<PAGE>
As filed with the Securities and Exchange Commission on November 23, 1999
Registration No. 333-55753
- --------------------------------------------------------------------------------
U.S. Securities and Exchange Commission
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Baron Capital Properties, L.P.
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 6798 31-1574856
- ---------------------------- ------------------------- -------------------
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization) Code Number)
Baron Capital Trust
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 6798 31-1584691
- ---------------------------- ------------------------- -------------------
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization) Code Number)
Gregory K. McGrath
7826 Cooper Road 7826 Cooper Road
Cincinnati, Ohio 45242 Cincinnati, Ohio 45242
(513) 984-5001 (513) 984-5001
------------------------------- -----------------------------------
(Address, including ZIP Code (Name, address, including ZIP Code,
and telephone number, including and telephone number, including
area code, of registrants' area code, of agent for service)
principal executive offices)
Copies to:
Edward L. Lublin, Esq.
Manatt, Phelps & Phillips, LLP
1501 M Street, N.W. , Suite 700
Washington, D.C. 20005
(202) 463-4300
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the Registration Statement becomes
effective.
NOTE: This Post-Effective Amendment is being filed solely to file a supplement
to the prospectus of Baron Capital Properties, L.P., dated November 9, 1999.
<PAGE>
SUPPLEMENT TO THE PROSPECTUS DATED NOVEMBER 9, 1999
BARON CAPITAL PROPERTIES, L.P.
2,500,000 UNITS OF LIMITED PARTNERSHIP INTEREST
EXCHANGE PARTNERSHIPS
<TABLE>
<CAPTION>
<S> <C>
BARON STRATEGIC INVESTMENT FUND, LTD. FLORIDA CAPITAL INCOME FUND II, LTD.
BARON STRATEGIC INVESTMENT FUND II, LTD. FLORIDA CAPITAL INCOME FUND III, LTD.
BARON STRATEGIC INVESTMENT FUND IV, LTD. FLORIDA CAPITAL INCOME FUND IV, LTD.
BARON STRATEGIC INVESTMENT FUND V, LTD. FLORIDA INCOME ADVANTAGE FUND I, LTD.
BARON STRATEGIC INVESTMENT FUND VI, LTD. FLORIDA INCOME APPRECIATION FUND I, LTD.
BARON STRATEGIC INVESTMENT FUND VIII, LTD. FLORIDA INCOME GROWTH FUND V, LTD.
BARON STRATEGIC INVESTMENT FUND IX, LTD. FLORIDA OPPORTUNITY INCOME PARTNERS, LTD.
BARON STRATEGIC INVESTMENT FUND X, LTD. GSU STADIUM STUDENT APARTMENTS, LTD.
BARON STRATEGIC VULTURE FUND I, LTD. LAMPLIGHT COURT OF BELLEFONTAINE APARTMENTS, LTD.
BREVARD MORTGAGE PROGRAM, LTD. MIDWEST INCOME GROWTH FUND VI, LTD.
CENTRAL FLORIDA INCOME APPRECIATION FUND, LTD. REALTY OPPORTUNITY INCOME FUND VIII, LTD.
FLORIDA CAPITAL INCOME FUND, LTD.
</TABLE>
THE EXCHANGE OFFERING WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE DESCRIBED IN THE
ELECTION FORM, UNLESS EXTENDED.
Baron Capital Properties, L.P. (the "Operating Partnership"), a
Delaware limited partnership, hereby offers, upon the terms and subject to
the conditions set forth in the accompanying Prospectus (as the same may be
amended or supplemented from time to time, the "Prospectus") and in the
accompanying Letter of Transmittal and Election Form (which together
constitute the "Exchange Offering"), to issue up to 2,500,000 units of
limited partnership interest in the Operating Partnership ("Operating
Partnership Units" or "Units"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement of which the Prospectus constitutes a part, in
exchange for units of limited partnership interest ("Exchange Partnership
Units") owned by individual limited partners ("Exchange Limited Partners") in
23 limited partnerships (the "Exchange Partnerships") which directly or
indirectly own equity and/or subordinated mortgage interests in one or more
residential apartment properties.
SEE "SUMMARY OF RISK FACTORS" AND "RISK FACTORS" ON PAGES 31 THROUGH
35 AND PAGES 48 THROUGH 68, RESPECTIVELY, FOR A DISCUSSION OF CERTAIN
MATERIAL FACTORS WHICH SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE
OFFERING AND THE OWNERSHIP OF OPERATING PARTNERSHIP UNITS AND TRUST COMMON
SHARES.
The Cash Offering by Baron Capital Trust ("Trust") of 2,500,000
Common Shares pursuant to a prospectus dated June 11, 1999, was scheduled to
terminate on November 30, 1999. The Trust has determined to extend the
expiration date of the Cash Offering to May 31, 2000, which will be the
latest date for determining the number of Common Shares of the Trust to be
issued to Gregory K. McGrath and Robert S. Geiger, founders of the Trust, in
exchange for the Operating Partnership Units they presently own.
- ------------------------------------------------------------------------------
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES COMMISSIONS
HAVE NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
The Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the Common Shares. An offer will only be made by delivery
of the prospectus dated November 9, 1999 when accompanied by the Prospectus
Supplement.
The date of this Supplement to the Prospectus is November 23, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
A list of exhibits included as part of this Registration Statement is
set forth in the Index to Exhibits which immediately precedes such exhibits.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has caused this Post-Effective Amendment No. 1 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Cincinnati,
State of Ohio on November 23, 1999.
BARON CAPITAL PROPERTIES, L.P.
By: Baron Capital Trust,
General Partner
By: Baron Advisors, Inc.,
Managing Shareholder
By: /s/ Gregory K. McGrath
-----------------------------
Gregory K. McGrath, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 has been signed by the following person in the
capacity and on the date stated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
President of Baron Advisors, Inc.,
/s/ Gregory K. McGrath Managing Shareholder of November 23, 1999
- ---------------------- Baron Capital Trust,
Gregory K. McGrath General Partner of Registrant
</TABLE>
3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
- ------- --------------------
<S> <C>
3.1* Certificate of Limited Partnership of the Registrant.
3.2* Agreement of Limited Partnership of Registrant, dated as of May 15, 1998
(incorporated herein by reference to Exhibit 10.6 to
Amendment No. 3 to the Form SB-2 Registration Statement of
Baron Capital Trust filed with the Securities and Exchange
Commission on May 15, 1998 (Registration No.
333-35063).
4.1* Form of Unit Certificate
5.1* Form of Opinion of Dennis P. Spates, Esq. as to legality of securities
being registered.
5.2* Form of Opinion of Manatt, Phelps & Phillips, LLP on certain tax
matters.
10.1* Trust Management Agreement, dated as of May 15, 1998,
between the Registrant and Baron Advisors, Inc.
(incorporated herein by reference to Exhibit 10.1 to
Amendment No. 3 to the Form SB-2 Registration Statement of
Baron Capital Trust filed with the Securities and Exchange
Commission on May 15, 1998 (Registration No. 333-35063).
10.2* Amended and Restated Declaration of Trust for Baron Capital Trust made
as of August 11, 1998.
10.3* Indemnification Agreement among the Registrant, Baron
Capital Trust (its General Partner), officers of the
Registrant and trustees, officers and members of the Board
of Baron Capital Trust and such other persons as Baron
Capital Trust may designate (included in Section 7.7 of the
Agreement of Limited Partnership of the Registrant
referenced above in Exhibit 3.2)
10.4* Amended and Restated Security Escrow Agreement dated as of
May 15, 1998 among Gregory K. McGrath, Robert S. Geiger,
Baron Capital Trust and American Stock Transfer & Trust
Company.
10.5* Founders' Subscription Agreement.
10.6* First Amendment to Amended and Restated Security Escrow Agreement, dated
April 30, 1999.
10.7* Amendment to Founders' Subscription Agreement, dated April 30, 1999.
10.8 Second Amendment to Amended and Restated Security Escrow Agreement,
dated November 16, 1999
10.9 Amendment to Founders' Subscription Agreement, dated November 16, 1999
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
23.1* Consent of Dennis P. Spates, Esq. (included in the opinion filed as
Exhibit 5.1 to this Registration Statement).
23.2* Consent of Manatt, Phelps & Phillips, LLP (included in the opinion filed
as Exhibit 5.2 to this Registration Statement)
23.3* Consents of Elroy D. Miedema, Certified Public Accountant
23.4* Consents of Rachlin Cohen & Holtz LLP, Independent Certified Public
Accountants
99.3* Prior Performance Table VI: Acquisitions of Properties by
Program required under Guide 5 relating to preparation of
registration statements relating to interests in real estate
limited partnerships.
99.4* Consent of Consortium Appraisal, Inc. and Consortium Appraisal and
Consulting Services, Inc., Appraisal Firms.
99.5* Consent of Richards Appraisal Service, Inc., Appraisal Firm
99.6* Appraisal Reports relating to Exchange Properties
99.7* Computation of Ratio of Earnings to Fixed Changes and Calculation of
Weighted Average Partnership Units Outstanding
99.8 Appraisal Reports relating to certain Exchange Properties
</TABLE>
- ------------------------
* Previously filed
<PAGE>
EXHIBIT 10.8
Second Amendment to Amended and Restated
Security Escrow Agreement,
dated November 16, 1999
<PAGE>
SECOND AMENDMENT TO
AMENDED AND RESTATED SECURITY ESCROW AGREEMENT
("AGREEMENT")
RECITALS
A. The termination date of the public offering of Common Shares of
Baron Capital Trust which on April 30, 1999 was extended from May 14, 1999 to
November 30, 1999 has been further extended to May 31, 2000.
For good and valuable consideration, the parties hereto agree that
the Agreement, made as of May 5, 1998, by and among Gregory K. McGrath,
Robert S. Geiger, Baron Capital Trust, Baron Capital Properties, L.P. and
American Stock Transfer and Trust Company be and is hereby further amended as
follows:
1. Paragraph 3.1, "May 31, 2000" shall be the "Share Determination
Date" in place of "November 30, 1999."
2. Exhibit A to the Agreement is amended by substituting "May 31,
2000" in place of "November 30, 1999".
Dated: November 16, 1999
BARON CAPITAL TRUST
/S/GREGORY K. MCGRATH By: /S/GREGORY K. MCGRATH
- ------------------------- ------------------------------
Gregory K. McGrath Gregory K. McGrath
Chief Executive Officer
BARON CAPITAL PROPERTIES
/S/ROBERT S. GEIGER By: /S/GREGORY K. MCGRATH
- ------------------------- ------------------------------
Robert S. Geiger Gregory K. McGrath
Chief Executive Officer
AMERICAN STOCK TRANSFER AND TRUST COMPANY
By: /S/HERBERT J. LEMMER
------------------------------
Herbert J. Lemmer
Vice President
<PAGE>
EXHIBIT 10.9
AMENDMENT TO FOUNDERS' SUBSCRIPTION AGREEMENT,
DATED NOVEMBER 16, 1999
<PAGE>
November 16, 1999
Baron Capital Properties, L.P.
Baron Capital Trust
7826 Cooper Road
Cincinnati, Ohio 45242
Gentlemen:
Reference is made to our Founders' Subscription Agreement
("Agreement"), made as of February 3, 1998, whereby each of the undersigned
subscribed for 601,080 Units of limited partnership interest ("Units") in
Baron Capital Properties L.P. ("Partnership"), subject to adjustment, which
can be exchanged for common shares of Baron Capital Trust ("Trust"). The
amount of Units to be received by each of the undersigned is intended to be
exchangeable for an amount equal to 9.5% of the Common Shares of the Trust
issued and outstanding upon completion of the public offering ("Cash
Offering") of the Trust's common shares. It was originally contemplated that
the offering would be completed by May 14, 1999 and that date was extended to
November 30, 1999 which is defined as the "Share Determination Date" in the
Agreement. In view of the fact that the Cash Offering has been further
extended to May 31, 2000, the Share Determination Date in the Agreement has
been amended to reflect that change.
Accordingly, it is hereby agreed that May 31, 2000 shall be
substituted in place of November 30, 1999 as the Share Determination Date in
paragraph 1 of the Agreement.
Kindly indicate your agreement by signing below.
/S/GREGORY K. MCGRATH
----------------------------
Gregory K. McGrath
/S/ROBERT S. GEIGER
----------------------------
Robert S. Geiger
BARON CAPITAL TRUST
By: /S/GREGORY K. MCGRATH
----------------------------
Gregory K. McGrath
Chief Executive Officer
BARON CAPITAL PROPERTIES, L.P.
BARON CAPITAL TRUST
By: /S/GREGORY K. MCGRATH
----------------------------
Gregory K. McGrath
Chief Executive Officer
<PAGE>
EXHIBIT 99.8
Appraisal Reports Relating to Certain Exchange Properties
<PAGE>
October 6, 1998
Mr. Gregory McGrath
Sigma Financial Capital VI, Inc.
7826 Cooper Road
Cincinnati, OH 45242
Gentlemen:
At your request, our firm has inspected and appraised the existing Brookwood Way
apartment community which contains 65 rental apartment units. The subject
property is located at 327 N. Brookwood Way, in the city of Mansfield, Richland
County, Ohio, 44906.
The objective of this appraisal was to estimate the market value of the fee
simple interest in the real estate, including chattels, under market conditions
prevailing on September 22, 1998.
The market value estimate, as contained herein, is contingent upon the following
conditions:
1. The subject project opened in 1974. The property reports a current
occupancy of 100.0%. The Appraiser inspected the exterior of the
apartment community and the interior of one unit. Access to most of the
units was not available due to the high occupancy rate of the property.
2. A current certified survey of the subject project verifying the site
dimensions, area calculations, access, building locations, building area
calculations, unit mix and the legal description as set out herein.
3. The Appraiser has not been provided with environmental reports relating
to the subject site or improvements. This appraisal has been made
contingent upon the existence of no hazardous contamination of the
subject site and upon the absence of hazardous building materials being
incorporated into the subject building improvements. Environmental
reports relating to the subject site and improvements were not available,
and should be obtained.
4. The Appraiser did not review sub-soil, structural, mechanical or other
engineering reports depicting the current condition of the subject
property. It is recommended that such reports be obtained. Based upon the
Appraiser's visual inspection of the subject property and
<PAGE>
Sigma Financial Capital VI, Inc.
October 6, 1998
Page 2
discussions with property management, it appears that the subject
property is in good overall condition. Over the last two years the
subject property has received repairs and renovations including 1) the
repair and re-sealing of the parking lot. 2) the replacement of four
roofs; 3) the replacement and repair of the siding on four building
endcaps; 4) the replacement of all patio fences; 5) the leveling and
repair of the project's concrete stoops and walks; 6) the repair and
replacement of a retaining wall and; 7) the repair and replacement of the
foundation wall on the south side of Building 7. However, a number of
items of deferred maintenance were noted and should be cured. The most
significant items of deferred maintenance have been summarized as
follows:
a. Some areas of the property's exterior siding need to be repaired.
b. Some areas of the property's exterior trim needs to be repaired.
c. The roof on one building needs to be replaced.
The cost to cure these items of deferred maintenance has been estimated at
$5,000. In addition, during the 4th Quarter of 1998 the property will reportedly
sub-meter the subject units so that sewer, water and garbage costs can be
transferred to the tenant. The estimated cost to sub-meter the subject property
equals $11,375. This appraisal, and the value estimates reported herein, are
subject to the completion of the sub-metering of the subject property in a
timely manner.
This appraisal is subject to: a) the building components on and within the
subject buildings being structurally sound and in good physical condition,
excepting those deteriorated items so noted in this report; and b) the
verification of the cost estimates for the curable physical deterioration set
out herein by a qualified building contractor. This report is subject to
revision based upon the findings of the contractor.
By virtue of the Appraiser's inspection, investigation and analyses, it was the
opinion of the Appraiser that the estimated market value of the "as-is" fee
simple interest in the subject Brookwood Way Apartments, based upon market
conditions prevailing on September 22, 1998, equaled:
ONE MILLION SEVEN HUNDRED SEVENTY-FIVE THOUSAND DOLLARS
($1,775,000)
<PAGE>
Sigma Financial Capital VI, Inc.
October 6, 1998
Page 3
At the request of the client, an estimate of the market value of the subject
property "as-if" the items of deferred maintenance were cured has also been
made. This value estimate was calculated by adding the previously estimated
costs to cure the deferred maintenance to the "as-is" market value estimate as
reported above. The estimated value of the subject property, "as-if complete"
based upon market conditions existing on September 22, 1998, and subject to the
limiting conditions and contingencies set out herein, was:
ONE MILLION SEVEN HUNDRED EIGHTY THOUSAND DOLLARS
($1,780,000)
The undersigned certify that, to the best of our knowledge and belief, the
statements of fact contained in this report are true and correct. The reported
analyses, opinions, and conclusions are limited only by the reported assumptions
and limiting conditions, and are our personal, unbiased professional analyses,
opinions, and conclusions. We have no present or prospective interest in the
property that is the subject of this report, and we have no personal interest or
bias with respect to the parties involved. Our compensation is not contingent on
an action or event resulting from the analyses, opinions, or conclusions in, or
the use of, this report. Our compensation is further not contingent upon the
reporting of a predetermined value or directions in value that favors the cause
of the client; the amount of the value estimate; the attainment of a stipulated
result; or the occurrence of a subsequent event. Our analyses, opinions, and
conclusions were developed, and this report has been prepared, in conformity
with the requirements of the Code of Professional Ethics and the Standards of
Professional Practice of The Appraisal Institute, the Uniform Standards of
Professional Appraisal Practice, and the requirements of State of Florida for
state-certified Appraisers. The use of this report is subject to the
requirements of The Appraisal Institute relating to review by its duly
authorized representatives.
The research, data accumulation, personal on-site inspections of the subject
property and comparables, verifications/confirmations, valuation analysis, and
composition of the attached appraisal report were conducted and completed by
Charles B. Byrd. The report was reviewed by Philip F. Wood, MAI, and this review
process consisted of: an exterior physical inspection of the subject property,
and the subject neighborhood; and the reading and examination of the completed
<PAGE>
Sigma Financial Capital VI, Inc.
October 6, 1998
Page 4
report.
As of the date of this report, Philip F. Wood has completed the requirements of
the continuing education program of the Appraisal Institute. No one provided
significant professional assistance to the persons signing this report. We do
not authorize the out-of-context quoting from or partial reprinting of this
appraisal report. Further, neither all nor any part of this appraisal report
shall be disseminated to the general public by the use of media for public
communication without the prior written consent of the Appraiser(s) signing this
appraisal report.
Please refer to the attached COMPLETE, SELF-CONTAINED APPRAISAL REPORT for
documentation of this value estimate. If any additional information is needed,
please advise.
NOTE: THE INFORMATION CONTAINED IN THIS REPORT IS COPYRIGHTED. THE WILLFUL
UNAUTHORIZED USE OF ANY CONTENTS OF THIS REPORT CONSTITUTES COPYRIGHT
INFRINGEMENT WHICH COULD SUBJECT THE INFRINGER TO CIVIL DAMAGES AND CRIMINAL
PENALTIES PURSUANT TO SS.SS.504 AND 506 OF THE FEDERAL COPYRIGHT REVISION ACT OF
1976. THE FLORIDA REAL ESTATE LICENSE LAW (CHAPTER 475-PART II, FLORIDA STATUTES
DEFINES AN APPRAISAL, AN APPRAISAL SERVICE, AN APPRAISAL ASSIGNMENT AND AN
ANALYSIS ASSIGNMENT. BE ADVISED THAT THIS REPORT FALLS WITHIN THESE DEFINITIONS
ONLY IF PROPERLY EXECUTED HEREIN. PROPER EXECUTION INCLUDES AN ORIGINAL BLUE-INK
SIGNATURE BY THE APPRAISER OVERLAID BY A RAISED SEAL. ANY DEVIATION FROM THIS
MEANS THAT THE REPORT IS COPYRIGHT INFRINGED, UNAUTHORIZED AND DOES NOT
REPRESENT SERVICES PROVIDED BY THE APPRAISERS OR THE FIRM.
Respectfully submitted,
CONSORTIUM APPRAISAL, INC. CONSORTIUM APPRAISAL, INC.
REVIEWED BY:
Philip F. Wood, MAI, SRPA Charles B. Byrd
President (Corporate Seal) Staff Appraiser
State-Certified General Real State-Certified General Real
Estate Appraiser Estate Appraiser
<PAGE>
Sigma Financial Capital VI, Inc.
October 6, 1998
Page 5
Florida License No. 0000777 Florida License No. 0000908
PFW/CBB:tms
98-072
This report was prepared under temporary practice permits #438018 and #438015
issued by the State of Ohio Department of Commerce, Division of Real Estate,
Appraiser Section on August 14, 1998.
<PAGE>
March 4, 1998
Mr. Gregory McGrath
Baron Capital, Inc.
7826 Cooper Road
Cincinnati, OH 45242
RE: Heatherwood Phase II Apartments
Dear Mr. McGrath:
Under market conditions prevailing on June 25, 1997, our firm prepared an
appraisal of the Heatherwood Phase II apartment community. The Heatherwood Phase
II apartments, which contain 40 units, are located at 1005 Airport Road
(Hoagland Boulevard), in the city of Kissimmee, Osceola County, Florida. The
appraisal of the Heatherwood Phase II apartment community was prepared for GMAC
Commercial Mortgage. The function of the appraisal report was to provide a basis
for the underwriting of a mortgage loan by GMAC. The purpose of the appraisal
was to estimate the market value of the fee simple interest in the real estate,
including chattels, under market conditions prevailing on June 25, 1997. The
appraisal of the Heatherwood Phase II apartment community indicated that the
property had an estimated "as-is" market value of $1,130,000, which was subject
to four specific contingencies.
This letter has been prepared as an addendum to the appraisal of the Heatherwood
Phase II apartment community. The purpose of this addendum is to address items
of deferred maintenance, proposed renovations, and utility submetering.
The appraisal of the Heatherwood Phase II apartment community recognized that
deferred maintenance existed at the property. The Appraiser found a
significant amount of deferred maintenance, primarily relating to the
subject's roofs, deteriorated siding, deteriorated patio fences, and the need
for exterior painting. These items of deferred maintenance were described in
detail within the appraisal. The Appraiser estimated the cost to cure the
deferred maintenance at $57,000. In addition, the subject property was found
to suffer from curable functional obsolescence due to the use of one 1BR/1BA
rental unit for storage. The cost to cure this functional obsolescence was
estimated at $1,000. The cost to cure the deferred maintenance and functional
obsolescence, totaling $58,000, was deducted from each of the approaches to
value considered in the valuation of the subject apartment community. The
valuation of the Heatherwood Phase II apartment community considered the
Cost, Income, and Market Approaches to value.
<PAGE>
Mr. Gregory McGrath
March 4, 1998
Page 2
The Appraiser has subsequently been provided with a proposed deferred
maintenance repair budget for the Heatherwood Phase II apartment community. The
budget for implementing repairs currently proposed has been set out as follows:
<TABLE>
<S> <C>
Roofing $ 8,677
Siding repair/replacement $ 28,343
Exterior painting $ 10,780
Landscaping $ 3,000
Asphalt repair/restriping $ 3,000
Interior renovations $ 2,500
---------
Total repairs and unit upgrades proposed $ 56,300
</TABLE>
On page 109 of the appraisal, the value of the subject property via the Income
Approach, as if curable physical and functional deficiencies were corrected, was
estimated at $1,160,369. On page 127 of the appraisal, the market value of the
subject property via the Market Approach, as if curable physical and functional
deficiencies were corrected, was estimated at $1,218,816. The Appraiser
developed the Cost Approach to value for the subject property recognizing the
existing deferred maintenance. However, the Cost Approach to value was not given
significant consideration when estimating a correlated value indication for the
property. Based upon the review of the Cost, Income and Market approaches to
value, it is the Appraiser's opinion that the correlated market value estimate
for the subject property, as if curable physical and functional deficiencies
were corrected, would approximate $1,188,000.
You have advised the Appraiser that a utility submetering system will be
installed at the Heatherwood Phase II apartment community. The cost to install
the submetering system approximates $8,200. Submetering utility systems like
that proposed at Heatherwood Phase II apartments enable the landlord to
individually bill tenants for their sewer and water consumption needs. The
Florida market has been in a transition during the past years from landlords
typically providing sewer and water services to the services being paid for by
the tenants. The Appraiser has reviewed the subject market and other comparable
apartment communities in order to determine the market acceptance of utility
submetering and the impacts of utility submetering upon the property's net
operating income.
In general, it was found that approximately 65% of the sewer and water costs can
be passed through to the tenants by implementing this submetering equipment. In
addition, apartment communities instituting utility submetering programs are
able to maintain the same quoted street rents for the individual apartment
units. As a result, the utility submetering income tends to offset a substantial
portion of the property's utility expenses and becomes a direct benefit to the
property's net operating income.
On page 104 of the appraisal of the Heatherwood Phase II apartment community, a
summary of
<PAGE>
Mr. Gregory McGrath
March 4, 1998
Page 3
actual expenses incurred at the community during 1995 and 1996 was provided,
together with the estimated operating expenses as set forth by the Appraiser at
the date of valuation. This summary of operating expenses indicates that
utilities and trash removal were estimated at the date of valuation to reflect
$16,000 annually. The submetering of the Heatherwood Phase II apartment
community should result in the recovery of approximately $10,400 of this utility
expense. This reflects 65% of the total estimated utility costs.
Recognizing the utility submetering benefits, the net operating income for the
subject property would equal approximately $123,536. In developing the Income
Approach to value, an overall capitalization rate of 9.75% was utilized. When
this estimated overall capitalization rate is applied to the adjusted net
operating income estimate of $123,536, the Income Approach to value reflects a
value indication for the subject property, as if fully submetered, of
$1,267,036. From this value indication it is necessary to subtract the cost to
install the utility sub-metering system, as previously reported at $8,200. This
results in a final value indication for the subject, as sub-metered, of
$1,258,836. This figure has been rounded slightly to $1,259,000.
In developing the Market Approach to value, the effective gross income
multiplier unit of comparison was relied upon when estimating a value indication
for the subject property. On page 127 of the original appraisal report, an
effective gross income multiplier of 6.00 was selected based upon a review of
eight comparable sales of similar apartment complexes.
The effective gross income multiplier of 6.00 utilized in the original appraisal
report was based upon comparable sales which reflected landlord paid sewer,
water and garbage expenses. When submetered, the subject property will reflect
operating expense levels below those reflected by the comparable sales and the
effective gross income multiplier should be adjusted to reflect the lower
operating expenses reflected by the subject property, as submetered.
Therefore, for the purposes of this addendum, an effective gross income
multiplier of 6.50 has been utilized when re-analyzing the Market Approach to
value for the subject property, as submetered. Applying this effective gross
income multiplier of 6.50 to the estimated effective gross income of $203,136
reported on page 109 of the original report, results in a value indication for
the subject property via the Market Approach to value, as if submetered, of
$1,320,384. From this value indication it is necessary to subtract the cost to
install the utility sub-metering system, as previously reported at $8,200. This
results in a final value indication for the subject, as sub-metered, of
$1,312,184. This figure has been rounded slightly to $1,312,000.
Based upon a re-analysis of the subject property, recognizing the impacts of
submetering, the Income and Market Approaches have reflected value indications
for the subject property of $1,259,000 and $1,312,000, respectively. The
correlated value indication for the subject property, as if submetered, has been
estimated at $1,285,000.
<PAGE>
Mr. Gregory McGrath
March 4, 1998
Page 4
In summary, this letter addendum addresses the impacts upon value associated
with correcting the items of deferred maintenance and installing the submetering
system. The resulting value indications are reflected for the Heatherwood Phase
II apartment community:
<TABLE>
<S> <C>
Estimated as-is market value under market
conditions prevailing on June 25, 1997, as
originally reported: $1,130,000
Estimated market value as if curable
deficiencies were corrected under market
conditions prevailing on June 25, 1997: $1,188,000
Estimated market value as if curable deficiencies were corrected
under market conditions prevailing on June 25, 1997, and as if
the submetering system were installed
and operational: $1,285,000
</TABLE>
This letter addendum should be read and reviewed only in conjunction with the
self-contained appraisal report that was prepared on July 1, 1997. The
self-contained appraisal report is a document containing 137 pages plus
exhibits.
If any additional information is requested, please advise.
Respectfully submitted,
<TABLE>
<CAPTION>
CONSORTIUM APPRAISAL, INC. CONSORTIUM APPRAISAL, INC.
<S> <C>
Reviewed By:
Philip F. Wood, MAI, SRPA Charles B. Byrd
President (Corporate Seal) Staff Appraiser
State-Certified General Real State-Certified General Real
Estate Appraiser Estate Appraiser
Florida License No. 0000777 Florida License No. 0000908
</TABLE>
<PAGE>
March 4, 1998
Mr. Gregory McGrath
Baron Capital, Inc.
7826 Cooper Road
Cincinnati, OH 45242
RE: Longwood Phase I Apartments
Dear Mr. McGrath:
Under market conditions prevailing on July 2, 1997, our firm prepared an
appraisal of the Longwood Phase I apartment community. The Longwood Phase I
apartments, which contain 59 units, are located at 1524 Clearlake Road in the
city of Cocoa, Brevard County, Florida. The appraisal of the Longwood Phase I
apartment community was prepared for GMAC Commercial Mortgage. The function of
the appraisal report was to provide a basis for the underwriting of a mortgage
loan by GMAC. The purpose of the appraisal was to estimate the market value of
the fee simple interest in the real estate, including chattels, under market
conditions prevailing on July 2, 1997. The appraisal of the Longwood Phase I
apartment community indicated that the property had an estimated "as-is" market
value of $1,630,000, which was subject to four specific contingencies.
This letter has been prepared as an addendum to the appraisal of the Longwood
Phase I apartment community. The purpose of this addendum is to address items of
deferred maintenance, proposed renovations, and utility submetering.
The appraisal of the Longwood Phase I apartment community recognized that
deferred maintenance existed at the property. The Appraiser found a significant
amount of deferred maintenance, primarily relating to the subject's roofs and
deteriorated siding. These items of deferred maintenance were described in
detail within the appraisal. The Appraiser estimated the cost to cure the
deferred maintenance at $34,000. The cost to cure the deferred maintenance was
deducted from each of the approaches to value considered in the valuation of the
subject apartment community. The valuation of the Longwood Phase I apartment
community considered the Cost, Income, and Market Approaches to value.
The Appraiser has subsequently been provided with a proposed deferred
maintenance repair budget for the Longwood Phase I apartment community. The
budget for implementing repairs currently proposed has been set out as follows:
<PAGE>
Mr. Gregory McGrath
March 4, 1998
Page 2
<TABLE>
<S> <C>
Roofing $ 21,600
Siding repair/replacement $ 2,100
Exterior painting $ 12,000
Landscaping $ 5,000
Asphalt repair/restriping $ 5,000
Interior renovations $ 14,600
--------
Total repairs and unit upgrades proposed $ 60,300
</TABLE>
On page 96 of the appraisal, the value of the subject property via the Income
Approach, as if curable deficiencies were corrected, was estimated at
$1,615,200. On page 117 of the appraisal, the market value of the subject
property via the Market Approach, as if curable deficiencies were corrected, was
estimated at $1,712,664. The Appraiser developed the Cost Approach to value for
the subject property recognizing the existing deferred maintenance. However, the
Cost Approach to value was not given significant consideration when estimating a
correlated value indication for the property. Based upon the review of the Cost,
Income and Market approaches to value, it is the Appraiser's opinion that the
correlated market value estimate for the subject property, as if curable
deficiencies were corrected, would approximate $1,664,000.
You have advised the Appraiser that a utility submetering system will be
installed at the Longwood Phase I apartment community. The cost to install the
submetering system approximates $11,600. Submetering utility systems like that
proposed at Longwood Phase I apartments enable the landlord to individually bill
tenants for their sewer and water consumption needs. The Florida market has been
in a transition during the past years from landlords typically providing sewer
and water services to the services being paid for by the tenants. The Appraiser
has reviewed the subject market and other comparable apartment communities in
order to determine the market acceptance of utility submetering and the impacts
of utility submetering upon the property's net operating income.
In general, it was found that approximately 65% of the sewer and water costs can
be passed through to the tenants by implementing this submetering equipment. In
addition, apartment communities instituting utility submetering programs are
able to maintain the same quoted street rents for the individual apartment
units. As a result, the utility submetering income tends to offset a substantial
portion of the property's utility expenses and becomes a direct benefit to the
property's net operating income.
On page 91 of the appraisal of the Longwood Phase I apartment community, a
summary of actual expenses incurred at the community during 1995 and 1996 was
provided, together with the estimated operating expenses as set forth by the
Appraiser at the date of valuation. This summary of operating expenses indicates
that utilities and trash removal were estimated at the date of valuation to
reflect $27,000 annually. The submetering of the Longwood Phase I apartment
community should result in the recovery of approximately $17,550 of this utility
expense. This reflects 65% of the total estimated utility costs.
<PAGE>
Mr. Gregory McGrath
March 4, 1998
Page 3
Recognizing the utility submetering benefits, the net operating income for the
subject property would equal approximately $170,994. In developing the Income
Approach to value, an overall capitalization rate of 9.50% was utilized. When
this estimated overall capitalization rate is applied to the adjusted net
operating income estimate of $170,994, the Income Approach to value reflects a
value indication for the subject property, as if fully submetered, of
$1,799,937. From this value indication it is necessary to subtract the cost to
install the utility sub-metering system, as previously reported at $11,600. This
results in a final value indication for the subject, as sub-metered, of
$1,788,337. This figure has been rounded slightly to $1,788,000.
In developing the Market Approach to value, the effective gross income
multiplier unit of comparison was relied upon when estimating a value indication
for the subject property. On page 117 of the original appraisal report, an
effective gross income multiplier of 6.00 was selected based upon a review of
nine comparable sales of similar apartment complexes.
The effective gross income multiplier of 6.00 utilized in the original appraisal
report was based upon comparable sales which reflected landlord paid sewer,
water and garbage expenses. When submetered, the subject property will reflect
operating expense levels below those reflected by the comparable sales and the
effective gross income multiplier should be adjusted to reflect the lower
operating expenses reflected by the subject property, as submetered.
Therefore, for the purposes of this addendum, an effective gross income
multiplier of 6.50 has been utilized when re-analyzing the Market Approach to
value for the subject property, as submetered. Applying this effective gross
income multiplier of 6.50 to the estimated effective gross income of $285,444
reported on page 117 of the original report, results in a value indication for
the subject property via the Market Approach to value, as if submetered, of
$1,855,386. From this value indication it is necessary to subtract the cost to
install the utility sub-metering system, as previously reported at $11,600. This
results in a final value indication for the subject, as sub-metered, of
$1,843,783. This figure has been rounded slightly to $1,844,000.
Based upon a re-analysis of the subject property, recognizing the impacts of
submetering, the Income and Market Approaches have reflected value indications
for the subject property of $1,788,000 and $1,844,000, respectively. The
correlated value indication for the subject property, as if submetered, has been
estimated at $1,820,000.
In summary, this letter addendum addresses the impacts upon value associated
with correcting the items of deferred maintenance and installing the submetering
system. The resulting value indications are reflected for the Longwood Phase I
apartment community:
<TABLE>
<S> <C>
Estimated as-is market value under market
conditions prevailing on July 2, 1997, as
originally reported: $1,630,000
</TABLE>
<PAGE>
Mr. Gregory McGrath
March 4, 1998
Page 4
<TABLE>
<S> <C>
Estimated market value as if curable
deficiencies were corrected under market
conditions prevailing on July 2, 1997: $1,664,000
Estimated market value as if curable
deficiencies were corrected under market
conditions prevailing on July 2, 1997, and
as if the submetering system were installed
and operational: $1,820,000
</TABLE>
This letter addendum should be read and reviewed only in conjunction with the
self-contained appraisal report that was prepared on August 1, 1997. The
self-contained appraisal report is a document containing 127 pages plus
exhibits.
If any additional information is requested, please advise.
Respectfully submitted,
<TABLE>
<CAPTION>
CONSORTIUM APPRAISAL, INC. CONSORTIUM APPRAISAL, INC.
<S> <C>
Reviewed By:
Philip F. Wood, MAI, SRPA Charles B. Byrd
President (Corporate Seal) Staff Appraiser
State-Certified General Real State-Certified General Real
Estate Appraiser Estate Appraiser
Florida License No. 0000777 Florida License No. 0000908
</TABLE>
<PAGE>
March 4, 1998
Mr. Gregory McGrath
Baron Capital, Inc.
7826 Cooper Road
Cincinnati, OH 45242
RE: Sunrise Phase I Apartments
Dear Mr. McGrath:
Under market conditions prevailing on July 2, 1997, our firm prepared an
appraisal of the Sunrise Phase I apartment community. The Sunrise Phase I
apartments, which contain 60 units, are located at 3805 S. Hopkins Avenue, in
the city of Titusville, Brevard County, Florida. The appraisal of the Sunrise
Phase I apartment community was prepared for GMAC Commercial Mortgage. The
function of the appraisal report was to provide a basis for the underwriting of
a mortgage loan by GMAC. The purpose of the appraisal was to estimate the market
value of the fee simple interest in the real estate, including chattels, under
market conditions prevailing on July 2, 1997. The appraisal of the Sunrise Phase
I apartment community indicated that the property had an estimated Aas-is@
market value of $1,300,000, which was subject to four specific contingencies.
This letter has been prepared as an addendum to the appraisal of the Sunrise
Phase I apartment community. The purpose of this addendum is to address items of
deferred maintenance, proposed renovations, and utility submetering.
The appraisal of the Sunrise Phase I apartment community recognized that
deferred maintenance existed at the property. The Appraiser found a significant
amount of deferred maintenance, primarily relating to the subject's roofs and
deteriorated siding. These items of deferred maintenance were described in
detail within the appraisal. The Appraiser estimated the cost to cure the
deferred maintenance at $60,000. In addition, the subject property was found to
suffer from curable functional obsolescence due to the use of one of the 1BR/1BA
units for storage. The cost to cure this functional obsolescence was estimated
at $1,500. The cost to cure the deferred maintenance and functional
obsolescence, totaling $61,500, was deducted from each of the approaches to
value considered in the valuation of the subject apartment community. The
valuation of the Sunrise Phase I apartment community considered the Cost,
Income, and Market Approaches to value.
The Appraiser has subsequently been provided with a proposed deferred
maintenance repair budget for the Sunrise Phase I apartment community. The
budget for implementing repairs currently proposed has been set out as follows:
<PAGE>
Mr. Gregory McGrath
March 4, 1998
Page 2
<TABLE>
<S> <C>
Roofing $ 39,000
Siding repair/replacement $ 9,500
Exterior painting $ 17,640
Landscaping $ 3,500
Asphalt repair/restriping $ 5,000
Interior renovations $ 5,000
--------
</TABLE>
Total repairs and unit upgrades proposed $ 79,640
On page 96 of the appraisal, the value of the subject property via the Income
Approach, as if curable physical and functional deficiencies were corrected, was
estimated at $1,248,168. On page 117 of the appraisal, the market value of the
subject property via the Market Approach, as if curable physical and functional
deficiencies were corrected, was estimated at $1,479,456. The Appraiser
developed the Cost Approach to value for the subject property recognizing the
existing deferred maintenance. However, the Cost Approach to value was not given
significant consideration when estimating a correlated value indication for the
property. Based upon the review of the Cost, Income and Market approaches to
value, it is the Appraiser's opinion that the correlated market value estimate
for the subject property, as if curable physical and functional deficiencies
were corrected, would approximate $1,361,500.
You have advised the Appraiser that a utility submetering system will be
installed at the Sunrise Phase I apartment community. The cost to install the
submetering system approximates $12,000. Submetering utility systems like that
proposed at Sunrise Phase I apartments enable the landlord to individually bill
tenants for their sewer and water consumption needs. The Florida market has been
in a transition during the past years from landlords typically providing sewer
and water services to the services being paid for by the tenants. The Appraiser
has reviewed the subject market and other comparable apartment communities in
order to determine the market acceptance of utility submetering and the impacts
of utility submetering upon the property's net operating income.
In general, it was found that approximately 65% of the sewer and water costs can
be passed through to the tenants by implementing this submetering equipment. In
addition, apartment communities instituting utility submetering programs are
able to maintain the same quoted street rents for the individual apartment
units. As a result, the utility submetering income tends to offset a substantial
portion of the property's utility expenses and becomes a direct benefit to the
property's net operating income.
On page 91 of the appraisal of the Sunrise Phase I apartment community, a
summary of actual expenses incurred at the community during 1995 and 1996 was
provided, together with the estimated operating expenses as set forth by the
Appraiser at the date of valuation. This summary of operating expenses indicates
that utilities and trash removal were estimated at the date of valuation to
reflect
<PAGE>
Mr. Gregory McGrath
March 4, 1998
Page 3
$27,500 annually. The submetering of the Sunrise Phase I apartment community
should result in the recovery of approximately $17,875 of this utility expense.
This reflects 65% of the total estimated utility costs.
Recognizing the utility submetering benefits, the net operating income for the
subject property would equal approximately $136,451. In developing the Income
Approach to value, an overall capitalization rate of 9.50% was utilized. When
this estimated overall capitalization rate is applied to the adjusted net
operating income estimate of $136,451, the Income Approach to value reflects a
value indication for the subject property, as if fully submetered, of
$1,436,326. From this value indication it is necessary to subtract the cost to
install the utility sub-metering system, as previously reported at $12,000. This
results in a final value indication for the subject, as sub-metered, of
$1,424,326. This figure has been rounded slightly to $1,424,000.
In developing the Market Approach to value, the effective gross income
multiplier unit of comparison was relied upon when estimating a value indication
for the subject property. On page 117 of the original appraisal report, an
effective gross income multiplier of 6.00 was selected based upon a review of
nine comparable sales of similar apartment complexes.
The effective gross income multiplier of 6.00 utilized in the original appraisal
report was based upon comparable sales which reflected landlord paid sewer,
water and garbage expenses. When submetered, the subject property will reflect
operating expense levels below those reflected by the comparable sales and the
effective gross income multiplier should be adjusted to reflect the lower
operating expenses reflected by the subject property, as submetered.
Therefore, for the purposes of this addendum, an effective gross income
multiplier of 6.50 has been utilized when re-analyzing the Market Approach to
value for the subject property, as submetered. Applying this effective gross
income multiplier of 6.50 to the estimated effective gross income of $246,576
reported on page 117 of the original report, results in a value indication for
the subject property via the Market Approach to value, as if submetered, of
$1,602,744. From this value indication it is necessary to subtract the cost to
install the utility sub-metering system, as previously reported at $12,000. This
results in a final value indication for the subject, as sub-metered, of
$1,590,744. This figure has been rounded slightly to $1,591,000.
Based upon a re-analysis of the subject property, recognizing the impacts of
submetering, the Income and Market Approaches have reflected value indications
for the subject property of $1,424,000 and $1,591,000, respectively. The
correlated value indication for the subject property, as if submetered, has been
estimated at $1,510,000.
In summary, this letter addendum addresses the impacts upon value associated
with correcting the items of deferred maintenance and installing the submetering
system. The resulting value indications are reflected for the Sunrise Phase I
apartment community:
<PAGE>
Mr. Gregory McGrath
March 4, 1998
Page 4
<TABLE>
<S> <C>
Estimated as-is market value under market
conditions prevailing on July 2, 1997, as
originally reported: $1,300,000
Estimated market value as if curable
deficiencies were corrected under market
conditions prevailing on July 2, 1997: $1,361,500
Estimated market value as if curable
deficiencies were corrected under market
conditions prevailing on July 2, 1997, and
as if the submetering system were installed
and operational: $1,510,000
</TABLE>
This letter addendum should be read and reviewed only in conjunction with the
self-contained appraisal report that was prepared on July 19, 1997. The
self-contained appraisal report is a document containing 127 pages plus
exhibits.
If any additional information is requested, please advise.
Respectfully submitted,
<TABLE>
<CAPTION>
CONSORTIUM APPRAISAL, INC. CONSORTIUM APPRAISAL, INC.
<S> <C>
Reviewed By:
Philip F. Wood, MAI, SRPA Charles B. Byrd
President (Corporate Seal) Staff Appraiser
State-Certified General Real State-Certified General Real
Estate Appraiser Estate Appraiser
Florida License No. 0000777 Florida License No. 0000908
</TABLE>
PFW/CBB:tms
<PAGE>
[GROVE HAMLET PROPERTY APPRAISAL]
TO: SIGMA FINANCIAL CAPITAL,INC.
4261 PARK RD.
ANN ARBOR, MICHIGAN 48103
FROM: DENNIS J. VOYT (VOYTOVICH)
FLORIDA RESIDENTIAL REAL ESTATE APPRAISER
RD 0000103
690 OSCEOLA AV. #408
WINTER PARK, FLA. 32789
DATE: SEPTEMBER 4, 1998
SUBJECT PROPERTY: GROVE HAMLET APARTMENTS
650 N. BOUNDARY AV.
DELAND, FLA. 32720
AS REQUESTED, I HAVE APPRAISED A "TYPICAL" 1 BEDROOM AND 2 BEDROOM UNIT LOCATED
WITHIN THE GROVE HAMLET APARTMENT COMPLEX.
THE APPRAISALS WERE SUBJECT TO A CONVERSION OF THE SUBJECT APARTMENT COMPLEX
INTO A 56 UNIT CONDOMINIUM DEVELOPMENT.
IN ADDITION THE APPRAISALS WERE SUBJECT TO INTERIOR RENOVATIONS WHICH INCLUDED
BUT NOT LIMITED TO NEW CARPETING, VINYL, WALLPAPER AND INTERIOR PAINTING.
AS A RESULT OF RESEARCHING THE DELAND CONDOMINIUM MARKET, IT IS MY OPINION THAT
THE 1 BEDROOM UNIT WOULD HAVE AN ESTIMATED VALUE OF $41,000 AND THE 2 BEDROOM
UNIT WOULD HAVE AN ESTIMATED VALUE OF $54,000.
THE SUPPORTING MARKET DATA AS WELL AS THE COMPLETED FANNIE MAE CONDOMINIUM FORM
1073 ARE IN THE POSSESSION OF MY CLIENT, SIGMA FINANCIAL CAPITAL, INC.
SINCERELY,
/S/ DENNIS J. VOYT (VOYTOVICH)
DENNIS J. VOYT (VOYTOVICH)
<PAGE>
Strickland & Wright
A Full Service Valuation and Consulting Firm
7807 Laurel Avenue, Cincinnati, Ohio 45243-2608
Phone 513/561-2305 Fax 513/561-2881
October 8, 1998
Mr. Greg McGrath
Baron Capital Incorporated
The Terwilliger House
7795 Cooper Road
Cincinnati, Ohio 45242
Re: Steeplechase Apartments
814 W 53rd Street, Anderson, Madison County, Indiana 46013
Dear Mr. McGrath:
In accordance with your request for an appraisal of the above captioned
property, we submit the following. The subject property is improved with a
72-unit apartment complex contained within five buildings. Gross Building area
is calculated at 58,056 Sq. Ft. for all five structures combined, indicating a
gross area on average per unit at 806 Sq. Ft. Land area for the subject property
is estimated at 139,500 Sq. Ft. or 3.2 acres.
The purpose of this appraisal is to estimate the Market Value as of August 6,
1998, the effective date of this appraisal report and the date of inspection. A
prospective value estimate is not considered applicable, since the project has
achieved a stabilized level of occupancy.
Given the fact the subject property is an apartment property, short term
contract leases typical for apartment projects are in place. The existing leases
are either short-term month to month, less than one year, or a one year term if
newly contracted, therefore a value estimate in fee simple ownership is
applicable.
We are reporting our conclusion via this COMPLETE SUMMARY APPRAISAL REPORT. It
should be clearly understood that COMPLETE SUMMARY APPRAISAL REPORT is one in
which the Departure Provision of the Uniform Appraisal Standards of Professional
Appraisal Practice is not invoked. This means that the difference between a
SELF-CONTAINED AND A COMPLETE SUMMARY APPRAISAL REPORT is the level of detail
presented. Backup data and detailed information from which this COMPLETE SUMMARY
APPRAISAL REPORT draws and is referenced to, is available in file and is
considered an integral part of the assignment. The
<PAGE>
Income and Sales Comparison Approaches to value are considered the only
applicable methods of valuation for the subject property.
It should be clearly understood that the reliability of the results of this
COMPLETE SUMMARY APPRAISAL REPORT are not affected by the type of report
supplied Market data used in supporting the various approaches to value were
obtained from, but not limited to: prior appraisals performed by our firm,
developers, real estate agents, appraisers, private individuals, government
records and private market information services to which we subscribe.
Statistical support for economic data was gathered from sources such as but not
limited to: the U.S. Department of Commerce; Bureau of the Census; Ohio,
Kentucky, Indiana Regional Council of Governments; Anderson Chamber of Commerce;
various governmental and administrative offices of the City of Anderson City,
and Madison County.
We have personally inspected the property and made a careful study of the
neighborhood data affecting the subject and competing properties. Our findings
and conclusions are contained in the report and accompanying addenda which
follow.
Therefore, considering all factors pertinent to the subject property, its final
"As Is" value estimate as of August 6, 1998 is:
- --------------------------------------------------------------------------------
$1,690,000*
ONE MILLION SIX HUNDRED NINETY THOUSAND DOLLARS*
- --------------------------------------------------------------------------------
*THE FINAL VALUE ESTIMATE ASSUMES THAT THE PROPERTY IS FREE OF ANY CONTAMINATION
AS PROVEN THROUGH AN ENVIRONMENTAL QUALITY TEST PERFORMED ON THE SUBJECT
PROPERTY. THIS ESTIMATE ALSO ASSUMES STRUCTURAL INTEGRITY OF THE SUBJECT
BUILDINGS. FURTHER, ALL INFORMATION PROVIDED BY THE OWNERS, CURRENT MANAGEMENT
OR THEIR AGENTS IS ASSUMED TO BE CORRECT AND ACCURATE. THE CONDITION OF UNITS
(ALL UNITS) NOT INSPECTED ARE ASSUMED TO BE UPDATED IN SIMILAR CONDITION TO
THOSE UNITS INSPECTED. THE FINAL VALUE ESTIMATE ASSUMES THE RECOUPMENT OF WATER
AND SEWER CHARGES FOR THE INDIVIDUAL UNITS. FINALLY, SINCE NO HISTORIC EXPENSE
DATA WAS PRESENTED ON THE SUBJECT, THE FINAL VALUE ESTIMATE COULD CHANGE WITH A
DETAILED ANALYSIS OF SUCH.
<PAGE>
If you have any questions or we may be of further services, please feel free to
call.
Sincerely,
Nicholas R. Dietrich
Ohio State Certified General Appraiser #383628
Kentucky State Certified General Appraiser #001198
Gary S. Wright, MAI, SRA
Ohio State Certified General Appraiser #380580
Kentucky State Certified General Appraiser #000233
(REVIEW APPRAISER - DID NOT INSPECT)
/mlr
Enclosures
<PAGE>
Strickland & Wright
A Full Service Valuation and Consulting Firm
7807 Laurel Avenue, Cincinnati, Ohio 45243-2608
Phone 513/561-2305 Fax 513/561-2881
August 11, 1998
Mr. Chuck Dell
Commercial Real Estate Loan
Metropolitan Savings Bank
8050 Hosbrook Road
Suite 408
Cincinnati, Ohio 45236
Re: Proposed Villas at Lake Sycamore Condominium Project
Sycamore Twp., Hamilton County, Ohio 45237
Dear Mr. Dell:
In accordance with your request for an appraisal of the above captioned
property, we submit the following. The subject property is improved with a
164-unit condominium project to be situated in 23 buildings. The first phase
will reflect 26 units in four buildings and has been approved by the County.
The subject's parent tract is platted as 2 parcels totaling 22.44 acres. The
project phasing per site plans allocated 2.2 acres to Phase 1 and 20.2 to the
2nd phase, thus the site plan data reflects a similar total of 22.4 acres.
The purpose of this appraisal is to estimate both the 1) As Is Value and 2)
Prospective Market Value. Each value estimate will be further explained in the
appropriate section of this report. The "As Is" Market Value estimate is as of
the date of inspection, July 6, 1998. The Prospective Market Value estimate is a
point in time in the future at a projected date of completion, in this case
January 1, 2000. Completion refers the point in time when all the units in the
project are estimated to available for sale. For the purposes of the Cash Flow
statement, the units are assumed to be completed at this point in time.
We have personally inspected the property and made a careful study of the
neighborhood data affecting the subject and competing properties. Our findings
and conclusions are contained in the report and accompanying addenda which
follow.
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
FINAL AS IS VALUE ESTIMATE
AS OF JULY 6, 1998 $ 1,080,000*
"PROSPECTIVE GROSS SELL-OUT,
UPON COMPLETION", AS OF JANUARY 1, 2000
THE PROPOSED DATE OF COMPLETION FOR PROJECT $14,312,000*
"PROSPECTIVE DISCOUNTED MARKET VALUE,
UPON COMPLETION", AS OF JANUARY 1, 2000
THE PROPOSED DATE OF COMPLETION FOR PROJECT $ 8,500,000*
- --------------------------------------------------------------------------------
</TABLE>
*THE FINAL VALUE ESTIMATE ASSUMES THAT THE PROPERTY IS FREE OF ANY CONTAMINATION
AS PROVEN THROUGH AN ENVIRONMENTAL QUALITY TEST PERFORMED ON THE SUBJECT
PROPERTY. THE FINAL VALUE ESTIMATE ALSO ASSUMES COMPLETION OF CONSTRUCTION WITH
SATISFACTORY WORKMANSHIP AND MATERIALS. THE FINAL VALUE ESTIMATE ALSO ASSUMES
COMPLETION OF THE PROJECT WITH THE ALLOCATION OF UNIT TYPES PROPOSED BY THE
DEVELOPER.
If you have any questions or we may be of further services, please feel free to
call.
Sincerely,
Nicholas R. Dietrich
Ohio State Certified General Appraiser #383628
Kentucky State Certified General Appraiser #001198
Gary S. Wright, MAI, SRA
Ohio State Certified General Appraiser #380580
Kentucky State Certified General Appraiser #000233
(REVIEW APPRAISER - DID NOT INSPECT)
/mlr
Enclosures
