<PAGE>
EXHIBIT (c)(3)
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APPRAISAL OF REAL PROPERTY
SUNBURST HOSPITALITY CORPORATION
37 Properties
IN A SUMMARY REPORT
As of November 14, 2000
Prepared For:
The Chase Manhattan Bank
380 Madison Avenue, 9th Floor
New York, New York 10017-2591
Prepared By:
CB Richard Ellis, Inc.
Valuation and Advisory Services
Lodging Appraisal Group
201 South Orange Avenue, Suite 1500
Orlando, Florida 32801
<PAGE>
November 14, 2000
Mr. Peter C. Lilienfield
Vice President
The Chase Manhattan Bank
380 Madison Avenue, 9th Floor
New York, New York 10017
Re: SUNBURST HOSPITALITY CORPORATION
37 Properties
Dear Mr. Lilienfield:
In fulfillment of our agreement as outlined in the Letter of Engagement,
CB Richard Ellis, Inc. has undertaken an appraisal of each of the 37 hotel
properties in the above captioned portfolio; the chart at the end of this
document provides details regarding each property, parameters used in the
appraisal, and the final value conclusions. This document acts as a summary of
the process and conclusions reached in this assignment. Individual Complete,
Self Contained appraisals were prepared on each property, inclusive of a
description of the property and the market in which it is located. Comparable
data is presented and analyzed, leading to a conclusion of the market value of
the appropriate fee simple, leased fee or leasehold interest.
Each property has been appraised under its highest and best use, with
consideration given to the property both as vacant and as improved.
Consideration was given to typical generators of hotel income and expenses, as
well as third party tenants, ground leases, and other sources of revenues and
costs. The value conclusions recognize the contributory value of the furniture,
fixtures and equipment at each property; an allocation for this element is
presented in each appraisal. While the value conclusions do not recognize any
existing financing, both excess land and excess development potential, if any,
have been taken into account in the final value conclusion.
The properties contained in this portfolio were individually inspected
between September 26th and October 16, 2000 by CB Richard Ellis, Inc.
appraisers. The date of value for each property is as detailed in each report.
<PAGE>
USPAP/FIRREA Compliance
-----------------------
This is a Complete Appraisal in a Summary Report which is intended to
comply with the reporting requirements set forth under Standards Rule 2-2(b) of
the Uniform Standards of Professional Appraisal Practice for an Appraisal Report
as well as our interpretation of your institution's guidelines and in compliance
with the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA)
1989 as amended. As such, it presents a brief discussion of the data, reasoning,
and analyses that were used in the appraisal process to develop the appraisers'
opinions of value. Supporting documentation concerning the data, reasoning, and
analyses is retained in the appraisers' files. The depth of discussion contained
in this report is specific to the needs of the client and for the intended use
stated below. The appraiser is not responsible for unauthorized use of this
report.
We are issuing this Summary Report in advance of our individual Complete
Self Contained reports which will be prepared on each asset and forwarded to you
shortly.
Portfolio Description
---------------------
The property appraised consists of the following:
Thirty-seven (37) hotel properties are operated under various Choice Hotel
franchise flags except for one Holiday Inn Express. The 37 properties in this
assignment are a part of a total portfolio of 75 hotels owned and operated by
Sunburst Hospitality Corporation, a publicly owned and traded corporation which
is being purchased by a group of investors (including several current officers
of the corporation) and taken private. The 37 properties appraised were located
in 14 states with 10 being in Florida and six in North Carolina.
The 37 properties contain a total of 4,818 rooms. Seven of the hotels with
a total of 1,401 rooms (29%) were considered full-service operations with most
carrying the Clarion flag. Twelve of the hotels were MainStay Suites, an
extended stay operation containing 1,183 rooms (25%). The balance were limited
service hotels operated under the Sleep Inn, Comfort Inn or Quality Inn flags.
Items considered in each appraisal included the brand and franchise
affiliation, the type of hotel operation, size of the property in relation to
the market and its competitors, age, amenities, source of revenue other than
rooms, and the interest to be appraised. The properties appraised include 5
leasehold (subject to ground leases), 3 leased fee, and 29 fee simple
properties. In instances where the lease involved a significant component of the
improvements or the overall cash flow, the terms of the lease have been
considered.
Several properties had somewhat special circumstances:
1. Property 738, Holiday Inn Express in Miami Springs, Florida was operated
historically as a Comfort Inn until converted to a Holiday Inn Express
as of August 30, 2000. We noted a stronger reservation system with
Holiday Inn and considered that in our valuation.
<PAGE>
2. Properties 764, Clarion and Comfort Inn & Suites in Miami Springs,
Florida have been historically operated as two separate hotels (one
full service and the other limited service) segmented into a Clarion
and Comfort Suites product mix. The hotels shared a ground floor area
which contained restaurants, lounges, and separate check-in desks. This
property is planned for 2000-2001 conversion totally to a Comfort Inn
and Suites, therefore we considered this in our valuation.
3. Property 731, Clarion Hotel in Baltimore, Maryland also has an off-site
parking garage located 4 blocks away from the hotel. The garage
provides parking for the hotel as well as others, and has been included
in our valuation consideration.
4. Property 714, Comfort Inn in Pikesville, Maryland has 103 limited
service hotel rooms, plus 87 apartment units in four buildings located
behind the hotel. 27 of these apartments are operated as extended stay
suites as part of the overall hotel operation. 60 of the apartments are
master leased for 9 months of the year to a nearby college for student
housing, and the units are not utilized in the off-season months.
5. Property 779, Comfort Inn in Hilton Head, South Carolina operates a
water park as a special attraction. Hotel guests get special discounts.
All the income areas have been considered in the appraisal.
6. Property 740, Quality Hotel Maingate in Anaheim, California is situated
on a land lease, which expires in 2012. Our investigations and
interviews indicated no options to renew and no terms for a new lease;
therefore, after discussions with you, the valuation indicated no
reversion after 2012.
7. Property 737, Comfort Inn by the Bay in San Francisco, California is
situated on a land lease, which expires in 2012. Our investigations and
interviews indicated no options to renew and no terms for a new lease;
therefore, after discussions with you, the valuation indicated no
reversion after 2012.
Definitions of Value, Interest Appraised, and Other Pertinent Terms
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The following definition of Market Value has been taken from the Uniform
Standards of Professional Appraisal Practice of the Appraisal Foundation:
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;
<PAGE>
3. A reasonable time is allowed for exposure in the open market;
4. Payment is made in terms of cash in U.S. dollars or in terms of
financial arrangements comparable thereto; and
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.
Exposure Time
Under item 3 of the definition of Market Value, the value estimate presumes
that "A reasonable time is allowed for exposure in the open market".
Exposure time is defined as the estimated length of time the property
interest being appraised would have been offered on the market prior to the
hypothetical consummation of a sale at the market value on the effective
date of the appraisal. Exposure time is presumed to precede the effective
date of the appraisal.
Marketing Time
Marketing time is an estimate of the time that might be required to sell a
real property interest at the appraised value. Marketing time is presumed
to start on the effective date of the appraisal. Marketing time is
subsequent to the effective date of the appraisal and exposure time is
presumed to precede the effective date of the appraisal. The estimate of
marketing time uses some of the same data analyzed in the process of
estimating reasonable exposure time and it is not intended to be a
prediction of a date of sale.
Estimates of exposure and marketing time will be presented in each complete
self-contained report.
The following definitions of pertinent terms are taken from the Dictionary
of Real Estate Appraisal, Third Edition (1993), published by the Appraisal.
Gross Leasable Area (GLA)
The total floor area designed for tenants' occupancy and exclusive use,
including any basements, mezzanines, or upper floors, expressed in square
feet and measured from the centerline of joint partitions and from outside
wall faces.
Fee Simple Estate
Absolute ownership unencumbered by any other interest or estate, subject to
the limitations imposed by the governmental powers of taxation, eminent
domain, police power, and escheat.
Leased Fee Estate
An ownership interest held by a landlord with the rights of use and
occupancy conveyed by lease to others. The rights of the lessor (the leased
fee owner) and the leased fee are specified by contract terms contained
within the lease.
<PAGE>
Leasehold Estate
The interest held by the lessee (the tenant or renter) through a lease
conveying the rights of use and occupancy for a stated term under certain
conditions.
Market Value As Is
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.
Market Rent
The rental income that a property would most probably command on the open
market, indicated by the current rents paid and asked for comparable space
as of the date of appraisal.
Cash Equivalent
A price expressed in terms of cash, as distinguished from a price expressed
totally or partly in terms of the face amounts of notes or other securities
that cannot be sold at their face amounts.
Purpose and Intended Use of the Appraisal
-----------------------------------------
The purpose of this appraisal is to estimate the market value of the
respective fee simple, leasehold or leased fee estate in each Sunburst
Hospitality Corporation property in the portfolio. The function of this
appraisal is for financing purposes.
Extent of the Appraisal Process
-------------------------------
In the process of preparing each appraisal, we:
. Inspected the building, site improvements, and market in which each
property is located.
. Interviewed representatives of ownership and/or the property
management company, where applicable.
. Reviewed operating history at each property, including occupancy
levels and average daily rates (ADR), as well as a detailed budget of
income and expense forecasts.
. Conducted market research to identify existing competitive properties
and proposed additions to the supply of hotel rooms in the market
place.
. Analyzed demand for hotel rooms and estimated future demand growth
trends by market segments to derive potential room night demand.
<PAGE>
. Forecasted occupancy patterns based on market segmentation and
penetration analysis. A prospective stabilized level of occupancy was
projected for those properties not currently considered to be
stabilized.
. Forecasted ADR and subsequent increases based on historic performance,
changes in market supply and demand, and potential property specific
physical and marketing changes. A prospective stabilized ADR was
projected for those properties not currently considered to be
stabilized.
. Reviewed third party leases for tenants occupying portions of the
improvements, as well as ground leases.
. Identified recent sales of similar properties to ascertain sales price
per room, effective gross revenue multipliers and capitalization
rates.
. Developed a value estimate of the property through direct sales
comparison.
. Based on occupancy and ADR projections, estimated revenues from rooms
as well as other associated departments (food and beverage, telephone,
other).
. Prepared a forecast of income and expenses in keeping with the Uniform
System of Accounts for Hotels in connection with an estimate of
stabilized net income for direct capitalization purposes, and/or
developed a discounted cash flow analysis over a 10 year holding
period. Revenue from third party leases and the expense attributed to
ground leases, if any, were considered in each property's projected
cash flows.
. Converted the projected cash flows into an indicator of value
utilizing capitalization and discount rates derived from industry
surveys, comparable transactions and an analysis of debt and equity
parameters.
. Reconciled the value indications from the Sales Comparison and Income
Approaches and concluded to a final value estimate for the property.
An allocation was subsequently made for FFE, and real estate
components.
. Estimated insurable value for each property.
. For this assignment, Complete appraisals of the subject properties
have been performed with the results being conveyed in individual
Self-Contained reports. A Complete appraisal involves an estimate of
market value without any departure from the Uniform Standards of
Professional Appraisal Practice maintained by the Appraisal
Foundation. A Self-Contained report makes a comprehensive presentation
of the data and analyses that serve as the basis of our conclusion of
value for the subject property.
<PAGE>
Valuation Methodology
---------------------
Our valuation methodology has considered all three approaches to value. The
most appropriate methodology was matched to the specific interest being
appraised (i.e. fee simple, leased fee, leasehold). The charts presented at the
end of this summary report provide specific details regarding the interest
appraised, significant parameters used in the valuation of each property, and
the final value conclusion. In each instance, the property's highest and best
use was determined and formed the basis for valuation. The value of any excess
land and/or excess development potential has been taken into account in the
final value conclusion.
The Cost Approach was not utilized in this assignment. While some of the
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properties were recently constructed, it was determined that the Cost Approach
was not a reliable indicator of market value because of the inherent
entrepreneurial and business enterprise value in hotels. Investors and sellers
base their purchase decisions primarily on the value of the cash flows of the
property. Elements of the Cost Approach have been used in deriving Insurable
Value for each property.
The Sales Comparison Approach has been used to estimate the value of each
-------------------------
property based upon recent comparable sales. A national database of transactions
has been supplemented with local and regional sales of comparable properties.
Sale prices per room or unit have been analyzed and an appropriate unit rate
selected for application to the subject. Where available, an overall
capitalization rate was extracted from these sales for use in the Income
Approach.
The Income Approach is a method of converting the anticipated economic
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benefits of owning property into a value estimate through capitalization. The
most common methods of converting net income into value are direct
capitalization and discounted cash flow analysis. The application of the
appropriate Income Approach technique is determined based upon the specific
appraisal situation. A combination of direct capitalization and discounted cash
flow analysis has been utilized in the valuation of the individual properties in
the portfolio.
Historical operations at each property were reviewed along with a market
segmentation analysis to derive projected occupancy and average daily rates over
the projected holding period. This included consideration of existing
competitors in the market, as well as anticipated new construction. Expenses
were projected based upon operating histories as well as industry standards,
with consideration given to existing franchise agreements, reserves for
replacement, and management fees. The projected income stream was either
capitalized into an indicator of value using a direct capitalization methodology
or the use of a discounted cash flow analysis. In those instances where the
property was not considered to be stabilized, both a current market value and a
prospective stabilized value were estimated.
In the instance of a property subject to a ground lease (where the value
reflects the leasehold interest), the annual rent was recognized as an
additional expense line item, with an adjustment made, as necessary, in the
selected capitalization or discount rate. For leased fee properties (with third
party tenants), lease revenues were reflected in the cash flows, with an
adjustment made, as necessary, in the selected capitalization or discount rate.
Conclusion
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<PAGE>
The indicators of value derived via the methodologies summarized above were
reconciled into a market value after weighing the strengths and weaknesses of
each approach, leading to a final conclusion of value. The individual values
that comprise our conclusions are presented in the summary chart shown below.
It should be noted that the summation of these values should not be
considered a reflection of value to a single purchaser of the defined portfolio.
Furthermore, the value conclusions displayed herein are subject to CB Richard
Ellis, Inc. standard Assumptions and Limiting Conditions, which are attached at
the end of this report.
Respectfully submitted,
CB RICHARD ELLIS, INC.
Valuation & Advisory Services
Sam Hines, MAI, CRE
Senior Managing Director
<PAGE>
<TABLE>
<CAPTION>
CHARTS
SUNBURST HOTEL PORTFOLIO - CBRE VALUATION
Estate Market Date of
# Name Address City State Valued Value Value
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<S> <C> <C> <C> <C> <C> <C> <C>
735 Clarion on the Lake 4813 Central Ave (SR 7S) Hot Springs AR FS $8,300,000 10/16/00
864 MainStay Suites 2165 W 15 St Tempe AZ FS $4,500,000 10/29/00
740 Quality Hotel-Maingate 616 Convention Way Anaheim CA LH $7,740,000 10/4/00
737 Comfort Inn by the Bay 2775 Van Ness Ave San Francisco CA LH $10,600,000 10/5/00
858 MainStay Suites 4693 Salisbury Rd Jacksonville FL FS $5,150,000 10/6/00
720 Quality Hotel Southpoint 4660 Salisbury Rd Jacksonville FL LF $6,800,000 10/6/00
859 MainStay Suites 1040 Greenwood Blvd. Lake Mary FL FS $6,200,000 10/9/00
852 MainStay Suites 101 Fairway Dr Miami Springs FL FS $8,100,000 10/11/00
738 Holiday Inn Express 5125 NW 36 St Miami Springs FL FS $4,400,000 10/11/00
711 Sleep Inn - Miami Airport 105 Fairway Dr Miami Springs FL FS $6,500,000 10/11/00
764 Comfort Inn & Suites/Clarion 5301 NW 36 St. Miami Springs FL FS $11,800,000 10/10/00
742 Comfort Inn 830 Lee Road Orlando FL FS $5,150,000 10/09/00
789 Comfort Inn 1901 Palm Bch Lake Blvd WPBeach FL FS $6,600,000 09/27/00
734 Quality Inn 9090 Wesleyan Road Indianapolis IN FS $3,200,000 10/03/00
861 MainStay Suites 8520 NW Blvd. Indianapolis IN FS $4,000,000 10/03/00
768 Sleep Inn 10322 Plaza Americana Dr Baton Rouge LA FE $1,700,000 10/10/00
724 Comfort Inn University 2445 So. Acadian Baton Rouge LA LH $5,750,000 10/10/00
865 MainStay Suites 120 Admiral Cochrane Dr Annapolis MD FS $7,800,000 10/10/00
731 Clarion Hotel 612 Cathedral St Baltimore MD FS $7,200,000 10/3/00
714 Comfort Inn NW 10 Wooded Way Pikesville MD LH $4,450,000 10/3/00
727 Clarion Hotel 321 W. Woodlawn Rd Charlotte NC FS $3,000,000 10/4/00
798 Sleep Inn 8525 No. Tryon St Charlotte NC FS $5,000,000 10/3/00
770 Comfort Inn 5822 Westpark Dr Charlotte NC FS $3,175,000 10/4/00
747 Sleep Inn 2617 Appliance Ct Raleigh NC FS $1,900,000 09/26/00
868 MainStay Suites 2601 Appliance Ct Raleigh NC FS $3,000,000 09/26/00
788 Quality Suites 4400 Capital Blvd Raleigh NC FS $4,500,000 09/26/00
874 MainStay Suites One Plaza Drive Secaucus NJ LH $17,000,000 10/11/00
862 MainStay 25 Merritt Blvd Fishkill NY FS $8,700,000 10/9/00
857 MainStay Suites 4630 Creek Road Blue Ash OH FS $4,750,000 10/6/00
705 Clarion Hotel 7007 No. High Street Worthington OH FS $6,300,000 10/5/00
870 MainStay Suites 8 E. Swedesford Road Malvern PA LH $6,200,000 10/11/00
779 Comfort Inn 2 Tanglewood Dr Hilton Head SC LF $5,300,000 10/06/00
869 MainStay Suites 5045 No. Arc Lane No Charleston SC FS $5,460,000 09/26/00
754 Sleep Inn 750 Six Flags Dr Arlington TX FE $3,850,000 10/9/00
769 Sleep Inn 15675 JFK Blvd. Houston TX FE $3,100,000 10/9/00
748 Sleep Inn 1990 No. I-H35 Round Rock TX FE $3,900,000 10/12/00
761 Sleep Inn 8318 IH 10 W. San Antonio TX FE $2,100,000 10/12/00
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Total $213,175,000
</TABLE>
<PAGE>
ASSUMPTIONS AND LIMITING CONDITIONS
-----------------------------------
1. Unless otherwise specifically noted in the body of the report, it is
assumed that title to the property or properties appraised is clear and
marketable and that there are no recorded or unrecorded matters or
exceptions to total that would adversely affect marketability or value. CB
Richard Ellis, Inc. is not aware of any title defects nor has it been
advised of any unless such is specifically noted in the report. CB Richard
Ellis, Inc., however, has not examined title and makes no representations
relative to the condition thereof. Documents dealing with liens,
encumbrances, easements, deed restrictions, clouds and other conditions
that may affect the quality of title have not been reviewed. Insurance
against financial loss resulting in claims that may arise out of defects in
the subject property's title should be sought from a qualified title
company that issues or insures title to real property. CB Richard Ellis,
Inc. assumes no private deed restrictions, limiting the use of the subject
property in any way.
2. No survey of the boundaries of the property was undertaken. All areas and
dimensions furnished are presumed to be correct. It is further assumed that
no encroachments to the realty exist.
3. It is assumed that there is full compliance with all applicable federal,
state, and local environmental regulations and laws unless noncompliance is
stated, defined and considered in the appraisal report.
4. Also, unless otherwise noted in the body of this report, it is assumed that
no changes in the present zoning ordinances or regulations governing use,
density, or shape are being considered. The property is appraised assuming
that all required licenses, certificates of occupancy, consents, or other
legislative or administrative authority from any local, state, nor national
government or private entity or organization have been or can be obtained
or renewed for any use on which the value estimates contained in this
report is based, unless otherwise stated.
5. CB Richard Ellis, Inc. is not aware of any contemplated public initiatives,
governmental development controls, or rent controls that would
significantly affect the value of the subject.
6. 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. CB Richard Ellis, Inc. has no knowledge of the existence
of such materials on or in the property. CB Richard Ellis, Inc., however,
is not qualified to detect such substances. The presence of substances such
as asbestos, urea formaldehyde foam insulation, contaminated groundwater or
other potentially hazardous materials may affect the value of the property.
The value estimate is predicated on the assumption that there is no such
material on or in the property that would cause a loss in value. No
responsibility is assumed for any such conditions, or for any expertise or
engineering knowledge required to discover them. The client is urged to
retain an expert in this field, if desired.
We have inspected, as thoroughly as possible by observation, the land;
however, it was impossible to personally inspect conditions beneath the
soil. Therefore, no representation is made as to these matters unless
specifically considered in the appraisal.
7. Unless otherwise noted in the body of the report, it is assumed that there
are no mineral deposit or subsurface rights of value involved in this
appraisal, whether they be gas, liquid, or solid. Nor are the rights
associated with extraction or exploration of such elements considered
unless otherwise stated in this appraisal report. Unless otherwise stated
it is also assumed that there are no air or development rights of value
that may be transferred.
8. Unless otherwise specifically noted in the body of this report, it is
assumed: that the existing improvements on the property or properties being
appraised are structurally sound, seismically safe and code conforming;
that all building systems (mechanical/electrical, HVAC, elevator, plumbing,
etc.) are in good working order with no major deferred maintenance or
repair required; that the roof and exterior are in good condition and free
from intrusion by the elements; that the property or properties have been
engineered in such a manner that the improvements, as currently
constituted, conform to all applicable local, state, and federal building
codes and ordinances. CB Richard Ellis, Inc. professionals are not
engineers and are not competent to judge matters of an engineering nature.
CB Richard Ellis, Inc. has not retained independent structural, mechanical,
electrical, or civil engineers in connection with this appraisal and,
therefore, makes no representations relative to the condition of
improvements. Unless otherwise specifically noted in the body of the
report: no problems were brought to the attention of CB Richard Ellis, Inc.
by ownership or management; CB Richard Ellis, Inc. inspected less than 100%
of the entire interior and exterior portions of the improvements; and CB
Richard Ellis, Inc. was not furnished any engineering studies by the owners
or by the party requesting this appraisal. If questions in these areas are
critical to the decision process of the reader, the advice of competent
engineering consultants should be obtained and relied upon. It is
specifically assumed that any knowledgeable and prudent purchaser would, as
a precondition to closing a sale, obtain a satisfactory engineering report
relative to the structural integrity of the property and the integrity of
building systems. Structural
<PAGE>
problems and/or building system problems may not be visually detectable. If
engineering consultants retained should report negative factors of a
material nature, or if such are later discovered, relative to the condition
of improvements, such information could have a substantial negative impact
on the conclusions reported in this appraisal. Accordingly, if negative
findings are reported by engineering consultants, CB Richard Ellis, Inc.
reserves the right to amend the appraisal conclusions reported herein.
9. It is assumed that all factual data furnished by the client, property
owner, owner's representative, or persons designated by the client or owner
to supply said data are accurate and correct unless otherwise specifically
noted in the appraisal report. Unless otherwise specifically noted in the
appraisal report, CB Richard Ellis, Inc. has no reason to believe that any
of the data furnished contain any material error. Information and data
referred to in this paragraph include, without being limited to, numerical
street addresses, lot and block numbers, Assessor's Parcel Numbers, land
dimensions, square footage area of the land, dimensions of the
improvements, gross building areas, net rentable areas, usable areas, unit
count, room count, rent schedules, income data, historical operating
expenses, budgets, and related data. Any material error in any of the above
data could have a substantial impact on the conclusions reported. Thus, CB
Richard Ellis, Inc. reserves the right to amend conclusions reported if
made aware of any such error. Accordingly, the client-addressee should
carefully review all assumptions, data, relevant calculations, and
conclusions within 30 days after the date of delivery of this report and
should immediately notify CB Richard Ellis, Inc. of any questions or
errors.
10. The date of value to which any of the conclusions and opinions expressed in
this report apply, is set forth in the Letter of Transmittal. Further, that
the dollar amount of any value opinion herein rendered is based upon the
purchasing power of the American Dollar on that date. This appraisal is
based on market conditions existing as of the date of this appraisal. Under
the terms of the engagement, we will have no obligation to revise this
report to reflect events or conditions which occur subsequent to the date
of the appraisal. However, CB Richard Ellis, Inc. will be available to
discuss the necessity for revision resulting from changes in economic or
market factors affecting the subject.
11. The estimate of Market Value, which may be defined within the body of this
report, is subject to change with market fluctuations over time. Market
value is highly related to exposure, time promotion effort, terms,
motivation, and conclusions surrounding the offering. The value estimate(s)
consider the productivity and relative attractiveness of the property, both
physically and economically, on the open market.
12. Any cash flows included in the analysis are forecasts of estimated future
operating characteristics are predicated on the information and assumptions
contained within the report. Any projections of income, expenses and
economic conditions utilized in this report are not predictions of the
future. Rather, they are estimates of current market expectations of future
income and expenses. The achievement of the financial projections will be
affected by fluctuating economic conditions and is dependent upon other
future occurrences that cannot be assured. Actual results may vary from the
projections considered herein. CB Richard Ellis, Inc. does not warrant
these forecasts will occur. Projections may be affected by circumstances
beyond the current realm of knowledge or control of CB Richard Ellis, Inc.
13. Unless specifically set forth in the body of the report, nothing contained
herein shall be construed to represent any direct or indirect
recommendation of CB Richard Ellis, Inc. to buy, sell, or hold the
properties at the value stated. Such decisions involve substantial
investment strategy questions and must be specifically addressed in
consultation form.
14. Any value estimate provided in the report applies to the entire property,
and any pro ration or division of the title into fractional interests will
invalidate the value estimate, unless such pro ration or division of
interests has been set forth in the report.
15. The distribution of the total valuation in this report between land and
improvements applies only under the existing program of utilization.
Component values for land and/or buildings are not intended to be used in
conjunction with any other property or appraisal and are invalid if so
used.
16. The maps, plats, sketches, graphs, photographs and exhibits included in
this report are for illustration purposes only and are to be utilized only
to assist in visualizing matters discussed within this report. Except as
specifically stated, data relative to size or area of the subject and
comparable properties has been obtained from sources deemed accurate and
reliable. None of the exhibits are to be removed, reproduced, or used apart
from this report.
17. No opinion is intended to be expressed on matters which may require legal
expertise or specialized investigation or knowledge beyond that customarily
employed by real estate appraisers. Values and opinions expressed presume
that environmental and other governmental restrictions/conditions by
applicable agencies have been met, including but not limited to seismic
hazards, flight patterns, decibel levels/noise envelopes, fire hazards,
hillside ordinances, density, allowable uses, building codes, permits,
licenses, etc. No survey, engineering study or architectural analysis has
been made known to CB Richard Ellis, Inc. unless otherwise stated within
the body of this report. If the Consultant has not been
<PAGE>
supplied with a termite inspection, survey or occupancy permit, no
responsibility or representation is assumed or made for any costs
associated with obtaining same or for any deficiencies discovered before or
after they are obtained. No representation or warranty is made concerning
obtaining these items. CB Richard Ellis, Inc. assumes no responsibility for
any costs or consequences arising due to the need, or the lack of need, for
flood hazard insurance. An agent for the Federal Flood Insurance Program
should be contacted to determine the actual need for Flood Hazard
Insurance.
18. CB Richard Ellis, Inc. assumes that the subject property analyzed herein
will be under prudent and competent management and ownership; neither
inefficient or super-efficient.
19. All furnishings, equipment and business operations, except as specifically
stated and typically considered as part of real property, have been
disregarded with only real property being considered in the report unless
otherwise stated. Any existing or proposed improvements, on or off-site, as
well as any alterations or repairs considered, are assumed to be completed
in a workmanlike manner according to standard practices based upon the
information submitted to CB Richard Ellis, Inc. This report may be subject
to amendment upon re-inspection of the subject property subsequent to
repairs, modifications, alterations and completed new construction. Any
estimate of Market Value is as of the date indicated; based upon the
information, conditions and projected levels of operation.
20. Acceptance and/or use of this report constitutes full acceptance of the
Contingent and Limiting Conditions and special assumptions set forth in
this report. It is the responsibility of the Client, or client's designees,
to read in full, comprehend and thus become aware of the aforementioned
contingencies and limiting conditions. Neither the Appraiser nor CB Richard
Ellis, Inc. assumes responsibility for any situation arising out of the
Client's failure to become familiar with and understand the same. The
Client is advised to retain experts in areas that fall outside the scope of
the real estate appraisal/consulting profession if so desired.
21. The Americans with Disabilities Act (ADA) became effective January 26,
1992. Notwithstanding any discussion of possible readily achievable barrier
removal construction items in this report, CB Richard Ellis, Inc. has not
made a specific compliance survey and analysis of this property to
determine whether it is in conformance with the various detailed
requirements of the ADA. It is possible that a compliance survey of the
property together with a detailed analysis of the requirements of the ADA
could reveal that the property is not in compliance with one or more of the
requirements of the ADA. If so, this fact could have a negative effect on
the value estimated herein. Since CB Richard Ellis, Inc. has no specific
information relating to this issue, nor is CB Richard Ellis, Inc. qualified
to make such an assessment, the effect of any possible non-compliance with
the requirements of the ADA was not considered in estimating the value of
the subject property.
22. Client shall not indemnify Appraiser or hold Appraiser harmless unless and
only to the extent that the Client misrepresents, distorts, or provides
incomplete or inaccurate appraisal results to others, which acts of the
Client proximately result in damage to Appraiser. The Client shall
indemnify and hold Appraiser harmless from any claims, expenses, judgments
or other items or costs arising as a result of the Client's failure or the
failure of any of the Client's agents to provide a complete copy of the
appraisal report to any third party. In the event of any litigation between
the parties, the prevailing party to such litigation shall be entitled to
recover from the other reasonable attorney fees and costs.
23. The report is for the sole use of the client; however, client may provide
only complete, final copies of the appraisal report in its entirety (but
not component parts) to third parties who shall review such reports in
connection with loan underwriting or securitization efforts. Appraiser is
not required to explain or testify as to appraisal results other than to
respond to the client for routine and customary questions. Please note that
our consent to allow an appraisal report prepared by CB Richard Ellis, Inc.
or portions of such report, to become part of or be referenced in any
public offering, the granting of such consent will be at our sole
discretion and, if given, will be on condition that we will be provided
with an Indemnification Agreement and/or Non-Reliance letter, in a form and
content satisfactory to us, by a party satisfactory to us. We do consent to
your submission of the reports to rating agencies, loan participants or
your auditors in its entirety (but not component parts) without the need to
provide us with an Indemnification Agreement and/or Non-Reliance letter.
