%. In Case Study 2, six units were purchased in bulk in
April of 2010 at a unit price of $293.04 per square foot. The
remaining sales were of individual units within the same building
ranging in unit price from $310.96 to $391.56 per square foot. The
indicated discount rates from this case study range from 5.76% to
25.16%. In Case Study 3, eight units were purchased in bulk in July
of 2010 at a unit price of $65.92 per square foot. The remaining
sales are of individual units within the same neighborhood as the
building where the bulk sale occurred. These sales range in unit
price from $64.51 to $87.34 per square foot. The indicated discount
rates from this case study range from 11.32% to 24.52%. Based on
the above analysis, a discount rate of 20% of the Gross Value is
considered applicable for the subject units.
Gross Sellout Value $3,320,000 Discount Rate 20% As Is Market
Value $2,656,000
The indicated average unit price of the subject units based on
the As Is Market Value is approximately $120,727 per unit.
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QUINLIVAN APPRAISAL 81
MARKET VALUE BY DISCOUNTED SELLOUT Converting the Gross Sellout
Value to Market Value requires a discounting process to account for
selling expenses and holding costs, if any, from the completion of
construction to the sale and closing of all the units. The
discounting process is performed in three steps. First, an
absorption period is estimated for the unsold units. Estimated
sales expenses and holding costs are then deducted from the gross
sales proceeds to derive net sales proceeds. A discount rate is
then applied to the net sales proceeds to reflect a return on debt
and equity capital. Estimate of Absorption Period Based on a review
of historic sales and the current soft condition of the office
condominium market, it is projected that it will require a period
of 24 months to sell the subject units. During the sellout period,
the property would be operated as a rental. The rental income is
based on the effective gross income of $420,184 estimated
previously in the Income Approach. The indicated effective income
per square foot is $20.81 ($420,184 20,189 Sq. Ft.). The sale
prices for the units were estimated preciously in the Sales
Comparison Approach at an average of $165.00 per square foot. The
sales prices in year two of the sellout are projected to increase
based on a growth rate of 3%. The vacant space is projected to be
absorbed over 24 months at a rate of 878 square feet per month
(20,189 Sq. Ft. 23 Months). The first month would be projected to
not have a sale. The growth rate on expenses is projected at 2%
annually. The estimated growth rate is based on historic trends in
the Consumer Price Index (CPI) and investor surveys. The Korpacz
Price Waterhouse Coopers Investor Survey- Second Quarter 2011
indicates expense growth rates for office buildings ranging from
1.00% to 3.0%. Selling Expenses There will be closing costs,
recording fees and legal expenses. It is expected there would be a
five year holding period from the date of valuation to the date in
which all units are closed. During this period, there will be
interest holding costs, sales commissions, and overhead and
marketing. These expenses are estimated on the following page.
Sales commissions are estimated at 3% of gross sales. Closing costs
are estimated at 1.5% of gross sales. Overhead and marketing is
estimated at 2.0% of gross sales. Operating expenses are estimated
at $12.06 per square foot of the unsold office space while it is
operated as a rental. The operating expenses are based on the
expenses estimated previously in the Income Approach ($243,461
20,189 Sq. Ft.). The growth rate on operating expenses is projected
at 2% annually.
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QUINLIVAN APPRAISAL 82
Discount Rate A discount rate (yield rate) is applied to the
cash flow over the seven year projection period to reflect a net
present value. A discount rate and an overall rate differ in
concept. The overall rate is based on current net operating income
as of the date of sale. The overall rate implicitly recognizes
future income increases and appreciation in property value at the
time of sale. Whereas the discount rate explicitly will recognize
future income increases and appreciations in property value at time
of sale. The overall rate is used in direct capitalization
technique using first year net income. The discount rate is used in
an annuity capitalization technique with an income stream. The
discount rate is influenced by the degree of apparent risk,
prospective rates of return of alternative investment
opportunities, historical rates of return earned by comparable
properties, market attitudes with respect to future inflation or
deflation, supply of and demand for mortgage funds, availability of
tax shelter, etc. A review of the Realty Rates.com Investor Survey
Third Quarter 2011 indicates that typical investors desire an
internal rate of return in the 8.63% to 14.43% range for suburban
office buildings, with the average being 12.01%. The Korpacz Price
Waterhouse Coopers Investor Survey- Second Quarter 2011 indicates
discount rates for rental office buildings ranging from 7.0% to
16.0%, with the average being 10.38%. It should be noted that the
discount rates reported in the investor surveys are for multiple
tenant rental office properties, not fractured interests of office
condominiums. Discount rates from sales of fractured interests of
office condominium properties are not reported in investor surveys.
Sales of fractured interests of office condominium properties are
few in number and each property is unique as to overall size, unit
size, percentage of ownership, location, etc. Fractured interests
of office condominium properties typically sell by the purchase of
mortgage notes and are not recorded. Abstracting discount rates
from actual sales of fractured interests of office condominium
properties is therefore difficult. The discount rates from the
investor surveys may not be a direct comparison for fractured
interests of office condominium properties, but do provide a
general guideline for discount rates for fractured interests. Based
on the above analysis, a discount rate of 12.0% is considered
appropriate for the subject income stream. The Discounted Sellout
Analysis is contained on the following page. The indicated value of
the property under a scenario operating as a rental while
simultaneously selling out the condominium over two years is
$2,650,000. Based on a profit on sales of 10% and a discount rate
of 12%, the indicated true Internal Rate of Return (IRR) is
16.8%.
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QUINLIVAN APPRAISAL 84
DISCOUNTED MARKET VALUE CONCLUSION Case studies were prepared to
abstract a discount from sales of bulk inventories of commercial
condominium units. The discounting process is performed based on a
matched pair analysis of bulk sales of commercial condominium units
to sales of individual commercial condominium units in the same
project or comparable projects. The estimated bulk sale adjustment
is then applied to the estimated gross sellout value to indicate
the as is value of the property. A discounted sellout analysis was
also prepared. First, an absorption period is estimated for the
unsold units. There has been very limited market activity in the
vicinity of the subject which makes estimating an accurate
absorption rate difficult. Estimated sales expenses and holding
costs are then deducted from the gross sales proceeds to derive net
sales proceeds. A discount rate is then applied to the net sales
proceeds to reflect a return on debt and equity capital. The
discounted value indicated by the bulk sale analysis is $2,656,000.
The indicated market value by discounted sellout is $2,646,948.
Based on the above, it is the appraisers opinion that the subject
units have a Discounted Market Value of:
$2,650,000
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QUINLIVAN APPRAISAL 85
RECONCILIATION AND VALUE CONCLUSION
-
QUINLIVAN APPRAISAL 86
RECONCILIATION AND VALUE CONCLUSION The reconciliation of the
data and indicated value estimates is the final step in the
appraisal process. Sufficient data has been assembled and analyzed
for the purpose of judging the reactions of typical purchasers in
the market place. In this report, the three accepted appraisal
techniques are utilized. The value estimates indicated by these
approaches resulted in the following:
Cost Approach to Value N/A Income Approach to Value
$2,210,000
Sales Comparison Approach to Value $2,650,000 Cost Approach to
Value The subject unit is located in an office condominium building
on a single site with common parking facilities. The Cost Approach
typically is not applicable to single units in condominium
properties where there are multiple units with multiple ownership
of the common elements. Therefore, the Cost Approach would have no
applicability in this situation and was not utilized. Income
Approach to Value The data in this approach as to the quality,
quantity and durability of the income is considered fair. The
income and expenses are based on the actual operation of the
subject building and comparable buildings. Net Income is
capitalized by means of a direct capitalization method with an
overall rate derived from market sales, market surveys and a Band
of Investment Technique. Typically, these units are owner-occupied
and not purchased by investors as income property. This is
evidenced by the difference in value between operating the property
as a rental