JACKSON SQUARE PROMENADE 2460 Terry Road Jackson, Hinds County, Mississippi 39204 CBRE, Inc. File No. 11-341AT-3621 Self-Contained Appraisal Report Prepared For: Jessie Wright ENTERGLOBE ENTERPRISES LLC 23133 Hawthorne Boulevard, Suite 110 Torrance, California 90505 VALUATION & ADVISORY SERVICES
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JACKSON SQUARE PROMENADE 2460 Terry Road Jackson, Hinds County, Mississippi 39204 CBRE, Inc. File No. 11-341AT-3621
Self-Contained Appraisal Report
Prepared For: Jessie Wright ENTERGLOBE ENTERPRISES LLC 23133 Hawthorne Boulevard, Suite 110 Torrance, California 90505
VALUATION & ADVISORY SERVICES
V A L U A T I O N & A D V I S O R Y S E R V I C E S
3280 Peachtree Road, Suite 1400 Atlanta, GA 30305
T (404) 812-5010 F (404) 812-5051
www.cbre.com
November 21, 2011 Jessie Wright ENTERGLOBE ENTERPRISES LLC 23133 Hawthorne Boulevard, Suite 110 Torrance, California 90505 RE: Appraisal of Jackson Square Promenade 2460 Terry Road Jackson, Hinds County, Mississippi 39204 CBRE, Inc. File No. 11-341AT-3621
Dear Mr. Wright:
At your request and authorization, CBRE, Inc. has prepared an appraisal of the market value of the referenced property. Our analysis is presented in the following Self-Contained Appraisal Report.
The subject is a 323,467-square foot retail property (neighborhood/community center) located at 2460 Terry Road in Jackson. The improvements were constructed in 1968, renovated in 2008 and are situated on a 31.530-acre site. Currently, the property is 42.4% occupied and is considered to be in average overall condition. The subject tenants are considered local in nature. The subject is more fully described, legally and physically, within the enclosed report.
Based on the analysis contained in the following report, the market value of the subject is concluded as follows:
MARKET VALUE CONCLUSION
Appraisal Premise Interest Appraised Date of Value Value Conclusion
As Is Leased Fee Interest November 4, 2011 $4,100,000
Compiled by CBRE
Data, information, and calculations leading to the value conclusion are incorporated in the report following this letter. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter.
The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed
Jessie Wright November 21, 2011 Page 2
based on, and this report has been prepared in conformance with, our interpretation of the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. It also conforms to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) and Title XI Regulations.
The report is for the sole use of the client; however, client may provide only complete, final copies of the appraisal report in its entirety (but not component parts) to third parties who shall review such reports in connection with loan underwriting or securitization efforts. The appraiser is not required to explain or testify as to appraisal results other than to respond to the client for routine and customary questions. Please note that our consent to allow an appraisal report prepared by CBRE, Inc. or portions of such report, to become part of or be referenced in any public offering, the granting of such consent will be at our sole discretion and, if given, will be on condition that we will be provided with an Indemnification Agreement and/or Non-Reliance letter, in a form and content satisfactory to us, by a party satisfactory to us. We do consent to your submission of the reports to rating agencies, loan participants or your auditors in its entirety (but not component parts) without the need to provide us with an Indemnification Agreement and/or Non-Reliance letter.
It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE, Inc. can be of further service, please contact us.
Respectfully submitted, CBRE, Inc. - VALUATION & ADVISORY SERVICES
Decker Dickson Ronald A. Neyhart, MAI Senior Appraiser Senior Managing Director Mississippi Temporary Permit Applied For Mississippi Certification No. GA-829 Phone: 404.812.5015 Phone: 404.812.5020 Fax: 404.812.5051 Fax: 404.812.5051 Email: [email protected] Email: [email protected]
JACKSON SQUARE PROMENADE | CERTIFICATION OF THE APPRAISAL
i
CERTIFICATION OF THE APPRAISAL
We certify to the best of our knowledge and belief:
1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions
and limiting conditions and are our personal, impartial and unbiased professional analyses, opinions, and conclusions.
3. We have no present or prospective interest in or bias with respect to the property that is the subject of this report and have no personal interest in or bias with respect to the parties involved with this assignment.
4. Our engagement in this assignment was not contingent upon developing or reporting predetermined results.
5. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.
6. This appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan.
7. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice, as well as the requirements of the State of Mississippi.
8. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.
9. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.
10. As of the date of this report, Ronald A. Neyhart, MAI have completed the continuing education program of the Appraisal Institute.
11. As of the date of this report, Decker Dickson has completed the Standards and Ethics Education Requirement of the Appraisal Institute for Associate Members.
12. Decker Dickson has and Ronald A. Neyhart, MAI has not made a personal inspection of the property that is the subject of this report.
13. No one provided significant real property appraisal assistance to the persons signing this report. 14. Valuation & Advisory Services operates as an independent economic entity within CBRE, Inc.
Although employees of other CBRE, Inc. divisions may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy were maintained at all times with regard to this assignment without conflict of interest.
15. Decker Dickson and Ronald A. Neyhart, MAI have not provided any real estate related services on this property in the three years prior to accepting this assignment.
Decker Dickson Ronald A. Neyhart, MAI Mississippi Temporary Permit Applied For Mississippi Certification No. GA-829
JACKSON SQUARE PROMENADE | SUBJECT PHOTOGRAPHS
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SUBJECT PHOTOGRAPHS
AERIAL VIEW
Subject
Subject
JACKSON SQUARE PROMENADE | SUBJECT PHOTOGRAPHS
iii
TYPICAL VIEW OF THE SUBJECT
TYPICAL VIEW OF THE SUBJECT
JACKSON SQUARE PROMENADE | SUBJECT PHOTOGRAPHS
iv
VIEW OF THE PARKING AREA
VIEW OF SUBJECT STORE FRONTS
JACKSON SQUARE PROMENADE | SUBJECT PHOTOGRAPHS
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VIEW OF A TYPICAL RETAIL STORE INTERIOR
VIEW OF A TYPICAL RETAIL STORE INTERIOR
JACKSON SQUARE PROMENADE | SUBJECT PHOTOGRAPHS
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VIEW OF THE VACANT SPACE
VIEW OF THE SUBJECT’S SIGNAGE
JACKSON SQUARE PROMENADE | SUBJECT PHOTOGRAPHS
vii
VIEW OF THE SUBJECT’S VISIBILITY FROM INTERSTATE 55
VIEW OF THE SUBJECT’S WALKWAYS
JACKSON SQUARE PROMENADE | SUMMARY OF SALIENT FACTS
viii
SUMMARY OF SALIENT FACTS
Property Name
Location
Assessor’s Parcel Number
Highest and Best Use
As If Vacant
As Improved
Property Rights Appraised
Land Area 31.53 AC 1,373,447 SF
Improvements
Property Type Retail
Number of Buildings
Number of Stories
Gross Leasable Area
Year Built 1968 Renovated: 2008
Condition
Estimated Exposure Time
Financial Indicators
Current Occupancy (Stabilized) 42.4%
Stabilized Credit Loss 1.0%
Overall Capitalization Rate 12.00%
Pro Forma Operating Data Total Per SF
Effective Gross Income $1,257,724 $3.89
Operating Expenses $295,992 $0.92
Expense Ratio 23.53%
Net Operating Income $961,731 $2.97
207-2-2
1
3
Jackson Square Promenade
Leased Fee Interest
Retail
Retail
2460 Terry Road, Jackson, Hinds County, Mississippi 39204
(Neighborhood/Community Center)
9 Months
Average
323,467 SF
VALUATION Total Per SF
Sales Comparison Approach $3,900,000 $12.06
Income Capitalization Approach $4,100,000 $12.68
CONCLUDED MARKET VALUE
Appraisal Premise Interest Appraised Value
As Is Leased Fee Interest $4,100,000
Compiled by CBRE
Date of Value
November 4, 2011
JACKSON SQUARE PROMENADE | SUMMARY OF SALIENT FACTS
ix
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS (SWOT)
Strengths and weaknesses are internal to the subject; opportunities & threats are external to the subject
Strengths
The subject has undergone renovations of approximately $975,000 including a new roof recently The subject is located along a major thoroughfare within the neighborhood and enjoys visibility on
Interstate 55 with traffic counts of 79,000 cars per day
Weaknesses
The subject is located in a low-income area with slightly declining demographics based upon historical trends
Opportunities
None noted
Threats
The weakened overall economy has contributed to depressed levels of consumer spending
EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS
None noted.
JACKSON SQUARE PROMENADE | TABLE OF CONTENTS
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TABLE OF CONTENTS
CERTIFICATION OF THE APPRAISAL ............................................................................................. i
SUBJECT PHOTOGRAPHS .......................................................................................................... ii
SUMMARY OF SALIENT FACTS ................................................................................................. viii
TABLE OF CONTENTS ................................................................................................................ x
INCOME CAPITALIZATION APPROACH .................................................................................... 39
RECONCILIATION OF VALUE .................................................................................................. 54
ASSUMPTIONS AND LIMITING CONDITIONS .......................................................................... 55
ADDENDA A Glossary of Terms B Improved Sale Data Sheets C Rent Comparable Data Sheets D Qualifications
JACKSON SQUARE PROMENADE | INTRODUCTION
1
INTRODUCTION
PROPERTY IDENTIFICATION
The subject is a 323,467-square foot retail property (neighborhood/community center) located at
2460 Terry Road in Jackson. The improvements were constructed in 1968, renovated in 2008 and
are situated on a 31.530-acre site. Currently, the property is 42.4% occupied and is considered to be
in average overall condition. The subject tenants are considered local in nature. The subject is more
fully described, legally and physically, within the enclosed report.
OWNERSHIP AND PROPERTY HISTORY
Title to the property is currently vested in the name of BRC Jackson Square LLC. To the best of our
knowledge, there has been no ownership transfer of the property during the previous three years.
PREMISE OF THE APPRAISAL
The following table illustrates the various dates associated with the valuation of the subject, the
valuation premise(s) and the rights appraised for each premise/date:
PREMISE OF THE APPRAISAL
Item Date Interest Appraised
Date of Report: November 21, 2011
Date of Inspection: November 4, 2011
Dates of ValueAs Is: November 4, 2011 Leased Fee Interest
Compiled by CBRE
PURPOSE OF THE APPRAISAL
The purpose of this appraisal is to estimate the market value of the subject property. The current
economic definition of market value agreed upon by agencies that regulate federal financial
institutions in the U.S. (and used herein) is as follows:
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
interests; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements
comparable thereto; and
JACKSON SQUARE PROMENADE | INTRODUCTION
2
5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. 1
TERMS AND DEFINITIONS
The Glossary of Terms in the Addenda provides definitions for additional terms that are, and may be
used in this appraisal.
INTENDED USE AND USER OF REPORT
This appraisal is to be used by the client for internal decision making purposes.
SCOPE OF WORK
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:
Client Intended use Intended user Type of opinion Effective date of opinion Relevant characteristics about the subject Assignment conditions
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
USPAP. That is, this report incorporates, to the fullest extent possible, practical explanation of the
data, reasoning and analysis that were used to develop the opinion of value. This report also includes
thorough descriptions of the subject and the market for the property type. CBRE, Inc. completed the
following steps for this assignment:
1 Office of Comptroller of the Currency (OCC), 12 CFR Part 34, Subpart C – Appraisals, 34.42 (g); Office of Thrift
Supervision (OTS), 12 CFR 564.2 (g); Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002), 177-178. This is also compatible with the RTC, FDIC, FRS and NCUA definitions of market value as well as the example referenced in the Uniform Standards of Professional Appraisal Practice (USPAP).
JACKSON SQUARE PROMENADE | INTRODUCTION
3
Data Resources Utilized in the Analysis
RESOURCE VERIFICATION
Site Data Source/Verification:Size County Assessor
Improved Data Source/Verification:Net Size/Units Rent RollNo. Bldgs. Site InspectionParking Spaces Site InspectionYOC County Assessor
Economic Data Source/Verification:Income Data: Client ProvidedExpense Data: CBRE
Compiled by CBRE
Extent to Which the Property is Identified
CBRE, Inc. collected the relevant information about the subject from the owner (or representatives),
public records and through an inspection of the subject property. The property was legally identified
through the following sources:
postal address assessor’s records
Economic characteristics of the subject were identified via:
analysis of leases and/or lease briefs between the lessor and lessee recent rent roll
Extent to Which the Property is Inspected
CBRE, Inc. inspected both the interior and exterior of the subject, as well as its surrounding environs
on the effective date of appraisal.
Type and Extent of the Data Researched
CBRE, Inc. reviewed the micro and/or macro market environments with respect to physical and
economic factors relevant to the valuation process. This process included interviews with regional
and/or local market participants, available published data, and other various resources. CBRE, Inc.
also conducted regional and/or local research with respect to the following:
applicable tax data zoning requirements flood zone status demographics income and expense data comparable data
JACKSON SQUARE PROMENADE | INTRODUCTION
4
Type and Extent of Analysis Applied
CBRE, Inc. analyzed the data gathered through the use of appropriate and accepted appraisal
methodology to arrive at a probable value indication via each applicable approach to value. The
steps required to complete each approach are discussed in the methodology section. CBRE, Inc. then
correlated and reconciled the results into a reasonable and defensible value conclusion, as defined
herein. A reasonable exposure time associated with the value estimate presented has also been
considered.
EXPOSURE/MARKETING TIME
Current appraisal guidelines require an estimate of a reasonable time period in which the subject
could be brought to market and sold. This reasonable time frame can either be examined historically
or prospectively. In a historical analysis, this is referred to as exposure time. Exposure time always
precedes the date of value, with the underlying premise being the time a property would have been on
the market prior to the date of value, such that it would sell at its appraised value as of the date of
value. On a prospective basis, the term marketing time is most often used. The exposure/marketing
time is a function of price, time, and use. It is not an isolated estimate of time alone. In consideration
of these factors, we have analyzed the following:
exposure periods for comparable sales used in this appraisal; exposure/marketing time information from the CBRE, Inc. National Investor Survey and the
Korpacz Real Estate Investor Survey; and the opinions of market participants.
The following table presents the information derived from these sources.
EXPOSURE/MARKETING TIME INFORMATION
Exposure/Mktg. (Months)Investment Type Range Average
CBRE Community Centers
Class C 2.0 - 18.0 8.8
CBRE Neighborhood Centers
Class C 2.0 - 18.0 7.6
PwC Strip Shopping Center
National Data 2.0 - 18.0 8.1
CBRE Exposure Time Estimate
Source: CBRE National Investor Survey & PwC Real Estate Investor Survey
9 Months
CBRE, Inc. has concluded an exposure/marketing time of 9 months to be reasonable for the subject.
This exposure/marketing time reflects current economic conditions, current real estate investment
market conditions, the terms and availability of financing for real estate acquisitions, and property and
JACKSON SQUARE PROMENADE | INTRODUCTION
5
market-specific factors. It assumes that the subject is (or has been) actively and professionally
marketed. The marketing/exposure time would apply to all valuation premises included in this report.
JACKSON SQUARE PROMENADE | AREA ANALYSIS
6
AREA ANALYSIS
Moody’s Economy.com provides the following Jackson, MS metro area economic summary as of Jul-
11. The full Moody’s Economy.com report is presented in the Addenda.
Jackson's economy is recovering, boosted by growth in commercial construction and retail trade. The
unemployment rate has declined since the beginning of the year. At 8.1%, the jobless rate is below
both the state and national averages. Manufacturing and finance have finally resumed hiring since the
JACKSON SQUARE PROMENADE | AREA ANALYSIS
7
beginning of the year and are supporting an expanding labor force. As the state capital, it is
encouraging that public sector employment is holding up. The housing market, however, is not
improving as higher than average foreclosure starts and inventories are keeping a lid on prices.
AUTO MANUFACTURING
As the Japanese tsunami-related supply chain bottlenecks ease, JAM's auto manufacturing will resume
expanding. Nissan North America, among the metro area's largest employers, reported a sales
increase of 11.4% in June compared with the previous year. Nissan's plant in Canton produces the
Altima, Titan, and the NV commercial vehicles. Sales of the fuel-efficient Altima rose 22.7% in June
before, and sales for the first half of the year were 17.6% higher than during the same period last
year. The NV commercial vehicles, a new addition to the plant, also enjoyed a sizable improvement in
sales. Sales of the Titan pickup truck, however, have risen only modestly over the past year, hurt by
high energy prices and low residential construction nationwide.
Nissan's plan to expand production at its Canton plant brightens the auto industry's long-term outlook
in JAM. Soon after the tsunami in Japan, Nissan announced that it will shift production of the Xterra
SUV and the Frontier pickup to the Canton plant by the end of 2012. This will create jobs, both
directly and indirectly, since auto manufacturing enjoys a high employment multiplier in the state. The
plant's expansion will also support an increase in consumer spending given the high wages.
CONSTRUCTION
Unlike the nation, commercial construction payrolls will expand in JAM in the coming months. The
Mississippi Museum of Art recently announced that it will receive a grant from the National
Endowment of the Arts to support the construction of an Art Garden as part of its Cultural District
Project. A civil rights museum and a Mississippi museum of history have also been approved by the
state and are on target for a 2017 completion. In addition to these planned projects, commercial
construction will also benefit from growth in office-using employment in JAM. Office-using
employment accounts for one-fifth of the total employment in JAM and is supported by the metro
area's highly educated workforce. About one-third of adults in the metro area have a college degree,
compared with one-fifth in Mississippi. The new satellite campuses of Tulane University and Strayer
University will further strengthen this comparative advantage.
CONSUMER
The economy will benefit from strong consumer fundamentals. Although delinquency rates for most
loans, especially first mortgages, rose in JAM during the recession, they have since been declining and
are now below the state average. The metro area also enjoys a lower than average loan-to-value
ratio and higher than average home equity. Equity per household in JAM is 10% higher than the state
average and almost 20% higher than the national average.
JACKSON SQUARE PROMENADE | AREA ANALYSIS
8
CONCLUSION
Jackson will recover over the next few years as production expansion at Nissan's Canton plant
generates high-paying jobs through a strong multiplier effect and declining household debt boosts
consumer spending. Construction, education, health and retail trade will also support the recovery.
Long term, the area will benefit from its skilled workforce and its concentration of universities and
medical centers and will perform in line with the state and nation.
JACKSON SQUARE PROMENADE | NEIGHBORHOOD ANALYSIS
9
NEIGHBORHOOD ANALYSIS
LOCATION
The subject property is located along the west side of Terry Road approximately three miles south of
downtown Jackson and within the southern city limits of Jackson. A neighborhood map is shown
above.
BOUNDARIES
The neighborhood boundaries are not exact and generally comprise a three- to five-mile radius
surrounding the subject property.
LAND USE
The subject neighborhood can be considered mature and is approximately 90% built out, with primary
development in the immediate area consisting of restaurants, gas station/convenience stores, retail
stores and service activities oriented to the proximity of Interstate 55 and Terry Road. Commercial
development in the neighborhood is concentrated along Terry Road, which is the main commercial
thoroughfare in the neighborhood. Much of the development in the neighborhood is 20 years old or
more. Many of the buildings’ original tenants have vacated the area and the buildings and have
been, or are being, re-tenanted with discount stores and local tenants.
JACKSON SQUARE PROMENADE | NEIGHBORHOOD ANALYSIS
10
Residential development is most heavily concentrated in the northern and western portions of the
neighborhood, with limited new residential development occurring. According to information
obtained from Claritas, approximately 53% of the housing units are renter occupied within a three
mile radius. In addition, approximately 8% of the housing units within a three-mile radius were
constructed since 1990, while 60% were built prior to 1970. The majority of the single-family
residential development within a three-mile radius of the subject may be described as single family
homes in the $40,000 to $100,000 price range.
ACCESS
The accessibility to the neighborhood in general and the subject property in particular, is considered
good. Interstate 55 and Terry Road both extend through the neighborhood in a north/south direction,
while Interstate 20 extends through the neighborhood in an east/west direction. In addition, Interstate
220 extends from Interstate 20 in the northwest portion of the neighborhood through the northwest
portion of Jackson, intersecting with Interstate 55 north of Jackson. This results in easy access to all
areas of metropolitan Jackson.
The primary local traffic arteries include Terry Road, Daniel Lake Boulevard, Cooper Road, and
McClure Road. Daniel Lake Boulevard, Cooper Road and McClure Road extend in an east/west
direction, while Terry Road runs in a north/south direction as can be seen in the map above.
DEMOGRAPHICS
Selected neighborhood demographics in 1-, 3-, and 5-mile radii from the subject are shown in the
following table:
JACKSON SQUARE PROMENADE | NEIGHBORHOOD ANALYSIS
11
SELECTED NEIGHBORHOOD DEMOGRAPHICS
2460 Terry RoadJackson, MS
Population
2016 Population 6,362 48,236 97,685
2011 Population 6,642 50,473 101,040
2000 Population 7,233 55,878 108,802
1990 Population 6,690 60,729 117,830
Annual Growth 2011 - 2016 -0.86% -0.90% -0.67%
Annual Growth 2000 - 2011 -0.77% -0.92% -0.67%
Annual Growth 1990 - 2000 0.78% -0.83% -0.79%
Households
2016 Households 2,368 16,849 35,195
2011 Households 2,511 17,868 36,671
2000 Households 2,767 19,899 39,284
1990 Households 2,800 22,196 42,732
Annual Growth 2011 - 2016 -1.17% -1.17% -0.82%
Annual Growth 2000 - 2011 -0.88% -0.97% -0.62%
Annual Growth 1990 - 2000 -0.12% -1.09% -0.84%
Income
2011 Median HH Inc $23,601 $25,933 $28,221
2011 Estimated Average Household Income $31,345 $35,041 $38,160
2011 Estimated Per Capita Income $11,712 $12,766 $14,238
Age 25+ College Graduates - 2010 475 4,728 11,151
Age 25+ Percent College Graduates - 2011 13.4% 16.9% 19.3%
Source: Claritas
1 Mile Radius
3 Mile Radius
5 Mile Radius
CONCLUSION
As shown above, the population within the subject neighborhood has shown a slight decline over the
past 10 years. The neighborhood currently has a lower-middle class demographic profile based on
income and education statistics. The subject property is located in an area that has good access, with
the overall development characteristics of the neighborhood considered conducive to commercial
development. The subject is conveniently located to area employment centers in addition to a variety
of support services and retail options. Furthermore, we anticipate that the overall demographic nature
and development character of the neighborhood will remain the same in the near-term future,
suggesting continued moderate acceptance of the subject property and similar free standing retail
facilities.
JACKSON SQUARE PROMENADE | MARKET ANALYSIS
12
MARKET ANALYSIS
The market analysis forms a basis for assessing market area boundaries, supply and demand factors,
and indications of financial feasibility. Primary data sources utilized for this analysis include CoStar
Market Report First Quarter 2011.
The subject is in the Jackson market and is considered a Class C unanchored retail center with a
primary trade area of approximately three to five miles. According to the Urban Land Institute (ULI) (in
Dollars & Cents of Shopping Centers), the following retail property definitions may be applicable
towards the subject:
A shopping center is defined as a group of commercial establishments planned, developed, owned, and managed as a unit related in location, size, and type of shops to the trade area it serves. It provides on-site parking relating to the types and sizes of its stores.
DEMOGRAPHIC ANALYSIS
Demand for additional retail property is a direct function of population change and household
income. Retail properties are products of a clearly definable demand relating directly to population
shifts and income patterns.
Housing, Population and Household Formation
The following table illustrates the population and household changes for the subject neighborhood
The majority of the comparables are in the $6 - $15 adjusted square foot range. Sale 3 is in close
proximity to the subject but is considered a superior property for its age and occupancy. Therefore we
have concluded towards the middle of the tighter range. The following chart presents the valuation
conclusion:
SALES COMPARISON APPROACH
GLA (SF) X Value Per SF = Value
323,467 X $12.00 = $3,881,604
VALUE CONCLUSION
Indicated Stabilized Value $3,881,604
Rounded $3,900,000
Value Per SF $12.06
Compiled by CBRE
JACKSON SQUARE PROMENADE | INCOME CAPITALIZATION APPROACH
39
INCOME CAPITALIZATION APPROACH
The following map and table summarize the comparable data used in the valuation of the subject. A
detailed description of each transaction is included in the addenda.
SUMMARY OF COMPARABLE RETAIL RENTALS
Comp. No. Property Name Location
Year Built Occ. GLA (SF)
QuotedRental Rate
Expense Basis
1 1960 75% 66,000 $2 - $5 NNN
2 1967 70% 48,271 $7.00 PSF NNN
3 Unknown 45% 13,333 $15.00 PSF NNN
4 1973 100% 82,371 $10.00 PSF NNN and Gross
5 1959 100% 94,562 $3 - $5 Gross & NNN
Subj. Jackson Square Promenade 2460 Terry Road,Jackson, Mississippi
1968 42% 323,467 --- ---
Compiled by CBRE
SS of McDowell at Sucrest Drive,Jackson, MS
McDowell Square Shopping Center
Apple Ridge Shopping Center 2515 Mcfadden Road,Jackson, MS
Metro Crossing
Southgate Shopping Center 2885 Terry Road,Jackson, MS
4820 Highway 18,Jackson, MS
1335 Ellis Avenue,Jackson, MS
Ellis Avenue Plaza
The rentals utilized represent the best data available for comparison with the subject. They were
selected from our research within the Jackson area. The following table shows a summary of the
space allocation for the subject.
JACKSON SQUARE PROMENADE | INCOME CAPITALIZATION APPROACH
40
MARKET RENT CATEGORIES
Space Allocation Size
Anchors 245,640 SF
In-line 77,827 SF
Compiled by CBRE
DISCUSSION/ANALYSIS OF RENT COMPARABLES
Rent Comparable One
This comparable represents a 66,000 square foot retail center located along Mcfadden Road in
Jackson. The center is 75% occupied and was built in 1960. Currently there are two open suites with
the 14,000 square foot space going for $2.06 PSF and the 2,200 square foot space going for $4.77
PSF on a triple net basis.
As compared to the subject this comparable is similar with respect to construction quality and age. No
adjustments were necessary.
Rent Comparable Two
This comparable represents a strip retail center located along Ellis Avenue, just north of Highway 80
in Jackson. The center was developed in 1967 with three additional phases with the most recent
completed around 1994. The center is un-anchored and has a mix of national and local tenants.
The center currently has around 24,000 square feet available, which is being marketed at $7.00 per
square foot on a NNN basis. Free rent is not currently offered but reportedly might be available
during any build-out period, i.e. 1-2 months. Tenant improvement allowances if given would be
minimal.
As compared to the subject this comparable is similar with respect to construction quality and age. No
adjustments were necessary.
Rent Comparable Three
This comparable represents a strip retail center located along Highway 18 at the entrance to a Wal-
Mart and across the street from Lowes in southwest Jackson. The center is currently 45% occupied.
The vacant space is being marketed for $15.00 per square foot on a NNN basis. The broker
indicated that free rent of 2-3 months would be considered as would tenant improvement allowances.
In comparison to the subject, this property has a superior location in close proximity to a Wal-Mart.
This property is considered superior to the subject.
JACKSON SQUARE PROMENADE | INCOME CAPITALIZATION APPROACH
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Rent Comparable Four
This neighborhood center has good access, visibility and exposure. The center was developed in
1973 and has average overall market appeal. The center is anchored by Piggly Wiggly. The leasing
agent/owner indicated the rental rates are higher for smaller spaces than larger spaces. Mr. Lambert
reported the Dollar General is currently paying about $6.00 per square foot and the smaller shop
space averages around $10.00 per square foot. The leases vary from gross to NNN, where the
tenant pays their pro rata share of taxes and insurance. Expenses were not estimated. Free rent is not
currently offered but would be negotiable and tenant improvement allowances are not offered. Rental
rate escalations are negotiable. The owner indicates that the rents have not changed over the past few
years and that the center has maintained 100% occupancy.
This comparable has an established grocery anchor as well as a national discount chain. Thus, this
comparable is considered superior to the subject.
Rent Comparable Five
This comparable represents a 94,562 square foot neighborhood center located on the west side of
Terry Road in Jackson. The property was built in 1959 and is anchored by Roses and Freds. The
center is currently 100% leased. According to the property manager, because they are 100% leased
they did not have an asking rent; however, she did say their effective rents are between $3 and $6
PSF. The anchor tenants are on a triple net basis with $1.21 pass throughs plus percentage rent
based on sales. The smaller space is on a gross basis. The majority of the leases expire in 2014.
As compared to the subject this comparable is similar with respect to construction quality and age. No
adjustments were necessary.
LARGE SECOND-GENERATION SPACE
LARGE SECOND-GENERATION LEASE TERMSTenant Location Lease Date Annual Rent Size (SF) Rent PSF Lease Type Term
Burkes Eufaula, AL Nov-11 $81,869 25,990 $3.15 NNN 5 Yrs.
Marvins Eufaula, AL Oct-11 $140,250 33,000 $4.25 NNN 10 Yrs.
Hobby Lobby Northpoint, AL Sep-11 $180,000 60,000 $3.00 NNN N/A
Super 1 Foods New Iberia, LA May-11 $291,642 79,902 $3.65 NNN 5 Yrs.
Goodwill Ocean Springs, MS Mar-11 $99,000 18,000 $5.50 NNN 5 Yrs.
Dollar General Leesville, LA Jan-11 $31,500 9,000 $3.50 NNN 3 Yrs.
CATO Gulfport, MS Oct-10 $72,000 12,000 $6.00 NNN 5 Yrs.
Aplle Market LOI Fairfield, AL Feb-10 $75,000 30,000 $2.50 NNN 10 Yrs.
Beauty Mark LOI Fairfield, AL Feb-10 $200,870 104,620 $1.92 NNN 3 Yrs.
Ross Dress for Less Florence, AL Jan-10 $164,250 32,850 $5.00 NNN 5 Yrs.
Fli-Bingo Fairfield, AL Jan-10 $142,844 35,711 $4.00 NNN 10 Yrs.
Com Workforce Center Bossier City, LA Jan-10 $61,898 18,422 $3.36 NNN 5 Yrs.
Compiled by CB Richard Ellis Average $3.82
JACKSON SQUARE PROMENADE | INCOME CAPITALIZATION APPROACH
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SUBJECT RENTAL INFORMATION
The subject’s recent rental information is detailed below.
SUMMARY OF RECENT LEASES
New/ Term Commence Size Rental Rate ExpenseTenant Renewal (Yrs.) Date (SF) $/SF/Yr. $/Yr. Reimb.
Asking RatesVacant Space New 3 --- 186,394 $6.00 $1,118,364 NNN
Actual LeasesThe Water Warehouse New 3 Mar-11 910 $10.55 $9,601 NNNJulian's Thrift Store New 1 Oct-11 1,493 $7.23 $10,794 NNNKids First Academy New 2 Mar-11 2,281 $7.89 $17,997 NNN$7 Shop for Women New 3 Aug-11 1,014 $10.06 $10,201 NNNDiscount Purses New 2 Nov-11 1,015 $9.46 $9,602 NNNGreat Expectations New 5 Nov-11 10,581 $3.97 $42,007 NNNPPP Church New 3 Sep-11 1,668 $6.47 $10,792 NNNThe Galleria New 10 Mar-11 18,500 $2.27 $41,995 NNNAuto Shop New 3 Nov-11 6,198 $2.90 $17,974 NNNBernies Sports Grill New 3 Sep-11 3,258 $5.52 $17,984 NNNSplit Images Salon New 3 Jun-11 2,230 $5.38 $11,997 NNNWilson Fitness Plex New 5 Jun-11 2,730 $6.59 $17,991 NNNRegent Teen Club New 5 Oct-11 6,965 $2.58 $17,970 NNNOld Skool Club New 5 Jun-10 4,338 $4.01 $17,395 NNNThe Warehouse Live New 5 Feb-11 8,415 $4.99 $41,991 NNNPlus Size New 3 Oct-11 6,550 $2.75 $18,013 NNN
Subtotal Actual Leases 78,146 $4.02 $314,303
Compiled by CBRE
MARKET RENT ESTIMATE
The most recently executed leases within the subject have typically been consistent with trends
exhibited in the competitive market and by the rent comparables.
Base Rental Rate
The estimate of base rental rates is shown in the following chart.
BASE RENTAL RATES
Category
Subject's Quoted Terms N/A $6.00
Rent Comparable Data $1.92 - $6.00 $2 - $15
CBRE Estimate $3.50 $5.50
Compiled by CBRE
Anchors In-line
Based upon the indication of the market comparables, it would appear that the subject’s current
contract rental rates are in-line with market.
Concessions
The estimate of concessions is shown in the following chart.
JACKSON SQUARE PROMENADE | INCOME CAPITALIZATION APPROACH
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CONCESSIONS
Category
Subject's Quoted Terms N/A 1-3 Months
Rent Comparable Data None 1-3 Months
CBRE Estimate None 3 Months
Compiled by CBRE
Anchors In-line
Reimbursements
The estimate of reimbursements is shown in the following chart.
REIMBURSEMENTS
Category
Subject's Quoted Terms NNN NNN
Rent Comparable Data NNN NNN
CBRE Estimate NNN NNN
Compiled by CBRE
Anchors In-line
Escalations
The market rental rate for the subject is a base rate and does not include potential annual escalations.
At the present time, annual escalations are not prevalent in the local market and the market rental
rate reflects a flat rate over the term of the lease.
Tenant Improvements
The estimate of tenant improvements is shown in the following chart.
TENANT IMPROVEMENTS
Category
CBRE Estimate
New Tenants $1.00 $2.00
Renewals As Is As Is
Compiled by CBRE
Anchors In-line
Lease Term
The estimate of lease terms is shown in the following chart.
JACKSON SQUARE PROMENADE | INCOME CAPITALIZATION APPROACH
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LEASE TERM
Category
Subject's Quoted Terms N/A 3-5 YRS
Rent Comparable Data 5-10 YRS 3-5 YRS
CBRE Estimate 5 YRS 3 YRS
Compiled by CBRE
Anchors In-line
MARKET RENT CONCLUSIONS
The following chart shows the market rent conclusions for the subject:
MARKET RENT CONCLUSIONS
Category
GLA (SF) 245,640 77,827
Percent of Total SF 75.9% 24.1%
Market Rent ($/SF/Yr.) $3.50 $5.50
Concessions None 3 Months
Reimbursements NNN NNN
Annual Escalation None None
Tenant Improvements (New Tenants) $1.00 $2.00
Tenant Improvements (Renewals) As Is As Is
Average Lease Term 5 Years 3 Years
Compiled by CBRE
Anchors In-line
JACKSON SQUARE PROMENADE | INCOME CAPITALIZATION APPROACH
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RENT ROLL ANALYSIS
The subject’s rent roll is illustrated as follows:
RENT ROLL ANALYSIS
Suite Lease Lease Term Size (GLA) Contract Rental RateNo. Tenant Start Expiration (Yrs.) SF % Total $/SF/Yr. $/Yr.
The subject’s estimated stabilized occupancy rate was previously discussed in the market analysis and
has been concluded based upon the current income in-place.
Our estimate is inclusive of a credit loss factor.
EXPENSE REIMBURSEMENTS
The subject’s leases are typically based on a triple net structure whereby the tenant reimburses the
owner for a pro rata share of various expenses. Those expenses considered to be eligible for
reimbursement are as follows:
JACKSON SQUARE PROMENADE | INCOME CAPITALIZATION APPROACH
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REIMBURSED EXPENSES
Real Estate Taxes
Property Insurance
Common Area Maintenance
Compiled by CBRE
The subject’s expense reimbursements are detailed as follows:
EXPENSE REIMBURSEMENTS
Year Total $/SF
Budget $67,271 $0.21
CBRE Estimate $61,466 $0.19
Compiled by CBRE
EFFECTIVE GROSS INCOME
The subject’s effective gross income is detailed as follows:
EFFECTIVE GROSS INCOME
Year Total $/SF
Budget $666,023 $2.06
CBRE Estimate $660,233 $2.04
Compiled by CBRE
OPERATING EXPENSE ANALYSIS
Expense Comparables
The following chart summarizes expenses obtained from recognized industry publications and/or
comparable properties.
JACKSON SQUARE PROMENADE | INCOME CAPITALIZATION APPROACH
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EXPENSE COMPARABLES
Comparable Number 1 2 3
Location Jackson, MS Gulfport, MS Fairfield, AL
GLA (SF) 52,617 38,129 293,496
Expense Year 2010 Budget 2010 2009
Effective Gross Income $7.01 $17.46 $2.69
Expenses $/SF $/SF $/SF
Real Estate Taxes $1.53 $0.82 $0.33
Property Insurance 0.19 0.25 0.17
Common Area Maintenance 0.61 0.65 0.59
Management Fee 0.12 1.22 0.08 (as a % of EGI) 1.7% 7.0% 3.0%
Nonreimbursable Landlord Expense - 1.24 0.01
Reserves for Replacement - - -
Operating Expenses $2.45 $4.17 $1.19Operating Expense Ratio 34.9% 23.9% 44.1%
Source: Actual Operating Statements
The following subsections represent the analysis for the pro forma estimate of each category of the
subject’s stabilized expenses.
Real Estate Taxes
The real estate taxes for the subject were previously discussed. The subject’s expense is detailed as
follows:
REAL ESTATE TAXES
Year Total $/SF
Budget $32,000 $0.10
Expense Comparable 1 N/A $1.53
Expense Comparable 2 N/A $0.82
Expense Comparable 3 N/A $0.33
CBRE Estimate $31,834 $0.10
Compiled by CBRE
We note that we have concluded well below the comparable range; however, real estate taxes are a
highly property specific expense. Thus we have concluded at the historical figure for the subject.
JACKSON SQUARE PROMENADE | INCOME CAPITALIZATION APPROACH
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Property Insurance
Property insurance expenses typically include fire and extended coverage and owner’s liability
coverage. The subject’s expense is detailed as follows:
PROPERTY INSURANCE
Year Total $/SF
Budget $24,000 $0.07
Expense Comparable 1 N/A $0.19
Expense Comparable 2 N/A $0.25
Expense Comparable 3 N/A $0.17
CBRE Estimate $32,347 $0.10
Compiled by CBRE
We have concluded just below the comparable range but in-line with the budgeted amount. Thus, our
conclusion seems reasonable.
Common Area Maintenance
Common area maintenance expenses typically include utilities, parking lot sweeping and
maintenance, and routine repairs and maintenance of the building and site improvements. The
subject’s expense is detailed as follows:
COMMON AREA MAINTENANCE
Year Total $/SF
Budget $74,600 $0.23
Expense Comparable 1 N/A $0.61
Expense Comparable 2 N/A $0.65
Expense Comparable 3 N/A $0.59
CBRE Estimate $80,867 $0.25
Compiled by CBRE
We have concluded in line with the subject’s budget, which is just below the expense comparables.
Management Fee
Management expenses are typically negotiated as a percentage of collected revenues (i.e., effective
gross income). The subject’s expense is detailed as follows:
JACKSON SQUARE PROMENADE | INCOME CAPITALIZATION APPROACH
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MANAGEMENT FEE
Year Total % EGI
Budget $36,000 5.4%
Expense Comparable 1 N/A 1.7%
Expense Comparable 2 N/A 7.0%
Expense Comparable 3 N/A 3.0%
CBRE Estimate $33,012 5.0%
Compiled by CBRE
Professional management fees at the expense comparables ranged from approximately 2% up to 7%.
Discussions with a local management company indicated management fees in the 3.0% to 5.0% for
comparable properties. We have concluded at the middle of the range.
Reserves for Replacement
Reserves for replacement have been estimated based on market parameters with an indicated range
of $0.05 to $0.15 per square foot for comparable properties. Given the recent amount of capital
recently spent at the subject property somewhat offsets the subject’s age. Therefore, we have utilized
an expense near the mid-point of the range.
OPERATING EXPENSE CONCLUSION
The subject’s expense is detailed as follows:
OPERATING EXPENSES
Year Total $/SF
Budget $166,600 $0.52
Expense Comparable 1 N/A $2.45
Expense Comparable 2 N/A $4.17
Expense Comparable 3 N/A $1.19
CBRE Estimate $210,406 $0.65
Compiled by CBRE
The subject’s per square foot operating expense pro forma is slightly below the total per square foot
operating expenses indicated by the expense comparables and slightly above the budgeted amount.
We feel this is reasonable due to the subject’s low property tax expense. Additionally, the comparables
expense ratio ranges from 23.9% - 44.1%. For our analysis, our expense ratio indicates 31.87%,
which is in line with the comparables and appears reasonable.
NET OPERATING INCOME CONCLUSION
The subject’s net operating income is detailed as follows:
JACKSON SQUARE PROMENADE | INCOME CAPITALIZATION APPROACH
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NET OPERATING INCOME
Year Total $/SF
Budget $499,423 $1.54
CBRE Estimate $449,827 $1.39
Compiled by CBRE
Our estimate of net operating income is somewhat less than the subject’s budgeted amount as our
estimate includes market estimates for management fee and reserves expenses.
DIRECT CAPITALIZATION
Direct capitalization is a method used to convert a single year’s estimated stabilized net operating
income into a value indication. The following subsections represent different techniques for deriving
an overall capitalization rate for direct capitalization.
Comparable Sales
The overall capitalization rates (OARs) confirmed for the comparable sales analyzed in the sales
comparison approach are as follows:
COMPARABLE CAPITALIZATION RATES
Sale Sale Price
Sale Date $/SF Occupancy OAR
2 Jun-11 $14.79 20% 8.56%
3 Nov-10 $42.79 94% 11.97%
5 Feb-10 $22.72 90% 14.00%
Indicated OAR: 84% 8.56% - 14.00%
Compiled by: CBRE
Published Investor Surveys
The results of the most recent investor surveys are summarized in the following chart.
OVERALL CAPITALIZATION RATES
Investment Type OAR Range Average
CBRE Community Centers
Class C 9.00% - 12.00% 10.27%
CBRE Neighborhood Centers
Class C 8.00% - 12.00% 9.79%
Indicated OAR: 8.00% - 12.00%
Compiled by: CBRE
JACKSON SQUARE PROMENADE | INCOME CAPITALIZATION APPROACH
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The subject is considered to be a Class C property. Because of the subject’s age and condition, an
OAR near the upper end of the range indicated in the preceding table is considered appropriate.
Band of Investment
The band of the investment technique has been utilized as a crosscheck to the foregoing techniques.
The Mortgage Interest Rate and the Equity Dividend Rate (EDR) are based upon current market yields
for similar investments. The analysis is shown in the following table.
BAND OF INVESTMENT
Mortgage Interest Rate 5.50%
Mortgage Term (Amortization Period) 20 Years
Mortgage Ratio (Loan-to-Value) 50%
Mortgage Constant (monthly payments) 0.08255
Equity Dividend Rate (EDR) 13%
Mortgage Requirement 50% x 0.08255 = 0.04128
Equity Requirement 50% x 0.13000 = 0.06500
100% 0.10628
Indicated OAR: 10.60%
Compiled by: CBRE
Capitalization Rate Conclusion
The following chart summarizes the OAR conclusions.
OVERALL CAPITALIZATION RATE - CONCLUSION
Source Indicated OAR
Comparable Sales 8.56% - 14.00%
National Investor Survey 8.00% - 12.00%
Band of Investment 10.60%
CBRE Estimate 11.00%
Compiled by: CBRE
Direct Capitalization Summary
A summary of the direct capitalization at stabilized occupancy is illustrated in the following chart.
JACKSON SQUARE PROMENADE | INCOME CAPITALIZATION APPROACH
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DIRECT CAPITALIZATION - INCOME IN-PLACE
Income $/Door/Mo. $/SF/Yr Total Potential Rental Income Income in-place $499 $1.85 $598,767Expense Reimbursements 51 0.19 61,466
Effective Gross Income $550 $2.04 $660,233
ExpensesReal Estate Taxes $0.10 $31,834Property Insurance 0.10 32,347 Common Area Maintenance 0.25 80,867 Management Fee 5.00% 0.10 33,012 Reserves for Replacement 0.10 32,347
Operating Expenses $0.65 $210,406
Operating Expense Ratio 31.87%
Net Operating Income $1.39 $449,827
OAR / 11.00%
Indicated Stabilized Value $4,089,336
Rounded $4,100,000
Value Per SF $12.68
Matrix Analysis Cap Rate Value
10.75% $2,564,400
11.00% $2,469,300
11.25% $2,378,500
Compiled by CBRE
JACKSON SQUARE PROMENADE | RECONCILIATION OF VALUE
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RECONCILIATION OF VALUE
The value indications from the approaches to value are summarized as follows:
SUMMARY OF VALUE CONCLUSIONSSales Comparison Approach $3,900,000
Income Capitalization Approach $4,100,000
Reconciled Value $4,100,000
Compiled by CBRE
In the sales comparison approach, the subject is compared to similar properties that have been sold
recently or for which listing prices or offers are known. The sales used in this analysis are considered
comparable to the subject, and the required adjustments were based on reasonable and well-
supported rationale. In addition, market participants are currently analyzing purchase prices on
investment properties as they relate to available substitutes in the market. Therefore, the sales
comparison approach is considered to provide a reliable value indication, but has been given
secondary emphasis in the final value reconciliation.
The income capitalization approach is applicable to the subject since it is an income producing
property leased in the open market. Market participants are primarily analyzing properties based on
their income generating capability. Therefore, the income capitalization approach is considered a
reasonable and substantiated value indicator and has been given primary emphasis in the final value
estimate.
Based on the foregoing, the market value of the subject has been concluded as follows:
MARKET VALUE CONCLUSION
Appraisal Premise Interest Appraised Date of Value Value Conclusion
As Is Leased Fee Interest November 4, 2011 $4,100,000
Compiled by CBRE
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ASSUMPTIONS AND LIMITING CONDITIONS
1. Unless otherwise specifically noted in the body of the report, it is assumed that title to the property or properties appraised is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect marketability or value. CBRE, Inc. is not aware of any title defects nor has it been advised of any unless such is specifically noted in the report. CBRE, Inc., however, has not examined title and makes no representations relative to the condition thereof. Documents dealing with liens, encumbrances, easements, deed restrictions, clouds and other conditions that may affect the quality of title have not been reviewed. Insurance against financial loss resulting in claims that may arise out of defects in the subject’s title should be sought from a qualified title company that issues or insures title to real property.
2. Unless otherwise specifically noted in the body of this report, it is assumed: that the existing improvements on the property or properties being appraised are structurally sound, seismically safe and code conforming; that all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; that the roof and exterior are in good condition and free from intrusion by the elements; that the property or properties have been engineered in such a manner that the improvements, as currently constituted, conform to all applicable local, state, and federal building codes and ordinances. CBRE, Inc. professionals are not engineers and are not competent to judge matters of an engineering nature. CBRE, Inc. has not retained independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore, makes no representations relative to the condition of improvements. Unless otherwise specifically noted in the body of the report: no problems were brought to the attention of CBRE, Inc. by ownership or management; CBRE, Inc. inspected less than 100% of the entire interior and exterior portions of the improvements; and CBRE, Inc. was not furnished any engineering studies by the owners or by the party requesting this appraisal. If questions in these areas are critical to the decision process of the reader, the advice of competent engineering consultants should be obtained and relied upon. It is specifically assumed that any knowledgeable and prudent purchaser would, as a precondition to closing a sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems. Structural problems and/or building system problems may not be visually detectable. If engineering consultants retained should report negative factors of a material nature, or if such are later discovered, relative to the condition of improvements, such information could have a substantial negative impact on the conclusions reported in this appraisal. Accordingly, if negative findings are reported by engineering consultants, CBRE, Inc. reserves the right to amend the appraisal conclusions reported herein.
3. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the property was not observed by the appraisers. CBRE, Inc. has no knowledge of the existence of such materials on or in the property. CBRE, Inc., however, is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired.
We have inspected, as thoroughly as possible by observation, the land; however, it was impossible to personally inspect conditions beneath the soil. Therefore, no representation is made as to these matters unless specifically considered in the appraisal.
4. All furnishings, equipment and business operations, except as specifically stated and typically considered as part of real property, have been disregarded with only real property being considered in the report unless otherwise stated. Any existing or proposed improvements, on or off-site, as well as any alterations or repairs considered, are assumed to be completed in a workmanlike manner according to standard practices based upon the information submitted to CBRE, Inc. This report may be subject to amendment upon re-inspection of the subject subsequent to repairs, modifications, alterations and completed new construction. Any estimate of Market Value is as of the date indicated; based upon the information, conditions and projected levels of operation.
5. It is assumed that all factual data furnished by the client, property owner, owner’s representative, or persons designated by the client or owner to supply said data are accurate and correct unless otherwise specifically noted in the appraisal report. Unless otherwise specifically noted in the appraisal report, CBRE, Inc. has no reason to believe that any of the data furnished contain any material error. Information and data referred to in this paragraph include, without being limited to, numerical street addresses, lot and block numbers, Assessor’s Parcel Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any material error in any of the above data could have a substantial impact on the conclusions reported. Thus, CBRE, Inc. reserves the right to amend conclusions reported if made aware of any such error. Accordingly, the client-addressee should
JACKSON SQUARE PROMENADE | ASSUMPTIONS AND LIMITING CONDITIONS
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carefully review all assumptions, data, relevant calculations, and conclusions within 30 days after the date of delivery of this report and should immediately notify CBRE, Inc. of any questions or errors.
6. The date of value to which any of the conclusions and opinions expressed in this report apply, is set forth in the Letter of Transmittal. Further, that the dollar amount of any value opinion herein rendered is based upon the purchasing power of the American Dollar on that date. This appraisal is based on market conditions existing as of the date of this appraisal. Under the terms of the engagement, we will have no obligation to revise this report to reflect events or conditions which occur subsequent to the date of the appraisal. However, CBRE, Inc. will be available to discuss the necessity for revision resulting from changes in economic or market factors affecting the subject.
7. CBRE, Inc. assumes no private deed restrictions, limiting the use of the subject in any way.
8. Unless otherwise noted in the body of the report, it is assumed that there are no mineral deposit or subsurface rights of value involved in this appraisal, whether they be gas, liquid, or solid. Nor are the rights associated with extraction or exploration of such elements considered unless otherwise stated in this appraisal report. Unless otherwise stated it is also assumed that there are no air or development rights of value that may be transferred.
9. CBRE, Inc. is not aware of any contemplated public initiatives, governmental development controls, or rent controls that would significantly affect the value of the subject.
10. The estimate of Market Value, which may be defined within the body of this report, is subject to change with market fluctuations over time. Market value is highly related to exposure, time promotion effort, terms, motivation, and conclusions surrounding the offering. The value estimate(s) consider the productivity and relative attractiveness of the property, both physically and economically, on the open market.
11. Any cash flows included in the analysis are forecasts of estimated future operating characteristics are predicated on the information and assumptions contained within the report. Any projections of income, expenses and economic conditions utilized in this report are not predictions of the future. Rather, they are estimates of current market expectations of future income and expenses. The achievement of the financial projections will be affected by fluctuating economic conditions and is dependent upon other future occurrences that cannot be assured. Actual results may vary from the projections considered herein. CBRE, Inc. does not warrant these forecasts will occur. Projections may be affected by circumstances beyond the current realm of knowledge or control of CBRE, Inc.
12. Unless specifically set forth in the body of the report, nothing contained herein shall be construed to represent any direct or indirect recommendation of CBRE, Inc. to buy, sell, or hold the properties at the value stated. Such decisions involve substantial investment strategy questions and must be specifically addressed in consultation form.
13. Also, unless otherwise noted in the body of this report, it is assumed that no changes in the present zoning ordinances or regulations governing use, density, or shape are being considered. The property is appraised assuming that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, nor national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report is based, unless otherwise stated.
14. This study may not be duplicated in whole or in part without the specific written consent of CBRE, Inc. nor may this report or copies hereof be transmitted to third parties without said consent, which consent CBRE, Inc. reserves the right to deny. Exempt from this restriction is duplication for the internal use of the client-addressee and/or transmission to attorneys, accountants, or advisors of the client-addressee. Also exempt from this restriction is transmission of the report to any court, governmental authority, or regulatory agency having jurisdiction over the party/parties for whom this appraisal was prepared, provided that this report and/or its contents shall not be published, in whole or in part, in any public document without the express written consent of CBRE, Inc. which consent CBRE, Inc. reserves the right to deny. Finally, this report shall not be advertised to the public or otherwise used to induce a third party to purchase the property or to make a “sale” or “offer for sale” of any “security”, as such terms are defined and used in the Securities Act of 1933, as amended. Any third party, not covered by the exemptions herein, who may possess this report, is advised that they should rely on their own independently secured advice for any decision in connection with this property. CBRE, Inc. shall have no accountability or responsibility to any such third party.
15. Any value estimate provided in the report applies to the entire property, and any pro ration or division of the title into fractional interests will invalidate the value estimate, unless such pro ration or division of interests has been set forth in the report.
16. The distribution of the total valuation in this report between land and improvements applies only under the existing program of utilization. Component values for land and/or buildings are not intended to be used in conjunction with any other property or appraisal and are invalid if so used.
17. The maps, plats, sketches, graphs, photographs and exhibits included in this report are for illustration purposes only and are to be utilized only to assist in visualizing matters discussed within this report. Except as specifically stated, data relative to size or area of the subject and comparable properties has been obtained from sources deemed accurate and reliable. None of the exhibits are to be removed, reproduced, or used apart from this report.
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18. No opinion is intended to be expressed on matters which may require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. Values and opinions expressed presume that environmental and other governmental restrictions/conditions by applicable agencies have been met, including but not limited to seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, licenses, etc. No survey, engineering study or architectural analysis has been made known to CBRE, Inc. unless otherwise stated within the body of this report. If the Consultant has not been supplied with a termite inspection, survey or occupancy permit, no responsibility or representation is assumed or made for any costs associated with obtaining same or for any deficiencies discovered before or after they are obtained. No representation or warranty is made concerning obtaining these items. CBRE, Inc. assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance.
19. Acceptance and/or use of this report constitutes full acceptance of the Contingent and Limiting Conditions and special assumptions set forth in this report. It is the responsibility of the Client, or client’s designees, to read in full, comprehend and thus become aware of the aforementioned contingencies and limiting conditions. Neither the Appraiser nor CBRE, Inc. assumes responsibility for any situation arising out of the Client’s failure to become familiar with and understand the same. The Client is advised to retain experts in areas that fall outside the scope of the real estate appraisal/consulting profession if so desired.
20. CBRE, Inc. assumes that the subject analyzed herein will be under prudent and competent management and ownership; neither inefficient or super-efficient.
21. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless noncompliance is stated, defined and considered in the appraisal report.
22. No survey of the boundaries of the property was undertaken. All areas and dimensions furnished are presumed to be correct. It is further assumed that no encroachments to the realty exist.
23. The Americans with Disabilities Act (ADA) became effective January 26, 1992. Notwithstanding any discussion of possible readily achievable barrier removal construction items in this report, CBRE, Inc. has not made a specific compliance survey and analysis of this property to determine whether it is in conformance with the various detailed requirements of the ADA. It is possible that a compliance survey of the property together with a detailed analysis of the requirements of the ADA could reveal that the property is not in compliance with one or more of the requirements of the ADA. If so, this fact could have a negative effect on the value estimated herein. Since CBRE, Inc. has no specific information relating to this issue, nor is CBRE, Inc. qualified to make such an assessment, the effect of any possible non-compliance with the requirements of the ADA was not considered in estimating the value of the subject.
24. Client shall not indemnify Appraiser or hold Appraiser harmless unless and only to the extent that the Client misrepresents, distorts, or provides incomplete or inaccurate appraisal results to others, which acts of the Client approximately result in damage to Appraiser. Notwithstanding the foregoing, Appraiser shall have no obligation under this Section with respect to any loss that is caused solely by the active negligence or willful misconduct of a Client and is not contributed to by any act or omission (including any failure to perform any duty imposed by law) by Appraiser. Client shall indemnify and hold Appraiser harmless from any claims, expenses, judgments or other items or costs arising as a result of the Client's failure or the failure of any of the Client's agents to provide a complete copy of the appraisal report to any third party. In the event of any litigation between the parties, the prevailing party to such litigation shall be entitled to recover, from the other, reasonable attorney fees and costs.
25. The report is for the sole use of the client; however, client may provide only complete, final copies of the appraisal report in its entirety (but not component parts) to third parties who shall review such reports in connection with loan underwriting or securitization efforts. Appraiser is not required to explain or testify as to appraisal results other than to respond to the client for routine and customary questions. Please note that our consent to allow an appraisal report prepared by CBRE, Inc. or portions of such report, to become part of or be referenced in any public offering, the granting of such consent will be at our sole discretion and, if given, will be on condition that we will be provided with an Indemnification Agreement and/or Non-Reliance letter, in a form and content satisfactory to us, by a party satisfactory to us. We do consent to your submission of the reports to rating agencies, loan participants or your auditors in its entirety (but not component parts) without the need to provide us with an Indemnification Agreement and/or Non-Reliance letter.
26. As part of the client’s requested scope of work, an estimate of insurable value is provided herein. CBRE, Inc. has followed traditional appraisal standards to develop a reasonable calculation based upon industry practices and industry accepted publications such as the Marshal Valuation Service handbook. The methodology employed is a derivation of the cost approach which is primarily used as an academic exercise to help support the market value estimate and therefore is not reliable for Insurable Value estimates. Actual construction costs and related estimates can vary greatly from this estimate.
JACKSON SQUARE PROMENADE | ASSUMPTIONS AND LIMITING CONDITIONS
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This analysis should not be relied upon to determine proper insurance coverage which can only be properly estimated by consultants considered experts in cost estimation and insurance underwriting. It is provided to aid the client/reader/user as part of their overall decision making process and no representations or warranties are made by CBRE, Inc. regarding the accuracy of this estimate and it is strongly recommend that other sources be utilized to develop any estimate of insurable value.
JACKSON SQUARE PROMENADE | ADDENDA
ADDENDA
JACKSON SQUARE PROMENADE | ADDENDA
ADDENDUM A
GLOSSARY OF TERMS
JACKSON SQUARE PROMENADE | ADDENDA
assessed value Assessed value applies in ad valorem taxation and refers to the value of a property according to the tax rolls. Assessed value may not conform to market value, but it is usually calculated in relation to a market value base. †
cash equivalency The procedure in which the sale prices of comparable properties sold with atypical financing are adjusted to reflect typical market terms.
contract rent The actual rental income specified in a lease. ‡
disposition value The most probable price which a specified interest in real property is likely to bring under all of the following conditions: 1) Consummation of a sale will occur within a limited future marketing period specified by the client; 2) The actual market conditions currently prevailing are those to which the appraised property interest is subject; 3) The buyer and seller is each acting prudently and knowledgeably; 4) The seller is under compulsion to sell; 5) The buyer is typically motivated; 6) Both parties are acting in what they consider their best interests; 7) An adequate marketing effort will be made in the limited time allowed for the completion of a sale; 8) Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 9) The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.‡
effective rent The rental rate net of financial concessions such as periods of no rent during the lease term; may be calculated on a discounted basis, reflecting the time value of money, or on a simple, straight-line basis. ‡
excess land In regard to an improved site, the land not needed to serve or support the existing improvement. In regard to a vacant site or a site considered as though vacant, the land not needed to accommodate the site’s primary highest and best use. Such land may be separated from the larger site and have its own highest and best use, or it may allow for future expansion of the existing or anticipated improvement. See also surplus land. ‡
extraordinary assumption An assumption directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property such as market conditions or trends; or about the integrity of data used in an analysis. See also hypothetical condition. ‡
fee simple estate Absolute ownership unencumbered by any other interest or estate, subject only to the limitations
imposed by the governmental powers of taxation, eminent domain, police power, and escheat. ‡
floor area ratio (FAR) The relationship between the above-ground floor area of a building, as described by the building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area; also called building-to-land ratio. ‡
full service lease A lease in which rent covers all operating expenses. Typically, full service leases are combined with an expense stop, the expense level covered by the contract lease payment. Increases in expenses above the expense stop level are passed through to the tenant and are known as expense pass-throughs.
going concern value Going concern value is the value of a proven property operation. It includes the incremental value associated with the business concern, which is distinct from the value of the real estate only. Going concern value includes an intangible enhancement of the value of an operating business enterprise which is produced by the assemblage of the land, building, labor, equipment, and marketing operation. This process creates an economically viable business that is expected to continue. Going concern value refers to the total value of a property, including both real property and intangible personal property attributed to the business value. †
gross building area (GBA) The total floor area of a building, including below-grade space but excluding unenclosed areas, measured from the exterior of the walls. Gross building area for office buildings is computed by measuring to the outside finished surface of permanent outer building walls without any deductions. All enclosed floors of the building including basements, mechanical equipment floors, penthouses, and the like are included in the measurement. Parking spaces and parking garages are excluded. ‡
hypothetical condition That which is contrary to what exists but is supposed for the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis. See also extraordinary assumption. ‡
investment value Investment value is the value of an investment to a particular investor based on his or her investment requirements. In contrast to market value, investment value is value to an individual, not value in the marketplace. Investment value reflects the subjective relationship between a particular investor and a given investment. When measured in dollars, investment value is the price an investor would pay for an investment in light of its perceived capacity to satisfy his or her desires,
JACKSON SQUARE PROMENADE | ADDENDA
needs, or investment goals. To estimate investment value, specific investment criteria must be known. Criteria to evaluate a real estate investment are not necessarily set down by the individual investor; they may be established by an expert on real estate and its value, that is, an appraiser. †
leased fee See leased fee estate
leased fee estate An ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the leased fee are specified by contract terms contained within the lease.‡
leasehold See leasehold estate
leasehold estate The interest held by the lessee (the tenant or renter) through a lease conveying the rights of use and occupancy for a stated term under certain conditions.‡
liquidation value The most probable price which a specified interest in real property is likely to bring under all of the following conditions: 1) Consummation of a sale will occur within a severely limited future marketing period specified by the client; 2) The actual market conditions currently prevailing are those to which the appraised property interest is subject; 3) The buyer is acting prudently and knowledgeably; 4) The seller is under extreme compulsion to sell; 5) The buyer is typically motivated; 6) The buyer is acting in what he or she considers his or her best interests; 7) A limited marketing effort and time will be allowed for the completion of a sale; 8) Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 9) The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. ‡
market rent The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the specified lease agreement including term, rental adjustment and revaluation, permitted uses, use restrictions, and expense obligations; the lessee and lessor each acting prudently and knowledgeably, and assuming consummation of a lease contract as of a specified date and the passing of the leasehold from lessor to lessee under conditions whereby: 1) lessee and lessor are typically motivated; 2) both parties are well informed or well advised, and acting in what they consider their best interests; 3) a reasonable time is allowed for exposure in the open market; 4) the rent payment is made in terms of cash in U.S. dollars and is expressed as an amount per time period consistent with the payment schedule of the lease contract; and 5) the rental amount represents the normal consideration for the
property leased unaffected by special fees or concessions granted by anyone associated with the transaction. ‡
market value Market value is one of the central concepts of the appraisal practice. Market value is differentiated from other types of value in that it is created by the collective patterns of the market. 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) A reasonable time is allowed for exposure in the open market; 2) Both parties are well informed or well advised, and acting in what they consider their own best interests; 3) Buyer and seller are typically motivated; 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 the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.§
marketing period The time it takes an interest in real property to sell on the market subsequent to the date of an appraisal. ‡
net lease Lease in which all or some of the operating expenses are paid directly by the tenant. The landlord never takes possession of the expense payment. In a Triple Net Lease all operating expenses are the responsibility of the tenant, including property taxes, insurance, interior maintenance, and other miscellaneous expenses. However, management fees and exterior maintenance are often the responsibility of the lessor in a triple net lease. A modified net lease is one in which some expenses are paid separately by the tenant and some are included in the rent.
net rentable area (NRA) 1) The area on which rent is computed. 2) The Rentable Area of a floor shall be computed by measuring to the inside finished surface of the dominant portion of the permanent outer building walls, excluding any major vertical penetrations of the floor. No deductions shall be made for columns and projections necessary to the building. Include space such as mechanical room, janitorial room, restrooms, and lobby of the floor. *
occupancy rate The relationship or ratio between the income received from the rented units in a property and the income that would be received if all the units were occupied.‡
prospective value opinion A forecast of the value expected at a specified future date. A prospective value opinion is most frequently sought in connection with real estate projects that are proposed, under construction, or under conversion to a new us, or those that have not
JACKSON SQUARE PROMENADE | ADDENDA
achieved sellout or a stabilized level of long-term occupancy at the time the appraisal report is written. ‡
reasonable exposure time The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective opinion based upon an analysis of past events assuming a competitive and open market. ††
rent See full service lease net lease market rent contract, coupon, face, or nominal rent effective rent
shell rent The typical rent paid for retail, office, or industrial tenant space based on minimal “shell” interior finishes (called plain vanilla finish in some areas). Usually the landlord delivers the main building shell space or some minimum level of interior build-out, and the tenant completes the interior finish, which can include wall, ceiling, and floor finishes; mechanical systems, interior electric, and plumbing. Typically these are long-term leases with tenants paying all or most property expenses. ‡
surplus land Land not necessary to support the highest and best use of the existing improvement but, because of physical limitations, building placement, or neighborhood norms, cannot be sold off separately. Such land may or may not contribute positively to value and may or may not accommodate future expansion of an existing or anticipated improvement. See also excess land. ‡
usable area 1) The area actually used by individual tenants. 2) The Usable Area of an office building is computed by measuring to the finished surface of the office side of corridor and other permanent walls, to the center of partitions that separate the office from adjoining usable areas, and to the inside finished surface of the dominant portion of the permanent outer building walls. Excludes areas such as mechanical rooms, janitorial room, restrooms, lobby, and any major vertical penetrations of a multi-tenant floor. *
use value Use value is a concept based on the productivity of an economic good. Use value is the value a specific property has for a specific use. Use value focuses on the value the real estate contributes to the enterprise of which it is a part, without regard to the property’s highest and best use or the monetary amount that might be realized upon its sale. †
value indication An opinion of value derived through application of the appraisal process. ‡
† The Appraisal of Real Estate, Thirteenth Edition, Appraisal Institute, 2008.
‡ The Dictionary of Real Estate Appraisal, Fourth Edition, Appraisal Institute, 2002.
§ Office of Comptroller of the Currency (OCC), 12 CFR Part 34, Subpart C – Appraisals, 34.42 (g); Office of Thrift Supervision (OTS), 12 CFR 564.2 (g); Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002), 177-178. This is also compatible with the RTC, FDIC, FRS and NCUA definitions of market value as well as the example referenced in the Uniform Standards of Professional Appraisal Practice (USPAP).
* 2000 BOMA Experience Exchange Report, Income/Expense Analysis for Office Buildings (Building Owners and Managers Association, 2000)
†† Statement on Appraisal Standard No. 6, Appraisal Standards Board of The Appraisal Foundation, September 16, 1993, revised June 15, 2004.
JACKSON SQUARE PROMENADE | ADDENDA
ADDENDUM B
IMPROVED SALE DATA SHEETS
RETAIL SALE No. 1
2041 Douglas AveBrewton,AL 36426Escambia
Financial Data
N/A22%N/A
N/AN/AN/AN/AN/A
TotalN/A
Per SF
Analysis
Overall Cap. Rate (OAR):
Price Per S.F.N/AN/A %N/AN/A %$6.50
Comments
This comparable represents the sale of Douglas Square, a 114,891 square feet neighborhood shopping center located at thenorthwest corner of Douglas Avenue and Stadium Street in Brewton, AL. The center sold from Regions Bank. It features a 73,338square foot vacant former Wal-Mart box and a 41,553 square foot retail center. The center was 22% occupied at the time of sale.Goody's occupies 16,849 square feet. The center is also adjacent to a Piggly Wiggly Supermarket that is separately owned. Theproperty sold in June 2011 for $6.50 per square foot. The buyer purchases distressed assets around the southeast.
Parcel numbers include 30 15 05 16 2 005 005.001 and 30 15 05 16 2 005 005.004.
Douglas Square
N/AN/AN/AN/A
Buyers Underwriting Criteria.:
Source:Occupancy at Sale:Existing or ProForma Inc:
Potential Gross Income:Vacancy and Credit Loss:Effective Gross Income:Expenses and Reserves:
Net Operating Income:
Location:
County:
Location Data
Physical Data
Sale Data Sale
Market Square II, LLC c/o RegionsN/AN/A
Cash to Seller$746,792
$746,792$0$746,792
Buyer, Blue Ridge Capital, Steve Patrick 404.358.2888 (cell)
Neighborhood/CommunityType:
N/A6/2011
Transaction Type:
Sale Price:
Date:Marketing Time:Grantor:
Grantee:Document No.:
Req.Capital Cost:
Financing:Cash Eq.Price:
Adj. Sale Price:Verification:
30 15 05 16 2 005 005.001
N/AAtlas Ref:
Assessor's Parcel No:
Eff. Gross Multiplier (EGIM):
Oper. Expense Ratio (OER):Price Per Square Foot:
Land Area: 12.11 Acres
Projected IRR:
Excess Land:
Year Built:
Condition:Exterior Walls:
Parking:
Gross Leasable Area:
Anchor Tenant GLA:
Anchors:
GLA Purchased:
Vacant FormerGoody'sVacant FormerVacant Former Cato
Total GLA:
Local Tenant GLA:
N/A
1990
AverageMasonry
Surface
98,027 SF
73,338 SF16,849 SF4,200 SF
114,891 SF
3,640 SF
114,891 SF
16,864 SF
RETAIL SALE No. 2
1218 S Eufaula AvenueEufaula,AL 36027Barbour
Financial Data
N/A20%N/A
N/AN/AN/AN/A
$113,933
TotalN/A
Per SF
Analysis
Overall Cap. Rate (OAR):
Other8.56 %N/A %N/AN/A %$14.79
Comments
This comparable represents an 89,959-square foot neighborhood center located at 1218 South Eufaula Avenue in Eufaula. Theimprovements were constructed in 1990 and are situated on a 16.32-acre site. Currently, the property is 19.8% occupied and isconsidered to be in average overall condition. The former anchor tenant, Wal-Mart (71,159 SF), vacated the space prior to theirlease expiring in November 2010. The property sold for $1,330,500 or $14.79 PSF. The income in place at the time of sale was$113,933, indicating an 8.56% cap rate. Since the sale the buyer has leased the vacated Wal-Mart space to Marvins (33,000 sf) andBurkes (25,990 sf).
Eufaula Towne Center
N/AN/AN/A
$1.27
Buyers Underwriting Criteria.:
Source:Occupancy at Sale:Existing or ProForma Inc:
Potential Gross Income:Vacancy and Credit Loss:Effective Gross Income:Expenses and Reserves:
Net Operating Income:
Location:
County:
Location Data
Physical Data
Sale Data Sale
N/ADHS II Ventures, LLCN/A
Not Available$1,330,500
$1,330,500$0$1,330,500
Appraisal
Neighborhood/CommunityType:
N/A6/2011
Transaction Type:
Sale Price:
Date:Marketing Time:Grantor:
Grantee:Document No.:
Req.Capital Cost:
Financing:Cash Eq.Price:
Adj. Sale Price:Verification:
Multiple
N/AAtlas Ref:
Assessor's Parcel No:
Eff. Gross Multiplier (EGIM):
Oper. Expense Ratio (OER):Price Per Square Foot:
Land Area: 16.32 Acres
Projected IRR:
Excess Land:
Year Built:
Condition:Exterior Walls:
Parking:
Gross Leasable Area:
Anchor Tenant GLA:
Anchors:
GLA Purchased:
Vacant (Former
Total GLA:
Local Tenant GLA:
N/A
1990
AverageCMU Block
Surface
N/A
89,959 SF
N/A
N/A
RETAIL SALE No. 3
5777 Terry RoadByram,MS 39272Hinds
Financial Data
N/A94%N/A
N/AN/AN/AN/A
$353,713
TotalN/A
Per SF
Analysis
Overall Cap. Rate (OAR):
Other11.97 %N/A %N/AN/A %$42.79
Comments
This comparable represents the sale of a 69,054 square foot neighborhood center located on Terry Road in Byram just out side ofJackson. The property sold for $2,955,000 or $42.79 per square foot in Novemeber 2010. The property was built in 1991 and was94% occupied at the date of sale. According to the brokers underwriting the cap rate used was 11.97% indicating a NOI of$353,713.
Market at Byram
N/AN/AN/A
$5.12
Buyers Underwriting Criteria.:
Source:Occupancy at Sale:Existing or ProForma Inc:
Potential Gross Income:Vacancy and Credit Loss:Effective Gross Income:Expenses and Reserves:
Net Operating Income:
Location:
County:
Location Data
Physical Data
Sale Data Sale
Southgate Realty, LLCN/AN/A
Not Available$2,955,000
$2,955,000$0$2,955,000
Listing Broker
Neighborhood/CommunityType:
N/A11/2010
Transaction Type:
Sale Price:
Date:Marketing Time:Grantor:
Grantee:Document No.:
Req.Capital Cost:
Financing:Cash Eq.Price:
Adj. Sale Price:Verification:
N/A
N/AAtlas Ref:
Assessor's Parcel No:
Eff. Gross Multiplier (EGIM):
Oper. Expense Ratio (OER):Price Per Square Foot:
Land Area: 7.75 Acres
Projected IRR:
Excess Land:
Year Built:
Condition:Exterior Walls:
Parking:
Gross Leasable Area:
Anchor Tenant GLA:
GLA Purchased:
Total GLA:
Local Tenant GLA:
N/A
1991
AverageBrick
Surface
N/A
69,054 SF
N/A
N/A
RETAIL SALE No. 4
2448 Shorter AvenueRome,GA 30165Floyd
Financial Data
N/A10%N/A
N/AN/AN/AN/AN/A
TotalN/A
Per SF
Analysis
Overall Cap. Rate (OAR):
Price Per S.F.N/AN/A %N/AN/A %$17.21
Comments
This represents the acquisition of a 58,114-square foot neighborhood retail center located along Shorter Avenue in Rome. Theproperty was formerly anchored by Kroger and built in 1988. Randolph Oswalt (Jo Rand, LLC) acquired the property in July 2010for $1,000,000, or $17.21 per square foot. The broker confirmed an arms length transaction with no special financingconsiderations. The property was originally marketed for $1,700,000, resulting in a 70% SP to LP ratio.
Kroger West Shopping Center
N/AN/AN/AN/A
Buyers Underwriting Criteria.:
Source:Occupancy at Sale:Existing or ProForma Inc:
Potential Gross Income:Vacancy and Credit Loss:Effective Gross Income:Expenses and Reserves:
Net Operating Income:
Location:
County:
Location Data
Physical Data
Sale Data Sale
Topvalco, IncJo Rand, LLC2235/17
Market Terms$1,000,000
$1,000,000$0$1,000,000
Costar, Broker - David Joyner, Colliers International, 404-574-1028
This represents the sale of a 48,405 square foot neighborhood shopping center located at the southeast corner of Echo Drive andUS Highway 78 (Forestdale Boulevard) in Forestdale, Jefferson County, Alabama. The improvements were constructed in 1975and are situated on 4.32-acres. The center is anchored by Piggly Wiggly and Family Dollar. According to the broker, the centersold in February 2010 for $1,100,000, or $22.72 per square foot, indicating a 14% cap rate. The purchaser is a local, privateinvestor.
Village Hills Shopping Center
N/AN/AN/A
$3.18
Buyers Underwriting Criteria.:
Source:Occupancy at Sale:Existing or ProForma Inc:
Potential Gross Income:Vacancy and Credit Loss:Effective Gross Income:Expenses and Reserves:
Net Operating Income:
Location:
County:
Location Data
Physical Data
Sale Data Sale
Flint Village Realty AssociatesHorwath Hospitality InvestmentN/A
This comparable represents a 66,000 square foot retail center located along Mcfadden Road in Jackson. The center is 75% occupiedand was built in 1960. Currently there are two open suites with the 14,000 square foot space going for $2.06 PSF and the 2,200square foot space going for $4.77 PSF on a triple net basis.
This comparable represents a strip retail center located along Ellis Avenue, just north of Highway 80 in Jackson. The center wasdeveloped in 1967 with three additional phases with the most recent completed around 1994. The center is un-anchored and has amix of national and local tenants. The center currently has around 24,000 square feet available, which is being marketed at $7.00per square foot on a NNN basis. Free rent is not currently offered but reportedly might be available during any build-out period, i.e.1-2 months. Tenant improvement allowances if given would be minimal.
This comparable represents a strip retail center located along Highway 18 at the entrance to a Wal-MArt and across the street fromLowes in southwest Jackson. The center is currently 45% occupied. The vacant space is being marketed for $15.00 per square footon a NNN basis. The broker indicated that free rent of 2-3 months would be considered as would tenant improvement allowances.
This neighborhood center has good access, visibility and exposure. The center was developed in 1973 and has average overallmarket appeal. The center is anchored by Piggly Wiggly. The leasing agent/owner indicated the rental rates are higher for smallerspaces than larger spaces. Mr. Lambert reported the Dollar General is currently paying about $6.00 per square foot and the smallershop space averages around $10.00 per square foot. The leases vary from gross to NNN, where the tenant pays their pro rata shareof taxes and insurance. Expenses were not estimated. Free rent is not currently offered but would be negotiable and tenantimprovement allowances are not offered. Rental rate escalations are negotiable. The owner indicates that the rents have not changedover the past few years and that the center has maintained 100% occupancy.
McDowell Square Shopping Center
Physical Data
Lease Data
Neighborhood/CommunityType:
SS of McDowell at Sucrest DriveJackson,MS 39212Hinds
This comparable represents a 94,562 square foot neighborhood center located on the west side of Terry Road in Jackson. Theproperty was built in 1959 and is anchored by Roses and Freds. The center is currently 100% leased. According to the propertymanager, because they are 100% leased they did not have an asking rent; however, she did say their effective rents are between $3and $6 PSF. The anchor tenants are on a triple net basis with $1.21 pass throughs plus percentage rent based on sales. The smallerspace is on a gross basis. The majority of the leases expire in 2014.
EDUCATIONAL B.B.A., Real Estate – Georgia State University Appraisal Institute Course 410: Standards of Professional Practice, Part A (USPAP) Course 420: Standards of Professional Practice, Part B (USPAP) Course 310: Basic Income Capitalization Course 320: General Applications Course 510: Advanced Income Capitalization Course 550: Advanced Applications
LICENSE(S)/CERTIFICATION(S) Certified General Real Property Appraiser, Georgia – Certification Number 241763 Certified General Real Property Appraiser, Alabama – Certification Number G00887 Certified General Real Property Appraiser, Tennessee – Certification Number 00004136 Certified General Real Property Appraiser, South Carolina – Certification Number 6069
EMPLOYMENT EXPERIENCE
1998 – Present CB Richard Ellis, Inc. Vice President
Atlanta, Georgia
QUALIFICATIONS OF
RONALD A. NEYHART, MAI Senior Managing Director
CBRE, Inc. – Valuation & Advisory Services
3280 Peachtree Road, Suite 1100 Atlanta, Georgia 30305
(404) 812-5020 (404) 812-5051 FAX
EDUCATIONAL B.S. Finance and Real Estate - Florida State University Appraisal Institute
Course 1A-1, 1A-2, 1B-A, 1B-B, 2-1, 2-2, SPP
LICENSE(S)/CERTIFICATION(S) Georgia Real Estate Appraisal Board – Certified General Real Estate Appraiser - C000490 Tennessee Real Estate Commission – Certified General Real Estate Appraiser - 2013 North Carolina Real Estate Appraisal Board – Certified General Real Estate Appraiser - A4051 Alabama Real Estate Appraisal Board – Certified General Real Estate Appraiser - G00484 South Carolina Real Estate Appraisers Board – Certified General Real Estate Appraiser -
CG3429 Mississippi Real Estate Appraisal Board – Certified General Real Estate Appraiser - GA-829 Florida Real Estate Appraisal Board – Certified General Real Estate Appraiser - RZ2581 Kentucky Real Estate Appraisal Board – Certified General Real Estate Appraiser - 002780 Ohio Real Estate Appraisal Board – Certified General Real Estate Appraiser - 2002018920
PROFESSIONAL
Appraisal Institute
Designated Member, (MAI), Certification No. 8484
EMPLOYMENT EXPERIENCE 1979-1982 American Appraisal Associates, Staff Appraiser Atlanta, Georgia 1982-1984 Johnson, Lane, Space, Smith & Co., Account
Executive Atlanta, Georgia
1984 - 1992 CB Commercial Real Estate Group, Inc., Senior Real Estate Analyst
Atlanta, Georgia
1992-Present Senior Managing Director CBRE, Inc. Appraisal Services