1. real estate

Complete Appraisal - Summary Appraisal Report of the Market Value of the As Is
Leased Fee Interest of the subject property
Los Legate Apartments
A multifamily project located at
7235 East Double Tree Road, Scottsdale, Maricopa County, Arizona 85255
Prepared For:
ABC Bank
123 N. Scottsdale Road, Suite 870
Scottsdale, AZ 85253
Attention: Ms. Jim Wilson
Inspection Date: March x, 2006
Valuation Date: March x, 2006
PREPARED BY:
Real Estate Appraisers/Consultants P.O. Box 2829, Mesa, Arizona, 85214
Phone 480.497.1113 Fax 480.497-4774 E-mail larry@schnepfellsworth.com
Job # 10680XX Copy ___ of 3 Copyright 2005 by Larry Schnepf
Real Estate Appraisers/Consultants P.O. Box 2829, Mesa, Arizona, 85214
Phone 480.497.1113 Fax 480.393.0718 E-mail larry@schnepfellsworth.com
March 24, 2006
File No. 10680XX
Ms. Jim Wilson
ABC Bank
123 N. Scottsdale Road, Suite 870
Scottsdale, AZ 85253
RE:
Los Legate Apartments
7235 East Double Tree Road
Scottsdale, Arizona 85255
Dear Ms. Wilson:
In accordance with your request and authorization thereby for a Complete Appraisal - Summary
Appraisal Report of the Market Value of the As Is Leased Fee Interest of the subject property, we
hand you a narrative appraisal that describes and identifies methods of approach and valuation.
The ownership, legal description, and identification of the property is set forth in the following
report.
The property appraised is located 7235 East Double Tree Road, in Scottsdale, Maricopa County,
Arizona. It is a 135-unit multifamily property which is situated on a 5.0 acre (4.02 net acre) site.
The purpose of this appraisal is to estimate the Market Value of the As Is Leased Fee Interest of
the subject property site as of March x, 2006. The date of initial inspection of the property was
March x, 2006. The intended user of this report is ABC Bank. The intended use (function) of this
appraisal is to estimate the Market Value of the As Is Leased Fee Interest for loan underwriting
purposes by ABC Bank. The value estimates are subject to the Underlying Assumptions and
Contingent Conditions.
Information about the region in which the property is located, the subject neighborhood, site,
highest and best use, and valuation methods and techniques are discussed in detail in the report
that follows. Further, the value(s) reported are intended to conform with Code of Ethics and
Standards of Professional Practice of the Appraisal Institute; the Uniform Standards of
Letter of Transmittal - Page i
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Professional Appraisal Practice (USPAP) as promulgated by the Appraisal Standards Board of
the Appraisal Foundation and the Appraisal Institute and regulatory guidelines as published by
various federal agencies.
It is prepared for the above stated purpose and function and is not to be used, given, sold,
transferred, or relied upon by any other person or persons than the client without the prior
express written permission of the authors. The reader is also directed to the fact that the report is
under copyright and any use, in whole or part, by anyone except the addressee is expressly
prohibited. "Market Value", as defined by USPAP, is included in the body of the report.
Within this Complete Appraisal - Summary Appraisal Report all three approaches were
considered with the Income Approach given the most weight. Therefore, it is our opinion, based
upon the preceding data and discussion, that the Market Value of the As Is Leased Fee Interest
of the subject property, as of March x, 2006 (with an inspection date of March x, 2006), was:
Market Value of the As Is Leased Fee Interest of the subject property
Xxx Million Dollars
$xx,xxx,xxx
Respectfully submitted,
SCHNEPF ELLSWORTH APPRAISAL GROUP
Larry D. Schnepf, MAI, SRPA
Certified Arizona General Real Estate Appraiser
Certificate # 30284
Letter of Transmittal - Page ii
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Table of Contents
letter of transmittal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
table of contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
executive summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
subject photographs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
forward. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
underlying assumptions\conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
scope of work. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
premise of the appraisal and definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
type of appraisal report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
legal description. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ownership history. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
neighborhood/trade area data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
site data analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
assessed value and taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
improvement description. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
highest and best use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
valuation process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
sales comparison approach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
income approach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
reconciliation and final value estimate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
certification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
addenda
~ Ownership/Legal Descriptions
~ Engagement Letter
~ Qualifications
Table of Contents - iii
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
EXECUTIVE SUMMARY
General Information:
Type of Property:
The subject is an existing multifamily site
Type of Report:
Complete Appraisal - Summary Appraisal Report
Class:
multifamily
Job No.:
10680XX
Client No.:
n/a
Job. Name:
Los Legate Apartments
Address:
7235 East Double Tree Road, Scottsdale, Maricopa
County, Arizona 85255
Location:
The subject property is located at the northeast
corner of 72nd Street and Redfield Road,
one-quarter mile north of Thomas Road and
one-quarter mile east of Pima Road, in the northern
part of the City of Scottsdale.
Legal Description:
A full legal description is included within the
report. The legal description was obtained from
public records.
Statement of Ownership:
Documents detailing the ownership are herein.
Ownership is currently in the name of Los Legate
LLC.
Form of Ownership:
Fee Simple Interest
Property Rights Appraised: Market Value of the As Is Leased Fee Interest of the
subject property
Intended User/Intended Use
(Function) of the Appraisal: The intended user of this report is ABC Bank. The
intended use (function) of this appraisal is to
estimate the Market Value of the As Is Leased Fee
Interest for loan underwriting purposes by ABC
Bank.
Executive Summary - iv
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Improvements Summary:
The subject is improved with 135-unit apartment
project constructed in five detached two and
three-story buildings. The unit mix includes 91
1BR/1BA units at 718 square feet and 44 2BR/2BA
units at 889 square feet. Half of the one-bedroom
units and half of the two-bedroom units have
fireplaces. The net livable area 96,805 square feet
with an average 763 square feet. Amenities include
private balconies or patios, ceiling fans,
washers/dryers, swimming pool and spa. Off-site
improvements include paved street, curbs, gutters
and streetlights.
Improvements Size:
1BR/1BA/FP@ 718 SF x 33 units =
2BR/2BA @ 889 SF x 22 units =
2BR/2BA/FP @ 889 SF x 22 units =
Total Rentable Area (SF)
Office/Recreational Building (SF)
Gross Building Area (SF)
Age:
Completed 1986
Assessors Parcel:
215-05-365
Flood Zone Designation:
Zone FIRM Map #04013 1685F, Effective
September 30, 2005.
Real Estate Taxes:
The real estate taxes for 2005 totaled $44,491.66.
Site Area:
5.0 Acres (217,800 SF), 4.02 net acres (175,147
SF).
Zoning:
R-5, Multifamily residential, City of Scottsdale.
Topography:
The site is basically level.
Easements:
No unusual items or restrictions were noted. No title
report was provided to the appraisers.
Nuisance and Hazards:
No environmental reports were provided to the
appraisers. No obvious adverse environmental
conditions were noted during the inspection. No
known nuisances, hazards or environmental
problems exist.
Highest and Best Use:
As Is - -multifamily site
Executive Summary - v
22,077
19,866
19,866
96,805
1,392
99,755
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Unit Type:
The most applicable site unit measurement is price
per unit.
Date of Inspection:
March x, 2006
Date of Valuation:
March x, 2006
Valuation Conclusions:
Sales Comparison Approach:
Per unit method:. . . . . . . . . . . . . . . . . . . . . $xx,xxx,xxx
Income Approach:
Gross Income Multiplier Method:. . . . . . . $xx,xxx,xxx
Derivation from the
Comparable Sales Method:. . . . . . $xx,xxx,xxx
Market Value of the As Is Leased Fee Interest of the subject property
Xxx Million Dollars
$xx,xxx,xxx
Prepared By:
Larry D. Schnepf, MAI, SRPA
Certified Arizona General Real Estate Appraiser
Certificate # 30284
SCHNEPF ELLSWORTH APPRAISAL GROUP
P.O. Box 2829
Mesa, Arizona 85214
(480) 497-1113
Fax (480) 497-4774
Prepared For:
Ms. Jim Wilson
Abc Bank
123 N. Scottsdale Road, Suite 870
Scottsdale, AZ 85253
Executive Summary - vi
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
SUBJECT PHOTOGRAPHS
Subject Photographs - vii
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
FORWARD
Real estate investment decision-makers are frequently confronted with problems
that require the valuation of specified rights of real estate to aid in facilitating
reasonable and logical solutions. Such valuations are called appraisals that, if
professionally produced, are defensible in terms of a specified set of market or
other value considerations or decision criteria.
A professionally produced appraisal is a supportable estimate of the value of real
property. It is one thing to comment or speculate upon the value of real estate. It
is quite another to describe the factors and influences that affect value, to
describe the environmental and locational factors which influence value, and to
support the presentation and analysis of relevant data to a supportable value
conclusion.
The structure of real estate appraisal is predicated upon a rational decision-making
approach by informed decision-makers. That is to say, once presented with the
best available information about the alternatives or decision choices confronting
him, the decision-makers are presumed to apply logic in selecting the alternative
course of action that promises to come closest to their stated objective. These
decision-makers are generally seeking to maximize or optimize their economic
well-being. The "best available information" on which the decision choice is made
is (or should be) provided by an appraisal, and "best available information" should
be adequately analyzed to aid the decision-maker.
It is the intent of the report that follows, to present analyses of relevant economic,
locational and physical data to produce a professional, supported value estimate of
the subject property as of the date indicated.
A narrative appraisal report is a description of the factors that influence the value
of the property, a word portrayal of the property, the facts concerning the property
and an account of the reasoning by which the appraiser has developed his opinion
of its value. Procedurally, the process approximates a funnel whereby the
multitudinous data, influences and opinions are introduced, analyzed and
correlated to permit the reader to follow intelligently the appraisers' reasoning.
Hopefully, upon completing perusal of the report that follows, the reader will
concur in the appraiser's conclusions and that he will agree professional,
supportable value estimates of the subject property have been presented. The staff
of SCHNEPF ELLSWORTH APPRAISAL GROUP, encourage your comments and
questions on the following appraisal report.
Forward - 1
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
UNDERLYING ASSUMPTIONS/CONDITIONS
The following Underlying Assumptions and Limiting Conditions1 apply to the
property appraised herein and the appraisal report transmitted herewith.
1. Limit of Liability:
The liability of Schnepf Ellsworth Appraisal Group and employees is limited to
the fee collected for preparation of the appraisal. There is no accountability for
liability to any third party. No third parties may rely upon this appraisal report for
any purpose whatsoever, including the provision of financing for the acquisition
of improvement of the subject property. This appraisal was prepared specifically
for our client. Third parties who desire us to prepare an appraisal of the subject
property for their use should contact the signatory of this report.
2. Copies, Publication, Distribution, Use of the Appraisal Report:
Possession of the appraisal report or a copy of it does not carry with it the right of
publication through advertising media, or any other public means of
communication. It is a privileged communication. The appraisal report may not
be used for any purpose other than the purpose stated in the report by any person
or corporation other than the client or the party to whom it is addressed or copied
without the written consent from the appraiser(s), and then only in its entirety. All
valuations in the report are applicable only under the stated program of Highest
and Best Use, and are not necessarily applicable under other programs of use. The
value of a component part of the property is applicable only as a part of the whole
property. The physical report(s) remains the property of the appraiser(s) for the
use of the client, the fee being for the analytical services only.
Neither all, nor any part of the contents of this report, shall be conveyed to the
public through advertising, public relations, news, sales, or other media, without
the prior written consent and approval of the author(s), particularly as to valuation
conclusions, the identity of the appraiser(s), or firm with which he is connected, or
any reference to the Appraisal Institute, or the MAI designation. Disclosure of the
contents of this report is governed by the By-Laws of Regulations of the Appraisal
Institute and the Arizona Appraisal Board.
3. Third Parties:
No third parties may rely upon this appraisal report for any purpose whatsoever,
including the provision of financing for the acquisition of improvement of the
subject. This appraisal was prepared specifically for our client. Third parties who
1
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, Edition, Standards Rule 2-1(c), 2-2.
Underlying Assumptions/Conditions - 2
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
desire us to prepare an appraisal report on the subject property for their use should
contact the signatures of this report.
4. Confidentiality:
The appraiser(s) may not divulge the material (evaluation) contents of the report,
analytical findings or conclusions, or give a copy of the report to anyone other
than the client or his designee as specified in writing (except as may be required
by the Appraisal Institute as they may request in confidence for ethics
enforcement), or by a court of law or body with the power to subpoena. [USPAP,
Ethics Provision.]
5. Use in Entirety
This appraisal is to be used only it its entirety and no part is to be used without the
whole report. All conclusions and opinions concerning the analysis that are set
forth in the report were prepared by the appraiser(s) whose signature(s) appear on
the appraisal report, unless indicated as "Review Appraiser." No change of any
item in the report shall be made by anyone other than the appraisers, and the
appraisers and associated company shall have no responsibility if any such
unauthorized change is made.
6. Information and Data:
No responsibility is assumed for accuracy of information furnished by or from
others, the client, his designee, or public records. We are not liable for such
information or the work of possible sub-contractors. The comparable data relied
upon in this report has been confirmed with one or more parties familiar with the
transaction or from affidavit; are considered appropriate for inclusion to the best
of our factual judgment and knowledge and is accepted as satisfactory evidence
upon which rests the final expression of property value. It is assumed that all
information known to the client and relative to the valuation has been accurately
furnished and that there are no undisclosed leases, agreements, liens, or other
encumbrances affecting the use of the property.
7. Court Testimony/Consultation:
The contract for appraisal, consultation or analytical service is fulfilled and the
total fee payable upon completion of the report. The appraiser(s) or those assisting
in preparation of the report will not be asked or required to give testimony in court
or hearing because of having made the appraisal, in full or in part, nor engage in
post appraisal consultation with client or third parties except under separate and
special arrangement and at an additional fee. (Please refer to the Contract for
Appraisal Services: "Additional" Services Rates for itemized fee schedule.)
Underlying Assumptions/Conditions - 3
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
8. Exhibits:
The sketches included in the report are only to aid the reader(s) in visualizing the
property and are not necessarily to scale. Sizes and dimensions should not be
scaled from the sketches. Various photos, if any, are included for the same
purpose and are not intended to represent the property in other than actual status,
as of the date of the photo.
9. Legal, Engineering, Financial, Structural, Hidden Components:
No responsibility is assumed for matters legal in character or nature, whether
existing or pending, nor matters of survey, nor of any architectural, structural,
mechanical or engineering nature. The property is appraised as if free and clear,
unless otherwise stated in particular parts of the report. No opinion is rendered as
to the title, which the appraiser(s) assumes to be good and merchantable; the
property is an unencumbered fee; and the property does violate any applicable
codes, ordinances, statutes, or other governmental regulations. The property is
appraised as though under responsible ownership and competent management.
The appraiser(s) assumes that all required licenses, certificates of occupancy,
consents, or other legislative or administrative authority from any local, state, or
national government or private entity or organization have been or can be
obtained or renewed for any use on which the value estimate contained in this
report is based.
10. Legal Description:
The legal description is assumed to be correct as used in this report as furnished
by the client, his designee or as derived by the appraiser. The appraiser(s) has
neither made a legal survey nor has he commissioned one to be prepared;
therefore, reference to a sketch, plat, diagram or previous survey appearing in the
report is only for the purpose of assisting the reader to visualize the property.
11. Soil Conditions:
The appraiser(s) inspected, by observation, the land and the improvements
thereon; however, it was not possible to personally observe conditions beneath the
soil or hidden structure, or their components, or any mechanical components
within the improvements; no representations are made herein as to these matters
unless specifically stated and considered in the report; the value estimate
considers there being no such conditions that would cause a loss of value. The
land or the soil for the area being appraised appears firm; however, subsidence in
the area is unknown. The appraiser(s) do not warrant against this condition or
occurrence of problems arising from soil conditions.
12. Unapparent Conditions:
The appraiser(s) inspected, by observation, the land and the improvements'
thereon; however, it was not possible to observe conditions beneath the soil or
Underlying Assumptions/Conditions - 4
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
hidden structure, or their components, or any mechanical components within the
improvements; no representations are made herein as to these matters unless
specifically stated and considered in the report; the value estimate considers there
being no such conditions that would cause a loss of value. The land or the soil for
the area being appraised appears firm; however, subsidence in the area is
unknown. The appraiser(s) do not warrant against this condition or occurrence of
problems arising from soil conditions.
The appraisal is based on there being no hidden unapparent or apparent conditions
of the property site, subsoil or structures that would render it more or less
valuable. No responsibility is assumed for any such conditions or for any
expertise of engineering to discover them. All mechanical components are
assumed to be in operable condition and status standard for properties of the
subject type. Conditions of heating, cooling, ventilating, electrical and plumbing
equipment is considered to be commensurate with the condition of the balance of
the improvements unless otherwise stated. No judgment is made as to adequacy
of type of insulation or energy efficiency of the improvements or equipment.
13. Copyright Work:
This appraisal report is copyrighted and registered under the provisions of the
United States copyright laws. It is illegal, under these laws, to reproduce any
copyrighted material by any method, in whole or in part, regardless of purpose,
without the permission of the copyright owner, Larry D. Schnepf and Schnepf
Ellsworth Appraisal Group. Violation of these laws and infringements upon
copyrighted materials may result in legal action by the copyright owner against the
infringer in U.S. Federal District Court.
14. Legality of Use:
The appraisal is based on the premise that there is full compliance with all
applicable federal, state and local environmental regulations and laws unless
otherwise stated in the report; further, that all applicable zoning, building and use
regulations and restrictions of all types have been complied with unless otherwise
stated in the report; further, it is assumed that all required licenses, consents,
permits or other legislative or administrative authority, local, state, federal and/or
private entity or organization has been or can be obtained or renewed for any use
considered in the value estimate.
15. Hazardous Materials:
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.
The appraisers have no knowledge of the existence of such materials on or in the
property. The appraisers, however, are not qualified to detect such substances. The
presence of substances such as asbestos, urea-formaldehyde foam insulation, or
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
Underlying Assumptions/Conditions - 5
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
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, is desired.
16. Component Values:
The distribution of the total valuation of this report between land and
improvements applies only under the existing program of utilization. The
separate valuations for land and building must not be used in conjunction with any
other appraisal and are invalid if so used.
17. Auxiliary and Related Studies:
No environmental or impact studies, special market study or analysis, highest and
best use, analysis study or feasibility study has been requested or made unless
otherwise specified in an agreement for services or in the report. The appraiser(s)
reserves the unlimited right to alter, amend, revise or rescind any of the
statements, findings, opinions, values, estimates or conclusions upon any
subsequent such study or analysis or previous study or analysis subsequently
becoming known to him (them).
18. Dollar Values, Purchasing Power:
The market value estimated and the costs used, are as of the date of the estimate
value. All dollar amounts are based on the purchasing power and price of the U.S.
dollar and financing rates prevailing at the effective date of the value estimate.
19. Inclusions:
Furnishings and equipment or business operations except as specifically indicated
and typically considered as a part of the real estate have been disregarded with
only the real estate being considered.
20. Proposed Improvements, Conditioned Value:
Improvements proposed, if any, on or off site, as well as any repairs required are
considered, for purposes of this appraisal, to be completed in good and
workmanlike manner according to information submitted or considered by the
appraiser(s). In cases of proposed construction, the appraisal is subject to change
upon inspection of property after construction is completed.
21. Value Change, Dynamic Market, Influences:
The estimated market value is subject to change with market changes over time;
value is highly related to exposure, time, promotional effort, terms, motivation,
and conditions surrounding the offering. The value estimate considers the
productivity and surrounding the offering. The value estimate considers the
productivity and relative attractiveness of the property physically and
Underlying Assumptions/Conditions - 6
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
economically in the relative attractiveness of the property physically and
economically in the marketplace. The "Estimate of Market Value" in the
appraisal report is not based in whole or in part upon race, color or national origin
of the present owners or occupants of the properties in the vicinity of the property
appraised.
22. Management of the Property:
It is assumed that the property, which is the subject of this report, will be under
prudent and competent ownership and management, neither inefficient nor super
efficient.
23. Fee:
The fee for this appraisal or study is for the service rendered and not for the time
spent on the physical report.
24. Interest Appraised:
The valuation estimate applies only to the property specifically identified and
described in the ensuing report. The value reported is only applicable to the
property rights appraised and the report should not be used for any other purposes.
25. Publication:
Neither all, nor any part of the contents of this report, shall be conveyed to the
public through advertising, public relations, news, sales, or other media, without
the prior written consent and approval of the author(s), particularly as to valuation
conclusions, the identity of the appraiser(s), or firm with which he is connected, or
any reference to the Appraisal Institute, the MAI or SRA designations.
26. Federal/Professional Guidelines:
The Report has been prepared in conformity with, and is subject to the
requirements of the Uniform Standards of Professional Appraisal Practice
(USPAP) as promulgated by the Appraisal Standards Board of the Appraisal
Foundation and required by the Arizona Board of Appraisal licensure law for all
licensed State of Arizona appraisers; the appraisal standards required by Title XI
of FIRREA (Federal Financial Institutions Reform, Recovery, and Enforcement
Act of 1989) and the OCC (Office of the Comptroller of the Currency); the Office
of Thrift Supervision CFR insurance regulation 563.17-1a and policy statement
571.1b, effective January 7, 1988, and the Code of Professional Ethics and
Standards of Professional Appraisal Practice of the Appraisal Institute.
Underlying Assumptions/Conditions - 7
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
27. Americans with Disabilities Act:
The Americans with Disabilities Act ("ADA") became effective January 26, 1992.
I (we) have not made a specific compliance survey and analysis of this property to
determine whether or not it is in conformity with the various detailed
requirements of the ADA. It is possible that a compliance survey of the property,
together with a detailed analysis of the requirements of the ADA, could reveal that
the property is not in compliance with one or more of the requirements of the Act.
If so, this fact could have a negative effect upon the value of the property. Since I
(we) have no direct evidence relating to this issue, I (we) did not consider possible
noncompliance with the requirements of ADA in estimating the value of the
property.
28. Complete, Self-Contained Appraisal:
If applicable (also see #29 and #30). The act or process of estimating value or an
estimate of value performed without invoking the Departure Provision, under
Standards Rule 2-2(a) of a Complete or Limited Appraisal performed under
Standard 1, if applicable.
29. Limited Appraisal:
If applicable (also see #28 and #30), as agreed upon with the client prior to the
preparation of this appraisal, if applicable, this is a Limited Appraisal because it
invokes the Departure Provision of the Uniform Standards of Professional
Appraisal Practice. As such, information pertinent to the valuation has not been
considered and/or the full valuation process has not been applied. Depending on
the type and degree of limitations, the reliability of the value conclusions
provided herein may be reduced.
30. Summary Appraisal:
If applicable (also see #28 and #29). This is a Summary Appraisal Report which
is intended to comply with the reporting requirements set forth under Standard
Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice for a
Summary Appraisal Report, if applicable. As such, it might not include full
discussions of the data, reasoning and analysis that were used in the appraisal
process to develop the appraiser's opinion of value. Supporting documentation
concerning the data, reasoning, and analyses is retained in the appraiser's file.
The information contained in this report is specific to the needs of the client and
for the intended use stated in this report. The appraiser is not responsible for
unauthorized use of this report.
31. Property Encumbrances:
The property is appraised free and clear of any or all liens and encumbrances
unless otherwise stated in this report.
Underlying Assumptions/Conditions - 8
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32. Zoning:
It is assumed that all applicable zoning and use regulations and restrictions have
been complied with unless a nonconformity has been stated, defined and
considered in this appraisal report.
33. Licenses, Certifications etc.
It is assumed that all required licenses, certificates of occupancy or other
legislative or administrative authority from any local, state, or national
governmental or private entity or organization have been or can be obtained or
renewed for any use on which the value estimates contained in this report are
based.
34. Intended User and Intended Use:
The information contained in this report is specific to the needs of the client and
for the intended use stated in this report. It is written at a level that requires the
reader to have a sophisticated knowledge of complex real estate issues, complex
appraisal methodology and a geographical familiarity with the subject, and is not
written for, nor expected to be understood by the public at large. The client and/or
intended user is expected to review this report in a timely manner and if questions
or concerns about this appraisal or appraisal report arise, communicate those to
the appraiser(s) in a timely manner. If, after sixty days from the date of the
delivery of this report, no questions or concerns about the appraisal or appraisal
report have been communicated to the appraiser(s), no questions or concerns are
assumed to exist. The appraiser(s) is not responsible for unauthorized use of this
report.
Any action taken by any third party, including but not limited to governmental
bodies such as the State Board of Appraisal, relating to the use of this report that
require legal representation of the appraisers, the cost of such legal representation
shall be borne by the third party.
The Schnepf Ellsworth Appraisal Group or the individual analysts will expect to
be held harmless from all claims that might be brought by third parties that relate
in any way to claims for injury or damage suffered as the result of the
implementation of any advice we may have given or service we may have
rendered in this connection.
35. Extraordinary Assumptions and Hypothetical Conditions2:
Extraordinary Assumptions are defined as: "an assumption, directly related to a
specific assignment, which, if found to be false, could alter the appraiser's
opinions or conclusions. Comment: 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
2
Uniform Standards of Professional Appraisal Practice (USPAP) 2005 Edition, Standards Rule 1-2 (c), 2-2 (viii).
Underlying Assumptions/Conditions - 9
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market conditions or trends; or about the integrity of data used in an analysis.”3
There are no extraordinary assumptions that are part of this report.
Hypothetical Conditions are defined as: "that which is contrary to what exists but
is supposed for the purpose of analysis. Comment: 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."4 There are no Hypothetical Conditions that are a part of this
report.
The appraisers believe the any cited Special Underlying Assumptions are not
so limited in scope that the resulting appraisal would tend to mislead or
confuse the client, the users of the report, or the public. The client is hereby
advised that the assignment is subject to these Special Underlying
Assumptions (if any).
36. Jurisdictional Exception Rule5:
The Jurisdictional Exception Rule states "If any part of these standards is contrary
to the law or public policy of any jurisdiction, only that part shall be void and of
no force or effect in that jurisdiction."6 There are no Jurisdictional Exceptions
that are a part of this report.
37. Supplemental Standards Rule7:
Supplemental standards are “applicable to assignments prepared for specific
purposes or property types may be issued (i.e., published) by government
agencies, government sponsored enterprises, or other entities that establish public
policy. An analysts and client must ascertain whether any such published
supplemental standards in addition to these Uniform Standards apply to the
assignment being considered.”8 There are no Supplemental Standards that are
a part of this report.
38. Acceptance of this report:
Separation of the signature pages from the balance of our report invalidates the
value conclusion. The valuation estimate applies only to the property specifically
identified and described in the ensuing report. The value reported is only
applicable to the property rights appraised and the report should not be used for
any other purposes. Acceptance of, or the use of, this appraisal report constitutes
acceptance of the above conditions.
3
4
5
6
7
8
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, Glossary
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, Glossary
Uniform Standards of Professional Appraisal Practice (USPAP) 2005.
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, Glossary
Uniform Standards of Professional Appraisal Practice (USPAP) 2005.
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, Glossary
Underlying Assumptions/Conditions - 10
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The following Underlying Assumptions and Limiting Conditions9 apply to the
property appraised herein and the appraisal report transmitted herewith.
9
Uniform Standards of Professional Appraisal Practice (USPAP) 2005.
Underlying Assumptions/Conditions - 11
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SCOPE OF WORK
10
The firm of Schnepf Ellsworth Appraisal Group has been retained to estimate the
Market Value of the As Is Leased Fee Interest of the subject property.
Definition of the Scope of Work:
The Scope of Work is defined as “the amount and type of information researched
and the analysis applied in an assignment. Scope of work includes, but is not
limited to, the following:
v (1) the degree to which the property is inspected or identified;
v (2) the extent of research into physical or economic factors that could
affect the property;
v (3) the extent of data research; and
v (4) the type and extent of analysis applied to arrive at opinions or
conclusions.”11
The appraisal process is in large part an investigatory procedure. The appraiser(s)
have attempted to collect all of the relevant data on the subject from reliable
sources. However, due to time and location constraints he/they may have been
forced to rely in part on data sources which are not primary but secondary in
nature. Additionally, he/they recognize the potential for information provided to
be inaccurate due to communication problems. Therefore, the appraiser(s) request
the client to review the appraisal document and if any errors are found in the data
to immediately contact the appraiser(s) and relay this information to them. If
factual errors are discovered, the appraiser(s) reserves the right to re-address their
valuation. The appraiser(s) agrees to address any error which may be material in
writing in a timely manner.
As a part of this appraisal assignment, the appraiser(s) made a number of
independent investigations and analyses. Initially, we relied on SCHNEPF
ELLSWORTH APPRAISAL GROUP data which is retained in our files and regularly
updated to reflect current market phenomena and attitudes. Further investigations
undertaken and major data sources follow.
A search for data in the neighborhood of the subject is accomplished first. If there
is inadequate data for comparison the search is then expanded into other similar
markets.
The preparation of this report and the value indications adopted resulted from the
utilization of numerous investigations and analyses. Initially, we relied on
SCHNEPF ELLSWORTH APPRAISAL GROUP data which is retained in our files and
regularly updated to reflect current market phenomena and attitudes. Further
investigations undertaken and major data sources follow.
10
11
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, Standards Rule 1-2 (f)
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, Glossary
Scope of the Appraisal - 12
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Identification of the Appraisal Problem:
The subject is an improved site built-out with an existing 110 unit apartment
complex. appraisal assignment calls for the appraisers to determine the As Is
Market Value of the As Is Leased Fee Interest of the subject property.
Scope of the Appraisal:
A clear and accurate description of the scope of the appraisal is desirable to
protect those persons whose reliance on the appraisal may be affected. The
term scope of work refers to the amount and type of information researched and
the analysis applied in the assignment. The standards clearly impose a
responsibility on the appraiser to determine the appropriate scope of work to
develop the value opinion and prepare the report. By describing the scope of
work, the appraiser signifies acceptance of this responsibility.12
The appraisal process is in large part an investigatory procedure. The appraiser(s)
has (have) attempted to collect all of the relevant data on the subject from reliable
sources. However, due to time and location constraints he (they) may have been
forced to rely in part on data sources which are not primary but secondary in
nature. Additionally, he (they) recognize the potential for information provided to
be inaccurate due to communication problems. Therefore, the appraiser(s) request
the client to review the appraisal document and if any errors are found in the data
to immediately contact the appraiser(s) and relay this information to him (them).
If factual errors are discovered, the appraiser(s) reserves the right to re-address
their valuation. The appraiser(s) agree to address any error which may be material
in writing in a timely manner.
As a part of this appraisal assignment, the appraiser(s) made a number of
independent investigations and analyses. Initially, we relied on Schnepf Ellsworth
Appraisal Group SCHNEPF ELLSWORTH APPRAISAL GROUP data which is retained in
our files and regularly updated to reflect current market phenomena and attitudes.
Further investigations undertaken and major data sources follow.
A search for data in the neighborhood of the subject is accomplished first. If there
is inadequate data for comparison the search is then expanded into other similar
markets.
Area and Neighborhood Analysis:
Major sources utilized include the Arizona Department of Economic Security and
the Arizona Real Estate Center of Arizona State University and the City of
Scottsdale. Further data was abstracted from various other Arizona business
publications. The this appraisal report, the client is, per prior verbal agreement,
considered familiar with the neighborhood with no detailed analysis presented
herein.
12
The Appraisal of Real Estate, 12th ed., op. cit., p. 621.
Scope of the Appraisal - 13
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Site Description and Analysis:
The site description and analysis was based on a personal inspection by the
appraiser(s). The City of Scottsdale provided zoning information and information
relative to the availability of utility infrastructure. Other sources of information
included the Federal Emergency Management Agency, the Maricopa County
Assessor's Office, and the Maricopa County Treasurer's Office.
Improvement Description and Analysis:
Property data was gathered from inspection of site and inspection of the plans.
Market Data Program:
The appraiser obtained data on unimproved and improved property transfers
occurring between 2005 and the date of valuation from Co-Star-COMPS and from
public records and real estate brokers and/or property owners. The appraiser
located sales of similar property within the local and regional market for the Sales
Comparison Approach.
Further, the appraisers have made exterior inspections of all properties utilized in
our analyses. Comparable sales or the lack thereof were confirmed with
Co-Star-Comps database, and public records and where possible, brokers and/or
participants in the transactions. Sales were confirmed at a minimum with public
records.
Rental Data:
A rental data survey of comparable properties was conducted for this analysis.
Photographs:
All of the photographs utilized in the report were taken during the inspection. The
on-site manager indicated the condition of the property was similar on the date of
inspection to that of the date of valuation.
Hazardous Wastes:
The appraiser has inspected the subject property with the due diligence expected
of a professional real estate appraiser. The appraiser is not qualified to detect
hazardous waste and/or toxic materials. Any comment by the appraiser that might
suggest the possibility of the presence of such substance should not be taken as
confirmation of the presence of hazardous waste and/or toxic materials. Such
determination would require investigation by a qualified expert in the field of
environmental assessment.
Scope of the Appraisal - 14
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The presence of substances such as asbestos, urea-formaldehyde foam insulation,
or other potentially hazardous materials may affect the value of the property. The
appraiser's value estimates are predicated on the assumption that there is no such
material on or in the property that would cause a loss of value unless clearly
stated.
No responsibility is assumed for any environmental conditions, or for any
expertise or engineering knowledge required to discover them. The appraiser's
descriptions and resulting comments are the result of the routine observations
made during the appraisal process.
The subject has been improved since 1985. No environmental reports were
provided to the appraiser. If a toxic waste and/or contamination is detected,
the value estimate appearing in this report is considered null and void. If a
reappraisal is required, it will be made at an additional charge and upon
receipt of any additional information requested (i.e., what the toxic waste
and/or contaminate is and the cost of removal) by the appraiser.
Research Methodology:
SCHNEPF ELLSWORTH APPRAISAL GROUP has been retained to conduct an appraisal
of the Market Value of the As Is Leased Fee Interest of the subject property
multifamily site located 7235 East Double Tree Road,, Scottsdale, Arizona. This
report is the culmination of our market research analysis and assessments of this
property. The objectives of the research are:
1. To define the qualifying conditions of the appraisal;
2. To define the scope, purpose and function of the appraisal;
3. To identify and describe the subject property and its ownership;
4. To describe the subject area and neighborhood in adequate detail;
5. To determine the Highest and Best Use of the subject property.
6. To process, analyze and interpret the pertinent data, using one or more of the
three approaches to value.
7. To estimate the retrospective values as of the date of valuation.
The value(s) reported is subject to the constraints set forth in the Certification
Section at the end of this report.
Summary:
Our analyses encompass historic and projected demand, current supply, and
planned or new construction. The value estimates and judgments contained herein
are intended to reflect the appraisers' opinion as a disinterested third party. The
reader is referred to the Certification section of the report wherein the conditions
Scope of the Appraisal - 15
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are stated under which the report has been prepared. The Underlying Assumptions
and Contingent Conditions section of the report present pertinent caveats.
The report considers the various segments of the Scottsdale real estate market and
population and land use patterns in the vicinity of the subject property.
Additionally, an analysis of the highest and best use of the subject property has
been completed together with an investigation into the sales of vacant sites in the
general area.
Scope of the Appraisal - 16
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PREMISES OF THE APPRAISAL AND DEFINITIONS
Client:13
The client of this appraisal is identified as Abc bank.
Intended User(s)/ Intended Use (function) of the Appraisal:14
The intended user of this report is Abc bank. The intended use (function) of this
appraisal is to estimate the Market Value of the As Is Leased Fee Interest for loan
underwriting purposes by Abc bank.
This report is prepared for the above stated purpose and function and is not to be
used, given, sold, transferred, or relied upon by any other person or persons than
the client without the prior express written permission of the authors.
Purpose of the Appraisal:15
The purpose of this appraisal consulting assignment is to estimate the Market
Value of the As Is Leased Fee Interest of the subject property, on a cash equivalent
basis, assuming a reasonable marketing period, of the asset as described.
Date of the Report:16
The date of inspection is March x, 2006. The date of our initial and follow-up
inspection of the subject property. In accord with the client's instructions, the
effective analysis date is March x, 2006, thus references to market conditions, sale
prices, rental rates, etc. pertain to this era.
The effective date of the appraisal establishes the context for the value estimate,
while the date of the report indicates whether the perspective of the appraiser
relative to market conditions as of the effective date of the appraisal was
prospective, current, or retrospective. Reiteration of the date of the report and the
effective date of the appraisal at various stages of the report, in tandem, is
important for the clear understanding of the reader whenever market conditions on
the date of the report are different from market conditions on the effective date of
the appraisal.
The perspective of the appraiser(s) is an effective date of March x, 2006, where
the date of the report is the last date of inspection of the subject property by the
appraisers, March x, 2006.
13
14
15
16
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, SR 1-2(a).
Uniform Standards of Professional Appraisal Practice (USPAP) 2005. SR 1-2(b).
Uniform Standards of Professional Appraisal Practice (USPAP) 2005.
Uniform Standards of Professional Appraisal Practice (USPAP) 2005 SR 1-2(d). and Statement Appraisal Standards No. 3 (SMT-3) and
(SMT-4).
Premises of the Appraisal and Definitions - 17
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Previous Appraisals:
Schnepf Ellsworth Appraisal Group has previously prepared an appraisal report
on the subject property for Marshall & Ilsley Trust Company, the last being File
No. 102680 dated September 16, 2002.
.
Property Rights Appraised:
Property rights are ownership interests in real estate and have value. It is
important to know what property right(s) or estate(s) are involved in the appraisal
because the estate identifies the rights being valued. Estates may be classified in
several ways, the most common of which are defined as follows:
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.17
Fee Simple Title:
A title that signifies ownership of all the rights in a parcel of real property, subject
only to the limitations of the four powers of government.18
Leased Fee Estate:
Landlord's (lessor's) interest in fee estate, bound by a stated term and other
conditions of a lease or leases conveying rights, usually use and occupancy, to
one or more tenants (lessees).19
Leasehold Estate:
Tenant's (lessee's) property rights, usually use and occupancy, conveyed by a
lease establishing a stated term and other conditions.20
Leasehold Improvements:
Improvements or additions to leased property that have been made by the
lessee.21
Summary of the Property Rights Appraised:
The property rights appraised are the “As Is” Market Value of the As Is Leased
Fee Interest of the subject property with an effective date of March x, 2006.
17
18
19
20
21
Appraisal Institute, The Dictionary of Real Estate Appraisal, 3rd ed. (Chicago; Appraisal Institute, 1993), p. 140.
Ibid., p. 120.
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, Glossary.
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, Glossary.
Appraisal Institute, The Dictionary of Real Estate Appraisal, 3rd ed. (Chicago; Appraisal Institute, 1993), p. 204.
Premises of the Appraisal and Definitions - 18
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Definition of Market Value (per USPAP):
A type of value, stated as an opinion, that presumes the transfer of a property (i.e.,
a right of ownership or a bundle of such rights), as of a certain date, under specific
conditions set forth in the definition of the term identified by the appraiser as
applicable in an appraisal. Comment: Forming an opinion of market value is the
purpose of many real property appraisal assignments, particularly when the client's
intended use includes more than one intended user. The conditions included in
market value definitions establish market perspectives for development of the
opinion. These conditions may vary from definition to definition but generally fall
into three categories: 1. the relationship, knowledge, and motivation of the parties
(i.e., seller and buyer); 2. the terms of sale (e.g., cash, cash equivalent, or other
terms); and 3. the conditions of sale (e.g., exposure in a competitive market for a
reasonable time prior to sale). Appraisers are cautioned to identify the exact
definition of market value, and its authority, applicable in each appraisal
completed for the purpose of market value.22
Per the Title XI of the Federal Financial Institution's Reform, Recovery and
Enforcement Act of 1989 ("FIRREA"), Market Value is defined as follows:
Market value is the major focus of most real property appraisal assignments.
Both economic and legal definitions of market value have been developed and
refined. A current economic definition agreed upon by agencies that regulate
federal financial institutions in the United States of America is:
The most probable price which a property should bring in a competitive and open
market under all conditions requisite to a fair sale, the buyer and seller each
acting prudently 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 United States 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."
Substitution of another currency of United States dollars in the fourth condition is
appropriate in other countries or in report addressed to clients from other
countries.23
22
23
Uniform Standards of Professional Appraisal Practice (USPAP) 2005 Definitions
Title XI of the Federal Financial Institution's Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), Public Law No. 101-73, 103
Stat. 183 (1989).
Department of the Treasury, Office of the Comptroller of the Currency (OCC), Treasury, Rules and Regulations 12 C.F.R., Subpart C,
34.42 Federal Register, Volume 55, No. 165, Friday, August 24, 1990, page 34696.
Resolution Trust Corporation's Final Regulation on Appraisals, 12 C.F.R., Part 1608, Revised June 1991.
Premises of the Appraisal and Definitions - 19
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This definition is the defacto national definition of Market Value and is required
on all appraisal assignments done in the State of Arizona under the Arizona
Appraisal Board's USPAP minimum standards requirements.
Exposure Time:
The estimated length of time the property interest bring 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 estimate
based upon an analysis of past events assuming a competitive and open
market.24
Exposure time depends on several factors including market conditions and factors
of supply and demand. Pricing and competent professional marketing are two very
important factors. The estimate of value herein assumed that the subject property
has been exposed to the market for 12 months or less at a price not more than
10% above the appraised value. Support for this estimate is included within the
Sales Comparison Approach section of this report.
Marketing Time:
Marketing Time is an opinion of the amount of time it might take to sell a property
interest in real estate at the opinion market value level during the period
immediately after the effective date of an appraisal."25
Marketing Time depends on several factors including market conditions in the
immediate future. Like Exposure time, factors such as supply and demand, pricing
and competent professional marketing are also very important considerations. For
purposes of this analysis is estimated at 9 to 18 months.
Definition of "As Is Value":
As is26 value is as defined as follows:
the value of specific ownership rights to an identified parcel of real estate as of
the effective date of the appraisal; relates to what physically exists and is legally
permissible and excludes all assumptions concerning hypothetical market
conditions or possible rezoning.
It is also defined as follows:
"Market Value as is" on appraisal date means an estimate of the market value of
a property in the condition observed upon inspection and as it physically and
legally exists without hypothetical conditions, assumptions, or qualifications as of
the date the appraisal is prepared."27
24
25
26
27
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, Statement Appraisal Standards No. 6 (SMT-6). Emphasis added
Uniform Standards of Professional Appraisal Practice (USPAP) 2000, Frequently Asked Questions, Question. #59, page 32. Emphasis
added
The Dictionary of Real Estate Appraisal, 3rd ed., op. cit., p. 385.
Appraisal Policies and Practices of Insured Institutions and Service Corporations, Federal Home Loan Bank Board, "Final Rule", 12 CFR
Parts 563 and 571, December 21, 1987.
Premises of the Appraisal and Definitions - 20
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When an AS IS valuation premise is used, the property is valued as of a specified
date, assuming the property is in precisely the condition or status it actually was
(is) in on the effective date of value. This condition must be accurately described
in the appraisal report.
One proper approach in estimating the market value of an AS IS condition is to
first estimate the market value of the completed or "stabilized" condition. The AS
IS condition should consider (deduct) all of the anticipated costs incurred to
achieve full completion and/or stabilized occupancy of an income property.
Included might be leasing commissions, rent concessions typical of the existing
market, sales concessions, estimated costs to complete construction or tenant
improvements, and lost opportunity, etc. along with appropriate discounts for
time, etc.
In summary, an appraisal of the AS IS condition will estimate the defined value of
a property while precisely reflecting its actual physical, legal, economic, and
political status on the effective date of valuation.
This report addresses the subject property Retrospective Value, thus the As
Is Value is not applicable to this report. The appraiser(s) inspected the
property on March x, 2006. The effective date (valuation date) of the report
is March x, 2006.
Premises of the Appraisal and Definitions - 21
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TYPE OF APPRAISAL REPORT
Over the last several years the appraisal industry has undergone major changes
including the standards or guidelines which practitioners must adhere to.
In 1987 the Appraisal Foundation copyrighted the original Uniform Standards.
Since this time these standards have had some minor modification and some
significant additions. (A complete copy of the most current edition of the
standards are found in the appraisers office or are available on The Appraisal
Foundation web site www.appraisalfoundation.org).
In 1991 the State of Arizona pursuant to federal mandate formed the State of
Arizona Board of Appraisal and began a licensing program for all appraisers
doing work within the state borders. At the time the State of Arizona Board of
Appraisal was organized the state board by statue incorporated the 1990 Uniform
Standards of Appraisal Practice (USPAP). This report is intended to be written in
compliance with the most current edition of USPAP.
The 2005 Edition to the Uniform Standards of Professional Appraisal Practice
provides appraisal definitions that help define 1) the act of appraising and 2) the
reporting of that act. The first two definitions relate to the act of appraising and
the next three relate to the reporting process28.
Appraisal Development (USPAP Standard #1)
Complete Appraisal: The act or process of developing an opinion of value or an
opinion of value developed without invoking the DEPARTURE RULE.29
Limited Appraisal: The act or process of developing an opinion of value or an
opinion of value developed under and resulting from invoking the DEPARTURE
RULE.30
Appraisal Reporting (USPAP Standard #2)
Self-Contained Appraisal Report: A written report prepared under Standards
Rule 2-2(a) or 8-2(a).31
Summary Appraisal Report: A written report prepared under standards Rule
2-2(b) or 8-2(b).32
Restricted Appraisal Report: A written report prepared under Standards Rule
2-2(c), 8-2(c).33
28
29
30
31
32
33
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, Appraisal Standards Board, A)-11. Effective January 1, 2001.
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, Definitions, SMT-7
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, Definitions, SMT-7
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, Definitions.
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, Definitions.
Uniform Standards of Professional Appraisal Practice (USPAP) 2005, Definitions.
Type of Report - 22
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The incorporation of these new definitions allow for six different combinations of
appraisal assignments. There can be either:
‚ 1) Complete Appraisals that are Self-Contained, Summary or
Restricted Appraisal Reports; or
‚ 2) Limited Appraisals that are Self-Contained, Summary or Restricted
Appraisal Reports.
The difference between a Complete Report and a Limited Report is a Complete
Report meets all of the requirements of Standard One (deals with the operational
steps in the valuation process) and a Limited Report does not meet all of the these
requirements. A Limited Report relies on invoking the Departure Rule which
allow selected parts of Standard One not to be meet; however there are additional
requirement to meet whenever the Departure Rule is utilized. Departure Rule is
defined as follows:
This Rule permits exceptions from sections of the Uniform Standards that are
classified as specific requirements rather than binding requirements. The burden
of proof is on the appraiser to decide before accepting an assignment and invoking
this Rule that the scope of work applied will result in opinions or conclusions that
are credible. The burden of disclosure is also on the appraiser to report any
departures from specific requirements.
An appraiser may enter into an agreement to perform an assignment in which the
scope of work is less than, or different from, the work that would otherwise be
required by the specific requirements, provided that prior to entering into such an
agreement:
1. the appraiser has determined that the appraisal process to be performed is not
so limited that the results of the assignment are no longer credible;
2. the appraiser has advised the client that the assignment calls for something
less than, or different from, the work required by the specific requirements and
that the report will clearly identify and explain the departure(s); and
3. the client has agreed that the performance of a limited appraisal service would
be appropriate, given the intended use.34
Departure is akin to a waiver of a requirement of one of the Standards Rules, and
it is allowed for some requirements of Standards.
At one end of the spectrum is the Self-Contained Appraisal Report, which
contains detailed descriptions of the data, reasoning, and analyses used to arrive at
the value conclusion. At the opposite end of the spectrum is the Restricted Use
Appraisal Report, which contains virtually none of that information. In the
middle of the range is the Summary Appraisal Report, which contains some, but
not all, of the information. In all three cases, however, the report must contain
certain required elements.
34
Uniform Standards of Professional Appraisal Practice (USPAP) 2005. Departure Rule
Type of Report - 23
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The Departure Rule allow an appraiser to perform an appraisal assignment which
contains less than or different from the work that would otherwise be required by
the specific requirements detailed in the Uniform Standards if the assignment is
not so limited as to be misleading and the client understands and has agreed to the
use of the departure rule.
Once an election has been made as to the use of a Complete Report or a Limited
Report, there are three different manners in which the data can be organized. This
is were the "Self-Contained", "Summary" or "Restricted" reports come into play.
Generally speaking a "Self-Contained Report" describes in greater detail all of the
various items found in an appraisal report. In a "Summary Report", this same
information is provided but it is generally summarized or stated and not explained
in the same detail. A "Restricted Use Report" is very similar to a "Summary
Report" except that it contains a restriction that limits reliance on the report to the
client and warns that the report cannot be understood properly without additional
information which is contained in the work file of the appraiser.
Impact on reliability:
When an appraisal is limited, there is less information and/or analysis used in the
development of the opinion of value, so the value conclusion is less reliable than
if the appraisal were a Complete Appraisal.
The Statement regarding Permitted Departure from Specific Requirements for
Real Property Appraisal states, "Both appraisers and users of appraisal services
must realize that, as the degree of departure increases, the corresponding level of
reliability of the Limited Appraisal decreases and the user of the appraisal service
accepts a higher level of risk."
If the client has agreed to a Limited Appraisal, the client accepts the risk of
reduced reliability as long as the appraiser has appropriately invoked the
Departure Provision and properly disclosed the departures in the appraisal report.
Notice the distinction between accuracy and reliability. Webster's Third New
International Dictionary defines accuracy as the "degree of conformity of a
measure to a standard or a true value," and reliability as the "extent to which an
experiment, test, or measuring procedure yields the same results on repeated
trials." A Limited Appraisal might be just as accurate as a Complete Appraisal,
but it is never as reliable.
Conclusion:
For the purpose of this report and per the clients request this report has been
prepared as a complete appraisal - summary appraisal report. This type of
report does not requires the invoking of the departure provisions.
Type of Report - 24
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Plat Map - APN: 215-05-365
Type of Report - 25
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LEGAL DESCRIPTION
The subject property is located at the northeast corner of 72nd Street and Redfield
Road, one-quarter mile north of Thomas Road and one-quarter mile east of Pima
Road, in the northern part of the City of Scottsdale.. It is commonly known as Los
legata Apartments, 7235 East Double Tree Road, Scottsdale, Arizona. The subject
property legally described as:
Lot xx of the West Half of the Southwest Quarter of the Northwest Quarter of the
Southeast quarter of Section x, Township x North, Range x East of the Gila and
Salt River Base and Meridian, Maricopa County, Arizona.35
The subject site contains 5.0 gross acres (217,800 SF), 4.02 net acres (175,147
SF). The subject is further identified as Maricopa County Assessor's Tax Parcel
Number 215-05-365. The square footage indicated from plans is utilized
throughout this report. The Maricopa County Assessor's Plat Map is presented on
the prior page.
This is the legal description which has been furnished to us. We have
accepted the legal description as a correct representation of the boundaries
of the property appraised. We assume no responsibility for the accuracy of
the description and we recommend that the information be verified through
legal counsel or through a licensed State of Arizona land surveyor.
Ownership History/Prior Sale:
A guideline of the Uniform Standards of Professional Appraisal Practice
(USPAP) includes a provision for the reporting and analysis of any pending or
prior sales of the subject property over the last three years.36
Documents detailing the ownership are herein. Ownership is currently in the name
of Los Legate LLC. Title was acquired on June 1, 2004 from BB Los Legate LLC.
No sales price was indicted and this was not an arms length transaction.
Current Offerings:
The appraisers are not aware of any listings or offers on the subject.
35
36
Per Public Records and information provided to the appraisers.
Uniform Standards of Professional Appraisal Practice (USPAP) 2002, Standard Rule 1-5(b), p. 19.
Legal Description - 26
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Metro Phoenix Map
Regional Map
Neighborhood/Trade Area Data - 27
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Aerial Map
Neighborhood/Trade Area Data - 28
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NEIGHBORHOOD/TRADE AREA DATA
A property is an integral part of its neighborhood and normally cannot be treated
as an entity separate and apart from its environment. The value of real property is
not intrinsic but flows into the property from its environment; real property shares
the future with its neighborhood.
Every neighborhood, depending on the property types located within it, has an
economic life. Criteria have been developed for property types within various
neighborhoods. A primary consideration in deciding the criteria for achieving
optimum value for improvements in a given neighborhood is the specific purpose,
or market, which the improvements serve. Specifically, the improvements must be
compatible with the existing or transitory nature of the environment, and they
must appeal to the user for which they were or may be constructed.
Boundaries of the Neighborhood/Trade Area:
A neighborhood is:
. . . a group of complementary land uses; a related grouping of inhabitants,
buildings, or business enterprises.37
The four basic forces are identified as social ideals and standard, economic
conditions, government controls and regulations, and environmental conditions.
The neighborhood is defined by economic and political boundaries. The general
boundaries of the neighborhood are thus considered to be:
~
~
~
~
North:
South:
East:
West:
CAP Canal and Frank Lloyd Wright Boulevard, 1 mile
Shea Boulevard, 2 miles
CAP Canal/104th Street, 2 mile
Scottsdale Road, 3 blocks
The subject's trade area extends beyond the neighborhood boundaries and includes
all of Metro-Phoenix. The subject property is located at the northeast corner of
72nd Street and Redfield Road, one-quarter mile north of Thomas Road and
one-quarter mile east of Pima Road, in the northern part of the City of Scottsdale.
The subject is located in an area that is changing from underdeveloped desert to
upper quality residential and commercial uses. It is one-half mile east of the
Scottsdale Industrial Airpark and two miles east of the Scottsdale Municipal
Airport. This neighborhood is approximately 13 miles north and twelve miles east
of downtown Phoenix. It is ten miles northeast of downtown Scottsdale.
37
The Appraisal of Real Estate, 12th Edition, op. cit., p. 164.
Neighborhood/Trade Area Data - 29
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Major Arterials:
The subject property is located at the northeast corner of 72nd Street and Redfield
Road, one-quarter mile north of Thomas Road and one-quarter mile east of Pima
Road, in the northern part of the City of Scottsdale. Primary entrance to the
subject is from Redfield Road and 72nd Street. Good access is available via Frank
Lloyd Wright Boulevard (one-half mile north), Thomas Road (one-half mile
south) and Thompson Peak Parkway (one-quarter mile east). Both 72nd Street and
Redfield Road are feeder street paved to two lanes. Both are improved with
vertical curbs, gutters and streetlights. Frank Lloyd Wright Boulevard, Thompson
Peak Parkway and Thomas Road are major arterial that transverses the
northeastern part of Scottsdale. Both are currently among the major traffic
arterials through Scottsdale. Arizona Department of Transportation recently
completed the Pima Freeway (Loop 101). This freeway will loops to the west and
connect with the Squaw Peak and I-17 Freeways and to the south where it
connects with the Superstition Freeway.
Neighborhood Composition:
Conformity of Uses:
Appeal:
Value Trends:
Development Trends:
Subject Property Market Demand:
Neighborhood built-up:
Location:
Maintenance Level:
Immediate Neighborhood Trend:
Change in Present Land Use:
Good
Good
Stable
Stable
Excellent
85%
Suburban
Good
Stable
Vacant to office and industrial,
residential and commercial.
The subject is located in within the north Scottsdale area. Scottsdale has grown
from a tiny farming cluster of 2,000 persons occupying one square mile in 1951,
to a vibrant community of more than 200,000 persons spread over an area of 185
square miles. Founded by Army chaplain Winfield Scott in 1888, Scottsdale, has
matured into a urbane, sophisticated and cultured community.
Principal Economic Activities:
The Subject is located in and area of quality upscale developments just west of the
Scottsdale Industrial Airpark. Other major developments in the are include; The
McCormick Ranch Center, a 51 acre industrial, commercial, multifamily
mixed-use project; Scottsdale Ranch, a 1,100 acre master residential, commercial
development; The Mayo Clinic; The Tournament Players Club at Scottsdale and
Princess Hotel, two 18-hole PGA courses that are home to the Phoenix Open;
Horseman's Park, a 400 acre project including two stadium arenas with seating for
Neighborhood/Trade Area Data - 30
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10,000 spectators; Ganey Ranch Golf Course and developed area; and the
McCormick Ranch master-planned community.
Scottsdale is characterized by a hospitality industry serving both the business and
leisure visitor. The Scottsdale economy today contains, in addition to its resorts, a
diverse mix of financial services from banking to insurance and investment;
business services from advertising and public relation to software development;
computer services to market research and consulting; professional services from
major health care providers anchored by Scottsdale Memorial Health Systems and
the world renowned Mayo Clinic to attorneys, accountants, architects and
engineers; a network of galleries that puts Scottsdale among the top art markets in
nation; administrative offices from national headquarters of moderate-sized
companies and associations to regional offices and marketing offices of larger
organizations; a vibrant retail sector whose market extends well beyond the
borders of Scottsdale; and a manufacturing sector anchored by Motorola in the
southern part of the city and by several small to medium sized companies in the
Scottsdale Airpark.
Population38
1990
Scottsdale
130,069
Maricopa County 2,122,101
Arizona
3,665,228
2005 Summary
Total Population
Total Households
2005 Population by Sex
Male
Female
2005 Households by Income
Median Household Income
HH Income Under $50K
HH Income $50K-$100K
HH Income Over $100K
2000
202,705
3,072,149
5,130,632
2004
226,982
3,524,175
5,833,685
ZIP 85260
41,788
17,711
National
298,727,898
112,448,901
47.8%
52.2%
49.2%
50.8%
$82,536
26.1%
32.7%
41.3%
$49,747
50.3%
31.2%
18.6%
Labor Force Data39
Civilian Labor Force
Unemployed
Unemployment Rate
38
39
1990
2000
2004
73,197
2,309
3.2%
109,643
2,128
1.9%
122,749
3,534
2.9%
Sources: Arizona Department of Economic Security and U.S. Census Bureau and City of Scottsdale.
Source: Arizona Department of Economic Security
Neighborhood/Trade Area Data - 31
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Regional Freeway Map
Medical Facilities:
Scottsdale Memorial Hospital North, the closest major medical facility, is located
two miles to the south. The north campus together with Scottsdale Memorial
Hospital main campus near downtown are the only hospitals to serve Scottsdale.
They collectively provide 552 beds. In addition, Scottsdale contains a clinic, 16
nursing homes, three emergency medical centers, one neuropsychiatric hospital,
and more than 500 medical professional. Metro-Phoenix contains 42 hospitals
with 8,100 beds and two psychiatric hospitals with 889 beds. Scottsdale is also
home to the Mayo Clinic-Scottsdale.
Educational Facility:
There are adequate public elementary schools and middle schools, five public
high school, 19 charter and private schools, and Scottsdale Community Colleges.
Arizona State University, with 40,000+ students is located in Tempe.
Community Facilities:
The subject's neighborhood includes several public parks a public library, and a
post office. Other community facilities such as golf courses and sports
courts/fields are located within a five-mile radius.
Neighborhood/Trade Area Data - 32
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Government Services:
Local Government:
Police Department:
Fire Department:
Mayor, 6 Council Members, City Manager
City of Scottsdale
City of Scottsdale
Utilities:
Water and sewer service are municipally provided, natural gas service from
Southwest Gas Corporation, electrical service by Arizona Public Service and Salt
River Project, and telephone service via US West Communications/AT&T.
Housing:
The neighborhood is classified as a stable residential area. Residential areas
include a mix of single-family, condominium and multifamily residences ranging
from new to 30 years old. The typically price ranges is from $500,000 to
$1,000,000 plus. Multi-family residences typically range from 100 to 300 units
and were build in the 1970's through the 2000's.
Conclusions:
Neighborhood land uses include a variety of industrial, residential and commercial
developments. In the aggregate, the occupancy rates of these projects suggest that
demand in on the rise. New growth is occurring in the commercial and office
markets.
Overall, the neighborhood is considered above average in terms of affluence. The
subject is located in an area of upper quality residences with good linkage to
Metro-Phoenix.
Neighborhood/Trade Area Data - 33
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Location Map
Neighborhood Map
Neighborhood/Trade Area Data - 34
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Site Map
Neighborhood/Trade Area Data - 35
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SITE DATA ANALYSIS
The following site description is based upon a physical inspection of the property
by Larry D. Schnepf, MAI, SRPA and of Schnepf Ellsworth Appraisal Group on
March x, 2006.
Location:
The subject property is identified by address as 7235 East Double Tree Road. The
subject property is located at the northeast corner of 72nd Street and Redfield
Road, one-quarter mile north of Thomas Road and one-quarter mile east of Pima
Road, in the northern part of the City of Scottsdale.
Measurements/Configuration:
No survey was provided to the appraisers. The appraisers review the Maricopa
County Assessor's Tax Parcel Maps (APN # 215-05-365). The plat map was
compared to the legal description with an indicated net area of 5.0 Acres (217,800
SF), 4.02 net acres (175,147 SF). The site is rectangular in shape.
Utilities/Services:
Utilities appear available in adequate quantities to service the subject's
improvements. Services are currently provided as follows:
Electricity:
Water:
Telephone:
Sanitary Sewer:
Natural Gas:
Fire:
Police
Solid Waste
Arizona Public Service.
City of Scottsdale.
AT&T, U.S. West. Underground service provided.
City of Scottsdale.
n/a.
City of Scottsdale.
City of Scottsdale.
Contracted to a private company who owns containers and
provides collection.
Utility rates are comparable to other locations in Scottsdale.
Access:
Physical access to the subject is good via a curb cuts on both 72nd Street and
Redfield Road. The property has visibility to both street. The subject is located
one half mile east of Pima Road and one quarter mile north of Thomas Road.
Site Data - 36
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Street Improvements:
Redfield Road and 72nd Street are minor feeder streets asphalt paved to five lanes
(two in each direction plus a center turn lane). Roadside improvements include
concrete curbs, gutters, sidewalks and streetlights.
Pima Road and Thomas Road are closest major arterials. Both are asphalt paved
and improved with concrete curbs, gutters, sidewalks and streetlights.
Topography:
The site is basically level. The drainage is assumed to be typical of the area. Upon
our inspection of the subject, the drainage appeared to be adequate.
Flood Zone:
According to flood control maps, the subject is located in a Zone FIRM Map
#04013 1685F, Effective September 30, 2005. The definition of Zone "X" is:
Areas of minimal flooding with average depths less than one (1) foot or where the
contributing drainage areas are less than one square mile; and areas protected
by levees from 100-year base flood.
A copy of the Flood Map follows this section.
Soil Report:
No soil report was provided to the appraisers. It is assumed that the soils are of
sufficient load bearing capacity to support the existing improvements. Upon our
inspection of the site, we noted no apparent adverse soil or subsoil conditions. No
soil tests have been conducted by the appraisers.
Adjoining Property:
The following properties adjoin the subject:
~
~
~
~
North -South -East-West--
Apartments
Apartments
Apartments
Single-family Residential
Zoning:
The subject is zoned R-5, Multifamily residential, City of Scottsdale. According
to the City of Scottsdale Planning Department this zoning classification permits
up to 22.0 units per gross acre. The subject's density equals 22.0 units per gross
acre.
Site Data - 37
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Cultural:
There are no cultural, historical, or archaeological factors that would impact upon
development of the subject parcel.
Nuisances/Restrictions:
We are not qualified to determine the presence of hazardous conditions within the
structure(s) described. This would include, but not be limited to, urea
formaldehyde, asbestos, toxic chemicals of all kinds, dangerous electromagnetic
fields, etc. Unless otherwise stated, the structure(s) is assumed to be unaffected.
Easements and encroachments are only those created by municipalities and utility
companies for public benefit. These types of easements are not considered to
negatively impact the subject property or adversely affect the marketability of the
site. No title policy was provided to the appraisers and the appraisers assume no
responsibility for items that might be included therein that may affect the
marketability of the title. No unusual items were noted. No unusual items or
restrictions were noted. No title report was provided to the appraisers.
Hazardous Waste and Materials:
No environmental studies have been provided to the appraisers. No known
nuisances, hazards or environmental problems are known to exist.
Unless otherwise stated in this report, the existence of hazardous materials, which
may or may not be present on the property, was not observed by the appraisers.
The appraisers, however, are not qualified to detect such substances. The
presence of substances such as asbestos, ureaformaldehyde foam insulation, or
other potentially hazardous materials may affect the value of the property. The
value estimate is, therefore, predicated on the assumption that there are no such
materials on or in the property that would cause loss in value. No responsibility is
assumed for any such conditions, or for any expertise or engineering knowledge
required to discover them. The client may wish to retain an expert in this field, if
desired.
If the client needs certification that the property is free from environmental
contamination, we suggest engagement of an expert qualified in this area. The
appraiser does not claim to be an expert, and while we have not observed any
problems, we are not qualified to test for contamination.
The value herein is based on the assumption that the property is free from
contamination of any type. The presence of contamination and/or hazardous
materials in the subject property or on the subject site renders the value
estimates in this report null and void.
Site Data - 38
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Conclusion:
The subject site is adequately suited for the existing apartment project. The
physical and functional characteristics of the site are typical of those expected for
the subject's property type. Street access is good. Access is adequate to the area.
No other items were found that would detract from the utility of value of the site.
Site Data - 39
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Flood Insurance Rate Map
Site Data - 40
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Zoning Map
Site Data - 41
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ASSESSED VALUATION AND TAXES:
The subject property is located in Maricopa County and valued by the county
assessor for taxing purposes. The assessor's office is responsible for classifying
and appraising all real property at current Market Value. Commercial and
industrial real property is primarily appraised by use of a Multiple Regression
Analysis Program, based on cost and comparable sales data.
Since 1980, there has existed a unique two-tier property value system; primary
(limited) valuation and secondary (full cash) valuation. This system controls wild
fluctuations in the value of real estate from appreciation or inflation. Each
property has a "limited" value that cannot exceed the "full cash" value. This
"Limited Value" is based on the previous year's limited value increased by either
10 or 25 percent of the difference between the full cash value of the current year
and the limited value of the prior years, whichever is greater, unless the property
has been changed as defined in ARS 42-201.02C and D since the previous year.
The current assessment ratios are listed as follows:
Legislative Class
3
4
5
6
Assessment Ratio
25%
16%
10%
10%
Property Type
Commercial or industrial
Agricultural, vacant land and other
Owner-occupied residential
Leased or rented residential
There are also two tax rates: the primary rate and the secondary rate. The primary
rate currently comprises the bulk of the overall tax rate and is applied to the
limited value. The secondary rate is applied to the full cash value. The primary
(limited) property taxes are for state, county, city governments, and school and
junior college districts. The growth of actual tax levels for the primary rate is
limited to an increase of 2 percent per year. Taxes are restricted in growth by
limiting the increase in value of real estate by 10 percent per year over a base year
(1979) or the year in which it was developed. For secondary (full cash value)
property taxes, full cash value is used unadjusted to calculate tax levels for flood
control, water provision, bonds, and overrides.
Subject Property Tax Assessment History
For 2005, the subject was identified as Maricopa County Assessor's Parcel
Number 215-05-365. The real estate taxes for 2005 totaled $44,491.66.
Assessed Valuation and Taxes - 42
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Tax Data
Assessed Valuation and Taxes - 43
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Layout
Assessed Valuation and Taxes - 44
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IMPROVEMENT DESCRIPTION
The subject is improved with 135-unit apartment project constructed in five
detached two and three-story buildings. The unit mix includes 91 1BR/1BA units
at 718 square feet and 44 2BR/2BA units at 889 square feet. Half of the
one-bedroom units and half of the two-bedroom units have fireplaces. The net
livable area 96,805 square feet with an average 763 square feet. Amenities include
private balconies or patios, ceiling fans, washers/dryers, swimming pool and spa.
Off-site improvements include paved street, curbs, gutters and streetlights.
The following improvement description is based upon a physical inspection of the
site by the appraisers made on March x, 2006.
Improvements:
Type of Property:
The subject is an existing apartment project.
Improved Area:
1BR/1BA @ 718 SF x 33 units =
1BR/1BA/FP@ 718 SF x 33 units =
2BR/2BA @ 889 SF x 22 units =
2BR/2BA/FP @ 889 SF x 22 units =
Total Rentable Area (SF)
Office/Recreational Building (SF)
Gross Building Area (SF)
Class/Type of Const:
Marshall Valuation Service
Class: Excellent
Type: Excellent
Number of Stories:
Two and Three story buildings (6 buildings total).
The office/recreation building is one story.
Age:
Actual Age -1987
Effective Age -10 Years
Remaining Economic Life -- 40 years
Land to Building Ratio:
2.55:1
Parking Lot:
Paved - 166 total spaces (1.5 per unit). One covered
and reserved parking space per unit.
Layout:
The subject consists of six apartment buildings and
one office/recreation building. The buildings are
clustered together on the west side of the project
with lush landscaping running through the project.
Improvement Description - 45
22,077
22,077
19,866
19,866
96,805
1,392
99,755
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The office/recreation/pool area are located at the
southern entrance to the project. The parking lot is
runs along the north and west side of the project. A
second entrance is located at the sites northwestern
corner.
Street/Curb/Gutter:
Asphalt paved street; concrete walkway and
sidewalk. Poured in place concrete vertical gutter on
both 72nd Street and Redfield Avenue.
Fencing:
Masonry wall along the north and east sides.
Landscaped buffer along the west and south sides
(main entrance).
Pavement:
Parking Lot - Asphalt over ABC
Sidewalks - Concrete over ABC
Landscaping:
Good landscaped with trees, shrubs, flowers, grass
and ground cover. Landscaped is considered lush
through the project. Automatic sprinklers and
bubblers.
Type of Soil:
Native soil. No abnormal conditions observed.
Finish Grading:
Topsoil's amended to support landscaping. Finish
grading covers total building area.
Structural:
Structure is stucco over frame supported by
concrete slab-on-grade and foundation. The main
floor has a concrete slab on grade. Lightweight
concrete on plywood on floor joist between stories.
Stairs/Landings/Walkways: Precast metal support beams with precast concrete
treads. Wrought iron pickets and hand rails.
Concrete landings.
Carpentry:
Wood frame interior partitions. Pre-engineered
wood roof trusses.
Exterior Walls:
Painted stucco over frame. Six apartment buildings
and the office have been remodeled with faux
rocked exteriors.
Roofs:
Pitched roof with asphalt shingles. Recently
re-roofed with high quality shingles.
Improvement Description - 46
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Moisture Protection:
Exterior walls:
Ceiling below Roof:
Roofing:
Gutters/Downspouts:
R-11
R-30
Insulation assumed.
Yes
Doors, Windows and Glass:
Windows and Frames:
Glazing:
Doors and Frames:
Vertical fixed and sliding aluminum anodized
insulated windows.
Single and double pane
Exterior: Entry doors are solid core wood.
Interior: Painted hardboard hollow core doors.
Finishes:
Grade, material:
Acoustical texture ceiling, light texture wall finish.
Valuated ceilings in the upstairs units. Half of the
units have fireplaces. Carpet: Good quality. Kitchen
cabinets are simulated wood grain. Kitchen tops are
being upgrades as units become available from
plastic laminate to granite and slate stone. Vanity
tops are similarly being changed from plastic
laminated or cultured marble to granite and slate
stone.
Exterior: Faux rocked and painted stucco over wood
frame. Interior: Walls and ceilings painted. Painted
wood baseboards and door trim.
Painting:
Floor and Wall Coverings:
Living Room
Kitchen
Bedroom
Bathroom
Bathroom Accessories:
Floors
Carpet
Travertine
Carpet
Travertine
Walls
Paint
Paint
Paint
Paint
Towel bar, toilet paper holder, mirrors, recessed
medical cabinet.
Specialties:
Group anodized aluminum mail boxes.
Equipment:
Refrigerators:
Kitchen ranges:
Kitchen cabinets:
Dishwasher:
Improvement Description - 47
Good quality
Electric range/oven
combination. Being
remodeled to stainless steel.
Built-in.
Built-in.
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Other:
Furnishings:
Garbage disposal,
fan/hood, dishwasher,
prewired for cable.
Ceiling fans in all but 3 or 4
units.
Vertical blinds.
Mechanical:
Fixtures:
Sink, fiberglass/plastic tub/shower combination.
Enamel cast-iron white lavatory, water closet.
Domestic Water Heating: Domestic hot water provided by electrical hot water
heaters in the individual units.
Heating/Air Conditioning: Individual heating and air conditioning units. Each
tenant is responsible for their own utility expenses.
Ceiling fan(s) in most unit.
Electrical:
Electrical Wiring
Per code.
Electrical Fixtures:
Ceiling or wall mounted fluorescent or incandescent
per plan at various locations.
Electric light standards:
Outdoor lighting conforms to City code.
Common Area Facilities:
Office:
Management office and recreation room are located
on the south side of the complex. Similar type of
construction.
Laundry room:
None. Each unit has a stacked washer/dryer.
Pool:
Fenced pool and spa is located directly northwest of
the office/recreation room.
Other:
Good landscaping with walkways and BBQ's. Entry
fountain. Vaulted ceiling in exercise room and
office.
Fire Protection:
All of the units are sprinklered.
Improvement Description - 48
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 102680
Easements and
Restrictions:
No adverse easements or restrictions were noted.
No title report was provided to the appraisers.
Contamination/
Hazardous Materials:
Functional Utility/
Depreciation:
It is unknown what, if any, hazardous materials are
in use or have been in use on the premises. None
were noted during the inspection.
Overall, the functionality of the subject appears
adequate.
Conclusion:
The subject is considered to be an excellent quality apartment in good condition
located in an area of upper quality developments in north Scottsdale. It is
considered to be similar with regards to construction, of the products found within
the neighborhood. The improvements are adequately suited for the purposes for
which they were designed.
Improvement Description - 49
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 102680
HIGHEST AND BEST USE
Highest and best use is a fundamental concept in appraising real estate because it
focuses market analysis on the subject property's optimum use given current
market conditions. The Appraisal Institute has recognized highest and best use as:
The reasonably probable and legal use of vacant land or an improved property,
which is physically possible, appropriately supported, financially feasible, and that
results in the highest value.40
Implicit in the above definition are two different and distinct value estimates: the
highest and best use as vacant and the highest and best use as improved.
Highest and best use of a site as though vacant and available for development
assumes that a parcel of land is vacant or can be vacated by demolishing existing
improvements.
The goal of the analysis is to ascertain the optimum use of the land if it is, or
were, vacant and what type of improvement, if any, is warranted given market
conditions.
In growth areas and neighborhoods in transition or where a change in the near
term is expected, an interim use may be appropriate. For instance, the highest and
best use of a farm in the path of urban growth may be as a future shopping center
with an interim use as a farm.
Highest and best use implies contribution of that specific use to the community
environment or to community development goals in addition to wealth
maximization of individual property owners. Also, the estimate of highest and
best use result from the appraiser's judgment and analytical skill, i.e., the use
estimated from analysis represents an opinion, not fact to be found. In appraisal
practice, the concept of highest and best use represents the premise upon which
value is based. In the context of most probable selling price (market value),
another appropriate term to reflect highest and best use would be the most
probable use.
In estimating the highest and best use of a property, the test is to forecast which
program of future utilization is able to develop the highest net return on the land
over a long period of time. Highest and best use does not necessarily refer to a
building of the greatest size that someone might be induced to erect, nor does net
income always need to be interpreted strictly in terms of money. It can take the
form of amenities, such as an attractive wooded site best used as a park or game
refuge.
40
The Appraisal of Real Estate, op. cit., 12th Edition, p. 305.
Highest and Best Use - 50
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 102680
An equally important consideration in developing a best use estimate is
recognition of the fact that the appraiser's estimate for a particular property is
dependent upon the type of value being estimated. Each type of value is based
upon a particular set of conditions that are assumed to exist as of the date of
valuation. Depending upon the purpose of a particular appraisal assignment, the
best use estimate may vary depending upon the type of value being sought. In a
market value assignment, a best use estimate is always developed from the
perspective of potential purchasers/users who constitute an active market for the
subject property.
In many properties, the highest and best use conclusion may be identical to the
one permitted by either zoning ordinances or private restrictions. There may be
cases, however, where the land has a more valuable use than that permitted by
law, and if there is a strong possibility that changing the legal use would be
permitted, then it could properly be considered as a factor affecting value.
Conversely, zoning could legally permit a use more intense than the site could
reasonably be expected to perform. In such cases, if zoning will not permit a less
intense use, then it is necessary to determine whether or not the zoning could be
changed and the effect of this factor upon the ultimate utilization of the property.
In ascertaining the highest and best use of a site or a property, it is necessary to
study four factors:41
1. Legal Permissible Use - the uses that are permitted by zoning, existing leases and/or
deed restrictions.
2. Possible Use - the uses that are physically possible;
3. Financial Feasible Use - the uses which are possible and permissible, which will
produce a net return to the owner of the subject; and
4. Maximally Productive Use - the use of the subject site among the feasible uses that
produces the highest net return. This use is essentially its highest and best use.
Because of the subject is existing, both the highest and best use of the site "as if
vacant" and "As Is", is considered.
Highest and Best Use, As Vacant:
1. Legally Permissible:
As discussed in the Site Data Analysis section of this report, the subject site is
zoned R-5, Multifamily residential, City of Scottsdale. Under this zoning
classification, the subject's existing improvements are considered a legal use of
the site
41
The Appraisal of Real Estate, 12th ed., op. cit., pp. 307.
Highest and Best Use - 51
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 102680
2. Physically Possible:
The next constraint imposed on the use of the subject property is primarily
dictated by the physical aspects of the site itself. Size, shape, and topography
affect the uses to which land may be developed. The subject property is generally
rectangular and does not appear to suffer due to any slope irregularity. The site has
an adequate frontage to depth ratio and is approximately 5.0 Acres (217,800 SF),
4.02 net acres (175,147 SF) in size. It is at grade with the fronting streets and
adjacent properties and is not adversely affected by any known easements which
would restrict its utility. All public utilities are available and at the property line.
Primary access from the major fronting arterial is by a curb cut at the northeast
corner of the property. According to the Flood Insurance Rate Maps, the subject
site is not located within a hazardous flood plain area. It is not located within a
State or Federal SuperFund Site.
Our analysis of the physical characteristics of the site, as vacant, indicates a
number of physically possible uses for the subject parcel; however, from a
practical standpoint these are limited to apartments.
3. Financially Feasible:
In determining which uses are legally permissible and physically possible, we
have eliminated many uses from consideration (residential or agricultural). The
appraisers are of the opinion that it would be currently financially feasible to
develop the subject site, if vacant, with a use acceptable under the R-5,
Multifamily residential, City of Scottsdale zoning designation or be held for future
use or resale.
4. Maximally Productive:
Developed uses for the subject site which were found to be financially feasible
included residential use. Development as such or to hold the site for future resale
or development constitute the highest and best use of the as if vacant.
Highest and Best Use, As Improved:
1. Legally Permissible:
As discussed in the Site Data Analysis section of this report, the subject site is
zoned R-5, Multifamily residential, City of Scottsdale Under this zoning
classification, the subject's existing improvements are considered a legal use of
the site.
2. Physically Possible:
The existing improvements are located within a multifamily use area along a
major arterial. Utility availability is considered typical and adequate to support the
existing improvements, and no physically adverse conditions are believed to affect
Highest and Best Use - 52
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 102680
the subject site. The developed land-to-building ratio is within the general
coverage ratio guidelines for zoned districts. Based on the foregoing, it appears
the existing improvements, are physically possible and reasonable for the subject
site.
3. and 4. Financially Feasible and Maximally Productive:
A real estate project is financially feasible when analysis indicates that there is
reasonable likelihood of satisfying explicit objectives and when a selected course
of action is tested for fit to a context of specific constraints and limited resources.
Financial feasibility of a real estate project is normally related to its probable
economic potential.
Of the financially feasible uses, the use which produces the greatest value
consistent with the rate of return expected by the market for that use is recognized
as the Highest and Best Use.
The subject property is currently 88% leased. This property has been analyzed in
the valuation section of this report using the assumed market cash flows and
projected expenses to offer an indication of the net cash flow to ownership. We
believe that the final test of maximal productivity of the subject property, as
improved, is positively met.
Conclusions of the Highest and Best Use:
Since zoning and regulation of community plans tend to take precedence over
private wants and aspirations, the decisions as to Highest and Best Use must be
considered within the framework of public limitations. Finally, the Highest and
Best Use is a logical and appropriate use or range of uses that fall within the
constraints of private wants and public standards, presuming that all are working
within the guidelines of the real estate market. In general, decisions would be
rational, not arbitrarily arrived at, and would function in the scope of good
planning and reasonable productivity of use. Therefore, we conclude the
following:
‚ The existing project is considered Technically Feasible as it meets the test for legal,
zoning and probability within existing market standards. Additionally, government
services and planning are considered good.
‚ The development is considered "Long Term" Market Feasible because:
1. There is long-term demand in the marketplace.
2. The demographics suggest stability for the neighborhood.
‚ "As If Vacant" the subject should be held for future development Apartments or held
for resale.
Considered "As Is," the Highest and Best Use is its existing apartment project use.
As improved, it appears that the land and improvements have all the physical
attributes which would signify a successful project, as its Highest and Best Use.
Highest and Best Use - 53
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 102680
Street access and visibility are adequate with access provided for vehicular and
pedestrian traffic. The present use is a legal use and conforms to current zoning
and land use regulations, considering the property's anticipated future use, the
subject appears to be most appropriate thus no alternative use is recognized for the
improvements.
Highest and Best Use - 54
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
VALUATION PROCESS
Typically, real estate can be valued by applying three approaches, e.g., Cost,
Income and Sales Comparison. In addition, the site or land valuation is typically
analyzed by the usage of the sale comparison methodology. The three are defined
as follows:42
COST APPROACH
That approach in appraisal analysis which is based on the proposition that the
informed purchaser would pay no more than the cost of producing a substitute
property with the same utility as the subject property. It is particularly applicable
when the property being appraised involves relatively new improvements which
represent the highest and best use of the land or when relatively unique or
specialized improvements are located on the site and for which there exist no
comparable properties on the market.
INCOME APPROACH
That procedure in appraisal analysis which converts anticipated benefits (dollar
income or amenities) to be derived from the ownership of property into a value
estimate. The Income Approach is widely applied in appraising income-producing
properties. Anticipated future income and/or reversions are discounted to a
present worth figure through the capitalization process.
SALES COMPARISON APPROACH
Traditionally, an appraisal procedure at which the market value estimate is
predicated upon prices paid in actual market transactions and current listings; the
former fixing the lower limit of value in a static or advancing market (price wise),
and fixing the higher limit of value in a declining market; and the latter fixing the
higher limit in any market. It is a process of analyzing sales of similar recently
sold properties in order to derive an indication of the most probable sale price of
the property being appraised. The reliability of this technique is dependent upon
(a) the availability of comparable sales data, (b) the verification of the sales data,
(c) the degree of comparability or extent of adjustment necessary for time
differences and (d) the absence of non-typical conditions affecting the sale price.
In essence, all approaches to value (particularly when the purpose of the
appraisal is to establish market value) are market data approaches since the data
inputs are presumably market derived.
The subject is a 20 year older apartment complex. The Market Value of the As Is
Leased Fee Interest of the subject property is being valued. Therefore the Cost
Approach was not considered applicable and only the Sales Comparison and
Income Approaches are presented herein.
42
Byrl N. Boyce (ed.), Real Estate Appraisal Terminology, American Institute of Real Estate Appraisers and the Society of Real Estate
Appraisers (1st ed. rev.; Cambridge; Ballinger Publishing Co., 1981), p. 62, 126.132, 160.
Valuation Process - 55
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
SALES COMPARISON APPROACH
The Sales Comparison Approach is one of three traditional approaches to value.
This approach is also called the Market Data or Market Comparison Approach.
It is:
Approach through which an appraiser derives a value indication by comparing the
property being appraised to similar properties that have been sold recently,
applying appropriate units of comparison and making adjustments, based on the
elements of comparison, to the sale prices of the comparables.43
Basic real estate appraisal principles involved in this approach are the principle
of substitution, anticipation and contribution. The "principle of substitution" is the
underlying premise from Sales Comparison Approach and its definition is very
similar to that of the approach itself. This principle fundamentally states that
the value of a property is influenced to a large extent by the prices being paid in
the open market for similar properties offering the same utility. The market that is
made up of substitute properties then represents alternatives for a prospective
buyer and tends to set the range of values.
The "principle of anticipation" states that prices paid for property is a
reflection of the market's expectation of future benefits that accrue from
ownership. It follows, then, that if the property is old and nearing the end of its
economic life, or for another reason has a dismal future, the present worth of
value of all future benefits would be considerably lower than if the property was
new and could generate benefits for a longer period. The value of real property,
therefore, can be considered the present worth of all future benefits that can be
derived from its ownership.
The "principle of contribution" is the underlying rationale for the adjustment
process in the Direct Sales Comparison Approach. This principle views the
sale price of real property as the sum of all value contributing characteristics.
The individual characteristics are measured by the effect their presence or absence
has on the total sale price. Not only is their mere presence important, but also the
quantity and quality in which they exist.
There are other appraisal principles involved in Direct Sales Comparison, but the
three mentioned are considered most pertinent.
COMPARABLE SALES DATA
Five sales considered most comparable to the subject follow.
43
The Dictionary of Real Estate Appraisal, 2nd ed., op. cit., p. 265.
Sales Comparison Approach - 56
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Sale No. 1 Photograph
Sale No. 1 Plat Map
150
151
152
217-5 3-139
217-5 3-140
61
34
-204
2
7- 74
ROAD
-20
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7- 74
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54
53
217-36-343N
52
Sales Comparison Approach - 57
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Sale #1
8787 E Mountain View Rd
Scottsdale
Rancho Antigua
Buyer
Rancho Antigua Condominiums, LLC
The Continental Group
20701 N Scottsdale Rd
Suite 107
Scottsdale
AZ
614-1558
County:
Submarket:
Map(Page):
Legal:
Maricopa
Scottsdale North
106 - 175/LL
Por SE4 sec 25 T3N R4E & por SW4 sec 30 T3N R5E
Intended Use:
Frontage:
Apartments
n/a
Seller
Income and Expenses
DOC Investors, LLC
Con Am Management
3990 Ruffin Rd
Suite 100
San Diego
CA
614-7331
The selling broker indicated that the property was 94% occupied at time of
sale that the property will be converted to condominiums.
Vital Data
Sale Price:
$23,150,000
Doctument:
WD
Building SF:
217,758
Price/SF:
Topography:
Cap Rate:
Down Pmnt:
Pct Down:
Doc No:
No. Units
Price/Unit:
Recording Date:
Escrow/Contract:
Days on Market:
Exchange:
Conditions:
Zoning:
Frontage:
Comp No:
Property Type:
$106.31
Level
n/a
$250,000
1%
214808
220
$105,227
02/23/2005
n/a
N/Ap
No
Condo Conversion
R-5 PCD, Scottsdale
n/a
PXA-37187-03-0520
Apartment
Comments:
* Sale Price: The selling broker reported the property sold 'as is'.
However, prices for the condominiums will range between $120,000 to $300,
000 per unit.
Amenities:
Balcony, Cable TV, individual metered, patio, pool (3), rec room, spa,
individual washer/dryers.
Parcel Information
Parcel Number:
217-36-075
SF Gross:
SF Net:
Price/SF Gross:
Price/SF Net:
Improv Ratio(%):
619,989
619,989
$37.34
$37.34
80
Lot Dimensions:
Confirmed:
Irregular
Public records
Prior Sale
Docket
86482
01/29/1999
Sales Price
$13,700,000
Property Characteristics
Yr Built
1985
SF
217,758
Units
1BR
2BR
3BR
Number
60
140
20
Parking
Garages
Bldgs
22
Stories Construction
2 Frame/stucco
388 of which 220 are covered
None
Parking Ratio
Listing Broker
CB Richard Ellis
Sean
1.76
Buyer Broker
R.H. Crain & Associates, LLC
Dick
Crain
Cunningham
Financing
TD's
Lender
1st
Corus Bank
Title Co:
First American
The
buyer plans to convert the property to condominiums. Plans have not been
finalized. No costs have been estimated for the conversion at this time.
Balance
$22,900,000
Payment
n/a
Sales Comparison Approach - 58
Condition
Good
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Sale No. 2 Photograph
Sale No. 2 Plat Map
214-34-069
6
5
16
25
214-34-146
214-34-153
17
24
L ANE
214-34-061
214-34-147
214-34-058A
214-34-152
23
61
214-34-151
214-34-065
214-34-066
214-34-067
214-34-068
1
2
3
4
22
214-34-150
21
18
39TH
B EC K
214-34-148
58
57
214-34-057A
40TH
214-34-070
214-34-071
7
8
214-34-057C
214-34-072
19
214-34-149
20
ROAD
GREENW AY ROAD
GREENW AY
214-63-347
85
214-63-343
214-63-346
81
STREET
84
214-63-345
214-63-344
83
82
DR IVE
214-63-002E
214-63-002F
214-63-349
87
214-63-348
86
123
214-63-384
214-63-360
122
98
214-63-383
214-63-361
121
99
STREET
214-63-385
214-63-002G
214-63-382
120
214-63-362
100
214-63-381
119
214-63-363
101
214-63-380
118
214-63-364
102
40TH
214-63-379
117
214-63-377
Sales Comparison Approach - 59
TRACT E
7
1
214-63-896
15
214-63-888
214-63-928
214-63-376
214-63-883
214 -63 -9 30
214-63-002D
214-63-375
214-63-887
38TH
214-63-378
116
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Sale #2
3850 E Greenway Rd
Phoenix
Rancho Mirado
Buyer
S & F Conversions, LLC
Steven Caviness
8350 E Evans Rd
Scottsdale
AZ
Seller
County:
Submarket:
Map(Page):
Legal:
Maricopa
Paradise Valley
104 - 168/LH
Por N2 W2 NE4 NE4 sec 12 T3N R3E;
Intended Use:
Frontage:
Apartments
n/a
Easement
Income and Expenses
Condominium, LLC
Elias J. Winzeler
PO Box 81316
Phoenix
Condo conversion project.
AZ
Vital Data
Sale Price:
$7,590,000
Doctument:
SWD
Building SF:
63,840
Price/SF:
Topography:
Cap Rate:
Down Pmnt:
Pct Down:
Doc No:
No. Units
Price/Unit:
$118.89
Level
n/a
$230,000
3%
1812046
66
$115,000
Recording Date:
11/30/2005
Escrow/Contract:
Days on Market:
Exchange:
Conditions:
Zoning:
Frontage:
Comp No:
Property Type:
n/a
N/Av
N/Av
Condo Conversion
R3-A, Phoenix
n/a
PXA-13747-01-0620
Apartment
Comments:
Apartments being converted to condos.
Amenities:
Balcony, Cable TV, individual metered, patio, pool (3), rec room, spa,
individual washer/dryers.
Parcel Information
Parcel Number:
214-63-002E
SF Gross:
SF Net:
Price/SF Gross:
Price/SF Net:
Improv Ratio(%):
290,400
290,400
$26.14
$26.14
80
Lot Dimensions:
Confirmed:
605 x 480
Public records
Prior Sale
Docket
1424387
12/31/2002
Sales Price
$4,600,000
Property Characteristics
Yr Built
1988
SF
63,840
Units
1BR
2BR
Number
32
34
Parking
Garages
Bldgs
3
126 of which 66 are covered
None
Parking Ratio
Stories Construction
1 Frame/stucco
1.91
Listing Broker
Buyer Broker
Unknown
Unknown
Financing
TD's
Lender
1st
Stearns Bank of Arizona
Title Co:
Chicago
Balance
$7,360,000
Payment
n/a
Sales Comparison Approach - 60
Condition
Average
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Sale No. 3 Photograph
51
.5
0'
Sale No. 3 Plat Map
1'
.3
57
300'
680.51'
135 134
167-16- 165167-16- 164
167-16- 163 167-16- 162
13 2
133
13 1
12 9
130
167-16- 170
149
167-16- 157
167-16- 171
139
167-16- 185 167-16- 184
150
13 8
15 1
142
124
167-16- 158
144
167-16- 175
167-16- 173
14 0
167-16- 155
167-16- 177
167-16- 176
125
123
167-16- 159
167-16- 161
128
TRA CT CE
15 2
167-16- 154
12 1
127
12 6
167-16-270
14 1
122
167-16- 160
14 3
167-16- 174
167-16- 156
120
167-16- 146
167-16- 141
167-16- 139
S89d03m44sW 62.00'
62'
108
167-16- 134
10 6
167-16- 136
133.00'
133'
101
107
167-16- 135
102
103
11 3
167-16- 148
167-16- 147
167-16- 138
10 5
167-16- 137
104
11 5
167-16- 149
114
167-16- 145
167-16- 144
118
11 0
116
167-16- 142
119
11 2
167-16- 143
11 1
11 7
10 9
S89d0 3m44sW 537.18'
VILL AGE
L=23.5 1'
R=30'
167-16- 140
167-16- 150 167-16- 151
167-16-152167-16- 153
13 7
167-16- 172
PAR KWAY
L=13.61'
R=20'
NORTH
393.52 '
Sales Comparison Approach - 61
163.18' 22
S
sW
246'
02m.5
5
2
d
43
.4
6'
BOULEVARD
167-16-183167-16- 182
136
145
S01d22m52sE 402.37'
N00d 56m16sW 293.02'
293.02'
167-16- 169167-16- 168167-16- 167167-16- 166
167-16- 179167-16- 178
147 14 6
TATUM BOULEVARD
167-16- 181167-16- 180
14 8
TATUM
611.9 9'
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Sale #3
4704 E Paradise Village Pkwy N
Phoenix
Taos Condos (Paradise Pt. Apts.)
Buyer
4704 Paradise Point, LP
Timothy W. Clark
1020 Prospect St
Suite 314
La Jolla
CA
456-0014
County:
Submarket:
Map(Page):
Legal:
Maricopa
Paradise Valley
105 - 169/LJ
Por SE4 NE4 sec 18 T3N R4E; Easement
Intended Use:
Frontage:
Apartments
n/a
Seller
Income and Expenses
Elmsford Retirement Center
H. Howard Sahnow
2030 Elm St
Forest Grove
OR
357-1540
Gross Scheduled Inc.
Vacancy
Vital Data
Per Unit
0.1465
$1,254,960
$183,852
$1,071,108
Property Tax
Other Exp.
$72,160
$331,572
Total Exp.
$403,732
Net. Annual Income
$667,376
Sale Price:
$10,325,000
Doctument:
SWD
Building SF:
130,920
GIM:
Price/SF:
Topography:
Cap Rate:
Down Pmnt:
Pct Down:
Doc No:
No. Units
Price/Unit:
$78.86
Level
n/a
$4,175,000
40%
997279
136
$75,919
Cap Rate:
Recording Date:
07/19/2005
Escrow/Contract:
Days on Market:
Exchange:
Conditions:
Zoning:
Frontage:
Comp No:
Property Type:
n/a
N/Ap
No
Condo Conversion
PAD, Phoenix
n/a
PXA-41291-08-0520
Apartment
8.23
6.46%
Comments:
Condo conversion project.
Amenities:
Parcel Information
Parcel Number:
167-16-001H
SF Gross:
SF Net:
Price/SF Gross:
Price/SF Net:
Improv Ratio(%):
250,688
250,688
$41.19
$41.19
80
Lot Dimensions:
Confirmed:
Irregular
Public records
Prior Sale
Docket
597490
12/20/1991
Sales Price
$4,650,000
Property Characteristics
Yr Built
1984
SF
130,920
Units
1BR
2BR
Number
40
96
Parking
Garages
Bldgs
9
176 of which 136 are covered
None
Parking Ratio
Listing Broker
Sperry Van Ness
Julie
Stories Construction
2 and 3Frame/stucco
1.29
Buyer Broker
Sutton Realty
Thomas
Vaughn
Hope
Financing
TD's
Lender
1st
Merrill Lynch Capital
Title Co:
Fidelity National Title
Balance
$17,780,572
Payment
n/a
Sales Comparison Approach - 62
Condition
Average
$2,969
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Sale No. 4 Photograph
Sale No. 4 Plat Map
88
217-48-736
217-26-5 78
80
-5
26
21
7-
1
10 0 4
43 2
81
1052
1053
1049
1044
1054
1048
1056
1045
1055
1016
1022
1017
1018
1019
1021
1020
26
7-
85
-5
26
7-
84
21
26
7-
21
-5 56
217
- 26
00
2 17
- 2655
21
21
7- 26
21
-60
7-
1
26-6
22
17
-6
-6
26
26
7-
7-
21
21
18
-6
-6
26
-5 5
-5 5
1028
1027
217-26-565
95TH
217 -26-569
PLAC E
21 7-2 6-56 7
1030
1029
217-26-568
9
217-48-733
8
5
7
-2
5
-
5
6
7
R
217- 26-603
1
217-26-605
2
26
7-
7-
21
21 7-26 -560
2 17
- 26
3
21
21 7-26 -570
217- 26-56
-5 55
4
2 17
- 26
217-26-606
19
217 -26-571
8
1032
1031
217 -26-566
64
217- 26-5
-5 5
61
217- 26-5
7- 26
7- 26
62
217- 26-5
21
217-26-602
-6
217-26-574
217 -26-583
10 26
10 25
10 24
10 23
26
217 -26-572
217-26-582
21
217 -26-616 2 17-2 6-6 15
21
217-26-5 75
2 17-2 6-58 6
21 7-2 6-59 3
2 17-2 6-6 08
2 17-2 6-6 20
217-26-579
217- 26 -573
1035
1034
1033
1037
1036
-5
21 7-2 6-60 9
7-
217 -26-592
1
10 0 4
46 7
21 7-26 -610
10
180 10
7
1
10 80 10 9
83 84
2 17-2 6-5 87
217-26-594
2 17-2 6-61 1
217-26-6 07
217-26-5 91
7
217-26-612
-5
217-26-5 96
217-26-613
1040
1041
21
1076
1075
1074
1073
1072
1071
1070
1078
1077
1062
10691063
1068
1064
1065
1082 1067
1066
217- 26-577
-5
217-26-590
217- 26-576
98
26 -5
26-5
97
217-
217-
26
217-26-589
95TH
217-26-614
7-
1050
1051
217-26-5 95
10 39
10 38
21
217 -26-599
1061
1060
1059
1057
1058
1008
1015
1009
1010
1014
1013
1006
1011
1007
1012
1005
1086
1087
1004
1092
1088
1003
1089
1094
1090
1002
1095
1091
1001
1097
1096
1104
1102
1103 TRACT CE
1101
1100
1099
1098
2 17-2 6-5 46
21 7-26 -604
3
-5 5
217-26-547
26
1 7217-26-552 2 217 -26-548
9
21 7-2 6-55 1
-5 4
7- 26
21
217 -26-545
217-26-544
21
217-26-550
7- 26
-6 2
217-26-543
3
85
10
217-26-624
217- 26-631
10 93
217-26-625
21 7-26 -630
217-25-567J
21 7-26 -542
217-26-626
21 7-26 -541
217-26-627
2 1 7 - 2 5 - 5 6 7 N
21 7-26 -632
217-26-628
217-48-731
217-26-5 40
3
217-26-633
217-26-629
21 7-26 -634
2 17-2 6-53 9
217-26-6 35
217-26-642
21 7-
26 -6
2
40
9
26-63 38
21 7- 7- 26 -6
21
21 7-
26 -6
37
2 17-2 6-63 6
217-48-730
2 17-2 6-85 5
21 7-26 -641
-7 3
9
1
00
2
B1
00
1
5
B
0 6
B 1008
0
B1009
B1010
B 1011
B 1100
B 1007
B1012
B
B1013
B1014
21
7- 26
21
3
00 4
B 1 00
B1
7- 26
21
7- 26
-7 4
0
-7 4
217 -26-746
7- 26
-7
21
2 17-2 6-74 9
-7 4
7- 26
1
21
43
2
21
6
7- 2
-7 4
4
217 -26-747 2 17-2 6-7 48
21 7-26 -745 217 -26-752 2 17-2 6-7 51
217-26-7 50
217-26-795
B1056
B1055
B 1057
B1049
B1054 B1050
B 1058
B1059
B1060
B1053
217-26-794 217 -26-793 2 17-2 6-7 92
217-26-797217-26-7 98
B 10
51
B
205
1
B 10
41
B
704
8
21 7-26 -788 217-26-787
217-26-7 91
21 7- 2
217- 26-790 217
6-785 - 26-7
217- 2 89
6-786
7
B1016
1
80
1 1 B1015
22
B
10 2110
B
B
B1019 10
B
B1046
B1045
B1020
B1024
B 1023
217-26-796
217-26-783
217-26-7 84
21
4
04
9
2B413
0410 1003
B 1 B 10B4
B
7- 26
-780
21 7-26 -779
-782 7
7- 26 -7 7
21 - 26
17
-781 2
7- 26 -7 78
21 7- 26
21
B 1041
217-26-757
217-26-7 54
55
-7 6 0
217-26-753
26 -7
7- 26
2 1 1 75659 2
26 -7-7
7- 26
2 12 1 7-
217-25-567P
217-26-7 58
217-26-761 217 -26-762
21 7-26 -763
B1025
203 1
B1
B103
B1033
B1030 B1026
6
3 503
B1034
B 10B1
B1029 B1028
B1027
217-26-771
217-26-7 72
217-26-768
26 -769
21 7- 26-77 03 21726 -774
21 7- 26-77 217-
217-26-767
217-26-7 64
21 7-26 -765
217-26-7 66
217-26-775
B1037
B1038
217 -26-776
BOULEVARD
SHEA
Sales Comparison Approach - 63
BOULEVARD
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Sale #4
9450 E Becker Ln
Scottsdale
Adventura (Scottsdale Cove)
Buyer
Montecito Cove, LLC
Montecito Property Co
333 N First St
Jacksonville Beach
339-0091
County:
Submarket:
Map(Page):
Legal:
Maricopa
Scottsdale North
106 - 175/LK
Por SE4 SE4 sec 19 T3N R5E; Easements
Intended Use:
Frontage:
Apartments
n/a
FL
Seller
Income and Expenses
BRE Properties Inc
Mark Petersen
44 Montgomery St
San Francisco
445-6530
Selling broker reported that the property sold at a 5.05% cap rate based on a tralling 12
months income at the time of sale. The property was reported to be about 95% occupied.
CA
Vital Data
Sale Price:
$36,450,000
Doctument:
SWD
Building SF:
295,951
Price/SF:
Topography:
Cap Rate:
Down Pmnt:
Pct Down:
Doc No:
No. Units
Price/Unit:
$123.16
Level
n/a
$3,950,000
11%
346148
316
$115,348
Recording Date:
03/22/2005
Escrow/Contract:
Days on Market:
Exchange:
Conditions:
Zoning:
Frontage:
n/a
apx 157
No
Condo Conversion
C-2, Scottsdale
n/a
Comp No:
Property Type:
PXA-54349-04-0520
Apartment
Comments:
Condo conversion project.
Amenities:
Balcony, business center, club house, covered parking, gym, patio,
pool (2), spa (2), washer and dryer hook-ups.
Parcel Information
Parcel Number:
217-25-567K, 567Q
SF Gross:
SF Net:
Price/SF Gross:
Price/SF Net:
Improv Ratio(%):
940,896
940,896
$38.74
$38.74
80
Lot Dimensions:
Confirmed:
Irregular
Public records
Prior Sale
Docket
Sales Price
Property Characteristics
Yr Built
1991
and 1994
Units
1BR
2BR
3BR
SF
295,951
Stories Construction
2 Frame/stucco
Number
94
177
45
Parking
Garages
Listing Broker
CB Richard Ellis
Tyler
Bldgs
23
525 of which 350 are covered
None
Parking Ratio
1.66
Buyer Broker
Buyer is broker - represented self
Anderson
Financing
TD's
Lender
1st
Merrill Lynch Capital
Title Co:
First American
Balance
$32,500,000
Payment
n/a
Sales Comparison Approach - 64
Condition
Good
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Sale No. 5 Photograph
Sale No. 5 Plat Map
BO ULEVAR D
SH EA
SH EA
BOULE VARD
SHEA
TRACT B
-0
1
6
168 -05-356
168-05 -359
168-0 5-360
8
168-05-478
16 8-05-481
1002
1003
1001
1004
1007
1006
1008
1005
8
-3
168-05-473
1126
1125
1124 1119
1127
1123 1118
1121
1120
1122
168-05-358 168-05-357
168-05-36 1 168-05-362 16 8-05-363
168-0 5-480 168-05-47 9
16 8-05-474 168-0 5-475 168-05-47 6 168-05-477
168-05-47 2
168-05-470
4
5
168-05-301
4
168-05-471
168-05-307
-3
-0
168-05-303
8
168-05-305
6
168-05-313
1116
9
5
1
168-05-311
1117
7 5 3 1
9
11
13
15
17
COMMON A REA
19
168-05-309
168-05-468
1114
1115
168-05-469
168 -05-315
168 -05-317
-3
8
1
-0
4
STREET
1 6 8 - 0 5 - 35 1
1 6 8 - 0 5 - 35 0
168-05-208
168-05-206
168-05-205
168-05-204
168-05-203
168
167
166
165
7
5
6
168-05-319
168 -05-364 168-05-371
5
168 -05-367 168-05-3 68
168-05-327
31
168-05-372
168-05 -331
1018
1019
168-05-213B
168-05-373
3
1104
1101
1100
1024 1105
1025
1026
1027
1029 1092
1099
1028
1 68-05-459
168-0 5-376
168-05-3 78
-0
1
6
5
4
2
-3
168-05-38 3
8
37
39
05-339
168-
05-402
05-4
168-
8
10 49
10 4
168-
16 8-05-405
TRACT CE
03
168-05-4 01
168-05-40 6
168-05-384 16 8-05-391
1032
1031
1036
1035
168-05-4 04
99
05-39
168-05-385
168-05-386
168-05-389168-05-390
16 8-
05-3
168-
168-05-408
5
10 444
10
168-0 5-407
8
168-05-2 46
168-05-409
33
35
37
39
41
64
43
168-0 5-248
168-05-250
168-05-444
1090
1091
168-05-387 168 -05-388
168-05-445
1033
1034
168-05-41 1
1057
1056
1058
1059
1060
1061
ALAN
1087
1086
168-05-440
168- 05-438
168-05-169
131
168-05-168
168-05-167
130
129
168-05-43 7
168-05-418
168-05-419
168-05-43 6
16 8-05-397
168-05-396
168-05-146
168- 05-435
168-05-416
1080
1081
1063
1062
1064
1065
1066
1067
1069
1068
168- 05-434
1 68-05-395
168-05-4 17
168-05-213A
168-05-170
132
16 8-05-394
168-05 -415
168-05-002N
168-05-174
136
1038
1039
1083
1040
1082
1041
1043
1042
168-05-393
16 8-05-414
168-05-256
168-05-173
135
168-05-441
1085
1084
168-05-413
168-05-254
168- 05-439
16 8-05-392
168-05-412
168-05-172
134
1096
1095
168-05-410
1 68-05-252
168-05-171
133
168-05-449 16 8-05-450
1030
1037
168-0 5-400
168-05-244
168- 05-452 168- 05-451
168- 05-447168- 05-448
168-05-596
1 6 8 - 0 5 - 3 4 1
1051
1050
1047
1052
1046
1053
1054
1055
168-05-242
168-05-185
147
168-05-446 168 -05-453
1 68-05-382
168-05-3 37
1 68-05-240
168-05-186
148
1 68-05-381
168-05-335
168 -05-238
168-05-187
149
168-05-188
150
168-05 -380
1097
1098
1094
1093
TRACT A
108
168-05-145
107
168-05-147
16 8-05-420
168-05-4 21
106
4
-42
8- 05
168-05-148
-4 25
16
168
- 05
168-05-4 22
109
168-05-144
168-05-423
10
10 70
71
110
168-05-426
1072
1073
1075
1074
168-05-143
168-05-427
105
3
168-05-149
16 8
- 0543 1
10
10 76
77
168-05-117
43 0
168-05 -429
168-05-428
168-05-211
16 8
- 05-
168-0 5-236
23
25
27
29
31
168-05-454
1 68-05-379
168-05-333
PLACE
33
35
168-05 -377
1023
1022
168-05-192
154
54TH
4
5
168-05-191
153
168-05-455
54TH
-0
6
16 8-05-458
168- 05-442
-3
8
1
1110
1109
168- 05-456
4
168-05-190
152
1089
1088
-3
-0
168-05-189
151
CAN NON
168 -05-463 168-05-464
1013
1012
4
5
8
168- 05-457
6
1
1103
1102
168-05-329
168- 05-443
4
5
6
168- 05-461
168- 05-462
168- 05-465 168- 05-466
-0
1108
1107
1112
1111
8
1
1113
1106
168- 05-374
-3
16 8-05-325
16 8-05-460 168-05 -467
1016
1009
6
168- 05-375
4
5
6
168 -05-323
1020
1021
-0
168- 05-366 168- 05-365
168- 05-369 168- 05-370
-3
8
1
1010
1011
1014
1015
21
23
25
27
29
168-05-32 1
168-05 -432
TRACT A
111
168-05-142
1078
1079
104
168-05-4 33
BERYL
168-05-141
103
168-05-118
4
168-05-207
TRACT A
Sales Comparison Approach - 65
168-05-140
102
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Sale #5
5335 E Shea Blvd
Scottsdale
Bella Terra (City Place @ Paradise Valley)
Buyer
Bella Terra at PV, LLC
Monaco Development
142 E Ontario St
Suite 525
Chicago
IL
664-0800
County:
Submarket:
Map(Page):
Legal:
Maricopa
Paradise Valley
105 - 170/LL
Lot 1 Cityplace bk 372 pg 43
Intended Use:
Frontage:
Nursing home
0
Seller
Income and Expenses
Cityplace PV, LLC
Invesco Real Estate
13155 Noel Rd
Suite Gallerioa Twr
Dallas
TX
715-7400
Gross Scheduled Inc.
Vacancy
Per Unit
12.18%
Ste
Property Tax
Other Exp.
Vital Data
$144,344
$819,929
Total Exp.
Sale Price:
$44,500,000
Doctument:
SWD
Building SF:
233,060
GIM:
Price/SF:
Topography:
Cap Rate:
Down Pmnt:
Pct Down:
Doc No:
No. Units
Price/Unit:
$190.94
Level
n/a
$0
0%
1425580
240
$185,417
Cap Rate:
Recording Date:
09/27/2005
Escrow/Contract:
Days on Market:
Exchange:
Conditions:
Zoning:
Frontage:
Comp No:
Property Type:
n/a
N/Av
No
Condo Conversion
R-2, Phoenix
n/a
PXA-82143-10-0520
Apartment
$2,935,551
$357,550
$2,578,001
$964,273
Net. Annual Income
$1,613,728
15.16
3.63%
Comments:
Buyer plans to convert the property to condominiums.
Amenities:
Balcony, business center, club house, covered parking, gym, patio,
pool, spa, washer and dryer, individual metered.
Parcel Information
Parcel Number:
168-05-210
SF Gross:
SF Net:
Price/SF Gross:
Price/SF Net:
Improv Ratio(%):
595,901
595,901
$74.68
$74.68
80
Lot Dimensions:
Confirmed:
Irregular
Public records
Prior Sale
Docket
1144717
12/23/1999
Sales Price
$21,475,000
Property Characteristics
Yr Built
1993
SF
233,060
Units
1BR
2BR
3BR
Number
96
106
38
Parking
Garages
Bldgs
19
353 of which 156 are covered
None
Parking Ratio
Listing Broker
CB Richard Ellis
Tyler
Stories Construction Condition
2 Frame/stuccoGood
1.47
Buyer Broker
Buyer is broker - represented self
Anderson
Financing
TD's
Lender
1st
Cole Taylor Bank
Balance
Title Co:
LandAmerica American Title
$45,000,000
Payment
n/a
Sales Comparison Approach - 66
$4,018
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Improved Sales Map
Resume of Improved Sales
Sale
No.
1
2
3
4
5
Address
Rancho Antigua
8787 E Mountain View Rd Scottsdale
Rancho Mirado
3850 E Greenw ay Rd
Phoenix
Taos Condos (Paradise Pt. Apts.)
4704 E Paradise Village Pkw Phoenix
yN
Adventura (Scottsdale Cove)9450 E Becker Ln
Scottsdale
Bella Terra (City Place @ Paradise
5335 EValley)
Shea Blvd
Scottsdale
SP
Sale
Date
Feb-05
Nov-05
Jul-05
Jul-05
Sep-05
Yr.
Built
1985
1988
1984
1991
1993
Feb-06
1986
Unadjusted Total
Sales Units/
Price Beds
$23,150,000
220
$7,590,000
66
$10,325,000
136
$36,450,000
316
$44,500,000
240
Mean
Standard Deviation
Coefficient of Variation
135
196
86
44.2%
Total
Im p SF
217,758
63,840
130,920
295,951
233,060
Price
Per SF
$106.31
$118.89
$78.86
$123.16
$190.94
Price
Per Unit
$105,227
$115,000
$75,919
$115,348
$185,417
85,386
188,306
81,539
43.3%
$123.63
$37.03
30.0%
119,382
36,015
30.2%
Mean44, Standard Deviation (Measure Of Dispersion Around The Mean)45, Coefficient of Variation46
44
45
46
The Dictionary of Real Estate Appraisal, 3rd ed., op. cit., p. 225. Mean: A measure of central tendency. The sum of the values of a set
divided by the number of values. See also arithmetic mean; geometric average; median; mode; moving average; weighted average.
Ibid., p. 346. Standard Deviation: In statistics, a measure of the extent of absolute dispersion, variability, or scatter in a frequency
distribution; obtained by extracting the square root of the arithmetic mean of the squares of the deviations from the arithmetic mean of the
frequency distribution.
Ibid., p. 62. Coefficient of Variation: In statistics, the standard error of the estimate divided by the mean value of the dependent variable; a
measure of the relative chance for error in a forecast or estimate of the dependent variable. See also coefficient of dispersion.
Sales Comparison Approach - 67
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
VALUATION ANALYSIS
The Direct Comparison Method -- in which the sales will be discussed in the
traditionally comparative way with adjustments made accordingly -- will be
performed on the above sales.
DIRECT COMPARISON METHOD:
Five multifamily sales, all occurring since February 2005, are referenced. All are
located within the northeast Metro-Phoenix market. Accordingly, the appraisers
believe that the accumulated sales data accurately reflect the present market and
its interrelated economic forces.
There were some disparities within the data in relation to the most likely common
denominators, most applicable site unit measurement is price per unit. The
differences can be attributed to:
~
~
~
~
~
Real estate reflects an imperfect market;
Varying locations of the respective sales properties;
Inconsistencies relative to excess land of the sale properties in relation to the subject;
Zoning and other legal restrictions,
Physical characteristics, age of the improvements and the condition of the
improvements, and;
~ Quality of the tenants.
On the basis of the sales, we define the most probable buyer-type for properties
similar to the subject to be well capitalized investors and owner users with
holding power.
Investors typically utilize known transactions to form an opinion of the value of
the property in which they are interested and adjust for differences. Simulating
market action, considerations or adjustments for location, zoning, size and time
variations are deemed necessary.
Adjustment to the Comparable Sales:
The indicated sale prices and resulting units of comparison are based on
unadjusted sale prices not yet adjusted to a cash equivalent price. A cash
equivalent price is one which represents a normal consideration for the property
sold unaffected by special financing amounts, terms, services, fees, costs or
credits incurred in the transaction. The sale prices will be adjusted to cash
equivalency if affected by favorable or sub-market financing terms within the
following analysis. The subsequent extraction of various units of comparison are
then based on the cash equivalent price.
As in the valuation of the subject site, we assume typical buyers of these
properties to be prudent investors, hence these participants are considered to have
significant knowledge of market. These investors utilize known transactions to
Sales Comparison Approach - 68
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
form an opinion of the value of the property in which they are interested and they
are cognizant of the ranges within which other market participants operate.
Elements of comparison are the characteristics of properties and transactions that
cause the prices paid for real estate to vary. The appraisers considered and
compared all reasonable differences between the comparable properties and the
subject property that would affect their values. Market evidence was tested to
identify the variable elements to which property values are especially sensitive.
Adjustments for differences are made to the price of each comparable property to
make the comparables equal to the subject on the effective date of the value
estimate. The amount of adjustment made for each element of comparison
depends on the extent to which each comparable property differs from the subject
property.
There are ten basic elements of comparison that may be considered in the sales
comparison analysis.47
1. Real property rights conveyed
2. Financing terms
3. Conditions of sale
4. Expenditures made immediately after purchase
5. Market conditions (time)
6. Location
7. Physical characteristics, e.g., size, construction quality, condition
8. Economic characteristics, e.g., expense ratios, lease provisions, management, tenant
mix.
9. Use (zoning)
10. Non-realty components of value
In most cases these ten elements of comparison cover all the significant factors to
be considered, but on occasion additional elements may be relevant. Other
possible elements of comparison include access to the property, governmental
restrictions such as conservation or preservation easements, water and riparian
rights, on-site environmental conditions, and off-site improvements required for
the development of a vacant site. Often a basic element of comparison is broken
down into subcategories that specifically address the property factor being
analyzed. For example, physical characteristics may be broken down into
subcategories for age, condition, size, etc.
The sequence of adjustments applied to the comparables is determined by the
market data and the appraisers' analysis of those data.48 The ten basic elements are
not the only order in which quantitative adjustments may be made by the
appraiser; however, they have developed as the traditional sequence of
adjustments for comparables and are so presented in this analysis. The traditional
47
48
The Appraisal of Real Estate, 12th ed., op. cit., pp. 426-458.
The Appraisal of Real Estate, 12th ed., op. cit., p. 422.
Sales Comparison Approach - 69
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sequence of adjustments for comparing each comparable to the subject was as
follows:49
1.
2.
3.
4.
5.
Property Rights Conveyed
Financing terms
Conditions of Sale
Expenditures immediately after purchase
Market Conditions
These five adjustments are made in sequence with cumulative percentage
adjustments. Other pertinent adjustments are then summed to the adjusted market
condition (time) price to obtain the final adjusted sale price. These other
adjustments included: location, size, zoning/density (if appropriate), physical
characteristics, sales circumstances (if appropriate), and marketability/plottage (if
appropriate).
Following are those for which we believe adjustments for differences between the
sale properties and the subject property should be made. Because of the restricted
number of sales available for analysis and because of the numerous variables
involved in the comparison process, paired sales analysis is impractical and
illogical, thus the following adjustments are judgmental.
1. Real Property Rights Conveyed:
A transaction price is always predicated on the real property interest conveyed.
Many types of real estate, particularly income producing property, are sold subject
to existing leases. The revenue generating potential of a property is often fixed or
limited by the terms of existing leases. In the valuation process, adjustments must
be made to reflect the difference between properties leased at market rent and
those leased at rent either below or above market levels. The lengths of the
remaining lease terms affect these adjustments.
Market rent and the financing currently available are used to estimate the value of
a fee simple estate. When a property is considered free and clear of all existing
leases and loans, its value is normally based on the market rent that it can
command and the financing that can be obtained for it. The transaction price of a
property that is sold subject to existing leases reflects the contract rent that it will
generate during the term of each lease and the market rent that will likely be
achieved thereafter. In these situations, the real property interest that is sold or
being appraised is the leased fee estate subject to the existing leases.
No adjustments were deemed necessary as all comparables were conveyed on a
Fee Simple basis subject to standard exceptions.
49
The Appraisal of Real Estate, 12th ed., op. cit., pp. 443.
Sales Comparison Approach - 70
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
2. Financing Terms (Cash Equivalency):
The transaction price of one property may differ from that of an identical property
due to different financing arrangements. For example, the purchaser of a
comparable property may have assumed an existing mortgage at a favorable
interest rate. In another case a developer or seller may have arranged a buydown,
paying cash to the lender so that a mortgage with a below market interest rate
could be offered. In both cases, the buyers probably paid higher prices for the
properties to obtain below market financing. Below market rates might also be
extended to individuals who have substantial bank accounts and are therefore
especially creditworthy. Conversely, interest rates at above market levels often
result in lower sale prices.
Other non-market financing arrangements include installment sale contracts, in
which the buyer pays periodic installments to the seller and obtains legal title only
after the contract is fulfilled, and wraparound loans, which are superimposed on
existing mortgages to preserve their lower interest rates. These loans offer below
market overall or blended interest rates to borrowers (buyers), but they yield
market or above market interest rates to lenders (sellers).
A financing adjustment may or may not include an adjustment for conditions of
sale. A condition of sale adjustment recognizes that some sales are transacted by
parties under duress, who are at a disadvantage. A combined adjustment results
when favorable financing is a function of the seller's need to sell the property
wilsonly. Appraisers recognize that, in some situations, these factors are
interdependent.
In cash equivalency analysis, an appraiser investigates the sale prices of
comparable properties that were sold with apparent non-market financing to
determine whether adjustments to reflect typical market terms are warranted.
First, sales with non-market financing are compared to other sales transacted with
market financing to determine whether an adjustment for cash equivalency can be
made. If the market evidence is insufficient to support an adjustment based on the
comparable sales, but trend or linear regression analysis indicates a value variance
attributable to the difference in terms, then numerical adjustments can be made.
There are precise, mathematical calculations for analyzing cash equivalency, but
the financing adjustments derived from these calculations must be rigorously
tested against market evidence.
More often than not, the cash discount indicated by the calculations is not fully
recognized by buyers and sellers. The market evidence itself must support
whatever adjustment is made. The definition of market value recognizes cash
equivalent terms provided the calculation is based on market evidence.
Furthermore, conditions of sale may reveal other non-economic interests on the
part of buyers or sellers. Therefore, appraisers must use cash equivalency
Sales Comparison Approach - 71
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
calculations with caution and remember that the final adjustment is always
derived from the market.
Analysis of the comparables indicated that all of the sales sold on an all cash
basis or what has been considered as the equivalent of cash to the seller and,
therefore, these sales required no special adjustments for financing or cash
equivalency.
3. Conditions of Sale:
Adjustments for conditions of sale usually reflect the motivations of the buyer and
the seller. In many situations, the conditions of sale significantly affect
transaction prices. For example, a developer may pay more than market value for
lots needed in a site assemblage because of the anticipated incremental value, or
plottage value, resulting from the greater utility of a larger site. A sale may be
transacted at a below market price if the seller needs cash in a hurry. A financial,
business, or family relationship between the parties to a sale may also affect the
price of property. Interlocking corporate entities may record a sale at a non-market
price to serve their business interest. One member of a family may sell a property
to another at a reduced price, or a buyer may pay a higher price for a property
because it was built by his ancestors.
When non-market conditions for sale are detected in a transaction, the sale can be
used as a comparable only with great care. The circumstances of the sale must be
thoroughly researched before an adjustment is made, and the conditions must be
adequately disclosed in the appraisal. No adjustment for conditions of sale was
deemed necessary.
4. Expenditures Made Immediately After Purchase:
A knowledgeable buyer considers expenditures that will have to be made upon
purchase of a property, as these costs will typically affect the purchase price.
Examples of such expenditures may include costs associated with demolition of
obsolete improvements, potential zoning changes or remediation of environmental
contamination.
All of the comparable sales are improved parcels and were reported to be
purchased without the potential of additional excess costs to be paid after the
sale date. It is premature to anticipate that a potential purchaser of the
comparables would discount the asking price for costs associated with
remodeling. Therefore, no adjustments were deemed warranted to the
comparable sales for "Expenditures Made Immediately After Purchase".
5. Market Conditions (Time):
Comparable sales that occurred under different market conditions than those
applicable to the subject on the effective date of the report estimate require
adjustment for any differences that affect their values. A common adjustment for
Sales Comparison Approach - 72
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
market conditions is made for differences occurring since the date of sale. Since
the time of comparable sales were transacted, general values may have
appreciated or depreciated due to inflation or deflation and investors' perceptions
of market conditions may have changed.
Changes in market conditions may also result from other factors such as changes
in income tax laws, building moratoriums, and fluctuations in supply and demand.
Sometimes several economic factors working in concert cause a change in market
conditions. A recession tends to deflate all real estate prices, but different
property types will be affected differently. A decline in demand may affect only
one category of real estate. If the demand for a specific type of property falls
during a period of inflation, appraisals made during that period may not provide a
reliable indication of the value of a similar property in a different period unless
appropriate adjustments are made.
Sales of other types of real estate transacted during the same period may better
reflect the market conditions for the specific property under consideration. In a
depressed economy, recent sales are often difficult to find. Older sales may be
discounted over a reasonable holding period, corresponding to the length of time
estimated for the market segment to recover.
Although the adjustment for market conditions is often referred to as a "time"
adjustment, time is not the cause of the adjustment. Market conditions which
shift over time create the need for an adjustment, not time itself. If market
conditions have not changed, no adjustment is required even though considerable
time may have elapsed.
Appraisers must also recognize that the sale of a property may be negotiated
months or even years before the sale or final disposition of the property. In this
case an adjustment for changes in market conditions between the date the contract
is signed and the effective date of value may be appropriate.
Changes in market conditions are usually measured as a percentage of previous
prices. There are two traditional methods of estimating this percentage change in
due to market conditions.
The first method is paired analysis. If the physical and economic characteristics
of a property remain unchanged, analyzing two or more sales of the same property
over a period of time will indicate the rate of price change. An appraiser should
always attempt to examine several sets of sales to arrive at an appropriate
adjustment. An adjustment supported by just one paired data set may be
unreliable.
Sales and resale of the same properties provide the best indication of the change in
market conditions over time. If data on resale properties are unavailable, then the
second method typically utilized is to survey knowledgeable market participants
and estimate the potential impact as a percentage change in the previous price.
Sales Comparison Approach - 73
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
This is judgmental and is heavily influenced by the appraisers' experience and
knowledge of the local market.
Adjustments for time of sale are typically considered if there is reason to believe
that the prices of real estate are rising or falling over a particular time period.
The comparables all occurred within the 12 months. An upward trend of about
15% per year is evident over the past year based upon a comparison of the data.
The transactions have therefore been preliminary adjusted for the four elements of
adjustment previously discussed as follows:
SUMMARY OF CUMULATIVE PERCENTAGE ADJUSTMENTS
Sale
No.
1
2
3
4
5
Unadj.
Price
Address
Per Unit
Rancho Antigua
$105,227
Rancho Mirado
$115,000
Taos Condos (Paradise Pt. Apts.)
$75,919
Adventura (Scottsdale Cove)
$115,348
Bella Terra (City Place @ Paradise Valley) $185,417
Rights
Adjust
m ents
0.0%
0.0%
0.0%
0.0%
0.0%
CE
Adjust
m ents
0.0%
0.0%
0.0%
0.0%
0.0%
Conditions
Adjust
m ents
0.0%
0.0%
0.0%
0.0%
0.0%
Tim e
Adjust
m ents
14.9%
3.2%
8.8%
8.8%
5.9%
Cum
Adjusted
$/Per Unit
$120,880
$118,690
$82,594
$125,489
$196,310
In addition to the aforementioned, we have considered locational, physical,
economic, use and non-realty differences between the sale and the subject
property.
Typically, the remaining adjustments are estimated on a percentage basis. At
times, a deviation from this norm is required for actual or estimated dollar
expenses such as cost-to-cure items or rent loss contributed by a lease-up
program, etc. Where such dollar adjustments are required, the appraisers are of
the opinion that these two types of adjustments should be handled separately and
not merged into a composite adjustment.
6. Location:
An adjustment for location may be required when the locational characteristics of
a comparable property are different from those of the subject property. Excessive
locational differences may disqualify property from use as a comparable. Most
comparable properties in the same neighborhood have similar locational
characteristics, but variations may exist within a neighborhood.
A property's location is analyzed in relation to the location of other properties.
Although no location is inherently desirable or undesirable, an appraiser can
conclude that the market recognizes that one location is better than, equal to, or
worse than another.
Adjustments for location have been considered in this analysis with reference to
the two major categories of influence on the subject property. "Accessibility" or
Sales Comparison Approach - 74
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
"Linkage" and "Neighborhood Environment" or "Synergism". These two
influences are estimated separately then applied to the comparable sales on a net
basis.
6A. Accessibility (Linkages):
The specific location of a comparable property can influence its price. Further, the
access and visibility from a major arterial or location within a specific area can
have a positive impact upon that property's price. Arterial exposure is primarily
important for ease of locating and accessing the property by the public.
The subject property is located within a growing suburban area of metro-Phoenix.
All of the comparable sales are considered to have similar accessibility with no
adjustment made.
6B. Neighborhood Environment (Synergism):
Analysis of a site's environment focuses on the interrelationships between the
appraised site and neighboring properties. The effects of any hazards or nuisances
caused by neighboring properties must be considered.
A site's value is also influenced by nearby amenities and developments on
adjoining sites such as parks, fine buildings, and compatible commercial
buildings. The types of structures surrounding the property being appraised and
the activities of those who use them can greatly influence site value.
The immediate neighborhood has an impact on the type of tenants that can be
attracted to a property, such as population trends and crime statistics of the
neighborhood.
Neighborhood influences are those factors impacting value which are not
necessarily directly abutting the site but are located in the immediate vicinity.
Factors considered consist of the predominate use in the area, the quality and
upkeep of the area and the positive or negative transition occurring. No
adjustments were necessary for synergism.
7. Physical Characteristics:
If the physical characteristics of a comparable property and the subject property
differ in many ways, each of these differences may require comparison and
adjustment. Physical differences may include differences in: size, functional
utility, corner influences, topography, availability of infrastructure, attractiveness,
and amenities. On-site environmental conditions are also considered.
The value added or lost by the presence or absence of a differing item in a
comparable property does not usually equal the cost of installing or removing the
item. Frequently, variations in the size or shape of a parcel will influence the price
Sales Comparison Approach - 75
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paid. The appraisers have analyzed the comparable sale/listing to the subject size
for size, shape, corner influences, topography and infrastructure as follows:
7A. Building Age:
The subject property is proposed and has a projected economic life of 50 to 55
years The comparable sales have been set forth by age and the adjustment for
building applied at 1/2% per year of the difference in the age.
7B. Building Size:
Typically larger buildings sell for a lower per unit package price than smaller
buildings. The sales are compared to the subject in size and their variance is the
determination of a final value adjustment. A downward adjustment was made to
all of the sales due to for larger unit size.
Project Unit Size Adjustment
Sale
No.
1
2
3
4
5
Address
Rancho Antigua
Rancho Mirado
Taos Condos (Paradise Pt. Apts.)
Adventura (Scottsdale Cove)
Bella Terra (City Place @ Paradise Valley)
SP
Site
Size
990
967
963
937
971
%
Variance
56.5%
52.9%
52.2%
48.1%
53.5%
Site
Size
Adj.
-15.0%
-15.0%
-15.0%
-15.0%
-15.0%
632
7C. Building Amenities/Condition/Quality:
The subject property and the comparable sales were deemed to be of similar in
design and condition. Numbers 3 and 5 were adjusted for amenities, condition
and quality.
8. Economic Characteristics:
Economic characteristics include all the attributes of a property that affect its net
operating income. This element of comparison is usually applied to
income-producing properties. Characteristics that affect a property's net operating
income including operating expenses, quality of management, tenant mix, rent
concessions, lease terms, lease expiration dates, renewal options, and lease
provisions such as expense recovery clauses are considered. Investigation of these
characteristics is critical to proper analysis of the comparables and to the final
value estimate.
Sales Comparison Approach - 76
Other
Size
Adj.
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Specific economic conditions affecting the subject property and the comparable
sales involve the level of occupancy. Lower occupied buildings generally sell for a
lower unit price to allow for the deficit cash flow and the time necessary to lease
the building to physical stabilization. Each of the comparables are related and
compared to the subject in terms of physical stabilization and subsequently
adjusted. No adjustments were made for economic characteristics.
9. Use:
An appraiser must address any difference in the use or the highest and best use of
a potential comparable and the subject property. The appraiser must recognize
this difference and determine whether the sale is an appropriate comparable and
whether an adjustment is required. In most cases, the buyer or his or her agent
must confirm the ultimate use for which the comparable was purchased.
The subject is zoned R-5, Multifamily residential, City of Scottsdale. This zoning
classification allows for residential use. The sales are similarly zoned No
adjustment needed for density.
9. Non-Realty Components of Value:
Non-realty components of value include personalty, business concerns, or other
items that do not constitute real property but are included in the sale price of
either the comparable or the subject property. These components should be
analyzed separately from the realty. In most cases the economic lives, associated
investment risks, rate of return criteria, and collateral security for such non-realty
components differ from those of the realty.
Furniture, fixtures, and equipment in a hotel or restaurant are typical examples of
personalty. In the appraisal of properties in which the business operation is
essential to the use of the realty, the use of the non-realty component must be
recognized, estimated, and reported. Properties such as hotels and timeshare
condominiums which have high expense ratios attributable to the business
operation typically include a significant business value component.
There were no adjustments necessary for any items that would be considered a
trade fixture that was included in any of the three sales. No FF&E or non-realty
components have been considered in this valuation.
Sales Comparison Approach - 77
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
SUMMARY OF ADJUSTMENTS
Other
Adjustm ents
Sale
No.
1
2
3
4
5
Unadj.
$/Unit
$105,227
$115,000
$75,919
$115,348
$185,417
Cum
Adj.
14.9%
3.2%
8.8%
8.8%
5.9%
$/Unit
$120,880
$118,690
$82,594
$125,489
$196,310
Location
0.0%
0.0%
0.0%
0.0%
0.0%
Physical
-15.0%
-15.0%
5.0%
-15.0%
-35.0%
Econ.
0.0%
0.0%
0.0%
0.0%
0.0%
Use/
Zoning
0.0%
0.0%
0.0%
0.0%
0.0%
None
Realty
0.0%
0.0%
0.0%
0.0%
0.0%
Total Net
Other
Adjustm ents
-15.0%
-15.0%
5.0%
-15.0%
-35.0%
Adjusted
Price
Unit-Bed
$102,748
$100,886
$86,723
$106,666
$127,601
SP
$119,382
$104,925
Unadjusted vs. Adjusted SP/Unit
SP/SF $
200
Thousands
Avg
100
0
1
2
3
4
5
Means
Sale Number
Unadjusted $/Unit
Adjusted $/Unit
Indicated Value Per Unit
On a per unit basis the adjusted sales ranged from $86,723 to $127,601 per unit
with a mean of $104,925 per unit. Sale numbers 1, 2 and 4 are considered the
most similar due to amenities and overall comparability and location. We have
concluded to a middle range value with an estimate of $100,000 per unit made.
Therefore:
135 units x $xxxxxx = $xxxxxxxxx
Sales Comparison Approach - 78
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
INCOME APPROACH
This approach deals with the estimating of property value by measuring the worth
of a future income stream.
All of the basic real estate appraisal principles are involved in some manner in
the Income Approach. The principle of anticipation is very important and serves
as the underlying premise. The procedure in the Income Approach is to estimate
the present worth of value of future anticipated benefits that are derived from
ownership of the real property. The reason ownership of property rights have a
value in exchange is that the owner of these rights is entitled to the future
benefits accruing from the real estate. Anticipated future benefits have a direct
affect on value.
The Income Approach is a valid technique of estimating value when the appraised
property is an investment property that is purchased for the generation of income.
Properties like the subject are typically purchased for their anticipated benefits in
the form of annual cash throw-off and capital appreciation upon reversion after
the investment holding period.
The procedures involved in the Income Approach are a simulation of
investor-purchaser behavior. The approach accounts for many thought processes
and analysis an investor performs in the acquisition of real estate.
Rather than use an individual's investment objectives, general market objectives
for the typical purchaser are substituted so that the result is a Market Value or
value in exchange.
The process involved in this approach is twofold; (1) the various income and
expense items are defined that results in the estimation of Net Operating Income,
and (2) the Net Operating Income is then discounted into a value estimate by the
income capitalization process. The basic capitalization formula is: Value is equal
to the Net Operating Income divided by the Overall Capitalization Rate.
The following pages will present the above items under two major headings,
Income and Expense Estimate and the Income Capitalization Process.
INCOME AND EXPENSE ESTIMATE
This portion of the report concerns itself with the estimation of income and
expenses directly related to the operation of the real property under typical
management conditions. Income refers to monies or other benefits received from
the use and/or sale of the subject, while operating expenses denote those items
necessary to maintain the production of income to the property.
Income Approach - 79
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
INCOME:
This portion of the report seeks to derive the Effective Gross Income for the
subject property.
Operating History
The subject's current rent roll is as follows:
Income Approach - 80
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Income Approach - 81
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Potential Gross Income (Market Rents):
The Potential Gross Income is the annual rent roll at current market rates that the
subject property is able to produce, assuming 100% occupancy.
The Potential Gross Income is largely determined by what other similar properties
are currently being rented for in the open market. To estimate what the market
rental for the subject is, a survey was undertaken of similar apartment projects. Of
the rentals discovered, the ones presented on the following pages were deemed to
be most comparable to the subject property due to age, proximity and unit sizes.
Using the above rentals, the market rent for the subject is estimated below.
Income Approach - 82
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Rental Sheets
Income Approach - 83
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Income Approach - 84
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Income Approach - 85
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Income Approach - 86
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Rental Comparables
Income Approach - 87
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Comparable Rental Map
Rental Adjustments
All of the rentals are located within the northeast Scottsdale market area. The
rental adjustments are made as follows:
Effective Date
All of the rentals was obtained by personally inspection of each site and
confirmed by contact with leasing agents.
Type of Project/Stories
The subject and all of the comparables are two-story or three-story, garden-style
complexes. No adjustments appear necessary for this factor.
Income Approach - 88
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Project Occupancy
Within a five mile radius of the subject are 38 similar apartment projects built
between 1980 and 1995. The average from the above is 4.72%. For the subject we
have concluded to an occupancy rate of 95%. The subject is currently 99%
occupied.
Concessions
The appraisers visited each project to ask about concessions with the following
noted.
Year Built
The comparables were constructed between 1988 and 1995. No adjustment was
need for the age of the comparable rentals.
Income Approach - 89
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Square Feet Area
For purposes of size adjustments the subjects gross square footage was compared
with the reported square footage of the comparables. Our experience suggests that
these numbers are reasonable comparable. We recognize that differences also
occur for other factors, i.e.. amenities, location, in addition to size. We have
adjusted the comparables for square footage at $0.30 per square foot with no
adjustments made for differences less the 50 square feet.
Number of Bedrooms/Bath/Rooms
No adjustments were necessary for bedrooms/baths/rooms.
Balconcy/Terrace
Each of the subject's units will have balconies or patios. All rental comparables
have a similar feature with no adjustment needed.
Garages/Carports
The subject has carport available for each tenant. There area no garages on the
subject site.
Equipment
All rental comparables have similar equipment to the subject.
Services
The subject rents will include water, sewer and trash as do all of the comparables
with no adjustment needed.
Storage
All rental comparables have either interior or exterior storage and are considered
similar to the subject with no adjustments necessary
Project Location
All of the other comparables are considered to have a similar location with no
adjustment necessary.
Condition/Quality
The subject was built in 1987 and was recently remodeled. All of the other
comparables were built between 1988 and 1995. No adjustment was needed.
Income Approach - 90
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Fireplaces
Half of the units (all upstairs units) have fireplaces. All of the comparables offers
fireplaces as on option with a premium of $15 per month typical.
Other Income:
Other income refers to the miscellaneous or service income over and above what
was estimated in the Rent Roll estimate. Examples of such income are furniture
income, pet charge, retained deposits, cleaning/damages, late/NSF fees. This
income is added to the potential rent roll income. The subject includes the
following sources of other income; 1) pet rent; 2) retained deposits/late fees; 3)
vending and miscellaneous income; and 4) redecorating fees.
For purposes of our analysis, the following sources of other income has been
identified:
Pet Rent:
All of the comparable projects allow pets with a typical charge of $20 per month.
For the subject we estimate a rent of $20 per month for pets with 25% of the units
having pets for a project per unit average of $6.25 per unit per month.
Retained deposits/late fees:
Refundable security deposits range from $150 to $500 per unit. Based upon prior
projects we expect 50% of the deposits to be retained ($125 average) and a 75%
average turnover over a 12 month period (82 unit). This equals (82 x
$125/110/12) $7.77 (rounded) per unit per month. An additional $1 per unit per
month is added for late/NSF fees.
Vending:
Vending income is typically split with a vending company that owns and
maintains the equipment. We have estimated an amount of $6.50 per month per
units as reasonable.
Laundry:
All the units have washers and dryers. There in no laundry facility in this project.
The comparables are similarly appointed.
Redecorating Fee:
Redecorating fees range from $100 to $200 per unit. Based upon prior projects we
expect a 75% average turnover over a 12 month period (82 unit). This equals (82
x $150/110/12) $9.32 per unit per month.
Income Approach - 91
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
We have concluded to other income as follows:
Pet rent
$6.25
Retained deposits/late fees $8.77
Vending
$6.50
Laundry
$0.00
Redecorating fee
$9.32
Total other income $30.84
Reconciliation of Rents
We have concluded to the following rents:
1BR/1BA Units
Subject
1
2
3
4
5
6
Mean
669
722
670
688
707
725
758
712
Unadjusted Rent
$765
$760
$1,083
$770
$655
$785
803
Unadj. Rent/SF
$1.06
$1.13
$1.57
$1.09
$0.90
$1.04
$1.13
1BA/1BR
SF
Adjusted Rent
$775
$749
$760
$1,002
$759
$638
$758
$778
Adj. Rent/SF
$1.16
$1.04
$1.13
$1.46
$1.07
$0.88
$1.00
$1.10
$775
The adjusted rents on this one bedroom units ranged from $638 to $1,002 with a
mean of $778 per unit. On a per square foot basis, the range is from $0.88 to
$1.46 per square foot with a mean of $1.10. The projected market rent for the
subject is $775 per month with a fireplace and $760 per month without a
fireplace. This appears reasonable and within the range as shown above.
2BR/2BA Units
Subject
1
2
3
4
5
5
Mean
903
1,055
935
1,022
1,022
1,005
1,046
1014
Unadjusted Rent
$905
$855
$1,278
$1,020
$765
$925
$958
Unadj. Rent/SF
$0.86
$0.91
$1.25
$1.00
$0.76
$0.88
$0.94
2BR/2BA
SF
Adjusted Rent
$900
$860
$845
$1,168
$985
$735
$880
$912
Adj. Rent/SF
$1.00
$0.82
$0.90
$1.14
$0.96
$0.73
$0.84
$0.90
The adjusted rents on this two bedroom unit ranged from $735 to $1,168 with a
mean of $912 per unit. On a per square foot basis, the range is from $0.73 to
$1.14 per square foot with a mean of $0.90. The projected market rent for the
subject is $900 per month with a fireplace and $885 per month without a
fireplace. This appears reasonable and within the range as shown.
Income Approach - 92
$900
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
Market Adjusted Income
C. Estim ate of Incom e
27. No. of Each
Rentable Living
Family Type Units
Area (SF)
33
33
22
22
1/1
1/1
2/2
2/2
669
903
903
903
Composition of Units
1BR/1BA/LR/KIT/DA
2BR/2BA/LR/KIT/DA/FP
2BR/2BA/LR/KIT/DA
2BR/2BA/LR/KIT/DA/FP
Unit Rent
Total Mo. Rent
Per Month
For Unit Type
$760
$775
$885
$900
$25,080
$25,575
$19,470
$19,800
$89,925
28. Total Estim ated Rentals for All Fam ily Units
29. No. Parking Spaces -
Offstreet Parking and Other Non-Commercial Ancillary Income (Non Included in Rent)
Attended
Self Park
Open Spaces
@
Covered Spaces
@
216 Laundry
Other
units @
110
vending
216 Other
Total Spaces
$0.00
$0.00
units @
per month
per month
per month
$30.84
$0.00
per month
per month
$0
$0
$0
$3,392
$0
$3,392
Total Monthly Ancillary Income
30. Commercial (attach doct)
Area-Ground Level
0 SF @
Other Levels
0 SF @
0
0
per SF/month
per SF/month
31. Total Estimate Gross Income at 100% Occupancy
32. Total Annual Rent (Item 31 x 12 months)
$0.00 Total Monthly
$0.00 Com m ercial Incom e
$0
$93,317
$1,119,809
Expense Comparables
No. 1 - Monterery Point
This is a 244 unit garden style two and three-story project located at 510 S.
Extension Road in Mesa. It was built in 1987 and is in good condition. The
project consists of 1 and 2 bedroom units. Project amenities include swimming
pool, spa and clubhouse. Unit amenities include washer/dryer, a/c, ceiling fans,
refrigerators, balcony/patios, fireplaces and storage. Water, sewer and trash are
included in the rents.
No. 2 - Lakeside Village
This is a 230 unit garden style two-story project located at 855 N. Dobson Road in
Mesa. It was built in 1987 and is in good condition. The project consists of 1 and
2 bedroom units. Project amenities include swimming pool, spa, tennis courts,
laundry room, play area and clubhouse. Unit amenities include a/c, ceiling fans,
refrigerators, balcony/patios and storage. Water, sewer and trash are included in
the rents.
No. 3 - Mesa Park Apartments
This is a 140 unit garden style two-story project located at 604 W. 8th Avenue in
Mesa. It was built in 1999 and is in good condition. The project consists of 2 and
Income Approach - 93
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
3 bedroom units. Project amenities include swimming pool, spa and clubhouse.
Unit amenities include washer/dryer hookups, a/c, ceiling fans, refrigerators,
balcony/patios and storage. Water, sewer and trash are included in the rents.
No. 4 - Cordillera Apartments
This is a 272 unit garden style two-story project located at 17017 N. 12th Street
in Phoenix. It was built in 1996 and is in good condition. The project consists of
1, 2 and 3 bedroom units. Project amenities include swimming pool, spa,
racquetball and clubhouse. Unit amenities include a/c, ceiling fans, refrigerators,
washer/dryers, balcony/patios and storage. Water, sewer and trash are included in
the rents.
Expenses:
This involves an estimate and itemization of the expenses necessary in
maintaining the generation of income of the subject property. The major
categories of expenses are: administrative, operating, maintenance, replacement
reserve and taxes. We will, in this section, discuss the individual elements within
the above categories.
Administrative:
The first categories of expenses to be considered are management and other
administrative expenses.
1. Advertising/Promotions
This category includes a lease hostess, print/radio/TV, and printing supplies. The
updated expense comparables range from $100 to $149 per unit. Advertising costs
are likely to remain on the modest due to strong demand and a shrinking supply
due to the condo conversion occurring in the market. We have made an estimate
for the subject of $100 per unit per year.
2. Management
Management is estimated at a percentage of the Effective Gross Income (EGI).
This expense category is required to account for the time and effort required to
manage an apartment complex. It is necessary to consider this expense even when
the property is managed by the owner.
Conversations with various management companies involved in the apartment
market indicate a professional management expense of 3.5% to 5% of the EGI is
reasonable, especially when payroll for on-site employees and other
administrative expenses are excluded. Professional management encompasses the
management of the real estate and not investment management.
Income Approach - 94
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
The expenses comparables indicated a per unit management expense of $279 to
$452 per unit. The comparables have between 140 and 272 units and the
management expenses are typically expected to be higher on a per unit basis due
to the economics of scale.
For purposes of our analysis, we estimated an amount of 4% of the projected EGI
($1,063,818) or $42,553. This equates to approximately $387 per unit.
3. Other Administrative Cost
This figure represents other administrative costs, except payroll, including; any
leasing rental or renewal fees paid beyond the management fee; any alteration
supervisory charges paid by the owner; legal and auditing fees; dues in
professional organizations; architectural or professional engineer's fees; and all
telephone and building office expenses and supplies paid by the owner. This is
listed under several headings in the financial statement; salaries, maintenance, and
general administration expense.
The updated expense comparables range from $95 to $109 per unit. For purposes
of our analysis, an estimate in the amount of $100 per unit per year is utilized.
Operating:
This category includes electricity, water and sewer expenses, and building
services.
5. Elevator
No elevator expense is necessary for this project.
6. Fuel (Heating and Domestic Hot Water)
This includes all non-electrical fuel expenses for heating and domestic hot water.
The subject is individually metered with the tenant responsible for all utilities
except cold water, sewer and trash removal. In addition, this category included
utility expenses for swimming pools, clubhouse and the office/maintenance area.
For purposes of our analysis, we included this expense within item 7 and 9,
below.
7. Lighting and Misc. Power
This includes utilities for all purposes, including units, common maintenance
areas, water and other related purposes. This figure includes 100% of the utility
expenses. The subject is individually metered with the tenant responsible for all
utilities including electricity, cable, water, sewer and trash.
For purposes of this analysis, we included all electricity expenses within this
category. The updated expense comparables range is from $107 to $192 per unit
Income Approach - 95
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
per year. We estimate an amount for the subject of $175 per unit per year for
electrical usage.
8. Water (and sewerage)
The owner pays for the water and sewer services for the individual units and the
owner is also responsible for the common area. The comparables were adjusted to
exclude water, sewer and trash. The adjusted expense comparable estimates range
from $51 to $182 per unit with an average of $150 per unit. For the subject
property, we estimate an amount of $150 per unit per year.
9. Gas
Natural gas is not used in this case.
10. Garbage and Trash Removal
Garbage and trash removal will be provided by private carrier. The expense
comparables range from $40 to $63 per unit. We believe that an amount of $50
per unit per year is considered reasonable.
11. Payroll
This category includes on-site management personal and maintenance personnel.
The updated expense comparables indicate a range from $648 to $806 per unit.
There are no free rent units for management at any of the comparables. For our
analysis, an estimated amount of $700 per unit appears reasonable. This includes
payroll taxes estimated at $80 per unit per year, which is deducted from the line
11 and included in line 25 for purposes of this analysis. Thus the adjusted payroll
amount equals $620 per unit per year.
12. Other Operating Expenses
This is a category for miscellaneous operating expenses. This included minor
items not addressed above. The updated comparables indicate a range of from $0
to $50 per unit. For the subject we have used an estimate of $50 per unit.
Maintenance:
14. Decorating (Interior Only)
Included on this line are all materials and supplies used in the decorating of the
interior of the buildings. Paint, wallpaper, brushes, wall-washing, and similar
items belong in this category. Replacement of floor coverings, draperies,
furnishings or light fixtures (if not a capital expenditure) also belong in this
category. Exterior painting should be included in maintenance and repairs.
Income Approach - 96
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The updated comparables indicate a range between $55 to $174 per unit. Newer
units tend to be in better condition with decorating typically needed as units
turnover. We estimate an amount of $150 per unit per year.
15. Repairs
The repair expenses category accounts for all items of general maintenance and
repairs, both interior and exterior. This includes exterior painting or cleaning;
boiler inspection and repair contracts; air-conditioning service contracts; parts,
small hand tools; fire protection service and equipment; plumbing, electrical,
plastering, masonry, carpentry, heating, roofing service unless bills properly
constitute a capital expenditure.
The updated expense comparables range from $84 to $222 per unit. New units
tend to require less repairs and maintenance. We estimate the annual amount in
this category at $150 per unit per year, because the subject is new.
16. Extermination
The comparables range from $13 to $36 per unit. For our analysis, we will use an
estimate of $35 per unit.
17. Insurance
Insurance agencies were consulted for current quotes on coverage costs. Typical
insurance coverage carried by owners include all insurance expenses, i.e., fire,
comprehensive, liability, flood coverage, etc. Insurance premiums are based on
location, size of the complex, type and quality of construction, and distance
relative to fire protection.
The expense comparables range from $108 to $160 per unit. Current insurance
quotes were also considered. An amount of $150 per unit per year was used given
the subject slightly smaller unit size.
18. Ground Expense
This category represents gardening, landscaping, sidewalks and street sweeping,
and outside maintenance, including ground maintenance supplies, but excluding
wages. The expense comparable estimates range from $130 to $175 per unit. For
our analysis, the amount of $150 per unit is reasonable.
19. Other
A category for other operating expenses covers miscellaneous items not included
elsewhere in this analysis. This is a generally vague category and can vary, as
evidenced by the updated expense comparable, with a range of from $25 to $227
noted. For purposes of our analysis, we estimate an amount of $25 per month.
Income Approach - 97
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20. Trend Adjustment
The comparables were adjusted upward for time within this analysis based upon
IREM market analysis at a rate of 3% (typical range from 2% to 4%). From our
research files, we have analyzed 95 Class A Apartment sales over the past 10.
From our analysis, the average increase in expenses was 3.12%.
This adjustment is made geometrically with a total adjustment of factor 1.03 x
1.03 x 1.03 1.093. Rather than make a lump sum adjustment, we have trended
each expense line item individually.
21. Reserves for Replacement and Retrofit
A replacement reserve fund is a necessary expense item for income producing
property. Reserve for replacement is an annual allowance subtracted from the
income that provides for future replacement of components that will wear out
sooner than the bone structure. This annual reserve is necessary in that the
projected income would decrease if the worn-out item was not replaced; the most
probable user would not pay market rent for a deficient building. This is not a part
of the Institute of Real Estate Manager's operating costs outline.
The fund indexed to the physical components provides for the timely replacement
of short-lived items. Apartment projects can have the reserve and retrofit fund
indexed to the number of units. We estimate the reserve amount to be based upon
0.006% of the total hard cost estimate. For purposes of our analysis we have
estimated and amount equal to $350 per unit.
Taxes:
23. Real Estate Taxes
Real estate taxes are generally considered a fixed expense in that they typically do
not change with the level of occupancy. They are more likely to change as a result
of area-wide property appreciation/depreciation or with the fiscal requirements of
local municipal and county governments. The real estate taxes are based upon
current estimated and are thus not trended.
Income Approach - 98
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Real Estate Taxes
The Expense comparables real estate taxes fall in a range from $408 to $628 per
unit and from $0.45 to $0.65 per square foot of gross area. The subject is currently
taxed at $404 per unit and $0.52 per square foot. We estimate the real estate taxes
to be $425 per unit, which equals $46,750 or $0.52 per gross square foot.
24. Personal Property Tax
No personal property taxes are included within this analysis. A minimal amount of
personal property might be taxes on such items as office furnishing. An allowance
has been made in the Other Administrative category to cover this expense.
25. Employees Payroll Tax
In addition to salary expenses, payroll taxes must also be paid. We have included
an amount of $80 per unit for this category.
26 & 27. Other Taxes
No other taxes are expected or included herein.
29. Total Expenses
All expenses necessary in sustaining the income generation of the subject
property have been considered. These expenses include fixed, operating and
reserves for replacement. Expenses for capital improvements, principle and
interest payments on borrowed funds, income taxes, etc., are not considered
expenses to the real estate and were not deducted. Total expenses are estimated
at $368,285 per year, or $3,348 per unit per year. The estimated expenses are in
line with other apartment buildings as noted below.
Income Approach - 99
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NET OPERATING INCOME:
The next step in the Income Approach is the mathematical derivation of the Net
Operating Income. Estimated expenses are subtracted from the Effective Gross
Income. It is this income that is used in the capitalization formula. The Net
Operating Income represents the return on and the recapture of the improvement
investment and a return on the land investment.
Reconstructed Operating Statement
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Capitalization of Net Operating Income:
This is a procedure in appraisal analysis where anticipated economic benefits to
be derived from a property are converted into a value estimate through a
capitalization process. Two methods can be used to process the subject's income
stream. These methods are Direct Capitalization and Yield Capitalization.
Direct Capitalization of the Net Operating Income:
Direct capitalization is simple and thus easily understood. It does not specify a
distinction between return on and return of capital, nor does it explain value in
terms of specific assumptions made by lenders. Various techniques, dependent
upon the quantity and quality of data, are available. These include:
1. Derivation from comparable sales.
2. Derivation from effective gross income multipliers.
3. Band of Investment--mortgage and equity components.
4. Band of Investment--land and building components.
5. Debt coverage formula.
Direct capitalization is the process by which the net operating income is converted
into value. Specifically, direct capitalization is defined as the method used to
convert an estimate of a single year's income expectancy into an indication of
value in one step, either by dividing the income estimate by an appropriate rate or
multiplying the potential income estimate by an appropriate factor. The rate
reflects the relation between the income and value and is derived from market
data.
Gross Income Multiplier Method:
The GIM or Gross Income Multiplier Method is an economic characteristic of the
proper property analysis.
Typically, the economic characteristics of the comparable sales in the Sales
Comparison Approach are market extracted Gross Income Multipliers (GIM).
This multiplier is extracted from the comparable sales by dividing the property's
sale price by the Potential Gross Income, much like a times earning ratio of a
business enterprise. The GIM Method is best applied to properties with similar
cash flows and similar levels of physical and economic stabilization. The GIM
was adjusted downward slightly for locational differences. The following GIM
grid summaries the analysts' findings.
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Gross Income Multiplier Analysis
Derivation from Comparable Sales:
The second economic method analyzed was the Direct Capitalization Method.
The overall rate is extracted from the comparable sales by dividing the properties'
sale price by the Net Operating Income. The Overall rate was adjusted upward
slightly for locational differences. The following Direct Capitalization Analysis
summarizes the analysis findings.
Direct Capitalization
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Conclusion to Income Approach
Three methods were applied in the valuation of the subject property in order to
derive an estimate of value as follows:
Gross Income Multiplier Method:
Derivation from the Comparable Sales Method:
$xx,xxx,xxx
$xx,xxx,xxx
The GIM, OAR and Band of Investment Methods are considered significant and
reasonable accurate methods because the comparison analysis is straightforward
and the adjustments made were considered typical of market reactions.
Therefore, we are of the opinion the Market Value of the As Is Leased Fee Interest
of the subject property, as of March x, 2006, (with an inspection date of March x,
2006) via the Income Approach is: $xx,xxx,xxx.
Income Approach - 103
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RECONCILIATION AND FINAL VALUE ESTIMATE
Final reconciliation is:
The application of the process of evaluating alternative conclusions, and selecting
from the indications of value derived from each of the approaches utilized in the
appraisal problem, to arrive at a final estimate of value. The appraiser weighs the
relative significance, applicability and defensibility of the indications of value
derived from each approach and places the most weight and reliance on the one
that, in his professional judgment, best approximates the value defined. He
reconciles the facts, trends and observations developed in the analysis and
reviews his conclusions and the probable validity and reliability of those
conclusions.50
The Cost and Sales Comparison Approaches are, characteristically, expressions of
the value of fee simple interests. The Income Approach may or may not express a
value indication of the fee simple interest dependent upon the leasing status of the
property. Because the leases are short term in nature, no difference between the
Market Value of the As Is Leased Fee and Fee Simple Interest is made.
This a Complete Appraisal - Summary Appraisal Report. Please refer to the
Underlying Assumptions on pages 2 through 11. A summary of the value
indicators follows:
Sales Comparison Approach:
Per unit method:. . . . . . . . . . . . . . . . . . . . . . . . . . $xx,xxx,xxx
Income Approach:
Gross Income Multiplier Method:. . . . . . . . . . . . . $xx,xxx,xxx
Derivation from the Comparable Sales Method:. . $xx,xxx,xxx
Usually, depending upon the type of property appraised or the purpose of the
appraisal, one approach may carry more weight or be considered more reliable for
a final value estimate. In other instances, because of the inadequacy or
unavailability of data, one or even two approaches may be accorded little weight
in the final value estimate.
The subject is a 20 year older apartment complex. The Cost Approach offers little
support given the subjects age and was thus excluded from this analysis.
The value suggested by the Income Approach attempts to consider the investment
characteristics of the property and the risks inherent in this type of investment.
This approach is considered to have relatively good data, to the extent that the
estimates of income and expenses for the subject reflect the actual market.
50
Boyce, p. 103.
Reconciliation and Final Value Estimate- 104
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The Sales Comparison Approach offers reasonable support and justification of
current market conditions. In the subject's case, the price per unit indicator was
used as the unit measurement of value. Most of the recent sales activity of
apartments in the immediate area are for projects planning to be converted to
condominiums. While these represent a change in use from a rental project to a
sales project, they also represent the current resale market in the area. While this
represents an alternative use for the subject, it also means that the inventory of
apartments in the area is decreasing and will likely result in an increased demand
for rental units. This approach was given a considerable weight.
Within this Complete Appraisal - Summary Appraisal Report with the Sales
Comparison and Income Approach used. Both have good current market data
from which analysis and comparisons were made and both offer strong
supportable conclusions. Therefore, it is our opinion, based upon the preceding
data and discussion, the Market Value of the As Is Leased Fee Interest of the
subject property, as of March x, 2006 (with an inspection date of March x, 2006),
was:
Market Value of the As Is Leased Fee Interest of the subject property
Xxx Million Dollars
$xx,xxx,xxx
Reconciliation and Final Value Estimate- 105
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
CERTIFICATION
USPAP Certification
As a result of a request for a Complete Appraisal - Summary Appraisal Report
assignment of the property, legally described in the body of the report, we certify51
to the best of our knowledge and belief:
1. The statements of fact contained in this report are true and correct [S.R. 2-3, USPAP].
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 [S.R. 2-3, USPAP].
3. I (we) have no present or prospective interest in the property that is the subject of this
report, and we have no personal interest with respect to the parties involved [S.R. 2-3,
USPAP].
4. I have no bias with respect to the property that is the subject of this report or to the
parties involved with this assignment [S.R. 2-3, USPAP].
5. My engagement in this assignment was not contingent upon developing or reporting
predetermined results [S.R. 2-3, USPAP].
6. My (our) compensation for completing this assignment is not contingent upon
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
[S.R. 2-3, USPAP].
7. My (our) analyses, opinions, and conclusions were developed, and this report has been
prepared, in conformity with the Uniform Standards of Professional Appraisal Practice
(USPAP) published and copyrighted by the Appraisal Foundation and the Arizona
Appraisal Board and the standards and reporting requirements of the Code of
Professional Ethics and the Standards of Professional Practice of the Appraisal
Institute [S.R. 2-3, USPAP].
8. Larry D. Schnepf has made a personal inspection of the property that is the subject of
this report [S.R. 2-3, USPAP].
9. No other persons than those listed herein provided significant professional assistance to
the persons signing this report. [S.R. 2-3, USPAP].
10.The use of this report is subject to the requirements of the Arizona Appraisal Board
relating to review by its duly authorized representatives.
11. Larry Schnepf is currently certified under the State of Arizona's Appraisal Board
mandatory appraiser licensing and continuing education program. [A.R.S. Section
32-3601].
12.The appraisers have reviewed the Competency Provision of the USPAP and are in full
compliance with this provision [Competency Provisions - USPAP].
13.We certify that, to the best of our knowledge and belief, the reported analyses,
opinions and conclusions were developed, and this report has been prepared, in
51
Uniform Standards of Professional Appraisal Practice (USPAP) 2005.
Certification -106
… © SCHNEPF ELLSWORTH APPRAISAL GROUP ˆ 10680XX
conformity with the requirements of the Code of Professional Ethics and the Standards
of Professional Appraisal Practice of the Appraisal Institute.
14.We certify that the use of this report is subject to the requirements of the Appraisal
Institute relating to review by its duly authorized representatives.
15.The undersigned hereby acknowledges that he/she/they has/have the appropriate
education and experience to complete the assignment in a competent manner. The
reader is referred to the appraisers' Statement of Qualifications.
Further, the value reported is based upon cash in U.S. dollars or in terms of
similar financial arrangements.
The value(s) reported are intended to conform with Code of Ethics and Standards
of Professional Practice of the Appraisal Institute; the Uniform Standards of
Professional Appraisal Practice (USPAP) as promulgated by the Appraisal
Standards Board of the Appraisal Foundation and the Appraisal Institute and
regulatory guidelines as published by various federal agencies, including OCC's
Rule/Policy 12 CFR Part 34 pertaining to federally chartered banks.
Respectfully submitted,
Schnepf Ellsworth Appraisal Group
Larry D. Schnepf, MAI, SRPA
Certified Arizona General Real Estate Appraiser
Certificate # 30284
Certification -107
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Addenda
ƒOwnership/Legal Description
ƒEngagement Letter
ƒQualifications
Addenda