SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Rule 13-3 Transaction Statement
(Pursuant to Section 13(e) of the
Securities Exchange Act of 1934)
DECADE COMPANIES INCOME PROPERTIES -- A LIMITED PARTNERSHIP
(Name of the Issuer)
DECADE COMPANIES INCOME PROPERTIES -- A LIMITED PARTNERSHIP
(Name of Person Filing Statement)
Limited Partnership Interests
(Title of Class of Securities)
None
(CUSIP Number of Class of Securities)
Jeffrey Keierleber
c/o Decade Companies
Decade Companies Income Properties--A Limited Partnership
250 Patrick Boulevard, Suite 140
Brookfield, Wisconsin 53045-5864
with copies to
Conrad G. Goodkind, Esq.
Quarles & Brady
411 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202-4497
_________________________________________________________________
(Names, Addresses and Telephone Numbers of Persons Authorized to
Receive Notices and Communications on Behalf
of Person Filing Statement.)
This Statement is filed in connection with
(check the appropriate box):
a. [ ] The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C or
Rule 13e-3(c) under the Securities Exchange Act of
1934.
b. [ ] The filing of a registration statement under the
Securities Act of 1933.
c. [X] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or
information statement referred to are preliminary copies: [ ]
____________________Calculation of Filing Fee____________________
Transaction valuation* Amount of Filing Fee
_________________________________________________________________
$7,021,457 $1,404.00
_________________________________________________________________
* For purposes of calculating the filing fee only. This amount
assumes the purchase of 17,466.31 Limited Partnership Interests
at a per Interest price of $402.00. The amount of the filing
fee, calculated in accordance with Rule 0-11 under the Securities
Exchange Act of 1934, as amended, equals 1/50 of one percent of
the value of the securities subject to the tender offer.
<PAGE>
[ ] Check box if any part of the fee is offset as provided by
Rule 0-11(a)(2) and identify the filing with which the offsetting
fee was previously paid. Identify the previous filing by
registration statement number, or the Form or Schedule and the
date of its filing.
<PAGE>
This Rule 13e-3 Transaction Statement (the "Statement")
relates to an issuer tender offer by Decade Companies Income
Properties -- A Limited Partnership (the "Partnership") to
purchase outstanding limited partnership interests (the
"Interests") upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated October 24, 1996 (including
the annexes thereto, the "Offer to Purchase"), and in the related
Letter of Acceptance (which together constitute the "Offer"),
copies of which are filed as Exhibits (d)(1) and (d)(2) hereto,
respectively. This Statement is being filed by the Partnership.
Capitalized terms used in this Statement and not defined herein
shall have the meanings set forth in the Offer to Purchase.
Concurrently with the filing of this Statement, the
Partnership is filing with the Securities and Exchange
Commission, a Schedule 13E-4 Issuer Tender Offer Statement. A
copy of the Offer to Purchase is attached as Exhibit (d)(1)
thereto. The information contained in the Offer to Purchase is
incorporated by reference in answer to the items of this
Statement and the Cross Reference Sheet set forth below shows the
location in the Offer to Purchase of the information required to
be included in response to the items of this Statement. The
information contained in the Offer to Purchase, including all
exhibits and annexes thereto, is hereby expressly incorporated by
reference and the responses to each item herein are qualified in
their entirety by reference to the information contained in the
Offer to Purchase and the exhibits and annexes thereto.
<PAGE>
CROSS REFERENCE SHEET
(Pursuant to General Instruction to Schedule 13E-3)
Item of Location in Offer to Repurchase
Schedule 13E-3 (for incorporation by reference)
Item 1. Issuer and Class of Security Subject to the
Transaction.
(a) "The Partnership--Background of the Partnership."
(b) "The Partnership--Background of the Partnership."
(c) "Lack of Market and Distributions."
(d) "Lack of Market and Distributions."
(e) Not Applicable.
(f) Not Applicable.
Item 2. Identity and Background.
This Schedule 13E-3 is being filed only by the Partnership, the
issuer of the class of securities which is the subject of this
Rule 13e-3 transaction.
(a)-(d) "The Partnership--Background of the Partnership."
(e)-(f) During the past five years, neither the Partnership nor
any of the persons enumerated in General Instruction C
to Schedule 13E-3 has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors) or (ii) a party to a civil proceeding of
a judicial or administrative body of competent
jurisdiction, and, as a result of such proceeding, was
or is subject to a judgment, decree or final order
enjoining further violation of, or prohibiting
activities subject to, federal or state securities laws
or finding any violation of such laws.
(g) All relevant persons are citizens of the United States
of America.
Item 3. Past Contacts, Transactions or Negotiations.
(a) Not Applicable as the Schedule is being filed by the
issuer alone.
(b) "The Partnership--Interests of Certain Persons in the
Offer."
Item 4. Terms of the Transaction.
(a) "The Offer."
(b) "The Offer--Proration Rights."
Item 5. Plans or Proposals of the Issuer or Affiliate.
(a)-(g) "The Partnership--Certain Effects of the Offer;" "The
Partnership--Conduct of the Partnership After the
Offer."
Item 6. Source and Amount of Funds or Other Consideration.
(a)-(d) "Financing the Offer."
Item 7. Purposes, Alternatives, Reasons and Effects.
(a)-(c) "The Partnership--Background for the Offer."
(d) "The Partnership--Certain Effects of the Offer."
Item 8. Fairness of the Transaction.
(a)-(f) "The Partnership--Determination of the Offer Price."
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
(a)-(c) "The Partnership--August 1996 Appraisal of Pelican
Sound; September 1996 Appraisal of Meadows II; April
1996 Appraisal of Town Place;" "The Partnership--
Opinion of The Valuations Group."
Item 10. Interest in Securities of the Issuer.
(a)-(b) "Security Ownership."
Item 11. Contracts, Arrangements or Understandings with Respect
to the Issuer's Securities.
"The Partnership--Interests of Certain Persons in the
Offer."
Item 12. Present Intention and Recommendation of Certain Persons
with Regard to the Transaction.
(a) "The Partnership--Interests of Certain Persons in the
Offer."
(b) "Security Ownership;" "The Offer."
Item 13. Other Provisions of the Transaction.
(a) "The Offer."
(b)-(c) Not Applicable.
Item 14. Financial Information.
(a) "Financial Statements."
(b) "Pro Forma Financial Data."
Item 15. Persons and Assets Employed, Retained or Utilized.
(a)-(b) "The Offer;" "Financing the Offer--Estimated Costs and
Fees."
Item 16. Additional Information.
The Offer, the Annex and Exhibits attached hereto.
Item 17. Material to be filed as Exhibits
(a) Not Applicable
(b) (1) Fairness opinion of The Valuations Group (attached as
Annex D to the Offer to Purchase).
(2) Appraisal of Pelican Sound, Report Letter dated August
28, 1996, of Riggins, Atkinson, Combs, and Associates,
Inc. (attached as Annex A to the Offer to Purchase).
(3) Appraisal of The Meadows II, Report Letter dated
September 25, 1996, of T.M. Warner MAI, SRA (attached
as Annex B to the Offer to Purchase).
(4) Appraisal of Town Place, Report Letter dated April 15,
1996, of Riggins, Atkinson, Combs, and Associates, Inc.
(attached as Annex C to the Offer to Purchase).
(c) Not Applicable.
(d) (1) Offer To Purchase, dated October 24, 1996.
(2) Letter of Acceptance.
(3) Cover letter to Limited Partners, dated October 24,
1996.
(e) Not Applicable.
(f) Not Applicable.
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
Statement is true, complete and correct.
Dated: October 24, 1996.
DECADE COMPANIES INCOME PROPERTIES
-- A LIMITED PARTNERSHIP
BY: /s/Jeffrey Keierleber
Jeffrey Keierleber, General
Partner of Decade Companies,
General Partner of the
Partnership
<PAGE>
Offer to Purchase Interests of
Decade Companies Income Properties--A Limited Partnership
For Cash Consideration of $402 Per Interest
___________________________
This offer, the proration period and withdrawal rights
will expire at 12:00 midnight, Milwaukee time,
on November 22, 1996, unless extended.
__________________________________
Decade Companies Income Properties--A Limited Partnership (the
"Partnership") invites its Limited Partners to tender limited partnership
interests (the "Interests") in the Partnership for the cash purchase price
of $402 per Interest upon the terms and subject to the conditions set forth
in this Offer to Purchase and in the related Letter of Acceptance (which
together constitute the "Offer"). All Interests properly tendered and not
withdrawn will be purchased for $402 per Interest, net to the seller in
cash, upon the terms and subject to the conditions of the Offer. While
this is an Offer for all Interests, in the event that more than 8,944
Interests are tendered and the Partnership determines not to, or is unable
to, borrow additional funds upon acceptable terms, the tendered Interests
will be prorated for payment. See "The Offer." If the Partnership obtains
financing to purchase additional Interests, the Partnership will prepare
and disseminate supplemental material on the financing terms and the
increased number of Interests it agrees to purchase and, if required, will
extend the November 22, 1996 expiration date. This Offer is not
conditioned on any minimum number of Interests being tendered.
In deciding whether to tender Interests, a Limited Partner should
evaluate and consider the risks associated with tendering all or part of
the Interests and the risks associated with continuing to hold all or part
of the Interests.
- - The $402 offer price is below the June 30, 1996, approximate $576 net
asset value per Interest as determined by The Valuation Group. Such
net asset value does not include the costs of the Partnership
completing its required filings, or the costs of conducting the Offer.
See "The Partnership -- Determination of the Offer Price."
- - Selecting the $402 offer price involved a conflict of interest as the
Partnership and non-tendering Limited Partners would prefer a lower
price and the tendering Limited Partners would prefer a higher price.
See "The Partnership -- Determination of the Offer Price."
- - When the Partnership was originally formed, the General Partner
originally intended to sell the Partnership's property within seven to
nine years after the Partnership's acquisition of its investment
properties. The General Partner now believes the Partnership may have
to retain the property for an additional period of time in order to
maximize the potential profits. See "The Partnership -- Background of
the Offer," "The Partnership -- Certain Effects of the Offer" and "The
Partnership -- Conduct of the Partnership After the Offer."
- - If there are fewer than 300 remaining Limited Partners after
completion of the this Offer, the Partnership intends to terminate the
registration of Interests under the Securities Exchange Act of 1934,
which will result in Limited Partners receiving less information than
if the registration continued. See "The Partnership -- Conduct of the
Partnership After the Offer."
Neither the Partnership nor Decade Companies, its General Partner,
makes any recommendation to any Limited Partner as to whether to tender or
refrain from tendering Interests and no person has been authorized to make
any recommendation on behalf of the Partnership as to whether Limited
Partners should tender or refrain from tendering Interests pursuant to the
Offer. No person has been authorized to give any information or to make
any representations in connection with the Offer other than those contained
in this Offer. If given or made, such recommendation, information or
representation must not be relied upon as having been authorized by the
Partnership.
Limited Partners desiring to tender all or, subject to the terms
discussed herein, any portion of their Interests should complete and sign
the Letter of Acceptance, or a facsimile copy thereof, in accordance with
the instructions in the Letter of Acceptance, and mail or deliver it along
with any other required documents to the Partnership. A Limited Partner
having Interests registered in the name of a broker, dealer, commercial
bank, trust company or other nominee must contact that broker, dealer,
commercial bank, trust company or other nominee and have such holder
complete the Letter of Acceptance if such Limited Partner desires to tender
such Interests.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES ADMINISTRATOR OF ANY
STATE, NOR HAS THE COMMISSION OR SUCH ADMINISTRATOR PASSED UPON THE
FAIRNESS OR MERITS OF SUCH TRANSACTION OR UPON THE ACCURACY OR ADEQUACY OF
THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
The date of this Offer to Purchase is October 21, 1996.
<PAGE>
SUMMARY OF CERTAIN INFORMATION
The following is a summary of certain information contained
elsewhere in this Offer. This summary does not purport to be complete
and is qualified in its entirety by reference to the more detailed
information contained elsewhere in this Offer and the Annexes and
Exhibits hereto. Capitalized terms used but not defined in this
Summary are defined elsewhere in this Offer. Limited Partners are
urged to read this Offer to Purchase and the Annex and Exhibits in
their entirety.
The Offer
Offeror. . . . . . . . . The Partnership, a Wisconsin limited
partnership, invites all of its Limited
Partners to tender their Interests upon
the terms and subject to the conditions of
this Offer. See "The Partnership--
Background of the Partnership."
Offer Price. . . . . . . $402 per Limited Partnership Interest.
See "The Partnership--Determination of the
Offer Price."
Offer Expiration Date. . November 22, 1996, unless extended by the
Partnership. See "The Offer."
Offer Conditions . . . . This Offer is for all Interests and,
subject to the terms and conditions of
this Offer, the Partnership will purchase
all of the Interests tendered and not
withdrawn, provided, however, that if more
than 8,944 Interests are tendered and the
Partnership, in its sole discretion,
determines not to, or is unable to, borrow
additional funds upon acceptable terms,
the Partnership will prorate the tendered
Interests as set forth herein. See "The
Offer--Certain Conditions" and "Financing
The Offer." If the Partnership obtains
financing to purchase additional
Interests, the Partnership will prepare
and disseminate Supplemental Materials
and, if required, will extend the November
22, 1996 expiration date. If a Limited
Partner tenders any Interests and owns
Fractional Interests, an amount of
Interests must be tendered such that a
Limited Partner no longer owns any
Fractional Interests. If a Limited
Partner tenders less than all of their
Interests, a minimum of three (3)
Interests must be retained. See "The
Offer."
Procedures to
Tender Interests. . . . A Limited Partner who desires to tender,
subject to the terms and conditions
herein, all or any portion of their
Interests should complete and sign the
Letter of Acceptance and mail or deliver
it to the Partnership by the Expiration
Date. See "The Offer--Procedures for
Tendering Interests."
Financing the Offer. . . As of the date of this Offer, the
Partnership has sufficient cash reserves
to purchase 8,944 Interests and may borrow
additional funds to purchase additional
Interests. In case more than 8,944
Interests are tendered and the Partnership
does not or is not able to arrange
financing, tendered Interests will be
prorated. If the Partnership obtains
financing to purchase additional
Interests, the Partnership will prepare
and disseminate supplemental material on
the financing terms and may extend the
November 22, 1996, expiration date. See
"Financing the Offer."
Proration Terms. . . . . Upon the terms and subject to the
conditions of the Offer, the Partnership
will accept for purchase all Interests
tendered by the Expiration Date, provided
that if more than 8,944 Interests are
tendered and the Partnership does not, or
cannot, obtain additional financing, upon
acceptable terms, to purchase such
additional Interests, the Partnership will
prorate purchases. See "The Offer--
Proration." In the event of proration,
the Partnership will first accept all of
the tenders from Limited Partners who own
less than 100 Interests and who tender all
of their Interests by the Expiration Date.
If this amount is still in excess of 8,944
and the Partnership does not, or cannot,
borrow additional funds to purchase
Interests, the Partnership will prorate
purchases based upon the ratio of the
number of Interests tendered by each
Limited Partner who tendered all of their
Interests and who own less than 100
Interests by the Expiration Date to the
total number tendered by all Limited
Partners who tender all of their Interests
and who own less than 100 Interests by the
Expiration Date. In prorating purchases,
the General Partner intends to purchase an
amount so that a Limited Partner after
proration holds three or more Interests
and no Fractional Interests. After this
category of tendering Limited Partners has
been satisfied and if there are any funds
to purchase any other Interests tendered
and proration is necessary, the
Partnership will prorate purchases from
Limited Partners who tendered some, but
not all, of their Interests or who own 100
Interests or more based upon the ratio of
the number of Interests tendered by each
Limited Partner to the total remaining
number of Interests tendered, provided
that the Partnership may round the
prorated amount such that a Limited
Partner after the Offer will hold at least
three Interests and will not hold any
Fractional Interests. See "The Offer--
Proration."
Certain Effects of the
Repurchase Offer . . . As a result of the Offer, affiliates of
the General Partner, and Limited Partners
who do not tender their Interests, will
acquire a greater share of the equity,
profit, and losses of the Partnership, and
Limited Partners who tender their
Interests will no longer share in future
earnings, distributions, or growth of the
Partnership, if any. Further, the Limited
Partners who tender will no longer share
in the risks associated with achieving
such earnings or the potential to realize
greater value for their Interests. The
General Partner and its affiliates may
also benefit by receiving certain fees and
distributions pursuant to the Partnership
Agreement. See "The Partnership--
Interests of Certain Persons in the
Offer," "The Partnership--Certain Effects
of the Offer" and "The Partnership--
Conduct of the Partnership After the
Offer."
Opinion of
Financial Advisor . . . The Valuations Group has rendered a
written opinion that, subject to the
assumptions set forth therein, the Offer
of $402 per Interest is fair to such
holders. The full text of the written
opinion, dated as of October 7, 1996,
which sets forth the assumptions made,
procedures followed, matters considered
and limits of its review, is attached as
Annex D. Holders of interests are urged
to and should read such opinion in its
entirety. See "The Partnership--Opinion
of The Valuations Group."
Federal Income
Tax Consequences. . . . The receipt of cash for Interests,
pursuant to the Offer will be a taxable
transaction for federal income tax
purposes under the Internal Revenue Code
of 1986, as amended, and also may be a
taxable transaction under applicable
state, local, foreign and other tax laws.
See "The Partnership--Certain Federal
Income Tax Consequences of the Offer."
Cash Distributions . . . After the Offer has been consummated, the
Partnership intends to make cash
distributions, to the extent that cash is
available, in accordance with the
Partnership Agreement. See "The
Partnership--Certain Effects of the Offer"
and "The Partnership--Conduct of the
Partnership After the Offer."
Questions. . . . . . . . Questions and requests for assistance, or
for additional copies of this Offer to
Purchase, and the Letter of Acceptance,
may be directed to the Partnership at its
offices at 250 Patrick Boulevard, Suite
140, Brookfield, Wisconsin 53045-5864,
telephone (414) 792-9200, facsimile (414)
792-0808, Attention: Michael G. Sweet.
<PAGE>
THE PARTNERSHIP
Decade Companies Income Properties -- a Limited Partnership
(the"Partnership") invites its limited partners ("Limited Partners")
to tender limited partnership interests ("Interests") at the net price
of $402 per Interest (the "Offer Price"), to the tendering Limited
Partner in cash, upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the related Letter of
Acceptance (which together constitute the "Offer"). The $402 amount
will be prorated in respect of fractional limited partnership
interests ("Fractional Interests"). All references to Interests shall
include Fractional Interests, unless the context otherwise requires.
Neither the Partnership nor its General Partner makes any
recommendation to any Limited Partner as to whether to tender or
refrain from tendering Interests. Each Limited Partner, after
evaluating and considering the risks associated with tendering or
continuing to hold Interests, must make his or her own decision
whether to tender Interests and, if so, how many Interests to tender.
Background of the Partnership
The Partnership is a limited partnership formed under the
Wisconsin Uniform Limited Partnership Act to invest in existing
residential real properties and to make equity-participating and other
loans on income-producing real properties that are secured by a first
or junior mortgage lien. The general partner of the Partnership is
Decade Companies, a Wisconsin general partnership, (hereafter "General
Partner") of which Jeffrey Keierleber and Decade 80, Inc. are
currently the general partners. Decade 80, Inc. is entirely owned by
Jeffrey Keierleber. Prior to December, 1992, Harold Barian was also a
general partner in Decade Companies. The principal office of the
Partnership and Decade Companies is located at 250 Patrick Boulevard,
Suite 140, Brookfield, Wisconsin 53045-5864, Telephone (414) 792-9200.
From 1986 to 1988, the Partnership raised $18 million of capital
through sale of its Interests. From 1986 to 1993, the Partnership
acquired six apartment complexes, three of which it continues to own.
See "Business of the Partnership."
At the close of business on October 1, 1996, the Partnership's
17,466.31 Interests were held by 1,936 Limited Partners. See
"Description of the Limited Partnership Interests."
Background of the Offer
In April 1996, the Partnership received net loan proceeds of
$4,057,000 from the refinancing of its mortgage loan on Town Place
Apartments. The refinancing created an opportunity for the
Partnership, through its General Partner, to reassess its business
options and to re-evaluate its future course action in order to better
meet its investment objectives.
There have been 27 secondary market transactions for Limited
Partner-Interests since October 1994. See "Determination of The Offer
Price." Based upon this activity and based upon conversations with
Limited Partners and their representatives, the General Partner
believes that there are certain Limited Partners who desire to sell
their Interests immediately for cash in order to obtain liquidity and
other Limited Partners who do not need or desire the liquidity and
would prefer the opportunity to retain their Interests in order to
benefit from any potential future capital appreciation that may be
realized from continued operation and eventual sale of the
Partnership's property or other properties to be acquired. The
General Partner believes that the Limited Partners should be entitled
to make a choice between immediate liquidity and continued ownership
and, thus, believes that the Offer being made hereby accommodates the
differing goals of both groups of Limited Partners.
The General Partner considered the possibility of expanding
existing real estate operations by seeking the acquisition of
additional investment properties through leveraging the Partnership.
Although the General Partner strongly favors the alternative of
expanding real estate operations, it has determined to use existing
cash reserves in this Offer to provide Limited Partners a choice. The
General Partner may in the future reconsider the merits of expanding
the Partnership's real estate operation. See "The Partnership--
Conduct of the Partnership After the Offer."
The General Partner also considered the advisability of a pro
rata distribution of cash reserves, inclusive of the refinancing
proceeds. The General Partner does not believe that such an approach
would be the best alternative. The General Partner believes it is a
more efficient use of the Partnership's capital either to (i) continue
to operate the Partnership's properties and possibly acquire other
real estate properties and leverage the Partnership (and in compliance
with the securities laws terminate its public reporting requirements,
if possible) or (ii) sell the property at the prevailing market price,
wind up the affairs of the Partnership, liquidate and distribute the
net sale proceeds and other assets. Based upon (i) its experience in
real estate (ii) the long term historical increase in real estate
values in the Madison, Wisconsin area and Clearwater, Florida and St.
Petersburg, Florida area and (iii) the General Partner's perception
that financial institutions are increasingly willing to lend to
developers and real estate investors, which should result in an
increase in selling prices for real estate properties, the General
Partner believes the current value of the Partnership properties is
more likely than not to increase in the future, provided the
Partnership holds the property for a period of time and, therefore,
does not believe it is the optimal time to sell the property and
liquidate the Partnership. There can be no assurances, however, of
any profit or a distribution if a Limited Partner decides to hold
their Interests.
The General Partner believes that continued ownership by the
Partnership of its property is in the long-term best interests of
those Limited Partners willing and able to maintain their investment
in the Partnership. There can, of course, be no assurance that such
appreciation will occur, or, if it does occur, that it will result in
any specific level of return to the remaining Limited Partners.
In determining to make the Offer, the General Partner also
considered that the Partnership originally intended to sell the
properties within seven to nine years after the Partnership's
acquisition of its investment properties. The three properties owned
by the Partnership were acquired between January 1989 and November
1993. The General Partner now believes the Partnership may be
required to retain the properties for a longer period in order to
maximize the potential profit on sale.
Consequently, the General Partner decided that the Partnership
should undertake this Offer in order to permit the Limited Partners
either to sell their Interests at a price determined to be fair by an
independent third party (and generally above prevailing secondary
market sales prices), while offering other Limited Partners the option
of holding their Interests subject to the potential of future gain or
loss. Limited Partners who tender their shares pursuant to the Offer
are, in effect, exchanging the certainty and liquidity of a current
sale for the potentially higher return of continued ownership of their
Interests, but the continued ownership of Interests also entails the
risk of loss of all or a portion of the investment.
Once the Offer is completed, and if the number of Limited
Partners is reduced to less than 300, the Partnership will proceed
with deregistration of the Interests under the Exchange Act in order
to reduce the administrative overhead associated with compliance under
the federal securities laws. See "The Partnership--Certain Effects of
the Offer" and "The Partnership--Conduct of the Partnership After the
Offer."
Under the Amended and Restated Agreement of Limited Partnership,
dated September 30, 1996 (the "Partnership Agreement"), the Limited
Partners have the right upon a majority vote of the Interests to
remove the General Partner and then designate a new General Partner,
who would select an alternative other than this Offer. As of the date
of this Offer, the General Partner is not aware of any efforts to
remove the General Partner or seek a substitute.
Determination of the Offer Price
The Offer Price represents the price at which the Partnership is
willing to purchase Interests and was established after considering
the factors described below. No Limited Partner approval is required
or sought. No special committee of the Partnership or the Limited
Partners has approved this Offer and no such special committee or
independent person has been retained to act on behalf of the
Partnership or the Limited Partners in connection with this Offer.
The General Partner is aware of 27 sales of Interest in the last three
years at prices ranging from $127 to $700 per Interest. There is no
public organized market for Interests and the General Partner is
concerned that those limited partners who wish to dispose of their
investment before liquidation of the Partnership should receive a fair
price. The weighted average selling price of these 27 trades was $360
per Interest. A total of 402.56 Interests exchanged hands with an
average transaction of 14.91 Interests. For the reasons set forth in
this Offer, the General Partner believes $402 per Interest is fair to
the Limited Partners. Limited Partners are urged to consider
carefully all of the information contained in this Offer and to
consult with their own advisors, including tax and financial advisors,
in evaluating the terms of this Offer before deciding whether to
tender their Interests.
In making its determination as to fairness, the General Partner
has considered the voluntary nature of the transaction, the competing
interests of different groups of Limited Partners, and the current
state of the real estate market in St. Petersburg, Florida, Madison,
Wisconsin, Clearwater, Florida and nationally. The General Partner
also considered that the Interests are not traded on any registered
securities exchange or on the NASDAQ over-the-counter market, and, to
the knowledge of the General Partner, there is no market for such
Interests, and none is expected to develop. Thus, in the absence of
the Offer, Limited Partners desiring liquidity must seek a buyer for
their Interests in negotiated transactions, which to the General
Partner's knowledge has generally involved prices below $400.
The General Partner also determined that the liquidation value of
the Partnership's property is uncertain at this time. During the past
24 months, the General Partner has not received any offers to purchase
or exchange for either The Meadows Apartments or Pelican Sound
Apartments (or expression of interests to such effect). Town Place
has previously received such offers, as described below. Because
there has been no offer for either of these properties, it is not
possible precisely to determine what price a potential purchaser would
be willing to pay for either of these properties.
During 1994 the General Partner received 23 offers to purchase
Town Place (or expressions of interests to such effect). Some of such
offers have been for the purchase of Town Place in combination with
other properties owned by Affiliates of the General Partner. The
General Partner has considered each such offer and has generally made
counter offers in response. The proposed prices have ranged from a
low of $7,450,000 to a high of $9,500,000, with an average price of
$8,970,000. The Partnership accepted an offer to sell Town Place for
$9,500,000 but the proposed sale was cancelled by the buyer who
forfeited a $100,000 escrow deposit to the Partnership. Twelve of the
offers would have been below the appraised value of Town Place and the
highest offer would have exceeded such amount by less than $300,000
after estimated commissions.
During 1994 the General Partner received 17 offers to purchase
Pelican Sound (or expressions of interests to such effect). Some of
such offers have been for the purchase of Pelican Sound in combination
with other properties owned by Affiliates of the General Partner. The
General Partner has considered each such offer and has generally made
counter offers in response. The proposed prices have ranged from a
low of $13,000,000 to a high of $16,750,000, with an average price of
$14,618,000.
There have been no offers in 1994 to the present for The Meadows.
In selecting an Offer Price, the value of the Partnership's real
property as determined by appraisals was considered. The appraisal of
Pelican Sound Apartments set the fair market value at $14,250,000 as
of August 28, 1996. The appraisal of the Meadows II Apartments set
the fair market value at $11,100,000 as of September 25, 1996. The
appraisal of Town Place Apartments set the fair market value at
$9,200,000 as of April 15, 1996. A copy of each appraisal report is
included as Annex A, Annex B and Annex C and Limited Partners are
urged to review the appraisals in their entirety. There can be no
assurance that the properties could be sold at this point, or in the
future, for their 1996 appraised values. It is possible that a sale
at this time might yield a price which is either greater or lesser
than the appraised amount. However, based upon (i) its experience in
real estate, (ii) the long term historical increase in real estate
value in the properties and (iii) the General Partner's perception
that financial institutions are increasingly willing to lend to
developers and real estate investors, which should result in the
increased sales prices for real estate properties, the General Partner
believes that the value of the Partnership's property is more likely
than not to increase in the future, provided the Partnership holds the
property for a period of time sufficient to permit a further
strengthening in the real estate market in general and the Madison,
Wisconsin and Clearwater, Florida and St. Petersburg metropolitan real
estate markets in particular.
In October, 1996, The Valuations Group orally informed the
General Partner that the Interests, utilizing various methods, could
be valued from a range of $253 (under a review of trading activity in
similar limited partnerships) to approximately $576 (under a net asset
value method) per Interest. Based upon all these factors, including,
but not limited to, The Valuations Group analysis, the General Partner
selected $402 per Interest as the Offer Price, which The Valuations
Group opined would be fair, from a financial point of view, to such
holders. At this price, and after considering the cash distributions
(of between $554 and $704 per Interest that a holder, depending upon
the date of purchasing the Interest) received and the tax losses
previously allocated with respect to the Interests, most Limited
Partners who tender will receive more than their original price at
which the Interests were sold by the Partnership.
In determining the Offer Price, the General Partner noted that
the weighted average purchase price during the last three years was
for $360 an Interest. The General Partner has not derived a
definitive calculation of the liquidation value per Interest. In
selecting the Offer Price, the General Partner did consider that The
Valuations Group derived a net asset value of $576 per Interest, $389
per Interest under the fractional Interest discount approach, and $253
per Interest under the review of trading activity in similar limited
partnerships. After considering these factors, the General Partner
then selected a $402 Offer Price in order to not only provide all
limited partners with an opportunity to sell at a price in excess of
the current trading range, but also to provide those limited partners
who do not wish to sell with an incentive to hold their investment.
August 1996 Appraisal of Pelican Sound
The appraisal of Pelican Sound was performed by an independent
appraiser, Riggins, Atkinson, Combs & Associates, Inc. ("Riggins,
Atkinson"). The appraiser was selected on the basis of its general
qualifications and cost. Riggins, Atkinson previously performed
similar services for the Partnership. However, there is no material
relationship between (i) the appraiser, his affiliates and
representatives, and (ii) the Partnership or its General Partner or
affiliates. No limitations were imposed on the scope of the
investigation of the appraiser. The Appraisal report is set forth in
Annex A. Riggins, Atkinson appraised the property at $14,250,000 as
of August 28, 1996.
In preparing the appraisal, Riggins, Atkinson utilized three
basic techniques for estimating market value: cost, income, and market
data (or direct sales comparison), each of which derived a different
value. The results of these three approaches are
Cost $14,500,000
Market or Sales Comparison $14,300,000
Income $14,200,000
These approaches were then reconciled to a final estimate of
value. The cost technique is based on the proposition that an
informed purchaser would pay no more than the cost of producing a
substitute property with the same utility as the subject property.
This technique calls for comparison, weighing and relating sales data
to the land and property (including improvements) being appraised.
Greatest weight is placed on actual sales of similar properties made
at times concurrent with the date of the appraisal and under
comparable conditions. Whenever pertinent, consideration was given to
prices asked by owners and offers made by prospective purchasers
willing to buy. The income technique converts anticipated benefits to
be derived from the ownership of property into a value estimate.
Anticipated future income and/or reversions are discounted to a
present worth figure through the capitalization process. This
approach is based upon the underlying premise that income producing
real estate is typically purchased as an investment, and from the
investor's point of view earning power is the critical element
affecting property value. An investor who purchases income producing
real estate is essentially trading present dollars for the right to
receive future dollars. This approach focuses on how change affects
the value of income producing properties. The income capitalization
approach provides a value indication by converting these anticipated
future benefits and the various accompanying changes into a current
value. This conversion process can be accomplished by either direct
or yield capitalization methods. The market data or direct sales
comparison technique estimates value based on comparison to prices
paid in actual market transactions for similar properties. The
Appraisal report contains additional information on properties which
were determined to be comparable. Utilizing these techniques, the
appraiser concluded $14,250,000 was the fair value. There can be no
assurances that Pelican Sound will sell for an amount equal to, or
greater than, the appraised amount.
The appraiser's underlying analysis, supporting documents and
additional information on each of the three valuation approaches is
set forth in the Appraisal report, which is attached in its entirety
as Annex A to the Offer to Purchase. For further information on the
cost approach, Limited Partners should review the section of the
appraisal captioned "Cost Approach." For further information on the
market or sales comparison, Limited Partners should review the section
captioned "Sales Comparison Approach." For information on the income
approach, including the estimates and assumptions thereunder,
including the discount rate, Limited Partners should review the
section of the appraisal captioned "Income Capitalization Approach."
September 1996 Appraisal of The Meadows II
The appraisal of The Meadows II was performed by an independent
appraiser, T.M. Warner, MAI, SRA. The appraiser was selected on the
basis of his general qualifications and cost. Mr. Warner has
previously performed similar services for other partnerships sponsored
by the General Partner and affiliates. However, there is no material
relationship between (i) the appraiser, his affiliates and
representatives, and (ii) the Partnership or its General Partner or
affiliates. No limitations were imposed on the scope of the
investigation of the appraiser. The Appraisal report is set forth in
Annex B. Mr. Warner, MAI, SRA appraised the property at $11,100,000
as of September 25, 1996.
In preparing the appraisal, T.M. Warner utilized three basic
techniques for estimating market value: cost, income, and market data
(or direct sales comparison), each of which derived a different value.
The results of these three approaches are
Cost $11,400,000
Market or Sales Comparison $11,100,000
Income $11,100,000
These approaches were then reconciled to a final estimate of
value. The cost technique is based on the proposition that an
informed purchaser would pay no more than the cost of producing a
substitute property with the same utility as the subject property.
This technique calls for comparison, weighing and relating sales data
to the land and property (including improvements) being appraised.
Greatest weight is placed on actual sales of similar properties made
at times concurrent with the date of the appraisal and under
comparable conditions. Whenever pertinent, consideration was given to
prices asked by owners and offers made by prospective purchasers
willing to buy. The income technique converts anticipated benefits to
be derived from the ownership of property into a value estimate.
Anticipated future income and/or reversions are discounted to a
present worth figure through the capitalization process. This
approach is based upon the underlying premise that income producing
real estate is typically purchased as an investment, and from the
investor's point of view earning power is the critical element
affecting property value. An investor who purchases income producing
real estate is essentially trading present dollars for the right to
receive future dollars. This approach focuses on how change affects
the value of income producing properties. The income capitalization
approach provides a value indication by converting these anticipated
future benefits and the various accompanying changes into a current
value. This conversion process can be accomplished by either direct
or yield capitalization methods. The market data or direct sales
comparison technique estimates value based on comparison to prices
paid in actual market transactions for similar properties. The
Appraisal report contains additional information on properties which
were determined to be comparable. Utilizing these techniques, the
appraiser concluded $11,100,000 was the fair value. There can be no
assurances that The Meadows II will sell for an amount equal to, or
greater than, the appraised amount.
The appraiser's underlying analysis, supporting documents and
additional information on each of the three valuation approaches is
set forth in the Appraisal report, which is attached in its entirety
as Annex B to the Offer to Purchase. For further information on the
cost approach, Limited Partners should review the section of the
appraisal captioned "Cost Approach." For further information on the
market or sales comparison, Limited Partners should review the section
captioned "Direct Sales Comparison Approach." For information on the
income approach, including the estimates and assumptions thereunder,
including the discount rate, Limited Partners should review the
section of the appraisal captioned "Income Capitalization Approach."
April 1996 Appraisal of Town Place
The appraisal of Town Place was performed by an independent
appraiser Riggins, Atkinson. The appraiser was selected on the basis
of its general qualifications and cost. Riggins, Atkinson previously
performed similar services for other partnerships sponsored by the
General Partner and affiliates. There is no material relationship
between (i) the appraiser, his affiliates and representatives, and
(ii) the Partnership or its General Partner or affiliates. No
limitations were imposed on the scope of the investigation of the
appraiser. The Appraisal report is set forth in Annex C. Riggins,
Atkinson appraised the property at $9,200,000 as of April 15, 1996.
In preparing the appraisal, Riggins, Atkinson utilized three
basic techniques for estimating market value: cost, income, and market
data (or direct sales comparison), each of which derived a different
value. The results of these three approaches are
Cost $9,000,000
Market or Sales Comparison $8,900,000
Income $9,300,000
These approaches were then reconciled to a final estimate of
value. The cost technique is based on the proposition that an
informed purchaser would pay no more than the cost of producing a
substitute property with the same utility as the subject property.
This technique calls for comparison, weighing and relating sales data
to the land and property (including improvements) being appraised.
Greatest weight is placed on actual sales of similar properties made
at times concurrent with the date of the appraisal and under
comparable conditions. Whenever pertinent, consideration was given to
prices asked by owners and offers made by prospective purchasers
willing to buy. The income technique converts anticipated benefits to
be derived from the ownership of property into a value estimate.
Anticipated future income and/or reversions are discounted to a
present worth figure through the capitalization process. This
approach is based upon the underlying premise that income producing
real estate is typically purchased as an investment, and from the
investor's point of view earning power is the critical element
affecting property value. An investor who purchases income producing
real estate is essentially trading present dollars for the right to
receive future dollars. This approach focuses on how change affects
the value of income producing properties. The income capitalization
approach provides a value indication by converting these anticipated
future benefits and the various accompanying changes into a current
value. This conversion process can be accomplished by either direct
or yield capitalization methods. The market data or direct sales
comparison technique estimates value based on comparison to prices
paid in actual market transactions for similar properties. The
Appraisal report contains additional information on properties which
were determined to be comparable. Utilizing these techniques, the
appraiser concluded $9,200,000 was the fair value. There can be no
assurances that Town Place will sell for an amount equal to, or
greater than, the appraised amount.
The appraiser's underlying analysis, supporting documents and
additional information on each of the three valuation approaches is
set forth in the Appraisal report, which is attached in its entirety
as Annex C to the Offer to Purchase. For further information on the
cost approach, Limited Partners should review the section of the
appraisal captioned "Cost Approach." For further information on the
market or sales comparison, Limited Partners should review the section
captioned "Market or Direct Sales Comparison Approach." For
information on the income approach, including the estimates and
assumptions thereunder, including the discount rate, Limited Partners
should review the section of the appraisal captioned "Income
Capitalization Approach."
Opinion of The Valuations Group
In September, 1996, the Partnership retained The Valuations Group
to deliver an opinion in connection with the fairness of the offer
price. The Partnership selected The Valuations Group for its
familiarity and experience with valuing limited partnership interests,
its independence from the Partnership and the price and scheduling
terms on which it agreed to perform its services. The Partnership
placed no limits on the scope of analysis and investigation and no
deadline was set by which it had to complete its analysis. In
October, 1996, the Partnership was orally informed, and on October 7,
1996, it confirmed in writing, that on such date of opinion $402 per
Interest was fair to holders from a financial point of view. The
Valuation Group's opinion is not required to be updated after the date
of this Offer so as to take account of material developments, if any,
which may thereafter occur or may come to its attention. A copy of
the written opinion dated as of October 7, 1996 is attached hereto as
Annex D. Limited Partners are urged to read this opinion in its
entirety.
In rendering its opinion, The Valuations Group relied, in part,
without independent verification, on the accuracy and completeness of
information provided to it by the Partnership. The Valuations Group
did not make or obtain appraisals of the Partnership's assets, but
relied upon the appraisals dated August 25, 1996, September 25, 1996
and April 15, 1996, respectively, of the Partnership's properties and
did not solicit third parties who might be interested in acquiring all
or a part of the Partnership or the property. See "The Partnership --
August 1996 Appraisal of Pelican Sound," "The Partnership -- September
1996 Appraisal of The Meadows II," and "The Partnership -- April 1996
Appraisal of Town Place." The Valuations Group reviewed the key
assumptions of the respective appraisers and believes the assumptions
and resulting conclusions in each appraisal to be both reasonable and
adequately documented.
In reaching its conclusions about the fairness of the Offer, The
Valuations Group utilized a variety of valuation techniques and
performed a number of analyses of relevant information. In forming
its opinion, The Valuations Group has reviewed the Partnership's
recent Securities and Exchange Commission filings and data published
in real estate industry publications. Prior to being engaged to
provide this opinion in connection with the fairness of the offer
price, in 1995 The Valuations Group prepared an independent opinion of
value for a client unrelated to the Partnership. In that opinion, The
Valuations Group concluded that $440 per Interest was the fair market
value for an Interest; however, The Valuations Group's current
valuation based on the same methodology applied using information
available as of August 15, 1996 is $389 per Interest. The difference
arises from The Valuation Group (1) consideration of the expenses
associated with the Town Place financing; (2) consideration of
$200,000 of estimated liquidation costs; (3) consideration of limited
partners distributions in excess of operational cash and (4) inclusion
of a $225,000 fee due a third party upon sale of a Partnership
property. The principal methods, techniques and their outcome
supporting the opinion are summarized in the following paragraphs.
As part of the review, The Valuations Group sought information
about recent sales of the Interests. The Valuations Group, based upon
information from the General Partner and its own research, found that
402.56 limited partnership units in the Partnership changed hands in
27 transactions. These transactions occurred at prices ranging from a
low of $127.39 per Interest to a high of $700 per Interest. The
weighted average transaction price for the 27 recorded transactions
was $359.60 per Interest. The offer price is in excess of such price.
As part of its analysis in support of its opinion, The Valuations
Group derived an estimate of the Partnership's net asset value per
Interest. This estimate, which The Valuations Group believes to be
reasonable based on its analysis of Partnership information,
represents the dollar amount in cash which could be available for
distribution to the Partnership's Limited Partners, stated on a per
Interest basis, if the Partnership's properties were sold at their
appraised value and its outstanding liabilities were satisfied as of
June 30, 1996. Net asset value per Interest is equal to appraised
value less selling costs and repayment of debt plus net other assets
(e.g., cash, receivables, less payables, etc.). This amount does not
consider all of the costs of liquidating the Partnership, completing
all of the filings required by the Securities and Exchange Commission
or other agencies, or the costs of conducting this Offer. Based upon
its analysis, The Valuations Group derived a net asset value of $576
per Interest. The offer price, which does consider the costs of
liquidating the Partnership (and other related costs) and the costs of
this Offer, is approximately a 30.21% discount to this derived net
asset value.
As an additional part of its review to support its opinion, The
Valuations Group also analyzed recent trading prices for limited
partnership interests trading on the limited partnership secondary
market. These transactions typically occur at prices which are
substantially discounted to the partnership's net asset value.
Applying a 37.5% discount to The Valuations Group's derived net asset
value for the Partnership, The Valuations Group estimated a trading
market value of $360 per Interest.
The Valuations Group also considered that fractional, non-
controlling interests in limited partnerships typically trade at
discounts to the partnership's net asset value. These discounts are
often substantial and reflect investor preferences for a partnership's
unique investment characteristics. The Valuations Group has applied
discounts and premiums to net asset value based upon internally
derived, weightings which represent The Valuations Group's subjective
judgment as to the relative influence of a number of key factors on
the value of a non-controlling, minority interest in the Partnership.
These relative influences are reflected as additions to or
subtractions from net asset value and are expressed as premiums or
discounts applied thereto. In deriving the applicable discount for a
non-controlling, minority interest in the Partnership, The Valuations
Group looked at the following factors: secondary market, liquidity
and investment control, cash flow and distributions, asset type and
quality, management capabilities and fee structure, market
capitalization, portfolio diversification, liquidation time horizon,
recent historical performance, analytical complexity, and financial
leverage. Factors which figured most prominently in deriving the
discount appropriate to estimate the price for a non-controlling
interest in the Partnership were: (i) the secondary market trading
activity; (ii) lack of current distributions; (iii) weak liquidation
incentives; and (iv) the analytical complexity of the Partnership.
The Valuations Group, applying the fractional interest discount
approach derived a value of $389 per Interest which represents a
32.47% discount from net asset value (a 25% discount for lack of
marketability and control, a 2.5% discount for lack of cash flow, a
2.5% discount for liquidation time horizon, and 2.5% discount for
difficulties with valuing the Interests).
These analyses, taken as a whole, led The Valuations Group to
conclude that the offer price of $402 per Interest is fair to Limited
Partners from a financial point of view. The preparation of the
fairness opinion is a complex process and is not necessarily
susceptible to partial analysis or summary description. Selecting
portions of the analyses in the summary set forth above, without
considering the analyses as a whole, could create an incomplete view
of the processes underlying The Valuation Group's opinion. No
partnership or transaction used in the above analysis as a comparison
is identical to the Partnership or the contemplated Offer. In
arriving at its fairness determination, The Valuations Group
considered the results of all such analyses and did not assign any
particular weight to the results of any particular analysis. The
analyses were prepared for the purpose of enabling The Valuations
Group to provide its opinion as to fairness and do not purport to be
appraisals or necessarily reflect the prices at which businesses or
securities actually may be sold.
As compensation for financial advisory services rendered in
connection with the Offer, the Partnership has agreed to pay The
Valuations Group a fee of $9,000.00, whether or not the Offer is
consummated.
Interests of Certain Persons in the Offer
The General Partner's interest in the Partnership will not
increase as a result of the Offer. However, the General Partner could
benefit if, upon the eventual sale of the Partnership's property,
there were sufficient net cash proceeds to permit the General Partner
to share in distributions set forth in the Amended and Restated
Agreement of Limited Partnership, dated September 30, 1996 (the
"Partnership Agreement"). The Partnership Agreement permits the
General Partner to receive 12% of the net sale proceeds as well as
other payments set forth in the Partnership Agreement, provided the
Limited Partners have received a certain return. There can be no
assurance, however, that there will be any such amount available for
distribution to the General Partner or that the remaining Limited
Partners will receive either their capital contributions or any other
payment.
Jeffrey Keierleber, an affiliate of the General Partner, owns
193.04 Interests and has advised the General Partner that he does not
intend to tender his Interests. As a consequence of this Offer, Mr.
Keierleber will acquire a greater percentage ownership of the
Partnership, as will other Limited Partners who retain their
Interests, and be subject to the risks and benefits associated with
ownership of the Interests and the business of the Partnership.
An affiliate of the General Partner will continue to manage the
Partnership's property and receive property management fees from the
Partnership until the property is sold. The General Partner will
continue to manage the Partnership and receive partnership management
fees, subject to the limitations set forth in the Partnership
Agreement.
Certain Effects of the Offer
In addition to the effects of the Offer on tendering and
nontendering Limited Partners and upon the General Partner, the Offer
will affect the Partnership in several other respects.
The Partnership will use some or all of its existing cash
reserves for the purchase of Interests and will not have such cash
reserves available for future needs and contingencies. The use of
cash reserves will reduce or eliminate the Partnership's present
interest income earned on such cash reserves. Moreover, if the
Partnership borrows additional funds to finance the purchase of in
excess of 8,944 Interests, such additional borrowing will increase the
required debt service of the Partnership and reduce, eliminate, or
result in a negative cash flow. The Partnership has not sought or
obtained a commitment for financing and there can be no assurances as
to the availability, terms or applicable conditions of any financing.
The receipt of cash pursuant to the Offer will be a taxable
transaction to any Limited Partners who tender Interests. See "The
Partnership--Certain Federal Income Tax Consequences of the Offer."
For tax qualified investors, increasing the leverage could also result
in unrelated business taxable income. See "Certain Federal Income Tax
Consequences of the Offer."
If there are fewer than 300 remaining Limited Partners after
completion of this Offer, the Partnership intends to apply to
terminate the registration of the Interests under the Exchange Act.
The termination of registration of the Interests under the Exchange
Act is expected to reduce certain of the Partnership's administrative
costs, such as legal, accounting, printing, mailing and investor
communications expenses, and will reduce the information required to
be furnished by the Partnership to the Securities and Exchange
Commission and will make certain provisions of the Exchange Act, such
as the short-swing profit recovery provisions of Section 16(b) no
longer applicable and suspend the requirement to file reports pursuant
to Section 15(d).
Continued holding of the Interests will subject the Limited
Partners to the risks generally incident to the ownership of real
property, including: (a) the uncertainty of sufficient revenue to
meet fixed obligations, if any; (b) adverse changes in national
economic conditions; (c) changes in the popularity of real estate as
an investment; (d) adverse local market conditions due to changes in
general or local economic conditions or neighborhood values; (e)
changes in interest rates and the availability and terms of mortgage
funds in general; (f) the financial condition of tenants and sellers
of property; (g) changes in real estate tax rates or other operating
expenses; (h) energy shortages or price changes; or (i) governmental
actions such as rent or other economic controls, acts of God, and
other factors that are beyond the control of the General Partner.
Although the Partnership intends to maintain insurance with the types
and amounts of coverage that are customarily maintained by prudent
owners of similar properties, uninsured losses could nevertheless
occur. In addition, certain expenditures associated with real estate
equity investments (principally, real estate taxes and maintenance
costs) are not necessarily decreased by events adversely affecting the
Partnership's income from such investments. Thus, the cash required
to operate a property may exceed the rental income earned thereon, and
the Partnership may have to borrow funds in order to protect its
investment or may be required to dispose of the property at a loss.
The Partnership's ability to meet its obligations and thereafter to
make distributions to the Limited Partners will depend on these
factors and, for these and other reasons, no assurance of profitable
operations can be made. In addition, there can be no assurance that
the value of the Partnership's real estate holdings will appreciate in
the future.
Conduct of the Partnership After the Offer
The Partnership intends to operate Pelican Sound, The Meadows II
and Town Place for a number of years. There can, of course, be no
assurance that the market will be better or worse than presently
exists at any point in the future or that a profit will be realized by
the Partnership upon an eventual sale of its property. The General
Partner has no plans to seek a sale of the Partnership's property
until, in its opinion, such sale is necessary or appropriate. The
timing of such events cannot be predicted, but the General Partner
does not anticipate such a sale for at least two years, and perhaps
much longer. Other than as described in this Offer, the Partnership
does not have any present plans or proposals that would result in any
extraordinary transactions, or any material changes in the structure
of the Partnership.
If the Partnership obtains financing to fund this Offer, the
amount and frequency of future cash distributions will be affected by
any debt service obligations and possibly by the terms of the
financing arrangement. Future distributions may also be affected by
other factors, including cash flow of the Partnership's properties,
cash reserves of the Partnership, and number of Interests tendered and
purchased pursuant to this Offer. See "Lack of Market and
Distributions." The Partnership may consider acquiring additional
investment properties and leverage the Partnership. No specific
properties have been identified for investment, and the General
Partner will have substantial discretion in investing any funds from
refinancing of the Partnership property. No assurances can be given
that the Partnership will be successful in obtaining suitable
investments on financially attractive terms or that, if investments
are made, the objectives of the Partnership will be achieved.
Upon completion of the Offer, the Partnership may consider
purchasing any Interests not purchased in the Offer. Any such
purchases may be on the same terms or on terms which are more or less
favorable to Limited Partners than the terms of the Offer. Rule 13e-4
under the Exchange Act prohibits the Partnership and its affiliates
from purchasing any Interests, other than pursuant to the Offer, until
at least ten business days after the Expiration Date. Any possible
future purchases by the Partnership will depend on many factors,
including the market price of the Interests, the results of the Offer,
the Partnership's business and financial position and general economic
and market conditions.
Interests the Partnership acquires pursuant to the Offer will not
be available for the Partnership to issue without further Limited
Partner action.
Certain Federal Income Tax Consequences of the Offer
The following is a general summary under currently applicable law
of certain federal income tax considerations generally applicable to
the sale of Interests pursuant to the Offer and the retention of
Interests after the Expiration Date. The following summary is for
general information only, and the tax treatment described herein may
vary depending upon each Limited Partner's particular situation.
Certain Limited Partners (including, but not limited to, insurance
companies, tax-exempt organizations, financial institutions or
broker/dealers, foreign corporations, and persons who are not citizens
or residents of the United States) may be subject to special rules not
discussed below. In addition, the summary does not address the
federal income tax consequences to all categories of Interest
holders, nor does it address the federal income tax consequences to
persons who do not hold the Interests as "capital assets," as defined
by the Internal Revenue Code of 1986, as amended (the "Code"). No
ruling from the Internal Revenue Service ("IRS") will be sought with
respect to the federal income tax consequences discussed herein; thus,
there can be no assurance that the IRS will agree with the conclusions
stated. For tax years prior to 1996, the Partnetship utilized an
incorrect procedure for calculating and allocating certain
depreciations/deductions. See "Corrections of Depreciation Methods
and Allocations" below. Limited Partners are urged to consult
their own tax advisors as to the particular tax consequences
of a tender of their Interests to the Partnership for repurchase
pursuant to the Offer, including the applicability and effect of
any state, local, foreign or other tax laws, any recent changes
in applicable tax laws and any proposed legislation. The
following information is intended as a general statement of
certain tax considerations, and Limited Partners should
not construe this as legal or tax advice.
Sale of Interests Pursuant to the Offer. The receipt of cash for
Interests pursuant to the Offer will be a taxable transaction for
federal income tax purposes and may also be a taxable transaction
under applicable state, local and other tax laws. The repurchase of
Interests by the Partnership pursuant to the Offer will be deemed a
sale of the Interests by the tendering Limited Partner. The
Partnership's payment for a Limited Partner's Interests is in complete
liquidation of that portion of the Limited Partner's interest in the
Partnership represented by the repurchased Interests. The recipient
of such payments is taxable to the extent of any gain recognized in
connection with the liquidation. In general, and subject to the
recapture rules of the Code Section 751 discussed below, a holder will
recognize capital gain or loss at the time his Interests are purchased
by the Partnership to the extent that the money distributed to him
exceeds his adjusted basis the repurchased Interests. Upon a sale of
an Interest pursuant to the Offer, a Limited Partner will be deemed to
have received money in the form of any cash payments to him from the
Partnership and to the extent he is relieved from his proportionate
share of liabilities, if any, to which the Partnership's assets are
subject. A Limited Partner will thus be required to recognize gain
upon the sale of his Interests to the Partnership if the amount of
cash he actually receives, plus the amount he is deemed to have
received as a result of being relieved of his proportionate share of
Partnership nonrecourse liabilities (if any), exceeds the adjusted
basis of the Limited Partner for the repurchased Interests. The
income taxes payable upon the sale must be determined by each Limited
Partner on the basis of his own financial interests.
The adjusted basis of a Limited Partner's Interests is calculated
by taking his initial basis and making certain additions and
subtractions thereto. The initial basis of a Limited Partner is the
amount paid for his Interests ($1,000 per Interest for those who
purchased in the initial offering). This initial basis is increased
by a Limited Partner's proportionate share of nonrecourse liabilities,
if any, to which the Partnership's assets are subject and by the share
of Partnership taxable income, capital gains and other income items
allocated to the Limited Partner. A Limited Partner's basis is
reduced by cash distributions and by the share of Partnership losses
allocated to the Limited Partner.
A selling Limited Partner will be allocated a pro rata share of
the Partnership's taxable income or loss for 1996 with respect to the
Interests sold in accordance with the provisions of the Partnership
Agreement concerning transfers of Interests. Such allocation will
affect the Limited Partner's adjusted tax basis in his Interests and,
therefore, the amount of such Limited Partner's taxable gain or loss
upon a sale of Interests pursuant to this Offer. For individuals,
trusts and estates the income allocated will be treated as ordinary
income which could be taxed at a rate as high as 39.6% for federal
income tax purposes, while the corresponding reduction in taxable gain
upon the sale of the Interests will result in tax savings of no more
than 28% of the reduction in taxable gain.
There was nonrecourse debt attributed to the Interests in the
approximate amount of $23,086,000 as of June 30, 1996. Therefore,
in determining the tax consequences of accepting the Offer, the
Partnership's payments for Interests will be deemed to be equal
to the $402 cash payment per Interest plus a pro rata share
of the Partnership's nonrecourse debt (approximately $1,322 per
Interest) (together, the "Selling Price"). The taxable gain
(or loss) to be incurred as a consequence of accepting the Offer
is determined by subtracting the adjusted basis of the purchased
Interests from the Selling Price.
Each Limited Partner must determine his own adjusted tax basis,
as the adjusted tax basis will vary depending upon when the Limited
Partner purchased the Interests and the amount of distributions
received for each Interest, which varies by the day admitted to the
Partnership. As of June 30, 1996, the General Partner estimates that
the adjusted tax basis of each Interest held by an original Limited
Partner, based on tax returns filed by the Partnership, ranges from
$1,379 to $1,479, on average (for taxable limited partners), and
from $2,040 to $2,068, on average (for tax-exempt limited partners),
depending upon the year of investment, computed as follows:
<PAGE>
<TABLE>
<CAPTION>
1986 Purchase 1987 Purchase 1988 Purchase
Taxable Tax Exempt Taxable Tax Exempt Taxable Tax Exempt
<S> <C> <C> <C> <C> <C> <C>
Original Capital Contribution $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Ordinary Income (1986 to 1990) 50 50 50 50 34 34
Rental Income 318 294 314
Interest Income Reported
(through December 31, 1995) 110 110 110 110 71 71
Estimated 1996 Rental Income 3 3 3
Estimated 1996 Interest Income 7 7 7 7 7 7
Proportionate Share
of Non-Recourse Debt 1,322 1,322 1,322 1,322 1,322 1,322
2,489 2,810 2,489 2,786 2,434 2,751
Less: Net Rental Losses
(through December 31, 1995) (324) (325) (256)
Less: Investment Interest Expense
(through December 31, 1995) (43) (43) (43) (43) (43) (43)
Less: Section 1231 Loss (1994) (55) (55) (55) (55) (55) (55)
Less: Cash Distributions
(through September 30, 1996) (661) (661) (634) (634) (574) (574)
Estimated 1996 Rental Loss (16) (16) (16)
Estimated 1996 Investment
Interest Expense (11) (11) (11) (11) (11) (11)
Estimated Current Basis
Per Interest 1,379 2,040 1,405 2,043 1,479 2,068
</TABLE>
<PAGE>
THE FOREGOING ESTIMATE INCLUDES ESTIMATES OF THE ALLOCATED
PORTIONS OF ITEMS ATTRIBUTABLE TO 1996 (INCLUDING INTEREST
INCOME, AND PASSIVE ACTIVITY LOSSES). EACH LIMITED PARTNER MUST
DETERMINE HIS OWN ADJUSTED BASIS.
Under the foregoing and utilizing the estimated adjusted tax
basis, an original Limited Partner whose Interests are purchased
in the Offer would incur a gain of approximately $245 to $345 per
Interest (on average) for taxable limited partners or a loss of
approximately $316 to $344 per Interest (on average) for tax-
exempt limited partners as follows:
<PAGE>
<TABLE>
<CAPTION>
1986 1986 1987 1987 1988 1988
Taxable Tax Exempt Taxable Tax Exempt Taxable Tax Exempt
<S> <C> <C> <C> <C> <C> <C>
Cash for Interests 402 402 402 402 402 402
Relief from Non-Recourse Liabilities 1,322 1,322 1,322 1,322 1,322 1,322
Selling Price 1,724 1,724 1,724 1,724 1,724 1,724
Subtracted Basis (computed above) (1,379) (2,040) (1,405) (2,043) (1,479) (2,068)
Taxable gain (loss) $ 345 $ (316) $ 319 $ (319) $ 245 $ (344)
</TABLE>
<PAGE>
Such a loss will be a capital loss if the Interests are a
capital asset in the hands of the current Limited Partner.
Capital losses are deductible only to the extent of capital gains
plus, in the case of a noncorporate taxpayer, ordinary income up
to $3,000. Noncorporate taxpayers can carry a net capital loss
forward until it is exhausted. Corporations can carry net
capital losses back three years and forward five years.
The actual taxable gain (loss) for any particular Limited
Partner may vary depending on that Limited Partner's particular
circumstances. For example, if a current Limited Partner
acquired an Interest from another Limited Partner rather than in
the initial offering of Interests, the current Limited Partner's
basis for his Interests is probably not between $1,379 to $1,479
for taxable limited partners (the amounts shown above).
Furthermore, if the Limited Partner has suspended passive
activity losses from this Partnership or from any other activity,
the Limited Partner may be able to offset the income allocated to
him by the Partnership for 1996 by the amount of his suspended
passive activity losses. The General Partner estimates that the
amount of suspended passive activity losses from this Partnership
would range from $325 to $344 per Interest, on average, for
taxable limited partners, unless such losses have previously been
utilized by the Limited Partner. Under this assumption, the
resulting net gain (loss) of the sale of Interests pursuant to
this Offer would range from a net loss of $80 per Interest to a
net gain of $1 per Interest for taxable limited partners.
Under Code Section 469, a noncorporate taxpayer or personal
service corporation can deduct passive activity losses in any
year only to the extent of such individual's passive activity
income for such year, and closely held corporations may not
offset such losses against so-called "portfolio" income. A loss
recognized by a Limited Partner upon a sale of less than 100% of
his Interests pursuant to this Offer can be currently deducted
(subject to other applicable limitations) to the extent of such
Limited Partner's passive income from the Partnership for the
year of sale or to the extent of any other passive activity
income from that year, and a gain, if any, recognized by a
Limited Partner upon such sale can be offset by such Limited
Partner's current or carryover passive activity losses, if any,
from the Partnership or from other sources. If a Limited Partner
disposes of 100% of his Interests pursuant to the Offer, such
Limited Partner generally will be able to deduct his remaining
passive activity losses, if any, from the Partnership that could
not previously be deducted by such Limited Partner due to the
foregoing limitations.
A taxable gain, if any, on the disposition of Interests must
be allocated between ordinary income and long term capital gain.
Long term capital gain or loss will be realized on such sale by a
Limited Partner if (1) he or she is not a "dealer" in securities;
(2) he or she has held the Interests for longer than 12 months;
and (3) the Partnership has no Section 751 assets. To the extent
that a portion of the gain realized on the sale of an Interest is
attributable to Section 751 assets (i.e., "unrealized
receivables" and "inventory items of the Partnership which have
appreciated substantially in value") a Limited Partner will
recognize ordinary income, and not a capital gain, upon the sale
of the Interest. For purposes of Code Section 751, recapturable
cost recovery allowance is treated as if it were an "unrealized
receivable." Thus, gain, if any, recognized by a Limited Partner
who sells an Interest will be ordinary income in an amount not in
excess of his share of the Partnership's recapturable cost
recovery allowance. Furthermore, if the Partnership were deemed
to be a "dealer" in real estate for federal income tax purposes,
the property held by the Partnership might be treated as
"inventory items of the Partnership which have appreciated
substantially in value" for purposes of Code Section 751 and a
Limited Partner tendering his Interests would recognize ordinary
income, in an amount equal to his share of the appreciation in
value of the Partnership's real estate inventory. The General
Partner does not believe it has operated the Partnership's
business in a manner as to make the Partnership a "dealer" for
tax purposes.
For taxable Limited Partners the amount of recapturable
cost recovery allowance per Interest purchased by a Limited
Partner in the original offering is estimated to be $105 as
of December 31, 1996. Therefore, approximately $105 of the
taxable gain, if any, per Interest will be considered to be
ordinary income, with the balance of the taxable gain (loss)
considered to be capital gain (loss) for federal income tax
purposes for the Limited Partners who hold their Interests
as capital assets. Ordinary income recognized in 1996 is
taxed at a stated maximum rate of 39.6% for federal income
tax purposes. Net capital gains are taxed for federal
income tax purposes at a stated maximum rate of 28%. The tax
rates may actually be somewhat higher, depending on the
taxpayer's personal exemptions and amount of adjusted gross
income. For tax exempt Limited Partners subject to UBTI (see
"Retirement Plan Investors," below), the amount of
recapturable cost recovery allowance per Interest purchased by
a tax exempt Limited Partner in the original offering is
estimated to be $9 as of December 31, 1995.
Gain realized by a foreign Limited Partner on a sale of
Interests pursuant to this Offer will be subject to federal
income tax. Under Code Section 1445 and related regulations, the
transferee of a partnership interest held by a foreign person is
generally required to deduct and withhold a tax equal to 10% of
the amount realized on the disposition. The Partnership will
withhold 10% of the amount realized by a tendering foreign
Limited Partner. Amounts withheld would be creditable against a
foreign Limited Partner's federal income tax liability, and if in
excess thereof, a refund could be obtained from the Service by
filing a U.S. income tax return.
To prevent back-up federal income tax withholding equal to
31% of the payments made pursuant to the Offer, each Limited
Partner who does not otherwise establish an exemption from such
withholding must notify the Partnership of such Limited Partner's
correct taxpayer identification number (or certify that such
taxpayer is awaiting a taxpayer identification number) and
provide certain other information by completing a Substitute Form
W-9 to the Partnership. Certain Limited Partners, including
corporations, are not subject to the withholding and reporting
requirements. Foreign Limited Partners are subject to other
requirements. See "The Offer -- Signature Guarantees and Method
of Delivery."
Retirement Plan Investors. Qualified pension, profit-
sharing and stock bonus plans and IRA's (collectively "Qualified
Plans") are generally exempt from taxation except to the extent
that their unrelated business taxable income ("UBTI"), determined
in accordance with Code Sections 511-514, exceeds $1,000 in any
taxable year. Code Section 512(b)(5) provides generally that
UBTI does not include gains or losses from the disposition of
property other than inventory or property held primarily for sale
to customers in the ordinary course of business. However, Code
Section 512(b)(4) provides that notwithstanding Code Section
512(b)(5), a portion of the gain from the sale of debt-financed
property will be treated as UBTI. Because a portion of the
Partnership's assets are debt financed, a portion of the gain, if
any, recognized by a Qualified Plan on the sale of an interest
will be UBTI. If a Qualified Plan is not a "dealer" in
securities, the remaining portion of any gain from the sale of
Interests will not be UBTI unless the Partnership is deemed to be
a "dealer" in real estate. The General Partner does not believe
the Partnership's business has been operated in such a manner as
to make it a dealer, but there is no assurance that the Service
may not contend that the Partnership is a dealer. If the
Partnership obtains financing to repurchase Interests, the
Internal Revenue Service may contend that each nonredeeming
Limited Partner has acquired an interest in debt-financed
property, in addition to the current debt-financed property of
the Partnership. The Internal Revenue Service may also contend
that the increase in the principal amount of the Town Place
Apartments mortgage loan in April 1996 could reasonably have been
anticipated when the original mortgage loan had been obtained.
The General Partner does not believe that the increase could have
been reasonably anticipated. However, if the Internal Revenue
Service were successful in either contention, some additional
portion of the Partnership's income allocated to those Limited
Partners that are Qualified Plans would be UBTI.
Retention of Interests. There will be no immediate tax
consequences to Limited Partners with respect to Interests that
are not repurchased in the Offer. However, Limited Partners who
retain their Interests will, henceforth, have a proportionately
greater interest in the items of Partnership income and loss and
in distributions by the Partnership because each remaining
Interest will represent a greater percentage of the total
Interests outstanding. The extent of the change in proportionate
interest will depend upon the number of Interests tendered and
accepted by the Partnership. Plan Limited Partners who are
Qualified Plans will have a greater amount of UBTI. The actual
amount of UBTI will depend upon the actual number of Interests
purchased pursuant to this Offer.
Limited Partners who own Interests that are not repurchased
will have income or loss allocated to them by the Partnership for
1996 (estimated to be approximately $16 of net rental loss per Interest
for taxable partners and $3 of net rental income for tax-exempt limited
partners as of June 30, 1996. It is estimated that all limited
partners will report in 1996 interest income of $7 per Interest
and investment interest expense of $11 per Interest.). However,
such Limited Partners will receive cash distributions from the
Partnership in 1996 that can be used to pay the 1996 income taxes
resulting from such allocation. As discussed above, suspended
passive activity losses, if any, can be used to reduce the impact
of any taxable income allocated for 1996.
Correction of Depreciation Methods and Allocations. In
October 1996, the General Partner discovered that in years prior
to 1996 the Partnership had depreciated all of its depreciable
real estate on a straight-line basis over 27-1/2 years, its
land improvements on a straight-line basis over 15 years,
and its tangible personal property on an accelerated basis
over seven years and had allocated all of such depreciation
to the taxable Limited Partners. However, because some of
the Limited Partners are Qualified Plans, a portion of such
property should have been treated as tax-exempt property
under the Code and should have been depreciated on a straight
line basis over 40 years for real estate and land improvements
and over 10 years for tangible personal property. The
Partnership Agreement provides that the depreciation attributable
to tax-exempt real estate is to be allocated to Qualified Plans,
but is silent as to the allocation with respect to other tax-
exempt property. Beginning with 1996, the Partnership will
compute depreciation attributable to its tax-exempt property
on a straight-line basis over 40 years or 10 years, as the
case may be, and will allocate such depreciation to Qualified
Plans.
The Partnership does not intend (and is not required) to
file amended tax returns for years prior to 1996 to correct
these errors. However, if the I.R.S. audits the Partnership,
the I.R.S. may adjust depreciation for the three years prior to
1996 that are open to audit, thereby resulting in a timing
difference with respect to such deductions.
For a taxable Limited Partner, such adjustments would have
the effects of decreasing the amount of depreciation allocated to
the Limited Partner for the three years prior to 1996, increasing
the taxable income of the Limited Partner for such years (if the
losses allocated by the Partnership were not suspended passive
activity losses), reducing any suspended passive activity losses
for such years, increasing the Limited Partner's basis in his
or her Interest and reducing the gain (or increasing the loss)
on the sale of his or her Interest. The General Partner estimates
that a taxable Limited Partner who used losses from the
Partnership to reduce the Limited Partner's taxable income for
such years would have additional taxable income of approximately
$30 per Interest for each of the three years that are open to
federal audit adjustment. For a Qualified Plan, such adjustments
would have the effects of increasing the amount of depreciation
allocated to the Qualified Plan for the three years prior to 1996,
but reducing the UBTI of the Qualified Plan for such years (the
General Partner estimates this amount to be approximately $32
per Interest for each of the three years that are open to federal
audit adjustment), possibly creating suspended passive activity
losses from some of such years, reducing the Qualified Plan's
basis in its Interest and increasing the gain (or reducing the
loss) on the sale of the Interest.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY. EACH LIMITED PARTNER IS URGED TO
CONSULT THEIR OWN TAX ADVISOR TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO SUCH LIMITED PARTNER (INCLUDING THE APPLICABILITY
AND EFFECT OF THE CONSTRUCTIVE OWNERSHIP RULES AND FOREIGN, STATE
AND LOCAL TAX LAWS) OF THE DISPOSITION OF INTERESTS PURSUANT TO
THE OFFER.
Accounting Treatment
For accounting and financial purposes, the Offer will be
accounted for as a redemption of limited partnership interests in
accordance with Accounting Principles Board Opinion No. 16.
Regulatory Matters
Except as set forth in this Section of the Offer, the
Partnership is not aware of any filings, approvals or other
actions by any domestic or foreign governmental or administrative
agency that would be required prior to the repurchase of
Interests by the Partnership pursuant to this Offer. The
Interests are not "margin securities" under the regulations of
the Board of Governors of the Federal Reserve System and,
accordingly, such regulations are not applicable to this Offer.
Because a possible consequence of the Offer may be that the
Partnership would no longer be required to file reports under the
Exchange Act, the Offer is subject to the requirements of
Wisconsin Administrative Code Section SEC 6.05. Section SEC 6.05
permits such a transaction to occur if the following conditions
are met: (1) the terms of the transaction, including compensation
for the equity securities to be purchased, are fair to all
holders of the securities; (2) the issuer has delivered to each
holder of the securities and has filed with the Wisconsin
Commissioner of Securities a complete and accurate description of
the transaction at least 20 days prior to any purchase or
shareholder vote authorizing the purchase; (3) non-affiliated
security holders are treated no less favorably in connection with
the transaction than any affiliates; and (4) the Commissioner
does not find, within 15 days of the filing of the description of
the transaction, that the transaction constitutes a device,
scheme or artifice to defraud or tends to operate as a fraud or
deceit on the holders of the securities. The Partnership has
made the required filing under Section SEC 6.05 on October 11,
1996. This Offer is conditioned upon the Staff of the Wisconsin
Commissioner of Securities informing the Partnership that it will
not recommend that an order disallowing the tender offer be
issued. The Wisconsin Commissioner of Securities will not and
has not passed upon the merits of the Offer or made any finding
concerning its fairness.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
WISCONSIN COMMISSIONER OF SECURITIES NOR HAS THE COMMISSIONER
PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTION OR UPON
THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS
DOCUMENT.
THE OFFER
Under the terms of the Offer, the Partnership will pay for
Interests validly tendered on or prior to the Expiration Date and
not withdrawn in accordance with the Offer to Purchase. The term
"Expiration Date" shall mean 12:00 p.m., midnight, Milwaukee
time, on November 22, 1996 unless the Partnership extends this
Offer and, in such event, the term "Expiration Date" shall mean
the latest time and date on which the Offer, as so extended,
shall expire.
If, prior to the Expiration Date, the Partnership were to
increase the Offer Price, such increased Offer Price would be
delivered in respect of all Interests accepted pursuant to this
Offer, whether or not they were tendered prior to such increase.
This Offer is not conditioned on any minimum number of
Interests being tendered. This Offer is, however, subject to
satisfaction of certain conditions. See "The Offer--Conditions
of Offer," which sets forth in full the conditions of this Offer.
The General Partner reserves the right, in its sole discretion,
to waive any or all of such conditions, but shall not be
obligated to do so.
This Offer to Purchase and the related Letter of Acceptance
are being mailed by the Partnership to Limited Partners of record
(in the case of Individual Retirement Accounts and qualified
plans a copy will be sent to the beneficial owners).
There are no appraisal rights or other rights accorded to
nontendering Limited Partners under either the Partnership
Agreement or applicable state law.
Proration
This Offer is for all Interests and upon the terms and
subject to the conditions of the Offer, the Partnership will
accept for payment (and thereby purchase) up to all Interests.
The proration period also expires on the Expiration Date.
In the event that more than 8,944 Interests are tendered by
the Expiration Date, the Partnership will attempt to borrow
additional funds on terms deemed acceptable by the General
Partner, in its sole discretion, to enable the Partnership to
purchase up to 17,466.31 Interests. If the Partnership obtains
financing to purchase additional Interests, the Partnership will
prepare and disseminate supplemental materials and, if required,
will extend the Expiration Date. The maximum mortgage
indebtedness permitted by Section 7.2B (iii) of the Partnership
Agreement is 75% of the aggregate independently appraised fair
market value of the properties. There can be no assurance that
the Partnership will obtain such financing.
In the event that more than 8,944 Interests are tendered by
the Expiration Date (or such greater amount as allowed) and the
Partnership does not have sufficient funds to purchase all of the
Interests tendered by that date, the Partnership will prorate
purchases from the Limited Partners as follows:
1. The Partnership will first accept all of the tenders
from Limited Partners who own less than 100 Interests and who
tender all of their Interests by the Expiration Date. If this
amount is in excess of 8,944 and the Partnership does not, or
cannot borrow additional funds, the Partnership will prorate
purchases based upon the ratio of (a) the number of Interests
tendered by each Limited Partner who own less than 100 Interests
and tendered all of their Interests to (b) the total number of
Interests tendered by all Limited Partners who own less than 100
Interests and tender all of their Interests. The General Partner
will prorate such that every Limited Partner who has prorated
Interests will not hold Fractional Interests and will not hold
less than three Interests.
2. If the above category of tendering Limited Partners has
been satisfied and if there are funds to purchase other Interests
tendered, the Partnership will do so. This second category will
consist of those (i) Limited Partners who own 100 Interests or
more and (ii) Limited Partners who own less than 100 Interests
and who tendered some, but not all of their Interests. If
necessary, the Partnership will prorate tenders based upon the
ratio of the number of Interests tendered by each Limited Partner
in this second category to the total number of Interests tendered
in this second category, provided that the Partnership may round
the prorated amount such that a Limited Partner who tenders
Interests does not hold any Fractional Interest and must hold at
least three Interests. If a Limited Partner decides to tender
some, but not all, Interests, such Limited Partner must tender an
amount such that the Limited Partner does not hold Fractional
Interests and holds at least three Interests. See "The Offer--
Procedures for Tendering Interests."
If the Partnership increases or decreases the price to be
paid for Interests, or the Partnership increases the number of
Interests being bought and any such increase in the number of
Interests being bought exceeds 2% of the outstanding Interests,
or the Partnership decreases the number of Interests being
bought, and the Offer is scheduled to expire less than ten
business days from and including the date that notice of such
increase or decrease is first published, sent or given to Limited
Partners, then the Offer will be extended for ten business days
from and including the date of such notice. For purposes of the
Offer, a "business day" means any day other than a Saturday,
Sunday or federal holiday and consists of the time period from
12:01 A.M. through Midnight, Milwaukee, Wisconsin time. If the
Partnership obtains financing, it will prepare and disseminate
supplemental material and, if necessary, may extend the
Expiration Date.
Procedures for Tendering Interests
In order for a tendering Limited Partner to participate in
this Offer, Interests must be validly tendered on or prior to the
Expiration Date, and not withdrawn. A valid tender requires that
a properly completed and duly executed Letter of Acceptance and
duly executed signature pages for any other documents required by
the Letter of Acceptance be actually received by the Partnership
on or prior to the Expiration Date. A Limited Partner may tender
all or any portion of its Interests, including Fractional
Interests, provided the Limited Partner must tender any
Fractional Interests and may not hold fewer than three (3)
Interests, after the tender. All Interests of the Partnership
have been issued in book entry form, which means that there are
no certificates for the Interests. The Partnership expects to
forward cash to the Limited Partners who tender Interests within
30 days of the Expiration Date. It is a violation of Section
10(b) of the Exchange Act and Rule 10b-4 promulgated thereunder,
for a person to tender Interests for such person's own account
unless the person so tendering owns such Interests. Section
10(b) and Rule 10b-4 provide a similar restriction applicable to
the tender or guarantee of a tender on behalf of another person.
The acceptance of Interests by the Partnership for payment will
constitute a binding agreement between the tendering Limited
Partner and the Partnership upon the terms and subject to the
conditions of the Offer, including the tendering Limited
Partner's representation that (1) such Limited Partner owns the
Interests being tendered within the meaning of Rule 10b-4
promulgated under the Exchange Act and (2) the tender of such
Interests complies with Rule 10b-4.
The Letter of Acceptance must be signed by the registered
holder of the Interests, exactly as the name appears on the
register of the Partnership, and payment will be made directly to
that holder at the address indicated on the register.
THE METHOD OF DELIVERY OF THE LETTER OF ACCEPTANCE AND ALL
OTHER REQUIRED DOCUMENTS IS SOLELY AT THE OPTION AND RISK OF THE
TENDERING LIMITED PARTNER, AND DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE PARTNERSHIP. OVERNIGHT COURIER
SERVICE OR REGISTERED MAIL IS RECOMMENDED.
Signature Guarantees and Method of Delivery
No signature guarantee is required on the Letter of
Acceptance if the Letter of Acceptance is signed by the
registered holder of the Interests tendered therewith and payment
is to be made directly to such registered holder, or if Interests
are tendered for the account of a member firm of a registered
national securities exchange, a member of the National
Association of Securities Dealers, Inc. or a commercial bank or
trust company having an office, branch or agency in the United
States (each such entity being hereinafter referred to as an
"Eligible Institution"). In all other cases, all signatures on
the Letter of Acceptance must be guaranteed by an appropriate
institution. See Instruction 1 of the Letter of Acceptance.
If payment is requested to be made to a person or persons
other than those in whose name or address the Interests stand on
the Partnership's books, the signature of the Interest owner or
owners on the Letter of Acceptance must be guaranteed by a
federal or state chartered bank or savings and loan institution
or by a broker-dealer that is a member of the New York Stock
Exchange.
To prevent back-up federal income tax withholding equal to
31% of the gross payments made pursuant to the Offer, each
Limited Partner who does not otherwise establish an exemption
from such withholding must notify the Partnership of such Limited
Partner's correct taxpayer identification number (or certify that
such taxpayer is awaiting a taxpayer identification number) and
provide certain other information by completing the Substitute
Form W-9 included in the Letter of Acceptance. Certain Limited
Partners, including corporations, are not subject to the
withholding and reporting requirements. Foreign Limited Partners
who are subject to the different requests.
All questions as to the number of Interests to be accepted
and the validity, form, eligibility (including the time of
receipt) and acceptance for payment of any tender of Interests
will be determined by the General Partner, in its sole
discretion, which determination shall be final and binding on all
parties. The Partnership reserves the absolute right to reject
any and all tenders it determines not to be in proper form or the
acceptance of payment for which may, in the opinion of the
Partnership's counsel, be unlawful. The Partnership also
reserves the absolute right to waive any of the conditions of the
Offer and any defect or irregularity in the tender of any
particular Interest. No tender of Interests will be deemed to be
properly made until all defects and irregularities have been
cured or waived. The Partnership is not and will not be
obligated to give notice of any defects or irregularities in
tenders, and will not incur any liability for failure to give
such notice.
Withdrawal Rights
Except as provided in this section, the tender of Interests
pursuant to the Offer is irrevocable. Interests tendered
pursuant to the Offer may be withdrawn at any time before the
Expiration Date and, unless theretofore accepted for payment by
the Partnership, may also be withdrawn after 12:00 midnight,
Milwaukee time, on December 23, 1996.
For a withdrawal to be effective, the Partnership must
timely receive at its offices a written, telegraphic or facsimile
transmission notice of withdrawal. Such notice of withdrawal
must specify the name of the person having tendered the Interests
to be withdrawn and the number of Interests to be withdrawn and
the name of the registered holder, if different from that of the
person who tendered the Interests. All questions as to the form,
validity and eligibility (including time of receipt) of notices
of withdrawal will be determined by the Partnership, in its sole
discretion, which determination shall be final and binding on all
parties. The Partnership is not and will not be obligated to
give any notice of any defects or irregularities in any notice of
withdrawal, and will not incur any liability for failure to give
any such notice. Any Interests properly withdrawn will
thereafter be deemed not tendered for purposes of the Offer.
Withdrawn Interests may, however, be retendered before the
Expiration Date by again following the procedures set forth in
this Offer.
Certain Conditions
The Offer is subject to certain conditions specified in The
Offer to Purchase, including the proration terms.
Notwithstanding any other provision of the Offer, the Partnership
shall not be required to accept for payment, purchase or pay for
any Interests tendered, and may terminate or amend the Offer, or
may postpone the acceptance for payment of, or the payment for,
Interests tendered, if at any time on or after the date of the
Offer, and at or before the time of purchase of, or payment for,
any such Interests, any of the following events shall have
occurred (or shall have been determined by the Partnership to
have occurred) which, in the Partnership's reasonable judgment in
any such case and regardless of the circumstances (including any
action or omission to act by the Partnership), makes it
inadvisable to proceed with the Offer or with such acceptance for
purchase or payment:
(a) There shall have been threatened, instituted or pending
any action or proceeding by any government or
governmental, regulatory or administrative agency or
authority or tribunal or any other person, domestic or
foreign, or before any court or governmental,
regulatory or administrative authority or agency or
tribunal, domestic or foreign, which:
(1) challenges the making of the Offer, or the
acquisition of Interests pursuant to the Offer or
otherwise relates in any manner to the Offer; or
(2) in the Partnership's reasonable judgment, could
materially affect the business, condition
(financial or other), income, operations or
prospects of the Partnership or otherwise
materially impair in any way the contemplated
future conduct of the business of the Partnership
or materially impair the Offer's contemplated
benefits to the Partnership; or
(b) There shall have been any action threatened, pending or
taken, or approval withheld, or any statute, rule,
regulation, judgment, order or injunction threatened,
proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the
Offer or the Partnership, by any court or any
government or governmental, regulatory or
administrative authority or agency or tribunal,
domestic or foreign, which, in the Partnership's
reasonable judgment, could directly or indirectly:
(1) make the acceptance for payment of, or payment
for, some or all of the Interests illegal or
otherwise restrict or prohibit consummation of the
Offer;
(2) delay or restrict the ability of the Partnership,
or render the Partnership unable, to accept for
payment or pay for some or all of the Interests;
(3) materially impair the contemplated benefits of the
Offer to the Partnership; or
(4) materially affect the business, condition
(financial or other), income, operations, or
prospects of the Partnership, or otherwise
materially impair in any way the contemplated
future conduct of the business of the Partnership;
or
(c) There shall have occurred:
(1) the declaration of any banking moratorium or
suspension of payments in respect of banks in the
United States;
(2) any general suspension of trading in, or
limitation on prices for, securities on any United
States national securities exchange or in the
over-the-counter market;
(3) the commencement of a war, armed hostilities or
any other national or international crisis
directly or indirectly involving the United
States;
(4) any limitation (whether or not mandatory) by any
governmental, regulatory or administrative agency
or authority on, or any event which, in the
Partnership's reasonable judgment, might affect,
the extension of credit by banks or other lending
institutions in the United States;
(5) any change in the general political, market,
economic or financial conditions in the United
States or abroad that could have a material
adverse effect on the Partnership's business,
operations or prospects; or
(6) in the case of any of the foregoing existing at
the time of the commencement of the Offer, in the
Partnership's reasonable judgment, a material
acceleration or worsening thereof; or
(d) Any change shall occur or be threatened in the
business, condition (financial or other), income,
operations, Interests ownership or prospects of the
Partnership which, in the Partnership's reasonable
judgment, is or may be material to the Partnership or
its Limited Partners; or
(e) A tender or exchange offer for any or all of the
Interests (other than the Offer), or any merger,
business combination or other similar transaction with
or involving the Partnership, shall have been proposed,
announced or made by any person; or
(f) If (i) any entity, "group" (as that term is used in
Section 13(d)(3) of the Exchange Act) or person shall
have acquired or proposed to acquire beneficial
ownership of more than 5% of the outstanding Interests,
or (ii) such entity, group or person that has publicly
disclosed any such beneficial ownership of more than 5%
of the Interests prior to such date shall have
acquired, or proposed to acquire, beneficial ownership
of additional Interests constituting more than 2% of
the outstanding Interests or shall have been granted
any option or right to acquire beneficial ownership of
more than 2% of the outstanding Interests.
The foregoing conditions are for the Partnership's benefit
and may be asserted by the General Partner regardless of the
circumstances giving rise to any such condition (including any
action or inaction by the Partnership or General Partner) or may
be waived by the Partnership, in whole or in part. The
Partnership's failure at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right,
and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time. Any determination by
the Partnership concerning the events described in this Section
shall be final and binding upon all parties. In all of the
foregoing, the General Partner has conclusive authority to act
for the Partnership.
Estimated Costs and Fees
Estimated costs and fees in connection with the Offer and
the related transactions, which have been or will be paid by the
Partnership, are as follows:
Advisory fees . . . . . . . . . . . . . . . . . $ 9,000
Property appraisals . . . . . . . . . . . . . . 7,800
Legal fees. . . . . . . . . . . . . . . . . . . 45,000
Blue Sky fees and expenses. . . . . . . . . . . 8,000
Accounting fees . . . . . . . . . . . . . . . . 10,000
Printing, mailing fees, and EDGAR filing fees . 30,000
Commission filing fees. . . . . . . . . . . . . 3,500
Miscellaneous . . . . . . . . . . . . . . . . . 6,700
Total. . . . . . . . . . . . . . . . . . . $120,000
In connection with the Offer, the Partnership may utilize
the services of the Partnership manager, and certain other
employees of Decade Companies, or its affiliates. None of such
persons will receive any compensation from the Partnership in
connection with their services with respect to the Offer, other
than the General Partner and/or its affiliates may be reimbursed
at customary rates for time devoted by such person.
The Partnership will not pay fees or commissions to any
broker, dealer, commercial bank, trust company or other person
for soliciting any Interests pursuant to the Offer. The
Partnership will, however, reimburse such persons for customary
handling and mailing expenses incurred in forwarding materials in
respect of the Offer to the beneficial owners for which they act
as nominees. No such broker, dealer, commercial bank or trust
company has been authorized to act as the Partnership's agent for
purposes of this Offer.
FINANCING THE OFFER
General
If the Partnership purchases 8,944 or fewer Interests
pursuant to the Offer at a Purchase Price of $402 per Interest,
the Partnership anticipates that all required funds will be
obtained from the Partnership's available cash. Repurchase of
additional Interests, if any, would need to be funded by
Partnership borrowing. At the date of this Offer, the
Partnership has not sought or received any commitment for
financing and there can be no assurance that such financing could
be arranged on terms deemed satisfactory to the Partnership. See
"Pro Forma Financial Information" for further information
concerning the assumed cost of funds for the Offer. The actual
amount of any funds borrowed would depend upon the results of
this Offer, the interest rate of the borrowings, the term of the
loan, loan amortization, and costs incurred to obtain such loan.
There can be no assurances that the Partnership could obtain such
financing on acceptable terms.
Bank Financing
If the Partnership were to obtain financing, it would likely
be pursuant to a mortgage loan on Pelican Sound or The Meadows
II. The General Partner has not sought or received a commitment
for any financing, but based upon its past experience believes
that it may be possible for the Partnership to obtain mortgage
financing. If more than 8,944 Interests are tendered, the
Partnership intends to determine whether it can obtain financing
on acceptable terms. There can be no assurance that financing
will be available on acceptable terms and the Partnership may
enter into interim financing to fund this Offer. To the extent
the Partnership acquires indebtedness, a Limited Partner's
retained Interests will be subject to increased risks. In the
event of the financing constituting acquisition indebtedness
under Code Section 514(c), there may be unfavorable UBTI tax
consequences for certain retirement plan investors who retain
their Interests. See "The Partnership--Certain Federal Income
Tax Consequences of the Offer." The Partnership intends to repay
any amounts borrowed from cash flow from the Partnership's
operations.
DESCRIPTION OF THE LIMITED PARTNERSHIP INTERESTS
As of October 1, 1996, the Partnership had 17,466.31
Interests outstanding held by 1,936 Limited Partners. The
Partnership Agreement, as amended, authorized the issuance of a
maximum of 18,000 interests through a public offering for a total
potential Limited Partner investment of $18,000,000.
BUSINESS OF THE PARTNERSHIP
Since December 1986, the Partnership has been engaged in the
business of investing in, operating, and making loans on
residential apartment projects. The Apartment complexes owned by
the Partnership are collectively referred to as "the Apartments"
throughout this report. In December 1986, the Partnership
acquired Laguna Vista Apartments, a 235-unit apartment complex
located in Largo, Florida. In January 1989, the Partnership
acquired the Meadows II Apartments, a 316- unit apartment complex
located in Madison, Wisconsin. In January 1990, the Partnership
acquired Ashley Pointe Apartments, a 200-unit apartment complex
located in Orlando, Florida. In February 1990, the Partnership
traded Laguna Vista Apartments for Town Place Apartments, a 240-
unit apartment complex located in Clearwater, Florida. In June
1992, the Partnership purchased Woodbridge Apartments, a 168-unit
apartment complex located in Winter Park (Orlando), Florida. In
August 1993, the Partnership traded Woodbridge Apartments, and
completed the trade in November 1993, for Pelican Sound
Apartments, a 379-unit apartment complex located in St.
Petersburg, Florida. In April 1994, Ashley Pointe Apartments was
disposed with the intent to trade for a replacement property not
yet identified. The Partnership previously made mortgage loans
on real estate from 1986 to 1989 totaling $5,476,689, none of
which are outstanding.
The business of the Partnership is not seasonal, although
the Partnership's property may experience cyclical fluctuations
in occupancy levels in the rental markets where the Apartments
are located.
The Partnership does not have any employees. The Apartments
are managed by Decade Properties, Inc., an affiliate of the
General Partner. Employees of Decade Properties, Inc. perform
the on-site management services required to operate and maintain
the Apartments. Employees of the General Partner render
partnership management services to the Partnership such as
maintaining investor communications, compliance with tax laws and
other governmental regulations, and cash management.
The Partnership is not dependent upon any single tenant or
small groups of tenants for its operating success. The loss of
any one of or small group of tenants would not have a material
adverse effect. The Partnership does not foresee any events or
market trends which would have a materially adverse effect upon
the Partnership's revenues, except for increased competition for
residents.
The real estate operation of the Partnership, including the
value of its real estate holding, may be affected by many factors
over which the Partnership has limited or no control, among them
changes in general and local economic conditions, interest rate
levels, availability and terms of financing, changes in tax laws
and fluctuations in operating costs. The principal factors
affecting rental rates and occupancy levels include location,
ease of access, amenities, and the quality of property
management. The real estate investment business is highly
competitive. Additional residential rental projects may be built
which may compete directly with the properties owned by the
Partnership. At the present time, the Partnership conducts its
real estate operations solely in the St. Petersburg, Florida,
Madison, Wisconsin, and Clearwater, Florida rental markets. The
Partnership competes with numerous other entities involved in
real estate investment, including limited partnerships formed or
to be formed by the General Partner. Many of these competitors
may have greater assets than those of the Partnership or may be
associated with individuals with broader experience than that of
the General Partner. In addition, demand for investment
properties of the type owned by the Partnership may increase or
decrease. This competition is primarily based on property
location, condition, and asking rent. These factors may increase
or decrease the price of potential property acquisitions/sales.
The residential apartment complexes which are owned and operated
by the Partnership as of the date of this Offer are:
Rental
Name Location Units
Pelican Sound St. Petersburg, Florida 379
The Meadows II Madison, Wisconsin 316
Town Place Clearwater, Florida 240
The Meadows II was acquired by the Partnership in January 1989,
Town Place was acquired in February 1990, and Pelican Sound was
acquired as of November 1993.
The Meadows II is pledged as collateral against mortgage
encumbrances of approximately $6.7 million. Town Place is
pledged as collateral against a mortgage encumbrance of $6.7
million. Pelican Sound is pledged as collateral against a
mortgage encumbrance of $10 million.
The average monthly gross potential rent ("GPR") per unit at the
Apartments for the month of December and the related occupancy
rate ("OR") for December of each year is set forth below:
<PAGE>
Number December December December
of Units 1995 1994 1993
GPR OR GPR OR GPR OR
Pelican Sound 379 $564 92% $549 97% $531 92%
The Meadows II 316 $560 92% $566 85% $557 89%
Town Place 240 $569 92% $551 90% $542 93%
The average monthly gross potential rent per unit at the
apartment complexes for the three year period was:
Number
of Units 1995 1994 1993
Pelican Sound 379 $557 $537 $531
The Meadows II 316 $567 $559 $550
Town Place 240 $561 $548 $535
"Gross potential rent" represents the asking rent established by
the Partnership for a vacant apartment plus the rent in effect
for occupied apartments. As a general rule the asking rents are
the same as the actual rents eventually established by the rental
agreements.
The average occupancy level at the apartment complexes for the
three year period was:
1995 1994 1993
All Apartments 89% 92% 92%
Pelican Sound 93% 94% 92%
The Meadows II 80% 90% 93%
Town Place 93% 93% 95%
Ashley Pointe N/A 86% 83%
Woodbridge N/A N/A 94%
The range of occupancy levels at the apartment complexes for the
years was:
1995 1994 1993
Pelican Sound 91.3-96.9% 91.1-96.6% 92.0%
The Meadows II 69.8-91.9% 85.1-94.4% 88.5-95.6%
Town Place 90.5-97.0% 88.8-97.9% 90.8-98.0%
Ashley Pointe N/A 80.7-87.8% 80.1-86.5%
Woodbridge N/A N/A 90.1-96.7%
The differences in occupancy levels were primarily related to the
Partnership's asking rents compared to other competitors in the
marketplace.
The General Partner is not aware of any hidden or unapparent
conditions of the property, subsoil or structural conditions
which would render the apartment complexes more or less valuable.
The General Partner is not aware of the existence of potentially
hazardous materials used in the construction or maintenance of
the buildings, such as the presence of urea-formaldehyde foam
insulation, and/or the existence of toxic waste, which may or may
not be present at the apartment complexes. The General Partner
is not aware of any groundwater contamination, underground
methane gas or radon gas. The General Partner believes that the
apartment complexes do not produce air emissions or waste water
of environmental concern. The General Partner is not aware of
any underground storage tanks. The General Partner is not aware
of any incidents of spills, dumping or discharges at the
property/or the presence of hazardous substances. A Phase I
Environmental Site Assessment has been performed at Pelican Sound
and Town Place but has not been performed at The Meadows II. The
fairness opinion of the Valuations Group and the value estimates
provided by the appraisers assume that no environmental problems
exist.
A brief description of each property follows:
Pelican Sound Apartments, a residential apartment complex
owned and operated by the Partnership, is located at 10200 Gandy
Boulevard, St. Petersburg, Florida 33702. Pelican Sound
Apartments was built in 1988 and consists of 379 one- and two-
bedroom air conditioned living units with individual washers and
dryers. The units range in size from 505 square feet to 910
square feet. The Complex consists of 13 two and three-story
wooden frame with brick veneer garden apartment buildings plus a
1,961 square foot clubhouse/leasing office on approximately 21.59
acres. The complex includes a swimming pool with jacuzzi, two
tennis courts, 569 parking spaces, and an exercise room available
for all residents.
The complex is located in the "Gateway" region of St.
Petersburg, on Gandy Boulevard approximately one mile west of the
Gandy Bridge. The location provides easy access to both Pinellas
and Hillsborough business districts and is considered by the
General Partner to be a positive growth area for both commercial
and residential developments.
The Partnership's tax basis in Pelican Sound as of December
31, 1995 is as follows:
Land Furniture
Building Improvements and Equipment
Cost $7,695,400 $ 673,928 $ 966,214
Accumulated Depreciation (594,467) ( 93,601) (453,163)
Adjusted Tax Basis $7,100,933 $ 580,327 $ 513,051
The Partnership's property is being depreciated using MACRS
straightline over 27.5 years, and the furniture and equipment is
being depreciated using MACRS 200% declining balance over 7
years. Pelican Sound is taxed at a $26.1279 mill rate levy for
1995 (after consideration of major state aids) and paid annual
realty tax of $290,358.
The apartment mix and monthly asking rents at Pelican Sound
Apartments are as follows
<PAGE>
<TABLE>
<CAPTION>
Number
of Square Asking Rent
Style Units Feet 12/95 12/94 12/93
<S> <C> <C> <C> <C> <C>
One bedroom/one bath 128 505 $480-495 $475-490 $455-465
One bedroom/one bath 156 700 $565-590 $535-565 $515-545
One bedroom/one bath/den 27 830 $625-650 $615-645 $605-680
Two bedroom/two bath 68 910 $695-715 $680-710 $670-700
379
</TABLE>
<PAGE>
As of the date of this Offer, there are approximately 346
leases in effect, which generally are 12 months in duration. No
tenant occupies 10% or more of the property.
The average annual rental rate per apartment unit is
computed as follows:
1995 1994 1993 (one month)
Rental Income $2,373,779 $2,322,191 $185,608
Number of Apartment Units 379 379 379
Average Effective Annual (Annualized)
Rent Per Apartment Unit $ 6,263 $ 6,127 $ 5,877
The Meadows II Apartments (Phases II, III and IV), a
residential apartment complex owned and operated by the
Partnership, is located at 201-417 N. Thompson Drive, Madison,
Wisconsin 53714.
The Meadows Apartment Complex consists of 404 apartment
units in 32 two-story buildings covering approximately 24 acres
of land. The property was developed in four phases; between 1976
and 1980. On January 17, 1989, the Partnership acquired three of
the four phases comprising 316 of the 404 rental units, which is
The Meadows II. The other 88 rental units were acquired by, and
are operated by, an affiliated limited partnership (Decade's
Monthly Income & Appreciation Fund). The apartments in Phases
II, III, and IV were completed between 1977 and 1980 and consist
of one-, two- and three-bedroom units in 24 buildings. The
entire complex has a total of 720 parking spaces for a 1.78 to 1
ratio of stalls per unit. In addition to the apartment units,
the apartments owned by the Partnership feature one swimming
pool, one lighted tennis court, and a play area. Laundry room
areas and storage lockers are located in the basement of each
building.
The Meadows II, situated on approximately 19 acres, is
located at the southeast corner of the intersection of I-90/94
and Highway 30. The property is in a growing residential
neighborhood five miles northeast of Madison's Capitol Square.
The primary access route is Highway 30 and East Washington
Avenue. North-south linkages are provided by I-90/94 and Highway
51. Schenk Elementary School is about one-half mile southwest of
the property. Public bus transportation is convenient with two
bus stops servicing the property's residents. The expansion of
commercial development on major arterials west of the
neighborhood increases the desirability of the project's
location.
The Partnership's tax basis in the Meadows II as of December
31, 1995 is as follows:
Building Furniture and Equipment
Cost $8,590,349 $673,599
Accumulated Depreciation (2,173,585) (538,933)
Adjusted Tax Basis $6,416,764 $134,666
The Partnership's property is being depreciated using MACRS
straightline over 27.5 years, and the furniture and equipment is
being depreciated using MACRS 200% declining balance over 7
years. Meadows II is taxed at a $32.0676 mill rate levy for 1995
(after consideration of major state aids) and paid annual realty
tax of $269,368.
The apartment mix and monthly asking rents at The Meadows II
are as follows:
<PAGE>
<TABLE>
<CAPTION>
Asking Rent
Style Number of Square
Units Feet 12/95 12/94 12/93
<S> <C> <C> <C> <C> <C>
One-bedroom 88 625 $480-495 $505-515 $495
One-bedroom/deluxe 12 744 $490-505 $520-535 $515-525
Two-bedroom/one bath 192 875 $550-580 $585-605 $575-590
Two-bedroom/1.5 bath/den 12 1,466 $750-850 $795-825 $760-790
Three-bedroom 12 1,466 $750-850 $805-835 $760-790
316
</TABLE>
As of the date of this Offer, there are approximately 285
leases in effect, which generally are 12 months in duration. No
tenant occupies 10% or more of the property.
** The average annual rental rate per apartment unit is
computed as follows:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Rental Income $1,669,548 $1,867,077 $1,897,844 $1,889,822 $1,845,651
Number of Apartment Units 316 316 316 316 316
Average Effective Annual
Rent Per Apartment Unit $ 5,283 $ 5,908 $ 6,006 $ 5,980 $ 5,841
</TABLE>
<PAGE>
Town Place Apartments, a residential apartment complex owned
and operated by the Partnership, is located at 2545 N.E. Coachman
Road, Clearwater, Florida 33575.
Town Place Apartments was built in 1985 and consists of 240
one- and two-bedroom units. The units range in size from 540
square feet to 1,036 square feet. The complex consists of 24
buildings plus an office on approximately 25.7 acres. The
complex includes a swimming pool with jacuzzi, two tennis courts,
volleyball court, a 6.7 acre lake, clubhouse, 365 parking space,
and a laundromat for all residents.
The property is on the south side of N.E. Coachman Road
approximately one mile from the intersection of U.S. Highway 19
and Route 60. A Wal-Mart retail store is located directly across
the street. The area is mostly residential with no industry or
factories in the immediate area. Clearwater Beach is seven miles
from the property.
The Partnership's tax basis in Town Place as of December 31,
1995 is as follows:
Building Furniture and Equipment
Cost $4,133,018 $545,547
Accumulated Depreciation (882,963) (405,401)
Adjusted Tax Basis $3,250,055 $140,146
The Partnership's property is being depreciated using MACRS
straightline over 27.5 years, and the furniture and equipment is
being depreciated using MACRS 200% declining balance over 7
years. Town Place is taxed at a $23.0366 mill rate levy for 1995
(after consideration of major state aids) and paid annual realty
tax of $170,096.
The apartment mix and monthly asking rents at Town Place
Apartments are as follows:
<PAGE>
<TABLE>
<CAPTION>
Asking Rent
Style Number of Square
Units Feet 12/95 12/94 12/93
<S> <C> <C> <C> <C> <C>
One bedroom/Suite 36 540 $470 $455 $430
One bedroom/Garden 72 720 $515-540 $485-535 $475-525
Two bedroom/one bath 36 836 $620-635 $580-600 $555-565
Two bedroom/two bath 96 1,036 $655-725 $630-685 $605-650
240
</TABLE>
As of the date of this Offer, there are approximately 223
leases in effect, which generally are 12 months in duration. No
tenant occupies 10% or more of the property. The occupancy rate
expressed as a percentage for the past years is as follows:
The average annual rental rate per apartment unit is
computed as follows:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Rental Income $1,482,684 $1,448,885 $1,475,912 $1,433,126 $1,347,739
Number of Apartment Units 240 240 240 240 240
Average Effective Annual
Rent Per Apartment Unit $6,178 $6,038 $6,150 $5,971 $5,616
</TABLE>
<PAGE>
LACK OF MARKET AND DISTRIBUTIONS
To the knowledge of the General Partner, there is no market
for Interests and the Interests are not traded on any registered
securities exchange or the NASDAQ over the counter market and
none is expected to develop. The following table sets forth the
cash distributions declared per Interest for the fiscal periods
indicated:
Cash Distributions Declared Per Interest
1994
1st Quarter . . . . . . . . $12.50
2nd Quarter . . . . . . . . $12.50
3rd Quarter . . . . . . . . $12.50
4th Quarter . . . . . . . . $12.50
1995
1st Quarter . . . . . . . . $12.50
2nd Quarter . . . . . . . . $12.50
3rd Quarter . . . . . . . . $12.50
4th Quarter . . . . . . . . $12.50
1996
1st Quarter . . . . . . . . $12.50
2nd Quarter . . . . . . . . $12.50
3rd Quarter . . . . . . . . $ 0
The Partnership has paid consecutive quarterly cash
distributions to Limited Partners since it commenced operations
on June 9, 1986. Cash distributions were suspended for the third
quarter of 1996 to set aside cash reserves to be used for the
repurchase of Interests. The amount and frequency of cash
distributions in the future will depend on circumstances existing
at the time. However, such cash distributions would be
negatively affected by any decrease in cash reserves used to
repurchase limited partnership Interests to the extent that such
cash reserves previously supplemented cash distributions, by the
amount of any required debt service, and by the administrative
costs associated with the reporting requirements under the
federal securities laws, if applicable.
SECURITY OWNERSHIP OF THE GENERAL PARTNER
As of October 1, 1996, Jeffrey Keierleber, an affiliate of
the General Partner, owns 193.04 Interests of the Partnership
(1.105% of the outstanding Interests). Mr. Keierleber does not
intend to tender his Interests pursuant to the Offer. If the
Partnership repurchases 8,944 Interests (or approximately 51.2%
of the Interests outstanding at the date of the Offer) pursuant
to the Offer, and Mr. Keierleber does not tender his Interests
pursuant to the Offer, he would continue to own less than 2.3% of
the outstanding Interests.
Based upon the Partnership's records and upon information
provided to the Partnership by its General Partner, Partnership
Manager, and affiliates, neither the Partnership nor, to the best
of the Partnership's knowledge, any of the general partners of
the General Partner or Partnership Manager of the Partnership,
nor any associates of any of the foregoing, has effected any
transactions in the Interests during the 60 business day period
prior to the date hereof.
Except as set forth in this Offer neither the Partnership
nor, to the best of the Partnership's knowledge, any of its
affiliates, General Partner or the Partnership Manager is a party
to any contract, arrangement, understanding or relationship with
any other person relating, directly or indirectly, to the Offer
with respect to any securities of the Partnership (including, but
not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any such
securities, joint ventures, loan or option arrangements, puts or
calls, guaranties of loans, guaranties against loss or the giving
or withholding of proxies, consents or authorizations).
SUMMARY HISTORICAL FINANCIAL INFORMATION
Certain information as to the financial operation of the
Partnership is contained herein. Limited Partners are urged to
make their own assessment of the value of their Interests.
<PAGE>
<TABLE>
Selected Statement of Operations Data:
<CAPTION>
Six Months Ended
June 30 Year Ended December 31
1996 1995 1995 1994
(unaudited)
(in thousands of dollars,
except per Interest data)
<S> <C> <C> <C> <C>
Revenues associated with
rental properties $ 2,973 2,784 5,681 6,100
Income from rental property
operation $ 1,206 1,094 (288) (297)
Net Income (Loss) $ (175) (291) (470) (1,314)
Per Limited Partner Interest Data:
Net Income (Loss) $ (10) (17) (27) (75)
Cash distributions declared $ 25 25 50 50
Average Limited Partnership
Interests Outstanding 17,466.31 17,466.31 17,466.31 17,466.31
Ratio of earnings to combined
fixed charges 0.77 0.61 0.68 0.23
Selected Balance Sheet Data:
<CAPTION>
June 30 December 31
1996 1995 1995 1994
(unaudited)
(in thousands of dollars,
except per Interest data)
<S> <C> <C> <C> <C>
Working Capital $ 3,646 (2,338) 2,604 2,092
Total Assets $ 30,300 27,341 26,458 27,914
Total Liabilities $ 27,872 23,684 23,417 23,526
Total Capital $ 2,428 3,657 3,041 4,388
Book value per Interest $ 139 209 174 251
</TABLE>
<PAGE>
Certain matters that materially affect the comparability of
the information reflected in the selected financial data include
the disposition of Ashley Pointe Apartments in April 1994, and
the $6.7 million refinancing of the $2.5 million mortgage note on
Town Place Apartments in April 1996. The fluctuation in total
assets also reflects the depreciation on the rental properties.
PRO FORMA FINANCIAL DATA
The following unaudited pro forma condensed statements of
earnings and condensed balance sheets (collectively, the "Pro
Forma Statements") were prepared to illustrate the estimated
effects of the Offer as if the Offer had occurred for
consolidated statement of earnings presentation purposes on
January 1, 1995, or January 1, 1996, as the case may be and for
balance sheet presentation purposes on December 31, 1995, and
June 30, 1996, respectively.
The estimated transaction fees and expenses are provided
solely for the purpose of presenting the pro forma financial data
set forth below. The actual transaction fees and expenses may
differ from the assumption used.
The Pro Forma Financial data does not purport to represent
what the Partnership's financial position or results of
operations would actually have been if the Offer in fact had
occurred at December 31, 1995, or June 30, 1996, or if the Offer
had occurred on January 1, 1995, or January 1, 1996, as the case
may be or to project the Partnership's financial position or
results of operations for any future date or period.
The following financial information should be read in
conjunction with the audited consolidated financial statements
and related notes thereto included elsewhere in this Offer.
<PAGE>
<TABLE>
Decade Companies Income Properties
Pro Forma Balance Sheet (Unaudited)
(No Borrowing To Fund Offer)
<CAPTION>
December 31, 1995 June 30, 1996
Historical Historical Adjustments December 31, 1995 June 30, 1996
Assets (Note A) (Note A) (Note B) Pro Forma Pro Forma
<S> <C> <C> <C> <C> <C>
Investment Property, At Cost $30,927,237 $31,007,546 $30,927,237 $31,007,546
Less Accumulated Depreciation (5,393,539) (5,935,839) (5,393,539) (5,935,839)
Net Book Value 25,533,698 25,071,707 25,533,698 25,071,707
Cash 56,316 4,316,763 ($3,485,385) (3,429,069) 831,378
Exchange Escrow 497,390 230,103 (230,103) 267,287 0
Escrow Deposits 186,703 340,953 186,703 340,953
Prepaid Expenses and Other Assets 137,820 91,557 137,820 91,557
Debt Issue Costs 46,440 248,654 46,440 248,654
TOTAL ASSETS $26,458,367 $30,299,737 ($3,715,488) $22,742,879 $26,584,249
Liabilities
Tenant Security Deposits $169,369 $168,448 $169,369 $168,448
Accounts Payable 81,354 108,102 81,354 108,102
Other Accrued Expenses 307,339 544,387 307,339 544,387
Distributions Payable 221,154 223,154 221,154 223,154
Payable to Affiliates 3,409,338 3,508,511 3,409,338 3,508,511
Mortgage Notes Payable 19,228,533 23,319,498 19,228,533 23,319,498
TOTAL LIABILITIES 23,417,087 27,872,100 23,417,087 27,872,100
Partners' Capital
General Partner (Deficit) (69,185) (72,935) (69,185) (72,935)
Limited Partners 3,110,465 2,500,572 ($3,715,488) (605,023) (1,214,916)
TOTAL CAPITAL AND LIABILITIES $26,458,367 $30,299,737 ($3,715,488) $22,742,879 $26,584,249
</TABLE>
The foregoing unaudited Pro Forma Balance Sheet gives effect to
certain assumptions, including purchase by the Partnership of 8,944
Interests at $402 per Interest pursuant to the Offer. The Pro Forma
Balance Sheet gives effect to the transaction as if it had occurred on
December 31, 1995, and June 30, 1996, respectively. The pro forma
information should be read in conjunction with the historical
financial information for the Partnership, but does not purport to be
indicative of the results which may be obtained in the future or which
would actually have been obtained had the Offer occurred as of
December 31, 1995, or June 30, 1996. The December 31, 1995 pro forma
amounts do not reflect the Partnership's 1996 receipt of net loan
proceeds of $4,057,000 as a result of refinancing Town Place.
See notes to Pro Forma Financial Statements.
<PAGE>
<TABLE>
Decade Companies Income Properties
Pro Forma Balance Sheet (Unaudited)
(Borrowing $2,590,000 Million To Fund Offer)
<CAPTION>
December 31, 1995 June 30, 1996
Historical Historical Adjustments December 31, 1995 June 30, 1996
Assets (Note A) (Note A) (Note B) Pro Forma Pro Forma
<S> <C> <C> <C> <C> <C>
Investment Property, At Cost $30,927,237 $31,007,546 $30,927,237 $31,007,546
Less Accumulated Depreciation (5,393,539) (5,935,839) (5,393,539) (5,935,839)
Net Book Value 25,533,698 25,071,707 25,533,698 25,071,707
Cash 56,316 4,316,763 ($3,485,413) (3,429,097) 831,350
Exchange Escrow 497,390 230,103 (230,103) 267,287 0
Escrow Deposits 186,703 340,953 186,703 340,953
Prepaid Expenses And Other Assets 137,820 91,557 137,820 91,557
Debt Issue Costs 46,440 248,654 51,800 98,240 300,454
TOTAL ASSETS $26,458,367 $30,299,737 ($3,663,716) $22,794,651 $26,636,021
Liabilities
Tenant Security Deposits $169,369 $168,448 $169,369 $168,448
Accounts Payable 81,354 108,102 81,354 108,102
Other Accrued Expenses 307,339 544,387 307,339 544,387
Distributions Payable 221,154 223,154 221,154 223,154
Payable To Affiliates 3,409,338 3,508,511 3,409,338 3,508,511
Mortgage Notes Payable 19,228,533 23,319,498 $2,590,000 21,818,533 25,909,498
TOTAL LIABILITIES 23,417,087 27,872,100 2,590,000 26,007,087 30,462,100
Partners' Capital
General Partner (Deficit) (69,185) (72,935) (69,185) (72,935)
Limited Partners 3,110,465 2,500,572 (6,253,716) (3,143,251) (3,753,144)
TOTAL CAPITAL AND LIABILITIES $26,458,367 $30,299,737 ($3,663,716) $22,794,651 $26,636,021
</TABLE>
The foregoing unaudited Pro Forma Balance Sheet gives effect to
certain assumptions, including purchase by the Partnership of 15,258
Interests at $402 per Interest pursuant to the Offer. The Pro Forma
Balance Sheet gives effect to the transaction as if it had occurred on
December 31, 1995, and June 30, 1996, respectively. The pro forma
information should be read in conjunction with the historical
financial information for the Partnership, but does not purport to be
indicative of the results which may be obtained in the future or which
would actually have been obtained had the Offer occurred as of
December 31, 1995, or June 30, 1996. The December 31, 1995, pro forma
amounts do not reflect the Partnership's 1996 receipt of net loan
proceeds of $4,057,000 as a result of refinancing Town Place
Apartments.
See notes to Pro Forma Financial Statements.
<PAGE>
Decade Companies Income Properties
Condensed Pro Forma Statement of Income
(No Borrowing to Fund Offer)
The following unaudited condensed Pro Forma Statement of Income and
other financial information for the year ended December 31, 1995, and
six months ended June 30, 1996, gives effect to certain assumptions,
including the purchase by the Partnership of 8,944 Interests at $402
per Interest pursuant to the Offer. The unaudited Pro Forma Statement
of Operations gives effect to this transaction as if it had occurred
on January 1, 1995, or January 1, 1996, as the case may be.
The pro forma information should be read in conjunction with the
historical financial information for the Partnership, but does not
purport to be indicative of the results which may be obtained in the
future or which would actually have been obtained had the Offer
occurred as of January 1, 1995, or January 1, 1996, as the case may
be.
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1995 June 30, 1996 Year Ended Six Months Ended
Historical Historical Adjustments December 31, 1995 June 30, 1996
Assets (Note A) (Note A) (Note C) Pro Forma Pro Forma
<S> <C> <C> <C> <C> <C>
Operating Revenue $5,680,539 $2,973,288 $ 0 $5,680,539 $2,973,288
Operating Expenses (3,378,014) (1,767,582) (3,378,014) (1,767,582)
Net Operating Income 2,302,525 1,205,706 2,302,525 1,205,706
Depreciation (1,110,967) (542,300) (1,110,967) (542,300)
Net Income from Investment Property 1,191,558 663,406 1,191,558 663,406
Interest Income 43,069 46,395 43,069 46,395
Interest on Payables to Affiliates (33,550) (14,300) (33,550) (14,300)
Administrative Expenses (190,901) (103,898) (190,901) (103,898)
Net Income (Loss) Before Interest
expense 1,010,176 591,603 1,010,176 591,603
Interest expense (1,479,874) (766,586) (1,479,874) (766,586)
Net Income (Loss) $ (469,698) $(174,983) $ 0 $ (469,698) $(174,983)
<CAPTION>
Earnings Per Interest
<S> <C> <C> <C> <C> <C>
Net Income (Loss) attributable
to Limited Partners (99%) $(465,001) $(173,233) $ 0 $(465,001) $(173,233)
Net Income (Loss) per
Limited Partner Interest (26.62) (9.92) (54.56) (20.33)
Interests Outstanding 17,466.31 17,466.31 (8,944.00) 8,522.31 8,522.31
<CAPTION>
Ratio of Earnings to Fixed Charges
<S> <C> <C> <C> <C> <C>
Earnings (Loss) Before
Interest Expense $1,010,176 $591,603 $1,010,176 $591,603
Fixed Charges 1,479,874 766,586 1,479,874 766,586
Ratio 0.68 0.77 0.68 0.77
</TABLE>
The above ratio (fixed charge ratio) compares earnings before interest
expense to interest expense. It indicates how many times interest
charges have been earned by the Partnership.
See Notes to Pro Forma Financial Statements.
<PAGE>
Decade Companies Income Properties
Condensed Pro Forma Statement of Income
(Borrowing $2,590,000) to fund Offer
The following unaudited condensed Pro Forma Statement of Income and
other financial information for the year ended December 31, 1995, and
six months ended June 30, 1996, gives effect to certain assumptions,
including the purchase by the Partnership of 15,258 Interests at $402
per Interest pursuant to the Offer. The unaudited Pro Forma Statement
of Operations gives effect to this transaction as if it has occurred
on January 1, 1995, or January 1, 1996, as the case may be.
The pro forma information should be read in conjunction with the
historical financial information for the Partnership, but does not
purport to be indicative of the results which may be obtained in the
future or which would actually have been obtained had the Offer
occurred as of January 1, 1995, or January 1, 1996, as the case may
be.
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1995 June 30, 1996 December 31, 1995 June 30, 1996 Year Ended Six Months Ended
Historical Historical Adjustments Adjustments December 31, 1995 June 30, 1996
Assets (Note A) (Note A) (Note C) (Note C) Pro Forma Pro Forma
<S> <C> <C> <C> <C> <C> <C>
Operating Revenue $5,680,539 $2,973,288 $ 0 $ 0 $5,680,539 $2,973,288
Operating expenses (3,378,014) (1,767,582) (3,378,014) (1,767,582)
Net Operating Income 2,302,525 1,205,706 2,302,525 1,205,706
Depreciation (1,110,967) (542,300) (1,110,967) (542,300)
Net Income From
Investment Property 1,191,558 663,406 1,191,558 663,406
Interest Income 43,069 46,395 43,069 46,395
Interest on Payables
to Affiliates (33,550) (14,300) (33,550) (14,300)
Administrative Expenses (190,901) (103,898) (190,901) (103,898)
Net income (loss) before
interest expense 1,010,176 591,603 1,010,176 591,603
Interest expense (1,479,874) (766,586) (220,150) (110,075) (1,700,024) (876,661)
Net Income (Loss) $ (469,698) $ (174,983) $ (220,150) $ (110,075) $ (689,848) $ (285,058)
<CAPTION>
Earnings Per Interest
<S> <C> <C> <C> <C> <C> <C>
Net Income (Loss)
attributable to
limited partners (99%) $ (465,001) $ (173,233) $ (209,143) $ (104,571) $ (674,144) $ (277,804)
Net Income (Loss) per
Limited Partner Interest (26.62) (9.92) (305.28) (125.80)
Interests Outstanding 17,466.31 17,466.31 (15,258.00) (15,258.00) 2,208.31 2,208.31
<CAPTION>
Ratio of Earnings to Fixed Charges
<S> <C> <C> <C> <C> <C> <C>
Earnings (loss)
before interest
expense $1,010,176 $ 591,603 $1,010,176 $ 591,603
Fixed Charges 1,479,874 766,586 1,700,024 876,661
Ratio 0.68 0.77 0.59 0.67
</TABLE>
The above ratio (fixed charge ratio) compares earnings before interest
expense to interest expense. It indicates how many times interest
charges have been earned by the Partnership.
See Notes to Pro Forma Financial Statements.
<PAGE>
<TABLE>
Pro Forma Book Value of Limited Partner Interests (Unaudited)
(No Borrowing To Fund Repurchase Offer)
December 31, 1995, and June 30, 1996
<CAPTION>
December 31, 1995 June 30, 1996
Historical Historical Adjustments December 31, 1995 June 30, 1996
(Note A) (Note A) (Note D) Pro Forma Pro Forma
<S> <C> <C> <C> <C> <C>
Book value $3,110,465 $2,500,572 $(3,715,488) $(605,023) $(1,214,916)
Number of limited partner
Interests 17,466.31 17,466.31 (8,944.00) 8,522.31 8,522.31
Book value per limited
partner Interest $ 178.08 $ 143.17 $ 415.42 $ (70.99) $ ( 142.56)
</TABLE>
The foregoing unaudited pro forma financial information gives effect
to certain assumptions, including purchase by the Partnership of 8,944
Interests at $402 per Interest pursuant to the Offer. The unaudited
Pro Forma Book Value of Limited Partner Interests is derived from the
unaudited Pro Forma Balance Sheet which gives effect to the
transaction as if it had occurred on December 31, 1995, and June 30,
1996, respectively. The Pro Forma Information should be read in
conjunction with the historical financial information of the
Partnership, but does not purport to be indicative of the results
which may be obtained in the future or which would actually have been
obtained had the Offer occurred as of December 31, 1995, and June 30,
1996, respectively. The December 31, 1995, pro forma amounts do not
reflect the Partnership's 1996 receipt of net loan proceeds of
$4,056,000 as a result of refinancing Town Place.
See Notes to Pro Forma Financial Statements.
<PAGE>
Decade Companies Income Properties
<TABLE>
Pro Forma Book Value of Limited Partner Interests (Unaudited)
(Borrowing $2,590,000 To Fund Repurchase Offer)
December 31, 1995 and June 30, 1996
<CAPTION>
December 31, 1995 June 30, 1996
Historical Historical Adjustments December 31, 1995 June 30, 1996
(Note A) (Note A) (Note D) Pro Forma Pro Forma
<S> <C> <C> <C> <C> <C>
Book value $3,110,465 $2,500,572 $(6,253,716) $(3,143,251) $ (3,753,144)
Number of limited partner
Interests 17,466.31 17,466.31 (15,258.00) 2,208.31 2,208.31
Book value per limited
partner Interest $ 178.08 $ 143.17 $ 409.86 $ (1,423.37) $ (1,699.55)
</TABLE>
The foregoing unaudited pro forma financial information gives effect
to certain assumptions, including purchase by the Partnership of
15,258 Interests at $402 per Interest pursuant to the Offer. The
unaudited Pro Forma Book Value of Limited Partner Interests is derived
from the unaudited Pro Forma Balance Sheet which gives effect to the
transaction as if it had occurred on December 31, 1995 and June 30,
1996, respectively. The pro forma information should be read in
conjunction with the historical financial information of the
Partnership, but does not purport to be indicative of the results
which may be obtained in the future or which would actually have been
obtained had the Offer occurred as of December 31, 1995 and June 30,
1996, respectively. The December 31, 1995 pro forma amounts do not
reflect the Partnership's 1996 receipt of net loan proceeds of
$4,056,000 as a result of refinancing Town Place.
See Notes to Pro Forma Financial Statements.
<PAGE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND JUNE 30, 1996
The following notes describe the assumptions underlying the
Pro Forma Financial Statements. The Pro Forma Financial
Statements have been prepared to provide Limited Partners with
information about the continuing impact of the Partnership's
Offer by showing how it might have affected historical financial
statements if the transaction had been consummated at an earlier
time. The actual results which would have been achieved during
the pro forma periods had the transactions occurred on the
assumed date may have varied from the Pro Forma Financial
Statements, and the variations may have been material.
Two alternative assumptions are presented for each Pro Forma
Financial Statement as of each balance sheet date and the period
ended as of such date. One alternative assumes that 8,944
Interests are purchased by the Partnership using cash reserves
existing as of June 30, 1996, and no funds are borrowed to
finance the Offer. The other alternative assumes that the
Partnership borrows $2,590,000 at 8.75% per annum, incurs
financing costs of 2% of the borrowings ($51,800), and
repurchases a total of 15,258 Interests. The actual amount of
future borrowing will depend upon how many Interests are tendered
by Limited Partners to the Partnership, and the loan interest
rate, term, amortization period, and costs incurred to obtain
financing. The actual amount of future borrowing will also
impact how may Interests the Partnership will actually purchase.
Payment of an estimated $120,000 of expenses in connection with
the Offer are reflected for each alternative.
A. The historical Balance Sheet, Income Statement, and
book value figures are based on the audited financial statements
as of and for the year ended at December 31, 1995, and the
unaudited financial statements as of and for the six months ended
June 30, 1996.
B. Adjustments to the Pro Forma Balance Sheet give effect
to certain assumptions, including purchase by the Partnership of
8,944 Interests at $402 per Interest pursuant to the Offer if no
funds are borrowed, or the purchase by the Partnership of 15,258
Interests at $402 per Interest if $2,590,000 is borrowed. Under
these assumptions the aggregate redemption would amount to
$3,595,488 and $6,133,716, respectively. The Pro Forma Balance
Sheet gives effect to the transaction as if it had occurred on
the balance sheet date. However, the transaction as of December
31, 1995, results in a cash deficit reported on the pro forma
balance sheet because the proceeds from the Town Place
refinancing were not received until April 1996.
C. Adjustments to the condensed Pro Forma Statements of
Income give effect to certain assumptions, including purchase by
the Partnership of 8,944 Interests at $402 per Interest pursuant
to the Offer if no funds are borrowed, or the purchase by the
Partnership of 15,258 Interests at $402 per Interest if
$2,590,000 is borrowed. The unaudited Pro Forma Statements of
Income give effect to this transaction as if it had occurred at
the beginning of the periods presented. Interest expense has
been increased to reflect the estimated cost of borrowing
additional funds needed to consummate the transaction. An
assumed interest rate of 8.75% per annum was used on the new
mortgage loan of $2,590,000.
D. Adjustments to the Pro Forma Book Value of Limited
Partner Interests reflect the effect on the book value of the
Limited Partnership Interests of the redemption of 8,944
Interests at $402 per Interest pursuant to the Offer if no funds
are borrowed, or the redemption of 15,258 Interests at $402 per
Interest if $2,590,000 is borrowed.
INDEPENDENT AUDITORS
The financial statements of the Partnership as of December
31, 1995, and 1994 and for each of the fiscal years in the three-
year period ended December 31, 1995, 1994, and 1993 included
herein have been audited by Ernst & Young LLP, independent
auditors, as stated in their report appearing herein.
AVAILABLE INFORMATION
The Partnership has filed a Rule 13e-3 Transaction Statement
on Schedule 13E-3 (the "Schedule 13E-3") and Schedule 13E-4
Issuer Tender Offer Statement (the "Schedule 13E-4") with the
Securities and Exchange Commission (the "Commission") with
respect to the Offer. As permitted by the rules and regulations
of the Commission, this Offer omits certain information contained
in the Schedule 13E-3 and Schedule 13E-4. Such additional
information can be inspected at and obtained from the Commission
and the National Association of Securities Dealers, Inc. in the
manner set forth below. For further information pertaining to
the Partnership reference is made to the Schedule 13E-3, Schedule
13E-4, and the exhibits thereto. Statements contained herein
concerning any such documents are not necessarily complete and,
in each instance, reference is made to the copy of such document
filed as an exhibit to the Schedule 13E-3 and Schedule 13E-4.
Each such statement is qualified in its entirety by such
reference.
The Partnership is subject to the informational requirements
of the Exchange Act, and in accordance therewith, files reports,
proxy statements and other information with the Commission. The
Limited Partnership Interests of the Partnership are not traded
or listed. Schedule 13E-3 and Schedule 13E-4 and the respective
exhibits thereto, as well as reports, proxy statements and other
information filed by the Partnership can be inspected and copied
at the public reference facilities maintained by the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following Regional Offices of the Commission: Chicago Regional
Office, Northwestern Atrium Center, Suite 1400, S.W. West Madison
Street, Chicago, Illinois 60611; and New York Regional Office, 7
World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. Such reports, proxy statements
and other information may also be inspected at the office of the
National Association of Securities Dealers, Inc.,
1735 K Street, N.W., Washington, D.C. 20006.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
Page
Unaudited Condensed Balance Sheet as of June 30, 1996. . . . .F-1
Unaudited Condensed Statements of Operations for the
Three Months Ended June 30, 1996 and 1995 and for
the Six Months Ended as of June 30, 1996 and 1995 . . . . .F-2
Unaudited Condensed Statements of Cash Flows for the
Six Months Ended as of June 30, 1996 and 1995. . . . . . . .F-3
Notes to Unaudited Quarterly Financial Statements. . . . . . .F-4
Report of Independent Auditors . . . . . . . . . . . . . . . .F-5
Balance Sheets as of December 31, 1995 and 1994. . . . . . . .F-6
Statements of Operations for the Years Ended
December 31, 1995, 1994, and 1993 . . . . . . . . . . . . .F-7
Statements of Changes in Partners' Capital
for the Years Ended December 31, 1995,
1994, and 1993. . . . . . . . . . . . . . . . . . . . . . .F-8
Statements of Cash Flows for the Years Ended
December 31, 1995, 1994, and 1993 . . . . . . . . . . . . .F-9
Notes to Financial Statements. . . . . . . . . . . . . . . . F-10
<PAGE>
Decade Companies Income Properties - A Limited Partnership
UNAUDITED CONDENSED BALANCE SHEETS
June 30 December 31
1996 1995
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,316,763 $ 56,316
Restricted cash 230,103 497,390
Escrow deposits 340,953 186,703
Prepaid expenses and other
assets 48,142 94,405
Total Current Assets $ 4,935,961 $ 834,814
INVESTMENT PROPERTIES, AT COST: $31,007,546 $30,927,237
Less: accumulated depreciation (5,935,839) (5,393,539)
Net Investment Property $25,071,707 $25,533,698
OTHER ASSETS:
Utility deposits 43,415 43,415
Debt issue costs, net of
accumulated amortization 248,654 46,440
Total Other Assets 292,069 89,855
Total Assets $30,299,737 $26,458,367
LIABILITIES AND PARTNERS'
CAPITAL
LIABILITIES:
Accounts payable and
accrued taxes $607,366 $350,722
Tenant security deposits 168,448 169,369
Distributions payable 223,154 221,154
Accrued interest payable 45,123 37,971
Payables to affiliates 3,508,511 3,409,338
Mortgage notes payable 23,319,498 19,228,533
Total Liabilities $27,872,100 $23,417,087
PARTNERS' CAPITAL:
General Partner Capital (72,935) (69,185)
Limited Partners
(authorized--18,000 Interests;
outstanding--17,466.31
Interests) 2,500,572 3,110,465
Total Partners' Capital $2,427,637 $3,041,280
Total Liabilities and
Partners' Capital $30,299,737 $26,458,367
Note: The balance sheet at December 31, 1995 has been derived
from the audited financial statements at that date.
See Notes to Financial Statements.
<PAGE>
Decade Companies Income Properties - A Limited Partnership
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended
6/30/96 6/30/95 6/30/96 6/30/95
Operating revenue:
Rental income $1,495,409 $1,369,522 $2,973,288 $2,784,043
Operating expenses (738,612) (652,143) (1,403,002) (1,321,364)
Real estate taxes (181,040) (181,127) (364,580) (368,679)
Total operating
expenses (919,652) (833,270) (1,767,582) (1,690,043)
Net operating income 575,757 536,252 1,205,706 1,094,000
Interest expense (373,829) (374,250) (776,989) (743,220)
Depreciation (272,500) (275,300) (542,300) (550,300)
Amortization (2,948) (4,091) (3,897) (8,182)
Net income (loss)
from investment
property (73,520) (117,389) (117,480) (207,702)
Other income
(expenses):
Interest income 40,368 14,251 46,395 35,285
Partnership
management (53,540) (46,507) (103,898) (118,740)
(13,172) (32,256) (57,503) (83,455)
NET (LOSS) $ (86,692) $ (149,645) $ (174,983) $(291,157)
Net Income (loss)
attributable to
General Partner
(1%) $(867) $(1,496) $(1,750) $(2,912)
Net Income (loss)
attributable to
Limited Partners
(99%) (85,825) (148,149) $ (173,233) $(288,245)
$ (86,692) $ (149,645) $ 174,983 $(291,157)
Net (loss) per
Limited Partner
Interest $ (4.91) $ (8.48) $ (9.92) $ (16.50)
See Notes to Financial Statements
<PAGE>
Decade Companies Income Properties - A Limited Partnership
STATEMENTS OF CASH FLOWS - (UNAUDITED)
For The Six Months Ended June 30,
1996 1995
CASH PROVIDED FROM OPERATIONS $ 560,173 $ 410,720
INVESTING ACTIVITIES:
Proceeds from exchange escrow account 267,287 485,135
Additions to investment property (80,309) (60,088)
Net cash provided by investing
activities 186,978 425,047
FINANCING ACTIVITIES:
Proceeds from new mortgage loan 6,700,000 ---
Principal payments on mortgage notes (2,609,035) (39,939)
Proceeds from line of credit note 0 120,000
Payment on line of credit note 0 (220,000)
Payment of debt issue costs (141,009) 0
Distributions paid to limited partners (436,660) (437,703)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 3,513,296 (577,642)
INCREASE IN CASH & CASH
EQUIVALENTS 4,260,447 258,125
CASH & CASH EQUIVALENTS AT THE
BEGINNING OF PERIOD 56,316 16,415
CASH & CASH EQUIVALENTS
AT THE END OF PERIOD $4,316,763 $ 274,540
Supplementary disclosure of cash
flow information:
Interest paid $ 755,404 $ 729,209
Income taxes paid 0 0
See Notes to Financial Statements
<PAGE>
Decade Companies Income Properties - A Limited Partnership
Notes to Financial Statements (Unaudited)
Note A--Basis of Presentation
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three month and six month period ended
June 30, 1996 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1996. For
further information, refer to the financial statements and
footnotes thereto included in the Partnership's annual report on
Form 10-K for the year ended December 31, 1995.
<PAGE>
Report of Independent Auditors
The Partners
Decade Companies Income Properties--A Limited Partnership
We have audited the accompanying balance sheets of Decade
Companies Income Properties--A Limited Partnership (the
Partnership) as of December 31, 1995 and 1994, and the related
statements of operations, changes in Partners' capital and cash
flows for each of the three years in the period ended December
31, 1995. These financial statements are the responsibility of
the Partnerships management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Decade Companies Income Properties--A Limited Partnership as of
December 31, 1995 and 1994, and the results of its operations and
its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
January 26, 1996
<PAGE>
Decade Companies Income Properties - A Limited Partnership
Balance Sheets
December 31
1995 1994
Assets
Cash and cash equivalents $ 56,316 $ 16,415
Exchange escrow (Note 4) 497,390 1,117,531
Prepaid expenses and other assets 137,820 81,220
Escrow deposits 186,703 178,881
Investment properties, at cost:
Land 5,305,536 5,305,536
Buildings and improvements 23,308,727 23,304,606
Equipment 2,312,974 2,139,760
30,927,237 30,749,902
Less accumulated depreciation 5,393,539 4,282,571
$25,533,698 $26,467,331
Debt issue costs, net of
accumulated amortization
($88,193-1995; $71,836-1994) 46,440 52,797
$26,458,367 $27,914,175
Liabiities and Partners' capital
Liabilities:
Tenant security deposits $ 16,9369 $ 166,677
Accounts payable 81,354 53,874
Accrued real estate taxes 269,368 260,514
Accrued interest payable 37,971 37,872
Distributions payable 221,154 220,264
Payables to affiliates 3,409,338 3,386,016
Note payable to bank -- 100,000
Mortgage notes payable 19,228,533 19,300,793
$23,417,087 $23,526,010
Partners' capital:
General Partner (deficit) (69,185) (60,621)
Limited Partners (interests
authorized-18,000; interests
outstanding-17,466.31
in 1995 and 1994) 3,110,465 4,448,786
3,041,280 4,388,165
$26,458,367 $27,914,175
See accompanying notes.
<PAGE>
Decade Companies Income Properties - A Limited Partnership
Statements of Operations
Year ended December 31
1995 1994 1993
Operating revenue associated
with investment properties:
Rentals $5,526,011 $5,941,610 $5,019,399
Other 154,528 158,286 171,053
5,680,539 6,099,896 5,190,452
Operating expenses associated
with investment properties:
Operating 2,336,602 2,394,388 2,264,054
Administrative 300,830 289,678 272,762
Depreciation 1,110,967 1,242,885 1,109,669
Interest, including
amortization of debt-issue
costs 1,479,874 1,707,904 1,184,747
Real estate taxes 740,582 761,975 588,386
5,968,855 6,396,830 5,419,618
Loss from operations of
investment properties (288,316) (296,934) (229,166)
Other Partnership income
(expenses):
Interest income 43,069 177,404 94,736
Interest on payables to
affiliates (33,550) (28,764) (18,259)
Administrative Expenses (190,901) (194,405) (174,514)
Loss on disposition of
investment property -- (1,071,710) --
Forfeiture fee earned -- 100,000 --
(181,382) (1,017,475) (98,037)
Net loss $(469,698) $(1,314,409) $(327,203)
Net loss attributable to
General Partner - (1%) $ (4,697) $ (13,144) $ (3,272)
Net loss attributable to
Limited Partners - (99%) (465,001) (1,301,265) (323,931)
$(469,698) $(1,314,409) $(327,203)
Net loss per Limited
Partnership interest $ (26.62) $ (74.50) $ (18.55)
See accompanying notes
<PAGE>
Decade Companies Income Properties - A Limited Partnership
Statements of Changes in Partners' Capital
General
Limited Partner's Limited
Partnership Capital Partners'
Interests (Deficit) Capital Total
Balances at
January 1, 1993 17,466.31 $(32,010) $7,820,623 $7,788,613
Distributions to Partners -- (6,061) (873,320) (879,381)
Net loss for the year -- (3,272) (323,931) (327,203)
Balances at
December 31, 1993 17,466.31 (41,343) 6,623,372) 6,582,029
Distributions to Partners -- (6,134) (873,321) (879,455)
Net loss for the year -- (13,144) (1,301,265) (1,314,409)
Balances at
December 31,1994 17,466.31 (60,621) 4,448,786 4,388,165
Distributions to Partners -- (3,867) (873,320) (877,187)
Net loss for the year -- (4,697) (465,001) (469,698)
Balances at
December 31, 1995 17,466.31 $(69,185) $3,110,465 $3,041,280
() Denotes deduction or deficit
<PAGE>
Decade Companies Income Properties - A Limited Partnership
Statements of Cash Flows
Year ended December 31
1995 1994 1993
Operating activities
Net loss for the year $(469,698) $(1,314,409) $(327,203)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation 1,110,967 1,242,885 1,109,669
Loss on disposition of
investment property -- 979,610 --
Amortization of debt issue
costs 16,347 16,302 66,910
Changes in operating assets
and liabilities:
Prepaid and other assets (56,600) 42,464 (65,579)
Escrow deposits (7,822) 2,686 (6,648)
Security deposits payable 2,692 (29,945) 33,274
Accounts payable 27,480 (67,453) 50,729
Accrued real estate taxes 8,854 (9,407) (5,332)
Accrued interest payable 99 (43,453) 18,369
Payables to affiliates 23,322 101,350 37,609
Net cash provided by operating
affiliates 655,651 920,630 911,798
Investing activities
Proceeds from disposition of
investment property-- 2,990,181 5,326,313
Withdrawal from (deposit to)
Like-Kind Exchange Escrow
Trust 620,141 (1,117,531) --
Net additions to investment
properties (177,334) (159,791) (2,935,771)
Redemption (purchase) of
short-term investments 4,000,000 (4,000,000)
Net cash provided by (used in)
investing activities 442,807 5,712,859 (1,609,458)
Financing activities
Net proceeds from issuance of
mortgage note payable -- -- 4,000,000
Proceeds from note payable
to bank 120,000 100,000 --
Payments on note payable
to bank (220,000) -- --
Additions to debt issue costs (10,000) (13,606) (12,500)
Payments on mortgage notes
payable (72,260) (6,029,737) (2,685,753)
Distributions paid to Limited
Partners (873,320) (873,320) (873,320)
Distributions paid to General
Partner (2,977) (12,668) --
Net cash provided by (used
in) financing activities (1,058,557) (6,829,331) 428,427
Increase (decrease) in cash
and cash equivalents 39,901 (195,842) (269,233)
Cash and cash equivalents at
beginning of year 16,415 212,257 481,490
Cash and cash equivalents
at end of year $ 56,316 $ 16,415 $ 212,257
See accompanying notes
<PAGE>
Decade Companies Income Properties -
A Limited Partnership
Notes To Financial Statements
December 31, 1995
1. Organization and Basis of Accounting
Organization
Decade Companies Income Properties--A Limited Partnership (the
Partnership) was organized as a limited partnership under the
laws of the State of Wisconsin pursuant to a Certificate and an
Agreement (the Agreement) of Limited Partnership dated June 6,
1985, for the purpose of investing primarily in residential and
commercial real property. The Agreement terminates on or before
December 31, 2005. The Partnership began operations June 9,
1986. The Partnership operates three residential apartment
complexes located in Madison, Wisconsin, Clearwater, Florida, and
St. Petersburg, Florida.
The Partnership consists of a General Partner, Decade Companies--A
General Partnership, of which Jeffrey Keierleber and Decade 80,
Inc. are the general partners, and 1,936 Limited Partners at
December 31, 1995.
Basis of Accounting
The Partnership's accounting records are maintained on the basis
of accounting utilized for federal income tax reporting purposes.
The accompanying financial statements have been prepared from
such records adjusted for differences in depreciation methods and
related-party transactions. Certain accrual and tax basis
amounts are summarized as follows:
1995 1994 1993
______________________________________________________
Accrual Tax Accrual Tax Accrual Tax
Basis Basis Basis Basis Basis Basis
______________________________________________________
(In Thousands)
Total assets $26,474 $26,132 $27,914 $27,574 $36,094 $35,722
Partners' capital
(deficit):
General Partner (69) (60) (61) (52) (41) (28)
Limited Partners 3,110 6,360 4,449 7,617 6,623 9,659
Net loss:
General Partner (5) (4) (13) (12) (3) (1)
Limited Partners (465) (443) (1,301) (1,169) (324) (136)
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial
statements. Estimates also affect the reported amounts of revenue
and expenses during the reporting period. Although estimates are
considered to be fairly stated at the time that the estimates are
made, actual results could differ from those estimates.
Cash Equivalents
The Partnership considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents. Such investments are carried at cost which
approximates market value.
Depreciation
Depreciation is computed by the straight-line method using
estimated useful lives of 30 years for the buildings and
improvements and 5 years for related equipment.
For federal income tax purposes, the Partnership has adopted
various accelerated methods which provide for depreciation of
buildings and improvements over 27.5 years and related equipment
over 7 years.
Fees to Affiliates
Fees related to the offering, organizational and acquisition
stages of the Partnership paid to the General Partner or
affiliates, and deferred interest related thereto, are limited to
a maximum amount as defined in the Partnership prospectus. The
Partnership reached this maximum in 1993. Accordingly, interest
was not charged on certain deferred fees (see Note 6) and the
acquisition fee on Pelican Sound was limited (see Note 3).
Acquisition fees, mortgage placement and mortgage brokerage fees,
property management fees and real estate sales commissions are
payable to the General Partner or affiliates of the General
Partner. These fees are charged to expense as follows:
Acquisition Fees
Acquisition fees designated for selection, negotiation and
purchase of Partnership properties have been capitalized as
investment property and allocated to land, buildings and
improvements and equipment based on appraised values. The
portions allocated to buildings, improvements and equipment are
being depreciated over the respective lives of the buildings,
improvements and equipment.
Mortgage Placement and Mortgage Brokerage Fees
Fees for services rendered in locating potential borrowers and
investigating their creditworthiness for placement of mortgage
loans are payable by the Partnership to the extent not paid by
the mortgagor. Any fees paid by the Partnership will be charged
to expense over the terms of the mortgage loans.
Property Management Fees
Fees for property management and rental services are being
charged to expenses over the period property management services
are being performed.
Real Estate Sales Commissions
Fees may be earned for services rendered related to the sale of
Partnership property, as defined in the Partnership prospectus.
Payment of such fees to an affiliate of the General Partner shall
be subordinated to a return to the Limited Partners equal to
their original capital contribution plus a 6% per annum
cumulative return.
Expenses of Offering
Sales commissions, underwriting fees and reimbursed syndication
costs paid to the General Partner or affiliates of the General
Partner in connection with the capital offering have been
recorded as a charge to Limited Partners' capital.
Reimbursed Expenses
The Partnership reimburses the General Partner and affiliates of
the General Partner for the actual cost of goods and materials
used by or for the Partnership in the course of performing the
general functions of the Partnership. These general functions
include accounting, investor communications, investor
documentation, legal services, tax services, computer services,
risk management, and any other related operational and
administrative expenses necessary for the prudent organization
and operation of the Partnership.
Reimbursed expenses paid by the General Partner or affiliates of
the General Partner on behalf of the Partnership were as follows:
Decade Companies ($89,962-1995; $84,471-1994; $68,678-1993) and
Decade Properties, Inc. ($929,883-1995; $878,934-1994;
$772,494-1993). At December 31, 1995, the following amounts were
unpaid by the Partnership: Decade Companies ($2,949) and Decade
Properties, Inc. ($50,270).
Allocations and Distributions
Pursuant to the Agreement, net income and losses from operations
(exclusive of those from the sale or disposition of Partnership
properties) are to be allocated 99% to the Limited Partners and
1% to the General Partner. In computing net income and losses
from operations, depreciation expense is allocated differently to
taxable and nontaxable entities.
Any gains from the sale or disposition of Partnership properties
will be allocated: 1) 99% to the Limited Partners and 1% to the
General Partner until the cumulative gains are equal to any
losses from the sale or disposition of Partnership property for
all prior periods; 2) to the Limited Partners until their
cumulative gains equal the sum of all sales commissions,
underwriting fees, and reimbursed syndication costs for the
current year and all prior years, any losses from the sale or
disposition of Partnership property for the current year and all
prior years, and an amount equal to 6% per annum, cumulative and
noncompounded, on the Limited Partners' capital investment minus
prior distributions of cash available for distribution or to the
extent that prior distributions of sales proceeds exceed the
Limited Partners' original capital investment ("priority return")
from the inception of the Partnership to the end of the current
year; 3) to the General Partner an amount equal to the
distributions made to the General Partner under (iii)(b) below;
4) to the General Partner an amount equal to the distributions
made to the General Partner pursuant to (iv) below; 5) to the
Limited Partners until cumulative gains allocated to them are
equal to (v) below; 6) to the Limited Partners until cumulative
gains allocated to them are equal to (vi) below; and 7) to the
General Partner until cumulative gains allocated to the General
Partner are equal to (vii) below. Any losses from the sale or
disposition of Partnership properties will be allocated 99% to
the Limited Partners and 1% to the General Partner.
Cash available for distribution, as defined in the Agreement,
will be distributed 99% to the Limited Partners and 1% to the
General Partner. Proceeds from the sale or disposition of
Partnership properties, if any, remaining after repayment of any
General Partner's loan and payment of deferred fees, will be
distributed as follows: (i) to the Limited Partners, an amount
equal to 100% of their original capital contribution minus any
prior distributions of sales proceeds; (ii) to the Limited
Partners, an amount to provide their priority return; (iii) to
the General Partner an amount equal to the greater of the excess
of (a) its capital contribution over the sum of all prior
distributions of sales proceeds or (b) 1% of such sales proceeds;
(iv) in the case of the sale of any property in which brokerage
services are actually performed by the General Partner or an
affiliate, to the General Partner or an affiliate, an amount
equal to its subordinated real estate commission (generally up to
3% of the aggregated selling price of all properties); (v) of the
remaining proceeds, 88% to the Limited Partners; (vi) then, to
the Limited Partners, the deficiency, if any, in return of
capital plus a cumulative preference of 10% per annum on their
capital investment; and (vii) to the General Partner, the
remaining balance (not to exceed 12% of the proceeds remaining
after the distributions in accordance with (i) through (iv)
above).
Net Loss Per Limited Partnership Interest
Net loss per Limited Partnership interest is based on 99% of net
loss as allocated to the Limited Partners divided by the weighted
average number of interests outstanding during the year.
Pending Accounting Change
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of." SFAS No. 121 addresses
situations where information indicates that a company might be
unable to recover, through future operations or sale, the
carrying amount of long-lived assets. SFAS No. 121 requires that
long-lived assets that are used in operations be reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount of the assets might not be recoverable.
SFAS No. 121 is effective for the Partnership in 1996. The impact
to the Partnership's financial statements is not expected to be
material.
3. Like-Kind Exchange of Investment Property
During 1993 the Partnership traded the Woodbridge Apartments for
the Pelican Sound Apartments pursuant to a like-kind exchange
under Section 1031 of the Internal Revenue Code. The exchange
commenced on August 2, 1993, and was completed as of November_30,
1993. The Woodbridge Apartments were sold on August 2, 1993, to
an unaffiliated buyer for a net selling price of $5,400,000. The
sale proceeds of $5,326,313 (net of prorations of $73,687) were
transferred to a Like-Kind Exchange Escrow Trust specifically
reserved for the completion of the like-kind exchange and were
not available for distribution. The proceeds in the Like-Kind
Exchange Escrow Trust were used as follows: payoff of mortgage
note payable and accrued interest on Woodbridge Apartments of
$2,516,666, closing costs of $110,075 and purchase of Pelican
Sound Apartments of $2,699,572. The Partnership acquired Pelican
Sound Apartments for $12,550,000 as of November 30, 1993, within
the time period permitted by Section 1031 of the Internal Revenue
Code. The Partnership assumed a $10,000,000 mortgage note payable
on the investment property (see Note 4). The General Partner
earned an acquisition fee from the Partnership of $168,197 for
the purchase of Pelican Sound Apartments. An affiliate of the
General Partner earned a sales commission of $162,000 on the sale
of Woodbridge Apartments. Both fees are unpaid as of December_31,
1995. Because the transaction is considered an exchange for
financial reporting purposes, the cost basis of the Pelican Sound
Apartments equals the historical cost basis of the Woodbridge
Apartments exchanged plus the additional cash paid, net
liabilities assumed and fees earned by the General Partner and
its affiliate, and no gain or loss was recognized as a result of
this transaction.
4. Investment Properties
Investment properties owned at December 31, 1995, are as follows:
<PAGE>
<TABLE>
<CAPTION> Costs Capitalized
Initial Cost to Partnership Subsequent to Acquisition
_______________________________________________________________
Buildings Buildings
and and
Improve- Equip- Improve- Equip-
Description Encumbrances Land ments ment ments ment
__________________________________________________________________________________________
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Meadows II Apartments
Madison, Wisconsin $ 6,729 $1,144 $ 9,227 $ 442 $ 7 $262
Town Place Apartments
Clearwater, Florida 2,500 1,518 5,270 252 -- 348
Pelican Sound
Apartments 10,000 2,644 8,801 861 4 148
St. Petersburg, Florida
$19,229 $5,306 $23,298 $1,555 $11 $758
<CAPTION>
Gross Amount at Which Carried
_______________________________________________________________
Buildings
and Accumulated
Description Land Improvements Equipment Total Depreciation
__________________________________________________________________________________________
(In Thousands)
<S> <C> <C> <C> <C> <C>
Meadows II Apartments
Madison, Wisconsin $1,144 $9,234 $ 704 $11,082 $2,730
Town Place Apartments
Clearwater, Florida 1,518 5,270 600 7,388 1,544
Pelican Sound Apartments
St. Petersburg, Florida 2,644 8,805 1,009 12,458 1,119
$5,306 $23,309 $2,313 $30,928 $5,393
<CAPTION>
Description Date of Construction Date Acquired
<S> <C> <C>
Meadows II Apartments, Madison, Wisconsin In phases through 1980 January 1989
Town Place Apartments, Clearwater, Florida 1985 February 1990
Pelican Sound Apartments,
St. Petersburg, Florida 1987 November 1993
</TABLE>
<PAGE>
In April 1994, the Partnership disposed of Ashley Pointe
Apartments to an unaffiliated buyer for $3,070,000. The net
proceeds of $2,990,181 were transferred to a Like-Kind Exchange
Escrow Trust (Trust) as it was the Partnership's intent to
complete a like-kind exchange pursuant to Section 1031 of the
Internal Revenue Code. The proceeds in the Trust were used to
pay off the mortgage note payable on Ashley Pointe Apartments and
closing costs. Proceeds of $1,094,531 were kept on deposit in
the Trust to acquire a replacement property and complete the
like-kind exchange. The Partnership did not identify a
replacement property in the time permitted under Section 1031
and, as such, a loss of $970,958 was reported for federal income
tax purposes and a loss of $979,610 occurred, for financial
reporting purposes. Due to contractual arrangement, the
$1,094,531 deposit (along with interest earned of $23,000)
remained in the Trust as of December 31, 1994, reported as
exchange escrow. As of December 31, 1995, $497,390 remains on
deposit in the Trust to be used to acquire a replacement property
or to provide additional liquidity for the Partnership, if
necessary. Funds were withdrawn from the Trust in 1995 to fund
the Partnership's financing needs. An affiliate of the General
Partner earned a sales commission of $92,100 on the 1994
disposition of Ashley Pointe Apartments resulting in a total loss
of $1,071,710 for financial reporting purposes. This fee is
unpaid as of December 31, 1995, and is subordinated as set forth
in Note 2.
In 1989, the General Partner earned an acquisition fee from the
Partnership of $753,688 related to the purchase of the Meadows II
Apartments which was capitalized as part of the initial cost of
the investment property. The acquisition fee has not been paid
as of December 31, 1995.
In 1992, the General Partner earned an acquisition fee from the
Partnership of $264,000 related to the purchase of Woodbridge
Apartments, which was capitalized as part of the initial cost of
the investment property. Woodbridge Apartments was disposed of
in August 1993 (see Note 3). The acquisition fee has not been
paid as of December 31, 1995.
A reconciliation of the cost and accumulated depreciation of the
investment properties at December 31 follows:
1995 1994 1993
(In Thousands)
Cost
Balance at beginning of year $30,750 $35,387 $27,612
Acquisition of investment properties -- -- 12,306
Additions to investment properties 178 160 205
Disposal of investment property -- (4,797) (4,736)
Balance at end of year $30,928 $30,750 $35,387
Accumulated depreciation
Balance at beginning of year $ 4,282 $ 3,867 $ 2,923
Provision for the year 1,111 1,242 1,110
Disposal of investment property -- (827) (166)
Balance at end of year $ 5,393 $ 4,282 $ 3,867
The aggregate cost of the investment properties for federal
income tax purposes is $28,045,529 because the acquisition fees
and sales commission payable to the General Partner are
capitalizable for financial reporting purposes only. The
accumulated depreciation for federal income tax purposes was
$5,142,113, $4,030,227 and $3,645,760 at December 31, 1995, 1994
and 1993, respectively.
5. Mortgage Notes Payable
Mortgage notes payable consist of the following:
December 31
1995 1994
Mortgage note payable in monthly
installments of $21,952, including
interest at 7.5%, with final payment
due December 1, 2021. $3,009,554 $3,045,772
Mortgage note payable with interest
accruing at 2.48% over the monthly
weighted average cost of funds of
the bank, adjusted monthly, with
maximum and minimum rates of 14.75%
and 6.75%, respectively (7.591% at
December 31, 1995). Monthly payments
of principal and interest are computed
annually ($27,890 commencing January 1,
1996). The final payment is due
December 10, 2004. 3,718,979 3,755,021
Mortgage note payable with monthly
interest installments at 1.0% over
the prime rate (9.25% at
December 31, 1995). The entire
principal balance is due April 1, 1996. 2,500,000 $2,500,000
Mortgage note payable with monthly
interest installments at 7.0% for
two years. Monthly installments of
$67,184, including interest at 7.0%,
thereafter, with final payment due
December 1, 1998, unless the term is
extended for an additional five years
as described in the mortgage note
agreement. 10,000,000 10,000,000
$19,228,533 $19,300,793
The 7.5% mortgage note is insured under the National Housing Act
and, as a result, the operation of the rental property is subject
to the terms of the Regulatory Agreement between the Partnership
and the Department of Housing and Urban Development (HUD). The
mortgage is secured by the Meadows II property. Under the terms
of the Regulatory Agreements, certain actions, including the
payment of any distributions to the Partners from surplus cash
generated by the Project, require the approval of The Federal
Housing Administration as an agent for HUD.
The Meadows II, Town Place and Pelican Sound Apartments
investment properties and all associated operating revenues are
pledged as collateral for the mortgage notes payable. Interest
paid with respect to the mortgage notes and other indebtedness
was $1,454,778, $1,735,055 and $1,099,588 in 1995, 1994 and 1993,
respectively. Aggregate annual maturities of the mortgage notes
payable for the five years subsequent to December 31, 1995, are
as follows: $2,703,000-1996; $218,000-1997; $9,881,000-1998;
$117,000-1999 and $126,000-2000.
The Partnership had a $250,000 line of credit from a bank with
interest charged on outstanding draws at 6%, expiring January
1995. At December 31, 1994, there was $100,000 outstanding on
the line of credit. In January 1995, the line of credit was
extended to January 1996 at an interest rate of 8.5%. No amounts
are outstanding at December 31, 1995.
6. Income Taxes
The Partnership has received an opinion from legal counsel that
it will be classified as a partnership for federal income tax
purposes. Therefore, Partnership losses or income and taxes
attributable thereto will be the responsibility of the various
Partners and no provision for income taxes has been made in the
Partnership's financial statements.
Differences between the net loss as reported herein and net loss
reported for federal income tax purposes arise from timing
differences related to depreciation, disposition of investment
property and accrual-basis adjustments. The following is a
reconciliation of reported net loss and net loss reported for
federal income tax purposes:
Year ended December 31
1995 1994 1993
Net loss as reported for
financial reporting
purposes $(469,698) $(1,314,409) $(327,203)
Add:
Depreciation (917) 22,782 153,057
Loss on disposition of
investment property -- 100,752 --
Accrual basis adjustments 23,321 9,250 36,631
Net loss reported for
federal income tax
purposes $(447,294) $(1,181,625) $(137,515)
7. Transactions With Related Parties
Decade Companies and its general partners are general partners
for other limited partnerships which have invested in real
estate. The Partnership also shares certain management and
accounting employees and other expenses with entities that are
controlled by Decade Companies and its general partner. The
Partnership has executed certain contracts providing for the
following fees payable to the General Partner or to affiliates of
the General Partner:
Decade Companies
Decade Companies earned the following amount from the
Partnership: acquisition fees ($168,197-1993). Interest on
acquisition fees was not earned by Decade Companies in 1995,
1994 or 1993 due to the fee limitation imposed by the
Partnership prospectus (see Note 2). Acquisition fees of
$2,146,635 are payable to Decade Companies at December 31,
1995. Such fees were capitalized as part of the cost of the
investment properties.
In addition, the following other items are payable to Decade
Companies at December 31, 1995: accrued interest on
acquisition fees ($572,467) and mortgage placement fees
($90,246).
Decade Properties
Decade Properties earned the following amounts from the
Partnership: property management fees ($449,205-1995;
$489,960-1994; $399,221-1993), real estate sales commissions
($92,100-1994; $162,000-1993) and interest on sales commis-
sions ($28,588-1995; $26,570-1994; $18,259-1993). Real
estate sales commissions of $440,700 are payable to Decade
Properties at December 31, 1995. Such fees were capitalized
into the cost of the investment properties, except for the
fee earned on the disposition of Ashley Pointe Apartments of
$92,100 (see Note 4).
In addition, accrued interest on sales commissions
($115,821) is payable to Decade Properties at December 31,
1995.
Deferred fees payable to affiliates bear interest at the minimum
rate required under the Internal Revenue Code (the Code) to avoid
imputed interest under the Code and is payable only from sales
proceeds, Partnership operations or cash reserves. However, as
described above and in Note 2, interest has not been earned on
certain deferred fees for 1995, 1994 and 1993.
Charges by affiliated parties in 1996 are estimated by management
to approximate $455,000 for property management fees. Interest
charges by affiliated parties in 1996 are expected to approximate
1995 amounts.
<PAGE>
OFFER TO PURCHASE
TABLE OF CONTENTS
Page
SUMMARY OF CERTAIN INFORMATION . . . . . . . . . . . . . . . . 2
THE PARTNERSHIP. . . . . . . . . . . . . . . . . . . . . . . . 4
Background of the Partnership . . . . . . . . . . . . . . 4
Background of the Offer . . . . . . . . . . . . . . . . . 4
Determination of the Offer Price. . . . . . . . . . . . . 5
August 1996 Appraisal of Pelican Sound. . . . . . . . . . 6
September 1996 Appraisal of The Meadows II. . . . . . . . 7
April 1996 Appraisal of Town Place. . . . . . . . . . . . 8
Opinion of The Valuations Group . . . . . . . . . . . . . 9
Interests of Certain Persons in the Offer . . . . . . . . 10
Certain Effects of the Offer. . . . . . . . . . . . . . . 10
Conduct of the Partnership After the Offer. . . . . . . . 11
Certain Federal Income Tax Consequences of the Offer. . . 12
Correction of Depreciation Methods and Allocations. . . . 13
Accounting Treatment. . . . . . . . . . . . . . . . . . . 15
Regulatory Matters. . . . . . . . . . . . . . . . . . . . 15
THE OFFER. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Proration . . . . . . . . . . . . . . . . . . . . . . . . 16
Procedures for Tendering Interests. . . . . . . . . . . . 17
Signature Guarantees and Method of Delivery . . . . . . . 17
Withdrawal Rights
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Certain Conditions. . . . . . . . . . . . . . . . . . . . 18
Estimated Costs and Fees. . . . . . . . . . . . . . . . . 20
FINANCING THE OFFER. . . . . . . . . . . . . . . . . . . . . . 20
General . . . . . . . . . . . . . . . . . . . . . . . . . 20
Bank Financing. . . . . . . . . . . . . . . . . . . . . . 20
DESCRIPTION OF THE LIMITED PARTNERSHIP INTERESTS . . . . . . . 20
BUSINESS OF THE PARTNERSHIP. . . . . . . . . . . . . . . . . . 21
LACK OF MARKET AND DISTRIBUTIONS . . . . . . . . . . . . . . . 26
SECURITY OWNERSHIP OF THE GENERAL PARTNER. . . . . . . . . . . 26
SUMMARY HISTORICAL FINANCIAL INFORMATION . . . . . . . . . . . 28
PRO FORMA FINANCIAL DATA . . . . . . . . . . . . . . . . . . . 29
NOTES TO PRO FORMA FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND JUNE 30, 1996. . . . . . . . . . . . . . 36
INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . 37
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . 37
INDEX TO FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . 38
<PAGE>
Annex A: Appraisal of Pelican Sound
APPRAISAL
Pelican Sound
A 379-Unit Apartment Complex
10200 Gandy Boulevard
St. Petersburg, Florida 33702
PREPARED FOR
Mr. Michael Sweet
Decade
250 Patrick Boulevard, Suite 140
Brookfield, Wisconsin 53045-5864
EFFECTIVE DATE
August 28, 1996
TYPE OF REPORT
Complete, Self-contained
BY
Robert E. Riggins, SRA, MAI
State-certified general real estate appraiser
#0000605
William W. Atkinson, MAI
State-certified general real estate appraiser
#0001221
RIGGINS, ATKINSON, COMBS & ASSOCIATES, INC.
18840 U.S. HIGHWAY 19 NORTH, SUITE 401
CLEARWATER, FLORIDA 34624
(813) 530-9793
<PAGE>
08962310
September 12, 1996
Mr. Michael Sweet
Decade
250 Patrick Boulevard, Suite 140
Brookfield, Wisconsin 53045-5864
Re: Appraisal Report
Pelican Sound
A 379-Unit Apartment Complex
10200 Gandy Boulevard
St. Petersburg, Florida 33702
Dear Mr. Sweet:
As requested, we have prepared an appraisal of the above
captioned property. The purpose of the appraisal is to estimate
the market value of the subject property, as of the effective
date of August 28, 1996. Market value is defined on page 3 of
the text. This appraisal reflects or addresses any significant
information known to this appraiser which may materially alter
the "as is" nature of the appraisal.
The subject property is a 379-unit apartment complex, known as
the Pelican Sound apartments. The complex, which was constructed
in 1988, features one and two bedroom apartment units in two-
story and three-story walk-up garden style buildings. Amenities
include a clubhouse with leasing office and fitness facility, a
swimming pool and spa, and tennis courts. The construction
quality of the apartment complex is average to good cost and has
been maintained in above average condition. The total rentable
area of the buildings is 260,867 square feet.
The subject site is an irregular shaped parcel located on the
south side of Gandy Boulevard, east of the intersection with 4th
Street in the city of St. Petersburg. The site has about 1,327
feet of road frontage. Ingress and egress is adequately
provided. The total area of the site is 1,375,991 square feet or
31.59 acres.
08962310
<PAGE>
Mr. Michael Sweet
September 12, 1996
Page Two of Two
It is the intent of this appraisal to be in compliance with the
regulations governing federally regulated financial institutions
and the Uniform Standards of Professional Appraisal Practice as
adopted by the Appraisal Institute, as read and interpreted by
this office.
The following report contains the data, analysis, assumption and
limiting conditions on which we have based our value conclusions.
Your attention is directed to the "general assumptions and
limiting conditions" and the "certificate of appraisal" which are
considered typical for this type of assignment and have been
included within the text of this report.
The fee simple market value of the property described herein,
subject to the assumptions and limiting conditions as set forth,
as of August 28, 1996, in "as is" condition, is estimated to be:
<PAGE>
FOURTEEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS
($14,250,000)
INCLUDING
DEPRECIATED VALUE OF APPLIANCES
FIVE HUNDRED FIFTY THOUSAND DOLLARS
($550,000)
REAL PROPERTY
THIRTEEN MILLION SEVEN HUNDRED THOUSAND DOLLARS
($13,700,000)
Respectfully submitted:
_____________________________
________________________________
Robert E. Riggins MAI, SRA William W. Atkinson, MAI
President Vice President
State-certified general real State-certified general real
estate appraiser #0000605 estate appraiser #0001221
<PAGE>
Summary of Important Facts and Conclusions
Property Location: Property located on the south side
of Gandy Boulevard, east of the
intersection with 4th Street,
mailing address - 10200 Gandy
Boulevard, St. Petersburg, Florida
33702
Owner of Record: Decade Companies Income Properties,
Ltd.
Property Rights Appraised: Fee Simple Estate
Date of Valuation: August 28, 1996
Improvements: A 379-unit, average to good quality
apartment complex that was
constructed in 1988, known as the
Pelican Sound Apartments -
Amenities include a clubhouse with
leasing office and fitness
facility, a swimming pool and spa,
and tennis courts
Land Area: 1,375,991 square feet or 31.59
Acres
Zoning and Land Use: RO-P (Residential Office Parkway)
under the jurisdiction of the City
of St. Petersburg - Comprehensive
Land Use Plan, RO (Residential/
Office General)
Highest and Best Use:
As Though Vacant: A 379-unit good quality apartment
development
As Though Improved: Continue use as a 379-unit
apartment complex
Valuation Summary:
Estimated Land Value: $ 2,500,000
Value by the Cost Approach: $14,500,000
Value by the Sales Comparison Approach: $14,300,000
Value by the Income Capitalization Approach: $14,200,000
Final Estimate of Value:
"As Is" - Fee Simple: $14,250,000
Marketing Time: 6 Months
<PAGE>
SUBJECT PHOTOGRAPHS
VIEW OF APARTMENT BUILDING
AND PARKING AREAS - FACING SOUTHWEST
VIEW OF CLUBHOUSE - FACING SOUTHEAST
<PAGE>
Table Of Contents
Cover Page
Letter Of Transmittal
Summary Of Important Facts And Conclusions
Subject Photographs
Introduction Page
PURPOSE AND DATE OF APPRAISAL. . . . . . . . . . . . . . . . . 1
FUNCTION OF THE APPRAISAL. . . . . . . . . . . . . . . . . . . 1
INTEREST APPRAISED . . . . . . . . . . . . . . . . . . . . . . 1
SCOPE OF THE APPRAISAL . . . . . . . . . . . . . . . . . . . . 1
DEFINITION OF MARKET VALUE . . . . . . . . . . . . . . . . . . 2
DEFINITION OF FEE SIMPLE OWNERSHIP . . . . . . . . . . . . . . 3
IDENTIFICATION OF THE SUBJECT PROPERTY . . . . . . . . . . . . 3
ZONING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FLOOD INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 4
LEGAL DESCRIPTION. . . . . . . . . . . . . . . . . . . . . . . 4
TAX INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . 4
SALES HISTORY. . . . . . . . . . . . . . . . . . . . . . . . . 4
HIDDEN CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . 5
TAMPA BAY AREA ANALYSIS. . . . . . . . . . . . . . . . . . . . 6
TAMPA BAY AREA . . . . . . . . . . . . . . . . . . . . . . . . 6
NEIGHBORHOOD DESCRIPTION . . . . . . . . . . . . . . . . . . . 14
SITE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
IMPROVEMENT DESCRIPTION. . . . . . . . . . . . . . . . . . . . 23
HIGHEST AND BEST USE . . . . . . . . . . . . . . . . . . . . . 28
THE VALUATION PROCESS. . . . . . . . . . . . . . . . . . . . . 32
THE COST APPROACH. . . . . . . . . . . . . . . . . . . . . . . 33
COMPARABLE LAND SALES. . . . . . . . . . . . . . . . . . . . . 41
EXPLANATION OF ADJUSTMENTS . . . . . . . . . . . . . . . . . . 44
CORRELATION AND CONCLUSION . . . . . . . . . . . . . . . . . . 45
REPLACEMENT COST OF IMPROVEMENTS . . . . . . . . . . . . . . . 47
IMPACT FEES. . . . . . . . . . . . . . . . . . . . . . . . . . 47
DEVELOPER (ENTREPRENEURIAL) OVERHEAD AND PROFIT. . . . . . . . 47
DEPRECIATION . . . . . . . . . . . . . . . . . . . . . . . . . 48
Physical Depreciation. . . . . . . . . . . . . . . . . . . . . 48
SUMMARY OF THE COST APPROACH . . . . . . . . . . . . . . . . . 50
THE SALES COMPARISON APPROACH. . . . . . . . . . . . . . . . . 51
IMPROVED COMPARABLE NO. 1. . . . . . . . . . . . . . . . . . . 52
IMPROVED COMPARABLE NO. 2. . . . . . . . . . . . . . . . . . . 54
IMPROVED COMPARABLE NO. 3. . . . . . . . . . . . . . . . . . . 56
IMPROVED COMPARABLE COMPARISON CHART . . . . . . . . . . . . . 63
EXPLANATION OF ADJUSTMENTS . . . . . . . . . . . . . . . . . . 65
CORRELATION AND CONCLUSION . . . . . . . . . . . . . . . . . . 66
THE INCOME CAPITALIZATION APPROACH . . . . . . . . . . . . . . 69
ESTIMATE OF MARKET RENT. . . . . . . . . . . . . . . . . . . . 69
RENT COMPARABLE. . . . . . . . . . . . . . . . . . . . . . . . 70
Comparable Rent Analysis . . . . . . . . . . . . . . . . . . . 76
Comparable Rent Analysis . . . . . . . . . . . . . . . . . . . 77
Comparable Rent Analysis . . . . . . . . . . . . . . . . . . . 78
Comparable Rent Analysis . . . . . . . . . . . . . . . . . . . 79
ANALYSIS OF OPERATING HISTORY. . . . . . . . . . . . . . . . . 83
DIRECT CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . 85
BAND OF INVESTMENT . . . . . . . . . . . . . . . . . . . . . . 85
DEBT COVERAGE RATIO. . . . . . . . . . . . . . . . . . . . . . 86
SUMMARY OF THE DIRECT CAPITALIZATION APPROACH. . . . . . . . . 87
Discounted Cash Flow Analysis: . . . . . . . . . . . . . . . . 88
MULTIFAMILY INCOME PROFORMA. . . . . . . . . . . . . . . . . . 90
Summary of the Income Capitalization Approach. . . . . . . . . 93
RECAPITULATION AND FINAL RECONCILIATION. . . . . . . . . . . . 95
ESTIMATED MARKETING TIME . . . . . . . . . . . . . . . . . . . 97
CERTIFICATE OF APPRAISAL . . . . . . . . . . . . . . . . . . . 98
ASSUMPTIONS AND LIMITING CONDITIONS. . . . . . . . . . . . . . 99
Purpose and Date of Appraisal . . . . . . . . . . . . . . 1
Function of the Appraisal . . . . . . . . . . . . . . . . 1
Interest Appraised. . . . . . . . . . . . . . . . . . . . 1
Scope of The Appraisal. . . . . . . . . . . . . . . . . . 1
Definition of Market Value. . . . . . . . . . . . . . . . 3
Definition Of Fee Simple Ownership. . . . . . . . . . . . 4
Identification of the Subject Property. . . . . . . . . . 4
Zoning. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Flood Information . . . . . . . . . . . . . . . . . . . . 5
Legal Description . . . . . . . . . . . . . . . . . . . . 5
Tax Information . . . . . . . . . . . . . . . . . . . . . 5
Sales History . . . . . . . . . . . . . . . . . . . . . . 6
Hidden Conditions . . . . . . . . . . . . . . . . . . . . 6
Descriptive Analysis
Tampa Bay Area Analysis . . . . . . . . . . . . . . . . . 7
Neighborhood Analysis . . . . . . . . . . . . . . . . . . 17
Site Analysis . . . . . . . . . . . . . . . . . . . . . . 22
Improvement Description . . . . . . . . . . . . . . . . . 28
Highest And Best Use. . . . . . . . . . . . . . . . . . . 33
Valuation Analysis
The Valuation Process . . . . . . . . . . . . . . . . . . 39
The Cost Approach . . . . . . . . . . . . . . . . . . . . 41
Comparable Land Sales . . . . . . . . . . . . . . . . . . 52
Comparable Sales Comparison Chart . . . . . . . . . . . . 53
Explanation of Adjustments. . . . . . . . . . . . . . . . 54
Correlation and Conclusion. . . . . . . . . . . . . . . . 56
Replacement Cost Of Improvements. . . . . . . . . . . . . 58
Impact Fees . . . . . . . . . . . . . . . . . . . . . . . 58
Developer Overhead and Profit . . . . . . . . . . . . . . 59
Depreciation. . . . . . . . . . . . . . . . . . . . . . . 59
Physical Depreciation . . . . . . . . . . . . . . . . . . 60
Summary of the Cost Approach. . . . . . . . . . . . . . . 63
The Sales Comparison Approach . . . . . . . . . . . . . . 64
Improved Comparables. . . . . . . . . . . . . . . . . . . 65
Improved Comparable Comparison Chart. . . . . . . . . . . 81
Explanation of Adjustments. . . . . . . . . . . . . . . . 82
Correlation and Conclusion. . . . . . . . . . . . . . . . 84
The Income Capitalization Approach. . . . . . . . . . . . 87
Estimate of Market Rent . . . . . . . . . . . . . . . . . 87
Rent Comparables. . . . . . . . . . . . . . . . . . . . . 88
Comparable Rent Analysis. . . . . . . . . . . . . . . . . 99
Analysis of Operating History . . . . . . . . . . . . . 100
Direct Capitalization . . . . . . . . . . . . . . . . . 102
Band of Investment. . . . . . . . . . . . . . . . . . . 102
Debt Coverage Ratio . . . . . . . . . . . . . . . . . . 103
Summary of the Direct Capitalization Approach . . . . . .105
cADiscounted Cash Flow Analysis:. . . . . . . . . . . . .106
Multi-family Income Proforma. . . . . . . . . . . . . . .108
Summary of the Income Capitalization Approach . . . . . .110
Recapitulation and Final Reconciliation . . . . . . . . .111
Estimated Marketing Time. . . . . . . . . . . . . . . . .114
Certificate of Appraisal. . . . . . . . . . . . . . . . .115
Assumptions and Limiting Conditions . . . . . . . . . . .117
Addendum
Flood Plain Map
Supplemental Subject Photographs
Zoning Regulations
Legal Description
Rent Roll
Income Statement
Qualifications of Appraisers
<PAGE>
APPRAISAL REPORT
Pelican Sound
A 379-Unit Apartment Complex
10200 Gandy Boulevard
St. Petersburg, Florida 33702
PURPOSE AND DATE OF APPRAISAL:
The purpose of this appraisal is to estimate the market value of
the fee simple interest in the property described herein, as of
August 28, 1996, in "as is" condition.
FUNCTION OF THE APPRAISAL:
This appraisal report is to assist the client in a presentation
to the stockholders. This appraisal reflects or addresses any
significant information known to this appraiser which may
materially alter the nature of the appraisal.
INTEREST APPRAISED:
The fee simple interest in the property described herein has been
appraised. Liens and encumbrances, if not described, are unknown
and the property has been analyzed as if free and clear.
SCOPE OF THE APPRAISAL:
A physical inspection of the subject property was made on
August 28, 1996. The inspection of the property was made with
the assistance of Pamela Olcott, Property Manager and Wayne Shaw,
Regional Manager. Documentation supplied for the subject property
included a two and a half year operating income history and a
current rent roll. All of the improved structures were
physically inspected from the exterior. Interior inspections were
made of the leasing office, laundry/maintenance room, and a
sample of 5 apartment units. Public records were reviewed for
additional information on the subject property.
Once a physical inspection was completed, the economic conditions
of the region and neighborhood were investigated and analyzed in
relation to the relevant factors which effect the market value of
the subject. The cost approach, sales comparison approach, and
income capitalization approach were used to evaluate the relevant
factors and estimate the market value of the subject. The time
period for which comparable market data was investigated was from
January 1993 to the present. Data sources used to collect
comparable market information include Redi, Ulticomp, Realtron,
MetroScan, public records, and internal appraisal files.
The cost approach is derived by estimating the value of the land
and the depreciated replacement cost of the improvements. The
primary factors which were considered in the search for
comparable land sales were the highest and best use, the date of
sale, and the location. All of the land comparables were
researched, physically inspected, and confirmed with a
knowledgeable source. Both Pinellas and Hillsborough Counties
were searched for land comparables. Land sales in Pinellas
County were limited due to the dense development in the area and
the limited supply of vacant land. The replacement cost of the
improvements was estimated using Marshall Valuation Service.
Depreciation applicable to the improvements was estimated based
on a comparison of other structures in the neighborhood.
The sales comparison approach values the subject property by
comparing it to similar sales in the market area. The primary
factors which were considered in the search for improved
comparables were age and quality of the properties, the date of
sale, and the location. All of the improved comparables were
researched using public records, physically inspected, and
confirmed with a knowledgeable source. The search for improved
comparables was limited to Pinellas County.
The income capitalization approach estimates the value of the
subject by dividing net operating income by a capitalization rate
and estimating future cash flows and applying an appropriate
discount rate. Net operating income is derived by estimating the
gross potential income of the subject and then deducting for
vacancy, collection loss and operating expenses.
The gross potential income for the subject was derived using rent
comparables. The primary factors which were considered in the
search for rent comparables was the age and quality of the
properties and the location. All of the rent comparables were
researched using public records, physically inspected, and
surveyed with a knowledgeable source. All of the rent
comparables were located in the immediate subject neighborhood.
Vacancy, collection loss, and expenses were supported by the rent
comparables, as well as, the improved comparables. The
capitalization rate was derived using comparable sales, the band
of investment and the debt coverage ratio.
This narrative report describes the valuation problem and
contains data, analysis, assumptions and limiting conditions upon
which value conclusions have been based. It is the intent of
this appraisal to be in compliance with the regulations governing
federally regulated financial institutions and the Uniform
Standards of Professional Appraisal Practice as adopted by the
Appraisal Institute, and as read and interpreted.
DEFINITION OF MARKET VALUE:
"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
knowledgeably, and assuming the price is not affected by undue
stimulus. Implicit in this definition is the consummation of a
sale as of a specified date and the passing of title from seller
to buyer under conditions whereby:
1. buyer and seller are typically motivated;
2. both parties are well informed or well advised, and acting
in what they consider their own best interests;
3. a reasonable time is allowed for exposure in the open
market;
4. payment is made in terms of cash in United States dollars or
in terms of financial arrangements comparable thereto; and
5. the price represents the normal consideration for the
property sold unaffected by special or creative financing or
sales concessions granted by anyone associated with the
sale.
Important factors affecting market value include the time
element, neighborhood and economic changes, as well as
anticipation thereof. Market prices do not necessarily follow all
of these concepts and are often affected by salesmanship and the
urgency and need of the buyer and/or the seller. The essential
difference between market price and market value lies in the
premises of intelligence, knowledge and willingness, all of which
are contemplated in market value but not in market price.
The market value of the property appraised in this report is
estimated as of the date shown in the certificate of appraisal.
Constantly changing economic conditions have varying effects upon
real property values. Even after the passage of a relatively
short period, property values may change substantially and
require a review of the appraisal and recertification.
DEFINITION OF FEE SIMPLE OWNERSHIP:
"A fee simple estate implies absolute ownership unencumbered by
any other interest or estate. Partial interests in real estate
are created by selling, leasing, or otherwise limiting the bundle
of rights in a fee simple estate. Partial estates include leased
fee and leasehold estates."
IDENTIFICATION OF THE SUBJECT PROPERTY
The subject property is a 379-unit apartment complex, known as
the Pelican Sound apartments. The complex, which was constructed
in 1988, features one and two bedroom apartment units in two-
story and three-story walk-up garden style buildings. Amenities
include a clubhouse with leasing office and fitness facility, a
swimming pool and spa, and tennis courts. The construction
quality of the apartment complex is average to good cost and has
been maintained in above average condition. The total rentable
area of the buildings is 260,867 square feet.
The subject site is an irregular shaped parcel located on the
south side of Gandy Boulevard, east of the intersection with 4th
Street in the city of St. Petersburg. The site has about 1,327
feet of road frontage. Ingress and egress is adequately
provided. The total area of the site is 1,375,991 square feet or
31.59 acres.
ZONING:
The subject site is zoned RO-P (Residential Office Parkway) under
the jurisdiction of the City of St. Petersburg. Under the
comprehensive land use plan, the subject has a land use of RO
(Residential/Office General). The zoning classification and land
use for the subject are compatible.
The RO-P zoning district is intended to permit either residential
or office, or a compatible mixture of these uses, at medium
intensity or density of 12 units per acre for multiple use but
with density up to 15 units per acre obtainable through
utilization of Transfer of Development Rights.
Several of the permitted principal uses and structures include
multiple family development, special residential development,
boarding and rooming houses, community residential homes,
offices, churches, public parks, financial institutions, parking
lots, motels and hotels, academic schools, and bed and breakfast
homes.
The subject property is developed at a density of 12.00 units per
acre and appears to conform to the current zoning and land use.
FLOOD INFORMATION:
The subject property is located in flood zone A9. Flood zone
information was determined by F.I.R.M. community panel number
125139 0207C, dated June 1, 1983. An A9 zone is defined as areas
of 100-year flood; base flood elevations and flood hazard factors
determined. Insurance is required for improved structures within
an A9 zone. A copy of the flood map may be found at the addendum
of this report.
LEGAL DESCRIPTION:
A tract of land in Sections 18 and 19, Township 30 South, Range
17 East, Pinellas County, Florida, being more particularly
described at the addendum of the report.
The legal description for the subject was supplied by the client
and is assumed to be correct. No guarantee is made as to the
accuracy of the legal description.
TAX INFORMATION:
Census Tract: 244.05
Parcel Numbers: 19-30-17-68290-001-0010
Owner of Record: Decade Companies Income Properties, Ltd.
1995 Tax Valuation: $11,576,000
Millage Rate: 26.1279
1995 Gross Tax: $302,456.57 (1995 Taxes - Paid)
In review of the appraised value for the subject property, the
assessed value appears to be within an acceptable range. An
analysis of the tax assessment and tax comparables may be found
in the income capitalization approach section of the report.
SALES HISTORY:
A search of Pinellas County Public Records revealed one
transaction involving the subject property within the last five
years.
Decade Companies Income Properties, Ltd. purchased the subject
property in December of 1993 for $12,000,000 . The Warrantee
Deed is recorded in Pinellas County Official Record Book 8495,
Page 1097. The sale was reportedly caused by threat of
foreclosure and the price is not considered to reflect current
market value of the subject. To our knowledge the subject
property is not currently on the market for sale.
HIDDEN CONDITIONS:
The appraiser assumes that there are no hidden or unapparent
conditions of the property, subsoil or structures which would
render it more or less valuable than otherwise apparently
comparable property. The appraiser assumes no responsibility for
such conditions or for engineering which might be required to
discover such conditions.
<PAGE>
TAMPA BAY AREA ANALYSIS
TAMPA BAY AREA:
The Tampa Bay Area is located on the west coast of Florida,
midway up the Florida peninsula. The Tampa Bay Comprehensive
Planning District 8 is geographically defined as Hillsborough,
Manatee, Pasco and Pinellas Counties, which contain a total of
2,818 square miles. The primary concentration of development has
taken place around Tampa Bay and along the Gulf coast. The major
cities in the area are Tampa in Hillsborough County, and St.
Petersburg and Clearwater in Pinellas County.
The region is blessed with a moderate climate with an average
minimum temperature of 48 degrees in January and an average
maximum temperature of 89 degrees in July. The average annual
rainfall is 56 inches, the majority of which falls in the summer
months.
POPULATION:
The current population of the region is estimated at 2,311,198
(1995). The region has experienced a dramatic increase in
population since 1970, with a total increase of 44.9% between
1970 and 1980. Population growth has slowed somewhat since 1980,
with an increase of 26.8% between 1980 and 1990, or approximately
46,000 new residents annually. Total growth in 1990-1995,
however, was only 132,647, or 26,529 annually.
<TABLE>
POPULATION STATISTICS
<CAPTION>
Annual % Change
1980 1990 1995 80-90 90-95 20000*
<S> <C> <C> <C> <C> <C> <C>
Hillsborough 646,960 834,054 892,299 2.6% 1.4% 962,229
Manatee 148,445 211,707 232,700 3.6% 1.9% 257,404
Pasco 193,661 281,131 306,401 3.8% 1.7% 340,101
Pinellas 728,531 851,659 879,798 1.6% 0.7% 919,497
District 8 1,717,576 2,178,551 2,311,198 2.4% 1.2% 2,479,231
* Population projections, University of Florida.
Population growth during the 1970's was 3.8% on an annual basis.
In the period 1980-1990, growth in the area dropped to 2.4%
annually, in part due to the overall slowing of migration to the
sunbelt. With the slowdown in the economy, growth since 1990 has
been only 1.2% per year for the district. Growth is due
primarily to net immigration rather than natural growth.
Pinellas County has recorded the lowest percentage growth due to
the dwindling supply of available land.
Hillsborough County is the most populous county in the area and
contains the largest city, Tampa. The second most populous
county in the area is Pinellas, which is geographically the
second smallest county in Florida. This makes Pinellas County
the most densely populated county in Florida with over 3,122
residents per square mile. Pasco County exhibited the most
dramatic growth since 1980 due to its emergence as a retirement
area, and increases in employment opportunities, however, as with
other counties, Pasco County growth has slowed considerably.
The average age of the population for the region is 39 years, as
compared to 36 years for the State of Florida. The average age
for the counties are 43 years for Manatee, 33 years for
Hillsborough, 48 years for Pasco, and 42 years for Pinellas. The
more mature populations in Manatee, Pasco and Pinellas Counties
are primarily due to their history as retirement areas. Recent
years have shown a slight drop in average age due to the increase
in office and manufacturing employment opportunities. This is
particularly true of Pinellas County, where the retirement
population is being replaced by younger, working age, families.
There were 961,202 households in the District in 1994, which
represents an average household size of 2.40. The average
household size has decreased from 2.70 in 1970, in keeping with
national trends. Based on historical growth patterns, this would
equate to 19,450 new household formations annually. However, the
slower growth in 1990-1995 equates to only 11,033 new household
formations annually. This is reflected in the significant drop
in new housing starts in recent years. Housing starts have shown
a slight rebound in all counties in the years 1993, 1994 and
1995, due in part to lower interest rates.
Population growth is expected to rebound somewhat as the general
economy improves, however, it is unlikely to reach the level of
growth experienced in the 1970's and 1980's.
ECONOMIC BASE:
Historically the economy has been tourist and retirement oriented
in the coastal counties and manufacturing and commercially
oriented in Hillsborough County. While this is still true today,
Pinellas County has begun to attract a larger share of new
businesses, particularly in the high tech industries. Tampa,
however, remains the major economic hub of the area.
Major factors affecting the economic growth in the area, apart
from the retirement and tourist industries, are Tampa's deep
water port, Tampa International Airport and the major highway
arteries servicing the area. Tampa is a major break point
between railroads, air, highway and water transport. The Port of
Tampa handled 52.0 million short tons in 1990, with an additional
5.3 million short tons handled by Port Manatee. Ease of access
through Tampa International Airport and the interstate highway
system has made the area increasingly more attractive for
corporate and regional headquarters facilities, as well as high
tech industry. This has spurred additional growth in the service
and construction industries. The completion of I-75 through the
region opened new growth opportunities in Pasco, Hillsborough and
Manatee Counties, however, due to the general slowdown in the
economy, this growth has not yet materialized.
Taxable retail sales in the Tampa Bay Area increased from $19,521
million in 1990 to $23,502 million in 1994. Retail sales levels
are generally in line with the State of Florida, however they are
above national levels. The high level of retail sales is in
large part due to the tourist and part time resident trade. This
same influence is evident in the area employment statistics.
Total personal income has increased dramatically over the period
from 1985 to 1995. In 1985 the total personal income for the
area was $27,463 million. By 1995 this had increased to $51,327
million, an increase of 86.9%, or 6.45% annually. Per capita
income increased at a slightly slower rate than Florida as a
whole to a current level of $22,208, slightly below the Florida
per capita income of $22,534.
PER CAPITA PERSONAL INCOME
% Change Annual %
1990 1994 1995 94-95 90-95
Hillsborough $17,264 $20,743 $21,155 2.0% 4.1%
Manatee $18,525 $22,968 $22,636 -1.4% 4.1%
Pasco $14,424 $16,573 $17,146 3.5% 3.5%
Pinellas $21,881 $24,146 $24,725 2.4% 2.5%
District 8 $18,825 $21,721 $22,208 2.2% 3.4%
Florida $18,683 $21,890 $22,534 2.9% 3.8%
Employment in the region reflects a broad based economy, although
it is skewed somewhat to the retail trade and service industries.
Agriculture and mining were instrumental in the early growth of
the area but have declined substantially in recent years.
Historically the unemployment rate, at 5.3% in 1995, has stayed
below the national and state averages.
LABOR FORCE AND EMPLOYMENT (1995)
Labor Unempl.
Force Employed Unemployed Rate
Hillsborough 503,225 475,286 27,969 5.6%
Manatee 109,176 104,711 4,465 4.1%
Pasco 118,654 110,789 7,865 6.6%
Pinellas 441,700 419,406 22,283 5.0%
District 8 1,172,755 1,110,203 62,582 5.3%
The current labor force for the District is 1,172,755 or 50.7% of
the population. In 1982 the labor force was 717,916 or 41.8% of
the population. Not only has there been a substantial increase
in labor force, there has also been a dramatic increase in the
percent of population employed.
EMPLOYMENT DISTRIBUTION (1993)
Percent Percent
Industry Total Percent Florida US
Agriculture 20,910 2.20% 2.80% 2.70%
Mining 125 0.00% 0.10% 1.20%
Construction 42,682 4.60% 5.20% 4.50%
Manufacturing 95,427 10.30% 8.70% 20.00%
Transport, Communic. 50,127 5.40% 5.90% 5.60%
Wholesale Trade 51,372 5.50% 5.30% 5.80%
Retail Trade 188,913 20.30% 20.90% 16.40%
The comparison of the District distribution with the national
distribution of employment illustrates the importance of the
construction, retail sales and service sector in the local
economy and in Florida. This is due, in large part, to the
tourist and retirement influence in the area. Employment growth
had kept pace with population growth, thus providing adequate job
opportunities.
Due to the favorable economic environment, the quality of life in
the area and the strong economic base, the Tampa Bay area should
continue to grow as a major economic center. The area has been
successful and should continue to be successful in attracting new
businesses.
SOCIAL SERVICES:
All normal governmental services are adequately provided
throughout the region. Electrical power is provided by Florida
Power Corporation in Pasco and Pinellas Counties, Florida Power
and Light in Manatee County and by Tampa Electric Company, in
Hillsborough County at rates comparable with other areas of
Florida. Water, sewer, sanitation, police and fire protection
are provided by the various county and municipal governments.
Local tax rates are generally in line with other areas of the
state.
Due to past growth, particularly in Hillsborough, Pasco, and
Pinellas, certain services have been sorely taxed. Limited water
restrictions have been implemented throughout the area during dry
periods. The interior road systems are inadequate in certain
high growth areas. This problem has become more critical with
the implementation of the Florida Growth Management Act, which
requires infrastructure improvements to be made concurrent with
growth. While these factors do not appear to have had a major
impact on growth thus far, they are likely to become a major
factor in future growth, particularly if growth returns to past
levels.
The area has long been noted as a retirement and vacation spot
with its gulf beaches and attractions such as Busch Gardens,
Disney World and Weeki Wachee Springs. Over the years, the area
has also developed a number of other cultural and leisure
activities including an NFL football team, an NHL hockey team,
the Ruth Eckerd Hall in Clearwater, a number of smaller theaters
and the Performing Arts Center in Tampa. A 200,000 square foot
convention center has been constructed in downtown Tampa, along
with a new hockey arena. A sports stadium has been constructed
in downtown St. Petersburg, which has been awarded a new major
league baseball franchise.
Shopping is abundant and easily accessible to all areas. A
number of major area malls are scattered throughout the area.
These new cultural and leisure amenities have given the Tampa Bay
area a much more cosmopolitan atmosphere, thus making the area
much more attractive to both part time visitors and permanent
residents.
Educational opportunities are adequately provided in the area.
Each county has a public school system providing education from
kindergarten through the twelfth grade, as well as private
schools. Higher education is provided by a number of
institutions, both public and private, including St. Petersburg
Junior College, University of South Florida, University of Tampa,
Hillsborough Community College, Eckerd College and Stetson
University.
Health services are provided by 51 hospitals, with a total of
11,273 beds. There are approximately 5,184 licensed physicians
serving the area. There is also a large number of nursing homes
and care facilities serving the elderly population.
CONCURRENCY:
Concurrency laws were enacted in 1990, statewide. Concurrency is
part of the 1985 Florida Growth Management Act which states in
part that all infrastructures, which are, or will be affected by
any proposed development, must be in place, prior to, or
concurrent with development.
In most municipalities, there are seven areas that affect
concurrency.
1. Solid Waste 5. Transportation
2. Drainage 6. Parks and Recreation
3. Water 7. Mass Transportation
4. Sewer
The major items of concurrency which normally affect most
projects are sewers and roads. Sewers and roadway capacities are
also generally the most expensive to build.
Concurrency laws may require the developer to pave, widen, and/or
construct existing or additional roads to carry the burden of the
additional traffic generated by a proposed development. The
developer may also have to participate in the cost of
construction to increase the sewer capacity or may have to donate
land to be used for parks and recreation.
As a result of rapid development, a major concern in the area
lies with the inability of the existing roads to keep up with
vehicular traffic demands. Streets are rated "A" through "F".
Streets in the county with severe traffic problems are labeled
"F". Development on streets that are rated, or are approaching,
an "F" rating could be significantly curtailed. All counties
have major road construction programs underway to alleviate these
problems, however, they are likely to persist, at least in the
short run.
HOUSING MARKET:
The Housing Market remains stable in the Tampa Bay area, although
sales of new homes have slowed from the high levels experienced
during the high growth period of the 1970's. The most active
housing markets in both single family and multi-family
developments are northwest Hillsborough County, north Pinellas
County, and south Pasco County.
New housing starts over the period 1987-1992 experienced a steady
decline due to slower population growth and over building.
Housing starts in all counties stabilized in 1992, with an
increase in construction activity in 1993 and 1994. Preliminary
estimates for 1995 indicate a slight decrease in residential
construction activity, however, preliminary estimates have
historically been below actual figures. The extent of future
improvement in housing production is dependent on the improvement
of infrastructure, as mandated by the 1985 Growth Management Act,
new job creation and population increases. However, it is
unlikely that housing starts will return to the levels
experienced in the 1970's and early 1980's.
The following chart shows the housing starts through 1995 for all
counties in the metropolitan area.
</TABLE>
<TABLE>
HOUSING STARTS
<CAPTION>
County 1989 1990 1991 1992 1993 1994 1995*
<S> <C> <C> <C> <C> <C> <C> <C>
Hillsborough SF 4,100 2,454 3,167 4,237 4,484 5,208 6,809
MF 2,162 2,837 1,243 506 695 2,340
Manatee SF 1,254 1,185 1,012 1,304 1,551 1,917 2,401
MF 1,273 1,118 801 381 239 272
Pasco SF 2,080 1,460 1,484 1,661 2,098 2,177 2,054
MF 326 81 127 174 123 239
Pinellas SF 2,423 1,960 1,961 2,602 2,398 2,426 3,326
MF 1,737 1,935 1,855 591 1,241 1,101
Total (by type) SF 9,857 7,059 7,624 9,804 10,531 1,728
MF 5,498 5,971 4,026 1,652 2,298 3,952
Total 15,355 13,030 11,650 11,456 12,829 15,680 14,590
Percent Change -20.26% -15.14% -10.59% -1.67% 11.98% 22.22% -6.95%
<FN>
* Preliminary est., breakdown between Single and Multi Family not
available.
</FN>
</TABLE>
Inventories of new single-family homes are at reasonable levels
in all four counties. All counties are beginning to experience a
shortage of developed lots due to the recent increase in building
activity. This is particularly true of Pinellas County due to
the lack of developable land. This has caused an increase in
demand in southern Pasco County. New single family detached
construction is over a broad range of prices, generally from
$75,000 to $300,000. The most active condominium market is in the
$60,000 to $90,000 price range.
The multi-family market has experienced an increase in new
construction over the last 24 months, particularly in
Hillsborough and Pinellas County, however, exact numbers are not
available for 1995. Vacancy rates have stabilized in both
Pinellas and Hillsborough County at approximately 5% to 8%.
Rents have increased by approximately 3% to 5% per year.
Absorption rates in most well designed and well located new
projects are reported to be good.
An emerging trend is the renovation or replacement of older
residences in existing neighborhoods. This trend is particularly
noticeable in Pinellas County and south Tampa where available
land is in short supply.
The overall housing market remains stable, although there is
continuing softness in certain submarkets. The historic ability
of the Tampa Bay area to absorb new housing units should continue
to support new construction in the area. Current population
growth would indicate 11,033 new household formations per year,
which is reflected in production of new housing units. Steady
increases in rental rates and continued strong apartment
absorption rates would appear to indicate future improvement.
SUMMARY:
In summary, the Tampa Bay area currently provides all of the
normal services required by a major metropolitan area. Although
the tremendous growth over the last decade has strained some of
the governmental services, there should be no detrimental effects
on overall growth, at least in the short run. However, if
infrastructure development is not provided, as required by the
concurrency provisions of the Florida Growth Management Act, long
term growth could be slowed.
Sources: Florida Statistical Abstract
Florida Trend Economic Yearbook
The Maddux Report
A more detailed analysis of the specific market in which the
subject is located may be found in the following Neighborhood
Analysis. While our analysis will consider the market as a
whole, particular attention will be paid to the specific market
of the subject.
<PAGE>
TAMPA BAY AREA
REGIONAL LOCATION
<PAGE>
NEIGHBORHOOD DESCRIPTION
The subject site is located on the south side of Gandy Boulevard,
east of 4th Street North in the city of St. Petersburg. The
boundaries of the neighborhood can be generally described as
Interstate 275 to the north and west, 62nd Avenue North to the
south, and Tampa Bay, a large body of water, to the east. The
neighborhood boundaries encompass a large residential area which
is primarily within the city limits of St. Petersburg.
The improvements in the subject neighborhood contain a mixture of
commercial and residential uses. The main traffic arteries are
typically lined with commercial improvements, including offices,
service stations, convenience stores, restaurants, service shops,
auto sales/repair facilities, banks, and other commercial uses.
The northwest portion of the neighborhood is developed with
office, manufacturing and industrial type properties and the
balance of the surrounding areas are primarily developed with
residential properties.
As with most older cities, St. Petersburg was developed using a
grid system. As is typical with these older cities, the business
district usually has a central location and the supporting
residential development is at the surrounding areas. The central
business district for the city of St. Petersburg is concentrated
in the area were Central Avenue and Tampa Bay come together.
Over the years commercial development has slowly expanded into
the residential areas. In St. Petersburg all Avenue's travel in
an east-west direction and all Street's travel in a north-south
direction. The subject neighborhood is located approximately
four miles northwest of the central business district.
The major north-south arteries in the neighborhood are Interstate
275, 4th Street North, and 9th Street North. The major east-west
arteries in the neighborhood are Roosevelt Boulevard, Gandy
Boulevard and 62nd Avenue North. The roads are continuously
maintained and provide reasonably good traffic flow to and
through the neighborhood. The Howard Franklin Bridge (Interstate
275) and the Gandy Bridge (Gandy Boulevard) are two of four major
roadways linking Pinellas and Hillsborough counties.
Employment opportunities for the subject neighborhood are good.
Industrial and manufacturing employment opportunities are located
to the northwest of the subject neighborhood in the Gateway area
and corporate employment opportunities are located to the south
in the St. Petersburg central business district. Metropolitan
downtown Tampa, is located within a 20 minute driving distance to
the northeast, across Tampa Bay. Both the Gandy Bridge and the
Howard Franklin Bridge provide direct access from the subject
neighborhood the downtown Tampa. The St. Petersburg Clearwater
International Airport is located about 2 miles northwest of the
neighborhood and Tampa International is located within a fifteen
minute driving distance to the northeast.
A number of public parks, schools, and shopping centers are
located conveniently throughout the neighborhood. Elementary
schools servicing the area include Lynch, North Shore, Rio Vista,
and Shore Acres. Middle schools include Meadowlawn and Riviera.
The high school servicing the neighborhood is Northeast, which is
located just south of the subject neighborhood at the northwest
corner of 54th Avenue North and 16th Street North. Parks and
recreational activities servicing the area include the Mangrove
Bay Municipal Golf Course, Sawgrass Lake Park, and the Willis S.
John Fossil Center. Derby Lane, a seasonal greyhound racing
track, is located on Gandy Boulevard, east of 4th Street North.
The Pinellas County Gulf beaches are located within a 20 to 30
minute driving distance to the west or southwest. Neighborhood
shopping centers servicing the neighborhood include Gateway
Crossing, anchored by Publix and Walgreens, Paragon Crossing,
anchored by Winn Dixie, and Rutland Plaza, anchored by Winn Dixie
and Eckerd's. Gateway Mall, a regional center, is located at the
northeast corner of 9th Street North and 77th Avenue North and is
anchored by J Byrons, Publix, and Scotty's.
Single family dwellings account for about 40% of the residential
development. The remaining residential development consists of
multiple family dwellings, townhouses, condominium units, and
mobile homes. The area is approximately 90% developed and
improved properties are generally adequately maintained. Demand
for residential properties in the subject neighborhood is in line
with the current supply. Land for new residential development in
the area is available but limited.
The permanent population of the neighborhood is estimated at
18,274 as of 1990 and is up from 14,441 in 1980. The increase of
26.5% indicates an average annual compounded increase of about
2.4% over the 10 year period. The population growth in the area
has continued to increase at a decreasing rate. The growth rate
for the neighborhood will be slower due to the relatively large
stable population base and the limited amount of vacant land
available new residential development.
The average age of the population in the neighborhood is around
30 to 40 years and the average household has income around
$30,000 to $40,000. The population age and income levels are
attributed to the good accessibility to employment and the young
professional work-force which is attracted to the neighborhood.
With the exception of the residential development east of 4th
Street North with frontage on Tampa Bay or the canals or small
bodies of water leading to Tampa Bay, the single family
subdivisions in the neighborhood cater to the lower to moderate
income levels. The single family subdivision are predominately
located south of Gandy Boulevard and were constructed from the
early 1960's to the early 1980's. The non-waterfront
subdivisions have home prices from $30,000 to $120,000 and the
waterfront subdivisions have home prices from $80,000 to
$450,000.
Most of the condominium development in the neighborhood took
place in the middle 1970's. These developments were built as an
alternative to traditional detached single family housing. Unit
sale prices range from $30,000 to $50,000. These complexes
generally feature one or two story garden style buildings and are
well maintained in average condition for the area. Many of the
condominium complexes feature covered parking, a swimming pool,
and washer and dryer connections in the units.
The rental housing units in the area range dramatically in size
and age. The newer apartment complexes are generally located
along Gandy Boulevard, 4th Street North or the east side of 9th
Street North. These apartment properties are generally average
to good quality, are from 200 to 600 units in size, and offer a
good amenity package. The older vintage apartment complexes in
the neighborhood are generally located south of Gandy Boulevard.
These complexes are generally average quality, are usually
smaller in size, and have locations on 4th Street North or are
mixed with the residential development. A market investigation
was conducted in the subject neighborhood and it indicated that
there is good rental demand for apartment complexes. According
to local apartment managers in the area, typical vacancy rates
range from 0% to l0%. Monthly rents for one bedroom apartments
are from $400 to $775 a unit, monthly rents for two bedroom
apartments are from $500 to $950 a unit, and monthly rents for
three bedroom apartments are from $600 to $1,100 a unit.
Exclusive of reserves, expenses for the newer complexes range
from 35% to 50% of effective gross income and the expenses for
the older complexes range from 40% to 55%. Newer apartment
complexes are developed at 200 units or greater in order to be
financially feasible.
Mobile home parks account for most of the remaining residential
development in the neighborhood. Most of these mobile home parks
are relatively small and offer minimal recreational facilities.
Small retail and professional office properties in the
neighborhood are concentrated on 4th Street North, south of Gandy
Boulevard. Larger multiple tenant office buildings, manufacturing
facilities, and industrial development is generally concentrated
in the northwest portion of the neighborhood, which is a part of
the Gateway area. The Koger Executive Center, another large
concentration of large office buildings is located south of Gandy
Boulevard, between 4th Street North and 9th Street North. The
supply of retail and office properties on the market for sale or
for lease is in excess of demand. Predominate net rental rates
are between $6.00 and $12.00 a square foot and occupancy levels
are generally from 80% to 95%. Most office and retail buildings
in the area sell between $40.00 and $90.00 a square foot.
Water, sewer and refuse service, as well as, police and fire
protection are provided by the City of St. Petersburg. Florida
Power Corporation provides electrical service to the area and
General Telephone Company provides telephone service.
In summary, the neighborhood is located in east-central Pinellas
County, and encompasses a small portion of the city of St.
Petersburg. The neighborhood has a large residential population
base and is well supported by local commercial facilities and
general employment centers. The area is well served by local
utilities and governmental services. Recreational and social
amenities, including schools and parks, are also abundant in the
area. Vacant land is limited and existing properties are
generally maintained in adequate condition. Real property values
in the neighborhood have been relatively stable and should remain
relatively stable in the future.
<PAGE>
NEIGHBORHOOD MAP
<PAGE>
SITE DESCRIPTION
Location:
The subject site is located on the south side of Gandy Boulevard
about 1,000 feet east of the intersection with 4th Street in the
city of St. Petersburg. The physical mailing address of the
property is 10200 Gandy Boulevard, St. Petersburg, Florida 33702.
Size and Shape:
The subject site is an irregular shaped interior parcel with
about 1,327 feet of road frontage on Gandy Boulevard. The depth
ranges from about 790 feet to about 1,300 feet. The gross area
of the site is 1,375,991 square feet or 31.59 acres.
Topography and Drainage:
The subject site is improved with a 379-unit apartment complex
known as Pelican Sound apartments. As a result of development
the terrain of the site is gently rolling. The parcel has a
master drainage system with water retention ponds located at the
central and western portions. Drainage for the site appears to
be adequate. Southern, western, and eastern portions of the site
appear to be wetland areas and are described on the site plan
provided as mitigation areas. From the site plan we have
estimated that about 25% of the site is wetland area. Based on
the improvements to the site, the wetland area was allowed to be
used in determining density.
Easements, Encroachments, and Other Conditions:
Based on the site plan provided and a physical inspection of the
property, there were no adverse easements, encroachments or
conditions observed. A 30 foot public underground utility
easement runs in a north-south direction along the eastern
portion of the site.
Flood Information:
The subject property is located in flood zone A9. Flood zone
information was determined by F.I.R.M. community panel number
125139 0207C, dated June 1, 1983. An A9 zone is defined as areas
of 100-year flood; base flood elevations and flood hazard factors
determined. Insurance is required for improved structures within
an A9 zone.
Soil and Subsoil:
No soil analysis was made available, however given the existing
improvements to the site and surrounding properties, soil
conditions would appear adequate for development. At the time of
inspection, there were no unusual conditions observed on the site
that would suggest the presence of soil contamination. An
environmental analysis for the subject property is recommended in
the event that one has not already been performed.
Utilities and Services:
Water: City of St. Petersburg
Sewer: City of St. Petersburg
Electricity: Florida Power Corporation
Telephone: General Telephone Company
Police: City of St. Petersburg
Fire: City of St. Petersburg
The cost of utilities and services are similar to competing areas
within the Tampa Bay area.
Street Improvements:
Gandy Boulevard, in front of the subject site, a dividend road
with masonry sidewalks and no curbs. Telephone and electric
service in the area is pole mounted. Traffic counts taken in the
location of the subject for 1995 estimate travel on Gandy
Boulevard at 100,134 cars daily. Travel is by both local and
transient traffic. The visibility of the site is good.
Ingress/Egress:
Access to the site is provided only by Gandy Boulevard, to the
north. Access to Gandy Boulevard is available from 4th Street to
the west. Ingress and egress for the site is adequate and is
easily made from all traffic directions. Ingress and egress for
the site appears to be adequate during peak traffic hours.
Relationship to Surrounding Properties and Uses:
The subject property is bordered to the west with Derby Lanes, a
seasonal greyhound racing track. To the south the subject is
bordered with waterfront single family homes. To the north and
east the subject is bordered with mobile home parks, apartment
complexes and general office, retail, and industrial development.
The existing use of the subject site as improved with an
apartment complex provides a good transition from commercial to
residential development.
Zoning:
The subject site is zoned RO-P (Residential Office Parkway) under
the jurisdiction of the City of St. Petersburg. Under the
comprehensive land use plan, the subject has a land use of RO
(Residential/Office General). The zoning classification and land
use for the subject are compatible.
The RO-P zoning district is intended to permit either residential
or office, or a compatible mixture of these uses, at medium
intensity or density of 12 units per acre for multiple use but
with density up to 15 units per acre obtainable through
utilization of Transfer of Development Rights.
Several of the permitted principal uses and structures include
multiple family development, special residential development,
boarding and rooming houses, community residential homes,
offices, churches, public parks, financial institutions, parking
lots, motels and hotels, academic schools, and bed and breakfast
homes.
Concurrency:
Concurrency laws in the state of Florida became active on
January 1, 1990. Concurrency is part of the 1985 growth
management act which states in part that all infra-structures,
which are, or will be affected by the development of a property,
will be in place, prior to, or concurrent with development.
In most municipalities, there are seven areas that are affected
concurrency.
1. Solid Waste 5. Transportation
2. Drainage 6. Parks and Recreation
3. Water 7. Mass Transportation
4. Sewer
The major items of concurrency which normally affect most
projects are sewers and/or roads. Sewers and roadway capacities
are also generally the most expensive to build.
Concurrency laws may require the developer to pave, widen, and/or
construct existing or additional roads to carry the burden of the
additional traffic, (vehicular trips) that the subject project
will create. The developer may also have to participate in the
cost of construction to increase the sewer capacity or may have
to donate land to be used for parks and recreation.
Based on conversations with the City of St. Petersburg,
concurrency would appear to have no adverse influence on the
subject property.
Summary:
In summary, the subject site is located on a primary thoroughfare
in the city of St. Petersburg. The site is an irregular shaped
interior parcel which is 31.59 acres in size. All necessary
utilities are available to the site and the topography is gently
rolling and drainage appears to be adequate. The site has about
1,327 feet of road frontage, good ingress and egress to major
traffic arteries and good traffic visibility. The subject is
bordered with a combination of residential development and
general commercial and industrial development. The location of
the subject site appears well suited for multiple family
residential development.
<PAGE>
TAX MAP
<PAGE>
SITE PLAN
<PAGE>
IMPROVEMENT DESCRIPTION
The subject is improved with twelve two-story or three-story
garden style walk-up apartment buildings containing 379 units.
Amenities include a clubhouse with leasing office and fitness
facility, a swimming pool and spa, and tennis courts. The
apartment buildings were constructed in 1988.
The buildings are irregular in shape and uniformly arranged on
the site with attention given to the small ponds or lakes. The
clubhouse and pool are located in the northwestern portion of the
complex and the tennis courts and maintenance buildings are
located in the south-central portion of the complex. The
construction quality of the apartment complex is average to good
cost. The exterior walls are wood frame with masonite and brick
siding. The roof designs are gable, constructed of a wood truss
system with a waferboard deck and a composition shingle cover.
Aluminum gutters and downspouts are provided. The foundation of
the buildings are a reinforced concrete slab. Windows are
aluminum single hung. Exterior doors are metal, wood with glass
inserts, and sliding. Interior doors are hollow core. Covered
entries are located at the front of each of the units.
The total rentable area of the buildings is 260,867 square feet.
For the purpose of this report, the rentable area includes
exterior and common walls. The square foot sizes are based on
the physical measurements taken at the time of inspection. The
clubhouse is 2,063 square feet in size and the two maintenance
structures are respectively 482 square feet and 148 square feet
in size.
Landscaping is mature and consists of full sod, small to large
trees, and attractive shrubbery. The landscaped areas are well
maintained and irrigated by a full sprinkler system which draws
from City water.
Parking, as well as, ingress and egress are concrete paved and
maintained in adequate condition. There are 569 open parking
spaces provided and all are located relatively close to the
units. The apartment complex has 1.50 parking spaces for each
unit, which is considered adequate. Two additional open parking
areas are provided for overflow parking.
The individual units in the complex are made up of four different
type floor plans, two one-bedroom units, one-bedroom with a den
unit, and a two-bedroom unit. The smallest of the floor plans is
the one-bedroom one-bath Bay model. These units are 513 square
feet in size and there are 128 located within the complex. The
largest one-bedroom one-bath unit is the Cove model. The complex
has 156 of these 713 square foot units. The next larger floor
plan is a one-bedroom one-bath model with a den known as the
Harbor. These units are 841 square feet in size and there are 27
located within the complex. The largest of the floor plans is
the two bedroom two-bath Port Model. The complex has 68 of these
901 square foot units. All of the floor plans provide living
rooms with dining areas, exterior storage closets and porches or
balconies. All of rooms in each of the floor plans are adequate
in size and appear to provide adequate functional utility. Units
include a good amount of closet space.
MODEL UNITS TYPE SIZE
Bay 128 3Rm/1Br/1Bth 513
Cove 156 3Rm/1Br/1Bth 713
Harbor 27 4Rm/1Br/1Bth 841
Port 68 4Rm/2Br/2Bth 901
--- ------------ -------
Total 379 1,232 Rooms 260,867
Weighted Average Unit Size = 688 Square Feet
Unit interiors are of average quality construction. The floors
are covered with average quality ceramic tile, carpet and vinyl.
The ceramic tile areas are located at the foyers and the vinyl
areas are located at the kitchens and baths. All of the units
have water heaters, 125 amp electrical panels and central air
systems. Standard equipment includes a refrigerator, a range/oven
with a hood fan, a dishwasher, a disposal, washer and dryer, and
monitored security system. Units are individually metered for
electrical service and have telephone and cable television hook-
ups.
On August 28, 1996, the date of inspection, the apartment complex
had about 11 vacant units, but typically maintains a vacancy rate
of roughly 6%. All of the vacant units were reported to be in
rentable condition. The current asking rent is $490 to $505 a
month for the Bay units, $565 to $590 a month for the cove units,
$640 to $665 a month for the Harbor units, and $710 to $735 a
month for the Port units. Rent premiums are charged view
amenities. Tenants are responsible for payment of electric,
telephone and cable television service. As is typical, the
services included in the rental rates are water, sewage, and
trash removal.
As is common with apartment complexes the size of the subject,
the subject is professionally managed. Employees consist of a
property manager, an assistant manager, leasing agents, a
maintenance supervisor, maintenance assistants, a grounds keeper,
and a housekeeper. The subject complex has three nonrevenue
producing units which are used as models. The property manager
receives compensation in lieu of the use of a two-bedroom unit
free of charge. Four carpenters are currently employed by the
complex on a temporary basis to replace the untreated wood around
all of the balconies with new pressure treated wood. It was
reported that $100,000 was budgeted in 1996 to replace the wood
around the balconies and is about half way completed.
The subject property is well maintained in average condition with
no signs of items which are in need of immediate repair. As is
typical with large wood frame apartment complexes, some minor
signs of exterior wood rot were observed at the time of
inspection. Roofs and exterior paint appear to be in good
condition. The unit interiors and appliances are generally
maintained on a continual basis.
The subject is an average to good cost quality apartment complex
that was constructed in 1988. In comparison to competing rental
properties, the condition of the subject property is slightly
above average. The Marshall Valuation Service, a national cost
estimate company, indicates properties such as the subject have
total lives of approximately 50 years. Based on an observation
of other structures in the neighborhood, a physical life of 50
years would appear reasonable. In further observation of other
structures in the neighborhood, the effective age of the subject
has been estimated to be equal with actual at 8 years with a
remaining life estimated at 42 years.
Due to the age of the improvements, the presence of hazardous
materials used in the construction, such as asbestos, is less
likely. No environmental audit has been made available.
In summary, the Pelican Sound apartments is an average to good
cost quality apartment complex. In comparison to competing
rental properties, the subject is in slightly above average
condition. The unit mix, apartment sizes, and layout are well
suited to the rental market. The complex is architecturally
attractive and offers an average amenity package.
<PAGE>
CLUBHOUSE/POOL FACILITY
<PAGE>
UNIT FLOOR PLANS
<PAGE>
HIGHEST AND BEST USE
Highest and best use is defined as:
"The reasonably probable and legal use of vacant land or an
improved property, which is physically possible, appropriately
supported, financially feasible, and that results in the highest
value."
In appraisal practice, the concept of highest and best use is the
premise upon which value is based. The highest and best use
analysis studies the economic market forces and identifies the
most profitable and competitive use to which a property can be
put.
The highest and best use analysis first considers the site as
though vacant. If the site is improved, the highest and best use
analysis also considers the property as improved. The highest
and best use of the land as if vacant may not be the same as the
highest and best use of the property as improved. The use of the
property as improved will continue as the highest and best use,
as long as the value of the improved property exceeds the value
of the vacant site.
"Highest and best use of land or a site as though vacant assumes
that the parcel of land is vacant or can be made vacant by
demolishing any improvements." The highest and best use as
though vacant will determine a use for the site, the type of
improvements, and when improvements should be made. The highest
and best use of the site as vacant is useful for identifying
comparable land sales, as well as estimating a separate land
value, which is fundamental for the cost approach.
"Highest and best use of a property as improved pertains to the
use that should be made of an improved property in light of its
improvements." The highest and best use of a property as
improved will determine whether the improvements should be
maintained, adapted, or raised. The purpose of the highest and
best use of the property as improved is to determine the use
expected to produce the greatest value and assist in the
selection of improved comparable sales.
There are four criteria used in analyzing the highest and best
use of both the land as though vacant and the property as
improved. The highest and best use must be:
1. Physically Possible;
2. Legally Permissible;
3. Financially Feasible;
4. Maximally Productive.
Highest and Best Use as Though Vacant
Physically Possible
Physically possible uses are those uses that can be physically
put on the subject site. These uses change with the size, shape,
soil, and terrain of the property. This test also considers
whether public utilities are available to the site.
The subject site is located on the south side of Gandy Boulevard
about 1,000 feet east of the intersection with 4th Street in the
city of St. Petersburg. The site is an irregular shaped interior
parcel with about 1,327 feet of road frontage on Gandy Boulevard.
The depth ranges from about 790 feet to about 1,300 feet. The
gross area of the site is 1,375,991 square feet or 31.59 acres.
Drainage for the site appears to be adequate. Southern, western,
and eastern portions of the site appear to be wetland areas and
are described on the site plan provided as mitigation areas.
From the site plan we have estimated that about 25% of the site
is wetland area. Based on the improvements to the site, the
wetland area was allowed to be used in determining density.
Based on the site plan provided and a physical inspection of the
property, there were no adverse easements, encroachments or
conditions observed. A 30 foot public underground utility
easement runs in a north-south direction along the eastern
portion of the site.
The subject property is located in flood zone A9. Flood zone
information was determined by F.I.R.M. community panel number
125139 0207C, dated June 1, 1983. An A9 zone is defined as areas
of 100-year flood; base flood elevations and flood hazard factors
determined. Insurance is required for improved structures within
an A9 zone.
No soil analysis was made available, however given the existing
improvements to the site and surrounding properties, soil
conditions would appear adequate for development. At the time of
inspection, there were no unusual conditions observed on the site
that would suggest the presence of soil contamination. An
environmental analysis for the subject property is recommended in
the event that one has not already been performed.
The subject site is serviced by all typical urban utilities.
Electrical service is provided by the Florida Power Corporation,
public water and sewer service is provided by the City of St.
Petersburg, and telephone service is provided by General
Telephone Company. Police and fire protection are provided by
the City of St. Petersburg. Electrical service, street lights
and telephone service in the area are pole mounted. All services
provided to the subject site are underground.
Considering the size, shape, and topography of the site and the
availability of utilities, many uses could be physically built on
the site.
Legally Permissible
Legally permissible uses are those uses which are legally allowed
on the subject site. These uses vary with the type of zoning,
building codes, deed restrictions, and environmental restrictions
imposed on the subject site.
The subject site is zoned RO-P (Residential Office Parkway) under
the jurisdiction of the City of St. Petersburg. Under the
comprehensive land use plan, the subject has a land use of RO
(Residential/Office General). The zoning classification and land
use for the subject are compatible.
The RO-P zoning district is intended to permit either residential
or office, or a compatible mixture of these uses, at-medium
intensity or density of 12 units per acre for multiple use but
with density up to 15 units per acre obtainable through
utilization of Transfer of Development Rights.
Several of the permitted principal uses and structures include
multiple family development, special residential development,
boarding and rooming houses, community residential homes,
offices, churches, public parks, financial institutions, parking
lots, motels and hotels, academic schools, and bed and breakfast
homes.
The recent enactment of Concurrency Laws in the state of Florida,
which became effective January 1, 1990, can directly impact on
the use of a site. Concurrency is part of the 1985 Growth
Management Act, which states in part that all of an area's
infrastructure which are or will be affected by the development
of a property must be in place or concurrent with development and
must be adequate. Concurrency appears to have no adverse
influence on the subject property.
Based on the physical and legal characteristics of the subject
property it would appear as though several types of residential
development would be both physically possible and legally
permissible. A change in zoning to a commercial or industrial
use would be unlikely.
Given that the subject site is 31.59 acres in size, the subject
site could legally and physically accommodate up to 379 apartment
units. Condominium, townhouse, and single family subdivision
development would be less likely due to the bordering commercial
and multiple family development. In addition to complying with
the density requirements, all four uses would also appear to
comply with building setbacks, the building coverage ratio, open
areas, parking areas, and driveway requirements.
Financially Feasible
The test of financially feasible considers those uses which are
both physically possible and legally permissible. It determines
among them; which uses, if any, would generate a positive return
to the property. A return is positive if the income of the
property is greater than the property's operating expenses,
financial expenses and capital amortization.
A market investigation was conducted in the subject neighborhood
and it indicated that there is good rental demand for apartment
complexes. According to local apartment managers in the area,
typical vacancy rates range from 0% to 10%. Monthly rents for
one bedroom apartments are from $400 to $775 a unit, monthly
rents for two bedroom apartments are from $500 to $950 a unit,
and monthly rents for three bedroom apartments are from $600 to
$1,100 a unit. Exclusive of reserves, expenses for the newer
complexes range from 35% to 50% of effective gross income and the
expenses for the older complexes range from 40% to 55%. Newer
apartment complexes are developed at 200 units or greater in
order to be financially feasible.
Gandy Boulevard, in front of the subject site, a divided road
with masonry sidewalks and no curbs. Telephone and electric
service in the area is pole mounted. Traffic counts taken in the
location of the subject for 1995 estimate travel on Gandy
Boulevard at 100,134 cars daily. Travel is by both local and
transient traffic. The visibility of the site is good.
Access to the site is provided only by Gandy Boulevard, to the
north. Access to Gandy Boulevard is available from 4th Street to
the west. Ingress and egress for the site is adequate and is
easily made from all traffic directions. Ingress and egress for
the site appears to be adequate during peak traffic hours.
The subject property is bordered to the west with Derby Lanes, a
seasonal greyhound racing track. To the south the subject is
bordered with waterfront single family homes. To the north and
east the subject is bordered with mobile home parks, apartment
complexes and general office, retail, and industrial development.
Given that current occupancy and rental rates for apartment
complexes are at reasonable levels, development of the subject
site with an apartment complex would appear to provide a positive
return.
Maximally Productive
Among the financially feasible uses, the use which provides the
highest rate of return or value is the use which is maximally
productive. Thus, is the highest and best use of the property.
A market investigation indicated that most multiple family land
in Pinellas County was developed at or very near maximum density.
Most of the new multiple family development is for good quality
apartment complexes. Absorption rates for these new developments
are generally from 30 to 40 units a month. Also noted was that
these developments had good recreational amenities and attractive
landscaping.
Therefore, the Highest and Best Use of the site "as if vacant"
would be to develop the site with 379 good quality apartment
units (12.00 units per acre).
Highest and Best Use as Improved
The subject is a 379-unit apartment complex that was built in
1988. The construction is average to good cost quality and the
property has been well maintained. Most apartment complexes in
the Pinellas County, which are near stabilized occupancy, are in
average to good condition. It was reported that the complex
maintains an occupancy rate at about a 94%, which is average for
Pinellas County and the immediate area.
The subject property was constructed at a density of 12.00 units
per acre and appears to conform to zoning. The individual unit
sizes, site layout and available parking appears well suited for
use as a apartment complex.
The value of the site with the improvements far exceeds the site
value alone. Thus, the highest and best use of the subject
property, as improved, is to continue use as a 379-unit apartment
complex. Conversion to condominium units would not be reasonable
due to the bordering commercial development and the large number
of one bedroom units.
<PAGE>
THE VALUATION PROCESS
The estimate of market value for real property involves a
systematic process in which the problem is defined, the work
necessary to solve the problem is planned, and the data required;
is acquired, classified, analyzed and interpreted into an
estimate of value. In this process, three approaches are used by
the appraiser to estimate value. They are:
THE COST APPROACH
THE SALES COMPARISON APPROACH
THE INCOME CAPITALIZATION APPROACH
The cost approach is a method in which the value of a property is
derived from creating a substitute property with the same utility
as the subject property. In the Cost Approach, the appraiser
must estimate the market value of the subject site as if vacant,
by using the direct sales comparison approach, then estimate the
reproduction cost new of the improvements. Depreciation from all
sources is estimated and subtracted from the reproduction cost
new of the improvements. The depreciated reproduction cost of
all improvements is then added to the estimated site value with
the results being an indicated value by the cost approach.
The sales comparison approach also referred to as the market
approach, involves the comparison of similar properties that have
recently sold or similar properties that are currently offered
for sale, with the subject property. The basic principle of
substitution underlies this approach. It implies that an
informed purchaser would not pay more for a property than the
cost to acquire a satisfactory substitute property with the same
utility as the subject property in the current market. These
properties are compared to the subject with regard to differences
or similarities in time, age, location, physical characteristics,
and the conditions influencing the sale. The notable differences
in the comparable properties are adjusted to the subject property
to indicate a value range for the property being appraised. The
principle of increasing and decreasing returns is important in
identification of comparables. The principle of contribution is
the heart of the adjustment process in determining the effect
that the presence or absence of some characteristic has on the
sale price.
When sufficient sales data is available, these adjustments are
best determined by the actions of typical buyers and sellers in
the subject's market place. This value range, as indicated by
the adjusted comparable properties, is reconciled into a final
indicated value for the subject property by this approach.
The income capitalization approach is a process which discounts
anticipated income streams (whether in dollar income or amenity
benefits) to a present worth figure through the capitalization
process. The appraiser is again faced with obtaining certain
data related to the subject and comparing it to similar physical,
functional and economic properties. Comparable rental
information is analyzed to estimate potential gross income
(actual and/or comparative) to determine a projected net income
stream. The appraiser must estimate a capitalization rate,
either through extraction from the market or using other
available techniques. The net income stream is capitalized into
an indicated value by this approach.
The value estimates as indicated by the three approaches are then
reconciled into a final estimate of the property's value. In the
final reconciliation, the appraiser must weigh the relative
significance, defensibility, amount and accuracy of data, and
applicability of each approach as it pertains to the type of
property being appraised and that best approximates the value
being sought in the appraisal.
<PAGE>
THE COST APPROACH
The basic premise upon which this method of value estimate is
based, is known as the principle of substitution. This principle
logically states; "a prudent purchaser of a particular property
would be willing to pay no more for that property than the cost
of acquiring an equally desirable substitute." It is acknowledged
that one principal method of acquiring a substitute property
would be realized by the reproduction (or replacement) of the
improvements of commensurate utility on an equally desirable
site. This approach is most valid when analyzing new
improvements which have not experienced any loss in value through
normal wear and tear, or other forms of depreciation.
Therefore, the cost approach estimates the current market value
of a property through a process in which the replacement cost of
all improvements are estimated. From this figure is deducted the
total estimated loss in value (depreciation) for the
improvements. The basic steps used in this approach are outlined
below:
Step 1 Estimate the current market value of the site. The
site is valued as if vacant and free to be used in a
capacity representing its highest and best use. This
step is accomplished through the analysis of the sales
and listings of comparable commercial sites.
Step 2 Estimate the replacement cost new, of the subject
improvements. This step results in the appraisers'
estimate of the total cost of replacing a structure
with similarity to the subject improvements. The
replacement cost estimate associated with this
appraisal uses the estimated cost per square foot. The
method of estimating this cost factor is fully
described later in this report.
Step 3 Estimate the total accrued depreciation. This refers
to the total loss in value, which the subject property
may have experienced through physical, functional, or
external factors, which would negatively influence the
value of the property.
Step 4 Deduct the total estimated depreciation (Step 3) from
the reproduction cost estimate (Step 2) and add the
current value estimate for the site (Step 1). The
resulting figures represent the appraisers' estimate of
the current market value of the subject via the Cost
Approach.
Estimate of Land Value
The valuation of vacant land (Step l) is typically undertaken by
the sales comparison approach (market approach). The application
of this approach produces a value estimate for land by comparing
it with similar properties that have recently sold, in the same
or competitive neighborhoods. The sale price of these properties
tends to set the range of value in which the subject property
will fall, when reduced to an appropriate unit of comparison
(price per square foot, per front foot, per unit, etc).
Refinement of this data, by the comparative process, should lead
to a logical estimate of market value as of the date of
appraisal.
The reliability of this technique is dependent upon (l) the
degree of comparability of each sale to the subject, (2) market
conditions at the time of sale, (3) verification of pertinent
data, and (4) the absence of unusual conditions that influence
the sale. A variety of sales within the subject's neighborhood
were analyzed. Information on those sales considered to be most
comparable to the subject property are set forth in the following
pages.
<PAGE>
LAND COMPARABLE NO. 1:
LOCATION: South side of Fletcher Avenue, just west
of Interstate 75, Hillsborough County
TAX I.D. NUMBER (S-T-R): Portion of 37375.0000 & and others
(12-28-19)
SALE DATE: February 27, 1995
GRANTOR: Mary K. Wetherington and others
GRANTEE: Zom Tampa Fetcher Ltd.
O.R. BOOK/PAGE: 7688/1815 & 7688/1818
SALES PRICE: $2,200,000
SIZE: 22.00 Net Acres or 958,320 Square Feet
NO. OF UNITS: 352 Units (Developed)
DENSITY: 16.00 Units
PRICE PER SQ. FT.: $2.30
PRICE PER ACRE: $100,000
PRICE PER UNIT: $6,250
LOCATION: Average
UTILITIES: Available
SHAPE: Irregular
TOPOGRAPHY: Basically Level
ZONING: Alternate Multiple Family by Temple
Terrace
LAND USE: UL-2 (20 u.p.a.)
FINANCING: SouthTrust Bank $14,250,000 (A & D)
VERIFICATION: Representative of the Grantee, JMK
COMMENTS:
The site was purchased for development of The Arbors at Fletcher,
a 352 unit apartment complex offering one to three bedroom units
in two to three story buildings. Rents are projected between
$565 and $875. The site is across from the Hidden River Business
Park.
<PAGE>
TAX MAP
<PAGE>
LAND COMPARABLE NO. 2:
LOCATION: West side of North Dale Mabry Highway,
north of Gaither High School, northwest
Hillsborough County
TAX I.D. NUMBER (S-T-R): Portion of 015910.0000 (28-27-18)
SALE DATE: December 22, 1994
GRANTOR: Hillsborough Farms
GRANTEE: Carrollwood Place Limited Partnership
O.R. BOOK/PAGE: 7624/1404
SALES PRICE: $2,190,000
SIZE: 27.33 Net Acres or 1,190,495 Square Feet
NO. OF UNITS: 432 Units (Developed)
DENSITY: 15.81 Units
PRICE PER SQ. FT.: $1.84
PRICE PER ACRE: $80,132
PRICE PER UNIT: $5,069
LOCATION: Average
UTILITIES: Available
SHAPE: Irregular
TOPOGRAPHY: Basically Level
ZONING: PDH by Hillsborough County
LAND USE: RES-12 (12 u.p.a.)
FINANCING: SouthTrust Bank $17,800,000 (A & D)
VERIFICATION: Representative of the Grantee, JMK
COMMENTS:
This site was purchased for development of The Vinings at
Carrollwood Place, a 432 unit apartment complex offering one to
three bedroom units in two to three story buildings. Projected
rents are from $510 to $875. Access to the site is provided by
an
80 foot easement from North Dale Mabry Highway.
<PAGE>
TAX MAP
<PAGE>
LAND COMPARABLE NO. 3:
LOCATION: Southeast Quadrant of U.S. Highway 19
and Gulf-to-Bay Boulevard, east of
Seville condominium development on Old
Tampa Bay, City of Clearwater
TAX I.D. NUMBER: 17-29-16-00000-340-0200 and others
SALE DATE: November 8 & 9, 1993
GRANTOR: AEL Partnership & Simkin Industries,
Inc.
GRANTEE: ZOM Bayside Arbors, Limited
O.R. BOOK/PAGE: 8469/2003 and 8469/1995
SALES PRICE: $2,880,000 ($1,800,000 and $1,080,000)
SIZE: 40.00 Acres (MOL) Usable
NO. OF UNITS: 360 Units
DENSITY: 9.00 Units
PRICE PER SQUARE FOOT: $1.65
PRICE PER ACRE: $72,000
PRICE PER UNIT: $8,000
LOCATION: Good
UTILITIES: Available
SHAPE: Irregular
TOPOGRAPHY: Basically Level
ZONING: RM-12 City of Clearwater
LAND USE: RM (11.5 u.p.a.)
FINANCING: Cash to Seller
VERIFICATION: Eric L. Carlton, Esquire and Ellen with
ZOM Properties, 11/94, WWA
COMMENTS:
The assembled site has a large amount of water frontage, but has
limited visibility and an easement for ingress and egress. The
site was developed at a lower density in order to hedge against
anticipated opposition from the Seville Owners Association. The
transactions were reported to be arm's-length and at market
prices.
<PAGE>
TAX MAP
<PAGE>
COMPARABLE LAND SALES
<PAGE>
<TABLE>
LAND COMPARABLE COMPARISON CHART
<CAPTION>
COMPARABLE COMPARABLE COMPARABLE
1 2 3
<S> <C> <C> <C> <C>
SALES PRICE (S.P.) $2,200,000 $2,190,000 $2,880,000
LOCATION S18&19-T30-R17 S12-T28-R19 S28-T27-R18 S17&20-T29-R16
NUMBER OF ACRES 31.59 22.00 27.33 40.00
NUMBER OF UNITS 379 352 432 360
DENSITY 12.00 16.00 15.81 9.00
PRICE/ACRE $10,000 $80,132 $72,000
PRICE/UNIT $6,250 $5,069 $8,000
DATE OF APPRAISAL/SALE 28-Aug-96 27-Feb-95 22-Dec-94 09-Nov-93
ADJUSTMENTS
FINANCING/CONDITIONS OF SALE 0% 0% 0%
FIN/CON ADJ SALES PRICE $2,200,000 $2,190,000 $2,880,000
MARKET CONDITIONS
NUMBER OF MONTHS SINCE SALE 18 21 34
% ADJUSTMENT 0.00% 0.00% 0.00% 0.00%
TIME ADJUSTED SALES PRICE $2,200,000 $2,190,000 $2,880,000
PROPERTY CHARACTERISTICS
LOCATION Average-Good Average Average Good
UTILITIES Available Available Available Available
SHAPE Irregular Irregular Irregular Irregular
SIZE 31.59 22.00 27.33 40.00
ZONING RO-P AMF PD-H RM-12
ADJUSTMENTS
PRICE/SQ.FT. $2.30 $1.84 $1.65
LOCATION 5% 5% -5%
UTILITIES 0% 0% 0%
SIZE/SHAPE -5% -5% 5%
TOPOGRAPHY 0% 0% 0%
ZONING -5% -5% 7%
ADJUSTED PRICE/SQ.FT. $2.18 $1.74 $1.76
ADJUSTED PRICE/ACRE $94,762 $75,935 $76,847
ADJUSTMENTS
PRICE/UNIT $6,250 $5,069 $8,000
LOCATION 5% 5% -5%
UTILITIES 0% 0% 0%
SIZE/SHAPE -5% -5% 5%
TOPOGRAPHY 0% 0% 0%
ZONING 8% 7% -10%
ADJUSTED PRICE/UNIT $6,733 $5,411 $7,182
</TABLE>
<PAGE>
EXPLANATION OF ADJUSTMENTS
Where appropriate, adjustments have been made to the comparables
to account for material differences from the subject. The
adjustment categories include: financing/conditions of sale,
market conditions (time), location, utilities, topography, and
size/shape. The following is an explanation of the various
adjustments.
FINANCING/CONDITIONS OF SALE
All sales were confirmed with either the grantee, grantor, an
informed party, or through public records. There was no
disclosed under market financing or sale conditions which were
believed to have influenced the sale prices. Adjustments did not
appear warranted for any of the comparables.
MARKET CONDITIONS (TIME)
Due to dense development in Pinellas County, land comparables 1
and 2 are newer sales located in Hillsborough County and land
comparable 3 is an older sale located in Pinellas County. A
review of the comparables would appear to indicate that no
adjustment for time is warranted.
LOCATION/ACCESS
Factors which were included in this adjustment category are the
general location of the comparables when compared to the subject.
Typically, properties with good visibility and good ingress and
egress in exclusive areas sell at a higher price per unit. View
amenities such as golf courses and bodies of water will also
generally cause properties to sell at a higher price per unit.
All of the sales used were located in areas suitable for multiple
family development.
The subject property is located in a residential/commercial
transition area on the south side of Gandy Boulevard just east of
4th Street. The site has good visibility and adequate ingress
and egress. The site has no significant offsite view amenity.
Due to the central Pinellas County location and convenient bridge
access to Tampa, the area is has historically shown good demand
for rental apartment units, thus the overall location is
considered above average.
Due to the large amount of frontage on Old Tampa Bay, the
location of land comparable 3 was considered superior to the
subject and the other two comparables. In review of the
comparables, a downward adjustment of 5% appears warranted for
land comparable 3. The remaining two land comparables have
overall location characteristics that are slightly inferior to
the subject and upward adjustments of 5% were made to these
sales.
UTILITIES
This category is based on whether utilities were available to the
site at the time of sale. Like the subject, all three of the
land comparables have all public utilities available. No
adjustments to the comparables are warranted.
SIZE/SHAPE
Size/shape adjustments were made on the basis of the comparables
size/shape in relation to the subject. Typically, larger parcels
or irregular shaped parcels tend to sell at a lower price per
unit. Furthermore, smaller parcels are more affordable to a
larger number of buyers indicating more demand and higher prices
for smaller parcels. However, when larger parcels are scarce,
making assemblage necessary, larger parcels sell at a higher
price per unit. This is because of the time and effort necessary
to assemble them. Larger parcels can also be more economically
feasible to develop because the fixed development costs can be
absorbed by a larger number of units.
In review of the comparables, there appeared to be a slight
premium paid for smaller parcels and a slight discount for larger
parcels. The shapes of the comparables had no adverse influence
on the number of residential units that could be placed on the
sites. Based on a review of the comparables, an upward adjustment
of 5% appeared warranted for land comparables 3 and downward
adjustments of 5% appeared warranted for land comparables 1 and
2.
TOPOGRAPHY
This adjustment category is based on whether the comparable's
topography was irregular and/or whether it needed to be cleared
before construction could begin on the site. All of the
comparables required typical site preparation and development
costs and no adjustments were necessary.
ZONING
The subject is zoned RO-P with a RO land use which allows
development of the subject site, as if vacant, at an effective
density of 12.00 units per net acre. Land comparables 1 and 2
have zoning and land uses which resulted in higher developable
densities and land comparable 3 has a zoning and land use which
resulted in a lower developable density. Typically, the
developable density of multiple family land will have a direct
relationship with the price per square foot or price per acre and
an inverse relationship with the price per unit. A review of the
comparables confirms the relationship with the price per square
foot, price per acre and price per unit. The comparables appear
to indicate that a 1% change in density will cause about a 0.30%
inverse change in the indicated unit values and about a 0.10%
direct change in both the indicated square foot or acre values.
Adjustments were made accordingly to each of the comparable land
sales.
CORRELATION AND CONCLUSION
The three foregoing comparables have sale prices which were
compared on the basis of square foot, acre and unit selling
prices. All of the comparables were adjusted for differences as
compared with the subject and have adjusted price per square foot
values between $1.74 and $2.18. Similarly, the comparables have
adjusted price per acre values between $75,935 and $94,762. The
adjusted price per unit indicated by the three sales is from
$5,411 to $7,182. All three units of comparison are considered
applicable in valuing the subject site.
Land comparables 1 and 2 are the newest two sales, but are
located in Hillsborough County. Both comparables are similar to
the subject in size and were purchased for slightly higher
density apartment development. Land comparable 1 is located in a
more remote area, but is located across the street from the
Hidden River Business Park. The Hidden River Business Park is
the location of several Fortune 500 companies a provides a good
employment base.
Land comparable 3 is located about 8.5 miles northwest of the
subject property. The site has a large amount of frontage on Old
Tampa Bay and was purchased for the development with a 360 unit
moderate to upper income apartment complex. The size of the
parcel was larger than the subject, but the developable density
is lower.
Considering that all three of the land comparables had similar
adjustments, all were given roughly equal weight. Based on the
cited comparables, the value of the subject site is estimated at
$1.80 a square foot, $80,000 an acre, and $6,500 a unit. The
value of the subject site is estimated using the following
calculations.
1,375,991 Sq.Ft. X $1.80/Sq.Ft. = $2,476,783
31.59 Acres X $80,000/Acre = $2,527,200
379 Units X $6,500/Unit = $2,463,500
ESTIMATED VALUE OF THE SUBJECT SITE, AS IF VACANT
($2,500,000)
<PAGE>
REPLACEMENT COST OF IMPROVEMENTS
The subject improvements were evaluated in terms of type of
construction, design, and building materials to develop an
estimate of replacement cost. The cost estimates are inclusive
of indirect costs such as architect's fees and contractor's
overhead and profit but not developer's profit. The estimates of
the replacement cost new for the subject improvements were based
on current market standards determined from discussions with
various developers, contractors and architects, as well as
information obtained from the Marshall Valuation Service. Local
building costs and costs indicated in the Marshall Valuation
Service are mutually supportive. It is our opinion that cost
figures for the subject complex would fall within the lower end
of the average to good cost range for class "D" multiple family
residences.
Base Cost $42.00
Area Multiplier 1.00
Current Cost Multiplier 1.00
Local Multiplier 0.94
Total $39.48
Rounded $39.50
======
Based on this analysis, the indicated replacement cost for the
apartment buildings is estimated at approximately $39.50 a square
foot.
Further replacement costs associated with the buildings is the
cost of the clubhouse which is also estimated at $50.00 a square
foot. The replacement cost of the covered entries, porches or
balconies, storage closets, and stairs are estimated at $800,000
and the replacement cost of the appliances, fixtures, and
equipment are estimated at $1,050,000. These figures are also
based on Marshall Valuation Service.
The contributory value of the site improvements, which include
the swimming pool, concrete walks and drives, lighting, signs,
landscaping, etc. is estimated at $750,000.
IMPACT FEES
Because of the impact of new development on the infrastructure of
cities and counties, fees are now typically being assessed
against new development. These fees are for increased traffic,
increased use of sewers and water, radon detection, fire fighting
requirements and the like. These are known as impact fees and
can add substantially to the cost of new development. The impact
fee estimates used in this report were based on the fee schedule
for the City of St. Petersburg and are estimated at $535,000.
DEVELOPER (ENTREPRENEURIAL) OVERHEAD AND PROFIT
The above costs include contractors, but not developer overhead
and profit. Developer profit is the reward the developer
receives for taking the risk of developing the property.
Developer profit can be abstracted from the market by estimating
the replacement cost of a newly constructed building which has
recently sold. The difference between the sales price and the
replacement cost of the property is the developer profit. Sales
of properties in the Tampa Bay Area were analyzed. They
indicated developer overhead and profit between 10% to 15% with
the more risky projects being in the higher figure. Based on
this analysis a developer overhead and profit of 10% seems
reasonable for the subject.
ACCRUED DEPRECIATION
The next step in the cost approach is to estimate the accrued
depreciation for the subject. "Depreciation is a loss in
property value from any cause. It may also be defined as the
difference between the reproduction cost or replacement cost of
the improvement and its market value." The three major
components of accrued depreciation are physical deterioration,
functional obsolescence, and external obsolescence.
Physical deterioration can be either curable or incurable.
Curable physical deterioration applies to items of deferred
maintenance, which are in need of repair on the effective date of
the appraisal. Whenever the contribution to market value is equal
to or greater than the cost of replacement, the item is
classified as curable deterioration. Incurable physical
deterioration applies to structural items which naturally
deteriorate and are not practical or economically feasible to
correct.
Functional obsolescence is an element of accrued depreciation
which results from a defect, deficiency, or a superadequacy in
the structure(s), materials, or design. External obsolescence
results from a negative influence beyond or outside the
boundaries of the site, which results in a loss in value and is
nearly always incurable.
Deferred Maintenance
Deferred maintenance items are caused by physical deterioration
and should be corrected immediately. At the time of inspection
there was minor wood rot observed, however there were no
substantial items of maintenance which were in need of immediate
attention.
Physical Depreciation
The physical depreciation estimate is based on the age and the
overall life expectancy of the improvements. Based on a market
investigation of other structures in the neighborhood the
effective age of the structure is estimated to be equal with
actual at 8 years. The Marshall Valuation Service, a national
cost estimate company, indicates properties such as the subject
have a total physical life of about 50 years. Based on an
observation of other structures in the neighborhood, a physical
life estimate of 50 years would appear reasonable and will be
used when estimating depreciation. Subtracting the estimated
effective age from the estimated total physical life, indicates
an estimated remaining life of about 42 years.
The physical depreciation has been estimated by the age/life
method, in which the percentage of depreciation is a function of
the age of the improvements compared to the typical life for a
property of the subject design and quality. The formula for
estimating depreciation by the age/life method is as follows.
Replacement - Def. Maint.& X ____Age______ = Depreciation
Cost Short-Lived Physical Life
Items
$14,071,636 - $2,054,639 X 8/50 = $1,922,720
The physical depreciation for the short-lived items is estimated
as follows.
Roofs $163,263 X 8/20 = $ 65,305
Appliances $1,050,000 X 7/15 = $490,000
HVAC $525,860 X 7/15 = $245,401
Flooring $315,516 X 2/ 5 = $126,206
---------- --------
$2,054,639 $926,912
Functional Obsolescence
This type of depreciation generally results from defects in
design. It can also be caused by changes that occur over time and
have made some aspect of a structure, material, or design
obsolete by current standards.
Pelican Sound apartments is an average to good quality complex
and in comparison to competing rental properties, the subject is
in slightly above average condition. The unit mix, apartment
sizes, and layout are well suited to the rental market. The
complex is architecturally appealing and offers an average
amenity package.
The existing improvements are reasonably consistent with the
highest and best use of the site as though vacant and sustain no
market recognized loss in value attributed to functional
obsolescence.
External Obsolescence
This type of depreciation is the result of diminished utility of
a structure due to negative influences from outside the site.
This type of depreciation is almost always incurable. An example
of external obsolescence would be a garbage dump being located
adjacent or within close proximity to the subject. Another
example would be the local or general economy. As the local or
national economy weakens there could be a temporary reduction in
rents, thus reducing the market value of properties.
The improvements are considered to be an appropriate improvement
to the site and are reasonably consistent with highest and best
use as though vacant. No evidence of external obsolescence was
observed.
SUMMARY
Based on our analysis of the subject property and the summary of
the cost approach included on the following page, the indicated
value of the subject by the cost approach is:
ESTIMATE OF VALUE BY THE COST APPROACH: $14,500,000
<PAGE>
SUMMARY OF THE COST APPROACH
Buildings
Apartment Bldgs. 260,867 Sq.Ft. X $39.50 /SF = $10,304,247
Clubhouse 2,063 Sq.Ft. X $50.00 /SF = $103,150
Entry Porches, Stairs, etc. $800,000
Appliances, Fixtures and Equipment $1,050,000
-----------
Total Buildings $12,257,397
Impact and Other Fees $535,000
-----------
Total Improvements $12,792,397
Developer Overhead and Profit 10.00% $1,279,240
-----------
Replacement Cost New of Improvements $14,071,636
Less Depreciation
Physical Deterioration
Structure 16.00% $1,922,720
Roof 40.00% $65,305
Appliances 46.67% $490,000
HVAC 46.67% $245,401
Flooring 40.00% $126,206
Functional Obsolescence $0
Economic Obsolescence $0
----------
Total Depreciation 20.25% $2,849,632
Depreciated Cost of Improvements $11,222,004
Estimated Land Value $2,500,000
Contributory Value of Site Improvements $750,000
ESTIMATE OF VALUE BY THE COST APPROACH (Rounded) $14,500,000
===========
<PAGE>
THE SALES COMPARISON APPROACH
The sales comparison approach involves a detailed comparison of
the subject property with similar properties which have recently
sold in the same or competitive market. This approach is based
primarily on the principle of substitution. This principle
states, when several commodities or services with substantially
the same utility are available, the lower price attracts the
greatest demand and widest distribution. In other words, a
prudent investor/purchaser would not pay more to acquire a given
property in the market, considering that an alternative property
may be purchased for less. The five basic steps in this analysis
are listed below:
1. Research the market to identify similar properties for which
pertinent sales listings offerings and/or rental data is
available.
2. Qualify the data as to terms, motivating forces, or bona
fide nature.
3. Analyze the salient characteristics of the comparable
properties in relation to the property being appraised,
particularly those items relating to date of sale, location,
physical characteristics, and condition of sale.
4. Consider all dissimilarities and the probable effect on the
price of each sale and derive individual market value
indications for the property being appraised.
5. Formulate an opinion of market value from the pattern
developed from the foregoing analysis.
A market investigation was conducted in the subject's area to
find sales of properties comparable to the subject. The most
pertinent transactions have been presented on the following
pages, along with an identifying photograph and summary of
important facts.
<PAGE>
IMPROVED COMPARABLE NO. 1:
Lincoln Shores
11601 4th Street North
PARCEL NUMBER: 18-30-17-05480-001-0012
18-30-17-05480-001-0010
18-30-17-05480-001-0011
DATE: August 1, 1995
GRANTOR: Bay View Associates, LTD
GRANTEE: AETNA Life Insurance Company
O.R. BOOK & PAGE: 9071/1421 & 9071/1431
SALE PRICE: $17,000,000
FINANCING: Cash
DESIGN: Garden
CONSTRUCTION: Frame, Average Cost
CONDITION: Below Average for Age
<PAGE>
UNIT MIX: No. Total
Units Rms/Bd/Ba Sq. Ft. Sq. Ft.
144 3/1/1 540 = 77,760
160 3/1/1 617 = 98,720
144 3/1/1 696 = 100,224
176 4/2/2 923 = 162,448
7 4/2/2 Loft-FP 920 = 6,440
--- ---------- -------- -------
631 2,076 Rooms 706 SF 445,592
YEAR BUILT: 1983-84
RENTABLE BUILDING AREA: 445,592 Square Feet
AVERAGE UNIT SIZE: 706 Square Feet
AMENITIES: Lake, Three Swimming Pools, Lighted
Tennis and Racquetball Courts, and
Clubhouse with Fitness Center
PROJECT SIZE: 631 Units/52.58 Acres/12.00 u.p.a.
EFFECTIVE GROSS INCOME: Not Available
EXPENSES: Not Available
NET OPERATING INCOME: Not Available
VERIFICATION: Confidential, 4/96, WWA
UNIT VALUES:
$ Per Unit $26,941
$ Per Room $8,189
$ Per Square Foot $38.15
E.G.I.M. Not Available
O.A.R. Not Available
COMMENTS:
Details of this sale were limited because of a nondisclosure
agreement between the buyer and the seller. It was reported,
however, that because the property was in need of capital
improvements it was purchased at a capitalization rate well above
9%. This apartment complex is located on a well traveled
thoroughfare and was apparently at stabilized occupancy at the
time of contract.
<PAGE>
IMPROVED COMPARABLE NO. 2:
Country Place Village
2690 and 2775 Enterprise Road East
PARCEL NUMBER: 32-28-16-00000-210-0300
32-28-16-61629-000-0010
DATE: July 20, 1995
GRANTOR: County Place Village I Joint Venture &
County Place Village II Joint Venture
GRANTEE: Security Capital Atlantic Incorporated
O.R. BOOK & PAGE: 9055/0715 & 9055/0719
SALE PRICE: $7,555,000 ($7,932,750 Adjusted)
FINANCING: Cash
DESIGN: Garden
CONSTRUCTION: Masonry, Good Cost
CONDITION: Average+ for Age
<PAGE>
UNIT MIX: No. Total
Units Rms/Bd/Ba Sq. Ft. Sq. Ft.
32 3/1/1 796 = 25,472
28 3/1/1 835 = 23,380
24 4/2/1 979 = 23,496
28 4/2/2 1,109 = 31,052
38 4/2/2TH 1,134 = 43,092
18 4/2/2TH 1,212 = 21,816
16 4/2/2TH 1,234 = 19,744
4 5/3/2TH 1,494 = 5,976
--- --------- -------- -------
188 696 Rooms 1,032 SF 194,028
YEAR BUILT: 1984-85
RENTABLE BUILDING AREA: 194,028 Square Feet
AVERAGE UNIT SIZE: 1,032 Square Feet
AMENITIES: Two Swimming Pools, Lighted Tennis
Courts, and Clubhouse
PROJECT SIZE: 188 Units/22.22 Acres/8.45 u.p.a.
EFFECTIVE GROSS INCOME: Not Available
EXPENSES: Not Available
NET OPERATING INCOME: Not Available
VERIFICATION: Confidential, 4/96, WWA
UNIT VALUES:
$ Per Unit $42,195 Adjusted
$ Per Room $11,398 Adjusted
$ Per Square Foot $40.88 Adjusted
E.G.I.M. Not Available
O.A.R. Not Available
COMMENTS:
Details of this sale were limited because of nondisclosure by the
buyer and the lack of a knowledgeable contact for the seller. It
was reported, however, that the property required an adjustment
because it was part of a portfolio sale. This apartment complex
is located on a moderately traveled thoroughfare near a regional
mall and was apparently at stabilized occupancy at the time of
contract.
<PAGE>
IMPROVED COMPARABLE NO. 3:
Chesapeake Apartments
2307 Cumberland Road
PARCEL NUMBER: 30-28-16-00000-210-0300
DATE: March 1, 1995
GRANTOR: Gregory A. Rand, Trustee
GRANTEE: Phoenix Home Life Mutual Insurance
Company
O.R. BOOK & PAGE: 8928/1562
SALE PRICE: $11,800,000
FINANCING: Cash
DESIGN: Garden
CONSTRUCTION: Frame, Average-Good Cost
CONDITION: Average for Age
<PAGE>
UNIT MIX: No. Total
Units Rms/Bd/Ba Sq. Ft. Sq. Ft.
96 3/1/1 600-642 = 59,616
80 3/1/1 662-680 = 53,680
64 3/1/1 718 = 45,952
88 4/2/2 911-926 = 80,828
26 4/2/2 980 = 25,480
-- ----------- ------ ------
354 1,176 Rooms 750SF 265,556
YEAR BUILT: 1985
RENTABLE BUILDING AREA: 265,556 Square Feet
AVERAGE UNIT SIZE: 750 Square Feet
AMENITIES: Lakes, Swimming Pool, Tennis and
Racquetball Courts, and Clubhouse
PROJECT SIZE: 354 Units/27.50 Acres/12.87 u.p.a.
EFFECTIVE GROSS INCOME: $2,200,000
EXPENSES: $1,100,000 (50% EGI or $3,107/Unit)
NET OPERATING INCOME: $1,100,000 (Exclusive of Reserves)
VERIFICATION: John D. Selby, CCIM - Agent,
4/15/96, WWA
UNIT VALUES:
$ Per Unit $33,333
$ Per Room $10,034
$ Per Square Foot $44.44
E.G.I.M. 5.36
O.A.R. 9.32
COMMENTS:
This apartment complex is located on a moderately traveled
thoroughfare within close proximity to a regional mall.
Occupancy at the time of sale was at about 96%. Effective gross
income was reported at $2,013,084 and net operating income was
reported at $1,013,952. The above figures are based on 1995
projections by the buyer. Negotiations of $350,000 for wood
siding repairs and an additional $350,000 for interest rate
increases caused the purchase price to be $700,000 lower than the
original contract price. Rental rates include water and sewer
expenses.
<PAGE>
IMPROVED COMPARABLE NO. 4:
Stonegate Apartments
31177 U.S. Highway 19 North
PARCEL NUMBER: 18-28-16-00000-120-0400
DATE: March 1, 1996
GRANTOR: Jeremiah Associates, Ltd.
GRANTEE: Phoenix Home Life Mutual Ins. Co.
O.R. BOOK & PAGE: 9265/1189
SALE PRICE: $10,700,000
FINANCING: Principal Financial $5,400,000, 6.5%
interest only, 5 years
DESIGN: Garden
CONSTRUCTION: Frame, Average to Good Cost
CONDITION: Average+ for Age
<PAGE>
UNIT MIX: No. Total
Units Rms/Bd/Ba Sq. Ft. Sq. Ft.
72 3/1/1 743 = 53,496
16 3/1/1 837 = 13,392
22 4/2/2 992 = 21,824
54 4/2/2 1,113 = 60,102
32 4/2/2 1,123 = 35,936
24 5/3/2 1,348 = 32,352
-- ----- ----- ------
220 816 Rooms 987 SF 217,102
YEAR BUILT: 1991
RENTABLE BUILDING AREA: 217,102 Square Feet
AVERAGE UNIT SIZE: 987 Square Feet
AMENITIES: Swimming Pool, Spa, Sauna, Racquetball
Courts, Tennis Court, Full Size Washer
and Dryers, Carport/Garages and
Clubhouse with Fitness Room
PROJECT SIZE: 220 Units/18.89 Acres/11.65 u.p.a.
EFFECTIVE GROSS INCOME: $1,700,000
EXPENSES: $700,000
NET OPERATING INCOME: $1,000,000
VERIFICATION: John Selby, CCIM, 8/96, WWA
UNIT VALUES:
$ Per Unit $48,636
$ Per Room $13,113
$ Per Square Foot $49.29
E.G.I.M. 6.29
O.A.R. 9.35%
COMMENTS:
Occupancy at the time of sale was at about 98%. Effective gross
income was reported at $1,735,800 and net operating income was
reported at $913,066. The buyer anticipated reducing expenses to
$700,000 a year and achieving net operating income of $1,000,000.
Approximately $80,000 was budgeted for deferred maintenance
items.
<PAGE>
IMPROVED COMPARABLE NO. 5:
Promenade at Carillon
540 Carillon Parkway
PARCEL NUMBER: 12-30-16-73168-001-0010
DATE: October 21, 1994
GRANTOR: Carillon Limited Partnership I
GRANTEE: Merry Land & Investment Company, Inc.
O.R. BOOK & PAGE: 8820/1448
SALE PRICE: $20,650,000
FINANCING: Cash to Seller
DESIGN: Garden
CONSTRUCTION: Frame, Good+ Cost
CONDITION: Average+ for Age
<PAGE>
UNIT MIX: No. Total
Units Rms/Bd/Ba Sq. Ft. Sq. Ft.
60 3/1/1 670 = 40,200
64(8 w/Gar) 3/1/1 752 = 48,128
16 3/1/1 925 = 14,800
40 4/2/2 1,005 = 40,200
70(10 w/Gar) 4/2/2 1,040 = 72,800
44(2 w/Gar) 4/2/2 1,200 = 52,800
40(4 w/Gar) 5/3/2 1,369 = 54,760
--- ----------- -------- --------
334 1,236 Rooms 969 SF 323,688
YEAR BUILT: 1994
RENTABLE BUILDING AREA: 323,688 Square Feet
AVERAGE UNIT SIZE: 969 Square Feet
AMENITIES: Swimming Pool, Spa, Full Size Washer and
Dryers, Garages (90 total) and Clubhouse
with Fitness Room
PROJECT SIZE: 334 Units/12.00 Acres/27.83 u.p.a.
EFFECTIVE GROSS INCOME: $3,200,000
EXPENSES: $1,300,000 (exclusive of reserves)
NET OPERATING INCOME: $1,900,000
VERIFICATION: Julie Teague, Grantee, 9/96, WWA
UNIT VALUES:
$ Per Unit $61,826
$ Per Room $16,707
$ Per Square Foot $63.80
E.G.I.M. 6.45
O.A.R. 9.20%
COMMENTS:
Occupancy at the time of sale was at about 90% and had just
reached stabilized occupancy. The buyer anticipated gross income
of about $3,200,000, with net operating income of about
$1,900,000. The buyer made a reserve allowance of $150 a unit,
but is not included these figures. The exterior siding is
currently being reconditioned, but is under the builders
warranty.
COMPARABLE BUILDING SALES
<PAGE>
<TABLE>
IMPROVED COMPARABLE COMPARISON CHART
<CAPTION>
SUBJECT COMPARABLE COMPARABLE COMPARABLE COMPARABLE COMPARABLE
1 2 3 4 5
<S> <C> <C> <C> <C> <C> <C>
SALE PRICE $17,000,000 $7,555,000 $11,800,000 $10,700,000 $20,650,000
PROPERTY RIGHTS CONVEYED FEE SIMPLE Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple
ADJUSTMENT 0 0 0 0 0
ADJUSTED SALE PRICE $17,000,000 $7,555,000 $11,800,000 $10,700,000 $20,650,000
FINANCING Cash Cash Cash Conventional Cash
ADJUSTMENT 0 0 0 0 0
ADJUSTED SALE PRICE $17,000,000 $7,555,000 $11,800,000 $10,700,000 $20,650,000
DATE OF APPRAISAL/SALE 28-Aug-96 01-Aug-95 20-Jul-95 01-Mar-95 01-Mar-96 21-Oct-94
NUMBER OF MONTHS SINCE SALE 13 14 18 6 23
ADJUSTMENT 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
0 0 0 0 0
ADJUSTED SALE PRICE $17,000,000 $7,932,750 $11,800,000 $10,700,000 $20,650,000
PRICE PER UNIT $26,941 $42,195 $33,333 $48,636 $61,826
PRICE PER ROOM $8,189 $11,398 $10,034 $13,113 $16,707
PRICE PER SQUARE FOOT $38.15 $40.88 $44.44 $49.29 $63.80
PHYSICAL CHARACTERISTICS
LOCATION S18&19-T30-R17 S18-T30-R17 S32-T28-R16 S30-T28-R16 S18-T28-R16 S12-T30-R16
CONSTRUCTION Frame/Av-Gd Frame/Average Masonry/Good Frame/Av-Gd Frame/Av-Gd Frame/Good+
CONDITION Average+ for Age Below Avg for Age Average+ for Age Average for Age Average+ for Age Average+ for Age
YEAR BUILT 1988 1983-84 1984-85 1985 1991 1994
AMENITIES/EQUIPMENT Average Average Average Average Average Average
NUMBER OF UNITS 379 630 188 354 220 334
NUMBER OF ROOMS 1,232 2,076 696 1,176 816 1,236
RENTABLE BUILDING AREA 260,867 445,592 194,028 265,556 217,102 323,688
NUMBER OF ACRES 31.59 52.58 22.22 27.50 18.89 12.00
DENSITY 12.00 12.00 8.46 12.87 11.65 27.83
AVERAGE UNIT SIZE 688 706 1,032 750 987 969
AVERAGE ROOM SIZE 212 215 279 228 266 262
FINANCIAL CHARACTERISTICS
EFFECTIVE GROSS INCOME $2,487,704 Not Available Not Available $2,200,000 $1,700,000 $3,200,000
E.G.I.M. Not Available Not Available 5.36 6.29 6.45
EXPENSE RATIO 47.15% Not Available Not Available 50.00% 41.18% 40.63%
NET OPERATING INCOME $1,314,634 Not Available Not Available $1,100,000 $1,000,000 $1,900,000
OVERALL RATE Not Available Not Available 9.32% 9.35% 9.20%
PRICE PER UNIT ADJUSTMENTS $26,941 $42,195 $33,333 $48,636 $61,826
AVERAGE UNIT SIZE -1% -17% -4% -15% -14%
LOCATION 0% 5% 5% 5% 0%
AGE 15% 12% 9% -9% -18%
QUALITY 5% -5% 0% 0% -10%
CONDITION 20% 0% 5% 0% 0%
ADJUSTMENT (Cumulative) 43% -7% 15% -19% -37%
$11,706 ($3,069) $5,122 ($9,135) ($22,586)
ADJUSTED PRICE PER UNIT $38,647 $39,126 $38,455 $39,501 $39,240
PRICE PER ROOM ADJUSTMENTS $8,198 $11,398 $10,034 $13,113 $16,707
AVERAGE ROOM SIZE -1% -12% -3% -10% -10%
LOCATION 0% 5% 5% 5% 0%
AGE 15% 12% 9% -9% -18%
QUALITY 5% -5% 0% 0% -10%
CONDITION 20% 0% 5% 0% 0%
ADJUSTMENT (Cumulative) 43% -2% 17% -14% -34%
3,558 ($192) $1,662 ($1,836) ($5,610)
ADJUSTED PRICE PER ROOM $11,747 $11,206 $11,696 $11,277 $11,097
PRICE PER SQUARE FOOT ADJUSTMENTS $38.15 $40.88 $44.44 $49.29
$63.80
AVERAGE UNIT SIZE 1% 17% 4% 15% 14%
LOCATION 0% 5% 5% 5% 0%
AGE 15% 12% 9% -9% -18%
QUALITY 5% -5% 0% 0% -10%
CONDITION 20% 0% 5% 0% 0%
ADJUSTMENT (Cumulative) 46% 31% 25% 10% -16%
17.68 $12.56 $11.10 $4.87 ($10.12)
ADJUSTED PRICE SQUARE FOOT $55.83 $53.44 $55.54 $54.16 $53.68
</TABLE>
<PAGE>
The five foregoing improved sales were considered to be the most
reliable indicators of market value for the subject. Prior to
adjustments, the sales indicated values from $26,941 to $61,826 a
unit. Based on the number of rooms, the sales indicate values
from $8,189 to $16,707 and based on the number of square feet,
the sales indicate values from $38.15 to $63.80.
EXPLANATION OF ADJUSTMENTS
Where appropriate, adjustments have been made to the comparables
to account for material differences from the subject. The
adjustment categories include: financing/conditions of sale,
market conditions (time), average unit size, location, age,
quality, and condition. The following is an explanation of the
various adjustments.
FINANCING/CONDITIONS OF SALE
All sales were verified with either the grantee, grantor, an
informed party or the public records. With the exception of
improved comparable 2, there was no special financing or any
special considerations which may have influenced the comparable's
selling prices. It was reported that improved comparable 2 was
part of a portfolio sale and required an adjustment to reflect
that condition. Based on a review of the comparable sales, an
upward adjustment of 5% was made to improved comparable 2.
MARKET CONDITIONS (TIME)
Market conditions refer to the appreciation or depreciation of a
property over a period of time. The rental rates and expenses
for apartment complexes have shown moderate annual increases. In
review of the three improved comparables, it would appear that
property values have remained relatively stable. Therefore,
based on the above analysis, no market conditions adjustment will
be applied to the comparables.
AVERAGE UNIT SIZE
Typically the average unit size of the apartment complex has a
direct relationship with the price per unit, and an inverse
relationship with the price per square foot. A review of the
comparables indicates support for this relationship. The
comparables appear to indicate that a 1% change in the average
unit size will cause about a 0.50% direct change in the indicated
price per unit and a 0.50% inverse change in the indicated price
per square foot values. Adjustments were made accordingly for
each of the improved comparables.
The average room sizes of all the improved comparables are
slightly larger than the subject. A review of the comparables
indicates a direct relationship between the average room size and
the price per room. The comparables appear to indicate that a 1%
change in the average room size will cause about a 0.50% direct
change in the indicated price per room. Adjustments were made
accordingly for each of the improved comparables.
LOCATION
Factors which were included in this adjustment category are the
general location of the comparables when compared to the subject.
Typically, properties on major roads or in exclusive areas sell
at a higher price per unit.
The subject property is located in a residential/commercial
transition area on the south side of Gandy Boulevard just east of
4th Street. The site has good visibility and adequate ingress
and egress. The site has no significant offsite view amenity.
Due to the central Pinellas County location and convenient bridge
access to Tampa, the area is has historically shown good demand
for rental apartment units, thus the overall location is
considered above average.
Improved comparables 1 and 5 are located in the same general area
as the subject and therefore have reasonably similar locations.
Improved comparables 2 through 4 are located in competing areas
of Pinellas County and are believed to have slightly inferior
locations. A review of the comparables would appear to indicate
that upward adjustments of 5% are reasonable for improved
comparables 2 through 4.
AGE
This adjustment category is based on the effective age of the
comparables in relation to the subject. Properties with lower
effective ages typically sell at a higher price per unit. The
effective age of the comparables was determined based on a review
of the actual physical ages and by an exterior inspection of the
properties. A review of comparables indicate that age
differences cause about a 3% per year direct change in the
indicated values, which is similar to the depreciation estimate
in the cost approach. Adjustments were made accordingly to each
of the improved comparables.
QUALITY/CONDITION
This adjustment category is based on the quality and condition of
the comparables in relation to the subject. Typically, the
quality and condition of a property has a direct relationship
with the sale price. The quality and condition of the
comparables were determined by an exterior inspection of the
properties and by conversations with the grantee, grantor or
informed parties.
Improved comparables 3 and 4 are all reasonably similar to the
subject in construction quality, improved comparables 2 and 5 are
superior and improved comparable 1 is inferior. Based on a
review of the improved comparables, comparable 1 was adjusted
upward by 5%, comparable 2 was adjusted downward by 5% and
comparable 5 was adjusted downward by 10%.
Physical inspections of the properties and conversations with
informed parties lead us to believe that the overall condition of
improved comparable 2, 4, and 5 were reasonably similar to the
subject and that the overall conditions of improved comparables 1
and 3 are inferior. Based on review of the comparables, improved
comparable 1 was adjusted upward by 20% and improved comparable 3
was adjusted upward by 5%.
CORRELATION AND CONCLUSION
Comparable 1 was a sale of Lincoln Shores, a 631 unit complex
located about a mile northwest of the subject. The apartment
complex was constructed in 1983-84 and was in below average
condition for its age. The complex has only a slightly larger
average unit size than the subject and also has a larger number
of one bedroom units (71%).
Comparable 2 was a sale of Country Place Village, located about
11 miles northwest of the subject. Country Place Village is a
188 unit complex that was constructed in 1984-85 and is superior
in construction quality. The complex has a larger average unit
size, with a mix skewed toward two-bedroom units.
Comparable 3 is the sale of a 354 unit apartment complex, known
as Chesapeake Apartments. The complex was constructed in 1985,
is similar in construction quality, and is located about 12 miles
northwest of the subject. Like the subject and Lincoln shores,
this complex has a large number of one bedroom units (68%). The
average unit size for this complex is slightly larger.
Comparable 4 was a sale of Stonegate Apartments, located about 14
miles northwest of the subject. Stonegate is a 220 unit complex
that was constructed in 1991, but is similar in construction
quality. Like comparable 2, this complex has a larger average
unit size, with a mix skewed toward two-bedroom units.
Comparable 5 was a sale of the Promenade at Carillon located
about 2 miles northwest of the subject. This apartment complex
has 334 units, was constructed in 1994, and is superior in
overall construction quality. The complex has a larger average
unit size, with a small number of three bedroom units and a
relatively equal but large distribution of one and two bedroom
units.
After adjustments the indicated price per unit was from $38,455
to $39,501, the indicated price per room was from $11,097 to
$11,747, and the indicated price per square foot was from $53.44
to $55.83. Due to the large adjustments required for each of the
comparables, all were given roughly equal weight in the final
analysis.
<PAGE>
Based on the cited data and analysis, the estimated value per
unit, per room and per square foot are shown as follows:
379 Units X $38,000/Unit = $14,402,000
1,232 Rooms X $11,500/Room = $14,168,000
260,867 Sq.Ft. X $55.00/Sq.Ft. = $14,347,685
The estimated values by the three approaches used, strongly
support one another are within a range, from low to high, of less
than 2%. Most buyers and seller place more emphases on the price
per unit, thus the estimated value by the price per unit method
was given slightly greater weight.
Indicated Value by the Sales Comparison Approach $14,300,000
===========
<PAGE>
THE INCOME CAPITALIZATION APPROACH
The income capitalization approach relates to an investor's
thinking and motivation, as to the future benefits of ownership.
This is the basic tool for the valuation of income producing real
estate. It is based on the principle of substitution, which is
reflected in the definition of value as the present worth of all
the rights to future benefits accruing to ownership. The income
producing property is typically purchased for investment purposes
and the projected net income stream is the critical factor
affecting this market value.
The income capitalization approach is practical only when the
income stream can be estimated. This income estimate may be
developed and supported by a comparison in the local market. An
investor purchasing income producing real estate is, in effect,
trading a sum of present dollars for a right to the stream of
future dollars. There is a relationship between the two, and the
connecting link is the process of capitalization. The function
of capitalization is to translate an income projection into a
present capital value indication.
The valuation by the income capitalization approach consists of
the following steps:
1. Estimate the market rent for the subject property through a
market analysis of competitive projects to arrive at a gross
income estimate;
2. Estimate the vacancy and collection losses for the income
projection period;
3. Deduct the estimated vacancy and collection losses and the
annual operating expenses from the gross income estimate for
an estimated net income before recapture;
4. Determine the appropriate capitalization technique and
gather market supported data for its application.
5. Capitalize the resulting net income figure by an appropriate
capitalization rate in order to obtain an indicated value of
the property.
ESTIMATE OF MARKET RENT
The first step in the income capitalization approach is to
estimate the subject's market rent. The following rent
comparables are considered the best indicators for the estimate
of market rent for the subject property.
<PAGE>
RENT COMPARABLE #1: Waterford
Location: 10263 Gandy Boulevard
Number of Units: 384 Units
Average Unit Size: 850 Square Feet
Vacancy: 86%
Year Built: 1989
Construction Type: Frame, Average+ Cost, Average Condition
Recreation Facilities: Clubhouse with Fitness Facility, Two
Swimming Pools & Two Spas, Tennis,
Racquetball, and Sauna
Features: Standard Kitchen and Washer/Dryers
(Fireplaces in select units)
Rent No. Unit Unit
Schedule:Units Type Size Rent/Month Rent/Sq. Ft.
200 1/1 724 S.F. $565.00 $0.78
20 1/1 755 S.F. $575.00 $0.76
144 2/2 1,015 S.F. $715.00 $0.70
20 2/2TH 1,015 S.F. $810.00 $0.80
Rent Concessions: 1/2 Off 1st Month Rent
Premiums: View, Upstairs and End Units $10
Fireplaces $20-$30
<PAGE>
RENT COMPARABLE #2: Promenade at Carillon
Location: 540 Carillon Parkway
Number of Units: 334 Units
Average Unit Size: 969 Square Feet
Vacancy: 95% (MOL)
Year Built: 1994
Construction Type: Frame, Good+ Cost, Average Condition
Recreation Facilities: Clubhouse with Fitness Facility,
Swimming Pool & Spa
Features: Standard Kitchen
Rent No. Unit Unit
Schedule:Units Type Size Rent/Month Rent/Sq. Ft.
60 1/1 679 S.F. $579.00 $0.86
(8 w/Gar) 64 1/1 752 S.F. $599.00 $0.80
16 1/1 925 S.F. $719.00 $0.78
40 2/2 1,005 S.F. $749.00 $0.75
(10 w/Gar)70 2/2 1,040 S.F. $769.00 $0.74
(2 2/Gar) 44 2/2 1,200 S.F. $849.00 $0.71
(4 w/Gar) 40 3/2 1,369 S.F. $1,059.00 $0.77
Rent Concessions: 1st Month Free
Premiums: Washer/Dryer $30, Alarms $10, Garage $90
<PAGE>
RENT COMPARABLE #3: Bridgewater Place
Location: 115 112th Avenue Northeast
Number of Units: 260 Units
Average Unit Size: 941 Square Feet
Vacancy: 93%
Year Built: 1989
Construction Type: Frame, Average+ Cost, Average Condition
Recreation Facilities: Clubhouse with Fitness Facility, Two
Swimming Pools & Two Spas, Tennis
Courts, and Sauna
Features: Standard Kitchen (Fireplaces in select
units)
Rent No. Unit Unit
Schedule: Units Type Size Rent/Month Rent/Sq. Ft.
36 1/1 663 S.F. $585.00 $0.88
80 1/1 811 S.F. $640.00 $0.79
40 1/1/D 938 S.F. $730.00 $0.78
76 2/2 1,109 S.F. $820.00 $0.74
28 3/2 1,215 S.F. $950.00 $0.78
Rent Concessions: $300 1-Bedrooms and $500 2-Bedrooms
Premiums: Sunken Living Rooms, Vaulted Ceilings and
Fireplaces $10-$20
<PAGE>
RENT COMPARABLE #4: West Port Colony
Location: 190 112th Avenue North
Number of Units: 324 Units
Average Unit Size: 813 Square Feet
Vacancy: 92%
Year Built: 1989
Construction Type: Frame, Average+ Cost, Average Condition
Recreation Facilities: Clubhouse with Fitness Facility,
Swimming Pool, Spa, Tennis Courts,
Racquetball Court, and Sauna
Features: Standard Kitchen (Fireplaces and
Washer/Dryers in select units)
Rent No. Unit Unit
Schedule:Units Type Size Rent/Month Rent/Sq. Ft.
72 1/1 550 S.F. $485.00 $0.88
34 1/1 677 S.F. $565.00 $0.83
86 1/1 782 S.F. $610.00 $0.78
48 2/2 918 S.F. $690.00 $0.75
48 2/2 970 S.F. $740.00 $0.76
24 2/2 1,145 S.F. $850.00 $0.74
12 3/2 1,280 S.F. $945.00 $0.74
Rent Concessions: 1st Month Free
Premiums: Washer/Dryer $40, View $25, Fireplace $15
<PAGE>
RENT COMPARABLE #5: Post Bay
Location: 11901 4th Street North
Number of Units: 312 Units
Average Unit Size: 890 Square Feet
Vacancy: 97%
Year Built: 1989
Construction Type: Frame, Average+ Cost, Average Condition
Recreation Facilities: Clubhouse with Fitness Facility,
Swimming Pool, Spa, and Garage Parking
Features: Standard Kitchen (Washer/Dryers in
select units)
Rent No. Unit Unit
Schedule:Units Type Size Rent/Month Rent/Sq. Ft.
Unk Studio 560 S.F. $500.00 $0.89
Unk 1/1 630 S.F. $530.00 $0.84
Unk 1/1 750 S.F. $620.00 $0.83
Unk 2/1 970 S.F. $735.00 $0.76
Unk 2/2 1,150 S.F. $850.00 $0.74
Unk 2/2 1,280 S.F. $880.00 $0.69
Rent Concessions: 1st Month Free
Premiums: Washer/Dryer $25, Covered Parking $100,
View $10
<PAGE>
COMPARABLE RENTALS
<PAGE>
<TABLE>
Comparable Rent Analysis
One Bedroom Apartment (Small)
<CAPTION>
Subject Waterford Promenade Bridgewater West Port Colony Post Bay
Data Data Adjst. Data Adjst. Data Adjst. Data Adjst. Data Adjst.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Complex Size 379 384 334 260 324 312
Number 128 200 60 36 72 Unknown
Unit Type 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom
Baths 1 Bath 1 Bath 1 Bath 1 Bath 1 Bath 1 Bath
Monthly Rent $490 $565 $579 $585 $485 $530
Size 513 724 -20 670 -15 663 -15 550 630 -10
Rent/Sq. Ft. $0.96 $0.78 $0.86 $0.88 $0.88 $0.84
Qlty/Cndt Av-Gd/Av+ Av-Gd/Av+ Good/Av+ -10 Av-Gd/Av+ Av-Gd/Av+ Av/Gd/Av+
Year Built 1988 1989 1994 1989 1989 1989
Equipment Full Appl Full Appl Std. Ktch 5 Std. Ktch 5 Std. Ktch 5 Std. Ktch 5
Location Good Good Good Good Good Good
Concessions No 1/2 Month -23 1st Month -48 $300 -25 1st Month -40 1st Month -44
Occupancy 97% 86% 95% 93% 92% 97%
Amenities Average Average Average Average Average Average
Utilities Wtr/Sew/Trs Wtr/Sew/Trs Trsh 20 Wtr/Sew/Trs Wtr/Sew/Trs Wtr/Sew/Trs
Cov. Parking No No Gar(extra) No No Gar(extra)
Rents $522 $531 $550 $450 $481
$0.72 $0.79 $0.83 $0.82 $0.76
Estimated Subject Rent $490
</TABLE>
<PAGE>
<TABLE>
Comparable Rent Analysis
One Bedroom Apartment (Large)
<CAPTION>
Subject Waterford Promenade Bridgewater West Port Colony Post Bay
Data Data Adjst. Data Adjst. Data Adjst. Data Adjst. Data Adjst.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Complex Size 379 384 334 260 324 312
Number 156 200 60 80 34 Unknown
Unit Type 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom
Baths 1 Bath 1 Bath 1 Bath 1 Bath 1 Bath 1 Bath
Monthly Rent $565 $565 $599 $640 $565 $530
Size 713 724 752 811 -10 677 5 630
Rent/Sq. Ft. $0.79 $0.78 $0.80 $0.79 $0.83 $0.84
Qlty/Cndt Av-Gd/Av+ Av-Gd/Av+ Good/Av+ -10 Av-Gd/Av+ Av-Gd/Av+ Av/Gd/Av+
Year Built 1988 1989 1994 1989 1989 1989
Equipment Full Appl Full Appl Std. Ktch 5 Std. Ktch 5 Std. Ktch 5 Std. Ktch 5
Location Good Good Good Good Good Good
Concessions No 1/2 Month -23 1st Month -50 $300 -25 1st Month -47 1st Month -44
Occupancy 97% 86% 95% 93% 92% 97%
Amenities Average Average Average Average Average Average
Utilities Wtr/Sew/Trs Wtr/Sew/Trs Trsh 20 Wtr/Sew/Trs Wtr/Sew/Trs Wtr/Sew/Trs
Cov. Parking No No Gar(extra) No No Gar(extra)
Rents $542 $564 $610 $528 $491
$0.75 $0.75 $0.75 $0.78 $0.78
Estimated Subject Rent $565
</TABLE>
<PAGE>
<TABLE>
Comparable Rent Analysis
One Bedroom/Den Apartment
<CAPTION>
Subject Waterford Promenade Bridgewater West Port Colony Post Bay
Data Data Adjst. Data Adjst. Data Adjst. Data Adjst. Data Adjst.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Complex Size 379 384 334 260 200 312
Number 27 144 40 40 48 Unknown
Unit Type 1 Bed/Den 2 Bedroom 2 Bedroom 1 Bed/Den 2 Bedroom 2 Bedroom
Baths 1 Bath 2 Bath -10 2 Bath -10 1 Bath 2 Bath -10 1 Bath
Monthly Rent $640 $715 $749 $730 $690 $735
Size 841 1015 -15 1005 -15 938 -10 918 -10 970 -10
Rent/Sq. Ft. $0.76 $0.70 $0.75 $0.78 $0.75 $0.76
Qlty/Cndt Av-Gd/Av+ Av-Gd/Av+ Good/Av+ -10 Av-Gd/Av+ Av-Gd/Av+ Av/Gd/Av+
Year Built 1988 1989 1994 1989 1989 1989
Equipment Full Appl Full Appl Std. Ktch 5 Std. Ktch 5 Std. Ktch 5 Std. Ktch 5
Location Good Good Good Good Good Good
Concessions No 1/2 Month -29 1st Month -62 $300 -58 1st Month -58 1st Month -61
Occupancy 97% 86% 95% 93% 92% 97%
Amenities Average Average Average Average Average Average
Utilities Wtr/Sew/Trs Wtr/Sew/Trs Trsh 20 Wtr/Sew/Trs Wtr/Sew/Trs Wtr/Sew/Trs
Cov. Parking No No Gar(extra) No No Gar(extra)
Rents $661 $677 $700 $617 $669
$0.65 $0.67 $0.75 $0.67 $0.69
Estimated Subject Rent $640
</TABLE>
<PAGE>
<TABLE>
Comparable Rent Analysis
Two Bedroom Apartment
<CAPTION>
Subject Waterford Promenade Bridgewater West Port Colony Post Bay
Data Data Adjst. Data Adjst. Data Adjst. Data Adjst. Data Adjst.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Complex Size 379 384 334 260 324 312
Number 68 144 40 76 48 Unknown
Unit Type 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom
Baths 2 Bath 2 Bath 2 Bath 2 Bath 2 Bath 2 Bath
Monthly Rent $710 $715 $749 $820 $690 $850
Size 901 1015 -10 1005 -10 1109 -20 918 1150 -25
Rent/Sq. Ft. $0.79 $0.70 $0.75 $0.74 $0.75 $0.74
Qlty/Cndt Av-Gd/Av+ Av-Gd/Av+ Good/Av+ -10 Av-Gd/Av+ Av-Gd/Av+ Av/Gd/Av+
Year Built 1988 1989 1994 1989 1989 1989
Equipment Full Appl Full Appl Std. Ktch 5 Std. Ktch 5 Std. Ktch 5 Std. Ktch 5
Location Good Good Good Good Good Good
Concessions No 1/2 Month -29 1st Month -62 $500 -41 1st Month -47 1st Month -70
Occupancy 97% 86% 95% 93% 92% 97%
Amenities Average Average Average Average Average Average
Utilities Wtr/Sew/Trs Wtr/Sew/Trs Trsh 20 Wtr/Sew/Trs Wtr/Sew/Trs Wtr/Sew/Trs
Cov. Parking No No Gar(extra) No No Gar(extra)
Rents $676 $692 $764 $637 $760
$0.67 $0.69 $0.69 $0.69 $0.66
Estimated Subject Rent $710
</TABLE>
<PAGE>
The five rental properties used in the report are all considered
to directly compete with the subject complex. All five rent
comparables are located within two miles of the subject and all
are reasonably similar in quality and condition.
In comparison with the subject apartment complex, the rent
comparables generally have overall similar amenity packages, but
have larger average unit sizes and are all offering concessions.
Rent concessions in the area are typical and appear to have
influence on effective rental rates. Only Comparable 1, like the
subject, offers washers and dryers in each of the units. Rent
comparable 3 was the only complex to have a one-bedroom one-bath
den unit, like the subject.
The current base asking rent is $490 a month for the small one -
bedroom units, $565 a month for the large one-bedroom units, $640
a month for the one-bedroom/den units, and $710 a month for the
two-bedroom units. Additional rent of $15 to $25 is charged for
lake views. A review of the July 19, 1996 rent roll indicates
that the existing rent levels are in line with current base
asking rents. The lag in market rent increases is offset by the
additional rent charges. The rental rates for the competing
properties indicate some rent premiums are paid for views. A
copy of the current rent roll is provided at the addendum of the
report. A summary of the rent roll is provided as follows.
One-Bedroom (S) One-Bedroom (L) One-Bedroom (Den) Two-
Bedroom
Low Rent $475 $515 $615 $675
High Rent $540 $625 $745 $770
Mean Rent $493 $560 $655 $713
Median Rent $490 $563 $650 $710
Mode Rent $495 (30/128) $565 (36/156) $650 (5/27) $715 (14/68)
Vacant/% 10/7.8% 8/5.1% 1/3.7% 4/5.9%
After adjustments, the comparables have indicated monthly rents
between $450 and $550 a month for the small one bedroom units,
between $491 and $610 a month for the large one bedroom units,
between $617 and $700 a month for the one bedroom den units, and
between $637 and $764 a month for the two bedroom units. Based
on the cited rent comparables, the market rents for the subject
property are estimated at $490 a month for the small one bedroom
units, $565 a month for the large one bedroom units, $640 a month
for the one bedroom den units, and $710 a month for the two
bedroom units. The projected rents are reasonably close to the
mean of the adjusted rent range and are consistent with current
asking rents.
Vacancy and Collection Losses:
Vacancy and collection loss is estimated at 7% on a stabilized
basis. The five rent comparables had vacancy rates from about 3%
to 14%. At the time of inspection, it was reported that the
subject had about 11 vacant unrented units, but typically
maintains a vacancy rate of roughly 6%. The subject property has
three models, but no occupied nonrevenue producing units. It is,
however, typically for the on-site manager to receive a two-
bedroom unit free of charge. Documented historical vacancy and
collection loss for the subject complex has ranged from 5.2% to
7.0% over the last two and a half years.
Other Income:
In addition to the rent income from the apartment units, other
income is generated in the form of deposit forfeitures, laundry
and vending income, pet fees, lost key fees, etc. When compiled,
these sources of income typically generate approximately 1% to 3%
of gross apartment rental income. Other income for the subject
property has ranged from 2.1% to 3.4% and is estimated at the
upper portion of the range, at 3% of rent income.
Expenses:
In order to estimate operating expenses, income and expense
information for both the subject apartment complex and other
apartment complexes located in the area have been analyzed.
Documentation for the subject property consisted of a two and a
half year operating history.
Overall expenses for apartment complexes with more than 150 units
typically range from 35% to 50% of effective gross income or
approximately $2,700 to $3,200 per unit. The expenses estimated
for the subject result in an expense ratio of 47.15%, or $3,095
per unit. The expenses for the subject property are within the
predominant range.
Real Estate Taxes:
The 1996 proposed assessed tax value for the subject property is
$11,614,200. This estimated expense also considers the
assessments of several comparable properties. Assessments tend
to be below actual market value of the property. The following
comparables have been used due to their similarity with the
subject property.
Complex Assessment Per Unit
Waterford $15,048,900 $39,190
Bridgewater Place $10,677,800 $41,068
West Port Colony $12,424,800 $38,348
Subject $11,614,200 $30,644
Taking into account the smaller average unit size of the subject,
the 1996 assessed value of $11,614,200 for the subject property
would appear reasonable.
The 1996 proposed millage rate for the subject neighborhood is
25.6430 and the proposed gross tax liability is $297,823.
Millage rates and assessed values have generally been relatively
stable over the past two years. It is estimated that the
projection period real estate taxes will be slightly higher than
the 1996 real estate taxes. The projected real estate taxes for
the subject are estimated at $1.15 a square foot or $299,997.
Insurance:
Insurance costs typically range from $0.18 to $0.22 a square foot
depending on such consideration as type of construction, project
size, co-insurance clauses and location. The insurance expense
for 1995 was reported at $59,378 however annualized 1996 is
$40,670. The insurance for the subject property is, therefore,
estimated at $0.20 a square foot or $52,173.
Management Fees:
Management fees, charged by professional management firms, range
from 4% to 6% of effective gross income depending on project
size, condition and general rent levels. Considering the current
rental rates and size of the subject property in comparison with
other rental properties in the Tampa Bay area, the management
expense is estimated at 5.0% of effective gross income. The
subject property is professionally managed by Decade Properties,
who's management fee has ranged from 7.5% to 8.7% of effective
gross income. It was reported that the fee was above market in
lieu of up-front investor syndication costs.
General and Administrative Expenses:
This expense category includes those items necessary for on site
administration of the property such as administrative salaries,
supplies, telephone, etc. Again this could vary substantially
due to overall size of the complex and the efficiency of
management. The general and administrative expense is estimated
to be $1.10 a square foot or $286,954. Historically the general
and administrative cost for the subject has ranged from $278,023
to $296,006. Most apartment complexes the size of the subject
operate efficiently with 7 to 10 employees. The subject property
currently has 13 employees. Four carpenters are currently
employed by the complex on a temporary basis to replace the
untreated wood around all of the balconies with new pressure
treated wood. It was reported that $100,000 was budgeted in 1996
to replace the wood around the balconies and is about half way
completed.
Utilities:
All units are individually metered for electrical service. The
expenses charged generally include common area electrical service
and water, sewer, and trash removal for the entire property.
Typically, utility expenses are from $400 to $650 a unit on an
annual basis. The utility expense is estimated at $0.60 a square
foot or $413 a unit ($156,520). Historical utility expenses have
ranged from $143,415 to $153,231.
Maintenance:
This expense category includes normal costs for both interior and
exterior building maintenance and grounds maintenance. It is
expected that the maintenance expense for the subject would fall
within a range of $0.80 to $1.00 a square foot. In review of
historical maintenance costs, the maintenance expense is
estimated at $0.90 a square foot.
Marketing:
The marketing expense for yellow page listings, periodic
newspaper advertisements and listings in apartment rental
publications, and is estimated to be about $0.07 a square foot.
Reserves:
Reserves are used to annualize future costs of major maintenance
or replacement (short-lived) items. The managers and/or owners
of most rental properties in the Tampa Bay area generally set
aside little or no reserves for future capital expenditures. For
this reason, the reserves typically do not meet future capital
requirements. The calculation showing the estimated annual
reserves needed to repair or replace short-lived items is shown
as follows. The analysis assumes that increases in replacement
costs will be offset by interest earned on the reserve account.
<PAGE>
Reserves Reserves
Based on Based on
Remaining Remaining Total Total
Structural Replacement Economic Economic Economic Economic
Component Cost / Life = Life / Life = Life
______________________________________________________________________
Roofs $ 163,263 / 12 = $ 13,606 / 20 = $ 8,163
Appliances $1,050,000 / 8 = $131,250 / 15 = $ 70,000
HVAC $ 525,860 / 8 = $ 65,733 / 15 = $ 35,057
Flooring $ 315,516 / 3 = $105,172 / 5 = $ 63,103
$315,761 $176,323
Estimated Cost Per Unit (379 Units) = $833 $465
The estimated reserve expense of $833 a unit reflects the
reserves that are now required due to the lack of past
contributions to a reserve account. The estimated reserve
expense of $465 a unit reflects the contributions that would
have been necessary if the reserve account had originally been in
place.
For the purpose of this report, the reserve expense is for
illustration purposes only and will not be included in either the
direct capitalization estimate or the discounted cash flow
analysis. In order for reserves to be an expense item, the
expenses for the improved comparables would need to be adjusted
upward, thus causing a decrease in the indicated capitalization
rates. Both methods will result in the same value estimates.
ANALYSIS OF OPERATING HISTORY:
The operating history for the subject indicates that revenues
have increased by about 2% a year. Expenses over the two and a
half year period fluctuated from 48.7% to 51.1% of effective
gross income. The projected expense ratio is lower due primarily
to the lower projected market management fee.
As follows is a summary of the reconstructed income and operating
statements for 1994 through 1996 (annualized), and a projection
for upcoming year. The projected income and expense figures are
consistent with figures found in the direct capitalization and
discounted cash flow analysis.
<PAGE>
<TABLE>
OPERATING HISTORY
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Potential Gross Income $2,450,377 $2,534,428 $2,574,581 $2,597,040 $6,842 $9.96
Vacancy & Collection Loss 128,187 5.2% 160,649 6.3% 180,621 7.0% 181,793 7.00% 7.00%
Rent Income $2,322,190 $2,373,779 $2,393,960 $2,415,247 $6,373 $9.26
Other Income 47,962 2.1% 54,178 2.3% 80,973 3.4% 72,457 3.00% 3.00%
Effective Gross Income $2,370,152 $2,427,957 $2,474,933 $2,487,704 $6,564 $9.54
Percent Increase 2.4% 1.9% 0.5%
Expenses:
Real Estate Taxes $304,842 $298,528 $297,823 * 299,997 $792 $1.15
Insurance 29,964 59,378 40,670 52,173 $138 $0.20
Management 207,292 8.7% 188,428 7.8% 185,985 7.5% 124,385 $328 5.00%
General & Administrative 278,023 296,006 278,107 286,954 $757 $1.10
Utilities 143,415 153,231 152,757 156,520 $413 $0.60
Maintenance & Repairs 223,449 225,747 230,887 234,780 $619 $0.90
Marketing 21,857 17,629 19,719 18,261 $48 $0.07
Total Expenses $1,205,842 $1,239,947 $1,205,948 $1,173,070 $3,095 $4.50
Percent Increase 2.8% -2.7% -2.7%
Percent of Income 50.9% 51.1% 48.7% 47.2%
Net Operating Income $1,164,310 $1,188,010 $1,268,985 $1,314,634 $3,469 $5.04
*Based on Public Tax Information
</TABLE>
<PAGE>
The rent roll, dated July 19, 1996 indicates rent income from
existing leases at $202,462 a month (excluding vacant units).
Based on a straight line projection, the effective gross income
is calculated as follows.
$202,462 X 12 Months = $2,429,544
Other Income (3.0%) 72,886
----------
Annual Straight Line Projection $2,502,430
This straight line projection of $2,502,430 compares reasonably
well with the projected effective gross income of $2,487,704.
DIRECT CAPITALIZATION
The last item needed to complete the summary of the income
capitalization approach is deriving the capitalization rate
(O.A.R.). Direct Capitalization is the process of converting
income into value either by dividing the net income by an overall
rate or by multiplying the potential or effective gross income by
a multiplier.
When valuing property by direct capitalization, it is essential
that the market comparables reflect risk, income, expenses, and
physical characteristics similar to those of the property being
appraised. An overall capitalization rate is established by
dividing a comparable's estimated net operating income by its
selling price. The basic mathematical formula for deriving this
overall rate is as follows:
Net Operating Income
-------------------- = O.A.R.
Selling Price
Income and expense information was available for three of the
five comparables used in the sales comparison approach.
Comparable 3 (Chesapeake Apartments) sold at a 9.32%
capitalization rate, comparable 4 (Stonegate Apartments) sold at
a 9.35% capitalization rate, and comparable 5 (Promenade at
Carillon) sold at a 9.20% capitalization rate. While income and
expense information was not available for comparable 1 (Lincoln
Shores), it was reported that the capitalization rate was well
above 9% apparently due to necessary capital improvements. Based
on conversations with Paul Wikle, CCIM, of Wikle Properties, and
John D. Selby CCIM of CB Commercial it was indicated that
capitalization rates for 1990 vintage institutional grade
apartment properties are in the 8.5% to 9.0% range, 1980 vintage
institutional grade apartment properties are in the 9.0% to 9.5%
range, and 1970 vintage institutional grade apartment properties
are in the 9.5% to 10.0% range.
Considering that the subject complex has good occupancy and is
well maintained, it is believed that an appropriate
capitalization rate for the subject would fall at the middle of
the range for 1980 vintage institutional grade apartment
properties. Based on the above analysis, the overall rate for
the subject by market extraction is estimated at 9.25%.
BAND OF INVESTMENT
Another type of direct capitalization is the band of investment
technique. This technique builds a capitalization rate by
extracting information from the market. The information which is
extracted is the equity investors component (equity dividend
rate) and the mortgage component (mortgage constant).
Conversations with area lenders indicate that conventional
financing could be obtained for a property such as the subject at
an interest rate of about 8.5% fixed . The typical loan is
amortized over 25 years with a five year balloon. The typical
loan to value ratio for a property such as the subject is about
80% and the typical required debt coverage ratio is about 1.20.
Based on the current investment rate available in the market the
equity dividend rate for the subject is estimated at 7%.
Assumptions
Mortgage Constant: (8.50%, 25 years) 0.096627
Equity Dividend Rate: 0.07
Mortgage 0.80 x 0.096627 = 0.07730
Equity 0.20 x 0.070000 = 0.01400
-------
0.09330
Rounded 9.13%
DEBT COVERAGE RATIO
Another way of estimating an overall capitalization rate is by
using the typical debt service coverage ratio required by lenders
and multiplying this figure by the loan to value ratio and then
by the mortgage constant. Conversations with area lenders
indicated that they would typically require a debt coverage ratio
of l.20 on a property such as the subject. Using the above data,
the overall rate by the debt coverage ratio formula is estimated
as follows:
DCR LV MC OAR
1.20 80% .0966 = .0927 or 9.27%
DCR = Debt Coverage Ratio
LV = Loan to Value Ratio
MC = Annualized Mortgage Constant
OAR = Overall Capitalization Rate
The three techniques indicate overall capitalization rates for
the subject at 9.25%, 9.13% and 9.27% respectively. Typically
newer properties in good condition command lower overall rates
while older properties in poor condition command higher overall
rates. Also, another major factor which influences overall rates
is risk. The riskier the project or property, the higher the
overall rate.
The overall rate of 9.25% by market extraction is given the most
weight. The overall rates by both the band of investment and the
debt coverage ratio lend good support to the overall rate by
market extraction. These two techniques, however are only given
secondary weight because the data used in these techniques can
change daily. Therefore, based on the above analysis the overall
rate for the subject is estimated at 9.25%.
Based on the cited data and above analysis, the market value of
the
subject by direct capitalization is estimated as follows:
<PAGE>
SUMMARY OF THE DIRECT CAPITALIZATION APPROACH
Potential Gross Income
128 (1) 1/1 $490.00 $752,640
156 (2) 1/1 $565.00 $1,057,680
27 (3) l/lD $640.00 207,360
68 (4) 2/2 $710.00 579,360
-----------
Total Potential Gross Income 2,597,040
Vacancy and Collection Loss 7.00% 181,793
-----------
Total Rent Income 2,415,247
Other Income 3.00% 72,457
-----------
Effective Gross Income 2,487,704
Expenses
Real Estate Taxes 299,997
Insurance 52,173
Management 124,385
General & Administrative 286,954
Utilities 156,520
Maintenance 234,780
Marketing 18,261
-----------
Total Expenses 47.15% 1,173,070
-----------
Net Operating Income $1,314,634
===========
Capitalization Rate 9.25
ESTIMATE OF VALUE BY THE INCOME APPROACH $14,212,259
Rounded to: $14,200,000
===========
<PAGE>
Discounted Cash Flow Analysis:
The discounted cash flow analysis is an additional income
capitalization approach method of valuing an income producing
apartment complex. This method involves projecting an income
stream for the property over a period of time and converting the
cash flow to a present value. In this case, we have projected
the cash flow over a 10 year holding period which is generally
the maximum time a project is held due to deterioration of tax
benefits.
Income and expenses for the first year of the cash flow analysis
are estimated as previously described in the direct
capitalization approach. The sales price at the end of the
period (reversion) is estimated based on the eleventh year net
operating income capitalized at 9.75%. From this is deducted a
sale expense estimated at 5%.
The major assumption in this approach is that growth in both
income and expenses are estimated at 2% a year. The stabilized
vacancy rate is estimated at 7% and is supported by the recent
market trends. The 2% income and expense increases are
consistent with historical increases, as well as, the current
trend in the consumer price index (CPI). These estimates are
based on current market experience and may vary widely over time,
thus pointing out the major weakness of this approach.
Two separate techniques are used reflecting, 1) an unleveraged
deal and 2) a leveraged deal.
1) In the first technique, an unleveraged deal, the net
operating income and the net proceeds of sale are discounted to
present value. This discount rate is based on expected internal
rates of return by investors on various types of unleveraged
properties. We have chosen a discount rate of 11.0% based on the
risk and an analysis of similar real estate investments. A
survey in the December 1995 issue of Appraiser News, published by
the Appraisal Institute, indicates required internal rates of
return for apartment properties at about 10.0% to 13.0%.
2) The second technique, a leveraged deal, incorporates debt
service and loan payoff into the calculations. For the purposes
of this analysis a $11,337,675 loan (1.20 DCR) is assumed at
8.50% for 25 years. The resulting cash flow and proceeds at sale
are discounted to present value, to arrive at a value of the
equity investment. This is then added to the original mortgage
amount to arrive at a value for the subject. Due to the higher
risk associated with the equity in a leveraged deal, a discount
rate of 16.00% is considered appropriate.
In order to check the internal rate of return relative to the
capitalization rate, a basic value change formula is used. As
can be determined from the following analysis, the 11.00% and
16.00% yield rates appear reasonable.
The Basic Value Change Formula
UNLEVERAGED DEAL
Yo = Ro + [delta] a
Ro = 9.25%
[delta] a = CR = Compounded Rate of Income Change = 2.00%
Yo = 9.25% + 2.00% = 11.25%
LEVERAGED DEAL
Ye = Re + [delta] a
Re = 7.00%
[delta] a = CR = Compounded Rate of Income Change = 8.99%
Ye = 7.00% + 8.99% = 15.99%
Based on this analysis, the 10 year projected pro forma and the
present value of the resulting cash flows, before and after, debt
service can be calculated, as follows:
<PAGE>
<TABLE>
MULTIFAMILY INCOME PROFORMA
Project: Pelican Sound Location: 10200 Gandy Boulevard Date: 08/28/96
Gross Income Estimate:
<CAPTION>
Unit Type No. Rent/Mo. Rent/Yr. Vacancy Rate: 7.00% Expenses:
Other Income: 3.00%
<S> <C> <C> <C> <C> <C> <C> <C>
(1) 1/1 128 $490.00 $752,640 Income Growth: 3.00% R.E. Taxes $1.15 /Sq.Ft.
Expense Growth: 2.00% Insurance $0.20 /Sq.Ft.
(2) 1/1 156 $565.00 $1,057,680 Reversion: Management 5.00% EGI
Cap. Rate: 9.75% Utilities $0.60 /Sq.Ft.
(3) 1/1E 27 $640.00 $207,360 Sales Expense: 5.00% Maintenance $0.90 /Sq.Ft.
Mortgage: Marketing $0.07 /Sq.Ft.
(4) 2/2 68 $710.00 $579,360 Amount: $11,337,675 Gen. & Admin. $1.10 /Sq.Ft.
Interest Rate: 8.50%
Amortization: 25
Potential Gross Income: $2,697,040 Debt Serv. $1,095,528 Total Sq. Ft. 260,867
Bal. year 10 $9,270,881
<CAPTION>
==================================================================================================================================
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross Income $2,597,040 $2,648.981 $2,701,960 $2,756,000 $2,811,120 $2,867,342 $2,924,689 $2,983,183 $3,042,846 $3,103,703
Vacancy
& Collection $181,793 $185,429 $189,137 $192,920 $196,778 $200,714 $204,728 $208,823 $212,999 $217,259
Rent Income $2,415,247 $2,463,552 $2,512,823 $2,563,080 $2,614,342 $2,666,628 $2,719,961 $2,774,360 $2,829,847 $2,886,444
Other Income $72,457 $73,907 $75,385 $76,892 $78,430 $79,999 $81,599 $83,231 $84,895 $86,593
Eff. Gross
Income $2,487,704 $2,537,459 $2,588,208 $2,639,972 $2,692,772 $2,746,627 $2,801,560 $2,857,591 $2,914,742 $2,973,037
Expenses:
R.E. Taxes $299,997 $305,997 $312,117 $318,359 $324,726 $331,221 $337,845 $344,602 $351,494 $358,524
Insurance $52,173 $53,216 $54,281 $55,366 $56,474 $57,603 $58,755 $59,930 $61,129 $62,352
Management $124,385 $126,873 $129,410 $131,999 $134,639 $137,331 $140,078 $142,880 $145,737 $148,652
Gen. & Admin. $286,954 $292,693 $298,547 $304,518 $310,608 $316,820 $323,157 $329,620 $336,212 $342,937
Utilities $156,520 $159,650 $162,843 $166,100 $169,422 $172,811 $176,267 $179,792 $83,388 $187,056
Maintenance $234,780 $239,476 $244,265 $249,150 $254,133 $259,216 $264,400 $269,688 $275,082 $280,584
Marketing $18,261 $18,626 $18,999 $19,379 $19,766 $20,162 $20,565 $20,976 $21,396 $21,824
Total Expenses $1,173,070 $1,196,532 $1,220,462 $1,244,871 $1,269,769 $1,295,164 $1,321,068 $1,347,489 $1,374,439 $1,401,928
Net. Oper.
Income $1,314,634 $1,340,927 $1,367,746 $1,395,100 $1,423,003 $1,451,463 $1,480,492 $1,510,102 $1,540,304 $1,571,110
Debt Service $1,095,528 $1,095,528 $1,095,528 $1,095,528 $1,095,528 $1,095,528 $1,095,528 $1,095,528 $1,095,528 $1,095,528
Cash Flow $ 219,106 $245,399 $272,218 $299,572 $327,474 $355,934 $384,964 $414,573 $444,775 $475,581
</TABLE>
<PAGE>
DISCOUNTED CASH FLOW ANALYSIS
Cash Flow Summary:
N.O.I. Cash Flow
Year 1 $1,314,634 $219,106
Year 2 1,340,927 245,399
Year 3 1,367,746 272,218
Year 4 1,395,100 299,572
Year 5 1,423,003 327,474
Year 6 1,451,463 355,934
Year 7 1,480,492 384,964
Year 8 1,510,102 414,573
Year 9 1,540,304 444,775
Year 10 1,571,110 475,581
Reversion:
Est. Sales Price 16,436,224 16,436,224
Sales Expenses 821,811 821,811
Mortgage Payoff 9,270,88
----------- ------------
Net Proceeds $15,614,413 $6,343,533
=========== ============
Discount Rate: 11.00% 16.00%
Present Value:
Equity 13,835,237 2,938,513
Mortgage 11,337,675
----------- ------------
Total Present Value $13,835,237 $14,276,188
Rounded to: $13,800,000 $14,300,000
============ ============
This analysis uses two different assumptions to arrive at an
estimate of value. The first is based on an unleveraged
investment in the property and does not use the mortgage in the
overall calculation. It is the present value of the Net
Operating Income cash flows and reversion proceeds. The second
method incorporates the mortgage into the calculations to arrive
at a present value of the equity investment, to which is added
the original mortgage amount.
Summary of the Income Capitalization Approach
Three methods have been used to derive a value by the income
capitalization approach: capitalized net operating income,
discounted cash flow (DCF) analysis - unleveraged and discounted
cash flow (DCF) analysis - leveraged. These methods have yielded
the following results:
Capitalized Net Income: $14,200,000
DCF-unleveraged: $13,800,000
DCF-leveraged: $14,300,000
As indicated earlier, the discounted cash flow analysis methods
are based on the necessary assumptions as to income and expense
growth over the holding period. While every effort has been made
to make an accurate projection, this estimate could be subject to
wide fluctuations over time. For this reason, these methods were
given slightly less weight in the final analyzes.
The capitalized net income method is more closely related to
actual market transactions, in that the capitalization rate is
market derived. It does not require an opinion of future
movement of income and expenses, but tends to reflect the markets
perceptions as to future trends.
Therefore, based on the foregoing analysis, the value indication
by the income capitalization approach is:
$14,200,000
<PAGE>
RECAPITULATION AND FINAL RECONCILIATION
The valuation of real property involves a systematic process in
which the problem is defined, the procedure necessary to solve
the problem is planned, and required data is acquired,
classified, analyzed and reconciled into an final value estimate.
"Reconciliation is the analysis of alternative conclusions to
arrive at a final value estimate." The analysis considers the
reliability and accuracy of the information used in the value
conclusions for the cost approach, the sales comparison approach,
and the income capitalization approach. The market value
estimates for each of the three approaches used are:
COST APPROACH $14,500,000
SALES COMPARISON APPROACH $14,300,000
INCOME CAPITALIZATION APPROACH $14,200,000
The cost approach is a method in which the value of a property is
derived from creating a substitute property with the same utility
as the subject. It is typically considered to be relatively
reliable for new or proposed construction. The degree of error
tends to increase in this approach commensurate with the degree
of accrued depreciation. This approach includes an estimate of
land value based on direct comparison of the subject site with
sites having similar utility which have recently sold; an
estimate of the replacement cost new of the improvements; and an
estimate of all forms of accrued depreciation which is deducted
from the replacement cost new estimate.
Three comparable land sales were used to estimate the value of
the subject site. The land comparables were the best known
available in the market and lend adequate support to the
estimated value of the subject site. The Marshall Valuation
Service was used to estimate the replacement cost of the
improvements and the depreciation estimate was based on an
observation of the surrounding neighborhood. The subject was
constructed in 1988 and has a considerable amount of accrued
depreciation due to natural physical deterioration. The cost
approach is considered the least reliable in the final value
estimate.
The sales comparison approach involves comparing similar
properties that have recently sold, or similar properties that
are currently offered for sale, with the subject. The basic
principle of substitution underlies this approach.
Five improved apartment comparable sales were used to estimate
the market value of the subject. All of the sales were 1980 or
1990 vintage apartment complexes. Improved comparables 2 through
4 are located within about 13 miles of the subject and the
remaining 2 improved comparables are located within the same
geographical market area, within 2 miles of the subject.
Three units of comparison were used in the sales comparison
approach. The three units of comparison used include the
indicated price per unit, price per room and price per square
foot. After analysis, all three units of comparison indicated
similar values estimates. The sales comparison approach was
considered a reliable estimate of market value for the subject.
The income capitalization approach is also reliable when
estimating the value of an income property. This approach most
nearly reflects the value of the property as an investment. This
approach includes an analysis of the effective gross income which
the subject is capable of generating, based on rents achieved and
occupancy rates at competitive properties. A deduction for
normal operating expenses is made in order to derive net
operating income which is capitalized at an overall rate. The
resulting figure is the estimated value by the income
capitalization approach.
Financial information supplied included a July 19, 1996 rent roll
and a two and a half year operating history. Comparable rent
data was readily available and the operating expenses,
capitalization rate, and discount rates were well supported by
market evidence.
Two techniques were used in the income capitalization approach.
The first technique used was direct capitalization and the second
technique was a discounted cash flow analysis which considered
both a leveraged purchase and an unleveraged purchase. Both
techniques indicated value estimates which were reasonably
similar. The income capitalization approach was considered a
reliable estimate of market value for the subject.
In the final estimate of value, both the income capitalization
approach and the sales comparison approach were given equal
greatest weight. The cost approach was given little
consideration. Therefore, based on the cited market data and the
foregoing analysis, the market value of fee simple interest in
the subject in "as is" condition and as of the effective date of
August 28, 1996 is estimated at:
FOURTEEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS
($14,250,000)
INCLUDING
DEPRECIATED VALUE OF APPLIANCES
FIVE HUNDRED FIFTY THOUSAND DOLLARS
($550,000)
<PAGE>
REAL PROPERTY
THIRTEEN MILLION SEVEN HUNDRED THOUSAND DOLLARS
($13,700,000)
ESTIMATED MARKETING TIME:
We have reviewed the typical marketing time for apartment
complexes in the Tampa Bay area, as well as, discussed the
marketing time with knowledgeable commercial brokers. If
appropriately priced and marketed, the marketing time of the
subject property is estimated at 6 months.
<PAGE>
CERTIFICATE OF APPRAISAL
I certify that, to the best of my 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 my personal, unbiased professional analyses,
opinions, and conclusions.
- - I have no present or prospective interest in the property
that is the subject of this report, and I have no personal
interest or bias with respect to the parties involved.
- - My compensation is not contingent upon the reporting of a
predetermined value or direction in value that favors the
cause of the client, the amount of the value estimate, the
attainment of a stipulated result, or the occurrence of a
subsequent event.
- - My reported analyses, opinions, and conclusions were
developed, and this report has been prepared, in conformity
with the Uniform Standards of Professional Appraisal
Practice; and the requirements of the Code of Professional
Ethics and the Standards of Professional Practice of the
Appraisal Institute. Unless otherwise stated herein, the
departure provision does not apply.
- - I have made a personal inspection of the property that is
the subject of this report.
- - No one provided significant professional assistance to the
person signing this report.
- - The appraiser has preformed within the context of the
competency provision of the Uniform Standards of
Professional Appraisal Practice.
- - This report was not based on a requested minimum valuation,
a specific valuation, or the approval of a loan.
- - The use of this report is subject to the requirements of the
Appraisal Institute relating to review by its duly
authorized representatives.
- - As of the date of this report, both Robert E. Riggins and
William W. Atkinson have completed the requirements of the
continuing education program of the Appraisal Institute.
- - This appraisal recognizes the following definition of value:
Market Value: as defined in Chapter 12, Code of Federal
Regulations, Part 34.42(f) is, "The most probable price which a
property should bring in a competitive and open market under all
conditions requisite to a fair sale, the buyer and seller each
acting prudently knowledgeably, and assuming the price is not
affected by undue stimulus. Implicit in this definition is the
consummation of a sale as of a specified date and the passing of
title from seller to buyer under conditions whereby:
1. buyer and seller are typically motivated;
2. both parties are well informed or well advised, and acting
in what they consider their own best interests;
3. a reasonable time is allowed for exposure in the open
market;
4. payment is made in terms of cash in United States dollars or
in terms of financial arrangements comparable thereto; and
5. the price represents the normal consideration for the
property sold unaffected by special or creative financing or
sales concessions granted by anyone associated with the
sale.
The market value of the property described herein, subject to the
assumptions and limiting conditions set forth herein, as of
August 28, 1996, in "as is" condition, is estimated to be:
FOURTEEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS
($14,250,000)
INCLUDING
DEPRECIATED VALUE OF APPLIANCES
FIVE HUNDRED FIFTY THOUSAND DOLLARS
($550,000)
REAL PROPERTY
THIRTEEN MILLION SEVEN HUNDRED THOUSAND DOLLARS
($13,700,000)
Respectfully submitted:
___________________________ ____________________________
Robert E. Riggins, MAI, SRA William W. Atkinson, MAI
President Vice President
State-certified general real State-certified general real
estate appraiser #0000605 estate appraiser #0001221
ASSUMPTIONS AND LIMITING CONDITIONS
The Market Value estimate of the property or properties appraised
is subject to the following assumptions and limiting conditions:
1. The legal description furnished is assumed to be correct.
2. No responsibility is assumed for matters legal in character
nor is any opinion rendered herein as to title which is
assumed to be good and merchantable. It is assumed that the
property is free and clear of liens and encumbrances and
under responsible ownership and management on the appraised
date.
3. It is assumed that surveys and/or plats furnished to or
acquired by the appraiser and used in the making of this
report are correct. The appraiser has not made a land
survey or caused one to be made and therefore assumes no
responsibility for their accuracy.
4. Certain data used in compiling this report was given to the
appraiser from sources he considers reliable; however, he
does not guarantee the correctness of such data, although as
far as is reasonably possible the data has been checked and
is believed to be correct.
5. The soil and the area under appraisement appears to be firm
and solid, unless otherwise stated. Subsidence in the area
is unknown or uncommon but the appraiser does not warrant
against this condition or occurrence.
6. Subsurface rights (mineral and oil) were not considered in
making this report, unless otherwise stated.
7. Any riparian rights and/or littorial rights indicated by
survey, map or plat are assumed to go with the property
unless easements or deeds of record were found by the
appraiser to the contrary.
8. Possession of this report, or copy thereof, does not carry
with it, the right of publication or reproduction nor may it
be used by anyone but the applicant without prior written
consent of the applicant and the appraiser and in any event
only in its entirety. This limitation is not to exclude
applicant from copying the report in connection with the
normal course of a mortgage application of syndication of
the property.
9. The appraiser, by reason of this report, is not required to
give testimony in court with reference to the property
herein appraised nor is he obligated to appear before any
governmental body, board or agent unless arrangements have
been previously made thereof.
10. The distribution of the total valuation in this report
between land and improvements applies only under the
existing program of utilization. The separate valuations
for land and improvements must not be used in conjunction
with any other appraisal and are invalid if so used.
11. Neither all nor any part of the contents of this report
shall be conveyed to the public through advertising, public
relations, news, sales or other media without the written
consent and approval of the author, particularly as to the
valuation conclusions, the identity of the appraiser or firm
with which he is connected, or any reference to the American
Institute of Real Estate Appraisers, or the MAI designation.
12. We are not expert in determining the presence or absence of
hazardous substances, defined as all hazardous or toxic
materials, wastes, pollutants or contaminants (including,
but not limited to, asbestos, PCB, UFFI, or other raw
materials or chemical(s) used in construction, or otherwise
present on the property). We assume no responsibility for
the studies or analyses which would be required to determine
the presence or absence of such substances or for loss as a
result of the presence of such substances. The value
estimate is based on the assumption that the subject
property is not so affected.
<PAGE>
ADDENDUM
<PAGE>
FLOOD PLAIN MAP
<PAGE>
SUPPLEMENTAL SUBJECT PHOTOGRAPHS
INTERIOR VIEW OF CLUBHOUSE
SWIMMING POOL - FACING SOUTH
LAKE AND APARTMENT BUILDINGS - FACING NORTHEAST
TENNIS COURTS - FACING NORTHEAST
INTERIOR OF APARTMENT UNIT
INTERIOR OF APARTMENT UNIT
INTERIOR OF APARTMENT UNIT
GRAY BOULEVARD - FACING NORTHEAST
GANDY BOULEVARD - FACING SOUTHWEST
<PAGE>
City of St. Petersburg Article X
ZONING ORDINANCE
RO-P RESIDENTIAL OFFICE PARKWAY
SEC. 64.167 PURPOSE AND INTENT.
This district is intended to permit either residential or office,
or a compatible mixture of these uses, at medium intensity or
density of 12 units per acre for multifamily use but with density
up to 15 units per acre obtainable through utilization of
Transfer of Development Rights (T.D.R.).
Application of this district is intended for portions of major
thoroughfares where a parkway and uncluttered character is
desired, with development on large lots.
Developments in this zoning district which are also located
within a designated community redevelopment area as such area is
defined in Chapter 163 of the Florida Statutes, shall be reviewed
by the Community Redevelopment Agency (see Sec. 64.31.22 of the
Zoning Ordinance) for compliance with adopted Redevelopment
Plans.
SEC. 64.168 PERMITTED PRINCIPAL USES AND STRUCTURES. (SUBJECT
TO PROVISIONS OR RESTRICTIONS CONTAINED HERE AND
ELSEWHERE IN THE CHAPTER.)
Site Plans for permitted uses and structures with up to 20,000
square feet gross floor area inclusive or up to 60 units
inclusive require approval by the City Manager. Uses and
structures with more than 20,000 square feet gross floor area or
60 units will require Site Plan approval by the Environmental
Development Commission.
(1) Multifamily Development of not more than 60 units.
(2) Special Residential Development of not more than 60 units.
(3) Boarding and Rooming Houses of not more than 20 units.
(4) Community Residential Homes for 1-14 residents, subject to
conditions set forth in Sec. 64.09, Subsec. 31(a) and (b).
(5) Offices, provided there be no commercial display windows or
storefront type of buildings.
(6) Churches.
(7) Public Parks, Playgrounds and Playfields.
(8) Financial Institutions, without drive-in facilities,
provided there are no commercial display windows or
storefront type of buildings, and no illuminated signs are
erected that face residential districts, where feasible.
(9) Parking Lots in connection with nearby commercial uses,
where this district adjoins an office, commercial or
industrial district, along rear or side lot lines without an
intervening street (but with or without an intervening
alley), provided:
(a) Such parking lots may be permitted only between the
office, commercial or industrial district and the
nearest street in the residential district.
(b) A 5-foot solid decorative masonry wall shall be erected
along the sides of such off-street parking areas where
they adjoin residential property or undeveloped
property in the residential district.
(c) No source of illumination for such parking lots shall
be directly visible from any window in any residence.
(d) There shall be no movement of vehicles on such lots
between 10:00 p.m. and 7:00 a.m.
(e) There shall be no sales or service activities on such
lots, nor parking of house trailers of any kind, nor
trucks, except for operative automobiles and
appurtenances and light commercial vehicles for more
than 24 hours. No drive through to an adjacent or
abutting facility will be permitted.
(10) Motels and Hotels.
(11) Academic Schools; Colleges and Universities.
(12) Bed and Breakfast Homes.
SEC. 64.169 PERMITTED ACCESSORY USES AND STRUCTURES.
(1) Uses and structures which:
(a) Are customarily accessory and clearly incidental and
subordinate to permitted or permissible uses and
structures.
(b) Are not of a nature prohibited under "Prohibited Uses
and Structures."
(2) Apothecaries, for the sale of medical supplies and drugs
only, may be permitted as an internal accessory use with a
medical office complex when the gross floor area of the
medical complex is not less than 10,000 square feet and the
apothecary gross floor area does not exceed 1,000 square
feet.
(3) Temporary structures and operations in connection with, and
on the site of, building or land preparation developments,
including dredging and filling, grading, paving,
installation of utilities, construction, erection of field
offices, and structures for storage of equipment and
building materials; provided a certificate of occupancy
shall have been issued therefor.
SEC. 64.170 SPECIAL EXCEPTIONS PERMISSIBLE BY THE
ENVIRONMENTAL DEVELOPMENT COMMISSION. (SEE SEC.
64.23)
After public notice and hearing, and subject to appropriate con-
ditions and safeguards, the Environmental Development Commission
may permit:
(1) Multifamily Development greater than 60 dwelling units.
(2) Day Care Centers.
Outdoor activity areas (i.e., playgrounds) for the day care
center shall be visually shielded from a residential
district by 6-foot high solid decorative walls or fences, in
accordance with the Fence and Wall Limitations of Sec.
64.09, Subsec. 32 of the Zoning Ordinance.
(3) Community Service Clubs when on a major street, as
identified by the Major Street Map and made part of this
ordinance.
(4) Golf Courses.
(5) Recreational Uses except those in which the conduct of com-
mercial affairs plays a major part.
(6) Community Residential Homes for more than 14 residents,
subject to conditions set forth in Sec. 64.09, Subsec.
31(c).
(7) Boarding and Rooming Houses greater than 20 units.
(8) Nursing Homes, when on a major street.
(9) Government and Community Buildings and Uses.
(10) Business and Professional Schools.
(11) Utility Substations.
(12) Hospitals, provided the site abuts an arterial street, as
identified by the Major Street Map and made part of this
ordinance.
(13) Mixed Uses of a permitted or permissible nature involving a
residential use.
(14) Financial Institutions with drive-in facilities, providing
no structure or traffic lane is located closer than 25 feet
to a residential property line nor shall alleys or driveways
abutting residential property be used for such operations.
(15) Special Residential Development greater than 60 units. (See
Sec. 64.09, Subsec. 15.)
(16) Laboratories.
(17) Special Commercial Development when made an integral part of
a development subject to the following:
(a) The purpose and intent of Special Commercial
Development shall be to create a unified planned
development of residential and/or office use with a
limited amount of commercial development designed in a
comprehensive manner with controlled access, signage,
hours of operation and delivery, and sufficient
landscaping in order to avoid the appearance of strip
commercial development.
(b) Minimum total development size: five (5) acres.
(c) Special Commercial Development limited to 5 percent of
the gross floor area of any phase of construction for
which a certificate of occupancy is issued, but not to
exceed 20,000 square feet of gross floor area.
(d) Special Commercial Development uses shall be limited to
the following uses:
1. Retail stores; sales and display rooms and shops,
establishments for servicing household appliances,
other than gasoline engines, including places in
which goods are produced for sale only at retail
and only on the premises (provided that all sales,
storage, display of goods, or allowable production
of goods shall be within enclosed buildings).
2. Service establishments, with processing on the
premises provided that not over ten (10) persons
shall be employed in such processing.
3. Indoor eating and drinking establishments.1
(e) The applicant shall be required to demonstrate that the
proposed Special Commercial Development will be
supported by and dependent upon the remainder of the
development and does not duplicate existing retail
opportunities in the market area.
(f) The Special Commercial Development shall be internally
oriented within the development and easily accessible
to the remainder of the development through internal
roadways, pedestrian walkways, and bicycle paths.
(g) The Special Commercial Development shall not have
direct vehicular access to the roadway bordering the
overall development but instead shall have indirect
access by internally connecting to a primary access
road which enters into the overall development.
(h) No Certificate(s) of Occupancy shall be issued for any
portion of the Special Commercial Development until a
Certificate(s) of Occupancy has been issued for the
development that supports the Special Commercial
Development. For a development that has been approved
in phases, a Certificate(s) of Occupancy can be issued
for the Special Commercial Development in each phase
after a Certificate(s) of Occupancy has been issued for
the phase of the development that supports the Special
Commercial Development. The Special Commercial
Development in each phase of a development shall not
exceed the requirements of Sec. 64.170 (16)(c).
(i) The applicant shall submit, at the discretion of the
Planning Department, a detailed transportation study
based upon the proposed uses of the Special Commercial
Development which shall demonstrate that the level of
service of the roadway network surrounding the overall
development will not be negatively impacted. The
Planning Department shall approve the study methodology
prior to the study being initiated.
(j) No sign or other advertising device shall be erected
for a Special Commercial Development use without the
approval of the Environmental Development Commission
but in no case shall it exceed normal RO-P signage
requirements.
(k) Hours of operation and for deliveries shall occur
between the hours of 7 a.m. and 11 p.m.
(18) Mortuaries.
(19) Parking Garages.
(20) Office Research and Distribution Activities subject to the
following:
(a) Minimum total development size: Five (5) acres.
(b) Abutting at least one (1) major street as identified by
the Major Street Map and made a part of this Ordinance.
(c) Office-research as principal use, printing and distri-
bution only as internal accessory used.
(d) For purposes of all other zoning regulations, such
facilities will be considered as offices.
(21) Birthing Centers (See Sec. 64.06, Definitions).
(22) Communication Towers.
(23) Temporary Employment Offices, subject to the following:
It is the intent of this ordinance that all temporary
employment offices provide sufficient interior space to
house all temporary employment clients that may be waiting
on site until employment is located for their clients.
Temporary employment offices shall identify the maximum
number of clients that will be waiting for employment on
site at any given time based on historical data and shall
provide sufficient interior waiting space for these clients.
The minimum space per client shall be seven (7) square feet.
Adequate sanitary facilities shall be provided for the
maximum number of clients.
SEC. 64.171 PROHIBITED USES AND STRUCTURES.
All uses and structures not of a nature specifically, provision-
ally, or by reasonable implication permitted herein, and any use
which the Environmental Development Commission, upon appeal, and
after investigating similar uses elsewhere, shall determine to be
potentially noxious, dangerous, or offensive to residents of the
district or to those who pass on public ways by reason of odor,
smoke, noise, glare, fumes, gas, fire, explosion or emission of
particulate matter, or likely for other reasons to be
incompatible with the character of the district.
SEC. 64.172 MAXIMUM LOT DEVELOPMENT.
(1) Residential; Hotels and Motels:
Multifamily: 12 units per acre (3,630 square
feet per unit).
Multifamily
(with T.D.R.): 15 units per acre (2,904 square
feet per unit).
Boarding and
Rooming Houses: 3,630 square feet per dwelling unit
and 750 square feet per boarding
and rooming unit.
Community
Residential Homes: 3,630 square feet per dwelling unit
with 200 square feet of living
space per resident.
Nursing Homes: 15,000 square feet for the first
eight (8) bed plus 500 square feet
for each additional bed.
Hotels: 1,000 square feet per rental unit.
Motels: 1,200 square feet per rental unit.
(2) Mixed Uses (Nonresidential with Residential or Hotels and
Motels):
For determining allowable floor area for
nonresidential, number of allowable units or required
lot size. (See Sec. 64.09, Subsec. 17 of Text for
examples.)
(3) All Other Uses:
Floor Area Ratio (F.A.R.) = 0.35
(4) For categories (2) and (3) above, when 50 percent or more of
required parking is provided on the site within and as part
of the principal structure or within a multiple level
parking structure, the allowable F.A.R. = 0.50 and such
parking area shall not be included in the allowable F.A.R.
calculation.
SEC. 64.173 MINIMUM LOT REQUIREMENTS. AREA AND WIDTH.
Offices; Residential; Day Care Centers; Bed and Breakfast Homes:
Lot area: One (1) acre
Hospitals:
Lot area: Ten (10) acres
Schools:
Lot width: 300 feet
Lot area:
Elementary: Four (4) acres plus one (1) acre per 100
students and major fraction thereof.
Middle: Six (6) acres plus one (1) acre per 100
students and major fraction thereof.
Senior High: Eight (8) acres plus one (1) acre per
100 students and major fraction thereof.
All Other Uses:
Lot area: One (1) acre; or as may be determined by
the Environmental Development Commission
for Special Exceptions.
SEC. 64.174 MINIMUM YARD REQUIREMENTS. DEPTH AND WIDTH.
Special Provisions and Restrictions:
Required yards abutting streets shall contain no structures
except the prime identification sign, walkways and perpen-
dicular driveways. Such yards shall be planted with grass,
appropriate shrubbery and trees in a manner which will not
impede visibility of drivers and pedestrians. No part of a
yard abutting a major street shall be used for parking.
Front: 50 feet
Side (Street): 50 feet on major streets; 25 feet on
other streets.
Side
(Interior): 20 feet
Yards between
structures on
a single lot: 20 feet
Rear: 25 feet
SEC. 64.175 MAXIMUM HEIGHT OF STRUCTURES.
35 feet; for each additional foot of setback on all sides
measured at the ground, four (4) additional feet of height is
permitted (See Sec. 64.09, Subsec. 3 for height limitations); and
subject to the F.A.R. requirement and Airport height guidelines.
SEC. 64.176 MINIMUM OFF-STREET PARKING AND OFF-STREET LOADING
REQUIREMENTS. (SEE SEC. 64.09, SUB. 7 AND 8, AND
LANDSCAPING FOR VEHICULAR USE AREAS ORDINANCE.)
Multifamily Dwellings:
One and one-half (1-1/2) spaces for each dwelling unit.
Nursing Homes:
One (1) space for each 300 square feet of gross floor area.
Boarding or Rooming Houses:
One (1) space for each dwelling unit plus one (1) space for
each boarding or rooming unit or fraction thereof.
Hotels and Motels:
One (1) space per rental unit.
Offices; Financial Institutions; Laboratories; Mortuaries:
One (1) space for each 200 square feet of floor area.
Mortuaries shall provide off-street space for formation of
automobile processions.
Day Care Centers:
One (1) space shall be provided for every ten (10) persons
in the day care center. However, in no case shall there be
less than two (2) parking spaces on site.
There shall be a drop off/pick up area on the site
(preferably in the form of a circular driveway) for a
minimum of three (3) vehicles in facilities with 20 or fewer
persons; for five (5) vehicles in facilities with between
21-40 persons; for seven (7) vehicles in facilities with
between 41-60 persons; and nine (9) vehicles in facilities
with more than 60 persons .
Churches:
One (1) space for each 250 square feet in congregational
seating area (including aisles) in church proper and in
Sunday School or other meeting rooms and classrooms. Off-
street space shall be provided for taking on and discharging
passengers and for formation of automobile processions.
Government and Community Buildings:
Three (3) spaces for each office room, plus one (1) space
for each 150 square feet of seating area (including aisles)
in any room used for public meetings.
Community Service Clubs:
One (1) space for each 100 square feet of gross floor area,
or one (1) space for each three (3) seats in any room for
assembly, whichever is greater, and all parking shall be
shielded from view by heavy plantings; no parking to be
permitted in required yards of Community Service Clubs.
Schools:
Elementary and Middle: Two (2) spaces for each classroom or
office room, plus one (1) space for each 150 square feet of
seating area (including aisles) in any auditorium or any
gymnasium or cafetorium intended to be used as an
auditorium.
Senior High, Business and Professional Schools, Colleges and
Universities: Four (4) spaces for each classroom or office
room plus one (1) space each 150 square feet of seating area
(including aisles) in any auditorium or any gymnasium or
cafetorium intended to be used as an auditorium.
Hospitals:
One (1) space for each two (2) beds plus one (1) space for
each staff doctor.
Parking for Handicapped:
See Sec. 64.09, Subsec. 7-1.
Community Residential Homes:
With six (6) or fewer residents:
Two (2) spaces.
With seven (7) or more residents:
Two (2) spaces, plus one (1) space for each three (3)
residents.
All Other Uses:
One (1) space for each 200 square feet of gross floor area,
or as may be determined by the Environmental Development
Commission for Special Exceptions.
<PAGE>
LEGAL DESCRIPTION
DESCRIPTION: (PROPERTY DESCRIBED IN SAFECO POLICY NO. 49498 AND
CHELSEA POLICY NO. 37286)
THAT PART OF THE SOUTHEAST 1/4 OF SECTION 18, AND THAT PART OF
THE NORTHEAST 1/4 OF SECTION 19, TOWNSHIP 30 SOUTH, RANGE 17
EAST, PINELLAS COUNTY, FLORIDA, MORE PARTICULARLY DESCRIBED AS
FOLLOWS:
COMMENCE AT THE SOUTHWEST CORNER OF THE NORTH 3/4 OF THE NORTH
1/2 OF THE NORTHEAST 1/4 OF SECTION 19, TOWNSHIP 30 SOUTH, RANGE
17 EAST, PINELLAS COUNTY, FLORIDA; THENCE SOUTH 89" 55' 46" EAST,
ALONG THE SOUTH BOUNDARY OF SAID NORTH 3/4, A DISTANCE OF 1035.00
FEET TO THE POINT OF BEGINNING; THENCE NORTH 0 DEGREES 14' 59"
EAST, 790.91 FEET TO A POINT ON THE SOUTHERLY RIGHT-OF-WAY LINE
OF STATE ROAD 600 (GANDY BOULEVARD) ACCORDING TO O.R. 4420, PAGE
6, PUBLIC RECORDS OF PINELLAS COUNTY, FLORIDA; THENCE ALONG AND
WITH THE SOUTHERLY RIGHT-OF-WAY LINE OF SAID STATE ROAD 600. THE
FOLLOWING SIX (6) COURSES: (1) NORTH 79 DEGREES 47' 00" EAST,
258.08 FEET; (2) NORTH 71 DEGREES 14' 32" EAST, 102.50 FEET; (3)
NORTH 65 DEGREES 57' 53" EAST, 293.84 FEET, TO A POINT ON A CURVE
THAT IS CONCAVE SOUTHEASTERLY, HAVING A RADIUS OF 2809.79 FEET;
THENCE ALONG THE ARC OF SAID CURVE, A CHORD BEARING AND DISTANCE
OF (4) NORTH 70 DEGREES 10' 36" EAST, 147.14 FEET; (5) NORTH 71
DEGREES 40' 31" EAST, 299.68 FEET; (6) NORTH 72 DEGREES 49' 16"
EAST, 225.58 FEET; THENCE LEAVING SAID RIGHT-OF-WAY LINE SOUTH 0
DEGREES 31' 53" WEST, 210.57 FEET TO A POINT ON THE NORTH
BOUNDARY OF THE NORTHEAST 1/4 OF SAID SECTION 19 THAT IS NORTH 89
DEGREES 54' 50" WEST, 327.22 FEET FROM THE NORTHEAST CORNER OF
SAID NORTHEAST 1/4; THENCE SOUTH 0 DEGREES 09' 57" WEST, 372.67
FEET; THENCE NORTH 81 DEGREES 08' 18" EAST, 218.93 FEET; THENCE
SOUTH 0 DEGREES 09' 57" WEST, 111.00 FEET FROM AND PARALLEL WITH
THE EAST BOUNDARY OF SAID NORTHEAST 1/4, A DISTANCE OF 652.38
FEET TO A POINT ON THE SOUTH BOUNDARY OF NORTH 3/4 OF THE NORTH
1/2 OF SAID NORTHEAST 1/4 THAT IS NORTH 89 DEGREES 55' 46" WEST,
111.00 FEET FROM THE SOUTHEAST CORNER OF SAID NORTH 3/4; THENCE
NORTH 89 DEGREES 55' 46" WEST, ALONG SAID SOUTH BOUNDARY, 1472.68
FEET TO THE POINT OF BEGINNING. ALL BEING IN THE SOUTHEAST 1/4
OF SECTION 18 AND THE NORTHEAST 1/4 OF SECTION 19, TOWNSHIP 30
SOUTH, RANGE 17 EAST, PINELLAS COUNTY, FLORIDA, SUBJECT TO
RIGHTS-OF-WAY AND EASEMENTS OF RECORD.
CONTAINING 31.591 ACRES, MORE OR LESS.
Pelican Sound Building Code Review
<PAGE>
<TABLE>
07/19/96 DECADE PROPERTIES Page 1
4:24 pm PELICAN SOUND ID 3.6.6
Rent Roll
As of 19 Jul 1996
Grouping codes included: ABCDEFGHIJKLMNOPQRSTUVWXY
<CAPTION>
Unit # Name Type Sq.Ft. Autobill Deposit Moved In Lease Ends Status
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0201 Bowman, Margaret HARBOR.B 830 745.00 300.00 26 May 1995 Monthly 0
0202 Hoffman, Michael COVE 700 565.00 100.00 17 May 1996 28 Feb 1997 0
0203 Smith, Phyllis M COVE 700 550.00 100.00 30 Jun 1995 31 Jan 1997 0
0204 Calvert, Theresa J COVE 700 525.00 100.00 29 Jun 1994 31 Jul 1996 0
0205 Hope, Michael R COVE 700 525.00 200.00 9 Jul 1993 31 Jul 1996 NR
0206 Titus, Leanna COVE 700 565.00 100.00 31 May 1996 28 Feb 1997 0
0207 Goldfarb, Jami COVE 700 550.00 100.00 11 Jan 1995 31 Jan 1997 0
0208 Hall, Karen COVE.W 700 565.00 100.00 9 Feb 1996 28 Feb 1997 NU
0209 Crawford, Barbara COVE.W 700 555.00 100.00 5 Apr 1996 31 Jan 1997 0
0210 Moore, Christine Hylton COVE.W 700 560.00 100.00 3 Sep 1994 31 Oct 1996 0
0211 King, Duque & Sheri COVE.W 700 590.00 100.00 14 Jun 1996 30 Jun 1997 0
0212 Chapman, Michael COVE.W 700 555.00 200.00 15 Mar 1996 31 Dec 1996 0
0213 Miller, Angela L COVE.W 700 590.00 100.00 29 Nov 1995 28 Aug 1996 0
0214 Freeman, Holly COVE 700 535.00 200.00 1 Apr 1994 31 Dec 1996 0
0215 Vacant COVE 700 565.00 0.00 VU
0216 Wilson, Michael COVE.FP 700 530.00 100.00 1 Mar 1996 30 Nov 1996 0
0217 Davenport, Mellodee COVE 700 565.00 100.00 25 Jun 1993 31 Dec 1996 0
0218 Hamada, Denise COVE 700 565.00 100.00 24 Jun 1996 23 Mar 1997 0
0219 Latour, Edmund L COVE.FP 700 550.00 200.00 8 Sep 1995 30 Jun 1997 0
0220 Vacant COVE.W 700 590.00 0.00 VU
0221 Batdorf, Robert COVE.W 700 575.00 100.00 4 Jan 1995 31 Jan 1997 0
0222 Murphy, Mark T. COVE.WFP 700 575.00 100.00 20 Mar 1993 31 Oct 1996 0
0223 Sanders, Robert COVE.W 700 515.00 100.00 16 Feb 1996 28 Feb 1997 0
0224 Drutman, Robin COVE.W 700 565.00 200.00 20 Oct 1993 31 Oct 1996 0
0225 Tucker, Laura Lee COVE.WFP 700 545.00 250.00 24 Aug 1990 31 Aug 1996 0
0226 Lopez, Ralph A. COVE 700 540.00 100.00 27 Oct 1993 30 Sep 1996 0
0227 Capitano, Irene L. COVE 700 540.00 100.00 3 Oct 1991 30 Apr 1997 0
0228 Montiero, Lisamarie COVE 700 540.00 100.00 20 Jun 1995 31 Mar 1997 0
0229 Kraczkowski, Nicole COVE 700 530.00 100.00 26 Apr 1996 31 Jan 1997 0
0230 Zalesky, Jonathan COVE 700 540.00 100.00 2 Dec 1994 31 Dec 1996 0
0231 Lockley, Donna COVE 700 535.00 100.00 26 Mar 1993 31 Mar 1997 0
0232 Bobo, Karen COVE.W 700 565.00 100.00 14 Jul 1995 31 Jul 1996 NU
0233 Guiberson, Julie COVE.W 700 515.00 100.00 19 Feb 1996 28 Feb 1997 0
0234 Schaal, Michael COVE.W 700 590.00 100.00 18 Jun 1996 31 Mar 1997 0
0235 Vacant COVE.W 700 590.00 0.00 VR
0236 Teise, Kenneth COVE.W 700 625.00 100.00 12 May 1995 Monthly NR
0237 Crowder, Stephanie COVE.W 700 565.00 100.00 12 Apr 1996 30 Apr 1997 0
0301 Rauch, Patricia HARBOR.B 830 695.00 300.00 10 Nov 1995 30 Nov 1996 0
0302 Ransinger, Tonjia L. COVE 700 540.00 200.00 1 Jan 1994 31 Oct 1996 0
0303 Moyer, Lance COVE 700 540.00 100.00 19 Dec 1993 31 Dec 1996 0
0304 French, John COVE 700 600.00 100.00 16 Aug 1995 Monthly 0
0305 Schumacker, David COVE 700 520.00 200.00 21 Mar 1996 31 Dec 1996 0
0306 Clouse, Christine\Darrin COVE 700 532.00 100.00 29 Apr 1996 31 Dec 1996 0
0307 Vacant COVE 700 565.00 0.00 VR
0308 Parham, Kristi COVE.C 700 565.00 100.00 25 May 1996 31 May 1997 0
0309 Ivey, Misty M. COVE.C 700 540.00 100.00 11 Feb 1994 31 Jul 1996 0
0310 Johnson, Ellen COVE.C 700 555.00 100.00 16 Aug 1993 31 May 1997 0
0311 Horvath, Janet COVE.W 700 555.00 200.00 19 Apr 1996 31 Jan 1997 0
0312 Bodzianowski, Michael COVE.W 700 515.00 100.00 1 Mar 1996 28 Feb 1997 0
0313 Dankert, Richard COVE.W 700 625.00 100.00 5 Apr 1991 Monthly 0
0314 Cambron, Diana COVE 700 540.00 200.00 22 Mar 1989 31 Dec 1996 0
0315 Nordquist, Elizabeth COVE 700 515.00 100.00 26 Feb 1996 30 Nov 1996 0
0316 Miller, Glenn R. COVE.FP 700 560.00 100.00 5 May 1995 28 Feb 1997 0
0317 Daras, Nick COVE 700 565.00 100.00 15 May 1996 31 May 1997 0
0318 Ponton, Rae A COVE 700 545.00 100.00 14 Apr 1995 30 Apr 1997 0
0319 Mark, Reinhold COVE.FP 700 565.00 100.00 7 Jun 1996 30 Jun 1997 0
0320 McGloine, Frederick COVE.C 700 560.00 200.00 1 Sep 1995 30 Sep 1996 0
0321 Whitaker, Erin COVE.C 700 575.00 100.00 21 Jun 1996 30 Jun 1997 0
0322 Willman, Lisa M COVE.CFP 700 550.00 100.00 31 Aug 1995 31 Aug 1996 0
0323 Schoenfelder, Robert COVE.C 700 555.00 100.00 20 Feb 1993 31 Dec 1996 0
0324 Marti, John C. COVE.C 700 550.00 100.00 15 Nov 1993 30 Nov 1996 0
0325 Adams, Amy K. COVE.CFP 700 550.00 100.00 1 Sep 1994 31 Aug 1996 0
0326 Keely, Amy J COVE 700 565.00 200.00 19 Oct 1995 31 Jul 1996 0
0327 Webb, Teresa COVE 700 565.00 200.00 6 Oct 1995 31 Oct 1996 0
0328 Urena, Alfred COVE 700 540.00 200.00 31 Aug 1995 30 Sep 1996 0
0329 Kilroy, Renee L COVE 700 550.00 200.00 4 Aug 1995 28 Feb 1997 0
0330 Nayyar, Anjali K COVE 700 540.00 100.00 11 Aug 1995 31 Aug 1996 NU
0331 Eller, Mary L COVE 700 600.00 100.00 11 Oct 1995 28 Feb 1997 0
0332 Streetman, Shannon COVE.C 700 555.00 100.00 3 Mar 1995 31 Aug 1996 NU
0333 Armstrong, David COVE.C 700 555.00 100.00 30 Apr 1994 31 Mar 1997 0
0334 Streicher, Mark H. COVE.C 700 545.00 200.00 15 Mar 1995 31 Mar 1997 0
0335 Swanson, Nancy COVE.C 700 515.00 300.00 1 Mar 1996 28 Feb 1997 0
0336 Hillary-Hale, Cynthia COVE.C 700 575.00 100.00 1 May 1996 31 Jan 1997 0
0337 Paul, Marla COVE.C 700 565.00 100.00 31 Mar 1996 31 Dec 1996 0
0401 Farmer, Gregory W BAY.C 505 485.00 100.00 8 Sep 1995 30 Sep 1996 0
0402 Eligado, Monica BAY.C 505 485.00 100.00 19 Jan 1996 18 Jan 1997 0
0403 Gaffney, Katherine BAY.C 505 480.00 100.00 7 Jul 1995 31 Jul 1996 0
0404 Zucco, Tom F BAY.C 505 485.00 100.00 13 Oct 1995 31 Jul 1996 0
0405 Wilson, Frank BAY 505 485.00 100.00 18 Aug 1995 28 Feb 1997 0
0406 Murnane, Catherine BAY 505 480.00 100.00 31 May 1994 30 Sep 1996 0
0407 Tubbs, Sharon BAY 505 490.00 100.00 1 Apr 1996 31 Dec 1996 0
0408 Ahn, Sook Yul BAY 505 480.00 100.00 1 Dec 1995 30 Nov 1996 0
0409 Digby, Julia PORT.C 910 715.00 200.00 7 Jun 1996 30 Jun 1997 0
0410 Alterkruse, John M PORT.C 910 705.00 200.00 15 Nov 1995 31 Aug 1996 0
0411 Vacant PORT.CFP 910 720.00 0.00 VR
0412 Steinke, James PORT.C 910 715.00 200.00 5 Apr 1996 31 Jan 1997 0
0403 Gortot, Frank PORT.C 910 705.00 200.00 5 Jan 1996 31 Dec 1996 0
0414 Defilippo, Richard PORT.CFP 910 705.00 200.00 16 Feb 1996 30 Nov 1996 0
0415 Brodeur, Ronald PORT.C 910 705.00 300.00 6 Mar 1996 31 Dec 1996 0
0416 Lee, Marilyn PORT.C 910 705.00 200.00 26 Jan 1996 31 Oct 1996 0
0417 Johnson, Kelly J. PORT.CFP 910 740.00 400.00 1 Jan 1994 Monthly NU
0418 Schultz, Barbara H PORT 910 695.00 200.00 17 Feb 1995 28 Feb 1997 0
0419 Guerini, Rosemarie PORT 910 695.00 200.00 15 Feb 1996 31 Dec 1996 0
0420 Cooper, William PORT.FP 910 710.00 200.00 31 May 1996 31 May 1997 0
0501 Ramos, Ronald BAY 505 480.00 100.00 30 Jul 1993 30 Apr 1997 0
0502 Clement, Laurie BAY 505 490.00 100.00 29 Mar 1996 31 Mar 1997 0
0503 Blood, Andrea BAY 505 490.00 100.00 7 Jun 1996 30 Jun 1997 0
0504 Zucchetti, Jorge BAY 505 480.00 200.00 8 Sep 1995 30 Sep 1996 0
0505 Pfeiffer, Brooks F BAY.W 505 495.00 100.00 26 Apr 1995 31 Oct 1996 0
0506 Ringquist, Linda A BAY.W 505 490.00 100.00 1 May 1995 30 Apr 1997 0
0507 Brennan, Christoph BAY.C 505 485.00 100.00 30 Jun 1995 30 Jun 1997 0
0508 Asanaka, Miyaki BAY.C 505 480.00 100.00 22 Jul 1994 31 Jul 1996 0
0509 Foronda, Edwin PORT 910 695.00 200.00 2 Nov 1994 31 Oct 1996 0
0510 Buck, William R PORT 910 0.00 0.00 1 Dec 1995 30 Nov 1996 0
0511 Hetland, Vicki PORT.FP 910 705.00 200.00 16 Feb 1996 28 Feb 1997 0
0512 Williams, Ida PORT 910 705.00 120.00 17 Apr 1993 30 Apr 1997 0
0513 Phillips, Christopher PORT 910 695.00 300.00 29 Dec 1995 31 Dec 1996 0
0514 Gibson, John PORT.FP 910 680.00 200.00 19 Jul 1995 31 Jul 1996 NU
0515 Heisler, Jan M PORT.W 910 710.00 200.00 7 Jul 1995 31 Jul 1996 NR
0516 Stransky, Jason H NO CHECKS!! PORT.W 910 715.00 200.00 1 Sep 1995 31 Aug 1996 0
0517 Abasi, Tariq & Naheeda PORT.WFP 910 735.00 200.00 20 Jun 1996 30 Jun 1997 0
0518 Kim, Yun Joong PORT.W 910 715.00 150.00 18 Oct 1992 31 Oct 1996 0
0519 Sutton Iii, William PORT.W 910 715.00 250.00 20 Feb 1993 28 Feb 1997 0
0520 Landy, Susan PORT.WFP 910 715.00 200.00 24 Feb 1995 31 Aug 1996 0
0521 Ryan, Jennifer BAY 505 480.00 300.00 12 May 1995 28 Feb 1997 0
0522 Vacant BAY 505 490.00 0.00 VR
0523 Chambers, Lance BAY 505 480.00 200.00 9 Feb 1996 28 Feb 1997 0
0524 Ramos, Janet BAY 505 490.00 100.00 24 Apr 1996 30 Apr 1997 0
0525 Phillips, Paul BAY.C 505 530.00 100.00 23 Nov 1994 Monthly 0
0526 Fischer, Carson BAY.C 505 495.00 200.00 10 May 1996 31 May 1997 0
0527 Mays, Cristie BAY.W 505 505.00 200.00 5 Apr 1996 31 Jan 1997 0
0528 Brames, Mary BAY.W 505 485.00 100.00 5 Oct 1995 31 Jul 1996 0
0601 McCluskey, phillip D PORT 910 705.00 300.00 8 Jul 1994 30 Apr 1997 NU
0602 Freeney, Donna and Sonja PORT 910 705.00 200.00 3 Jun 1996 30 Jun 1997 0
0603 Merriewether, Thomas PORT.FP 910 680.00 150.00 28 Aug 1996 31 Aug 1996 0
0604 Holtz, Kimberely PORT 910 680.00 200.00 2 Jan 1993 31 Aug 1996 NU
0605 Kondelik, Jeanne PORT 910 745.00 300.00 27 Oct 1993 Monthly 0
0606 Cahenzli, Peter PORT.FP 910 695.00 200.00 20 Jan 1995 31 Jan 1997 0
0607 Desai, Sanjeev PORT.W 910 710.00 200.00 14 Jul 1995 31 Jul 1996 0
0608 Pattton, Jr., George W. PORT.W 910 715.00 200.00 10 Nov 1995 31 Aug 1996 NU
0609 Zawrotny, James T PORT.WFP 910 770.00 100.00 20 Jun 1995 Monthly 0
0610 Richardson, John R. PORT.W 910 725.00 150.00 24 Jun 1994 30 Jun 1997 0
0611 Sande, Blake PORT.W 910 725.00 300.00 3 May 1996 28 Feb 1997 0
0612 Bentley, Melinda PORT.WFP 910 735.00 200.00 19 Jul 1996 18 May 1997 0
0613 Hicks, Diana BAY 505 490.00 100.00 6 Jun 1996 31 May 1997 0
0614 Vacant BAY 505 490.00 0.00 VR
0615 Cloud, Drew BAY 505 490.00 100.00 8 Mar 1996 31 Dec 1996 0
0616 Coldwell, Pamela BAY 505 480.00 100.00 3 Feb 1995 28 Feb 1997 0
0617 Vacant BAY.W 505 505.00 0.00 VU
0618 Levin, Eric J BAY.W 505 490.00 100.00 25 Aug 1995 31 Aug 1996 0
0619 Vacant BAY.W 505 505.00 0.00 VR
0620 Ford, Regina M BAY.W 505 495.00 100.00 9 Dec 1994 31 Jul 1996 NU
0701 Vacant BAY 505 490.00 0.00 VU
0702 Tampalacio, Mariquit B BAY 505 480.00 100.00 18 Nov 1995 31 Aug 1996 0
0703 Thomsen, Robin BAY 505 485.00 100.00 16 Dec 1994 30 Jun 1997 0
0704 Turley, Marthan A BAY 505 525.00 545.00 18 Aug 1992 Monthly 0
0705 Cristobal, Malourdes BAY 505 490.00 100.00 26 Apr 1996 31 Jan 1997 0
0706 Moore, Perry BAY 505 490.00 100.00 12 Jan 1996 31 Aug 1996 0
0707 Suzuki, Kyoko BAY.W 505 495.00 200.00 27 Jan 1995 31 Oct 1996 0
0708 Lawrence, Katie BAY.W 505 495.00 200.00 29 Jul 1993 31 Dec 1996 0
0709 Rubin, Mark BAY.W 505 540.00 100.00 2 Jul 1993 Monthly NU
0710 Coleman, Julia L. BAY.W 505 495.00 100.00 7 Oct 1994 31 Dec 1996 0
0711 Cetraro, Marco BAY.W 505 495.00 100.00 6 Jul 1992 30 Apr 1997 0
0712 Royeton, John J BAY.W 505 490.00 100.00 14 Jul 1995 31 Jul 1996 NU
0713 Labbie, Douglas COVE 700 530.00 100.00 9 Sep 1994 30 Sep 1996 0
0714 Davis, Cheryl A. COVE 700 540.00 100.00 15 Jan 1994 31 Aug 1996 0
0715 Vacant COVE.FP 700 565.00 0.00 VU
0716 Horton, Allison COVE 700 565.00 100.00 19 Jul 1996 31 Jul 1997 0
0717 Everett, Karen COVE 700 565.00 100.00 15 Apr 1996 30 Apr 1997 0
0718 Barrow, Kevin COVE.FP 700 535.00 100.00 1 Apr 1994 31 Apr 1997 0
0719 Holt, Lisa COVE.W 700 575.00 200.00 2 Aug 1994 28 Feb 1997 0
0720 Bhangu, Mala COVE.W 700 565.00 100.00 9 Nov 1994 30 Nov 1996 0
0721 Grieve, Alistair COVE.WFP 700 590.00 100.00 2 Jan 1993 31 Aug 1996 0
0722 Lonas, Jeff COVE.W 700 565.00 200.00 1 Dec 1993 30 Nov 1996 0
0723 Moser, Sandra COVE.W 700 625.00 600.00 7 Aug 1995 Monthly 0
0724 Smith, Thomas COVE.WFP 700 590.00 100.00 11 Jun 1996 31 Mar 1997 0
0725 Laughery, Michael BAY.W 505 495.00 100.00 12 Jan 1996 31 Oct 1996 0
0726 Oliver, Linda BAY.W 505 505.00 100.00 15 May 1996 28 Feb 1997 0
0727 Shapiro, Michael NO CHECKS!!! BAY.W 505 495.00 100.00 5 Aug 1994 30 Nov 1996 0
0728 Gandia, Louis BAY.W 505 505.00 100.00 17 Feb 1996 31 Oct 1996 0
0729 Bryant, Laurin BAY.W 505 495.00 200.00 19 Jan 1996 31 Oct 1996 0
0730 Gorman, Joseph BAY.W 505 515.00 100.00 17 May 1996 31 Dec 1996 0
0731 Champlin, Krista BAY.C 505 485.00 100.00 21 Mar 1995 31 Jul 1996 NU
0732 Lincoln, Debbie BAY.C 505 480.00 100.00 28 Jan 1993 31 Aug 1996 NU
0733 Stern, Ellen L BAY.C 505 495.00 100.00 12 Jul 1996 31 Jul 1997 0
0734 Vacant BAY.W 505 505.00 0.00 VU
0735 Miller, Marilyn L BAY.W 505 530.00 200.00 18 Mar 1995 Monthly 0
0736 Richardson, John BAY.W 505 495.00 100.00 28 Jun 1996 30 Jun 1997 0
0801 Lewis, Russell HARBOR 830 635.00 200.00 6 Dec 1995 31 Jul 1996 NU
0802 Carden Jr., Jimmie W HARBOR 830 640.00 200.00 3 Apr 1995 30 Nov 1996 0
0803 Yureka, Karen/Blood, Barry HARBOR 830 630.00 200.00 31 Mar 1995 31 Oct 1996 0
0804 Le, Man M COVE 700 550.00 200.00 28 Apr 1995 30 Apr 1997 0
0805 Aschi, Michael COVE 700 545.00 100.00 10 Mar 1995 31 Dec 1996 0
0806 Ochs, Lynn E. COVE 700 575.00 100.00 19 Jan 1996 30 Sep 1996 0
0807 Pemberton, Monica COVE.W 700 590.00 100.00 8 Nov 1995 30 Nov 1996 NU
0808 Buendia, Janeth COVE.W 700 575.00 100.00 10 Jan 1995 31 Oct 1996 0
0809 Rooney, Jill COVE.W 700 565.00 100.00 1 Dec 1995 30 Nov 1996 0
0810 Shaarda, Roberta HARBOR.W 830 665.00 200.00 18 Jul 1996 31 Jul 1997 0
0811 Caruthers, David L HARBOR.W 830 700.00 200.00 30 Jun 1995 Monthly 0
0812 Young, Christina HARBOR.W 830 645.00 200.00 28 Jul 1995 31 Jul 1996 0
0813 Parker, Laura COVE 700 565.00 100.00 5 Jul 1996 30 Apr 1997 0
0814 Driscoll, Carolyn COVE 700 525.00 100.00 15 Mar 1996 31 Dec 1996 0
0815 Plotsky, Ellen S COVE.FP 700 550.00 100.00 1 May 1995 30 Apr 1997 0
0816 Knecht, Debbie K COVE 700 540.00 100.00 1 Sep 1995 31 Aug 1996 0
0817 Shephard, Scott COVE 700 565.00 200.00 13 May 1996 31 May 1997 0
0818 Martin, Keith W. COVE.FP 700 540.00 250.00 21 May 1993 31 Aug 1996 0
0819 Fotopoulous, Ted COVE.W 700 565.00 100.00 1 Jul 1992 31 Oct 1996 0
0820 Sluss, Mollie A. COVE.W 700 555.00 100.00 8 Jul 1994 31 Jul 1996 NU
0821 Autrand, Terry E COVE.WFP 700 575.00 100.00 26 Jun 1995 30 Jun 1997 0
0822 Julia Santiesteban COVE.W 700 515.00 100.00 1 Mar 1996 28 Feb 1997 0
0823 Pandya, Priti COVE.W 700 555.00 100.00 15 Mar 1996 31 Mar 1997 0
0824 Kuttner, Peter COVE.WFP 700 590.00 100.00 1 Mar 1996 28 Feb 1997 0
0825 Crisci, Christopher COVE 700 530.00 300.00 26 Apr 1996 31 Jan 1997 0
0826 McCalebb, Jennifer COVE 700 540.00 200.00 7 Mar 1996 31 Dec 1996 0
0827 Sparks, Jeff COVE 700 540.00 100.00 15 Jul 1994 31 Jul 1996 NU
0828 Steele, Richard HARBOR 830 625.00 200.00 19 Jan 1996 31 Oct 1996 0
0829 Alkire, George HARBOR 830 640.00 200.00 1 May 1996 30 Apr 1997 0
0830 Ohall, Carl J. HARBOR 830 625.00 250.00 28 Jan 1993 31 Aug 1996 0
0831 Kopec, Fred HARBOR.W 830 650.00 200.00 22 Feb 1995 28 Feb 1997 0
0832 Amador, Cornelio HARBOR.W 830 665.00 200.00 10 May 1996 31 May 1997 0
0833 Wartenberg, Karen HARBOR.W 830 650.00 300.00 12 Dec 1994 30 Sep 1996 0
0834 Vacant COVE.W 700 590.00 0.00 VU
0835 Frobeen, Christine COVE.W 700 555.00 200.00 15 May 1996 28 Feb 1997 0
0836 Barnard, Sherly L. COVE.W 700 565.00 200.00 23 May 1994 30 Sep 1996 0
0901 Pomerleau, David J. BAY 505 480.00 100.00 1 Nov 1995 31 Oct 1996 0
0902 Seale, Lanny R BAY 505 475.00 100.00 4 Aug 1995 31 Aug 1996 0
0903 Rubin, Suzanne T BAY 505 490.00 100.00 26 Nov 1993 31 Dec 1996 0
0904 Doyle, Daniel BAY 505 480.00 100.00 2 Jan 1996 31 Oct 1996 0
0905 Munsey, Victoria NO CHECKS! BAY 505 480.00 100.00 28 Apr 1995 31 Jul 1996 0
0906 Lucas, Tamara BAY 505 475.00 100.00 11 Aug 1995 31 Aug 1996 0
0907 Works, Amy C BAY.W 505 495.00 100.00 19 Apr 1995 31 Jul 1996 NU
0908 Sweeny, Chris BAY.W 505 495.00 100.00 7 Feb 1996 30 Nov 1996 0
0909 Linn, John BAY.W 505 505.00 100.00 17 Apr 1996 31 Jan 1997 0
0910 Alkhatib, Tenesia BAY.W 505 495.00 100.00 12 Oct 1995 31 Jul 1996 NU
0911 Salminen, Candace M BAY.W 505 490.00 100.00 25 Jul 1995 31 Jul 1996 0
0912 Stunden, Lorie BAY.W 505 505.00 100.00 29 Mar 1996 31 Dec 1996 0
0913 Taylor, Shana/Spalding, John COVE 700 565.00 100.00 5 Jul 1996 30 Jun 1997 0
0914 Schweers, Scott COVE 700 520.00 100.00 29 Mar 1996 31 Dec 1996 0
0915 Snowden, Contance COVE.FP 700 550.00 100.00 7 Apr 1995 31 Oct 1996 0
0916 Sullivan, Marcia COVE.W 700 575.00 100.00 1 Mar 1993 28 Feb 1997 0
0917 Mullen, Steven COVE.W 700 590.00 100.00 25 Jun 1996 31 Mar 1997 0
0918 Curtis, Heather COVE.WFP 700 590.00 200.00 26 Jun 1996 30 Jun 1997 0
0919 Vacant COVE.W 700 590.00 0.00 VU
0920 Stoltzfus, Jeffrey COVE.W 700 555.00 100.00 30 Apr 1996 31 Jan 1997 0
0921 Laplante, Glenn COVE.WP 700 555.00 100.00 10 Apr 1996 31 Jan 1997 0
0922 Bernard, Cameron COVE.W 700 565.00 100.00 1 Dec 1995 30 Nov 1996 0
0923 Swihura, Alison COVE.W 700 545.00 100.00 5 Apr 1996 31 Jan 1997 0
0924 Mahdi, Mojdeh COVE.WFP 700 575.00 100.00 25 Jun 1994 31 Aug 1996 0
0925 Greenberg, Sandy BAY.W 505 505.00 100.00 21 Jun 1996 30 Jun 1997 0
0926 Beyer, Chrisitine BAY.W 505 530.00 100.00 1 Oct 1993 Monthly 0
0927 Knapp, Kelly BAY.W 505 490.00 200.00 14 Jul 1995 31 Jul 1996 0
0928 Lynch, David BAY.W 505 495.00 100.00 17 Feb 1995 30 Nov 1996 0
0929 Cappa, John R BAY.W 505 495.00 100.00 9 Jun 1995 30 Jun 1997 0
0930 Koch, Kimberly BAY.W 505 490.00 200.00 30 Apr 1994 31 May 1997 0
0931 Grano, Joan BAY.W 505 505.00 100.00 27 Dec 1995 31 Jul 1996 0
0932 Brey, Thomas BAY.W 505 500.00 100.00 22 Jan 1994 31 May 1997 0
0933 Barrett, Mark E. BAY.W 505 495.00 100.00 20 Feb 1995 31 Oct 1996 0
0934 Unger, Irwin BAY.W 505 485.00 100.00 17 Jul 1992 30 Jun 1997 0
0935 Bise, Michele L BAY.W 505 495.00 200.00 28 Apr 1995 31 Mar 1997 0
0936 Ehlen, Mary BAY.W 505 505.00 100.00 29 Apr 1996 30 Apr 1997 0
1001 Teaman, Dan BAY 505 480.00 100.00 13 Feb 1996 28 Feb 1997 0
1002 Dorrance, Jennifer BAY 505 480.00 100.00 2 Jan 1996 31 Oct 1996 0
1003 Faren, Arnel I BAY 505 480.00 200.00 25 Aug 1995 31 Aug 1996 0
1004 Vacant BAY 505 490.00 0.00 VU
1005 Thornbrugh, Kristen BAY.W 505 505.00 300.00 24 May 1996 28 Feb 1997 0
1006 Giffin, Sherri C BAY.W 505 500.00 100.00 25 Aug 1995 30 Apr 1997 0
1007 Massaro, Nicholas BAY.W 505 495.00 100.00 11 Dec 1995 20 Sep 1996 0
1008 Hamilton, Mark BAY.W 505 495.00 100.00 15 Sep 1995 30 Sep 1996 0
1009 Armstrong, Jeanne T. PORT 910 695.00 300.00 27 Nov 1995 31 Aug 1996 0
1010 Jones, Katheryn PORT 910 695.00 200.00 29 Dec 1995 30 Sep 1996 0
1011 Embree, William PORT.FP 910 695.00 200.00 29 Oct 1994 31 Oct 1996 0
1012 Wilson, Christoph PORT 910 740.00 200.00 3 Jul 1995 Monthly 0
1013 Dattilo, Bill PORT 910 705.00 300.00 12 Apr 1996 31 Jan 1997 0
1014 Boren, Catherine & Bryan PORT.FP 910 695.00 200.00 12 Jan 1996 31 Jan 1997 0
1015 Baker, Angela PORT.W 910 715.00 200.00 7 Apr 1995 31 Aug 1996 0
1016 Janus, Frank PORT.W 910 735.00 200.00 1 Jul 1996 30 Jun 1997 0
1017 Mattson, Michael PORT.WFP 910 725.00 200.00 15 Apr 1996 30 Apr 1997 0
1018 Mac Harg, Michael PORT.W 910 715.00 200.00 24 Sep 1994 30 Sep 1996 0
1019 Herman, Deborah PORT.W 910 715.00 200.00 18 Aug 1995 31 Aug 1996 0
1020 Blessing-Watson, Carolyn PORT.WFP 910 710.00 300.00 21 Jul 1995 31 Jul 1996 0
1021 Scott, Glenn BAY 505 480.00 100.00 9 Nov 1995 31 Aug 1997 0
1022 Nichols, Deanna BAY 505 480.00 200.00 25 Feb 1995 30 Nov 1996 NU
1023 China, Catherine BAY 505 475.00 200.00 8 Jul 1994 30 Apr 1997 0
1024 Holmes, Suzanna BAY 505 480.00 100.00 6 Nov 1991 31 Oct 1996 0
1025 Rothwell, Bonnie BAY.W 505 505.00 100.00 28 May 1996 30 Apr 1997 0
1026 Evans, Jennefer BAY.W 505 505.00 100.00 7 Jun 1996 30 Jun 1997 0
1027 Thompson, William J BAY.W 505 495.00 100.00 8 Nov 1995 31 Aug 1996 0
1028 Vacant BAY.W 505 505.00 0.00 VR
1101 Cruz, Wilmer BAY 505 490.00 100.00 31 May 1996 28 Feb 1997 0
1102 Juckett, Christie BAY 505 480.00 200.00 25 Sep 1993 31 Aug 1996 0
1103 Fehr, Diana Jo BAY 505 480.00 200.00 11 Aug 1995 31 Aug 1996 0
1104 Wagers, Scott BAY 505 515.00 100.00 12 Aug 1994 Monthly 0
1105 Milligan, Michael BAY 505 490.00 100.00 12 Jul 1996 30 Apr 1997 0
1106 Flores, Jeanie M BAY 505 0.00 100.00 14 Jul 1995 31 Jul 1996 NU
1107 Flack, Kenneth BAY.W 505 495.00 100.00 22 Dec 1995 30 Sep 1996 0
1108 Macmaster, Frank J BAY.W 505 540.00 200.00 18 Aug 1995 Monthly 0
1109 Yastrop, Mark BAY.W 505 495.00 100.00 6 Feb 1996 30 Nov 1996 0
1110 Anderson, Muriel BAY.W 505 505.00 100.00 7 Jun 1996 31 May 1997 0
1111 Nelson, Edward M. BAY.W 505 495.00 100.00 30 Jun 1994 31 Jul 1996 0
1112 Mann, Terry M BAY.W 505 495.00 100.00 6 Apr 1995 31 Jan 1997 0
1113 Marchaesi, Jeff & Donna COVE 700 565.00 100.00 19 Jul 1996 31 Jul 1997 0
1114 Hunt, Clarence COVE 700 515.00 100.00 23 Feb 1996 28 Feb 1997 NR
1115 Walters, Lois/Loyd COVE.FP 700 565.00 200.00 1 Feb 1996 31 Oct 1996 0
1116 Dahlstrom, Lisa M COVE 700 550.00 100.00 29 Jun 1995 30 Jun 1997 0
1117 Binios, Angela COVE 700 565.00 100.00 25 Sep 1995 3 Sep 1996 0
1118 Hanny, James COVE.FP 700 520.00 100.00 5 Apr 1996 31 Jan 1997 0
1119 Dobson, Nathan COVE.W 700 590.00 100.00 22 May 1996 31 May 1997 0
1120 Tiedemann, Terry J COVE.W 700 565.00 100.00 1 Jul 1995 30 Nov 1996 0
1121 O Conner, Kevin H COVE.WFP 700 590.00 100.00 7 Aug 1995 30 Sep 1996 0
1122 Davis, Thomas M COVE.W 700 565.00 100.00 16 Nov 1995 30 Nov 1996 0
1123 Cuppy, Shawnine COVE.W 700 590.00 200.00 31 May 1996 31 May 1997 0
1124 Kaufhold, Steven COVE.WFP 700 565.00 100.00 8 Feb 1996 30 Nov 1996 0
1125 Edwards, Terry BAY 505 475.00 100.00 19 Sep 1994 30 Nov 1996 0
1126 Newman, Terrence BAY 505 490.00 100.00 8 Mar 1996 31 Dec 1996 0
1127 Mayhall, Robert C. BAY 505 475.00 100.00 7 Jul 1995 30 Apr 1997 0
1128 Renner, Scott BAY 505 490.00 100.00 23 Jan 1996 31 Aug 1996 0
1129 Drost, William BAY 505 490.00 100.00 5 Jul 1996 31 Jul 1997 0
1130 Bodie, Matthew BAY 505 480.00 100.00 22 Dec 1995 3 Sep 1996 0
1131 Lamb, Marie BAY.W 505 505.00 100.00 15 Mar 1996 28 Feb 1997 0
1132 Carrington, Jon BAY.W 505 525.00 100.00 12 Nov 1994 Monthly 0
1133 Martin, Jennifer BAY.W 505 495.00 200.00 6 Oct 1995 30 Sep 1996 NU
1134 Reiss, William BAY.W 505 505.00 100.00 10 Jul 1996 30 Apr 1997 0
1135 Janis, Anne BAY.W 505 495.00 100.00 23 Feb 1990 31 Aug 1996 0
1136 Eric, Doyle BAY.W 505 505.00 100.00 1 May 1996 30 Apr 1997 0
1201 Cholowski, Ann M HARBOR 830 615.00 200.00 10 Jul 1995 31 Jul 1996 0
1202 Hamilton, Rebecca L HARBOR 830 615.00 200.00 28 Jul 1995 31 Jul 1996 0
1203 Vacant HARBOR 830 640.00 0.00 VU
1204 Desai, Sanjeev COVE 700 545.00 100.00 10 Mar 1995 30 Sep 1996 0
1205 Creely, Curt P COVE 700 540.00 100.00 28 Jul 1995 31 Jul 1996 0
1206 Tharpe, Donald W COVE 700 565.00 200.00 6 Oct 1995 31 Jul 1996 0
1207 Sesin, Anthony COVE.W 700 565.00 200.00 4 Nov 1994 31 Aug 1996 0
1208 Vacant COVE.W 700 590.00 0.00 VR
1209 Stoneking, Stephanie COVE.W 700 600.00 100.00 1 May 1996 30 Nov 1996 0
1210 Obara, Kathleen HARBOR.W 830 650.00 150.00 10 Mar 1994 31 Jul 1996 NU
1211 Morelli, Michelle HARBOR.W 830 650.00 200.00 22 Nov 1995 30 Nov 1996 NU
1212 Steimle, Eric HARBOR.W 830 665.00 200.00 15 May 1996 31 May 1997 0
1213 Dhaliwall, Lori COVE.W 700 0.00 0.00 26 Apr 1996 30 Apr 1997 NU
1214 Ashworth, Sherwood COVE.W 700 625.00 100.00 9 Jun 1995 Monthly 0
1215 Shelton, Wesley E COVE.WFP 700 565.00 200.00 25 Aug 1995 31 Aug 1995 0
1216 Mulks, Lori-Meyers, Todd COVE.W 700 545.00 300.00 29 Feb 1996 30 Sep 1996 0
1217 Massar, Joe COVE.W 700 590.00 100.00 17 May 1996 28 Feb 1997 0
1218 Goodall, Lorilee COVE.WFP 700 575.00 100.00 24 Jan 1995 31 Oct 1996 0
1219 Guertin, Kevin COVE.W 700 625.00 200.00 15 Oct 1993 Monthly 0
1220 Bloom, Jonathan COVE.W 700 515.00 200.00 16 Feb 1996 15 Feb 1997 0
1221 Megill, Scott COVE.WFP 700 545.00 300.00 29 Feb 1996 30 Nov 1996 0
1222 Doxater, Jay W COVE.W 700 590.00 100.00 1 Nov 1995 31 Oct 1996 0
1223 Arbuckle, Craig D. COVE.W 700 625.00 100.00 1 Jun 1994 Monthly 0
1224 Foley, Dennis M. COVE.WFP 700 590.00 100.00 1 Nov 1995 31 Oct 1996 0
1225 McLaughlin, Julie COVE.W 700 545.00 100.00 22 Mar 1996 31 Dec 1996 NU
1226 Cochrane, Jennifer COVE.W 700 590.00 100.00 19 Jul 1996 31 Jul 1997 0
1227 Deason, Gale COVE.W 700 545.00 100.00 29 Feb 1996 30 Nov 1996 0
1228 Josuweit, Thomas HARBOR.W 830 650.00 200.00 20 Dec 1995 31 Dec 1996 0
1229 Sebetzki, George HARBOR.W 830 650.00 200.00 21 Aug 1994 31 Jul 1996 NR
1230 McKyton, Richard HARBOR.W 830 645.00 200.00 28 Jul 1995 31 Jul 1996 0
1231 Fratarcangeli, Linda HARBOR.W 830 665.00 300.00 5 Apr 1996 31 Jan 1997 0
1232 Gerber, Kenneth HARBOR.W 830 645.00 200.00 28 Jul 1995 31 Jul 1996 0
1233 Dawe, Jonathon HARBOR.W 830 665.00 150.00 1 Feb 1993 30 Nov 1996 0
1234 Vacant COVE.W 700 590.00 0.00 VU
1235 Borte, Angela COVE.W 700 565.00 200.00 30 Dec 1995 30 Sep 1996 0
1236 Zander, Kimberly COVE.W 700 565.00 100.00 20 Nov 1995 31 Aug 1996 0
1301 Foster, Tim R PORT 910 695.00 200.00 16 Nov 1995 31 Aug 1996 0
1302 Zipfel, Erika PORT 910 0.00 0.00 1 Dec 1995 30 Nov 1996 0
1303 Holland, Robert E. PORT 910 730.00 200.00 28 Jan 1995 Monthly 0
1304 Alchin, John PORT 910 705.00 200.00 15 May 1996 28 Feb 1997 0
1305 Shuttera, Nicole PORT.W 910 735.00 250.00 1 Jul 1994 31 Jan 1997 0
1306 Crooks, Michael PORT.W 910 735.00 200.00 19 Jul 1996 31 Jul 1997 0
1307 Abshier, Stacie PORT.W 910 715.00 200.00 22 Dec 1995 30 Sep 1996 0
1308 Long, Elizabeth PORT.W 910 710.00 200.00 7 Jul 1995 31 Jul 1996 0
1309 Gilmore, Martha PORT 910 740.00 350.00 17 Apr 1994 Monthly 0
1310 Sanchez, Michell PORT 910 695.00 400.00 29 Jul 1994 31 Aug 1996 0
1311 Mahajan, Ranjan PORT.FP 910 695.00 200.00 5 Sep 1995 30 Jun 1997 0
1312 Vacant PORT 910 710.00 0.00 VU
1313 Campbell, James PORT 910 675.00 150.00 1 Aug 1994 31 Jul 1996 NU
1314 Fort, Kenyon PORT.FP 910 710.00 200.00 21 Jun 1996 30 Jun 1997 0
1315 Merchant, Christoph PORT.W 910 770.00 200.00 3 Nov 1995 Monthly 0
1316 Hutchinson, Buffie J PORT.W 910 715.00 300.00 8 Sep 1995 30 Sep 1996 0
1317 Einwalter, Norma PORT.WFP 910 715.00 200.00 6 Dec 1995 30 Sep 1996 0
1318 Hilley, Patricia PORT.W 910 715.00 200.00 5 Oct 1995 31 Oct 1996 0
1319 Turrell, Kathleen PORT.W 910 725.00 300.00 7 Feb 1996 30 Sep 1996 0
1320 Mc Killop, Jerry & Patricia PORT.WFP 910 720.00 250.00 13 Jun 1992 30 Jun 1997 0
1321 Vacant BAY 505 490.00 00.00 VU
1322 Hennessey, Sheryl BAY 505 480.00 100.00 7 Apr 1995 31 Jan 1997 0
1323 Dennie, Calvin R BAY 505 475.00 100.00 16 Nov 1994 31 Aug 1996 0
1324 Carter, Levon BAY 505 480.00 100.00 9 Dec 1994 30 Nov 1996 0
1325 Ciccarone, Michael BAY.W 505 495.00 100.00 30 Jun 1995 30 Jun 1997 0
1326 Palmer, Kenneth BAY.W 505 505.00 200.00 10 Jul 1996 31 Jul 1997 0
1327 Gudino, Richard BAY.W 505 495.00 100.00 6 Mar 1996 31 Dec 1996 0
1328 Spirtos, Nicki BAY.W 505 490.00 100.00 1 Aug 1994 31 Jul 1996 NU
1329 Morgan, Debra BAY.W 830 695.00 300.00 10 Oct 1994 31 Oct 1996 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Code Status # Units Rent Schedule Amount
====================================================================================================
<S> <C> <C> <C> <C>
O Occupied, No Notice 324 Units Occupied-- 202,462.00
Actual Rent
NU Occupied, Notice 29 Units Vacant-- 11,775.00
Unrented Vacant Potential
NR Occupied, Notice 5
VU Vacant, Unrented 13 100% (Gross) 214,237.00
Potential Value
VR Vacant, Rented 8
SU Charging A Skip, 0 Total Escrow 53,815.00
Unrented Deposits
SR Charging A Skip 0 Total Rentable 258,130
Square Feet
====================================================================================================
Total Units 379 379
====================================================================================================
</TABLE>
<PAGE>
SEP-09'OO MON 15:46 ID: TEL NO:# 660 P02
R:
PELICANS
PELICAN SOUND INCOME STATEMENT
INCOME STATEMENT
1/1/93-7/31/96
1/1/96-
1993 1994 1995 7/31/96
________________________________________________________________
GROSS POTENTIAL RENT 201,285 2,450,377 2,534,428 1,501,839
RENT LOSS-VACANT (16,149) (154,074) (169,631) (94,534)
RENT LOSS-DELINQUENT (4,174) (82,818) (23,239) (7,874)
RENT CONCESSION (638) (9,295) (2,781)
PRIOR MONTH RENT 1,269 67,799 32,344 4,983
PREPAID RENT 3,377 41,544 9,172 (5,156)
TOTAL RENTAL INCOME 185,608 2,322,190 2,373,779 1,396,477
SERVICE INCOME 3,328 46,088 53,345 45,632
OTHER INCOME 49 1,874 833 1,602
TOTAL INCOME 188,985 2,370,152 2,427,957 1,443,711
PERSONNEL 21,564 219,249 239,765 134,418
OFFICE - SITE 2,666 20,850 20,851 11,208
ADVERTISING &
MARKETING 1,757 21,857 17,629 11,503
OUTSIDE CONTRACTORS 1,285 45,317 41,124 27,539
BUILDING SERVICES 10,438 117,487 117,938 65,702
SUPPLIES 1,225 34,741 34,830 16,603
UTILITIES 23,297 143,415 153,231 89,108
GROUNDS 4,273 60,383 66,717 41,443
PROFESSIONAL FEES 813 3,183 560
REPAIRS COVERED
BY INSURANCE 262 968
PROPERTY MANAGEMENT
FEE 10,000 207,292 188,428 108,491
PROPERTY TAXES 28,609 304,842 298,528 163,000
INSURANCE 1,800 26,964 59,378 23,724
TOTAL OPERATING
EXPENSES 107,727 1,205,842 1,239,947 692,739
NET OPERATING INCOME 81,258 1,164,310 1,188,010 750,972
<PAGE>
Robert E. Riggins, SRA, MA
Education:
Memphis State University - Master of Science Degree (1980): Major
- - Real Estate Finance; Minor - Economics.
Memphis State University - Bachelor of Business Administration
Degree (1970): Major - Economics; Minor - Accounting
Courses: American Institute of Real Estate Appraisers (AIREA):
I-A - Basic Appraisal Principals, Methods and Techniques
I-B - Capitalization Theory and Techniques
II - Urban Properties
VI - Real Estate Investment Analysis
IX - Appraisal Administration and Review
IV - Litigation Valuation
Courses: Appraisal Institute
Standards of Professional Practice, Parts A & B
Capitalization Theory, Part B
Uniform Residential Appraisal Report
Seminars:
Statistics in Real Estate (AIREA)
Multifamily Appraisal Seminar (SREA)
Investment Feasibility Analysis (SREA)
Market and Marketability Analysis (SREA)
Cash Flow and Risk Analysis (SREA)
Instructor - Single Family Underwriting Seminar (MBA)
FHLBB - R-41(c) Seminar (AIREA)
Standards of Professional Practice (SREA)
New URAR Appraisal Report (Appraisal Institute) 1993
USPAP "Core" Law
HUD Lender Selection Roster Appraiser Training (11/94)
Professional Affiliations:
Member of the Appraisal Institute, MAI Designation #6123.
Past President and Member of the Board of Directors, Memphis
Chapter #53 of the Society of Real Estate Appraisers.
Past Chairman of the Educational Committee and Candidates
Committee, Memphis Chapter #51 of the American Institute of Real
Estate Appraisers.
Board of Directors of the Tampa Bay Chapter of the Appraisal
Institute.
Beta Sigma Phi, National Honorary Scholastic Fraternity.
Member - FNMA Condominium Task Force.
Experience:
President, RIGGINS, ATKINSON, COMBS & ASSOCIATES, INC. (1994--
Present)
Senior Vice President and Regional Manager, Commercial Real
Estate Appraisals, AppraisalFirst, Inc. (1990 - 1994).
Vice President and Regional Manager, Commercial Real Estate
Appraisals, AppraisalFirst, Inc. (1987 - 1990).
Regional Manager, Commercial Real Estate Appraisals, AmeriFirst
Appraisal Company (1985-1987).
Senior Vice President, Construction and Commercial Lending,
Banksmiths Mortgage Corporation (1984-1985).
Senior Vice President, Chief Appraiser, Citizens Mortgage
Corporation (1983-1984).
Vice President, Commercial Lending and Commercial Appraisal
Departments, Leader Federal Savings and Loan Association (1972-
1983).
Licenses:
Licensed Real Estate Broker, State of Florida.
State Certified, General Appraiser # 0000605
The Appraisal Institute conducts a program of continuing
education for designated members. Designated members who meet
the minimum standards of this program are awarded periodic
educational certification. Robert E. Riggins is currently
certified under this program.
<PAGE>
William W. Atkinson, MAI
Education:
Florida State University 1986, Tallahassee Florida, Bachelor of
Science Degree in Finance and Real Estate. Minor in Accounting.
Courses:
Florida State University
Real Estate Feasibility Analysis
Real Estate Principles and Practices
Real Estate and Its Legal Environment
Real Estate Appraisal
Real Estate Market Analysis
Real Estate Finance
Appraisal Institute
Standards of Professional Practice SPP, Part A (9/94)
Standards of Professional Practice SPP, Part B (9/94)
Real Estate Appraisal Principles 1A1 (10/89)
Basic Valuation Procedures 1A2 (3/90)
Capitalization Theory and Techniques, Part A IBA (3/91)
Capitalization Theory and Techniques, Part A lBB (6/91)
Case Studies in Real Estate Valuation (11/92)
Report Writing and Valuation Analysis (6/93)
Non-Residential Demonstration Report (10/94)
The Appraiser's Complete Review (2/95)
Comprehensive Exam (2/95)
Commercial Investment Real Estate Institute
Financial Analysis For Commercial Investment Real Estate
CI 101 (4/96)
Market Analysis For Commercial Investment Real Estate CI 201
(8/96)
Decision Analysis For Commercial Investment Real Estate
CI 301 (5/96)
Seminars:
Appraisal Institute
Demonstration Non-Residential Report Writing (3/94)
USPAP "Core" Law (6/94)
U.S. Department of Housing & Urban Development
HUD Lender Selection Roster Appraiser Training (11/94)
Professional Affiliations:
Member of the Appraisal Institute, MAI Designation #10,975
Candidate For CCIM Designation
Experience:
Vice President, Riggins, Atkinson, Combs & Associates, Inc.
(1994-Present)
Staff Appraiser, Residential and Commercial Division -
AppraisalFirst, Inc., Clearwater, Florida. (1987-1994)
Staff Appraiser, Residential Division - AmeriFirst Appraisal
Company, Clearwater, Florida (1986-1987)
License:
Licensed Real Estate Broker - State of Florida.
State-certified general appraiser #0001221
<PAGE>
Annex B: Appraisal of Meadows II
AN APPRAISAL OF
THE MEADOWS - PHASES II, III & IV
A 316 Unit Apartment Community
LOCATED AT
201 - 401 North Thompson Drive
Madison, Wisconsin
FOR
THE DECADE COMPANIES, INC.
250 PATRICK BOULEVARD
SUITE 140
BROOKFIELD, WISCONSIN 53045
BY
T. M . WARNER, MAI, SRA
Wisconsin Certified General Appraiser 227
EFFECTIVE DATE OF APPRAISAL
September 25, 1996
<PAGE>
The Meadows II Apartments
201-401 North Thompson Drive
Madison, Wisconsin
<PAGE>
Table of Contents
PAGE
Assumptions and Limiting Conditions. . . . . . . . . . . . . .-1-
Market Value Defined . . . . . . . . . . . . . . . . . . . . .-2-
Hazardous Materials. . . . . . . . . . . . . . . . . . . . . .-3-
ADA Compliance . . . . . . . . . . . . . . . . . . . . . . . .-3-
Property Rights Appraised. . . . . . . . . . . . . . . . . . .-3-
Purpose Of The Appraisal . . . . . . . . . . . . . . . . . . .-4-
Function Of The Appraisal. . . . . . . . . . . . . . . . . . .-4-
Appraisal Scope. . . . . . . . . . . . . . . . . . . . . . . .-4-
Inspection . . . . . . . . . . . . . . . . . . . . . . . . . .-4-
Market Delineation . . . . . . . . . . . . . . . . . . . . . .-4-
Data Sources . . . . . . . . . . . . . . . . . . . . . . . . .-4-
Valuation Process. . . . . . . . . . . . . . . . . . . . . . .-5-
Taxes and Assessments. . . . . . . . . . . . . . . . . . . . .-6-
Zoning . . . . . . . . . . . . . . . . . . . . . . . . . . . .-6-
Flood Hazard Statement . . . . . . . . . . . . . . . . . . . .-6-
Legal Description. . . . . . . . . . . . . . . . . . . . . . .-6-
Owner Of Record. . . . . . . . . . . . . . . . . . . . . . . .-6-
Market Analysis. . . . . . . . . . . . . . . . . . . . . . . .-8-
Subject Market Summary . . . . . . . . . . . . . . . . . . . .-8-
Estimated Marketing Period . . . . . . . . . . . . . . . . . .-8-
Neighborhood Description . . . . . . . . . . . . . . . . . . .-9-
Site Description . . . . . . . . . . . . . . . . . . . . . . -10-
Physical Description of Improvements . . . . . . . . . . . . -10-
Highest and Best Use . . . . . . . . . . . . . . . . . . . . -12-
The Three Approaches to Value. . . . . . . . . . . . . . . . -14-
The Cost Approach. . . . . . . . . . . . . . . . . . . . . . -14-
Direct Sales Comparison Approach . . . . . . . . . . . . . . -21-
The Income Capitalization Approach . . . . . . . . . . . . . -29-
Correlations and Conclusions . . . . . . . . . . . . . . . . -37-
Certification. . . . . . . . . . . . . . . . . . . . . . . . -39-
Addenda
Surveys Photographs
Site Plans Corporate Resume
General Area Data Qualifications of the Appraiser
<PAGE>
September 25, 1996
Mr. Michael Sweet
The Decade Companies
250 Patrick Boulevard, Suite 140
Brookfield, Wl 53045
RE: The Meadows Apartments - Phases II, III & IV
201- 401 North Thompson Drive
Madison, Wisconsin 53714
Dear Mr. Sweet:
As requested, we have prepared an analysis and valuation of the
above captioned property, an irregularly shaped improved site
containing a total of 848,224 square feet, or 19.473+/- acres, more
or less. The site has twelve two story and basement, wood frame
construction apartment buildings containing 316 apartment units,
pool area, tennis courts and other recreational features. The
buildings were built in 1977 to 78,79 and 1980. The buildings
contain a total of 254,836+/- square feet. There are also asphalt
parking areas, drives, pool, deck fencing, tennis courts, walks and
patios, landscaping and project signage as described in the report.
The subject's zoning is R4 Multi-Family Residential. The
improvements represent a legal and conforming use in accordance
with this zoning classification. The property is served by all
utilities, including municipal sewer and water, and commercial gas,
telephone and electric service.
We have reviewed the Federal Reserve Board (FRB) rules regarding
Appraisal Policies and Procedures effective 8/9/90, revised 10/94
and this report was prepared in conformance with these regulations.
We have reviewed the Uniform Standards of Professional Appraisal
Practice (USPAP), adopted by the Professional Standards Board of
the Appraisal Foundation effective 4/27/87, revised 12/94 and to
the best of our knowledge have followed the policies and procedures
set forth in these regulations in appraising this property.
Accordingly, this appraisal specifically complies with laws and
regulations as defined in Chapters 15, 440, and 458, Wisconsin
Statutes, and RL 80-86, Wisconsin Administrative Code. The value
stated in this letter of transmittal is valid only in conjunction
with the analysis found in the narrative portion of this report.
<PAGE>
Based on an inspection of the subject site, the improvements
thereon, a study of the Southern Wisconsin apartment market, a
study of sales, offerings of similar properties, as well as other
environing factors pertinent to value, it is our opinion that the
subject that the subject property has an estimated "Market Value"
of the Fee Simple Estate as of September 25, 1996, of:
Eleven Million One Hundred Thousand Dollars
($11,100,000)*
*of which $1,422,000 is ascribed to the value of the land. No
furniture, fixtures and equipment (FF&E) or any other personal
property was valued in connection with this assignment.
Respectfully submitted,
T. M. Warner, MAI, SRA
Wisconsin Certified and Licensed General Appraiser
No. 227
As of the date of this report, I have completed the
requirements of the Continuing Education Program of
the Appraisal Institute Physically inspected
subject property
<PAGE>
Assumptions and Limiting Conditions
The certification of the Appraisers appearing in the appraisal
report is subject to the following conditions and to such other
specific and limiting conditions as are set forth by the
Appraisers in the report The Appraisers assume no responsibility
for matters of a legal nature affecting the property appraised or
the title thereto, nor do the Appraisers render any opinion as to
the title, which is assumed to be good and marketable. The
property is appraised as though under responsible ownership.
The Appraisers have made no survey of the property. Any sketch in
the report may show approximate dimensions and is included to
assist the reader in visualizing the property. The Appraisers are
not required to give testimony or appear in court as a result of
having made the appraisal with reference to the property in
question, unless arrangements have been previously made therefor.
Any distribution of the valuation in the report between land and
improvements applies only under the existing program of
utilization. The separate valuations for land and building must
not be used in conjunction with any other appraisal and are
invalid if so used.
The Appraisers assume that there are no hidden or unapparent
conditions of the property, subsoil or structures, which would
render it more or less valuable. However, the appraisers have
noted in the appraisal report any adverse conditions (such as,
needed repairs, depreciation, the presence of hazardous wastes,
toxic substances, etc.) observed during the inspection of the
subject property or have become aware of during the normal
research involved in performing the appraisal. Unless otherwise
stated in the appraisal report, the appraiser has no knowledge of
any hidden or unapparent conditions of the property or adverse
environmental conditions (including the presence of hazardous
wastes, toxic substances, etc.) that would make the property more
or less valuable, and has assumed that there are no such
conditions and makes no guarantees or warranties, express or
implied, regarding the condition of the property. The appraiser
will not be responsible for any such conditions that do exist or
for any engineering or testing that might be required to discover
whether such conditions exist. Because the appraiser is not an
expert in the field of environmental hazards, the appraisal
report must not be considered as an environmental assessment of
the property.
Information, estimates, and opinions furnished to the Appraisers
and contained in the report were obtained from sources considered
reliable and believed to be true and correct. However, no
responsibility for accuracy of such items furnished the
Appraisers can be assumed by the Appraisers.
Disclosure of the contents of the appraisal report is governed by
the Uniform Standards of Professional Appraisal Practice (USPAP)
as adopted by the Appraisal Institute to which the Appraisers are
affiliated. Neither all nor any part of the contents of the
report or copy thereof (including conclusions as to the
property's value, the identity of the Appraisers, professional
designations, reference to any professional appraisal
organizations, or the firm with which the Appraisers are
connected), shall be used for any purposes by anyone but the
client in the report, the borrower if appraisal fee paid by same,
the mortgagee or its successors and assigns, mortgage insurers,
consultants, professional appraisal organizations, any state or
federally-approved financial institution, any department, agency,
or instrumentality of the United States or any State or the
District of Columbia, without the previous written consent of the
Appraisers; nor shall it be conveyed by anyone to the public
through news, advertising, public relations, sales, or other
media without written consent and approval of the Appraisers.
Appraisals subject to satisfactory completion, repairs, or
alterations are contingent upon completion of the improvements in
a workmanlike manner. (FHLMC 439, 1986) It is hereby certified
that, as well as can be determined, the statements contained in
this appraisal and upon which opinions expressed herein are based
are correct, subject to the limiting conditions set forth. This
appraisal report conforms with regard to format and content in
accordance with the Uniform Standards of Professional Appraisal
Practice (USPAP) as adopted by the Appraisal Institute to which
the Appraisers are affiliated.
All furnishings/equipment, except if specifically indicated or
typically considered part of real estate, are disregarded and
only the real estate is considered. Sales data used in this
report is believed reliable but since it was not possible to
inspect each property completely it is necessary to rely on
information furnished by others and the value conclusions are
subject to the correctness and verification of the said data.
"Market Value", as defined below, does not reflect "Fair Value"
as defined in foreclosure cases, which value may be less, nor
does it reflect liquidation value. This report is not meant for
insurance purposes, is not an energy inspection and is subject to
an "Energy Efficiency Certificate, Stipulation or Waiver" as
authorized by DILHR, if so required. This appraisal report was
prepared for Mr. Michael Sweet of the Decade Companies, for
company purposes and may not be used for any other purpose,
without written consent from T. M. Warner, MAI, SRA.
Market Value Defined
The definition of
"Market Value"
according to Office of the Comptroller of Currency (OCC) 12 CFR
34, Subpart C is as follows:
"The most probable price which a property should bring in a
competitive and open market under all conditions requisite to a
fair sale, the buyer and seller, each acting prudently, and
knowledgeably, and assuming the price is not affected by undue
stimulus. Implicit in this definition is the consummation of a
sale as of a specified date and the passing of title from seller
to buyer under conditions whereby;
- Buyer and seller are typically motivated;
- Both parties are well informed or well advised, and
acting in what they consider their own best interests;
- A reasonable time is allowed for exposure in the open
market;
- Payment is made in terms of cash in U.S. dollars * or
in terms of financial arrangements comparable thereto;
and
- 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".
* Adjustments to the comparables must be made for special or
creative financing or sales concessions. No adjustments are
necessary for those costs which are normally paid by seller as a
result of tradition or law in a market area; these costs are
readily identifiable since the seller pays these costs in
virtually all sales transactions. Special or creative financing
adjustments can be made to the comparable property by comparison
to financial items offered by a third party institutional lender
that is not already involved in the property or transaction. Any
adjustment should not be calculated on a mechanical dollar for
dollar cost of the financing or concession but the dollar amount
of any adjustment should approximate the market's reaction to the
financing or concessions based on the Appraisers' judgment.
To aid the casual reader of this report, basic, non-definitional
principles of Market Value are summarized below:
- Market value is an economic concept based on the notion
of trading one thing for another according to an
agreed-on element of exchange such as money, services,
goods, or real estate.
- Market value is not the same as either "price" or
"cost".
- Market value assumes that a marketplace exists in which
privately owned properties can be traded and that
government supports and encourages, but also regulates
(and therefore contributes to), the private market and
the ownership of property.
- Market value is based on values established in
transactions between independent parties and is the
equitable standard for determining value between such
parties when voluntary negotiation is not possible.
- Market value is determined by the market, even when it
is not possible to precisely define the nature or
extent of that market.
Hazardous Materials
The value estimated is based on the assumption that the property
is not negatively affected by the existence of hazardous
substances or detrimental environmental conditions, unless
otherwise stated in this report. The Appraisers are not experts
in the identification of hazardous substances or detrimental
environmental conditions. The Appraisers' routine inspection of
and inquiries about the subject property did not develop any
information that indicated any apparent significant hazardous
substances or detrimental environmental conditions which would
affect the property negatively unless otherwise stated in this
report. It is possible that tests and inspections made by a
qualified hazardous substance and environmental expert would
reveal the existence of hazardous substances or detrimental
environmental conditions on or around the property that would
negatively affect its value.
ADA Compliance
The Appraiser(s) have not, nor are they qualified to conduct an
evaluation to determine whether or not the subject building
complies with Title 111 of the Americans With Disabilities Act
(ADA) printed in the Federal Register, CFR Part 36, July 26,
1991, effective January 26, 1992 relating to Public
Accommodations and Commercial Facilities containing Public
Accommodations. Regardless of ADA Compliance, this appraisal
assumes any improvements have been completed in a workmanlike
manner and in accordance with the plans and specifications and
building codes of said Community or State, whichever applies.
Property Rights Appraised
To be appraised are the leased fee property rights in and to the
herein described real estate. Fee simple ownership is described
as follows:
Absolute ownership unencumbered by any other interest or
estate, subject only to the limitations imposed by the
governmental powers of taxation, eminent domain, police
power and escheat.
Purpose Of The Appraisal
This appraisal is made to estimate the current "Market Value" of
the Fee Simple ownership of the subject property.
Function Of The Appraisal
The estimated "Market Value" as reported is to serve as a basis
establishing value for for internal purposes of the ownership
entity.
Appraisal Scope
An appraisal is a supported estimate of market value; the
appraisal process itself is a type of research study or project
including analysis of information found and conclusion drawn
about the estimated value of the property appraised.
Specifically, the report includes information about the real
estate market, its supply and demand balance, and information
about marketing terms, pricing, and values. As stated, the
objective of the appraisal is to estimate market value of the
property appraised. The appraisal is a process of research and
analysis; the appraisal report is the written summary of that
physical and mental activity. Thus, it is important to define
here, as well as in various sections of this appraisal, the
"Scope" is the extent and nature of the research and analysis
involved in the appraisal process.
Specific Assignment
The appraisal assignment is to value the land (including any
excess land) and all proposed improvements, including building
fixtures and appurtenances attached thereto by each of the three
recognized approaches to value: the Cost, Income Capitalization,
and Direct Sales Comparison Approaches, and to establish the
contributory value of any fixed building service equipment. No
furnishings, fixtures and equipment (FF&E) or any other personal
property was valued in connection with this assignment.
Inspection
The property was inspected for appraisal purposes on September 21
and September 25, 1996 by T. M. Warner, MAI, SRA. The effective
date of valuation is the date of inspection, September 25, 1996.
Market Delineation
The subject market area is defined as similar apartment areas in
Southeastern Wisconsin, focusing on the Madison Metropolitan
property markets. Naturally, comparable improved and vacant land
sales in the immediate area were given the greatest consideration
in the market analysis. Of the specific comparable vacant and
improved properties researched by the Appraisers as a basis of
comparison, all are regarded as "arm's length" sales and in a
market not normally subject to speculation. The motivational
factors of the sales will be discussed in the valuation section
to follow.
Data Sources
Comparable property research data sources included the
appraiser's real estate market information files and computer
records, physical signs indicating comparable property for sale,
for lease, or sold (and corresponding agent or broker), published
advertising, published news articles, personal interviews,
various assessors and the appraisers' other public record
reporting services. These sales and offerings were verified by
physical inspection, examination of county records and
conversations with the owners and/or agents of the individual
properties. Included within this report is an analysis of vacant
land and similar improved properties that are (were) the most
comparable to the subject. The valuation of the subject is based
on the (subject's) highest and best use, as defined later within
this report. Cost information for the building and land
improvements was obtained from the "Marshall Valuation Service"
published by Marshall and Swift, Los Angeles, California, and the
"Boeckh Building Valuation Manual" published by E. H. Boeckh
Company, New Berlin, Wisconsin, a division of Thomson Publishing
Corp.
Valuation Process
Application of the three conventional valuation techniques
including the Cost Approach, the Direct Sales Comparison Approach
and the Income Capitalization Approach, resulted in independent
value estimates. In a complete appraisal, all three approaches
are considered and the reasonableness and appropriateness of each
technique was weighted in comparison to typical market behavior.
A complete discussion of this process is located at the end of
the valuation sections in the reconciliation of the three
approaches.
<PAGE>
PROPERTY SALIENT FACTS
Taxes and Assessments
The subject property is identified as Tax Key Numbers 0710-032-
1502,1503 & 1504. The property is presently assessed as follows:
Land $1,246,000
Improvements 7,154,000
Total $8,400,000
The 1995 net real estate taxes were $269,370. The present
assessment ratio is 98.83%, indicating a real estate value of
$8,499,444.
Note: The value estimated as reported in this appraisal
differs from the Tax Assessor's estimate of "Fair
Market" value. As is customary, we did not consult the
Assessor to question the method(s) used in the
estimation. Accordingly, we are unable to review the
Assessor's findings and/or comment on the accuracy of
the estimate itself. No discernable pattern exists with
the assessments in the area; however, we have found the
commercial assessments to be relatively fair between
the various properties.
Zoning
Zoning classification for the property is R-4 Multi-Family
Residential District and the existing improvements represent a
legal and conforming use in accordance with this zoning
classification. All building and land improvements on the site
were approved by the City of Madison.
Flood Hazard Statement
According to the flood hazard map published by the Department of
Housing and Urban Development for the Federal Insurance
Administration (FEMA) Community Panel 5500830019-D, the subject
site is in a Zone C, an area of minimal flood hazard.
Legal Description
The subject's legal description is: Phase II: Lot 2 Certified
Survey Map 1872
Phase III: Lot 1 of
Certified Survey Map 2982
Phase IV: Lots 2 & 3
Certified Survey Map 2982
as further described on
the attached and included
surveys of lands located
in the City of Madison,
Dane County, Wisconsin.
Owner Of Record
According to Dane County Register of Deeds, there have been no
recent sales of the subject property. The property was purchased
in January, 1989 by the Decade Companies for $10,049,173.
<PAGE>
Area Information
Regional Overview - Madison Metropolitan Area
The subject is located in the city of Madison, Dane county,
Wisconsin. The City of Madison is part of Madison-Dane County
Metropolitan Area (SMA). Madison is located in south central
Wisconsin, 140 miles northwest of Chicago and 290 miles southeast
of Minneapolis. It is the state capitol and second largest city
in the state.
The Madison metro area had a population of 393,788 in 1995. The
January of 1994 population was 389,677 and the 1990 population
was 367,085. This is the largest increase in population of the 13
metro counties in Wisconsin.
Madison has been a very stable community because of its major
employer - the University and state and federal government. The
University of Wisconsin at Madison employs 26,467 with the next
major employers, the UW Hospital with 4,528 the US government
with 3,700 and the Madison school district with 3,462.
The unemployment rate has remained under 2% while the state has
average 3.8% almost two percent under the national rate of 5.8%.
The City of Madison has attracted much press in the last several
years. It topped "Money" magazines list of Best Places to Live
recently. Included is a copy of the article from the July, 1996
issue which will provide and detail many statistics and
background information.
Summary
The Madison Metropolitan area's accessibility to major markets,
its excellent location and superior transportation facilities,
its diversified economy and its favorable social and cultural
climate insure its position as an important center for trade and
commerce. Prospects for continued growth and prosperity are
excellent.
<PAGE>
Market Analysis
MULTIPLE FAMILY MARKET
The apartment market in Madison has a history of consistent
growth. There are approximately 45,300 rental in the city of
Madison and 69,100 rental units in Dane county. Over the past
three years construction of new multi-family units in Madison has
average approximately 1,100 unit per year. The balance of supply
and demand has kept overall vacancy rate in the 3 to 6 percent
range for most properties. 1995 was the year that construction
neared saturation and the market neared an overbuilding state.
Occupancies neared 7% in the far west region of Madison in 1995.
The market has recovered through 1996 with projects like the
Meadows now having waiting lists for several of its unit types.
Newer construction will have its niche but higher construction
costs and locations that are further from current amenities and
workplaces should lessen their competitive impact.
Subject Market Summary - Real Estate Sales
With the exception of the 1990-91 recession, in spite of
declining real estate values in other areas of the country, area
market values have been stable to increasing. Overall, we have
seen no evidence of decreasing local real estate values and this
stable to upward trend is expected to continue into the
foreseeable future. Demand for apartments and small freestanding
one story buildings continues to be the strongest segment of the
office, industrial and retail markets.
Financing
Ample funds are available; however, area lenders require a
considerable amount of equity in multi-family properties.
Although the lenders are very selective, financing for quality
borrowers with 20 to 30%+/- equity has been available. Interest
rates have risen slightly from the previous 25-year low observed
in mid to late 1993.
Summary - Estimated Marketing Period
An overview of the market for property similar to the subject
suggests a "typical" marketing period of less than six months.
As will be mentioned later, a project similar to the subject, the
465 unit "Country Meadows" was recently offered for sale and has
received over a dozen offers within a 60 day period. It is our
opinion that the marketing time should be within the above
mentioned time frame assuming the following:
- That the subject's condition at the time of offering
was the same as described in this report.
- That the subject offering price was within a reasonable
range of this appraisal's estimated "Market Value".
Neighborhood Description
The subject is located in the northeasterly portion of Madison.
The area is primarily single and multifamily residential.
Stoughton Road where local shopping is located is one-half mile
to the west.
Typical Developments
The immediate area is single family residential to the south and
west. There is commercial further east along Stoughton Road and
the main Madison post office at Milwaukee and Stoughton
intersection. To the north of Highway 30 is multifamily and
single family residential in the area range in value from $75,000
to $180,000. The neighborhood is considered a stable residential
area.
Freeway Access/Transportation
The site is buffered to the south by Highway 30 and to the east
by the 1-90/94 right of way. Highway 30 and 1-90 are at higher
grades than the project providing little objectionable noise
pollution.
The area has good transportation service with Thompson's access
to the previously mentioned highways and to Milwaukee and
Stoughton Roads. These streets also give good accessibility to
other areas in the city and the surrounding counties.
Adverse Influences
Overall, the subject apartments are comparable in use to the area
and do not exert or receive adverse market influences.
General Remarks
The area has good street access to other points in the
Metropolitan Madison via via arterial streets and the freeway
system. Residential values have been stable during the past year.
There has been limited development of new apartments projects
during the last year as developers completed rentup and
stabilization of newly developed stock that had made the market
become fragile.
<PAGE>
SITE IMPROVEMENTS
Site Description
Size
The subject property has slightly over 1827 feet of frontage on
North Thompson Drive, over 860 feet of frontage along the curve
of Highway 30 to its north and to the southeast abuts the I90-94
right of way as can best be seen from the included surveys. The
site is irregular in shape and contains 848,224 square feet or
approximately 19.473 acres.
Site
Parking Area The subject has asphalt paved
surface parking 512+/- cars. The
existing asphalt paving is in
average condition for its age.
Concrete Concrete sidewalks, curbs, stairs
and patios. There are individual
patios for ground floor units.
Landscaping Grass, trees and shrubs.
Signs Project identification signs along
N. Thompson, at the managers
building and along Highway 30 and
I90-94.
Utilities Commercial electric and gas,
municipal water, sanitary sewer and
storm sewer.
Topography The site is generally rolling
sloping from the southeast.
Bearing Quality No apparent problems.
Drainage Appears adequate.
Adverse Easements Typical utility, etc. To the best
of the Appraisers' knowledge, there
are no private restrictions,
easements, or encroachments, etc.,
which would adversely effect the
utility or value of the property.
Special Assessments None known.
Designated Flood Hazard Flood zone "C". See previous
section of this report for map
reference.
Underground Tanks None known.
Physical Description of Improvements
The site is improved with a two story and basement apartment
buildings, with a total of 316 units, of wood frame construction
with brick veneer first story exterior and wood and stucco panel
exterior surface finish. The 12 buildings are "L" shaped and
contain a total of 254,836+/- square feet of above ground gross
building. It should be noted that there is a difference between
the referenced typical unit sizes and this calculated building
area as shown on the rent roll. This is not unusual because
typical unit sizes are a generalization. The calculated size is
from surveys and the appraiser's measurements.
Unit Layout
Included are typical unit floor plans or layouts for the four
unit types: one, two, three and four bedroom units. The subject
has 100 one bedroom units, 192 two bedroom and 12 three bedroom
and 12 four bedroom types of units.
Building Specifications The quality of construction is assumed
to be average for a building of this
type.
Year Built Phase II was built in 1977 to 78, Phase
III in 1979 and Phase IV in 1980.
Foundation Reinforced concrete footings and poured
concrete block walls below grade, with a
4" reinforced concrete floor.
Exterior Walls The buildings being built in phases have
slightly different materials but are
generally wood frame with brick veneer
for the first story and wood and stucco
panel trim on the second story.
Wall Height 9'+/- story height for above grade levels.
Framing Wood framing above grade. With wood
trusses supporting the second floor and
batt insulation in the first floor
ceiling. The roof is supported by wood
trusses.
Roof Gable style, mediums pitched roof with
asphalt shingles.
Floors
Basement Concrete as described previously.
First Plyscore over wood joists.
Second Appears to be glued floor system on deep
floor trusses.
Floor Finishes Corridors and stairwells are to be
carpeted. The individual units will have
a carpeted foyer, carpeting in the
living rooms, bedrooms and walk-in
closets and sheet vinyl in the kitchens.
Bathrooms have a variety of finishes
including carpet, vinyl and ceramic
tile.
Walls Painted 1/2" drywall on the interior
walls, with 5/8" drywall on all exterior
walls, common walls and both sides of
the corridor walls. Assumes that there
are double insulated walls on the common
walls between units.
Ceilings Flat painted 5/8" drywall ceilings.
Windows Anodized aluminum framed double hung
windows in the bedrooms, with self
storing storms and screens. Each unit
has an anodized aluminum framed patio
door, with screens.
Electrical The building has adequate electrical
service, with each unit having 60+/- amps
breaker boxes. All units have smoke
alarms, as do the public areas, as
required by building codes.
Water Heater High recovery gas fired water heater.
Heating/Air Conditioning Each building has hot water
hydronic heating and separate
sleeve electric air conditioning.
Miscellaneous All units have electric range,
refrigerator, dishwasher, hood and
disposal.
Highest and Best Use
The following is given to clarify the concept of highest and best
use.
Highest and best use has been defined as:
The reasonably probable and legal use of vacant land or an
improved property, which is physically possible,
appropriately supported, financially feasible, and results
in the highest value.
Alternatively, that use, from among reasonably probable and
legal alternative uses, found to be physically possible,
appropriately supported, financially feasible, and which
results in highest land value.
The definition immediately above applies specifically to the
highest and best use of land. It is to be recognized that in
cases where a site has existing improvements on it, the highest
and best use may very well be determined to be different from the
existing use. The existing use will continue, however, unless and
until land value in its highest and best use exceeds the total
value of the property in its existing use.
Implied within these definitions is recognition of the
contribution of that specific use to community environment or to
community development goals in addition to wealth maximization of
individual property owners. Also implied is that the
determination of highest and best use results from the
Appraisers' judgment and analytical skill, i.e., that the use
determined from analysis represents an opinion, not a fact to be
found. In appraisal practice, the concept of highest and best use
represents the premise upon which value is based. In the context
of most probable selling price (market value) another appropriate
term to reflect highest and best use would be most probable use.
In the context of investment value an alterative term would be
most profitable use.
In ascertaining the subject's highest and best use, consideration
was given to such factors as zoning, location, surrounding
developments, the nature of the existing building improvements
and the current demand for land/buildings that are similar to the
subject.
The Land As If Vacant
Given the land use pattens of Madison and present zoning for the
area, the land would likely be improved with a similar multi-
family residential buildings.
Summary - Highest and Best Use
The existing subject multifamily residential improvements
represents the highest and best use of the subject property as of
the date of this analysis.
<PAGE>
Valuation Section
The Three Approaches to Value
The three basic appraisal techniques used in evaluating real
estate are the Cost, Direct Sales Comparison and Income
Capitalization Approaches. All approaches to value rely on
data derived from the market. The Cost Approach uses recent
sales of vacant land having similar amenities and zoning to
arrive at a land value which is added to the depreciated
value of the improvements. The Direct Sales Comparison
Approach is based on sales of similar, recently-sold
properties which develop an indication of the most probable
sale price for the property being valued. Under the Income
Capitalization Approach, data is taken from the market to
develop a gross income multiplier and/or a capitalization
rate.
The Cost Approach
This approach to value can be described as:
That approach in appraisal analysis which is based on the
proposition that the informed purchaser would pay no more
than the cost of producing a substitute property with the
same utility as the subject property. It is particularly
applicable when the property being appraised involves
relatively new improvements which represent the highest and
best use of the land or when relatively unique or
specialized improvements are located on the site and for
which there exist no comparable properties on the market.
Methodology
The procedure for valuing property with the Cost Approach
includes the following steps: 1) estimate the value of the land
(site) as though vacant and available for development to its
highest and best use; 2) estimate the reproduction or replacement
cost of the primary structure(s) as of the effective appraisal
date, including direct and indirect costs; 3) estimate other
costs (indirect costs) to bring the new, vacant primary
structure(s) to market conditions and occupancy levels; 4)
estimate an entrepreneurial profit; 5) add reproduction or
replacement costs, other costs, and the entrepreneurial profit to
arrive at the total cost of the primary structure(s); 6) estimate
accrued depreciation due to physical deterioration, functional
obsolescence, and external obsolescence; 7) deduct estimated
accrued depreciation from the total cost of the primary
structure(s) to derive an estimate of the depreciated cost; 8)
estimate the depreciated cost of accessory buildings and site
improvements; 9) add the depreciated costs of the primary
structure(s), the accessory buildings, and site improvements to
obtain the total depreciated cost of all the improvements; 10)
add site value to the total depreciated cost of the improvements
to obtain a value indication for the fee simple estate; and 11)
adjust the fee simple value to reflect the interests being
appraised, if necessary.
Replacement Cost
Defined as the estimated cost to construct, at current prices as
of the effective appraisal date, a building with utility
equivalent to the building being appraised, using modern
materials and current standards, design, and layout.
Reproduction Cost
Defined as the estimated cost to construct, at current prices as
of the effective date of the appraisal, an exact duplicate or
replica of the building being appraised, using the same
materials, construction standards, design, layout, and quality of
workmanship and embodying all the deficiencies, superadequacies
and obsolescence of the subject building.
Considering the age and condition of the improvements, the
replacement cost method was chosen for the appraisal. Cost
information and estimated replacement cost estimates were
generated by use of The Marshall Valuation Service. The manual is
copyrighted and published by The Marshall and Swift Company, Los
Angeles, California.
Analysis of Overhead and Profit
The estimated overhead cost, general contractor profits and
developer profit are reflected in a single factor by the Boeckh
cost valuation software, which may or may not be reflective of
the market. Overhead costs are expenses incurred that are
necessary to conduct the contractor's business. General
contractor profits represent the return (profit) after all other
expenses have been met involving the construction process.
Entrepreneurial profit is a market derived figure that reflects
the amount an entrepreneur (developer) expects to receive for his
or her contributions. It represents the return required for risk
and expertise associated with the development of the project,
over and above the cost of the project including the contractor's
profit. The important point here is the term general contractor,
developer, and/or entrepreneur is not necessarily synonymous and
often pertains to two (or more) entities.
If the cost of developing a property is used to indicate a value,
the appraiser must recognize the contribution of the entrepreneur
and consider this entrepreneurial profit in addition to the
direct and indirect costs, including the contractor's overhead
and profit. However, not all projects will realize an
entrepreneurial profit even if one appears to be reasonable from
information extracted from the market. Potential entrepreneurial
profit should be derived from market analysis and through
interviews with developers to determine expected profits required
to compel particular development. Historical profit margins
should be given less emphasis, as past expectations will
typically not equate to present anticipations, given a
continually changing economical climate.
The appraiser found that an entrepreneurial profit was
represented since most facilities of this type are constructed
for economic gain as would be expected from an apartment complex.
Estimation of Accrued Depreciation
Accrued depreciation is the difference between the replacement
cost of the improvements on the effective date of the appraisal
and the market value of the improvements on the same date.
Depreciation is separated by three general causes including
physical, functional, and economic or external.
Physical
Depreciation taken in this report is based on observed conditions
at the time of inspection. Physical deterioration is due to
normal wear and tear as a result of occupancy and weathering. The
age/life method was used in estimating the physical depreciation
of the building improvements. This method is estimated by
dividing the remaining life of the improvements by the sum of the
effective age and remaining life (known as the total physical
life). The building have actual ages ranging from 16 to 19 years,
the effective age of the entire building complex is estimated to
be approximately years. The remaining physical life is estimated
to be approximately forty-five years, assuming normal
maintenance.
Functional
Functional obsolescence reflects the loss in value brought about
by such factors as defects, deficiencies, or superadequacies that
effect the structure from performing adequately the function for
which it was (originally) intended. Generally, functional
inadequacies are typical for older buildings and the market
accepts them at a certain price level. The replacement cost
method is meant to remove certain functional obsolescence
relating to the overall design and construction methods, and as a
result is most useful in estimating the value of newer buildings.
Taking into consideration the subject's age, construction
quality, design and layout, no functional obsolescence was
charged to the building in the Cost Approach for the lack of
adequate handicap facilities.
Economic (External) Obsolescence
It should be noted that gains or losses in value caused by
externalities accrue to both land and buildings. Since the
estimated value of the site used in the Cost Approach is its
present market value as if vacant, any loss due to external
causes is already included. In the Cost Approach, a loss in
building value due to external causes is ascribed to external
obsolescence. Economic obsolescence is stated as an impairment of
desirability or useful life of a structure arising from external
factors. Usually, economic obsolescence is comprised of many
diverse and complex elements and can be somewhat difficult to
estimate.
No additional depreciation was charged as economic obsolescence
in the Cost Approach, since the present area rent levels would
not be economically feasible to construct this complex with its
present amenities.
Land Valuation
The area market was observed for other vacant land sales that
were similar to the subject site, as if vacant and available for
development. A detailed analysis of the five sales used is given
as follows. A summary table is located below.
<PAGE>
<TABLE>
SUMMARY OF VACANT SITE SALES
<CAPTION>
Address Sale Site Size $/Unit Units/Acre
Date Price (Square Feet)
<S> <C> <C> <C> <C> <C> <C>
Land Sale 266 Junction 3/94 $438,333 265,312 $3,653 20
#1 Madison
Land Sale 6009-29 Cottontail 11/93 $420,000 158,060 $7,500 15
#2 Madison
Land Sale 202-10 Junction 10/93 $421,000 254,750 $3,661 20
#3 Madison
Land Sale 1606 Cottontail 12/93 $288,000 140,289 $4,500 20
#4 Madison
Land Sale 7402 Watts 11/92 $1,100,000 597,927 $3,943 20
#5 Madison
</TABLE>
<PAGE>
Analysis of Sales
The subject's lot area is 848,224 square feet as taken from the
included surveys. For the subject, this would indicate a density
of 16.34 units per.
Sale Adjustments
Property Rights Conveyed
No adjustments were indicated as all transfers were of the fee
simple property rights.
Conditions Of Sale
Of the sales cited, any known sales concessions or other
financing factors were taken into consideration when analyzing
the subject's position in a typical "arm's length" transaction
per the aforementioned "definition of market value," herein. The
adjustment for financing/motivation takes into consideration any
below-market (or above) interest rate financing, and other
factors influencing the sale price not related to the real estate
itself. All sales were reported to be arms length, thus no
adjustments were indicated.
Market Conditions/Date of Sale
The sales sample spans a period of approximately four years, the
market for vacant sites in the area has been fairly stable to
improving over the past few years. An adjustment for time was
indicated for the vacant sales.
Neighborhood
The location adjustment takes into consideration the community,
neighborhood, access, visibility, and other known factors that
may contribute or detract an estimate of value for the subject.
Site Characteristics
Topography/shape, site access, sewer/water/utilities, zoning,
units permitted and site size are considered in estimating the
per unit value for the subject.
Summary
The sales were reviewed and compared to the subject with respect
to:
- Method of financing and other motivational factors
- Market conditions
- Neighborhood
- Zoning and intended use of the site
- Site characteristics
From this overview it is the Appraisers' opinion that the Direct
Sales Comparison Approach of the site develops a value of:
One Million Four Hundred Twenty-Two Thousand Dollars
($1,422,000)
This indicates a value of $4,500 +/- per unit for the
subject's 316 units.
<PAGE>
Area Computations: The Meadows II (Phases II,III & IV) 201-401 N.
Thompson Drive Madison, TMW96:47
Land Dimensions
Tax Key Numbers: 0710-032-1502,1503 & 04
From Attached Surveys
Land Area Phase II Lot 2 CSM 1872 220,844 SF+/-
Phase III Lot 1 CSM 2982 248,496 SF+/-
Phase IV Lots 2 & 3 CSM 2982 378,885 SF+/-
Total Land Area 848,224 SF +/- or 19.473 Acres +/-
Building Dimensions
Basement Area
Gross Basement Area 102,456
First Floor Gross Finished Floor Area 127,418 SF+/-
Second Floor Gross Finished Floor Area 127,418 SF+/-
Gross Finished Floor Area 254,836 SF+/-
First & Second Floors
Wall Length 2005.6 Lineal Feet+/-
Average Story Height 9.00 Feet +/-
Floor to Wall Ratio 127.06 Ratio
(Square feet + Lineal Feet)
Gross Building Area: 254,836 SF+/-
Site Improvements
Asphalt Paving - Drives & parking areas
Pool, deck, fencing and equipment building
Tennis courts
Concrete - Walks and patio
Landscaping - (Grass, Shrubs & Flowers)
Project Identification Signs
<PAGE>
Cost Analysis The Meadows II (Phases II,III & IV) 201-401 N. Thompson
Drive Madison, WITMW 96:47
Subject Building
Total Replacement Cost New
Basement 102,456 $ 1,485,612
First & Second Floors 254,836 SF @ $42.10 /SF+/- = $10,728,596
Depreciation Estimate $12,214,208
Actual Age 1977-78,79 & 80+/- 16 -19 Years
Effective Age 11 Years
Remaining Economic Life 45 Years
Depreciation Base 100%
Physical Deterioration 20%
Functional Obsolescence 0%
Economic Obsolescence 0%
Total Observed Depreciation 20% (2,442,842)
Total Net Improvement Value $9,771,366
Site Improvements Depreciated Values
Asphalt Paving - Drives & parking areas $95,000
Pool, deck, fencing and equipment building 17,500
Tennis courts 8,500
Concrete - Walks and patio. 25,000
Landscaping - {Grass, Shrubs & Flowers} 50,000
Project Identification Signs 2,000
$198,000
Land Value
Improved Site 316 units @ 4,500 per unit Rounded to $1,422,000
$11,391,366
Estimated Value (Value in Use) - Cost Approach Rounded to $11,400,000
<PAGE>
Direct Sales Comparison Approach
This approach to value is defined as:
That approach in appraisal analysis which is based on the
proposition that an informed purchaser would pay no more for
a property than the cost of acquiring an existing property
with the same utility. This approach is applicable when an
active market provides sufficient quantities of reliable
data which can be verified from authoritative sources. The
Direct Sales Comparison Approach is relatively unreliable in
an inactive market or in estimating the value of properties
for which no real comparable sales data are available. It is
also questionable when sales data cannot be verified with
principals to the transaction. Also referred to as the
Market Comparison or Market Data Approach.
The market was studied for similar improved sales and five
apartment buildings sales were selected as the most comparable to
the subject. A detailed analysis of each sale is given on the
following pages.
<PAGE>
Listing (Sale No. 1)
Country Meadows
Address: 6840 Schroeder Road (West side of Madison)
Date of Sale: Current listing
Land Size: 29.62 acres
Unit Mix: 84-Studio; 339-1 BR and 42-2BR=465 total
Size: 341 to 796, average is 607 square feet
Age: Phase I 1972-74 and II 1980
Sales Price: Offered at $13,050,000, final offers reported at
$12,500,000
Gross Rent Multiplier: 4.24
Estimated Net Operating Income: $1,226,000
Capitalization Rate: 9.8%
Price per Unit: $26,882
Sales Price Per Square Foot: $43.85
Comments: Project similar in age. Concentration of smaller units.
Offering had high interest with over a dozen strong offers. All
calculations were at reported final offer price.
<PAGE>
Sale No. 2
Woodhill
Address: 802-834 S. Gammon Road (West side of Madison)
Date of Sale: June 15,1993
Land Size: 3.70 acres
Unit Mix: 28-1 BR and 6-2BR= 34 total
Size: average is 1050 square feet
Age: 1987
Sales Price: $1,857,000
Gross Rent Multiplier: 6.28
Estimated Net Operating Income: $175,858
Capitalization Rate: 9.47%
Price per Unit: $54,618
Sales Price Per Square Foot: $48.87
Comments: Smaller project. Lower density and no amenities. Busy street
location.
<PAGE>
Sale No. 3
Maple Grove
Address: 3013-41 Maple Valley Drive (Southwest side of Madison)
Date of Sale: 3 closings May-October 1995
Land Size: 13.2 acres
Unit Mix: 160-1 BR and 72-2BR=232 total
Size: average is 909 square feet
Age: 1992-1995
Sales Price: $11,964,000
Gross Rent Multiplier: 6.1
Estimated Net Operating Income: $1,104,770
Capitalization Rate: 9.23%
Price per Unit: $51,569
Sales Price Per Square Foot: $56.43
Comments: Newer project. Lease up of a number of units necessary. Good
amenity package.
<PAGE>
Sale No. 4
High Point Woods
Address: 7601 Watts Road (West side of Madison)
Date of Sale: November 1, 1995
Land Size: 9.04 acres
Unit Mix: 64-1 BR and 116-2BR=180 total
Size: average is 921 square feet
Age: 1990
Sales Price: $8,667,000
Gross Rent Multiplier: 7.22
Estimated Net Operating Income: $780,896
Capitalization Rate: 9.01%
Price per Unit: $48,150
Sales Price Per Square Foot: $52.28
Comments: Newer project. Underground parking. Good west side location.
<PAGE>
Sale No. 5
Lincoln Ridge
Address: 7502 Watts Road (West side of Madison)
Date of Sale: November, 1995
Land Size: 22.3 acres
Unit Mix: 156-1 BR and 92-2BR=248 total
Size: average is 779 square feet
Age: 1988
Sales Price: $9,960,000
Gross Rent Multiplier: 6.49
Estimated Net Operating Income: $920,300
Capitalization Rate: 9.24%
Price per Unit: $40,161
Sales Price Per Square Foot: $51.55
Comments: Newer project. Underground parking. Good west side location
<PAGE>
Analysis of Sales
Sale Adjustments
Property Rights Conveyed
All of the transfers were of the fee simple property rights. No
adjustments were applied to any of the sales.
Conditions Of Sale
Of the sales cited, any known sales concessions or other
financing factors were taken into consideration when analyzing
the subject's position in a typical "arms' length" transaction
per the aforementioned "definition of market value", herein. The
adjustment for financing/motivation takes into consideration any
below-market (or above) interest rate financing, and other
factors influencing the sales price not related to the real
estate itself. All sales were reported to be "arms' length" and
no adjustments were necessary.
Market Conditions/Date of Sale
The sales sample spans a period of three years. The pricing
structure for existing apartment buildings in the subject's
market area has been stable over the past few years. Therefore,
no time adjustment per year was indicated.
Site Size
The method of adjustment for site size is the difference between
the subject and comparable multiplied by the Appraisers' observed
estimate of the effect the site size has on the value of each of
the comparables.
Neighborhood
The location adjustment takes into consideration the community,
neighborhood, access, visibility, and other known factors that
may cause economic (external) obsolescence. All of the
comparables are in defined apartment residential neighborhoods
similar to the subject.
Building Characteristics
Adjustments for age, quality, condition, ceiling height, floor
plan, and gross area, although closely related, are separated to
minimize generalization of the building as compared to the
subject. The major adjustments related to the age of the building
as compared to the individual sales. Adjustments for age were
made on the basis of a 40 year economic life. Adjustments for
construction quality and condition were not warranted for the
comparables. Adjustments were warranted for all of the
comparables but least applied to Sale 1 which was most comparable
with the exception of smaller unit sizes and concentration of
mix.
<PAGE>
Summary
The sales were reviewed and compared to the subject with respect
to:
- Personal property
- The property rights conveyed
- Method of financing and other motivational factors
- Date of sale
- Site size
- Zoning
- Desirability of area
- Type of building and construction quality
- Building age and size
- Condition of building
- Quality of finish
- The finished office area of the building
From this overview it is the Appraisers' opinion that the Direct
Sales Comparison develops an estimated "Market Value" of the Fee
Simple Estate, of:
Eleven Million One Hundred Thousand Dollars
($11,100,000)
The market indicator is $43.56+/- per square foot for
254,836+/-square feet, or $35,126 per unit for 316 units and a GRM
of 4.95.
<PAGE>
The Income Capitalization Approach
This approach to value can be described as:
That procedure in appraisal analysis which converts
anticipated benefits (dollar income or amenities) to be
derived from the ownership of property into a value
estimate. The Income Capitalization Approach is widely
applied in appraising income-producing properties.
Anticipated future income and/or reversions are discounted
to present worth through the capitalization process.
The income premise is defined as:
The underlying assumptions as to the pattern of the future
income expectancy which represents the basis of income
capitalization in the appraisal process. The income premise
may be based on the assumption that, while future income
installments may fluctuate, their equivalent is assumed to
be: (a) a level yearly income of a certain amount; (b) a
series of future incomes graduating upwards or downwards or
in both directions as per the series assumed in the
appraisal for valuation purposes.
Subject Rentals
Please refer to the Appraiser's Operating Statement for a list of
the present rentals and the rent per square foot of the subject.
To determine if these rentals are at market levels, the subject's
units were compared to competing projects.
Comparable Rentals
In analyzing the subject and comparable rental projects, a
comparison was made of the amenities offered. The rents were
profiled on a per unit and square foot basis. The projects chosen
are representative of the rental markets in Madison and appeal to
a similar tenant type that the subject is likely to attract.
<PAGE>
<TABLE>
Comparable Rentals - 1 Bedroom
<CAPTION>
Rent/SF Occupancy Size
Project _____ Heat ______
Rent/Month paid S.F.
<S> <C> <C> <C> <C> <C>
Rental No. 1 County Meadows $504-548
Madison $0.76-.83 91% No 609-722
Rental No. 2 Westridge Pond $482
Madison $0.77 98% No 625
Rental No. 3 Greenbriar I $528
Madison $0.78 99% No 675
<CAPTION>
Comparable Rentals - 2 Bedroom/1 Bath
Rent/SF Occupancy Size
Project _____ Heat ______
Rent/Month paid S.F.
<S> <C> <C> <C> <C> <C>
Rental No. 1 County Meadows
Madison $599
$0.75 91% No 796
Rental No. 2 Westridge Pond
Madison $548
$0.61 98% No 900
Rental No. 3 Greenbriar I
Madison $628
$0.66 99% No 950
</TABLE>
Summary, Comparable Rentals
Comparable rental analysis indicates that the existing subject
rentals, after considering differences for amenities, age,
condition of the unit and project location, are well supported in
the market. The resident manager has waiting lists for the three
and four bedroom units and is ready to implement a waiting list
for the two bedroom units.
Vacancy
Based on recent estimates and the experience of the rental
comparables, vacancy for similar apartment properties in the area
is at 6 to 9%. Vacancy forecast in an appraisal is based on the
investor's perceived risk of vacancy, even if the building is
100% occupied. While the quality of the tenants may be excellent
in the area, vacancies do exist in the market as evidenced by the
table of comparable rentals. A vacancy rate of 8% will be used
for the subject based upon its last three years history and
experience at Country Meadows.
Expense Estimate
The expenses are based on the actual expenses for the subject
project, included in the addendum of this report, and adjustments
made by the appraiser based on our experience with actual
projects to reflect current market expenses.
<PAGE>
<TABLE>
APPRAISER'S STABILIZED OPERATING STATEMENT TMW
96:47
<CAPTION>
# of Apartment Unit Description: Unit Size Total Net Base Rent Total Rent Total Rent Total Rent
Units (Based on Projected Rental Sq.Ft. Sq.Ft. Per.Mo.$ /Month $ Per SF Per Yr. $
Income Upon Completion)
<S> <C> <C> <C> <C> <C> <C> <C>
88 One Bedroom and One Bath 625 55000 $500 $44,000 $0.80 $528,000
12 One Bedroom and One Bath 744 8928 520 6,240 $0.70 $74,880
192 Two Bedrooms and One Bath 875 168000 585 112,320 $0.67 $1,347,840
12 Three Bedrooms and Two
Baths 1466 17592 750 9,000 $0.51 $108,000
12 Four Bedrooms and Two Baths 1466 17592 850 10,200 $0.58 $122,400
316 267,112 $181,760 $0.68 $2,181,120
<CAPTION>
<S> <C> <C> <C>
Miscellaneous Income: $16.60 $5,246 $62,947
Projected Gross Income From All Sources: $2,244,067
Vacancy and Credit Loss: 8.00% (179,525)
<CAPTION>
Effective Gross Income: $2,064,542
($/SF) ($/YR)
<S> <C> <C> <C>
Real Estate Taxes 1.01 269,370
Personal Property Tax 0.00 N/A
Insurance 0.11 29,000
TOTAL FIXED EXPENSES $298,370
OPERATING EXPENSES
Personnel 0.80 215,000
Office on site 0.04 11,500
Utilities - Common area and vacant 0.56 150,000
Management Expenses @ (5.% EGI) 0.39 103,227
Outside Contractors 0.19 52,000
Building Services 0.13 34,000
Supplies 0.11 29,000
Grounds 0.10 26,000
Profession Fees 0.03 6,800
Advertising and Marketing 0.07 17,500
Reserves 0.12 31,600
Miscellaneous 0.01 1,896
TOTAL OPERATING EXPENSES 678,523
TOTAL FIXED & OPERATING EXPENSES 3.66 976,893
NET OPERATING INCOME (NOI) 4.07 $1,087,649
Expenses as a % of Effective Gross Income 47.32%
<PAGE>
Capitalization Theory and Techniques
The Income Approach is the most relevant valuation method for the
valuation of property usually bought and sold based upon its
income production. The analysis of the subject's income
production has been stabilized for typical stabilized expenses
and rental production on the operating statement included.
Processing this income can be done in two ways: direct
capitalization which utilizes the ratio of currently expect net
operating income from comparable sales data and/or converting
projected future income into an indication of present value, by
discounted cashflow analysis. Both methods were utilized and
produced consistent value indications for the subject.
Direct Capitalization
From the appraiser's stabilized operating statement, net
operating income was estimated at $1,087,649. A direct
capitalization rate was determined from the previous sales
analyzed as well as the appraiser's experience with similar
properties and the following value indicated:
$1,087,649 + .0975 = $11,100,000 (Rounded)
Discounted Cashflow Analysis (DCF)
The table following this section is the Appraisers' analysis of
the cashflow potential of the subject property over the ten (10)
year projection (holding) period. The cashflows are derived from
the previously mentioned rental income, less expenses and
reserves. In direct capitalization, the income and expenses are
assumed to be level and stabilized over the holding period. We
have projected both the income and expenses to increase 2% over
the holding period trailing the CPI. In the DCF, the cashflow of
each period is discounted to present worth, and all present
values are totaled. The future value of the equity reversion, or
return OF investment is defined as the lump sum of the investment
realized upon the sale of the property, is forecast at the end of
the period as shown on the table and is discounted at the same
rate.
Selection of the Discount Rate
Increasing slightly in the past few months, mortgage interest
rates range from 8.0% to 10.00%. If overall capitalization rates
are 9-10%+/- and interest rates are at 8.0% to 10.00%+/-, for a 70-
80% loan-to-value, with a 20 to 30 year amortization rate, the
yield to the 25% equity position is between 12-16%, depending
upon the expectation of the investor regarding scheduled rent
increases and/or reversion. After analyzing and considering the
potential risk, upside potential and reviewing the discount rate
abstracted from the sales analyzed, a 15.00% discount rate was
applied to this real estate investment.
Estimated Reversion Value
At the end of the period, normally the sale price of the subject
property is estimated by capitalizing the expected net operating
income (NOI) of the eleventh (11th) year at a capitalization rate
comprised of the mortgage interest rate, and discount (equity
yield) rate as shown on the DCF assumptions. The resulting
estimated sale price of the property, less sale expenses and
mortgage balance, is discounted at the same rate as the periodic
income. Since we discounted the cashflow for adequate
replacement reserves and the investors interviewed do not expect
significant appreciation over the holding period, the estimated
reversion value is not expected to increase over the present
estimated value. The discounted cash value is indicated to be
$11,203,000, before rounding and than rounded to $11,200,000.
Conclusion
The value estimate in the Income Capitalization Approach by
Direct Capitalization converts only the first year NOI into
value, however most represents the owner/occupant in the market.
The use of a Discounted Cashflow Analysis allows for irregular
cashflows. Both methods employed recognize return ON and return
OF capital, however, we feel the use of a Discounted Cashflow
Analysis is the appropriate method of valuation for the subject
property. Both techniques support each other.
Estimated Value by The Income Capitalization Approach
Direct Capitalization -Eleven Million One Hundred Thousand
Dollars
($11,100,000)
Discounted Cash Flow-Eleven Million Two Hundred Thousand Dollars
($11,200,000)
<PAGE>
</TABLE>
<TABLE>
Discounted Cashflow Analysis TMW 96:47
<CAPTION>
Year 1 2 3 4 5 6 7 8 9 10
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue
Potential Gross
Income (PGI) 2,244,067 2,288,949 $2,334,728 $2,381,422 $2,429,051 $2,477,632 $2,527,184 $2,577,728 $2,629,282 $2,681,868
Annual Change
in PGI Base 2.00% 2.00% 2.00% 2.00% 2.00 2.00% 2.00% 2.00% 2.00%
Vacancy and
Collection
Loss % 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Vacancy and
Collection
Loss $ $(179,525) ($183,116) ($186,778) ($190,514) ($194,324) ($198,211) ($202,175) ($206,218) ($210,343) 2#($214,549)
Effective Gross
Income (EGI) $2,064,542 $2,105,833 $2,147,949 $2,190,908 $2,234,726 $2,279,421 $2,325,009 $2,371,510 $2,418,940 $2,467,319
Expenses
Fixed Expenses
%Change in
Property Taxes Base 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Property Taxes $269,370 $274,757 $280,252 $285,857 $291,574 $297,405 $303,353 $309,420 $315,608 $321,920
%Change in
Insurance Base 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Insurance $29,000 $29,580 $30,172 $30,775 $31,391 $32,019 $32,659 $33,312 $33,978 $34,658
Total Fixed
Expenses $298,370 $304,337 $310,424 $316,632 $322,965 $329,424 $336,012 $342,732 $349,586 $356,578
Variable Expenses
%Change In
Variable
Expenses 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Total Variable
Expenses $678,523 $692,094 $705,936 $720,055 $734,456 $749,145 $764,128 $779,411 $794,999 $810,899
Total Expenses
and Reserves $976,893 $996,431 $1,016,360 $1,036,687 $1,057,421 $1,078,569 $1,100,140 $1,122,143 $1,144,585 $1,167,477
Debt Service
Mortgage Balance
Beginning of
Year $8,366,000 $8,268,823 $8,162,793 $8,047,104 $7,920,877 $7,783,151 $7,632,878 $7,468,917 $7,290,019 $7,094,824
Mortgage Balance
End of Year $8,268,823 $8,162,793 $8,047,104 $7,920,877 $7,783,151 $7,632,878 $7,468,917 $7,290,019 $7,094,824 $6,881,848
Monthly Payment $68,781 $68,781 $68,781 $68,781 $68,781 $68,781 $68,781 $68,781 $68,781 $68,781
Total Debt
Payment $825,366 $825,366 $825,366 $825,366 $825,366 $825,366 $825,366 $825,366 $825,366 $825,366
Interest $728,189 $719,337 $709,678 $699,139 $675,094 $675,094 $661,405 $646,469 $630,172 $612,390
Principal $97,177 $106,030 $115,689 $126,227 $137,726 $150,272 $163,962 $178,898 $195,195 $212,976
Cash Flow Summary
Effective Gross
Income (EGI) $2,064,542 $2,105,833 $2,147,949 $2,190,908 $2,234,726 $2,279,421 $2,325,009 $2,371,510 $2,418,940 $2,467,319
Total Expenses
and Reserves ($976,893) ($996,431)($1,016,360)($1,036,687)********************($1,100,140)($1,122,143)($1,144,585)($1,167,477)
Net Operating
Income (NOI) $1,087,649 $1,109,402 $1,131,589 $1,154,221 $1,177,305 $1,200,852 $1,224,869 $1,249,367 $1,274,355 $1,299,842
Less Total Debt
Service ($825,366) ($825,366) ($825,366) ($825,366) ($825,366) ($825,366) ($825,366) ($825,366) ($825,366) ($825,366)
Equity Dividend $262,282 $284,035 $306,223 $328,855 $351,939 $375,486 $399,503 $424,000 $448,988 $474,475
Net Proceeds
from Reversion $4,587,842
Total Cash Flow $262,282 $284,035 $306,223 $328,855 $351,939 $375,486 $399.503 $424,000 $448,988 $5,062,317
<CAPTION>
Basic Assumptions & Mortgage Data Reversion Calculations
<S> <C> <C> <C> <C>
Discount Rate 15.00% Eleventh Year NOI $1,325,839
Mortgage Interest Rate 8.75% Terminal Capitalization Rate 10.75%
Amortization (Years) 25 Annual Appreciation (Reversion) 1.50%
Mortgage Amount $8,366,000 Reversion Value $12,333,000
Mortgage Ratio 75.00% Sales Expenses (% of Reversion Value) 7% ($863,310)
First Year Expense Ratio
(Includes Reserves) 47.32% Outstanding Mortgage ($6,881,848)
First Year NOI (For
Market Comparison) $1,087,649 Net Proceeds From Reversion $4,587,842
Stabilized OAR 9.71%
<CAPTION>
Reconciliation
Net Present Value of
Cash Flow $2,837,274
Plus Original Mortgage
Amount 8,366,000
Estimated Market Value $11,203,274
Say $11,200,000
<PAGE>
Correlations and Conclusions
Value can be defined as the power of acquiring commodities in
exchange, generally for a comparable utility - the utility of the
commodity parted with (money) and that of the commodity acquired
in the exchange (property). All aspects of the appraisal problem
have been considered and based upon information researched and
received, as detailed in this report, the following observations
can be made:
- The subject's zoning is R-4 Multi-Family and the
present improvements represent a legal and conforming
use in accordance with this zoning classification. The
property is served by all utilities, including
municipal sewer and water, and commercial gas,
telephone and electric service.
- At the time of inspection of the site and existing
building improvements were considered to be in average
condition for their age. Quality of materials used is
considered average for this type of apartment project.
- There are sufficient recent sales of apartment projects
of a variety of attributes to provide sufficient
support and data to produce reliable value indicators
and competing existing rental projects are well
occupied.
- The subject improvement consists of twelve apartment
buildings with 316 units. This building represents an
appropriate use of the land and best represents the
highest and best use of the subject property as of the
date of this valuation.
- The area has good street access to shopping and support
facilities and to the Madison Metropolitan area. Market
values have been stable to increasing and vacancies
appear to be declining.
Reconciliation
The appraisal process is based upon information and data obtained
from the market. Data cited within this report is based upon
verified information and all sources of information are assumed
to be reliable. Proper management of the subject project is
assumed. The Appraisers assume the property will be maintained
according to acceptable community standards.
The $11,400,000 value indicated by the Cost Approach was given
consideration but less weight than the other two approaches due
to the necessity of estimating depreciation for the subject.
The estimate of $11,100,000 by the Direct Sales Comparison
Approach was given a great deal of consideration since the data
used to develop this approach was extracted from the market. The
estimates of $11,200,000 using Discounted Cash Flow Analysis and
$11,100,000 using Direct Capitalization provide consistent value
indications. These two approaches allow for the use of market
derived income and expense, and the use of market-derived
indicators to estimate value. In the final analysis, the
predominant value indicated was selected to provide the final
value.
Based on an inspection of the subject property, a study of the
Madison Metropolitan apartment property market, a study of sales,
offerings of similar properties, as well as other environing
factors pertinent to value, it is our opinion that the subject
property has an estimated "Market Value" of the Fee Simple Estate
as of September 25, 1996 of:
Eleven Million One Hundred Thousand Dollars
($11,100,000)*
*of which $1,422,000 is ascribed to the value of the land. No
furniture, fixtures and equipment (FF&E) or any other personal
property was valued in connection with this assignment.
Respectfully submitted,
T. M. Warner, MAI, SRA
Wisconsin Certified and Licensed General
Appraiser No. 227
As of the date of this report, I have
completed the requirements of the
Continuing Education Program of the
Appraisal Institute Physically inspected
subject property
<PAGE>
Certification
According to the best of the Appraisers' knowledge and belief,
all statements and information in this report are true and
correct and the Appraisers have not knowingly withheld any
significant information. All contingent and limiting conditions
are contained herein (imposed by the terms of the assignment or
by the undersigned Appraisers affecting the analysis, opinions,
and conclusions contained in this report). 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. Neither our engagement to
make this appraisal (nor any future appraisals for this client)
nor any compensation therefor are contingent upon the reporting
of a predetermined value or direction in value that favors the
cause of the client, the amount of the value estimate, the
attainment of a stipulated result, or the occurrence of a
subsequent event. Our analyses, opinions, and conclusions were
developed and this report has been prepared, in conformity with
the Uniform Standards of Professional Appraisal Practice. The
undersigned Appraisers have personally inspected the property
that is the subject of this report, both inside and out. All
conclusions and opinions concerning the real estate that are set
forth in the appraisal report were prepared by the Appraisers
whose signatures appear on this appraisal report and no one
provided significant professional assistance to the persons
signing the report. No change of any item of the appraisal report
shall be made by anyone other than the Appraisers and the
Appraisers shall have no responsibility for any such unauthorized
change.
The undersigned Appraisers certify to Mr. Michael Sweet of the
Decade Companies that this appraisal meets those minimum
standards established under the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 ("Act") and adopted by
regulators subject to the Act for federally related real estate
transactions.
Respectfully submitted,
T. M. Warner, MAI, SRA
Wisconsin Certified and Licensed General
Appraiser No. 227
As of the date of this report, I have
completed the requirements of the
Continuing Education Program of the
Appraisal Institute Physically inspected
subject property
<PAGE>
One of The Meadows II buildings
looking southeast from Thompson Drive
Pool Area
<PAGE>
Subject Property's management office area
Property Management office interior
<PAGE>
Subject Property grounds
Street scene looking south along Thompson Drive
<PAGE>
Typical building exteriors and volleyball area
Subject Property - Typical unit interior
<PAGE>
Mechanical room
Subject Property looking northerly
<PAGE>
Subject Property
<PAGE>
THE MEADOWS APARTMENT GRAPH HERE!
<PAGE>
LOT 1, CSM NO. 2982 GRAPH HERE!
<PAGE>
LOT 2, CSM 1872 GRAPH HERE!
<PAGE>
ONE BEDROOM GRAPH
TWO BEDROOM/DEN GRAPH
<PAGE>
TWO BEDROOM GRAPH
THREE BEDROOM/DEN GRAPH
<PAGE>
LIVE IN AMERICA
<PAGE>
No. 1
Why Madison, Wis. Is The Big Cheese
So what makes the Madison, Wis. area such a great place to
live today? MONEY senior writer Carla Fried went there to ask a
cross section of the residents just that. She got such
convincing answers that she now says she's ready to move there
herself-after winter's over. Here's what she heard:
- Area population: 390,300
- Unemployment rate: 1.5%
- Three-bedroom house: $123,000
- Property tax: $3,800
- Top state and local income tax: 6.93%
- Sales tax: 5.5%
- Violent crimes per 100,000: 280
- Annual sunny days: 190
- For more information: 608-256-8348
"There are tons of Madison leagues. I play on my company's
basketball team."
-Jim Kappelman, a Promega biochemist
"With the festivals and things like the farmers' market, there's
lot to do."
-Jeanette Gunderson, a waitress for 36 years at Smoky's,
which is a Madison institution
"It's a great place for kids, with excellent schools."
-UW professor Rich Matyi, with wife Rita and kids
BEST PLACES
1996
*
full of trade-offs. The 390,300 residents of Dane
County, 80 miles west of Milwaukee in south-central Wisconsin,
have a vibrant economy with plentiful jobs, superb health care
and a range of cultural activities usually associated with cities
twice as big. Yet this mid-size metro area also offers up a low
crime rate and palpable friendliness you might assume are
available only in, say, Andy Griffith's Mayberry. The news that
the great Dane County is top dog this year probably won't
surprise the region's residents. More than 90% of Madison-ians
rated their quality of life good or very good in a recent survey.
Since the cosmopolitan Madison area-the city accounts for about
half the county's population-is surrounded by Wisconsin's ever
present diary farms, it seems only right to toast 1996's No. 1
big cheese with a wedge of aged Wisconsin cheddar.
Yet mid-size Madison's rise to the top this year-from No. 16 in
1995-is more than a simple dairy tale. Madison won the gold
medal much like a decathlon champion who piles up point without
winning any single event. As the top 10 table on page 72 shows,
Madison beat all its competitors by being proficient in many of
our broad categories. If residents of the Wisconsin capital have
any major complaint, it might be about the weather. The average
winter high is a mere 20 degrees F, and April snow-showers sometimes
usher in late-May flowers. But Madisonians will tell you that's
the price to pay for the sublime spring, summer and fall weather.
And they do try to make the best of the cold; the city will host
the 1997 International Kite Skiing World Championships next Jan.
30 to Feb. 1.
If you're looking for more temperate climes with a great
quality of life, Florida is this year's best state. For the
second consecutive year, the Sunshine State boasts five of the
top 10 places, though not the same five as last year. Punta
Gorda (No. 2), 50 miles south of Sarasota on the Gulf Coast,
leads the Florida flotilla, while Gainesville (No. 7) slipped
from last year's No. 1 ranking. Fort Lauderdale (No. 4), Fort
Myers/Cape Coral (No. 6) and Lakeland (No. 10) complete the
Florida Five in our top 10. Strikingly, the state is home to 10
of the top 20 best places this year. "The Florida economy is
extremely healthy," says Mark Vitner, an economist at First Union
National Bank in Charlotte, N.C. who specializes in the
southeastern states.
Florida's 20 metro areas also have the pocketbook-friendly
advantage of no state or local income tax. That was an important
factor in the high rankings for Austin (No. 8) and Seattle (No.
9) too. And taxes aside, strong economies, terrific health care
and low crime helped Rochester, Minn. (No. 3) and Ann Arbor (No.
5) round out our top 10.
All 10 of our Best Places share some key characteristics:
- -Plenty of jobs. While many Americans worry about keeping their
jobs-or getting new ones if they're downsized-there are ample
employment opportunities in our top 10. NPA Data Services, a
Washington, D.C. research and economic forecasting firm, projects
that each of these metro areas will post job gains through 1999
that easily beat the forecast 6% U.S. average.
- -Great Outdoors. Yes, it gets darn cold in Ann Arbor, Madison
and Rochester, but locals in all top 10 spots gloat about their
natural surroundings. Weather permitting, each area offers great
biking, boating, fishing, swimming and jogging opportunities.
- -Manageable size. Eight of our top 10 places are either small
(population below 250,000) or medium-size (up to 999,999). Fort
Lauderdale (1.4 million) and Seattle (2.2 million) are the lone
biggies. The box on page 92 offers more proof that the good life
is harder to come by in the nation's large cities.
So what makes us so mad about Madison? Start with the peppy
economy. Madison's absurdly low 1.5% unemployment rate is the
lowest of all 300 places we ranked. Partly, that's because the
40,000 - student University of Wisconsin accounts for nearly 13%
of the area's steady work force. Madison is also home base for
about 20,000 recession-resistant federal, state and county
government jobs. More than 10,000 small and mid-size
manufacturing and service firms help fuel local growth.
You might not think of Madison as a high-tech center, but
more than 300 tech firms-mostly small biomedical, pharmaceutical
and micro-electronic companies-having notched average annual job
growth of more than 10% during the past decade. Bill Linton,
founder and president of Promega, a $60 million supplier of
chemical products for researchers, says Madison's superb quality
of life has been an important recruiting tool. "We don't have
oceans or mountains, but even people from California like coming
here," says Linton, who oversees a staff of 425. "That's because
we also don't have long commutes, traffic congestion, a crime
problem or overcrowded schools."
The schools get understandably high marks from parents.
There are 14 students per teacher in the county's public schools,
on average, which is the 23rd lowest among our 300 places,
according to Expansion Management, a trade magazine in Overland
Park, Kans. that measures the nation's schools for MONEY. In
addition, the 1,141 average SAT score for Madison high schoolers
is 25% higher than the U.S. average. No wonder, then, that 91%
of parents send their children to public schools.
Mad City, as locals call it, is also Fun City, especially if
you like boats and bikes. The Mendota and Monona lakes are
separated by a half-mile-wide isthmus that serves as downtown
Madison. Add in three other large lakes, and Dane County can
satisfy any type of boating preference. Cyclers have more than
150 miles of bike trails and routes to pedal. In winter, cross-
country skiers glide through more than 100 miles of trails. For
cerebral outings, Madison has five museums, including the little-
hands-on Madison Children's Museum.
Saturdays in the fall are reserved for rooting on UW's
revered Badgers football team. The Milwaukee Brewers and Bucks
provide major league baseball and hoops action, and football's
Packers are a two-hour drive in Green Bay. A popular May through
October ritual is the farmers' marker, where about 18,000
residents shop each Saturday. The convivial throng could teach
New Yorkers a thing or two about crowd control, as everyone moves
in a fluid and orderly counterclockwise processional. Serious
shoppers pull wagons to haul home portobello mushrooms, smoked
trout, plants, bratwurst, baked goods and, of course, cheese.
There's also plenty to do without getting out of a chair.
The Canterbury Booksellers Coffeehouse Inn attracts a
multigenerational crowd, where evening entertainment ranges from
a jazz combo and book readings to elementary school kids reading
their original works. Around the corner, you can catch an earful
at the Madison Civic Center, where the Wisconsin Chamber
Orchestra and Madison Symphony perform, and plays such as Edward
Albee's Pulitzer prizewinning Three Tall Women are staged.
Madison became No. 1 through our proprietary three-step
ranking process. First, we had the New York City polling firm of
Roper/Starch Worldwide survey our readers, asking a
representative sample of 250 subscribers (median household income
of $72,625) to rate 41 quality-of-life factors on a scale of 10
(most important) down to one (least important). Low crime was
the top priority this year, although job concerns scored highly
too. For a detailed look at what matters most to MONEY readers,
see page 79.
Next, working with Fast Forward, the Portland, Ore.
demographic consulting firm, we collected data for the 300
largest metro areas as defined by the U.S. Office of Management
and Budget. Flagstaff, Ariz. (No. 208) and Hattiesburg, Miss.
(No. 260) joined this year's list. We used a combination of
government data and information from private sources. For
example, our crime figures are from the latest FBI Uniform Crime
Statistics report, which covers 1994. Century 21's real estate
brokers gave us the typical price of a three-bedroom home and its
property taxes in each area, plus the appreciation rate over the
past 12 months. Other data providers included the American
Chamber of Commerce Researchers Association for cost-of-living
stats; Arizona State University's Economic Outlook Center for
recent job growth; and NPA Data Services for future job growth.
We added three new types of data this year. To measure air
quality, we used the ozone ratings of the Environmental
Protection Agency. To flesh out our arts scores, we included
figures from Opera America, a not-for-profit group. And in our
leisure category, we awarded points to metro areas within 60
miles of the nation's most visited amusement parks, according to
Amusement Business magazine.
Once we had the figures, Fast Forward's Bert Sperling
assigned them to our nine broad categories: crime, economy,
health, housing, education, weather, leisure, arts and culture,
and transportation. Then we weighted the data according to our
readers' preferences. Finally, reporters visited the top 10 and
bottom five places. After all, computers can't tell you
everything.
As in the past, some places moved substantially in our
rankings. Such seismic shifts are a combination of our readers'
changing preferences from last year, updated figures and new
data. The new certainly improved in Norfolk/Virginia
Beach/Newport News, which jumped to No. 117 from 283 last year,
powered by improved rankings in health, education and housing,
No. 38 Monmouth/Ocean counties, N.J. also shimmied up, from 167
in 1995, on the strength of forecast job growth. California-and
its economy-is on the comeback trail from 1995, when its highest
ranking was 24th-place San Francisco. This year, San Francisco,
San Diego and San Jose landed in the top 20, at No. 13, 16, and
19 respectively. Benton Harbor, Mich. (No. 249) plunged the
farthest; a projected job growth rate that's a third the U.S.
average contributed to its 202-slot dive.
The bottom five places didn't score highly in any of our
categories. Lima, Ohio (No. 296) is contending with massive
downsizings. For example, the General Dynamics plants employs
600 workers, compared with more than 2,000 in 1992. Talk to
anyone in Davenport, Iowa (No. 297), and you'll hear that life is
a lot better than the early '80s, when the nation's farm economy
hit the skids. Still, the area-which includes Bettendorf, Iowa,
and Moline and Rock Island, Ill.-was in the bottom third of our
economy, crime and education rankings and scored poorly for
leisure. To be fair, the Quad City Thunder play in the
Continental Basketball League and there's riverboat gambling on
the Mississippi and class-A baseball. Peoria (No.298) copes with
big public school classes and small future job growth that's
expected to be half the U.S. rate. Though last year's No. 300,
the farming community of Yuba City, Calif. moved up to 299, it
still struggles with a near 20% unemployment rate in the winter
non-farming months.
At the bottom, No. 300 Rockford, Ill. grapples with subpar
prospects for future job growth and a below-average health-care
system. The region's low number of doctors per capita rates in
the bottom third of our 300 areas. Rockford also has little in
the way of measurable arts, culture or leisure activities. But
Sunil Puri, 35, raves about the area's friendliness. "This is a
community where people really care about one another," says the
land developer. On page 86, Michael Moore reports on the
continuing travails of his hometown, No. 140 Flint, Mich., which
was our first No. 300 and the subject of his film, Roger and Me.
For detailed descriptions of our Best Places Nos. 2 through
10, read on. You can also find out how living costs vary, on
page 81. And if crime is on your mind, check out the box on page
92 for a look at the metro areas with the lowest crime rates in
America: Appleton/Oshkosh, Wis. and Johnstown, Pa. -C.F.
<PAGE>
No. 1 THROUGH THE YEARS 1987-1996
Our No. 1 place has moved around a lot during the past decade.
First , the Northeast was Eden (Nashau, N.H. and Danbury, Conn.);
then the West was best (Seattle, Bremerton, Wash. and Provo/Orem,
Utah). Next the midwest (Sioux Falls, S.D. and Rochester, Minn.)
and Southeast (Raleigh/Durham, N.C. and Gainesville, Fla.)
scored. Now, the heartland rules again with Madison, Wis.
OUR RANKING OF THE BIGGEST PLACES
HOW OUR TOP 10 COMPARE
IF YOU WANT TO KNOW WHY MADISON, WIS. is this year's no. 1, look
at how each of our top 10 metropolitan areas scored in nine broad
categories. Madison did especially well in four: economy,
health, transit and education. No. 2 Punta Gorda, Fla. zoomed up
19 spots with its economy's perfect score, due partly to 16.3%
projected job growth through 1999. Also, naturally, all five of
our top 10 Florida areas rated highly for weather. No. 3
Rochester, Minn. is tops in health, with the Mayo Clinic. The
safest place among our top 10 is No. 5 Ann Arbor, which also has
a strong economy and great health care. Recent job growth of
6.76% helped propel Austin to No. 8. And our most populous
winner, No. 9 Seattle, led the pack in leisure choices, with it
three pro teams. The best performance figures in the top 10 are
indicated by circles. -L.M.
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
1996 RANK (1995) Economy Health Crime Housing Education Weather Transit Leisure Arts
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Madison, WI (16) 94 99 49 27 96 11 85 8 28
2 Punta Gorda, Fla. (6) (100) 23 56 25 29 77 28 21 27
3 Rochester, Minn.(2) 65 (100) 65 49 61 14 (100) 12 27
4 Fort Lauderdale (6) 91 57 8 49 37 71 17 41 26
5 Ann Arbor (33) 84 75 (80) 18 48 19 42 34 (45)
6 Fort Myers/Cape Coral, Fla. (34) 8 23 22 (59) 30 77 22 16 14
7 Gainesville, Fla. (1) 90 37 5 45 55 79 47 16 18
8 Austin (35) 95 27 23 41 (80) 68 26 15 18
9 Seattle (4) 70 61 22 14 46 47 60 (90) 37
10 Lakeland, Fla. (41) 78 47 11 52 36 (81) 19 37 18
1996 Metropolitan area 1995 27 Daytona Beach, Fla. (13)
11 Tampa/St. Petersburg (11) 28 Boulder (48)
12 Orlando (17) 29 Fort Pierce, Fla. (50)
13 San Francisco (24) 30 Lafayette, Ind. (20)
14 Fargo, N.D. (30) 31 Provo/Orem, Utah (29)
15 Naples, Fla. (10) 32 Charlottesville, Va. (15)
16 San Diego (86) 33 Fort Collins, Colo. (32)
17 San Antonio (129) 34 Phoenix (91)
18 Fort Walton Beach, Fla. (28) 35 Houston (162)
19 San Jose (44) 36 Sheboygan, Wis. (52)
20 Jacksonsville (3) 37 Ocala, Fla. (5)
21 Columbia, Mo. (31) 38 Monmouth/Ocean counties, N.J. (167)
22 Miami (67) 39 Dothan, Ala. (79)
23 Sarasota/Bradenton (14) 40 Los Angeles/Long Beach (94)
24 Raleigh/Durham/Chapel Hill N.C. (8) 41 McAllen, Texas (169)
25 West Palm Beach, Fla. (26) 42 Nausha, N.H. (19)
26 Brevard County, Fla. (53) 43 Brownsvillle, Texas (83)
<PAGE>
44 Portsmouth, N.H. (119) 95 Santa Barbara (126)
45 Bryan/College Station, Texas (63) 96 Greeley, Colo. (27)
46 Abilene, Texas (106) 97 Santa Rosa, Calif. (64)
47 Tucson (60) 98 Reno (38)
48 Portland, Ore. (38) 99 Corpus Christi (164)
49 Sioux, Falls, S.D. (18) 100 Altoona, Pa. (143)
50 Manchester, N.H. (12) 101 Nashville (223)
51 Tacoma, Wash. (42) 102 Pueblo, Colo. (21)
52 Fayetteville, Ark. (59) 103 Wilmington, Del. (149)
53 Tallahassee (55) 104 Beaumont, Texas (166)
54 Pensacola, Fla. (22) 105 New Orleans (87)
55 Fort Worth/Arlington (39) 106 Galveston/Texas City (220)
56 Muncie, Ind. (54) 107 Colorado Springs (68)
57 Clarksville, Tenn. (109) 108 Baton Rouge (240)
58 Appleton/Oshkosh, Wis. (163) 109 Monroe, La. (104)
59 Killeen/Temple, Texas (138) 110 Wichita Falls, Texas (132)
60 Orange County, Calif. (88) 111 Lansing (96)
61 Springfield, M.O. (76) 112 Stamford/Norwalk, Conn. (65)
62 Roanoke (77) 113 Johnstown, Pa. (194)
63 Joplin, Mo. (73) 114 Las Vegas (9)
64 Bloomington, Ind. (57) 115 Atlanta (252)
65 Dallas (144) 116 Brazoria, Texas (121)
66 Kalamazoo/Battle Creek (81) 117 Norfolk/Virginia Beach (283)
67 Bellingham, Wash. (170) 118 Eugene/Springfield, Ore. (66)
68 San Luis Obispo, Calif. (116) 119 Green Bay (190)
69 Boston (75) 120 Duluth, Minn. (82)
70 Yuma, Ariz. (74) 121 Topeka (272)
71 Grand Rapids/Muskegon (122) 122 Athens, Ga. (146)
72 Indianapolis (199) 123 Las Cruces, N.M. (201)
73 Lynchgburg, Va. (177) 124 Waco, Texas (40)
74 Houma, La. (78) 125 Fort Wayne (134)
75 Oakland (135) 126 Texarkana, Texas (213)
76 Olympia, Wash. (43) 127 Riverside/San Bernardino, Calif. (118)
77 Salt Lake City/Ogden (62) 128 Washington, D.C. (140)
78 Lubbock, Texas (71) 129 Tyler, Texas (51)
79 Mobile (130) 130 Lafayette, La. (139)
80 La Crosse, Wis. (156) 131 Bremerton, Wash. (69)
81 St. Cloud, Minn. (150) 132 Columbus, Ga. (154)
82 Johnson City, Tenn. (234) 133 Saginaw/Bay City/Midland, Mich. (161)
83 Central New Jersey (72) 134 State College, Pa. (124)
84 Charlotte, N.C. (206) 135 Richmond (276)
85 Denver (37) 136 Sacramento (247)
86 Detroit (56) 137 Kenosha, Wis. (242)
87 Minneapolis/St. Paul (46) 138 Danville, Va. (168)
88 Honolulu (102) 140 Hagerstown, Md. (58)
89 Ventura, Calif. (84) 141 Flint, Mich. (49)
90 Long Island, N.Y. (127) 141 Albany, Ga. (115)
91 Baltimore (113) 142 Wichita (273)
92 Albuquerque (70) 143 Lexington, Ky. (125)
93 Amarillo, Texas (93) 144 Odessa/Midland, Texas (189)
94 Panama City, Fla. (99) 145 Greenville/Spartanburg, S.C. (147)
<PAGE>
146 Cleveland/Lorain/Elyria (205) 197 Mrytle Beach, S.C. (136)
147 Eau Claire, Wis. (197) 198 Providence (153)
148 Portland, Maine (151) 199 New Bedford, Mass. (221)
149 Pittsburg (97) 200 Columbus (221)
150 Salem, N.H./Harverhill, Mass. (7) 201 Santa Cruz, Calif. (117)
151 Montgomery (230) 202 Merced. Calif. (231)
152 Lawton, Okla. (85) 203 Racine, Wis. (262)
153 Florence, Ala. (112) 204 Terre Haute, Ind. (172)
154 Worcester, Mass. (178) 205 Jackson, Miss. (92)
155 Wausau, Wis. (212) 206 Hickory, N.C. (108)
156 Laredo, Texas (180) 207 Cedar Rapids, Iowa (218)
157 Boise, Idaho (160) 208 Flagstaff, Ariz. N.L.
158 Sharon, Pa. (100) 209 Columbia, S.C. (291)
159 Middlesex County, Mass. (45) 210 Jamestown, N.Y. (193)
160 Knoxville (103) 211 Fayetteville, N.C. (241)
161 Greensboro/Winston-Salem, N.C. (90) 212 Bakersfield, Calif. (285)
162 Huntsville, Ala. (203) 213 Asheville, N.C. (217)
163 Northwest Indiana (204) 214 Canton, Ohio (286)
164 Salem, Ore. (158) 215 Monterey, Calif. (227)
165 Greenville, N.C. (233) 216 Omaha (152)
166 Danbury, Conn. (111) 217 South Bend, Ind. (225)
167 Lake Charles, La. (107) 218 Utica/Rome, N.Y. (237)
168 Bridgeport, Conn. (264) 219 Des Moines (229)
169 Wheeling, W.Va. (157) 220 Tulare County, Calif. (295)
170 Allentown/Bethlehem, Pa. (207) 221 Fresno (287)
171 Goldsboro, N.C. (101) 222 Wilmington, N.C. (215)
172 Kansas City, Mo. (209) 223 Cumberland County, N.J. (244)
173 Tuscaloosa, Ala. (186) 224 Youngstown, Ohio (239)
174 Decatur, Ala. (202) 225 Lincoln, Neb. (120)
175 Lancaster, Pa. (188) 226 Anniston, Ala. (208)
176 Evansville, Ind. (277) 227 Hunginton, W. Va. (211)
177 Milwaukee (123) 228 Bergen/Passaic counties, N.J. (181)
178 Binghamton, N.Y. (155) 229 Parkersburg, W. Va (255)
179 New London, Conn. (214) 230 Savannah (246)
180 Janesville/Beloit, Wis. (184) 231 New York City (141)
181 Longview, Texas (98) 232 Buffalo/Niagara Falls (187)
182 Jacksonville, N.C. (196) 233 Philadelphia (269)
183 Memphis (271) 234 Louisville (274)
184 Charleston, S.C. (251) 235 Biloxi/Gulfport, Miss. (171)
185 Oklahoma City (216) 236 York, Pa. (265)
186 Fitchburg, Mass. (25) 237 Birmingham (298)
187 Fort Smith, Ark. (250) 238 Brockton, Mass. (80)
188 El Paso (268) 239 Dutchess County, N.Y. (175)
189 Hamilton/Middletown, Ohio (95) 240 Northwest New Jersey (224)
190 Dover, Del. (165) 241 Cape Cod, Mass. (266)
191 Rocky Mount, N.C. (148) 242 Steubenville, Ohio (128)
192 Syracuse (142) 243 Tulsa (236)
193 Napa Valley, Calif. (137) 244 Macon (110)
194 Burlington, Vt. (228) 245 Santa Fe (275)
195 Little Rock (176) 246 Redding, Calif. (248)
196 Chicago (183) 247 St. Louis (248)
<PAGE>
248 Chattanooga (248) 298 Peoria (297)
249 Benton Harbor, Mich. (47) 299 Yuba City, Calif. (300)
250 Charleston, W.Va. (219) 300 Rockford, Ill. (293)
251 Shreveport, La. (249)
252 Reading, Pa. (259)
253 Rochester, N.Y. (195)
254 Medford/Ashland, Ore. (173)
255 Chico/Paradise, Calif.(210) (210)
256 Yolo, Calif. (281)
257 Cincinnati (145)
258 Williamsport, Pa. (263)
259 Jackson, Miss. (222)
260 Hattiesburg, Miss. N.L.
261 Erie, Pa. (238)
262 Scranton/Wilkes/Barre (192)
263 Sumter, S.C. (260)
264 Elkhart/Goshen, Ind. (133)
265 Mercer County, N.J. (282)
266 Hartford (288)
267 Harrisburg, Pa. (289)
268 Atlantic/Cape May counties, N.J. (254)
269 Champaign, Ill. (185)
270 New Haven (174)
271 Yakima, Wash. (243)
272 Billings, Mont. (200)
273 Glens Falls, N.Y. (296)
274 Waterloo, Iowa (182)
275 Springfield, Mass. (292)
276 Bloomington/Norma, Ill. (257)
277 Toledo (261)
278 Anchorage (270)
279 Richland, Wash. (191)
280 Stockton, Calif. (253)
281 Spokane (232)
282 Dayton/Springfield (256)
283 Newburg, N.Y. (105)
284 Akron (131)
285 Modesto, Calif. (299)
286 Florence, S.C. (280)
287 Decatur, Ill. (258)
288 Sioux City, Iowa (179)
289 Augusta, Ga. (278)
290 Hudson County, N.J. (294)
291 Alexandria, La. (89)
292 Waterbury, Conn. (114)
293 Albany/Schenectady/Troy, N.Y. (267)
294 Mansfield, Ohio (235)
295 Springfield, Ill. (279)
296 Lima, Ohio (245)
297 Davenport, Iowa (290)
<PAGE>
R1
MEAD II
THE MEADOWS II APARTMENTS
NET OPERATING INCOME
1/1/93-7/31/96
1/1/96-
1993 1994 1995 7/31/96
GROSS POTENTIAL RENT 2,083,668 2,122,480 2,149,370 1,239,133
RENT LOSS-VACANT (150,580) (206,123) (431,111) (123,448)
RENT LOSS-DELINQUENT (57,529) (61,086) (59,287) (15,188)
RENT CONCESSION (2,196) (19,801) (27,791) (13,824)
RENT LOSS-OFFICE/MODEL (13,140) (12,468) (9,105) (6,790)
PRIOR MONTH RENT 35,525 40,472 45,800 11,886
PREPAID RENT 2,096 3,603 1,672 (5,979)
TOTAL RENTAL INCOME 1,897,844 1,867,077 1,669,548 1,085,790
SERVICE INCOME 42,055 46,041 42,297 36,529
OTHER INCOME 987 159 256 0
TOTAL INCOME 1,940,886 1,913,277 1,712,101 1,122,319
PERSONNEL 181,801 174,511 193,800 132,367
OFFICE - SITE 9,192 11,535 11,546 6,598
ADVERTISING & MARKETING 9,077 10,464 15,375 9,313
OUTSIDE CONTRACTORS 46,745 48,031 64,829 37,040
BUILDING SERVICES 31,756 35,783 34,999 32,686
SUPPLIES 30,054 30,352 25,292 13,946
UTILITIES 131,519 136,626 129,167 86,771
GROUNDS 22,576 21,587 23,296 11,686
PROFESSIONAL FEES 1,948 11,559 10,489 2,990
REPAIRS COVERED BY
INSURANCE (1,000) 0 0 0
PROPERTY MANAGEMENT FEE 139,341 143,970 145,372 79,824
PROPERTY TAXES 269,921 260,514 269,368 157,500
INSURANCE 27,657 28,029 29,275 13,777
TOTAL OPERATING EXPENSES 900,587 912,961 952,808 584,498
NET OPERATING INCOME 1,040,299 1,000,316 759,293 537,821
<PAGE>
</TABLE>
<TABLE>
8/20/96 DECADE PROPERTIES, INC.
<CAPTION>
User: TOM Rent Roll Page
Property: The Meadows II
Apartments
Unit Rent Per Lease Lease
Reference Monthly Square Square Starting Exp. Deposits
Number Name Rent Feet Foot Date Date Held
<S> <C> <C> <C> <C> <C> <C> <C>
37-2011 OKEY, DENISE 585.00 875 8.02/yr 6/01/96 11/30/96 291.50
37-2012 KLEINBROOK,HEATHER, AND 450.00 625 8.64/yr 5/01/96 4/30/97 224.00
37-2013 MCMILLEN, BRADLEY & DEANA 585.00 875 8.02/yr 4/01/96 3/31/97 281.00
37-2104 HAUGE, TRACI/JUDY 480.00 625 9.22/yr 9/01/96 8/31/97 239.00
37-2015 FOGELBERG, DINA 570.00 875 7.82/yr 7/01/96 6/30/97 274.00
37-2016 PASKEY, TAMMY AND 520.00 625 9.98/yr 10/01/95 9/30/96 259.00
37-2017 SEVEDGE, MARCIA 585.00 875 8.02/yr 7/01/96 6/30/97 291.50
37-2018 MYERS, RICHARD 480.00 625 9.22/yr 10/01/95 9/30/97 239.00
37-201A DALY, JOSEPH/TOBIAS, THERESON 750.00 1466 6.14/yr 5/01/96 4/30/97 374.00
37-201B BIXBY, MARTHA & MARGARET AND 540.00 744 8.71/yr 8/01/96 7/31/97 269.00
37-2051 PETERSON, DARREN & HEATHER 545.00 625 10.46/yr 8/01/96 1/31/97 0.00
37-2052 KAMBWA, AGUSTO & CECILIA 565.00 875 7.75/yr 2/01/96 1/31/97 266.00
37-2053 SKRALY, FRANK 495.00 625 9.50/yr 9/01/96 2/28/97 246.50
37-2054 WOODHOUSE, SCOTT AND (NSF-2) 530.00 875 7.27/yr 9/01/96 8/31/96 264.00
37-2055 RICHARDSON, GARY 515.00 625 9.89/yr 7/01/96 6/30/97 241.00
37-2056 VEITH, JOHN AND (LAT-1) 565.00 875 7.75/yr 9/01/96 2/28/97 274.00
37-2057 KUNZ, WILLIAM 480.00 625 9.22/yr 1/01/96 12/31/97 239.00
37-2058 VACANT 530.00 875 7.27/yr 0.00
37-205A STOLARCZYK, THOMAS 525.00 744 8.47/yr 10/01/95 9/30/96 254.00
37-205B PERK, ALDEN & PHYLLIS 760.00 1466 6.22/yr 6/01/96 5/31/97 0.00
37-2091 RIVERA, MIGUEL & CLAUDIA 555.00 875 7.61/yr 3/01/96 12/31/96 276.50
37-2092 GUZINSKI, SEAN/NASETT, D AND 565.00 875 7.75/yr 8/01/96 7/31/97 281.50
37-2093 TROW, ROSE (30) 585.00 875 8.02/yr 7/01/96 6/30/97 274.00
37-2094 DOUMA, DANIEL & HARVEY AND 600.00 875 8.23/yr 6/01/96 6/01/96 299.00
37-2095 HILLARD, GRACE AND 565.00 875 7.75/yr 4/01/96 3/31/97 279.00
37-2096 ROGERS, DEBORAH 565.00 875 7.75/yr 8/01/96 7/31/97 281.50
37-2097 BEIERSDORF, TIMOTHY AND 605.00 875 8.30/yr 6/01/96 6/30/96 299.00
37-2098 BROESCH, JESSICA AND 550.00 875 7.54/yr 9/01/96 2/28/97 274.00
37-209A GOLD, JUDITH AND 800.00 1466 6.55/yr 3/01/96 2/28/97 399.00
37-209B GONZALEZ, JOSE/HOLLY, DEAN AND 750.00 1466 6.14/yr 9/01/96 8/31/97 374.00
37-2131 SMOOT, CASSANDRA 550.00 875 7.54/yr 9/01/95 8/31/96 274.00
37-2132 ROZMAN, SCOTT (30) 505.00 625 9.70/yr 9/01/96 8/31/97 236.00
37-2133 URSCHLITZ, DEBRA 615.00 875 8.43/yr 7/01/96 12/31/96 281.00
37-2134 ZIMMERMAN, JEREMY 480.00 625 9.22/yr 8/01/96 7/31/97 239.00
37-2135 VOLKEY, LARRY 560.00 875 7.68/yr 8/01/96 4/30/97 264.00
37-2136 RAYMER, FLETCHER 450.00 625 8.64/yr 4/01/96 3/31/97 224.00
37-2137 WAGNER, C & P/LAMESE,C AND 565.00 875 7.75/yr 8/01/96 1/31/97 281.50
37-2138 BEALE, MARY 490.00 625 9.41/yr 6/01/96 2/28/97 239.00
37-213A COYLE, KEVIN & BARBARA (NSF-2) 815.00 1466 6.67/yr 6/01/96 5/31/97 329.00
37-213B SALT, NORMAN AND 540.00 744 8.71/yr 7/01/96 6/30/97 251.00
37-2171 SEISER, EDWARD (30) 550.00 625 10.56/yr 6/01/96 6/01/96 200.00
37-2172 NELSON, TODD/DARDEN, TOM AND 595.00 875 8.16/yr 8/01/96 7/31/97 296.50
37-2173 WOHLERS, STEVE 450.00 625 8.64/yr 4/01/96 3/31/97 224.00
37-2174 BUCKINGHAM, TYRONE AND 530.00 625 10.18/yr 9/01/96 8/31/97 264.00
37-2175 BAST, MARTHA 480.00 625 9.22/yr 6/01/96 5/31/97 239.00
37-2176 WEBER, CYNTHIA AND 530.00 875 7.27/yr 9/01/95 8/31/96 264.00
37-2177 GANNON, ANTHONY AND 500.00 625 9.60/yr 3/01/96 2/28/97 249.00
37-2178 HEIBEL, JESSICA/SMART, ROXANNE & 550.00 875 7.54/yr 6/01/96 11/30/96 274.00
37-217A JONES, KATHERINE AND (NSF-1) 510.00 744 8.23/yr 5/01/96 10/31/96 244.00
37-217B CONNOR, NATHANIEL AND 815.00 1466 6.67/yr 4/01/96 9/30/96 399.00
37-2211 GRASTY, THOMAS & GRACIE 595.00 875 8.16/yr 12/01/95 12/01/95 246.00
37-2212 MANDERS, JESSICA 565.00 875 7.75/yr 7/01/96 6/30/97 281.50
37-2213 DELEU, RICHARD & JOYCE 610.00 875 8.37/yr 4/01/96 3/31/97 304.00
37-2214 CASTO, SHELIA 575.00 875 7.89/yr 8/01/96 07/31/96 264.00
37-2215 VACANT 530.00 875 7.27/yr 0.00
37-2216 HANSEN, LISA AND 565.00 875 7.75/yr 8/01/96 7/31/97 281.50
37-2217 HELGERSON, DOUGLAS AND 565.00 875 7.75/yr 8/01/96 7/31/97 281.50
37-2218 NEHLS, JEFF AND 550.00 875 7.54/yr 10/01/95 9/30/96 274.00
37-221A WILLIAMS, ANN/PERKINS, LAURA & 750.00 1466 6.14/yr 7/01/96 12/31/96 374.00
37-221B VACANT 825.00 1466 6.75/yr 0.00
37-2251 LOPPOW, GARY 575.00 875 7.89/yr 3/01/96 2/28/97 286.50
37-2252 PELTIER, MICHAEL 580.00 875 7.95/yr 8/01/96 7/31/97 289.00
37-2253 GJAVENIS, DEBBY 580.00 875 7.95/yr 4/01/96 3/31/97 289.00
37-2254 VACANT 515.00 875 7.06/yr 0.00
37-2255 GLADEM, AL AND 605.00 875 8.30/yr 8/01/96 1/31/97 281.00
37-2256 VACANT 530.00 875 7.27/yr 0.00
37-2257 DOMMERSHAUSEN, TAJARA AND 565.00 875 7.75/yr 6/01/96 5/31/97 281.50
37-2258 BIRKETT, BRIAN AND 615.00 875 8.43/yr 8/01/96 8/01/96 284.00
37-225A ROBERTSON, NATHANIEL (LAT-2) 800.00 1466 6.55/yr 6/01/96 2/28/97 399.00
37-225B VACANT 750.00 1466 6.14/yr 0.00
37-2291 SKALITZKY, NOEL 590.00 875 8.09/yr 8/01/96 1/31/97 254.00
37-2292 BRUNO, JOE 480.00 625 9.22/yr 8/01/96 7/31/97 239.00
37-2293 GENNRICH, WILIAM (LAT-1) 585.00 875 8.02/yr 8/01/96 7/31/97 0.00
37-2294 BROCK, JEFFREY AND 495.00 625 9.50 /yr 5/01/96 10/31/96 246.50
37-2295 WARNER, SUSANN AND 530.00 875 7.27/yr 9/01/95 8/31/96 264.00
37-2296 DEMROW, ROSS 505.00 625 9.70/yr 1/01/96 12/31/96 251.50
37-2297 BENISCH, KRISTIE AND 565.00 875 7.75/yr 5/01/96 4/30/97 281.50
37-2298 JORDAN, A.B. 480.00 625 9.22/yr 6/01/96 5/31/97 239.00
37-229A GEE, KEITH AND 765.00 1466 6.26/yr 4/01/96 3/31/97 300.00
37-229B HUSTON, SCOTT 490.00 744 7.90/yr 7/01/96 6/30/97 244.00
37-2331 HARMELINK, JOHN 480.00 625 9.22/yr 1/01/96 12/31/96 239.00
37-2332 VACANT 550.00 875 7.54/yr 0.00
37-2333 CHAPMAN, RANDY 480.00 625 9.22/yr 11/01/95 10/31/96 239.00
37-2334 LARSON, GARY 585.00 875 8.02/yr 6/01/96 5/31/97 261.00
37-2335 ZUELSDORF, JAMES 495.00 625 9.50/yr 10/01/95 9/30/96 241.00
37-2336 DEVINE, DARLENE 565.00 875 7.75/yr 6/01/96 5/31/97 281.50
37-2337 OLSON, DOUGLAS 480.00 625 9.22/yr 8/01/96 1/31/97 239.00
37-2338 VACANT 530.00 875 7.27/yr 0.00
37-233A BRUNNER, TERESA 585.00 744 9.44/yr 8/01/96 8/01/96 266.00
37-233B HUDZINSKI, NICOLE/BOHN, JASON 885.00 1466 7.24/yr 7/01/96 7/01/96 441.50
37-2371 STANTON/GAVEL/SCHROEDER AND 590.00 875 8.09/yr 7/01/96 12/31/96 294.00
37-2372 LAGGREN, JIM 480.00 625 9.22/yr 9/01/96 2/28/97 239.00
37-2373 VACANT 585.00 875 8.02/yr 0.00
37-2334 CHALONE, RHONDA 515.00 625 9.89/yr 4/01/96 3/31/97 256.00
37-2375 HOGG, LESLIE AND (NSF-1) 595.00 875 8.16/yr 3/01/96 8/31/96 296.50
37-2376 POPP, GARY 510.00 625 9.79/yr 9/01/96 9/30/96 234.00
37-2377 REILLY, KELLY/JAMES, KELLY AND 565.00 875 7.75/yr 8/01/96 7/31/97 281.50
37-2378 MICHER, PAUL 540.00 625 10.37/yr 9/01/95 9/01/95 269.00
37-237A STEPHENSON, ANDREW AND (LAT-1) 815.00 1466 6.67/yr 5/01/96 10/31/96 399.00
37-237B TOLBERT, JANESE 510.00 744 8.23/yr 5/01/96 4/30/97 244.00
37-2411 VACANT 515.00 625 9.89/yr 0.00
37-2412 BIERMAN, LESLIE AND 560.00 875 7.68/yr 9/01/96 9/01/96 264.00
37-2413 JAKUBOWSKI, CHRISTINA 515.00 625 9.89/yr 8/01/96 7/31/97 256.50
37-2414 VACANT 545.00 875 7.47/yr 0.00
37-2415 WICHERN, JOHN AND 480.00 625 9.22/yr 12/01/95 11/30/96 239.00
37-2416 KLUTH, LELAND 595.00 875 8.16/yr 4/01/96 3/31/97 281.50
37-2417 SUTCHER, PAUL AND 490.00 625 9.41/yr 5/01/96 4/30/97 244.00
37-2418 FISHER, CAROL 615.00 875 8.43/yr 3/01/96 9/30/96 306.50
37-241A MCQUEEN, ALISSA 515.00 744 8.31/yr 6/01/96 5/31/97 0.00
37-241B RISSEEUW, JEFF & RUTH AND (LAT-1) 800.00 1466 6.55/yr 5/01/96 4/30/97 399.00
37-2451 DETTWILER, RANDALL 605.00 875 8.30/yr 7/01/96 7/01/96 281.50
37-2452 VACANT 530.00 875 7.27/yr 0.00
37-2453 MORANGE, DIANNE AND 540.00 875 7.41/yr 1/01/96 12/31/96 264.00
37-2454 VACANT 530.00 875 7.27/yr 0.00
37-2455 VACCANT 545.00 875 7.47/yr 0.00
37-2456 VACANT 510.00 875 6.99/yr 0.00
37-2457 HILTON, TINA AND 565.00 875 7.75/yr 6/01/96 5/31/97 281.50
37-2458 OSTERVOLD, KATHRYN AND 580.00 875 7.95/yr 8/01/96 8/31/96 279.00
37-245A WILLIAMS, L/JUDKINS, T/CURRY, J 850.00 1466 6.96/yr 8/01/96 4/30/97 424.00
37-245B RING, LARRY/GOSEWEHR, GREG & 750.00 1466 6.14/yr 1/01/96 12/31/96 374.00
37-2491 NELSON, GEANIE AND 470.00 625 9.02/yr 7/01/96 12/31/96 239.00
37-2492 VACANT 550.00 875 7.54/yr 0.00
37-2493 CAUCUTT, LINDA 475.00 625 9.12/yr 5/01/96 10/31/96 236.50
37-2494 AGNEW, GREGORY & CHRISTINE 580.00 875 7.95/yr 6/01/96 4/30/97 274.00
37-2495 VACANT 515.00 625 9.89/yr 0.00
37-2496 GJERMO, KIMBERLY AND 560.00 625 10.75/yr 8/01/96 8/01/96 259.00
37-2497 HUSS, JEFFRY 520.00 625 9.98/yr 10/01/95 9/30/96 259.00
37-2498 VACANT 530.00 875 7.27/yr 0.00
37-249A COUGHLAN, TAMMY & JOSOPH 480.00 744 7.74/yr 4/01/96 3/31/97 239.00
37-249B HOERNEMAN, M/OLMSTEAD, R AND 800.00 1466 6.55/yr 9/01/96 8/31/97 399.00
37-2531 WEATHERWAX, KRISTINE AND 585.00 875 8.02/yr 9/01/95 8/31/96 291.50
37-2532 BAUMHARDT, BRIAN 515.00 625 9.89/yr 7/01/96 7/01/96 256.50
37-2533 HOUGHTON, LANNIE 565.00 875 7.75/yr 2/01/96 1/31/97 274.00
37-2534 REYNOLDS, REBECCA 450.00 625 8.64/yr 5/01/96 5/01/96 224.00
37-2535 SWETT, NICHOLAS & ELIZABETH 620.00 875 8.50/yr 7/01/96 6/30/97 309.00
37-2536 BERE, NANCY 490.00 625 9.41/yr 8/01/96 4/30/97 244.00
37-2537 VACANT 560.00 875 7.68/yr 0.00
37-2538 BISHOP, THOMAS AND 470.00 625 9.02/yr 1/01/96 12/31/96 234.00
37-253A VACANT 800.00 1466 6/55/yr 0.00
37-253B ZWEIFEL, KRISTIN 510.00 744 8.23/yr 11/01/95 10/31/96 244.00
37-2571 SPAHN, LOIS 580.00 875 7.95/yr 7/01/96 6/30/97 247.00
37-2572 NELSON, COLLEEN 570.00 875 7.82/yr 5/01/96 4/30/97 284.00
37-2573 KRUZAN, TAMARA 570.00 875 7.82/yr 7/01/96 6/30/97 284.00
37-2574 CLEMENS, DOROTHY 570.00 875 7.82/yr 8/01/96 7/31/97 284.00
37-2575 BRICK, TIFFANY AND (LAT-1) 565.00 875 7.75/yr 4/01/96 3/31/97 281.50
37-2576 VACANT 550.00 875 7.54/yr 0.00
37-2577 FJELSTAD, ELAINE AND 580.00 875 7.95/yr 10/01/95 9/30/96 274.00
37-2578 WOLFRAM, MIKE AND 565.00 875 7.75/yr 4/01/96 9/30/96 281.50
37-257A TRAINOR, JOHN AND (NSF-2) 800.00 1466 6.55/yr 3/01/96 8/31/96 399.00
37-257B VACANT 815.00 1466 6.67/yr 0.00
37-2611 FISH, CAROLYN 560.00 875 7.68/yr 4/01/95 4/01/95 279.00
37-2612 COSSETTE, CLARENCE AND 615.00 875 8.43/yr 7/01/96 6/30/97 296.50
37-2613 ROOK, SANDRA AND 580.00 875 7.95/yr 7/01/96 6/30/97 276.00
37-2614 DONAHUE, DANENE AND 585.00 875 8.02/yr 6/01/96 5/31/97 291.50
37-2615 DRURY, THERESA 600.00 875 8.23/yr 7/01/96 7/01/96 299.00
37-2616 NELSON, DAVID 615.00 875 8.43/yr 8/01/96 8/01/96 264.00
37-2617 CHRISTOFFERSON, MOLLY AND 550.00 875 7.54/yr 9/01/95 8/31/96 274.00
37-2618 GARDINER, J & M & J AND 565.00 875 7.75/yr 7/01/96 6/30/97 281.50
37-2651 LANG, ALICE & (30) 600.00 875 8.23/yr 9/01/96 5/31/97 200.00
37-2652 BRESEMAN, JANE 500.00 625 9.60/yr 7/01/96 12/31/96 246.50
37-2653 CORBETT, SONDRA 570.00 875 7.82/yr 6/01/96 5/31/97 279.00
37-2654 ZENTNER, MARK 475.00 625 9.12/yr 6/01/96 2/28/97 236.50
37-2655 SALVERSON, TINA/PARIS, PAUL AND 590.00 875 8.09/yr 6/01/96 11/30/96 294.00
37-2656 EDGE, JENNIFER AND 480.00 625 9.22/yr 8/01/96 7/31/97 239.00
37-2657 VACANT 530.00 875 7.27/yr 0.00
37-2658 WINEMAN, LARA 510.00 625 9.79/yr 9/01/96 8/31/97 254.00
37-2691 PACHE, APRIL 480.00 625 9.22/yr 7/01/96 6/30/97 239.00
37-2692 MELMS, JOHN & LISA 600.00 875 8.23/yr 6/01/96 5/31/97 291.00
37-2693 MIDTHUN, STEVE 480.00 625 9.22/yr 3/01/96 2/28/97 239.00
37-2694 VACANT 530.00 875 7.27/yr 0.00
37-2595 INTIHAR, AMY AND (LAT-1)(NSF-1) 480.00 625 9.22/yr 4/01/96 3/31/97 653.00
7-2696 YOUNG, TIMOTHY AND 595.00 875 8.16/yr 8/01/96 7/31/97 296.50
37-2697 KUHN, MICHELLE AND 490.00 625 9.41/yr 8/01/96 1/31/97 239.00
37-2698 SLIPPER, JAY & HANSON (KATIE) 630.00 875 8.64/yr 8/01/96 8/0196 314.00
37-2731 VACANT 530.00 875 7.27/yr 0.00
37-2732 HOLMES, PAMELA 500.00 625 9.60/yr 5/01/96 4/30/97 249.00
37-2733 LORD, LISA AND 530.00 875 7.27/yr 9/01/96 8/31/97 264.00
37-2734 O'BRIEN, KATIE 480.00 625 9.22/yr 8/01/96 7/31/97 239.00
37-2735 LEE, JENNIFER AND (LAT-1) 540.00 875 7.41/yr 10/01/95 9/30/96 269.00
37-2736 CLASS, BRIAN AND 500.00 625 9.60/yr 9/01/95 8/31/96 249.00
37-2737 MORK, KARI AND 530.00 875 7.27/yr 9/01/96 8/31/97 264.00
37-2738 WINTER, SARA 490.00 625 9.41/yr 7/01/96 6/30/97 239.00
37-2771 ROSE, TERRANCE 505.00 625 9.70/yr 12/01/95 11/30/96 219.00
37-2772 BLAKE, ROBERT AND 595.00 875 8.16/yr 8/01/96 7/31/97 276.00
37-2773 OLSON, JEFFREG 480.00 625 9.22/yr 3/01/96 8/31/96 239.00
37-2774 VACANT 595.00 875 8.16/yr 0.00
37-2775 YOUNG, MICHAEL 505.00 625 9.70/yr 9/01/95 8/31/96 251.50
37-2776 VACANT 595.00 875 8.16/yr 0.00
37-2777 MORTENSEN, JEFF AND 500.00 625 9.60/yr 7/01/96 12/31/96 249.00
37-2778 VACANT 520.00 875 7.13/yr 0.00
37-2811 BANFIELD, THOMAS 565.00 875 7.75/yr 6/01/96 5/31/97 281.50
37-2812 SCHNEIDER, TIFFIN AND 565.00 875 7.75/yr 7/01/96 6/30/97 281.50
37-2813 JULIAN, KENNETH & CINDY 570.00 875 7.82/yr 6/01/96 5/31/97 281.50
37-2814 BARMAN, MICHAEL 595.00 875 8.16/yr 7/01/96 6/30/97 296.50
37-2815 BOUCHARD, ROBERTA/AMANDA/DAVID 585.00 875 8.02/yr 5/01/96 10/31/96 281.50
37-2816 HIRSCH, VALERIE AND 540.00 875 7.41/yr 10/01/95 9/30/96 269.00
37-2817 CHOICE, TANYA 580.00 875 7.95/yr 8/01/96 7/31/97 269.00
37-2818 McDOWELL, PATRICK AND 595.00 875 8.16/yr 6/01/96 5/31/97 296.50
37-2851 ALBERS, WILLIAM 615.00 875 8.43/yr 3/01/96 3/01/96 269.00
37-2852 JOHNSON, JASON/WHITE, J&P AND 585.00 875 8.02/yr 5/01/96 12/31/96 281.50
37-2853 HERNANDEZ, LENIN & CARMEN 560.00 875 7.68/yr 6/01/96 11/30/96 264.00
37-2854 BUTCHER, DARRELL & CASSANDRA 585.00 875 8.02/yr 7/01/96 6/30/97 291.00
37-2855 FEMRITE, TOM 570.00 875 7.82/yr 3/01/96 2/28/97 284.00
37-2856 ERBRECHT, EMILY/JEFFREY/MOLLY 560.00 875 7.68/yr 6/01/96 11/30/96 279.00
37-2857 EMERSON, ROBIN & BETTY AND 580.00 875 7.95/yr 8/01/96 1/31/97 289.00
37-2858 SPYCHALLA, CRAIG AND (NSF-1) 570.00 875 7.82/yr 8/01/96 7/31/97 264.00
37-285A VACANT 825.00 1466 6.75/yr 0.00
37-285B VACANT 845.00 1466 6.92/yr 0.00
37-2891 STEVENS, JOSEPH (LAT-1) 595.00 875 8.16/yr 9/01/95 8/31/96 296.00
37-2892 THOMPSON, LINDA 510.00 625 9.79/yr 3/01/96 2/28/97 236.00
37-2893 BOOMER, DARRELL AND 615.00 875 8.43/yr 4/01/96 9/30/96 304.00
37-2894 KRUEGER, BRADLEY 480.00 625 9.22/yr 4/01/96 3/31/97 239.00
37-2895 TOLLEFSON, JENNIFER AND 530.00 875 7.27/yr 9/01/95 8/31/96 264.00
37-2896 FUNNEMARK, MICHELE AND 510.00 625 9.79/yr 8/01/96 4/30/97 226.00
37-2897 MEILLER, ROBIN (30) 570.00 875 7.82/yr 9/01/96 8/31/97 269.00
37-2898 VANDERVEST, LAURA 510.00 625 9.79/yr 4/01/96 9/30/96 251.50
37-289A UTKE, DANIELLE AND (FRE) 750.00 1466 6.14/yr 1/01/96 12/31/96 374.00
37-289B MORSCHAUSER, STEVE 535.00 744 8.63/yr 8/01/96 8/31/96 259.00
37-2931 CRONK, JOYCE 550.00 625 10.56/yr 8/01/96 8/01/96 274.00
37-2932 VACANT 560.00 875 7.68/yr 0.00
37-2933 WEINSTEIN, MARGAUX AND 490.00 625 9.41/yr 9/01/96 2/28/97 244.00
37-2934 HERMOSILLO, CERRY 560.00 875 7.68/yr 8/01/96 7/31/97 264.00
37-2935 BORENSTEIN, LARRY (30) 485.00 625 9.31/yr 10/01/95 9/30/96 214.00
37-2936 CARLSON, KIRK & DAWN 590.00 875 8.09/yr 8/01/96 7/31/97 291.00
37-2937 ABBE, VERNON 500.00 625 9.60/yr 7/01/96 6/30/97 249.00
37-2938 GILL, MIKE AND (LAT-1) 550.00 875 7.54/yr 2/01/96 1/31/97 274.00
37-293A YAROCH, TIMOTHY 555.00 744 8.95/yr 7/01/96 6/30/97 266.00
37-293B VACANT 850.00 1466 6.96/yr 0.00
37-3011 GALVIN, RICHARD & EILEEN (30) 580.00 875 7.95/yr 11/01/95 10/31/96 242.00
37-3012 McBRIAR, JOHN & HANNAH (30) 580.00 875 7.95/yr 7/01/96 6/30/97 0.00
37-3013 BOYLAND, DANIEL & SHAYLA 560.00 875 7.68/yr 9/01/96 8/31/97 279.00
37-3014 ABEL, PENNIE 570.00 875 7.82/yr 9/01/95 8/31/96 274.00
37-3015 BAKER, JASON AND 560.00 875 7.68/yr 8/01/96 7/31/97 264.00
37-3016 FELTON, JILL AND 560.00 875 7.68/yr 8/01/95 7/31/96 264.00
37-3017 VACANT 550.00 875 7.54/yr 0.00
37-3018 JENSEN, SHEILA AND 540.00 875 7.41/yr 11/01/95 10/31/96 269.00
37-3051 VACANT 530.00 875 7.27/yr 0.00
37-3052 SAUK, ARTHUR 490.00 625 9.41/yr 6/01/96 5/31/97 0.00
37-3053 VOLK, NORMA (30) (LAT-1) 575.00 875 7.89/yr 10/01/95 9/30/96 200.00
37-3054 PIPPIN, CAROLYN 520.00 625 9.98/yr 10/01/96 9/30/97 352.00
37-3055 MISEL, ELIZABETH AND (LAT-1) 595.00 875 8.16/yr 8/01/96 1/31/97 264.00
37-3056 MAROTZ, JOAN 510.00 625 9.79/yr 8/01/96 7/31/97 150.00
37-3057 VACANT 605.00 875 8.30/yr 0.00
37-3058 SCHMIDT, THOMAS AND 490.00 625 9.41/yr 5/01/96 4/30/97 244.00
37-3091 THIERER, MARY 490.00 625 9.41/yr 4/01/95 3/31/96 0.00
37-3092 POMIJE, CARRIE 585.00 875 8.02/yr 8/01/96 7/31/97 291.50
37-3093 DANEK, PATRICIA 495.00 625 9.50/yr 8/01/96 7/31/97 246.50
37-3094 TENIENTE, VICTOR & CHRISTINA 580.00 875 7.95/yr 4/01/96 3/31/97 271.00
37-3095 MORTON, DONALD 495.00 625 9.50/yr 5/01/96 4/30/97 246.50
37-3096 VACANT 550.00 875 7.54/yr 0.00
37-3097 JACQUART, JAMES 510.00 625 9.79/yr 8/01/96 7/31/97 150.00
37-3098 WORTHEN, KEITH & ROBIN AND 585.00 875 8.02/yr 9/01/96 2/28/97 291.50
37-3131 MYERS, BILLIE/NAWAK, DAWN AND 530.00 875 7.27/yr 10/01/95 9/30/96 264.00
37-3132 RINGELSTETTER, KRISTIE 540.00 625 10.37/yr 8/01/96 7/31/97 266.50
37-3133 KHAN, ASHFAQ AND (NSF-1) 550.00 875 7.54/yr 9/01/95 8/31/96 513.00
37-3134 GRADY, LAILA 540.00 625 10.37/yr 6/01/96 5/31/97 224.00
37-3135 VACANT 580.00 875 7.95/yr 0.00
37-3136 GANDER, BRIAN (LAT-1) (NSF-1) 500.00 625 9.60/yr 10/01/95 9/30/96 239.00
37-3137 ALTMANN, KYLE AND 565.00 875 7.75/yr 8/01/96 7/31/97 281.50
37-3138 ALSHAHERI, ALI AND 450.00 625 8.64/yr 4/01/96 9/30/96 224.00
37-3171 GEMPELER, SHELLEY 520.00 625 9.98/yr 4/01/96 3/31/97 259.00
37-3172 MANNUR, SANDEEP 530.00 875 7.27/yr 9/01/96 8/31/97 264.00
37-3173 LEARNED, HAZEL 490.00 625 9.41/yr 6/01/96 5/31/97 0.00
37-3174 EVERY, DONNA 625.00 875 8.57/yr 5/01/96 4/30/97 307.50
37-3175 GERL, VERA 490.00 625 9.41/yr 6/01/96 5/31/97 244.00
37-3176 VACANT 595.00 875 8.16/yr 0.00
37-3177 SHERBURNE, JOHN (30) 525.00 625 10.08/yr 6/01/96 5/31/97 231.00
37-3178 MANI, GARY 600.00 875 8.23/yr 10/01/95 9/30/96 294.00
37-3211 QUANDT, BRIAN & BEVERLY AND 575.00 875 7.89/yr 8/01/96 1/31/97 286.50
37-3212 DAMM, JASON AND 565.00 875 7.75/yr 8/01/96 7/31/97 281.50
37-3213 VACANT 565.00 875 7.75/yr 0.00
37-3214 BARTELS, LEROY & SYLVIA 585.00 875 8.02/yr 8/01/96 7/31/96 286.00
37-3215 JENSEN, SCOTT & JACQUELINE 560.00 875 7.68/yr 8/01/96 7/31/96 264.00
37-3216 HEMP, ERIC AND (LAT-1) 560.00 875 7.68/yr 4/01/96 9/30/96 279.00
37-3217 SYLVE, KEVIN & AMY (30) 580.00 875 7.95/yr 7/01/96 6/30/97 254.00
37-3218 PETERSON,M/CARBONE,J&C AND 565.00 875 7.75/yr 9/01/96 2/28/97 281.50
37-4011 MODEL 485.00 875 6.65/yr 0.00
37-4012 OFFICE 485.00 875 6.65/yr 0.00
37-4013 BEYER, KRISTEN AND 585.00 875 8.02/yr 8/01/96 8/31/96 274.00
37-4014 JOHNSON, SCOTT AND 560.00 875 7.68/yr 4/01/96 9/30/96 279.00
37-4015 NODOLF, JAIME AND 565.00 875 7.75/yr 8/01/96 7/31/97 281.50
37-4016 CAPENER, VALERIE AND 570.00 875 7.82/yr 5/01/96 4/30/97 234.00
37-4017 RODRIGUEZ, JUANITA 595.00 875 8.16/yr 6/01/96 5/31/97 296.50
37-4018 BRANDON, CHRIS AND 575.00 875 7.89/yr 6/01/96 2/28/97 281.50
37-4051 FLORES, JOHN & BEV (30) 585.00 875 8.02/yr 10/01/95 9/30/96 286.00
37-4052 SAWICKI, MARK AND 575.00 875 7.89/yr 7/01/96 12/31/96 291.50
37-4053 BYINGTON, JOHN 560.00 875 7.68/yr 8/01/96 7/31/97 264.00
37-4054 VACANT 530.00 875 7.27/yr 0.00
37-4055 FAIR, WENDELL 560.00 875 7.68/yr 8/01/96 7/31/97 264.00
37-4056 PERALTA, HECTOR & IRMA 560.00 875 7.68/yr 8/01/96 7/31/97 264.00
37-4057 HUBRECHT, JEB & SHANI 585.00 875 8.02/yr 5/01/96 4/30/97 291.50
37-4058 REES, SHELDON AND 595.00 875 8.16/yr 8/01/96 7/31/97 296.50
37-4091 LOGA, LISA AND 575.00 875 7.89/yr 9/01/96 2/28/97 286.50
37-4092 BESL, COREY AND 565.00 875 7.75/yr 6/01/96 5/31/97 281.50
37-4093 KENNEDY, CONNIE AND (NSF-1) 540.00 875 7.41/yr 10/01/95 9/30/96 269.00
37-4094 OSTERN, MARY & GREGORY 590.00 875 8.09/yr 9/01/96 8/31/97 0.00
37-4095 WINGER, RUSTIE AND (LAT-3) 570.00 875 7.82/yr 5/01/96 10/31/96 279.00
37-4096 HERMANSON/McKENNA/WHITFORD AND 565.00 875 7.75/yr 8/01/96 1/31/97 281.50
37-4097 STONE, MATTHER AND (LAT-1) 560.00 875 7.68/yr 11/01/95 10/31/96 279.00
37-4098 VEIUM, PHILIP AND 565.00 875 7.75/yr 1/01/96 12/31/96 247.00
37-4131 LEAL, ANASTACIO 510.00 625 9.79/yr 4/01/96 3/31/97 246.00
37-4132 VACANT 570.00 875 7.82/yr 0.00
37-4133 HERBECK, LeRAY & FLORENCE 515.00 625 9.89/yr 7/01/96 7/01/96 256.50
37-4134 KALMERTON, TAMME 575.00 875 7.89/yr 5/01/96 10/31/96 279.00
37-4135 ESSER, DALE 505.00 625 9.70/yr 4/01/96 3/31/97 178.00
37-4136 WEGER, CARRIE/EAKINS, LINDA AND 595.00 875 8.16/yr 8/01/96 1/31/97 296.50
37-4137 STEINHARDT, STEVEN 495.00 625 9.50/yr 5/01/96 10/31/96 246.50
37-4138 BAKER, J&S / DENLINGER, M AND 585.00 875 8.02/yr 9/01/96 2/28/97 291.50
37-4171 SIGAFUS, DENNY & MARY AND 580.00 875 7.95/yr 7/01/96 6/30/97 279.00
37-4172 LANGER, LORI 510.00 625 9.79/yr 2/01/96 1/31/97 254.00
37-4173 TOOLEY, JOYCE (30) 600.00 875 8.23/yr 6/01/96 5/31/97 274.00
37-4174 EARLE, JEFFERY AND 490.00 625 9.41/yr 6/01/96 11/30/96 239.00
37-4175 PHILLIPS, JOYCE AND 565.00 875 7.75/yr 7/01/96 6/30/97 281.50
37-4176 LIQUORI, ROBERT 480.00 625 9.22/yr 8/01/96 7/31/97 239.00
37-4177 MOORE, KIM AND (XFER 37-2251) 575.00 875 7.89/yr 5/01/96 4/30/97 274.00
37-4178 ROCHE, ELIZABETH 500.00 625 9.60/yr 7/01/96 6/30/97 249.00
<CAPTION>
PROPERTY TOTALS:
--Percentage of Occupied Units--
<S> <C> <C> <C>
Total Occupied Rents 154,125.00 Total Occupied Units 275
Total Vacant Rents 24,295.00 Total Vacant Units 41
Total Gross Rents 178,420.00 Total Units 316
Total Square Footage 266612 Percentage Occupied 87%
Average Rent/Sq. Ft. / Yr. 8.03 --Percentage of Occupied Sq. Feet--
Average Rent/Sq. Ft. / Mth 0.67 Total Occupied Sq. Feet 227100
Total Security Deposits 72,371.50 Total Vacant Sq. Feet 39512
Total Square Footage 266612
</TABLE>
<PAGE>
T.M., WARNER, MAI, SRA
Wisconsin Certified General Appraisal # 227
- Professional Experience -
Previously, Mr. Warner was affiliated with The Mutual Group (US)
as an Assistant Vice President and Lending Officer. Prior to
that, as a senior officer an director with First Commerce
Financial of Brookfield and previously, as president of National
Equity Investors, real estate syndication and development company
and Director of Acquisitions for Security Spring & Boe Financial
Companies. Prior to that, he was associated with Landmark
Research as a partner, the Appraisal Company of Houston, Texas
and was manager of Appraisal Operations for Mortgage Guaranty
Insurance Company (MGIC). His experience includes acquisition,
negotiation, appraisal, consulting and market and financial
analysis of proposed and existing projects.
- Education -
Master of Science - Real Estate Appraisal and
Investment Analysis - University of Wisconsin
Bachelor of arts - Marquette University, Milwaukee, Wisconsin
- Professional Education -
Society of Real Estate Appraisers
Appraising Real Property Course 101
Appraising Income Producing Property Course 201
Special Applications of Appraisal Analysis Course 301
American Institution of Real Estate Appraisers
Real Estate Appraisal I Principles
Real Estate Appraisal III Urban Properties
Real Estate Appraisal VI Investment Properties
Real Estate Appraisal VII Industrial Properties
Real Estate Appraisal VIII Residential Properties
Contemporary Real Estate Appraisal, University of Wisconsin, 1977
- Publications -
Contributing author, The Appraisal of Real Estate, Eighth
Edition, The American Institute of Real Estate Appraisers,
Chicago, 1983
with James A. Graaskamp and W.C. Goolsby, "Cash Equivalent Value
of Real Property," The Real Estate Appraiser and Analyst, Vol.
49, No 3 Fall 1983, pp. 43-48.
- Professional Designations and Memberships -
MAI Member, American Institute of
Real Estate Appraisers, #4645
SREA Senior Real Estate Analyst,
Society of Real Estate of Appraisers
<PAGE>
Annex C: Appraisal of Town Place
APPRAISAL
Town Place Apartments
A 240-Unit Apartment Complex
2524 NE Coachman Road
Clearwater, Florida 34625
PREPARED FOR
Mr. Terry Bush
Corporate Banking
Republic Bank
111 Second Avenue NE, Suite 215
St. Petersburg, Florida 33701
EFFECTIVE DATE
April 15, 1996
TYPE OF REPORT
Complete, Self-contained
BY
Robert E. Riggins, SRA, MAI
State-certified general real estate appraiser
#0000605
William W. Atkinson, MAI
State-certified general real estate appraiser
#0001221
RIGGINS, ATKINSON, COMBS & ASSOCIATES, INC.
18850 U.S. HIGHWAY 19 NORTH, SUITE 525
CLEARWATER, FLORIDA 34624
(813) 530-9793
<PAGE>
04962248
April 24, 1996
RIGGINS,
ATKINSON,
COMBS &
ASSOCIATES,
INC.
Mr. Terry Bush
Corporate Banking
Republic Bank
111 Second Avenue NE, Suite 215
St. Petersburg, Florida 33701
Re: Appraisal Report
Town Place Apartments
A 240-Unit Apartment Complex
2524 NE Coachman Road
Clearwater, Florida 34625
Dear Mr. Bush:
As requested, we have prepared an appraisal of the above
captioned property. The purpose of the appraisal is to estimate
the market value of the subject property, as of the effective
date of April 15, 1996. Market value is defined on page 3 of the
text. This appraisal reflects or addresses any significant
information known to this appraiser which may materially alter
the "as is" nature of the appraisal.
The subject property is a 240-unit apartment complex, known as
the Town Place apartments. The complex, which was constructed in
1984, features one and two bedroom apartment units in two-story
and three-story walk-up garden style buildings. Amenities
include a leasing office, a swimming pool and spa, tennis courts,
and a laundry/maintenance room. The construction quality of the
apartment complex is average cost and has been maintained in
average condition. The total rentable area of the buildings is
202,004 square feet.
The subject site is an irregular shaped non-contiguous parcel
located on the south side of NE Coachman Road, west of the
intersection with U.S. Highway 19 in the city of Clearwater. The
site has about 852 feet of road frontage. Ingress and egress is
adequately provided, however it can be more difficult at peak
traffic hours. The site is basically level, with a gradual
downward slope from north to south. The total area of the site
is 750,310 square feet or 17.22 acres.
It is the intent of this appraisal to be in compliance with the
regulations governing federally regulated financial institutions
and the Uniform Standards of Professional Appraisal Practice as
adopted by the Appraisal Institute, as read and interpreted by
this
office.
The following report contains the data, analysis, assumption and
limiting conditions on which we have based our value conclusions.
Your attention is directed to the "general assumptions and
limiting conditions" and the "certificate of appraisal" which are
considered typical for this type of assignment and have been
included within the text of this report.
The fee simple market value of the property described herein,
subject to the assumptions and limiting conditions as set forth,
as of April 15, 1996, in "as is" condition, is estimated to be:
NINE MILLION TWO HUNDRED THOUSAND DOLLARS
($9,200,000)
INCLUDING
DEPRECIATED VALUE OF APPLIANCES
TWO HUNDRED THOUSAND DOLLARS
($200,000)
REAL PROPERTY
NINE MILLION DOLLARS
($9,000,000)
Respectfully submitted:
______________________________ ______________________________
Robert E. Riggins, MAI, SRA William W. Atkinson, MAI
President Vice President
State-certified general real State-certified general real
estate appraiser #0000605 estate appraiser #0001221
<PAGE>
Summary of Important Facts and Conclusions
Property Location: Property located on the south
side of NE Coachman Road about
280 feet southwest of the
intersection with U.S. Highway
19 in the city of Clearwater,
mailing address - 2545 NE
Coachman Road, Clearwater,
Florida 34625
Owner of Record: Decade Companies Income
Properties, Ltd.
Property Rights Appraised: Fee Simple Estate
Date of Valuation: April 15, 1996
Improvements: A 240-unit, average quality
apartment complex that was
constructed in 1984, known as
the Town Place Apartments -
Amenities include a leasing
office, a swimming pool and
spa, tennis courts, and a
laundry/maintenance room
Land Area: 750,310 square feet or 17.22
Acres
Zoning and Land Use: RPD-14 (Residential Planned
Development "Fourteen"
District) under the
jurisdiction of the City
of Clearwater - Comprehensive
Land Use Plan, MD (Medium
Density Residential 15 u.p.a.)
Highest and Best Use:
As Though Vacant: A 222-unit good quality
apartment development
As Though Improved: Continue use as a 240-unit
apartment complex
Valuation Summary:
Estimated Land Value: $1,350,000
Value by the Cost Approach: $9,000,000
Value by the Sales Comparison Approach: $8,900,000
Value by the Income Capitalization Approach: $9,300,000
Final Estimate of Value:
"AS IS" - Fee Simple: $9,200,000
Marketing Time: 6 Months
<PAGE>
Subject Photographs
View Of Apartment Building
From Parking Area Of Public Tennis Facility
Interior View Of Apartment Unit
<PAGE>
Table Of Contents
Cover Page
Letter Of Transmittal
Summary Of Important Facts And Conclusions
Subject Photographs
Introduction Page
Purpose and Date of Appraisal . . . . . . . . . . . . . 1
Function of the Appraisal . . . . . . . . . . . . . . . 1
Interest Appraised. . . . . . . . . . . . . . . . . . . 1
Scope of the Appraisal. . . . . . . . . . . . . . . . . 1
Definition of Market Value. . . . . . . . . . . . . . . 3
Definition of Fee Simple Ownership. . . . . . . . . . . 4
Identification of the Subject Property. . . . . . . . . 4
Zoning. . . . . . . . . . . . . . . . . . . . . . . . . 4
Flood Information . . . . . . . . . . . . . . . . . . . 6
Legal Description . . . . . . . . . . . . . . . . . . . 6
Tax Information . . . . . . . . . . . . . . . . . . . . 6
Sales History . . . . . . . . . . . . . . . . . . . . . 6
Descriptive Analysis
Tampa Bay Area Analysis . . . . . . . . . . . . . . . . 7
Neighborhood Description. . . . . . . . . . . . . . . . 17
Site Description. . . . . . . . . . . . . . . . . . . . 21
Improvement Description . . . . . . . . . . . . . . . . 26
Highest and Best Use. . . . . . . . . . . . . . . . . . 31
Valuation Analysis
Highest and Best Use as though Vacant . . . . . . . . . 32
Physically Possible . . . . . . . . . . . . . . . . . . 32
Legally Permissible . . . . . . . . . . . . . . . . . . 33
Financially Feasible. . . . . . . . . . . . . . . . . . 34
Maximally Productive. . . . . . . . . . . . . . . . . . 35
Highest and Best Use as Improved. . . . . . . . . . . . 35
The Valuation Process . . . . . . . . . . . . . . . . . 37
The Cost Approach . . . . . . . . . . . . . . . . . . . 39
Explanation of Adjustments. . . . . . . . . . . . . . . 52
Correlation and Conclusion. . . . . . . . . . . . . . . 54
Replacement Cost of Improvements. . . . . . . . . . . . 55
Depreciation. . . . . . . . . . . . . . . . . . . . . . 56
Summary of the Cost Approach. . . . . . . . . . . . . . 59
The Sales Comparison Approach . . . . . . . . . . . . . 60
Explanation of Adjustments. . . . . . . . . . . . . . . 71
Financing/Conditions of Sale. . . . . . . . . . . . . . 71
Market Conditions (time). . . . . . . . . . . . . . . . 71
Average Unit Size . . . . . . . . . . . . . . . . . . . 71
Location. . . . . . . . . . . . . . . . . . . . . . . . 72
Age . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Quality/Condition . . . . . . . . . . . . . . . . . . . 72
Correlation and Conclusion. . . . . . . . . . . . . . . 73
The Income Capitalization Approach. . . . . . . . . . . 75
Estimate of Market Rent . . . . . . . . . . . . . . . . 75
Rent Comparable . . . . . . . . . . . . . . . . . . . . 76
Analysis of Operating History . . . . . . . . . . . . . 88
Direct Capitalization . . . . . . . . . . . . . . . . . 91
Band of Investment. . . . . . . . . . . . . . . . . . . 92
Debt Coverage Ratio . . . . . . . . . . . . . . . . . . 92
Summary of the Direct Capitalization Approach . . . . . 94
Discounted Cash Flow Analysis . . . . . . . . . . . . . 95
Multifamily Income Proforma . . . . . . . . . . . . . . 97
Summary of the Income Capitalization Approach . . . . . 99
Recapitulation and Final Reconciliation . . . . . . . . 100
Certificate of Appraisal. . . . . . . . . . . . . . . . 104
Assumptions and Limiting Conditions . . . . . . . . . . 107
Addendum
Supplemental Subject Photographs
Flood Plain Map
Legal Description
Rent Roll
Income Statements
Zoning Regulations
Engagement Letter
Qualifications of Appraisers
<PAGE>
APPRAISAL REPORT
Town Place Apartments
A 240-Unit Apartment Complex
2524 NE Coachman Road
Clearwater, Florida 34625
PURPOSE AND DATE OF APPRAISAL:
The purpose of this appraisal is to estimate the market value of
the fee simple interest in the property described herein, as of
April 15, 1996, in "as is" condition.
FUNCTION OF THE APPRAISAL:
This appraisal report is to assist the client in the underwriting
of a mortgage loan to be secured by the subject property. This
appraisal reflects or addresses any significant information known
to this appraiser which may materially alter the nature of the
appraisal.
INTEREST APPRAISED:
The fee simple interest in the property described herein has been
appraised. Liens and encumbrances, if not described, are unknown
and the property has been analyzed as if free and clear.
SCOPE OF THE APPRAISAL:
A physical inspection of the subject property was made on April
15, 1996. The inspection of the property was made with the
assistance of Sheryl Sallimo, Property Manager and Wayne Shaw,
Regional Manager. Documentation supplied for the subject
property included a four year operating income history and a
current rent roll. All of the improved structures were
physically inspected from the exterior. Interior inspections
were made of the leasing office, laundry/maintenance room, and a
sample of 5 apartment units. Public records were reviewed for
additional information on the subject property.
Once a physical inspection was completed, the economic conditions
of the region and neighborhood were investigated and analyzed in
relation to the relevant factors which effect the market value of
the subject. The cost approach, sales comparison approach, and
income capitalization approach were used to evaluate the relevant
factors and estimate the market value of the subject. The time
period for which comparable market data was investigated was from
January 1993 to the present. Data sources used to collect
comparable market information include Redi, Ulticomp, Realtron,
MetroScan, public records, and internal appraisal files.
The cost approach is derived by estimating the value of the land
and the depreciated replacement cost of the improvements. The
primary factors which were considered in the search for
comparable land sales were the highest and best use, the date of
sale, and the location. All of the land comparables were
researched, physically inspected, and confirmed with a
knowledgeable source. Both Pinellas and Hillsborough Counties
were searched for land comparables. Land sales in Pinellas
County were limited due to the dense development in the area and
the limited supply of vacant land. The replacement cost of the
improvements was estimated using Marshall Valuation Service.
Depreciation applicable to the improvements was estimated based
on a comparison of other structures in the neighborhood.
The sales comparison approach values the subject property by
comparing it to similar sales in the market area. The primary
factors which were considered in the search for improved
comparables were age and quality of the properties, the date of
sale, and the location. All of the improved comparables were
researched using public records, physically inspected, and
confirmed with a knowledgeable source. The search for improved
comparables was limited to Pinellas County.
The income capitalization approach estimates the value of the
subject by dividing net operating income by a capitalization rate
and estimating future cash flows and applying an appropriate
discount rate. Net operating income is derived by estimating the
gross potential income of the subject and then deducting for
vacancy, collection loss and operating expenses.
The gross potential income for the subject was derived using rent
comparables. The primary factors which were considered in the
search for rent comparables was the age and quality of the
properties and the location. All of the rent comparables were
researched using public records, physically inspected, and
surveyed with a knowledgeable source. All of the rent
comparables were located in the immediate subject neighborhood.
Vacancy, collection loss, and expenses were supported by the rent
comparables, as well as, the improved comparables. The
capitalization rate was derived using comparable sales, the band
of investment and the debt coverage ratio.
This narrative report describes the valuation problem and
contains data, analysis, assumptions and limiting conditions upon
which value conclusions have been based. It is the intent of
this appraisal to be in compliance with the regulations governing
federally regulated financial institutions and the Uniform
Standards of Professional Appraisal Practice as adopted by the
Appraisal Institute, and as read and interpreted.
DEFINITION OF MARKET VALUE:
"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
knowledgeably, and assuming the price is not affected by undue
stimulus. Implicit in this definition is the consummation of a
sale as of a specified date and the passing of title from seller
to buyer under conditions whereby:
1. buyer and seller are typically motivated;
2. both parties are well informed or well advised, and acting
in what they consider their own best interests;
3. a reasonable time is allowed for exposure in the open
market;
4. payment is made in terms of cash in United States dollars or
in terms of financial arrangements comparable thereto; and
5. the price represents the normal consideration for the
property sold unaffected by special or creative financing or
sales concessions granted by anyone associated with the
sale.
Important factors affecting market value include the time
element, neighborhood and economic changes, as well as
anticipation thereof. Market prices do not necessarily follow
all of these concepts and are often affected by salesmanship and
the urgency and need of the buyer and/or the seller. The
essential difference between market price and market value lies
in the premises of intelligence, knowledge and willingness, all
of which are contemplated in market value but not in market
price.
The market value of the property appraised in this report is
estimated as of the date shown in the certificate of appraisal.
Constantly changing economic conditions have varying effects upon
real property values. Even after the passage of a relatively
short period, property values may change substantially and
require a review of the appraisal and recertification.
DEFINITION OF FEE SIMPLE OWNERSHIP:
"A fee simple estate implies absolute ownership unencumbered by
any other interest or estate. Partial interests in real estate
are created by selling, leasing, or otherwise limiting the bundle
of rights in a fee simple estate. Partial estates include leased
fee and leasehold estates."
IDENTIFICATION OF THE SUBJECT PROPERTY:
The subject property is a 240-unit apartment complex, known as
the Town Place apartments. The complex, which was constructed in
1984, features one and two bedroom apartment units in two-story
and three-story walk-up garden style buildings. Amenities
include a leasing office, a swimming pool and spa, tennis courts,
and a laundry/maintenance room. The construction quality of the
apartment complex is average cost and has been maintained in
average condition. The total rentable area of the buildings is
202,004 square feet.
The subject site is an irregular shaped non-contiguous parcel
located on the south side of NE Coachman Road, west of the
intersection with U.S. Highway 19 in the city of Clearwater. The
site has about 852 feet of road frontage. Ingress and egress is
adequately provided, however it can be more difficult at peak
traffic hours. The site is basically level, with a gradual
downward slope from north to south. The total area of the site
is 750,310 square feet or 17.22 acres.
ZONING:
The subject site is zoned RPD-14 (Residential Planned Development
"Fourteen" District) under the jurisdiction of the City of
Clearwater. The RPD-14 zoning allows residential development at
a maximum of 14 units per net acre. As defined by the City of
Clearwater, a net acre includes all uplands within a contiguous
parcel of ownership excluding existing or proposed public or
private roadways, right-of-way and vehicular access ways. The
City of Clearwater uses an 8% factor to determine net acreage.
The comprehensive land use plan, indicates that the subject has a
land use of MD (Medium Density Residential 15 u.p.a.). The
subject property is developed at a density of 13.94 units per
acre and appears to conform to the current zoning and land use.
<PAGE>
FLOOD INFORMATION:
The subject property is located in flood zones X and AE. Flood
zone information was determined by F.I.R.M. community panel
number 125096 0010 D, dated August 19, 1991. An X zone is
defined as areas determined to be outside the 500-year flood
plain or areas of 500-year flood; areas of a 100-year flood with
average depths of less than 1 foot or with drainage ares less
than 1 square mile; and ares protected by levees form 100-year
flood. An AE zone is defined as areas with base flood elevations
determined. Insurance is generally required for improved
structures within the AE zone. A copy of the flood map may be
found at the addendum of this report.
LEGAL DESCRIPTION:
A tract of land in Section 7, Township 29 South, Range 16 East,
Pinellas County, Florida, being more particularly described at
the addendum of the report.
The legal description for the subject was supplied by the client
and is assumed to be correct. No guarantee is made as to the
accuracy of the legal description.
TAX INFORMATION:
Census Tract: 267.02
Parcel Numbers: 07-29-16-00000-110-0500
Owner of Record: Decade Companies Income Properties, Ltd.
1995 Tax Valuation: $7,691,400
Millage Rate: 23.0366
1995 Gross Tax: $177,183.71 (1995 Taxes - Paid)
In review of the appraised value for the subject property, the
assessed value appears to be within an acceptable range. An
analysis of the tax assessment and tax comparables may be found
in the income capitalization approach section of the report.
SALES HISTORY:
A search of Pinellas County Public Records revealed that no
transactions involving the subject property have occurred over
the last five years.
It was reported that the subject property was under contract for
sale in 1995 for $9,500,000 and was one of a number of apartment
complexes being assembled for purchase by a Real Estate
Investment Trust. The contract fell through apparently due to
the lack of total funds raised, as well as, prior internal
purchase agreements
that were already in place. The trust forfeited a $100,000 non-
refundable binder deposit.
To our knowledge the subject property is not currently on the
market for sale.
HIDDEN CONDITIONS:
The appraiser assumes that there are no hidden or unapparent
conditions of the property, subsoil or structures which would
render it more or less valuable than otherwise apparently
comparable property. The appraiser assumes no responsibility for
such conditions or for engineering which might be required to
discover such conditions.
<PAGE>
TAMPA BAY AREA ANALYSIS
TAMPA BAY AREA:
The Tampa Bay Area is located on the west coast of Florida,
midway up the Florida peninsula. The Tampa Bay Comprehensive
Planning District 8 is geographically defined as Hillsborough,
Manatee, Pasco and Pinellas Counties, which contain a total of
2,818 square miles. The primary concentration of development has
taken place around Tampa Bay and along the Gulf coast. The major
cities in the area are Tampa in Hillsborough County, and St.
Petersburg and Clearwater in Pinellas County.
The region is blessed with a moderate climate with an average
minimum temperature of 48 degrees in January and an average
maximum temperature of 89 degrees in July. The average annual
rainfall is 56 inches, the majority of which falls in the summer
months.
POPULATION:
The current population of the region is estimated at 2,311,198
(1995). The region has experienced a dramatic increase in
population since 1970, with a total increase of 44.9% between
1970 and 1980. Population growth has slowed somewhat since 1980,
with an increase of 26.8% between 1980 and 1990, or approximately
46,000 new residents annually. Total growth in 1990-1995,
however, was only 132,647, or 26,529 annually.
<PAGE>
<TABLE>
POPULATION STATISTICS
<CAPTION>
1980 1990 1995 Annual % Change
80-90 90-95 2000*
<S> <C> <C> <C> <C> <C> <C>
Hillsborough 646,960 834,054 892,299 2.6% 1.4% 962,229
Manatee 148,445 211,707 232,700 3.6% 1.9% 257,404
Pasco 193,661 281,131 306,401 3.8% 1.7% 340,101
Pinellas 728,531 851,659 879,798 1.6% 0.7% 919,497
District 8 1,717,576 2,178,551 2,311,198 2.4% 1.2% 2,479,231
<FN>
* Population projections, University of Florida
</FN>
</TABLE>
<PAGE>
Population growth during the 1970's was 3.8% on an annual basis.
In the period 1980-1990, growth in the area dropped to 2.4%
annually, in part due to the overall slowing of migration to the
sunbelt. With the slowdown in the economy, growth since 1990 has
been only 1.2% per year for the district. Growth is due
primarily to net immigration rather than natural growth.
Pinellas County has recorded the lowest percentage growth due to
the dwindling supply of available land.
Hillsborough County is the most populous county in the area and
contains the largest city, Tampa. The second most populous
county in the area is Pinellas, which is geographically the
second smallest county in Florida. This makes Pinellas County
the most densely populated county in Florida with over 3,122
residents per square mile. Pasco County exhibited the most
dramatic growth since 1980 due to its emergence as a retirement
area, and increases in employment opportunities, however, as with
other counties, Pasco County growth has slowed considerably.
The average age of the population for the region is 39 years, as
compared to 36 years for the State of Florida. The average age
for the counties are 43 years for Manatee, 33 years for
Hillsborough, 48 years for Pasco, and 42 years for Pinellas. The
more mature populations in Manatee, Pasco and Pinellas Counties
are primarily due to their history as retirement areas. Recent
years have shown a slight drop in average age due to the increase
in office and manufacturing employment opportunities. This is
particularly true of Pinellas County, where the retirement
population is being replaced by younger, working age, families.
There were 961,202 households in the District in 1994, which
represents an average household size of 2.40. The average
household size has decreased from 2.70 in 1970, in keeping with
national trends. Based on historical growth patterns, this would
equate to 19,450 new household formations annually. However, the
slower growth in 1990-1995 equates to only 11,033 new household
formations annually. This is reflected in the significant drop
in new housing starts in recent years. Housing starts have shown
a slight rebound in all counties in the years 1993, 1994 and
1995, due in part to lower interest rates.
Population growth is expected to rebound somewhat as the general
economy improves, however, it is unlikely to reach the level of
growth experienced in the 1970's and 1980's.
ECONOMIC BASE:
Historically the economy has been tourist and retirement oriented
in the coastal counties and manufacturing and commercially
oriented in Hillsborough County. While this is still true today,
Pinellas County has begun to attract a larger share of new
businesses, particularly in the high tech industries. Tampa,
however, remains the major economic hub of the area.
Major factors affecting the economic growth in the area, apart
from the retirement and tourist industries, are Tampa's deep
water port, Tampa International Airport and the major highway
arteries servicing the area. Tampa is a major break point
between railroads, air, highway and water transport. The Port of
Tampa handled 52.0 million short tons in 1990, with an additional
5.3 million short tons handled by Port Manatee. Ease of access
through Tampa International Airport and the interstate highway
system has made the area increasingly more attractive for
corporate and regional headquarters facilities, as well as high
tech industry. This has spurred additional growth in the service
and construction industries. The completion of I-75 through the
region opened new growth opportunities in Pasco, Hillsborough and
Manatee Counties, however, due to the general slowdown in the
economy, this growth has not yet materialized.
Taxable retail sales in the Tampa Bay Area increased from $19,521
million in 1990 to $23,502 million in 1994. Retail sales levels
are generally in line with the State of Florida, however they are
above national levels. The high level of retail sales is in
large part due to the tourist and part time resident trade. This
same influence is evident in the area employment statistics.
Total personal income has increased dramatically over the period
from 1985 to 1995. In 1985 the total personal income for the
area was $27,463 million. By 1995 this had increased to $51,327
million, an increase of 86.9%, or 6.45% annually. Per capita
income increased at a slightly slower rate than Florida as a
whole to a current level of $22,208, slightly below the Florida
per capita income of $22,534.
PER CAPITA PERSONAL INCOME
1990 1994 1995 % Change Ann. %
94-95 90-95
Hillsborough $17,264 $20,743 $21,155 2.0% 4.1%
Manatee $18,525 $22,968 $22,636 -1.4% 4.1%
Pasco $14,424 $16,573 $17,146 3.5% 3.5%
Pinellas $21,881 $24,146 $24,725 2.4% 1.5%
District 8 $18,825 $22,208 $22,208 2.2% 3.4%
Florida $18,683 $22,534 $22,534 2.9% 3.8%
Employment in the region reflects a broad based economy, although
it is skewed somewhat to the retail trade and service industries.
Agriculture and mining were instrumental in the early growth of
the area but have declined substantially in recent years.
Historically the unemployment rate, at 5.3% in 1995, has stayed
below the national and state averages.
<PAGE>
LABOR FORCE AND EMPLOYMENT (1995)
Labor Unemply.
Force Employed Unemployed Rate
Hillsborough 503,225 475,286 27,969 5.6%
Manatee 109,176 104,711 4,465 4.1%
Pasco 118,654 110,789 7,865 6.6%
Pinellas 441,700 419,406 22,283 5.0%
District 8 1,172,755 1,110,203 62,582 5.3%
The current labor force for the District is 1,172,755 or 50.7% of
the population. In 1982 the labor force was 717,916 or 41.8% of
the population. Not only has there been a substantial increase
in labor force, there has also been a dramatic increase in the
percent of population employed.
EMPLOYMENT DISTRIBUTION (1993)
Percent Percent
Industry Total Percent Florida US
Agriculture 20,910 2.20% 2.80% 2.70%
Mining 125 0.00% 0.10% 1.20%
Construction 42,682 4.60% 5.20% 4.50%
Manufacturing 95,427 10.30% 8.70% 20.00%
Transport, Communic. 50,127 5.40% 5.90% 5.60%
Wholesale Trade 51,372 5.50% 5.30% 5.80%
Retail Trade 188,913 20.30% 20.90% 16.40%
Finance, Real Estate 65,773 7.10% 6.50% 5.80%
Services 365,408 39.30% 37.80% 20.80%
Government 49,663 5.30% 6.80% 17.20%
Total 930,401 100.00 100.00% 100.00%
The comparison of the District distribution with the national
distribution of employment illustrates the importance of the
construction, retail sales and service sector in the local
economy and in Florida. This is due, in large part, to the
tourist and retirement influence in the area. Employment growth
had kept pace with population growth, thus providing adequate job
opportunities.
Due to the favorable economic environment, the quality of life in
the area and the strong economic base, the Tampa Bay area should
continue to grow as a major economic center. The area has been
successful and should continue to be successful in attracting new
businesses.
SOCIAL SERVICES:
All normal governmental services are adequately provided
throughout the region. Electrical power is provided by Florida
Power Corporation in Pasco and Pinellas Counties, Florida Power
and Light in Manatee County and by Tampa Electric Company, in
Hillsborough County at rates comparable with other areas of
Florida. Water, sewer, sanitation, police and fire protection
are provided by the various county and municipal governments.
Local tax rates are generally in line with other areas of the
state.
Due to past growth, particularly in Hillsborough, Pasco, and
Pinellas, certain services have been sorely taxed. Limited water
restrictions have been implemented throughout the area during dry
periods. The interior road systems are inadequate in certain
high growth areas. This problem has become more critical with
the implementation of the Florida Growth Management Act, which
requires infrastructure improvements to be made concurrent with
growth. While these factors do not appear to have had a major
impact on growth thus far, they are likely to become a major
factor in future growth, particularly if growth returns to past
levels.
The area has long been noted as a retirement and vacation spot
with its gulf beaches and attractions such as Busch Gardens,
Disney World and Weeki Wachee Springs. Over the years, the area
has also developed a number of other cultural and leisure
activities including an NFL football team, an NHL hockey team,
the Ruth Eckerd Hall in Clearwater, a number of smaller theaters
and the Performing Arts Center in Tampa. A 200,000 square foot
convention center has been constructed in downtown Tampa, along
with a new hockey arena. A sports stadium has been constructed
in downtown St. Petersburg, which has been awarded a new major
league baseball franchise.
Shopping is abundant and easily accessible to all areas. A
number of major area malls are scattered throughout the area.
These new cultural and leisure amenities have given the Tampa Bay
area a much more cosmopolitan atmosphere, thus making the area
much more attractive to both part time visitors and permanent
residents.
Educational opportunities are adequately provided in the area.
Each county has a public school system providing education from
kindergarten through the twelfth grade, as well as private
schools. Higher education is provided by a number of
institutions, both public and private, including St. Petersburg
Junior College, University of South Florida, University of Tampa,
Hillsborough Community College, Eckerd College and Stetson
University.
Health services are provided by 51 hospitals, with a total of
11,273 beds. There are approximately 5,184 licensed physicians
serving the area. There is also a large number of nursing homes
and care facilities serving the elderly population.
CONCURRENCY:
Concurrency laws were enacted in 1990, statewide. Concurrency is
part of the 1985 Florida Growth Management Act which states in
part that all infrastructures, which are, or will be affected by
any proposed development, must be in place, prior to, or
concurrent
with development.
In most municipalities, there are seven areas that affect
concurrency.
1. Solid Waste 5. Transportation
2. Drainage 6. Parks and Recreation
3. Water 7. Mass Transportation
4. Sewer
The major items of concurrency which normally affect most
projects are sewers and roads. Sewers and roadway capacities are
also generally the most expensive to build.
Concurrency laws may require the developer to pave, widen, and/or
construct existing or additional roads to carry the burden of the
additional traffic generated by a proposed development. The
developer may also have to participate in the cost of
construction to increase the sewer capacity or may have to donate
land to be used for parks and recreation.
As a result of rapid development, a major concern in the area
lies with the inability of the existing roads to keep up with
vehicular traffic demands. Streets are rated "A" through "F".
Streets in the county with severe traffic problems are labeled
"F". Development on streets that are rated, or are approaching,
an "F" rating could be significantly curtailed. All counties
have major road construction programs underway to alleviate these
problems, however, they are likely to persist, at least in the
short run.
HOUSING MARKET:
The Housing Market remains stable in the Tampa Bay area, although
sales of new homes have slowed from the high levels experienced
during the high growth period of the 1970's. The most active
housing markets in both single family and multi-family
developments
are northwest Hillsborough County, north Pinellas County, and
south Pasco County.
New housing starts over the period 1987-1992 experienced a steady
decline due to slower population growth and over building.
Housing starts in all counties stabilized in 1992, with an
increase in construction activity in 1993 and 1994. Preliminary
estimates for 1995 indicate a slight decrease in residential
construction activity, however, preliminary estimates have
historically been below actual figures. The extent of future
improvement in housing production is dependent on the improvement
of infrastructure, as mandated by the 1985 Growth Management Act,
new job creation and population increases. However, it is
unlikely that housing starts will return to the levels
experienced in the 1970's and early 1980's.
The following chart shows the housing starts through 1995 for all
counties in the metropolitan area.
<PAGE>
<TABLE>
HOUSING STARTS
<CAPTION>
County 1989 1990 1991 1992 1993 1994 1995*
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hillsborough SF 4,100 2,454 3,167 4,237 4,484 5,208 6,809
MF 2,162 2,837 1,243 506 695 2,340
Manatee SF 1,254 1,185 1,012 1,304 1,551 1,917 2,401
MF 1,273 1,118 801 381 239 272
Pasco SF 2,080 1,460 1,484 1,661 2,098 2,177 2,054
MF 326 81 127 174 123 239
Pinellas SF 2,423 1,960 1,961 2,602 2,398 2,426 3,326
MF 1,737 1,935 1,855 591 1,241 1,101
Total (by type) SF 9,857 7,059 7,624 9,804 10,531 11,728
MF 5,498 5,971 4,026 1,652 2,298 3,952
Total 15,355 13,030 11,650 11,456 12,829 15,680 14,590
Percent Change -20.26% -15.14% -10.59% -1.67% 11.98% 22.22% -6.95%
<FN>
* Preliminary est., breakdown between Single and Multi Family not available.
</FN>
</TABLE>
<PAGE>
Inventories of new single-family homes are at reasonable levels
in all four counties. All counties are beginning to experience a
shortage of developed lots due to the recent increase in building
activity. This is particularly true of Pinellas County due to
the lack of developable land. This has caused an increase in
demand in southern Pasco County. New single family detached
construction is over a broad range of prices, generally from
$75,000 to $300,000. The most active condominium market is in
the $60,000 to $90,000 price range.
The multi-family market has experienced an increase in new
construction over the last 24 months, particularly in
Hillsborough and Pinellas County, however, exact numbers are not
available for 1995. Vacancy rates have stabilized in both
Pinellas and Hillsborough County at approximately 5% to 8%.
Rents have increased by approximately 3% to 5% per year.
Absorption rates in most well designed and well located new
projects are reported to be good.
An emerging trend is the renovation or replacement of older
residences in existing neighborhoods. This trend is particularly
noticeable in Pinellas County and south Tampa where available
land is in short supply.
The overall housing market remains stable, although there is
continuing softness in certain submarkets. The historic ability
of the Tampa Bay area to absorb new housing units should continue
to support new construction in the area. Current population
growth would indicate 11,033 new household formations per year,
which is reflected in production of new housing units. Steady
increases in rental rates and continued strong apartment
absorption rates would appear to indicate future improvement.
SUMMARY:
In summary, the Tampa Bay area currently provides all of the
normal services required by a major metropolitan area. Although
the tremendous growth over the last decade has strained some of
the governmental services, there should be no detrimental effects
on overall growth, at least in the short run. However, if
infrastructure development is not provided, as required by the
concurrency provisions of the Florida Growth Management Act, long
term growth could be slowed.
Sources: Florida Statistical Abstract
Florida Trend Economic Yearbook
The Maddux Report
A more detailed analysis of the specific market in which the
subject is located may be found in the following Neighborhood
Analysis. While our analysis will consider the market as a
whole, particular attention will be paid to the specific market
of the subject.
<PAGE>
TAMPA BAY AREA
REGIONAL LOCATION
<PAGE>
NEIGHBORHOOD DESCRIPTION
The subject property is located on the south side of NE Coachman,
west of U.S. Highway 19 in the city of Clearwater. The
surrounding neighborhood primarily consists of well established,
fully developed, residential properties with supporting
commercial facilities lining the major thoroughfares. The
neighborhood boundaries could readily be described as Sunset
Point Road to the north, McMullen-Booth Road and Old Tampa Bay to
the east, East Bay Drive to the south, and Highland Avenue to the
west.
The improvements in the subject neighborhood contain a mixture of
commercial and residential uses. The main traffic arteries are
typically lined with commercial improvements, including offices,
service stations, convenience stores, restaurants, service shops,
auto sales/repair facilities, banks, and other commercial uses.
The balance of the surrounding areas are primarily developed with
a mixture of single family and multiple family development.
Single family properties in the area range substantially in size
and age, thus catering from lower to higher income ranges.
Likewise, the multi-family properties in the area command rents
from the lower to higher income ranges. Properties are
adequately maintained and many of the older ones show signs of
renovation.
A small municipal airport is located at the northeastern portion
of the neighborhood. Several public parks, schools, shopping, a
golf course, and a baseball stadium (used in the summer months by
the Philadelphia Phillies) are conveniently located throughout
the neighborhood. Public Beaches, regional malls, employment,
and other supporting facilities are located within the
neighborhood or within a short driving distance. Tampa
International airport is located within a twenty-five minute
driving distance, east of the subject.
The major north-south arteries in the neighborhood are McMullen-
Booth Road, U.S. Highway 19, Belcher Road, Hercules Avenue, Keene
Road, and Highland Avenue. U.S. Highway 19 is a well traveled
thoroughfare located in the eastern portion of the neighborhood
and is heavily developed with office and retail properties. Both
Belcher Road and McMullen-Booth Road provide alternate north-
south travel routes to U.S. Highway 19, and are both improved
with mixed residential and commercial development. Highland
Avenue is primarily developed with residential type properties
with a scattered small amount of commercial development.
Hercules Avenue is primarily developed with commercial and
industrial type properties.
The major east-west arteries in the neighborhood are Sunset Point
Road, Drew Street, Gulf-to-Bay Boulevard, Druid Road, Sunset
Point Road, Belleair Road, and East Bay Drive. Both Gulf-to-Bay
Boulevard and East Bay Drive are heavily developed commercial
thoroughfares which carry large volumes of vehicular traffic.
The remaining east-west roads are primarily developed with small
"Mom
and Pop" commercial properties, scattered multi-family
properties, and single family subdivisions.
The roads in the neighborhood provide good traffic flow and are
well maintained on a continual basis. Construction to improve
road conditions is currently in progress on Sunset Point Road,
Keene Road, and East Bay Drive. Interstate access for the
neighborhood is located within a 20 minute driving distance east
or southeast of the neighborhood. Many of neighborhoods in
Pinellas County lack nearby interstate access and is not
considered to have any adverse influence on the subject
neighborhood.
Single family development in the subject neighborhood varies
dramatically from older masonry or frame homes in the lower to
moderate price range, to newer custom built homes in the upper
price range. The majority of the homes are typically older one
story, concrete block structures that are about 800 to 1,700
square feet in size and sell from $40,000 to $90,000.
The market for rental housing units in the area is well
diversified and is available for all household income levels. A
market investigation was conducted in the subject neighborhood
and it indicated that there is good demand for apartment
complexes. According to local apartment managers in the area,
typical vacancy rates range from 1% to 10%. Monthly rents for
one bedroom apartments are from $350 to $650 a unit, monthly
rents for two bedroom apartments are from $450 to $800 a unit,
and monthly rents for three bedroom apartments are from $600 to
$950 a unit. Several of the apartment complexes which directly
compete with the subject property are Coachman Crossing, Cameron
Lakes, Sunchase of Clearwater, Coral Cove, and Chesapeake. All
five apartment complexes, like the subject, feature clubhouses
and/or leasing offices, swimming pools and laundry facilities.
As the result of the city of Clearwater being nearly fully
developed there has been relatively little population growth from
1980 to 1994. The permanent population of Clearwater is
estimated as of 1994 at 100,604, which is up 1,820 from 1990 and
15,076 from 1980.
The median age of the neighborhood is 39.2 years, which is above
the state, but below both Pinellas County and the region. In the
neighborhood, 20.5% of the population is age 0 to 18, 29.5% is
age 18 to 39, 27.4% is age 39 to 65, and 22.6% is age 65 or
older. The population of the neighborhood is well diverse in age
as the result of supporting academic schools, employment centers,
health care, and recreational amenities.
About 25% of the neighborhood population earns an annual
household income up to $15,000, 25% earn $15,000 to $25,000, 33%
earn $25,000 to $50,000, and 17% earn $50,000 and up. The
annual household income figures indicate that quality employment
is available to the area.
All necessary public utilities are readily available in the
neighborhood, including water, sewer, telephone, and electrical
service. Police and fire protection are supplied by the City of
Clearwater. Local governments appear to keep the streets and
equipment properly maintained.
In summary, the subject neighborhood has a large residential
population base. The area is well-served by local utilities,
governmental services, and supporting commercial facilities.
Recreational and social amenities, including schools and parks,
are also abundant. Vacant land is somewhat scarce in the area,
and existing properties are adequately maintained, under
renovation, or demolished to make way for new construction. The
subject neighborhood appears to be in the stable portion of the
neighborhood life cycle. Real property values in the
neighborhood have been relatively stable for the past two years
and should remain relatively stable in the near future.
<PAGE>
NEIGHBORHOOD MAP
<PAGE>
SITE DESCRIPTION
Location:
The subject site is located on the south side of NE Coachman Road
about 280 feet southwest of the intersection with U.S. Highway 19
in the city of Clearwater. The physical mailing address of the
property is 2545 NE Coachman Road, Clearwater, Florida 34625.
Size and Shape:
The subject site is an irregular shaped non-contiguous interior
parcel with about 852 feet of road frontage on NE Coachmen Road
and a depth of about 1,335 feet. The gross area of the site is
750,310 square feet or 17.22 acres.
Topography and Drainage:
The site is basically level and slopes gradually downward from
north to south. The site is improved with a 240-unit apartment
11 complex known as Town Place Apartments. The parcel has a
master drainage system with water retention located at the
southeastern portion of the site. Drainage for the site appears
to be adequate.
Easements, Encroachments, and Other Conditions:
Based on the survey provided and a physical inspection of the
property, there were no adverse easements, encroachments or
conditions observed.
Flood Information:
The subject property is located in flood zones X and AE. Flood
zone information was determined by F.I.R.M. community panel
number 125096 0010 D, dated August 19, 1991. An X zone is
defined as areas determined to be outside the 500-year flood
plain or areas of 500-year flood; areas of a 100-year flood with
average depths of less than 1 foot or with drainage ares less
than 1 square mile; and ares protected by levees form 100-year
flood. An AE zone is defined as areas with base flood elevations
determined. Insurance is generally required for improved
structures within the AE zone.
Soil and Subsoil:
No soil analysis was made available, however given the existing
improvements to the site and surrounding properties, soil
conditions would appear adequate for development. At the time of
inspection, there were no unusual conditions observed on the site
that would suggest the presence of soil contamination. It was
reported that a 1992 environmental analysis for the subject
property found favorable results.
Utilities and Services:
Water: City of Clearwater
Sewer: City of Clearwater
Electricity: Florida Power Corporation
Telephone: General Telephone Company
Police: City of Clearwater
Fire: City of Clearwater
The cost of utilities and services are similar to competing areas
within the Tampa Bay area.
Street Improvements:
NE Coachman Road, in front of the subject site, is a two lane
road with masonry sidewalks and no curbs. Telephone and electric
service in the area is wood pole mounted. U.S. Highway 19 to the
east of the site is a six lane road with center turn lanes. The
intersection of NE Coachman Road and U.S. Highway 19 is signaled
with a traffic light. Traffic counts taken in the location of
the subject for 1993 estimate travel on NE Coachman Road at
13,862 cars daily and travel on U.S. Highway 19 at 71,862 cars
daily. Travel is by both local and transient traffic. The
visibility of the site is adequate.
Ingress/Egress:
Access to the site is provided only by NE Coachman Road, to the
north. Access to NE Coachman Road is available from U.S. Highway
19 to the east and Old Coachman Road or Belcher Road to the west.
Ingress and egress for the site is adequate and is easily made
from all traffic directions. Ingress and egress for the site may
be slightly more difficult during peak traffic hours.
Relationship to Surrounding Properties and Uses:
The subject property is bordered to the north with a Walmart, and
to the east with a motel and vacant commercial sites fronting on
U.S. Highway 19. To the south, the subject is bordered with
vacant land owned by Pinellas County, as well as, the spring
training facility for the Philidelphia Phillies, Major League
Baseball team. Within the land owned by Pinellas County, about
200 feet south of the subject site, is the Seaboard Coast Line
railroad. Trains run twice daily, usually around 12:00 pm and
between 1:00 and 4:00 am.
To the west, the subject is bordered with high tension power
lines and a competing 218 unit apartment complex, known as
Coachman Crossing. The location of the high tension power lines
and the railroad tacks are believed to have no significant
adverse influence on the subject property. In fact, many of the
units near the tracks are charged a view premium for a small lake
located in the area. Located within the complex, but separately
owned is the Royal Racquet Club, a public tennis facility. The
land where the front entrance is located, belongs to the tennis
facility, however the apartment complex maintains the entrance
and has an ingress and egress easement over the land. The
existing use of the subject site as improved with an apartment
complex provides a good transition from commercial to residential
development.
Zoning:
The subject site is zoned RPD-14 (Residential Planned Development
"Fourteen" District) under the jurisdiction of the City of
Clearwater. The RPD-14 zoning allows residential development at
a maximum of 14 units per net acre. As defined by the City of
Clearwater, a net acre includes all uplands within a contiguous
parcel of ownership excluding existing or proposed public or
private roadways, right-of-way and vehicular access ways. The
City of Clearwater uses an 8% factor to determine net acreage.
The comprehensive land use plan, indicates that the subject has a
land use of MD (Medium Density Residential 15 u.p.a.).
Concurrency:
Concurrency laws in the state of Florida became active on January
1, 1990. Concurrency is part of the 1985 growth management act
which states in part that all infra-structures, which are, or
will be affected by the development of a property, will be in
place, prior to, or concurrent with development.
In most municipalities, there are seven areas that are affected
concurrency.
1. Solid Waste 5. Transportation
2. Drainage 6. Parks and Recreation
3. Water 7. Mass Transportation
4. Sewer
The major items of concurrency which normally affect most
projects are sewers and/or roads. Sewers and roadway capacities
are also generally the most expensive to build.
Concurrency laws may require the developer to pave, widen, and/or
construct existing or additional roads to carry the burden of the
additional traffic, (vehicular trips) that the subject project
will create. The developer may also have to participate in the
cost of construction to increase the sewer capacity or may have
to donate land to be used for parks and recreation.
Based on conversations with the City of Clearwater, concurrency
would appear to have no adverse influence on the subject
property.
Summary:
In summary, the subject site is located on a secondary collector
road, just west of U.S. Highway 19, a primary commercial
thoroughfare in the city of Clearwater. The site is an irregular
shaped non-contiguous interior parcel which is 750,310 square
feet or 17.22 acres in size. All necessary utilities are
available to the site and the topography is gently sloping and
drainage appears to be adequate. The site has about 852 feet of
road frontage, adequate ingress and egress to major traffic
arteries and adequate traffic visibility. The subject is
bordered with a combination of multiple family development and
general commercial development. The location of the subject site
appears well suited for multiple family residential development.
<PAGE>
TAX MAP
<PAGE>
IMPROVEMENT DESCRIPTION
The subject is improved with twenty-four two-story or three-story
garden style walk-up apartment building containing 240 units.
Amenities for the apartment complex include a leasing office, a
swimming pool and spa, tennis courts, and a laundry/maintenance
room. The apartment buildings were constructed in 1984.
The buildings are irregular in shape and uniformly arranged on
the site, with the leasing office, swimming pool and tennis
courts located toward the southern rear portion of the site. The
construction quality of the apartment complex is average cost.
The exterior walls are wood frame with wood siding. The roof
designs are gable, constructed of a wood truss system with a wood
deck and a composition shingle cover. Aluminum gutters and
downspouts are not provided. The foundation of the buildings are
a reinforced concrete slab. Windows are aluminum sliding.
Exterior doors are metal and interior doors are hollow core.
Covered entries are located at the front of each of the units.
The total rentable area of the buildings is 202,004 square feet.
For the purpose of this report, the rentable area includes
exterior and common walls. The square foot sizes are based on
the physical measurements taken at the time of inspection. The
leasing office is 854 square feet in size and the
laundry/maintenance Room is 1,056 square feet in size. The six
washers and six dryers in the laundry/storage room are all leased
by the apartment complex.
Landscaping is mature and consists of full sod, small to large
trees, and attractive shrubbery. The landscaped areas are
adequately maintained and irrigated by a full sprinkler system
which draws water from the lake.
Parking, as well as, ingress and egress are asphalt paved and
maintained in adequate condition. There are 397 open parking
spaces provided and all are located relatively close to the
units. The apartment complex has 1.65 parking spaces for each
unit, which is considered adequate.
The individual units in the complex are made up of four different
type floor plans, two one-bedroom units and two two-bedroom
units. The smallest of the floor plans is the one-bedroom one-
bath Jasmine model. These units are 525 square feet in size and
there are 36 located within the complex. The largest one-bedroom
one-bath unit is the Gardenia model. The complex has 76 of these
720 square foot units. The next larger floor plan is a two-
bedroom one-bath model known as the Azalea. These units are 877
square feet in size and there are 32 located within the complex.
The largest and most abundant of the floor plans is the Hibiscus
Model. The complex has 96 of these 1,045 square foot units. All
of the floor plans provide living rooms with dining areas. All
of rooms in each of the floor plans are adequate in size and
appear to provide adequate functional utility. Units include a
good amount of closet space.
MODEL UNITS TYPE SIZE
_________________________________________________________________
Jasmine 36 3Rm/1Br/1Bth 525
Gardenia 76 3Rm/1Br/1Bth 720
Azalea 32 4Rm/2Br/1Bth 877
Hibiscus 96 4Rm/2Br/2Bth 1,045
--- ------------ -------
Total 240 848 Rooms 202,004
Weighted Average Unit Size = 842 Square Feet
Unit interiors are of average quality construction. The floors
are covered with average quality carpet and vinyl. The vinyl
areas are located at the foyers, kitchens, baths and sun room
areas. All of the units have 30 gallon water heaters, 125 amp
electrical panels and central air systems. Standard kitchen
equipment includes a refrigerator, a range/oven with a hood fan,
a dishwasher, and a disposal. Units are individually metered for
electrical service and have telephone and cable television hook-
ups. Hook-ups for washers and dryers are optional in all of the
models. Each unit is equipped with a fire alarm.
On April 15, 1996, the date of inspection, the apartment complex
had 14 vacant units, which was reported to be about typical. All
of the vacant units were reported to be in rentable condition.
The current asking rent is $470 a month for the Jasmine units,
$515 to $540 a month for the Gardenia units, $620 to $635 a month
for the Azalea units, and $655 to $725 a month for the Hibiscus
units. Rent premiums are charged washer and dryer hook-ups and
view amenities. Tenants are responsible for payment of electric,
telephone and cable television service. As is typical, the
services included in the rental rates are water, sewage, and
trash removal.
As is common with apartment complexes the size of the subject,
the subject is professionally managed. Employees consist of a
property manager, an assistant manager, a part-time leasing
agent, a maintenance supervisor, a maintenance assistant, a
grounds keeper, and a housekeeper. The subject complex has one
nonrevenue producing unit which is used as a model. The property
manager receives compensation in lieu of the use of a two-bedroom
unit free of charge.
The subject property is well maintained in average condition with
no signs of items which are in need of immediate repair. As is
typical with large wood frame apartment complexes, some minor
signs of exterior wood rot were observed at the time of
inspection. Roofs and exterior paint appear to be in adequate
condition. Asphalt resurfacing and striping will likely be
required within the next two years. The unit interiors and
appliances are generally maintained on a continual basis.
The subject is an average cost quality apartment complex that was
constructed in 1984. In comparison to competing rental
properties, the condition of the subject property is average.
The Marshall Valuation Service, a national cost estimate company,
indicates properties such as the subject have total lives of
approximately 50 years. Based on an observation of other
structures in the neighborhood, a physical life of 50 years would
appear reasonable. In further observation of other structures in
the neighborhood, the effective age of the subject has been
estimated to be equal with actual at 12 years with a remaining
life is estimated at 38 years.
Due to the age of the improvements, the presence of hazardous
materials used in the construction, such as asbestos, is less
likely. No environmental audit has been made available, however
it was reported that a 1992 environmental analysis for the
subject property found favorable results.
In summary, the Town Place Apartments is an average cost quality
apartment complex. In comparison to competing rental properties,
the subject is in average condition. The unit mix, apartment
sizes, and layout are well suited to the rental market. The
complex is architecturally attractive and offers an average
amenity package.
<PAGE>
SITE PLAN
<PAGE>
UNIT FLOOR PLANS
<PAGE>
HIGHEST AND BEST USE
Highest and best use is defined as:
"The reasonably probable and legal use of vacant land or an
improved property, which is physically possible, appropriately
supported, financially feasible, and that results in the highest
value."
In appraisal practice, the concept of highest and best use is the
premise upon which value is based. The highest and best use
analysis studies the economic market forces and identifies the
most profitable and competitive use to which a property can be
put.
The highest and best use analysis first considers the site as
though vacant. If the site is improved, the highest and best use
analysis also considers the property as improved. The highest
and best use of the land as if vacant may not be the same as the
highest and best use of the property as improved. The use of the
property as improved will continue as the highest and best use,
as long as the value of the improved property exceeds the value
of the vacant site.
"Highest and best use of land or a site as though vacant assumes
that the parcel of land is vacant or can be made vacant by
demolishing any improvements." The highest and best use as
though vacant will determine a use for the site, the type of
improvements, and when improvements should be made. The highest
and best use of the site as vacant is useful for identifying
comparable land sales, as well as estimating a separate land
value, which is fundamental for the cost approach.
"Highest and best use of a property as improved pertains to the
use that should be made of an improved property in light of its
improvements." The highest and best use of a property as
improved will determine whether the improvements should be
maintained, adapted, or raised. The purpose of the highest and
best use of the property as improved is to determine the use
expected to produce the greatest value and assist in the
selection of improved comparable sales.
There are four criteria used in analyzing the highest and best
use of both the land as though vacant and the property as
improved. The highest and best use must be:
1. Physically Possible;
2. Legally Permissible;
3. Financially Feasible;
4. Maximally Productive.
Highest and Best Use as Though Vacant
Physically Possible
Physically possible uses are those uses that can be physically
put on the subject site. These uses change with the size, shape,
soil, and terrain of the property. This test also considers
whether public utilities are available to the site.
The subject site is located on the south side of NE Coachman Road
about 280 feet southwest of the intersection with U.S. Highway 19
in the city of Clearwater. The site is an irregular shaped non-
contiguous interior parcel with about 852 feet of road frontage
on NE Coachmen Road and a depth of about 1,335 feet. The gross
area of the site is 750,310 square feet or 17.22 acres.
The site is basically level and slopes gradually downward from
north to south. The site is improved with a 240-unit apartment
complex known as Town Place Apartments. The parcel has a master
drainage system with water retention located at the southeastern
portion of the site. Drainage for the site appears to be
adequate. Based on the survey provided and a physical inspection
of the property, there were no adverse easements, encroachments
or conditions observed.
The subject property is located in flood zones X and AE. Flood
zone information was determined by F.I.R.M. community panel
number 125096 0010 D, dated August 19, 1991. An X zone is
defined as areas determined to be outside the 500-year flood
plain or areas of 500-year flood; areas of a 100-year flood with
average depths of less than 1 foot or with drainage areas less
than 1 square mile; and areas protected by levees from 100-year
flood. An AE zone is defined as areas with base flood elevations
determined. Insurance is generally required for improved
structures within the AE zone.
No soil analysis was made available, however given the existing
improvements to the site and surrounding properties, soil
conditions would appear adequate for development. At the time of
inspection, there were no unusual conditions observed on the site
that would suggest the presence of soil contamination.
The subject site is serviced by all typical urban utilities.
Electrical service is provided by the Florida Power Corporation,
public water and sewer service is provided by the City of
Clearwater, and telephone service is provided by General
Telephone Company. Police and fire protection are provided by
the City of Clearwater. Electrical service, street lights and
telephone service in the area are concrete or wood pole mounted.
All services provided to the subject site are underground.
Considering the size, shape, and topography of the site and the
availability of utilities, many uses could be physically built on
the site.
Legally Permissible
Legally permissible uses are those uses which are legally allowed
on the subject site. These uses vary with the type of zoning,
building codes, deed restrictions, and environmental restrictions
imposed on the subject site.
The subject site is zoned RPD-14 (Residential Planned Development
"Fourteen" District) under the jurisdiction of the City of
Clearwater. The RPD-14 zoning allows residential development at
a maximum of 14 units per net acre. As defined by the City of
Clearwater, a net acre includes all uplands within a contiguous
parcel of ownership excluding existing or proposed public or
private roadways, right-of-way and vehicular access ways. The
City of Clearwater uses an 8% factor to determine net acreage.
The comprehensive land use plan, indicates that the subject has a
land use of MD (Medium Density Residential 15 u.p.a.).
The recent enactment of Concurrency Laws in the state of Florida,
which became effective January 1, 1990, can directly impact on
the use of a site. Concurrency is part of the 1985 Growth
Management Act, which states in part that all of an area's
infrastructure which are or will be affected by the development
of a property must be in place or concurrent with development and
must be adequate. Concurrency appears to have no adverse
influence on the subject property.
Based on the physical and legal characteristics of the subject
property it would appear as though several types of residential
development would be both physically possible and legally
permissible. A change in zoning to a commercial or industrial
use would be unlikely.
Given that the subject site is 17.22 acres in size, the subject
site could legally and physically accommodate up to 222 apartment
units. Condominium, townhouse, and single family subdivision
development would be less likely due to the bordering commercial
and multiple family development. In addition to complying with
the density requirements, all four uses would also appear to
comply with building setbacks, the building coverage ratio, open
areas, parking areas, and driveway requirements.
Financially Feasible
The test of financially feasible considers those uses which are
both physically possible and legally permissible. It determines
among them; which uses, if any, would generate a positive return
to the property. A return is positive if the income of the
property is greater than the property's operating expenses,
financial expenses and capital amortization.
The market for rental housing units in the area is well
diversified and is available for all household income levels. A
market investigation was conducted in the subject neighborhood
and it indicated that there is good demand for apartment
complexes. According to local apartment managers in the area,
typical vacancy rates range from 1% to 10%. Monthly rents for
one bedroom apartments are from $350 to $650 a unit, monthly
rents for two bedroom apartments are from $450 to $800 a unit,
and monthly rents for three bedroom apartments are from $600 to
$950 a unit.
NE Coachman Road, in front of the subject site, is a two lane
road with masonry sidewalks and no curbs. Telephone and electric
service in the area is wood pole mounted. U.S. Highway 19 to the
east of the site is a six lane road with center turn lanes. The
intersection of NE Coachman Road and U.S. Highway 19 is signaled
with a traffic light. Traffic counts taken in the location of
the subject for 1993 estimate travel on NE Coachman Road at
13,862 cars daily and travel on U.S. Highway 19 at 71,862 cars
daily. Travel is by both local and transient traffic. The
visibility of the site is adequate.
Access to the site is provided only by NE Coachman Road, to the
north. Access to NE Coachman Road is available from U.S. Highway
19 to the east and Old Coachman Road or Belcher Road to the west.
Ingress and egress for the site is adequate and is easily made
from all traffic directions. Ingress and egress for the site may
be slightly more difficult during peak traffic hours.
The subject property is bordered to the north with a Walmart, and
to the east with a motel and vacant commercial sites fronting on
U.S. Highway 19. To the south, the subject is bordered with
vacant land owned by Pinellas County, as well as, the spring
training facility for the Philadelphia Phillies, Major League
Baseball team. Within the land owned by Pinellas County, about
200 feet south of the subject site, is the Seaboard Coast Line
railroad. Trains run twice daily, usually around 12:00 pm and
between 1:00 and 4:00 am. To the west, the subject is bordered
with high tension power lines and a competing 218 unit apartment
complex, known as Coachman Crossing. The location of the high
tension power lines and the railroad tracks are believed to have
no significant adverse influence on the subject property.
Located within the complex, but separately owned is the Royal
Racquet Club, a public tennis facility. The land where the front
entrance is located, belongs to the tennis facility, however the
apartment complex maintains the entrance and has an ingress and
egress easement over the land. The existing use of the subject
site as improved with an apartment complex provides a good
transition from commercial to residential development.
Given that current occupancy and rental rates for apartment
complexes are at reasonable levels, development of the subject
site with an apartment complex would appear to provide a positive
return.
Maximally Productive
Among the financially feasible uses, the use which provides the
highest rate of return or value is the use which is maximally
productive. Thus, is the highest and best use of the property.
A market investigation indicated that most multiple family land
in Pinellas County was developed at or very near maximum density.
Most of the new multiple family development is for good quality
apartment complexes. Absorption rates for these new developments
are generally from 30 to 40 units a month. Also noted was that
these developments had good recreational amenities and attractive
landscaping.
Therefore, the Highest and Best Use of the site "as if vacant"
would be to develop the site with 222 good quality apartment
units (14.00 units per net acre).
Highest and Best Use as Improved
The subject is a 240-unit apartment complex that was built in
1985. The construction is average cost quality and the property
has been well maintained in average condition. Most apartment
complexes in the Pinellas County, which are near stabilized
occupancy, are in average to good condition. As of the
inspection date, the subject had an occupancy rate at about a
94%, which is average for Pinellas County and the immediate area.
The subject property was constructed at a density of 13.94 units
per acre and appears to conform to zoning. The individual unit
sizes, site layout and available parking appears well suited for
use as a apartment complex.
The value of the site with the improvements far exceeds the site
value alone. Thus, the highest and best use of the subject
property, as improved, is to continue use as a 240-unit apartment
complex. Conversion to condominium units would not be reasonable
due to the bordering commercial development and the large number
of one bedroom units.
<PAGE>
THE VALUATION PROCESS
The estimate of market value for real property involves a
systematic process in which the problem is defined, the work
necessary to solve the problem is planned, and the data required;
is acquired, classified, analyzed and interpreted into an
estimate of value. In this process, three approaches are used by
the appraiser to estimate value. They are:
THE COST APPROACH
THE SALES COMPARISON APPROACH
THE INCOME CAPITALIZATION APPROACH
The cost approach is a method in which the value of a property is
derived from creating a substitute property with the same utility
as the subject property. In the Cost Approach, the appraiser
must estimate the market value of the subject site as if vacant,
by using the direct sales comparison approach, then estimate the
reproduction cost new of the improvements. Depreciation from all
sources is estimated and subtracted from the reproduction cost
new of the improvements. The depreciated reproduction cost of
all improvements is then added to the estimated site value with
the results being an indicated value by the cost approach.
The sales comparison approach also referred to as the market
approach, involves the comparison of similar properties that have
recently sold or similar properties that are currently offered
for sale, with the subject property. The basic principle of
substitution underlies this approach. It implies that an
informed purchaser would not pay more for a property than the
cost to acquire a satisfactory substitute property with the same
utility as the subject property in the current market. These
properties are compared to the subject with regard to differences
or similarities in time, age, location, physical characteristics,
and the conditions influencing the sale. The notable differences
in the comparable properties are adjusted to the subject property
to indicate a value range for the property being appraised. The
principle of increasing and decreasing returns is important in
identification of comparables. The principle of contribution is
the heart of the adjustment process in determining the effect
that the presence or absence of some characteristic has on the
sale price.
When sufficient sales data is available, these adjustments are
best determined by the actions of typical buyers and sellers in
the subject's market place. This value range, as indicated by
the adjusted comparable properties, is reconciled into a final
indicated value for the subject property by this approach.
The income capitalization approach is a process which discounts
anticipated income streams (whether in dollar income or amenity
benefits) to a present worth figure through the capitalization
process. The appraiser is again faced with obtaining certain
data related to the subject and comparing it to similar physical,
functional and economic properties. Comparable rental
information is analyzed to estimate potential gross income
(actual and/or comparative) to determine a projected net income
stream. The appraiser must estimate a capitalization rate,
either through extraction from the market or using other
available techniques. The net income stream is capitalized into
an indicated value by this approach.
The value estimates as indicated by the three approaches are then
reconciled into a final estimate of the property's value. In the
final reconciliation, the appraiser must weigh the relative
significance, defensibility, amount and accuracy of data, and
applicability of each approach as it pertains to the type of
property being appraised and that best approximates the value
being sought in the appraisal.
<PAGE>
THE COST APPROACH
The basic premise upon which this method of value estimate is
based, is known as the principle of substitution. This principle
logically states; "a prudent purchaser of a particular property
would be willing to pay no more for that property than the cost
of acquiring an equally desirable substitute." It is
acknowledged that one principal method of acquiring a substitute
property would be realized by the reproduction (or replacement)
of the improvements of commensurate utility on an equally
desirable site. This approach is most valid when analyzing new
improvements which have not experienced any loss in value through
normal wear and tear, or other forms of depreciation.
Therefore, the cost approach estimates the current market value
of a property through a process in which the replacement cost of
all improvements are estimated. From this figure is deducted the
total estimated loss in value (depreciation) for the
improvements. The basic steps used in this approach are outlined
below:
Step 1 Estimate the current market value of the site. The
site is valued as if vacant and free to be used in a
capacity representing its highest and best use. This
step is accomplished through the analysis of the sales
and listings of comparable commercial sites.
Step 2 Estimate the replacement cost new, of the subject
improvements. This step results in the appraisers'
estimate of the total cost of replacing a structure
with similarity to the subject improvements. The
replacement cost estimate associated with this
appraisal uses the estimated cost per square foot. The
method of estimating this cost factor is fully
described later in this report.
SteP 3 Estimate the total accrued depreciation. This refers
to the total loss in value, which the subject property
may have experienced through physical, functional, or
external factors, which would negatively influence the
value of the property.
Step 4 Deduct the total estimated depreciation (Step 3) from
the reproduction cost estimate (Step 2) and add the
current value estimate for the site (Step 1). The
resulting figures represent the appraisers' estimate of
the current market value of the subject via the Cost
Approach.
<PAGE>
Estimate of Land Value
The valuation of vacant land (Step 1) is typically undertaken by
the sales comparison approach (market approach). The application
of this approach produces a value estimate for land by comparing
it with similar properties that have recently sold, in the same
or competitive neighborhoods. The sale price of these properties
tends to set the range of value in which the subject property
will fall, when reduced to an appropriate unit of comparison
(price per square foot, per front foot, per unit, etc).
Refinement of this data, by the comparative process, should lead
to a logical estimate of market value as of the date of
appraisal.
The reliability of this technique is dependent upon (1) the
degree of comparability of each sale to the subject, (2) market
conditions at the time of sale, (3) verification of pertinent
data, and (4) the absence of unusual conditions that influence
the sale. A variety of sales within the subject's neighborhood
were analyzed. Information on those sales considered to be most
comparable to the subject property are set forth in the following
pages.
<PAGE>
LAND COMPARABLE NO. 1:
LOCATION: South side of Fletcher Avenue, just west
of Interstate 75, Hillsborough County
TAX I.D. NUMBER (S-T-R): Portion of 37375.0000 & and others (12-
28-19)
SALE DATE: February 27, 1995
GRANTOR: Mary K. Wetherington and others
GRANTEE: Zom Tampa Fetcher Ltd.
O.R. BOOK/PAGE: 7688/1815 & 7688/1818
SALES PRICE: $2,200,000
SIZE: 22.00 Net Acres or 958,320 Square Feet
NO. OF UNITS: 352 Units (Developed)
DENSITY: 16.00 Units
PRICE PER SQ. FT.: $2.30
PRICE PER ACRE: $100,000
PRICE PER UNIT: $6,250
LOCATION: Average
UTILITIES: Available
SHAPE: Irregular
TOPOGRAPHY: Basically Level
ZONING: Alternate Multiple Family by Temple
Terrace
LAND USE: UL-2 (20 u.p.a.)
FINANCING: SouthTrust Bank $14,250,000 (A & D)
VERIFICATION: Representative of the Grantee, JMK
COMMENTS:
The site was purchased for development of The Arbors at Fletcher,
a 352 unit apartment complex offering one to three bedroom units
in two to three story buildings. Rents are projected between
$565 and $875. The site is across from the Hidden River Business
Park.
<PAGE>
TAX MAP
<PAGE>
LAND COMPARABLE NO. 2:
LOCATION: West side of North Dale Mabry Highway,
north of Gaither High School, northwest
Hillsborough County
TAX I.D. NUMBER (S-T-R): Portion of 015910.0000 (28-27-18)
SALE DATE: December 22, 1994
GRANTOR: Hillsboro Farms
GRANTEE: Carrollwood Place Limited Partnership
O.R. BOOK/PAGE: 7624/1404
SALES PRICE: $2,190,000
SIZE: 27.33 Net Acres or 1,190,495 Square Feet
NO. OF UNITS: 432 Units (Developed)
DENSITY: 15.81 Units
PRICE PER SQ. FT.: $1.84
PRICE PER ACRE: $80,132
PRICE PER UNIT: $5,069
LOCATION: Average
UTILITIES: Available
SHAPE: Irregular
TOPOGRAPHY: Basically Level
ZONING: PDH by Hillsborough County
LAND USE: RES-12 (12 u.p.a.)
FINANCING: SouthTrust Bank $17,800,000 (A & D)
VERIFICATION: Representative of the Grantee, JMK
COMMENTS:
This site was purchased for development of The Vinings at
Carrollwood Place, a 432 unit apartment complex offering one to
three bedroom units in two to three story buildings. Projected
rents are from $510 to $875. Access to the site is provided by
an 80 foot easement from North Dale Mabry Highway.
<PAGE>
TAX MAP
<PAGE>
LAND COMPARABLE NO. 3:
LOCATION: Southeast Quadrant of U.S. Highway 19
and Gulf-to-Bay Boulevard, east of
Seville condominium development on Old
Tampa Bay, City of Clearwater
TAX I.D. NUMBER: 17-29-16-00000-340-0200 and others
SALE DATE: November 8 & 9, 1993
GRANTOR: AEL Partnership & Simkin Industries,
Inc.
GRANTEE: ZOM Bayside Arbors, Limited
O.R. BOOK/PAGE: 8469/2003 and 8469/1995
SALES PRICE: $2,880,000 ($1,800,000 and $1,080,000)
SIZE: 40.00 Acres (MOL) Usable
NO. OF UNITS: 360 Units
DENSITY: 9.00 Units
PRICE PER SQUARE FOOT: $1.65
PRICE PER ACRE: $72,000
PRICE PER UNIT: $8,000
LOCATION: Good
UTILITIES: Available
SHAPE: Irregular
TOPOGRAPHY: Basically Level
ZONING: RM-12 City of Clearwater
LAND USE: RM (11.5 u.p.a.)
FINANCING: Cash to Seller
VERIFICATION: Eric L. Carlton, Esquire and Ellen with
ZOM Properties, 11/94, WWA
COMMENTS:
The assembled site has a large amount of water frontage, but has
limited visibility and an easement for ingress and egress. The
site was developed at a lower density in order to hedge against
anticipated opposition from the Seville Owners Association. The
transactions were reported to be arm's-length and at market
prices.
<PAGE>
TAX MAP
<PAGE>
COMPARABLE LAND SALES
<PAGE>
<TABLE>
LAND COMPARABLE COMPARISON CHART
<CAPTION>
COMPARABLE COMPARABLE COMPARABLE
1 2 3
<S> <C> <C> <C> <C>
SALES PRICE (S.P.) $2,200,000 $2,190,000 $2,880,000
LOCATION S07-T29-R16 S12-T28-R19 S28-T27-R18 S17&20-T29-R16
NUMBER OF ACRES 17.22 22.00 27.33 40.00
NUMBER OF UNITS 222 352 432 360
DENSITY 12.89 16.00 15.81 9.00
PRICE/ACRE $100,000 $80,132 $72,000
PRICE/UNIT $6,250 $5,069 $8,000
DATE OF APPRAISAL/SALE 15-Apr-96 27-Feb-95 22-Dec-94 09-Nov-93
ADJUSTMENTS
FINANCING/CONDITIONS OF SALE 0% 0% 0%
FIN/CON ADJ SALES PRICE $2,200,000 $2,190,000 $2,880,000
MARKET CONDITIONS
NUMBER OF MONTHS SINCE SALE 14 16 30
% ADJUSTMENT 0.00% 0.00% 0.00% 0.00%
TIME ADJUSTED SALES PRICE $2,190,000 $2,190,000 $2,880,000
PROPERTY CHARACTERISTICS
LOCATION Average Average Average Good
UTILITIES Available Available Available Available
SHAPE Irregular Irregular Irregular Irregular
SIZE 17.22 22.00 27.33 40.00
ZONING RPD-14 AMF PD-H RM-12
ADJUSTMENTS
PRICE/SQ.FT. $2.30 $1.84 $1.65
LOCATION 0% 0% -10%
UTILITIES 0% 0% 0%
SIZE/SHAPE 0% 0% 10%
TOPOGRAPHY 0% 0% 0%
ZONING -4% -4% 9%
ADJUSTED PRICE/SQ.FT. $2.20 $1,77 $1.78
ADJUSTED PRICE/ACRE $96,000 $76,926 $77,695
ADJUSTMENTS
PRICE/UNIT $6,250 $5,069 $8,000
LOCATION 0% 0% -10%
UTILITIES 0% 0% 0%
SIZE/SHAPE 0% 0% 10%
TOPOGRAPHY 0% 0% 0%
ZONING 6% 6% -13%
ADJUSTED PRICE/UNIT $6,625 $5,374 $6,890
</TABLE>
<PAGE>
EXPLANATION OF ADJUSTMENTS
Where appropriate, adjustments have been made to the comparables
to account for material differences from the subject. The
adjustment categories include: financing/conditions of sale,
market conditions (time), location, utilities, topography, and
size/shape. The following is an explanation of the various
adjustments.
FINANCING/CONDITIONS OF SALE
All sales were confirmed with either the grantee, grantor, an
informed party, or through public records. There was no
disclosed under market financing or sale conditions which were
believed to have influenced the sale prices. Adjustments did not
appear warranted for any of the comparables.
MARKET CONDITIONS (TIME)
Due to dense development in Pinellas County, land comparables 1
and 2 are newer sales located in Hillsborough County and land
comparable 3 is an older sale located in Pinellas County. A
review of the comparables would appear to indicate that no
adjustment for time is warranted.
LOCATION/ACCESS
Factors which were included in this adjustment category are the
general location of the comparables when compared to the subject.
Typically, properties with good visibility and good ingress and
egress in exclusive areas sell at a higher price per unit. View
amenities such as golf courses and bodies of water will also
generally cause properties to sell at a higher price per unit.
All of the sales used were located in areas suitable for multiple
family development.
The subject property is located in a residential/commercial
transition area on the south side of NE Coachman Road just west
of U.S. Highway 19. The site has adequate visibility and ingress
and egress. The site has no significant view amenity and the
overall location is considered average.
Due to the large amount of frontage on Old Tampa Bay, the
location of land comparable 3 was considered superior to the
subject and the other two comparables. In review of the
comparables, a downward adjustment of 10% appears warranted for
land comparable 3. The remaining two land comparables have
overall location characteristics that are reasonably similar to
the subject and no adjustments for these sales appeared
necessary.
UTILITIES
This category is based on whether utilities were available to the
site at the time of sale. Like the subject, all three of the
land comparables have all public utilities available. No
adjustments to the comparables are warranted.
SIZE/SHAPE
Size/shape adjustments were made on the basis of the comparables
size/shape in relation to the subject. Typically, larger parcels
or irregular shaped parcels tend to sell at a lower price per
unit. Furthermore, smaller parcels are more affordable to a
larger number of buyers indicating more demand and higher prices
for smaller parcels. However, when larger parcels are scarce,
making assemblage necessary, larger parcels sell at a higher
price per unit. This is because of the time and effort necessary
to assemble them. Larger parcels can also be more economically
feasible to develop because the fixed development costs can be
absorbed by a larger number of units.
In review of the comparables, there appeared to be a slight
premium paid for smaller parcels and a slight discount for larger
parcels. The shapes of the comparables had no adverse influence
on the number of residential units that could be placed on the
sites. Based on a review of the comparables, an upward adjustment
of 10% appeared warranted for land comparables 3.
TOPOGRAPHY
This adjustment category is based on whether the comparable's
topography was irregular and/or whether it needed to be cleared
before construction could begin on the site. All of the
comparables required typical site preparation and development
costs and no adjustments were necessary.
ZONING
The subject is zoned RM-14 with a MD land use which allows
development of the subject site, as if vacant, at an effective
density of 12.89 units per net acre. Land comparables 1 and 2
have zoning and land uses which resulted in higher developable
densities and land comparable 3 has a zoning and land use which
resulted in a lower developable density. Typically, the
developable density of multiple family land will have a direct
relationship with the price per square foot or price per acre and
an inverse relationship with the price per unit. A review of the
comparables confirms the relationship with the price per square
foot, price per acre and price per unit. The comparables appear
to indicate that a 1% change in density will cause about a 0.30%
inverse change in the indicated unit values and about a 0.10%
direct change in both the indicated square foot or acre values.
Adjustments were made accordingly to each of the comparable land
sales.
CORRELATION AND CONCLUSION
The three foregoing comparables have sale prices which were
compared on the basis of square foot, acre and unit selling
prices. All of the comparables were adjusted for differences as
compared with the subject and have adjusted price per square foot
values between $1.77 and $2.20. Similarly, the comparables have
adjusted price per acre values between $76,926 and $96,000. The
adjusted price per unit indicated by the three sales is from
$5,374 to $6,890. All three units of comparison are considered
applicable in valuing the subject site.
Land comparables 1 and 2 are the newest two sales, but are
located in Hillsborough County. Both comparables are similar to
the subject in size and were purchased for slightly higher
density apartment development. Land comparable 1 is located in a
more remote area, but is located across the street from the
Hidden River Business Park. The Hidden River Business Park is
the location of several Fortune 500 companies a provides a good
employment base. Land comparable 2, like the subject, is located
just off of a major commercial thoroughfare.
Land comparable 3 is located within 2 miles southeast of the
subject property. The site has a large amount of frontage on Old
Tampa Bay and was purchased for the development with a 360 unit
moderate to upper income apartment complex. The size of the
parcel was much larger than the subject, but the developable
density is much lower.
Land comparable 2, although located in Hillsborough County, has a
location that was the most similar to the subject and was given
slightly greater weight over land comparables 1 and 3. Based on
the cited comparables, the value of the subject site is estimated
at $1.90 a square foot, $80,000 an acre, and $6,000 a unit. The
value of the subject site is estimated using the following
calculations.
750,310 Sq.Ft. X $1.80/Sq.Ft. = $1,350,558
17.22 Acres X $80,000/Acre = $1,377,600
222 Units X $6,000/Unit = $1,332,000
ESTIMATED VALUE OF THE SUBJECT SITE, AS IF VACANT
($1,350,000)
<PAGE>
REPLACEMENT COST OF IMPROVEMENTS
The subject improvements were evaluated in terms of type of
construction, design, and building materials to develop an
estimate of replacement cost. The cost estimates are inclusive
of indirect costs such as architect's fees and contractor's
overhead and profit but not developer's profit. The estimates of
the replacement cost new for the subject improvements were based
on current market standards determined from discussions with
various developers, contractors and architects, as well as
information obtained from the Marshall Valuation Service. Local
building costs and costs indicated in the Marshall Valuation
Service are mutually supportive. It is our opinion that cost
figures for the subject complex would fall within the average
cost range for class "D" multiple family residences.
Base Cost $38.50
Area Multiplier 0.948
Current Cost Multiplier 1.00
Local Multiplier 0.95
Total $34.67
Rounded $35.00
======
Based on this analysis, the indicated replacement cost for the
apartment buildings is estimated at approximately $35.00 a square
foot.
Further replacement costs associated with the buildings are the
cost of the leasing office estimated at $40.00 a square foot and
the cost of the laundry and maintenance room estimated at $30.00
a square foot. The replacement cost of the entry porches and
stairs are estimated at $470,000 and the replacement cost of the
appliances, fixtures, and equipment are estimated at $360,000.
These figures are also based on Marshall Valuation Service.
The contributory value of the site improvements, which include
the swimming pool, lighting, signs, landscaping, etc. is
estimated at $650,000.
IMPACT FEES
Because of the impact of new development on the infrastructure of
cities and counties, fees are now typically being assessed
against new development. These fees are for increased traffic,
increased use of sewers and water, radon detection, fire fighting
requirements and the like. These are known as impact fees and
can add substantially to the cost of new development. The impact
fee estimates used in this report were based on the fee schedule
for the City of Clearwater and are estimated at $720,000.
DEVELOPER (ENTREPRENEURIAL) OVERHEAD AND PROFIT
The above costs include contractors, but not developer overhead
and profit. Developer profit is the reward the developer
receives for taking the risk of developing the property.
Developer profit can be abstracted from the market by estimating
the replacement cost of a newly constructed building which has
recently sold. The difference between the sales price and the
replacement cost of the property is the developer profit. Sales
of properties in the Tampa Bay Area were analyzed. They
indicated developer overhead and profit between 10% to 15% with
the more risky projects being in the higher figure. Based on
this analysis a developer overhead and profit of 10% seems
reasonable for the subject.
ACCRUED DEPRECIATION
The next step in the cost approach is to estimate the accrued
depreciation for the subject. "Depreciation is a loss in
property value from any cause. It may also be defined as the
difference between the reproduction cost or replacement cost of
the improvement and its market value." The three major
components of accrued depreciation are physical deterioration,
functional obsolescence, and external obsolescence.
Physical deterioration can be either curable or incurable.
Curable physical deterioration applies to items of deferred
maintenance, which are in need of repair on the effective date of
the appraisal. Whenever the contribution to market value is
equal to or greater than the cost of replacement, the item is
classified as curable deterioration. Incurable physical
deterioration applies to structural items which naturally
deteriorate and are not practical or economically feasible to
correct.
Functional obsolescence is an element of accrued depreciation
which results from a defect, deficiency, or a superadequacy in
the structure(s), materials, or design. External obsolescence
results from a negative influence beyond or outside the
boundaries of the site, which results in a loss in value and is
nearly always incurable.
Deferred Maintenance
Deferred maintenance items are caused by physical deterioration
and should be corrected immediately. At the time of inspection
there was minor wood rot observed, however there were no
substantial items of maintenance which were in need of immediate
attention.
Physical Depreciation
The physical depreciation estimate is based on the age and the
overall life expectancy of the improvements. Based on a market
investigation of other structures in the neighborhood the
effective age of the structure is estimated to be equal with
actual at 12 years. The Marshall Valuation Service, a national
cost estimate company, indicates properties such as the subject
have a total physical life of about 50 years. Based on an
observation of other structures in the neighborhood, a physical
life estimate of 50 years would appear reasonable and will be
used when estimating depreciation. Subtracting the estimated
effective age from the estimated total physical life, indicates
an estimated remaining life of about 38 years.
The physical depreciation has been estimated by the age/life
method, in which the percentage of depreciation is a function of
the age of the improvements compared to the typical life for a
property of the subject design and quality. The formula for
estimating depreciation by the age/life method is as follows.
Replacement - Def. Maint. & X Age = Depreciation
Cost Short-Lived Physical Life
Items
$9,554,578 - $1,213,060 X 12/50 = $2,001,964
The physical depreciation for the short-lived items is estimated
as follows.
Roofs $203,914 X 12/20 = $122,348
Appliances $360,000 X 7/15 = $168,000
HVAC $405,716 X 7/15 = $189,334
Flooring $243,430 X 2/5 = $ 97,372
--------
$1,213,060 $577,054
Functional Obsolescence
This type of depreciation generally results from defects in
design. It can also be caused by changes that occur over time and
have made some aspect of a structure, material, or design
obsolete by current standards.
The Town Place apartments is an average quality complex and in
comparison to competing rental properties, the subject is in
average condition. The unit mix, apartment sizes, and layout are
well suited to the rental market. The complex is architecturally
appealing and offers an average amenity package. The existing
improvements are reasonably consistent with the highest and best
use of the site as though vacant and sustain no market recognized
loss in value attributed to functional deficiencies.
External Obsolescence
This type of depreciation is the result of diminished utility of
a structure due to negative influences from outside the site.
This type of depreciation is almost always incurable. An example
of external obsolescence would be a garbage dump being located
adjacent or within close proximity to the subject. Another
example would be the local or general economy. As the local or
national economy weakens there could be a temporary reduction in
rents, thus reducing the market value of properties.
The proposed improvements are considered to be an appropriate
improvement to the site and are reasonably consistent with
highest and best use as though vacant. No evidence of external
obsolescence was observed.
SUMMARY
Based on our analysis of the subject property and the summary of
the cost approach included on the following page, the indicated
value of the subject by the cost approach is:
ESTIMATE OF VALUE BY THE COST APPROACH: $9,000,000
<PAGE>
SUMMARY OF THE COST APPROACH
Buildings
Apartment Bldgs. 202,004 Sq.Ft. X $35.00 /SF = $7,070,140
Leasing Office 854 Sq.Ft. X $40.00 /SF = $34,160
Laundry & Maintenance 1,056 Sq.Ft. X $30.00 /SF =$31,680
Entry Porches and Stairs $470,000
Appliances, Fixtures and Equipment $360,000
----------
Total Buildings $7,965,980
Impact and Other Fees $720,000
Total Improvements $8,685,980
Developer Overhead and Profit 10.00% $868,598
__________
Replacement Cost New of Improvements $9,554,578
Less Depreciation
Physical Deterioration
Structure 24.00% $2,001,964
Roof 60.00% $122,348
Appliances 46.67% $168,000
HVAC 46.67% $189,334
Flooring 40.00% $97,372
Functional Obsolescence $0
Economic Obsolescence $0
-----------
Total Depreciation 26.99% $2,579,018
-----------
Depreciated Cost of Improvements $6,975,560
Estimated Land Value $1,350,000
Contributory Value of Site Improvements $ 650,000
-----------
ESTIMATE OF VALUE BY THE COST APPROACH (Rounded) $9,000,000
===========
<PAGE>
THE SALES COMPARISON APPROACH
The sales comparison approach involves a detailed comparison of
the subject property with similar properties which have recently
sold in the same or competitive market. This approach is based
primarily on the principle of substitution. This principle
states, when several commodities or services with substantially
the same utility are available, the lower price attracts the
greatest demand and widest distribution. In other words, a
prudent investor/purchaser would not pay more to acquire a given
property in the market, considering that an alternative property
may be purchased for less. The five basic steps in this analysis
are listed below:
1. Research the market to identify similar properties for which
pertinent sales listings offerings and/or rental data is
available.
2. Qualify the data as to terms, motivating forces, or bona
fide nature.
3. Analyze the salient characteristics of the comparable
properties in relation to the property being appraised,
particularly those items relating to date of sale, location,
physical characteristics, and condition of sale.
4. Consider all dissimilarities and the probable effect on the
price of each sale and derive individual market value
indications for the property being appraised.
5. Formulate an opinion of market value from the pattern
developed from the foregoing analysis.
A market investigation was conducted in the subject's area to
find sales of properties comparable to the subject. The most
pertinent transactions have been presented on the following
pages, along with an identifying photograph and summary of
important facts.
<PAGE>
IMPROVED COMPARABLE NO. 1:
Lincoln Shores
11601 4th Street North
PARCEL NUMBER: 18-30-17-05480-001-0012
18-30-17-05480-001-0010
18-30-17-05480-001-0011
DATE: August 1, 1995
GRANTOR: Bay View Associates, LTD
GRANTEE: AETNA Life Insurance Company
O.R. BOOK & PAGE: 9071/1421 & 9071/1431
SALE PRICE: $17,000,000
FINANCING: Cash
DESIGN: Garden
CONSTRUCTION: Frame, Average Cost
CONDITION: Below Average for Age
<PAGE>
UNIT MIX: No. Total
Units Rms/Bd/Ba Sq. Ft. Sq. Ft.
144 3/1/1 540 = 77,760
160 3/1/1 617 = 98,720
144 3/1/1 696 = 100,224
176 4/2/2 923 = 162,448
7 4/2/2 Loft 920 = 6,440
--- --------------- --- -------
631 2,076 Rooms 706 SF 445,592
YEAR BUILT: 1983-84
RENTABLE BUILDING AREA: 445,592 Square Feet
AVERAGE UNIT SIZE: 706 Square Feet
AMENITIES: Lake, Three Swimming Pools, Lighted
Tennis and Racquetball Courts, and
Clubhouse with Fitness Center
PROJECT SIZE: 631 Units/52.58 Acres/12.00 u.p.a.
EFFECTIVE GROSS INCOME: Not Available
EXPENSES: Not Available
NET OPERATING INCOME: Not Available
VERIFICATION: Confidential, 4/96, WWA
UNIT VALUES:
$ Per Unit $26,941
$ Per Room $8,189
$ Per Square Foot $38.15
E.G.I.M. Not Available
O.A.R. Not Available
COMMENTS:
Details of this sale were limited because of a nondisclosure
agreement between the buyer and the seller. It was reported,
however, that because the property was in need of capital
improvements it was purchased at a capitalization rate well above
9%. This apartment complex is located on a well traveled
thoroughfare and was apparently at stabilized occupancy at the
time of contract.
<PAGE>
IMPROVED COMPARABLE NO. 2:
Country Place Village
2690 and 2775 Enterprise Road East
PARCEL NUMBER: 32-28-16-00000-210-0300
32-28-16-61629-000-0010
DATE: July 20, 1995
GRANTOR: County Place Village I Joint Venture &
County Place Village II Joint Venture
GRANTEE: Security Capital Atlantic Incorporated
O.R. BOOK & PAGE: 9055/0715 & 9055/0719
SALE PRICE: $7,555,000 ($7,932,750 Adjusted)
FINANCING: Cash
DESIGN: Garden
CONSTRUCTION: Masonry, Average-Good Cost
CONDITION: Average+ for Age
<PAGE>
UNIT MIX: No. Total
Units Rms/Bd/Ba Sq. Ft. Sq. Ft.
32 3/1/1 796 = 25,472
28 3/1/1 835 = 23,380
24 4/2/1 979 = 23,496
28 4/2/2 1,109 = 31,052
38 4/2/2TH 1,134 = 43,092
18 4/2/2TH 1,212 = 21,816
16 4/2/2TH 1,234 = 19,744
4 5/3/2TH 1,494 = 5,976
--- --------- ----- -------
188 696 Rooms 1,032 SF 194,028
YEAR BUILT: 1984-85
RENTABLE BUILDING AREA: 194,028 Square Feet
AVERAGE UNIT SIZE: 1,032 Square Feet
AMENITIES: Two Swimming Pools, Lighted Tennis
Courts, and Clubhouse
PROJECT SIZE: 188 Units/22.22 Acres/8.46 u.p.a.
EFFECTIVE GROSS INCOME: Not Available
EXPENSES: Not Available
NET OPERATING INCOME: Not Available
VERIFICATION: Confidential, 4/96, WWA
UNIT VALUES:
$ Per Unit $42,195 Adjusted
$ Per Room $11,398 Adjusted
$ Per Square Foot $40.88 Adjusted
E.G.I.M. Not Available
O.A.R. Not Available
COMMENTS:
Details of this sale were limited because of nondisclosure by the
buyer and the lack of a knowledgeable contact for the seller. It
was reported, however, that the property required an adjustment
because it was part of a portfolio sale. This apartment complex
is located on a moderately traveled thoroughfare near a regional
mall and was apparently at stabilized occupancy at the time of
contract.
<PAGE>
IMPROVED COMPARABLE NO. 3:
Chesapeake Apartments
2307 Cumberland Road
PARCEL NUMBER: 30-28-16-00000-210-0300
DATE: March 1, 1995
GRANTOR: Gregory A. Rand, Trustee
GRANTEE: Phoenix Home Life Mutual Insurance
Company
O.R. BOOK & PAGE: 8928/1562
SALE PRICE: $11,800,000
FINANCING: Cash
DESIGN: Garden
CONSTRUCTION: Frame, Average Cost
CONDITION: Average for Age
<PAGE>
UNIT MIX: No. Total
Units Rms/Bd/Ba Sq. Ft. Sq. Ft.
96 3/1/1 600-642 = 59,616
80 3/1/1 662-680 = 53,680
64 3/1/1 718 = 45,952
88 4/2/2 911-926 = 80,828
26 4/2/2 980 = 25,480
--- ----------- ------- ------
354 1,176 Rooms 750 SF 265,556
YEAR BUILT: 1985
RENTABLE BUILDING AREA: 265,556 Square Feet
AVERAGE UNIT SIZE: 750 Square Feet
AMENITIES: Lakes, Swimming Pool, Tennis and
Racquetball Courts, and Clubhouse
PROJECT SIZE: 354 Units/27.50 Acres/12.87 u.p.a.
EFFECTIVE GROSS INCOME: $2,200,000
EXPENSES: $1,100,000 (50% EGI or $3,107/Unit)
NET OPERATING INCOME: $1,100,000 (Exclusive of Reserves)
VERIFICATION: John D. Selby, CCIM - Agent, 4/15/96,
WWA
UNIT VALUES:
$ Per Unit $33,333
$ Per Room $10,034
$ Per Square Foot $44.44
E.G.I.M. 5.36
O.A.R. 9.32%
COMMENTS:
This apartment complex is located on a moderately traveled
thoroughfare within close proximity to a regional mall.
Occupancy at the time of sale was at about 96%. Effective gross
income was reported at $2,013,084 and net operating income was
reported at $1,013,952. The above figures are based on 1995
projections by the buyer. Negotiations of $350,000 for wood
siding repairs and an additional $350,000 for interest rate
increases caused the purchase price to be $700,000 lower than the
original contract price.
<PAGE>
IMPROVED COMPARABLE NO. 4:
Cameron Lakes
2550 Stag Run Boulevard
PARCEL NUMBER: 06-29-16-00000-440-0100
DATE: January 27, 1995
GRANTOR: MAC International
GRANTEE: Security Capital Atlantic, Inc.
O.R. BOOK & PAGE: 8905/0419
SALE PRICE: $7,500,000
FINANCING: Cash
DESIGN: Garden
CONSTRUCTION: Frame/Masonry, Average Cost
CONDITION: Average for Age
<PAGE>
UNIT MIX: No. Total
Units Rms/Bd/Ba Sq. Ft. Sq. Ft.
56 3/1/1 791 = 44,296
28 3/1/1 876 = 24,528
56 4/2/2 1,021 = 57,176
28 4/2/2 1,106 = 30,968
10 4/2/2 1,268 = 12,680
5 4/2/2 1,340 = 6,700
4 4/2/1.5 1,090 = 4,360
8 4/2/2 1,250 = 10,000
8 4/2/2 1,269 = 10,152
4 5/3/2 1,588 = 6,352
--- --------- ----- -------
207 748 Rooms 1,001 SF 207,212
YEAR BUILT: 1986
RENTABLE BUILDING AREA: 207,212 Square Feet
AVERAGE UNIT SIZE: 1,001 Square Feet
AMENITIES: Lake, Swimming Pool, Racquetball Court,
and Clubhouse
PROJECT SIZE: 207 Units/18.22 Acres/11.36 u.p.a.
EFFECTIVE GROSS INCOME: Not Available
EXPENSES: Not Available
NET OPERATING INCOME: Not Available
VERIFICATION: Confidential, 4/96, WWA
UNIT VALUES:
$ Per Unit $36,232
$ Per Room $10,027
$ Per Square Foot $36.19
E.G.I.M. Not Available
O.A.R. Not Available
COMMENTS:
Details of this sale were limited because of nondisclosure by the
buyer and the lack of a knowledgeable contact for the seller. It
was reported, however, that the purchaser planned on major
renovations at the time of sale.
<PAGE>
COMPARABLE BUILDING SALES
<PAGE>
<TABLE>
IMPROVED COMPARABLE COMPARISON CHART
<CAPTION>
SUBJECT COMPARABLE COMPARABLE COMPARABLE COMPARABLE
1 2 3 4
<S> <C> <C> <C> <C> <C>
SALE PRICE $17,000,000 $7,555,000 $11,800,000 $7,500,000
PROPERTY RIGHTS CONVEYED Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple
ADJUSTMENT 0 0 0 0
ADJUSTED SALE PRICE $17,000,000 $7,555,000 $11,800,000 $7,500,000
FINANCING Cash Cash Cash Cash
ADJUSTMENT 0 0 0 0
ADJUSTED SALE PRICE $17,000,000 $7,555,000 $11,800,000 $7,500,000
CONDITIONS OF SALE Normal Portfolio Sale Normal Normal
ADJUSTMENT 0 5% 0 0
ADJUSTED SALE PRICE $17,000,000 $7,932,750 $11,800,000 $7,500,000
DATE OF APPRAISAL/SALE 15-Apr-96 01-Aug-95 20-Jul-95 01-Mar-95 27-Jan-95
NUMBER OF MONTHS SINCE SALE 9 9 14 15
ADJUSTMENT 0.00% 0.00% 0.00% 0.00% 0.00%
0 0 0 0
ADJUSTED SALE PRICE $17,000,000 $7,932,750 $11,800,000 $7,500,000
PRICE PER UNIT $26,941 $42,195 $33,333 $36,232
PRICE PER ROOM $8,189 $11,398 $10,034 $10,027
PRICE PER SQUARE FOOT $38.15 $40.88 $44.44 $36.19
PHYSICAL CHARACTERISTICS
LOCATION S07-T29-R16 S18-T30-R17 S32-T28-R16 S30-T28-R16 S06-T29-R16
CONSTRUCTION Frame Frame Masonry Frame Frame/Masonry
CONDITION Average+ for Age Below Avg for Age Average+ for Age Average for Age Average for Age
YEAR BUILT 1984 1983-84 1984-85 1985 1986
AMENITIES/EQUIPMENT Average Average Average Average Average
NUMBER OF UNITS 240 631 188 354 207
NUMBER OF ROOMS 848 2,076 696 1,176 748
RENTABLE BUILDING AREA 202,004 445,592 194,028 265,556 207,212
NUMBER OF ACRES 17.22 52.58 22.22 27.50 18.22
DENSITY 13.94 12.00 8.46 12.87 11.36
AVERAGE UNIT SIZE 842 706 1,032 750 1,001
AVERAGE ROOM SIZE 238 215 279 226 277
FINANCIAL CHARACTERISTICS
EFFECTIVE GROSS INCOME $1,579,761 Not Available Not Available $2,200,000 Not Available
E.G.I.M. Not Available Not Available 5.36 Not Available
EXPENSE RATIO 45.02% Not Available Not Available 50.00 Not Available
NET OPERATING INCOME $868,499 Not Available Not Available $1,100,000 Not Available
OVERALL RATE Not Available Not Available 9.32% Not Available
PRICE PER UNIT ADJUSTMENTS $26,941 $42,195 $33,333 $36,232
AVERAGE UNIT SIZE 10% -9% 6% -8%
LOCATION 0% 0% 0% 0%
AGE 0% 0% 0% 0%
QUALITY 0% -5% 0% 0%
CONDITION 15% 0% 5% 10%
ADJUSTMENT (Cumulative) 27% -14% 11% 1%
$7,139 ($5,717) $3,767 $435
ADJUSTED PRICE PER UNIT $34,080 $36,478 $37,100 $36,667
PRICE PER ROOM ADJUSTMENTS $8,189 $11,398 $10,034 $10,027
AVERAGE ROOM SIZE 5% -7% 3% -7%
LOCATION 0% 0% 0% 0%
AGE 0% 0% 0% 0%
QUALITY 0% -5% 0% 0%
CONDITION 15% 0% 5% 10%
ADJUSTMENT (Cumulative) 21% -12% 8% 2%
1,699 ($1,328) $818 $231
ADJUSTED PRICE PER ROOM $9,888 $10,070 $10,852 $10,258
PRICE PER SQUARE FOOT ADJUSTMENTS $38.15 $40.88 $44.44 $36.19
AVERAGE UNIT SIZE -10% 9% -6% 8%
LOCATION 0% 0% 0% 0%
AGE 0% 0% 0% 0%
QUALITY 0% -5% 0% 0%
CONDITION 15% 0% 5% 10%
ADJUSTMENT (cumulative) 3% 4% -1% 19%
1.34 $1.45 ($0.58) $6.80
ADJUSTED PRICE SQUARE FOOT $39.49 $42.33 $43.86 $42.99
</TABLE>
<PAGE>
The four foregoing improved sales were considered to be the most
reliable indicators of market value for the subject. Prior to
adjustments, the sales indicated values from $26,941 to $40,186 a
unit. Based on the number of rooms, the sales indicate values
from $8,189 to $10,885 and based on the number of square feet,
the sales indicate values from $36.19 to $44.44.
EXPLANATION OF ADJUSTMENTS
Where appropriate, adjustments have been made to the comparables
to account for material differences from the subject. The
adjustment categories include: financing/conditions of sale,
market conditions (time), average unit size, location, age,
quality, and condition. The following is an explanation of the
various adjustments.
FINANCING/CONDITIONS OF SALE
All sales were verified with either the grantee, grantor, an
informed party or the public records. With the exception of
improved comparable 2, there was no special financing or any
special considerations which may have influenced the comparable's
selling prices. It was reported that improved comparable 2 was
part of a portfolio sale and required an adjustment to reflect
that condition. Based on a review of the comparable sales, an
upward adjustment of 5% was made to improved comparable 2.
MARKET CONDITIONS (TIME)
Market conditions refer to the appreciation or depreciation of a
property over a period of time. The rental rates and expenses
for apartment complexes have shown moderate annual increases. In
review of the three improved comparables, it would appear that
property values have remained relatively stable. Therefore,
based on the above analysis, no market conditions adjustment will
be applied to the comparables.
AVERAGE UNIT SIZE
Typically the average unit size of the apartment complex has a
direct relationship with the price per unit, little or no
relationship with the price per room, and an inverse relationship
with the price per square foot. A review of the comparables
indicates support for this relationship. The comparables appear
to indicate that a 1% change in the average unit size will cause
about a 0.50% direct change in the indicated price per unit and a
0.50% inverse change in the indicated price per square foot
values. Adjustments were made accordingly for each of the
improved comparables.
The average room sizes of improved comparables 1 and 3 are
slightly smaller than the subject and the average room sizes for
improved comparables 2 and 4 are slightly larger. A review of
the comparables indicates a direct relationship between the
average room size and the price per room. The comparables appear
to indicate that a 1% change in the average room size will cause
about a 0.50% direct change in the indicated price per room.
Adjustments were made accordingly for each of the improved
comparables.
LOCATION
Factors which were included in this adjustment category are the
general location of the comparables when compared to the subject.
Typically, properties on major roads or in exclusive areas sell
at a higher price per unit.
The subject property is located in a mixed residential and
commercial area on NE Coachman Road and provides adequate traffic
ingress and egress and visibility. The overall location is
considered average.
All four of the improved comparables are located in areas that
are similar to the subject, and all have locations that are
suitable for apartment development. A review of the comparables
would appear to indicate that no adjustments for location are
warranted.
AGE
This adjustment category is based on the effective age of the
comparables in relation to the subject. Properties with lower
effective ages typically sell at a higher price per unit. The
effective age of the comparables was determined based on a review
of the actual physical ages and by an exterior inspection of the
properties. All four of the improved comparables are 1980
vintage apartment complexes, like the subject, and no adjustments
were necessary.
QUALITY/CONDITION
This adjustment category is based on the quality and condition of
the comparables in relation to the subject. Typically, the
quality and condition of a property has a direct relationship
with the sale price. The quality and condition of the
comparables were determined by an exterior inspection of the
properties and by conversations with the grantee, grantor or
informed parties.
Improved comparables 1, 3, and 4 are all reasonably similar to
the subject in construction quality and improved comparable 2 is
superior. Based on a review of the comparables a downward
adjustment of 5% would appear reasonable for improved comparable
2.
Physical inspections of the properties and conversations with
informed parties lead us to believe that the overall condition of
improved comparable 2 was reasonably similar to the subject and
that the overall conditions of improved comparables 1, 3, and 4
are inferior. Based on review of the three comparables, improved
comparable 1 was adjusted upward by 15%, improved comparable 3
was adjusted upward by 5%, and improved comparable 4 was adjusted
upward by 10%.
CORRELATION AND CONCLUSION
Comparable 1 was a sale of Lincoln Shores, a 631 unit complex
located about a 9 miles southeast of the subject. The apartment
complex was constructed in 1983-84 and was in below average
condition for its age. The complex has a smaller average unit
size than the subject due to the larger number of one bedroom
units (71%).
Comparable 2 was a sale of Country Place Village, located
slightly over 2 miles northeast of the subject. Country Place
Village is a 188 unit complex that was constructed in 1984-85 and
is superior in construction quality. The complex has a similar
unit mix, but has a larger average unit size.
Comparable 3 is the sale of a 354 unit apartment complex, known
as Chesapeake Apartments. The complex was constructed in 1985,
is similar in construction quality, and is located about 3 miles
northwest of the subject. Like Lincoln Shores, this complex has
a smaller average unit size than the subject due to the larger
number of one bedroom units (68%).
Comparable 4 was a sale of Cameron Lakes (formerly Calibre
Ridge), located about a block north of the subject. The
apartment complex has 207 units, was constructed in 1986, and was
in below average condition for its age. The complex has a
similar unit mix, but has a larger average unit size.
After adjustments the indicated price per unit was from $34,080
to $37,100, the indicated price per room was from $9,888 to
$10,852, and the indicated price per square foot was from $39.49
to $43.86. In review of the four comparables, improved
comparables 2 through 4 were the most similar in size and
location to the subject and were therefore greatest weight in the
final analysis.
Based on the cited data and analysis, the estimated value per
unit, per room and per square foot are shown as follows:
240 Units X $37,000/Unit = $8,880,000
848 Rooms X $10,500/Room = $8,904,000
202,004 Sq.Ft. X $43.00/Sq.Ft. = $8,686,172
The estimated values by the three approaches used, strongly
support one another are within a range, from low to high, of less
than 3%. Most buyers and seller place more emphases on the price
per unit, thus the estimated value by the price per unit method
was given slightly greater weight.
Indicated Value by the Sales Comparison Approach $8,900,000
<PAGE>
THE INCOME CAPITALIZATION APPROACH
The income capitalization approach relates to an investor's
thinking and motivation, as to the future benefits of ownership.
This is the basic tool for the valuation of income producing real
estate. It is based on the principle of substitution, which is
reflected in the definition of value as the present worth of all
the rights to future benefits accruing to ownership. The income
producing property is typically purchased for investment purposes
and the projected net income stream is the critical factor
affecting this market value.
The income capitalization approach is practical only when the
income stream can be estimated. This income estimate may be
developed and supported by a comparison in the local market. An
investor purchasing income producing real estate is, in effect,
trading a sum of present dollars for a right to the stream of
future dollars. There is a relationship between the two, and the
connecting link is the process of capitalization. The function
of capitalization is to translate an income projection into a
present capital value indication.
The valuation by the income capitalization approach consists of
the following steps:
1. Estimate the market rent for the subject property through a
market analysis of competitive projects to arrive at a gross
income estimate;
2. Estimate the vacancy and collection losses for the income
projection period;
3. Deduct the estimated vacancy and collection losses and the
annual operating expenses from the gross income estimate for
an estimated net income before recapture;
4. Determine the appropriate capitalization technique and
gather market supported data for its application.
5. Capitalize the resulting net income figure by an appropriate
capitalization rate in order to obtain an indicated value of
the property.
ESTIMATE OF MARKET RENT
The first step in the income capitalization approach is to
estimate the subject's market rent. The following rent
comparables are considered the best indicators for the estimate
of market rent for the subject property.
<PAGE>
RENT COMPARABLE #1: Coachman Crossing
Location: 2481 NE Coachman Road
Number of Units: 218 Units
Average Unit Size: 776 Square Feet
Vacancy: Not Disclosed
Year Built: 1985
Construction Type: Frame, Average+ Cost, Average Condition
Recreation Facilities: Clubhouse with Fitness Facility,
Swimming Pool & Spa, Tennis, and Laundry
Features: Standard Kitchen Appliance, Washer/Dryer
Connections and Fireplaces
Rent Schedule: No. Unit Unit
Units Type Size Rent/Month Rent/Sq.Ft.
120 1/1 652 S.F. $525.00 $0.81
30 1/1 748 S.F. $585.00 $0.78
24 2/2 873 S.F. $655.00 $0.75
44 2/2 078 S.F. $740.00 $0.69
Rent Concessions: 1 Month Free Rent
Premiums: $10 to $20 for fireplaces, screened
porches and washer/dryer connections
<PAGE>
RENT COMPARABLE #2: Cameron Lakes
Location: 2550 Stage Run Boulevard
Number of Units: 207 Units
Average Unit Size: 748 Square Feet
Vacancy: 98%
Year Built: 1986
Construction Type: Masonry, Average Cost, Average Condition
Recreation Facilities: Clubhouse with Fitness Facility,
Swimming Pool & Spa, Racquet Ball and
Laundry
Features: Standard Kitchen Appliance, Washer/Dryer
Connections, Fireplaces & Covered
Parking
Rent Schedule: No. Unit Unit
Units Type Size Rent/Month Rent/Sq.Ft.
56 1/1 791 S.F. $540.00 $0.68
(Rent Sample) 56 2/2 1,021 S.F. $640.00 $0.63
8 2/2 1,268 S.F. $785.00 $0.62
Rent Concessions: None
Premiums: $10 to $25 for fireplace, lake view and
covered parking
<PAGE>
RENT COMPARABLE #3: Sunchase of Clearwater
Location: 6550 150th Avenue North
Number of Units: 461 Units
Average Unit Size: 796 Square Feet
Vacancy: 93%
Year Built: 1985
Construction Type: Masonry, Average Cost, Average Condition
Recreation Facilities: Clubhouse with Fitness Facility, Two
Swimming Pools & Spa, Tennis,
Racquetball, and Laundry
Features: Standard Kitchen Appliance and Stack
Washer/Dryer
Rent Schedule: No. Unit Unit
Units Type Size Rent/Month Rent/Sq.Ft.
40 1/1Std 500 S.F. $445.00 $0.89
53 1/1 550 S.F. S470.00 $0.85
76 1/1 720 S.F. $495.00 $0.69
100 1/1 750 S.F. $515.00 $0.69
92 2/2 972 S.F. $650.00FP $0.67
100 2/2 975 S.F. $615.00 $0.63
Rent Concessions: None
Premiums: $1O to $20 for lake views
<PAGE>
RENT COMPARABLE #4: Coral Cove
Location: 25 North Belcher Road
Number of Units: 200 Units
Average Unit size: 701 Square Feet
Vacancy: 95%
Year Built: 1985
Construction Type: Masonry, Average Cost, Average Condition
Recreation Facilities: Clubhouse, Swimming Pool & Spa,
Racquetball, and Laundry
Features: Standard Kitchen Appliance and
Washer/Dryer Connections
Rent Schedule: No. Unit Unit
Units Type Size Rent/Month Rent/Sq.Ft.
40 1/1 550 S.F. $455.00 $0.83
80 1/1 616 S.F. $505.00 $0.82
40 2/1 787 S.F. $565.00 $0.72
40 2/2 936 S.F. $660.00 $0.71
Rent Concessions: $15.00 A Month Free Rent
Premiums: None
<PAGE>
RENT COMPARABLE #5: Chesapeake
Location: 2307 Cumberland Road
Number of Units: 354 Units
Average Unit Size: 760 Square Feet
Vacancy: 95%
Year Built: 1985
Construction Type: Frame, Average Cost, Average Condition
Recreation Facilities: Clubhouse, Swimming Pool & Spa, Tennis,
Racquetball, and Laundry
Features: Standard Kitchen Appliance and
Washer/Dryer Connections
Rent Schedule: No. Unit Unit
Units Type Size Rent/Month Rent/Sq.Ft.
96 1/1 600-642 S.F. $470.00 $0.76
80 1/1 662-680 S.F. $495.00 $0.74
64 1/1 718 S.F. $505.00 $0.70
88 2/2 911-926 S.F. $615.00 $0.70
26 2/2 980 S.F. $655.00 $0.67
Rent Concessions: No
Premiums: $10 for lake view
<PAGE>
COMPARABLE RENTALS
<PAGE>
<TABLE>
Comparable Rent Analysis
One Bedroom Apartment (Small)
<CAPTION>
Subject Coachman Cross Cameron Lakes Sunchase of Clear Coral Cove Chesapeake
Data Data Adjst. Data Adjst. Data Adjst. Data Adjst. Data Adjst.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Complex Size 240 218 207 461 200 354
Number 36 120 56 53 40 96
Unit Type 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom
Baths 1 Bath 1 Bath 1 Bath 1 Bath 1 Bath 1 Bath
Monthly Rent $470 $525 $540 $470 $455 $470
Size 540 652 -20 791 -50 550 550 600
Rent/Sq. Ft. $0.87 $0.81 $0.68 $0.85 $0.83 $0.78
Qlty/Cndt Avg/Avg Avg+/Avg -10 Avg/Avg Avg/Avg Avg/Avg Avg/Avg
Year Built 1985 1985 1986 1985 1985 1985
Equipment Std. Ktch Std. Ktch Std. Ktch Std. Ktch Std. Ktch Std. Ktch
Location Average Average Average Average Average Average
Concessions No Yes No No Yes No
Occupancy 94% Unknown 98% 93% 95% 95%
Amenities Average Average+ -10 Average+ -10 Average+ -10 Average Average
Covered Parking No No Partial No No No
Rents $485 $480 $460 $455 $470
$0.74 $0.61 $0.84 $0.83 $0.78
Estimated Subject Rent $470
</TABLE>
<PAGE>
<TABLE>
Comparable Rent Analysis
One Bedroom Apartment (Large)
<CAPTION>
Subject Belleair Gardens Oakbrook Village Sunchase of Clear Coral Cove Chesapeake
Data Data Adjst. Data Adjst. Data Adjst. Data Adjst. Data Adjst.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Complex Size 240 218 207 461 200 354
Number/Mix 40 30 56 76 80 64
Unit Type 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom 1 Bedroom
Baths 1 Bath 1 Bath 1 Bath 1 Bath 1 Bath 1 Bath
Monthly Rent $515 $585 $540 $495 $505 $505
Size 720 748 791 720 616 20 718
Rent/Sq. Ft. $0.72 $0.78 $0.68 $0.69 $0.82 $0.70
Qlty/Cndt Avg/Avg Avg+/Avg -10 Avg/Avg Avg/Avg Avg/Avg Avg/Avg
Year Built 1985 1985 1986 1985 1985 1985
Equipment Std. Ktch Std. Ktch Std. Ktch Std. Ktch Std. Ktch Std. Ktch
Location Average Average Average Average Average Average
Concessions No Yes No No Yes No
Occupancy 94% Unknown 98% 93% 95% 95%
Amenities Average Average+ -10 Average+ -10 Average+ -10 Average Average
Covered Parking No No Partial No No No
Rents $565 $530 $485 $525 $505
$0.76 $0.67 $0.67 $0.85 $0.70
Estimated Subject Rent $515
</TABLE>
<PAGE>
<TABLE>
Comparable Rent Analysis
Two Bedroom Apartment (Small)
<CAPTION>
Subject Coachman Cross Cameron Lakes Sunchase of Clear Coral Cove Chesapeake
Data Data Adjst. Data Adjst. Data Adjst. Data Adjst. Data Adjst.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Complex Size 240 218 207 461 200 354
Number 32 24 56 100 40 88
Unit Type 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom
Baths 1 Bath 2 Bath -10 2 Bath -10 2 Bath -10 1 Bath 2 Bath -10
Monthly Rent $620 $655 $640 $615 $565 $615
Size 877 873 1021 975 787 911
Rent/Sq. Ft. $0.71 $0.75 $0.63 $0.63 $0.72 $0.68
Qlty/Cndt Avg/Avg Avg+/Avg -10 Avg/Avg Avg/Avg Avg/Avg Avg/Avg
Year Built 1985 1985 1986 1985 1985 1985
Equipment Std. Ktch Std. Ktch Std. Ktch Std. Ktch Std. Ktch Std. Ktch
Location Average Average Average Average Average Average
Concessions No Yes No No Yes No
Occupancy 94% Unknown 98% 93% 95% 95%
Amenities Average Average+ -10 Average+ -10 Average+ -10 Average Average
Covered Parking No No Partial No No No
Rents $625 $620 $595 $565 $605
$0.72 $0.61 $0.61 $0.72 $0.66
Estimated Subject Rent $620
</TABLE>
<PAGE>
<TABLE>
Comparable Rent Analysis
Two Bedroom Apartment (Large)
<CAPTION>
Subject Coachman Cross Cameron Lakes Sunchase of Clear Coral Cove Chesapeake
Data Data Adjst. Data Adjst. Data Adjst. Data Adjst. Data Adjst.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Complex Size 240 218 207 461 200 354
Number 96 44 56 100 40 88
Unit Type 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom 2 Bedroom
Baths 2 Bath 2 Bath 2 Bath 2 Bath 2 Bath 2 Bath
Monthly Rent $655 $740 $640 $615 $660 $655
Size 1045 1078 1021 975 936 980
Rent/Sq. Ft. $0.63 $0.69 $0.63 $0.63 $0.71 $0.67
Qlty/Cndt Avg/Avg Avg+/Avg -10 Avg/Avg Avg/Avg Avg/Avg Avg/Avg
Year Built 1985 1985 1986 1985 1985 1985
Equipment Std. Ktch Std. Ktch Std. Ktch Std. Ktch Std. Ktch Std. Ktch
Location Average Average Average Average Average Average
Concessions No Yes No No Yes No
Occupancy 94% Unknown 98% 93% 95% 95%
Amenities Average Average+ -10 Average+ -10 Average+ -10 Average Average
Covered Parking No No Partial No No No
Rents $720 $630 $605 $660 $655
$0.67 $0.62 $0.62 $0.71 $0.67
Estimated Subject Rent $655
</TABLE>
<PAGE>
The five rental properties used in the report are all considered
to directly compete with the subject complex. All five rent
comparables are located within five miles of the subject and all
are reasonably similar in quality and condition.
In comparison with the subject apartment complex, rent
comparables 4 and 5 have reasonably similar amenity packages and
rent comparables 1, 2, and 3 have superior amenity packages.
Rent comparable 4 was the only complex to have a two-bedroom one-
bath unit, like the subject. Unit size adjustments appear to be
more warranted for the one-bedroom units than the two-bedroom
units. Sale concessions in the area are generally short term and
appear to have little or no influence on effective rental rates.
The current base asking rent is $470 a month for the small one-
bedroom units, $515 a month for the large one-bedroom units, $620
a month for the small two-bedroom units, and $655 a month for the
large two-bedroom units. Additional rent of $15 to $25 is
charged for washer/dryer connections and additional rent of $10
to $45 is charged for lake views. A review of the April 12, 1996
rent roll indicates that the existing rent levels are in line
with current base asking rents. The lag in market rent increases
is offset by the additional rent charges. The rental rates for
the competing properties indicate some rent premiums are paid for
views and floor locations. A copy of the current rent roll is
provided at the addendum of the report. A summary of the rent
roll is provided as follows.
One-Bedroom(S) One-Bedroom(L) Two-Bedroom(S) Two-Bedroom(L)
Low Rent $445 $470 $575 $625
High Rent $510 $515 $1,125* $735
Mean Rent $465 $512 $621 $669
Median Rent $460 $510 $590 $655
Mode Rent $460(12/36) $510(15/76) $590(6/32) $655(18/96)
* One Unit - short-term corporate tenant, with rental
furniture all utilities included in the rental rate.
Before adjustments, the five rent comparables have small one
bedroom rental rates between $455 and $540 a month, large one
bedroom rental rates between $495 and $585 a month, small two
bedroom rental rates between $565 and $655 a month, and large two
bedroom rental rates between $615 and $740 a month. After
adjustments, the comparables have indicated monthly rents between
$455 and $485 a month for the small one bedroom units, between
$485 and $565 a month for the large one bedroom units, between
$565 and $625 a month for the small two bedroom units, and
between $605 and $720 a month for the large two bedroom units.
Based on the cited rent comparables, the market rents for the
subject property are estimated at $470 a month for the small one
bedroom units, $515 a month for the large one bedroom units, $620
a month for the small two bedroom units, and $655 a month for the
large two bedroom units.
Vacancy and Collection Losses:
Vacancy and collection loss is estimated at 7% on a stabilized
basis. The five rent comparables had vacancy rates from about 2%
to 7%. At the time of inspection, it was reported that the
subject had 14 vacant unrented unit, thus indicating a vacancy
rate of roughly 6%. The subject property has a model, but no
occupied nonrevenue producing units. It is, however, typically
for the onsite manager to receive a two-bedroom unit free of
charge. Documented historical vacancy and collection loss for
the subject complex has ranged from 4.7% to 6.7% over the last
four years.
Other Income:
In addition to the rent income from the apartment units, other
income is generated in the form of deposit forfeitures, laundry
and vending income, pet fees, lost key fees, etc. When compiled,
these sources of income typically generate approximately 1% to 3%
of gross apartment rental income. Other income for the subject
property is estimated at the middle of the range, at 2% of rent
income.
Expenses:
In order to estimate operating expenses, income and expense
information for both the subject apartment complex and other
apartment complexes located in the area have been analyzed.
Documentation for the subject property consisted of a four year
operating history.
Overall expenses for apartment complexes with more than 150 units
typically range from 40% to 50% of effective gross income or
approximately $2,700 to $3,200 per unit. The expenses estimated
for the subject result in an expense ratio of 45.02%, or $2,964
per unit. The expenses for the subject property are well within
the predominant range.
Real Estate Taxes:
The 1995 assessed tax value for the subject property is
$7,691,400. This estimated expense also considers the
assessments of several comparable properties. Assessments tend
to be below actual market value of the property. The following
comparables have been used due to their similarity with the
subject property.
Complex Assessment Per Unit
Cameron Lakes $ 7,283,400 $35,186
Chesapeake Apartments $10,070,600 $28,448
Coachman Crossing $ 7,095,400 $32,548
Subject $ 7,691,400 $32,048
Taking into account the 1995 assessed value of the subject
property and the 1995 assessed value for similar properties, the
assessed value of $7,691,400 for the subject property would
appear reasonable.
The 1995 millage rate for the subject neighborhood is 23.0366 and
the gross tax liability is $177,183.71. Millage rates and
assessed values have generally been relatively stable over the
past two years. It is estimated that the projection period real
estate taxes will be slightly higher than the 1995 real estate
taxes. The projected real estate taxes for the subject are
estimated at $0.88 a square foot or $177,764.
Insurance:
Insurance costs typically range from $0.15 to $0.20 a square foot
depending on such consideration as type of construction, project
size, co-insurance clauses and location. The insurance expense
for 1995 was reported at $34,638 and appears to be reasonable.
The insurance for the subject property is, therefore, estimated
at $0.18 a square foot or $36,361.
Management Fees:
Management fees, charged by professional management firms, range
from 4% to 6% of effective gross income depending on project
size, condition and general rent levels. Considering the current
rental rates and size of the subject property in comparison with
other rental properties in the Tampa Bay area, the management
expense is estimated at 5.0% of effective gross income. The
subject property is professionally managed by Decade Properties,
who charges the complex a 5.0% management fee.
General and Administrative Expenses:
This expense category includes those items necessary for on site
administration of the property such as administrative salaries,
supplies, telephone, etc. Again this could vary substantially
due to overall size of the complex and the efficiency of
management. This expense is generally from $0.40 to $0.45 a
square foot. For the purpose of this appraisal, all normal
administrative expenses are included in this category with
appropriate consideration given for economies of scale associated
with the size of the property. The general and administrative
expense is, therefore, estimated to be $0.42 a square foot. Most
apartment complexes the size of the subject operate efficiently
with 5 to 7 employees. The subject property currently has 5
full-time employees and 1 part-time employee.
Utilities:
All units are individually metered for electrical service. The
expenses charged generally include common area electrical service
and water, sewer, and trash removal for the entire property.
Typically, utility expenses are from $550 to $650 a unit on an
annual basis. The utility expense is estimated at $600 a unit or
roughly $0.71 a square foot.
Maintenance:
This expense category includes normal costs for both interior and
exterior building maintenance and grounds maintenance. It is
expected that the maintenance expense for the subject would fall
within a range of $0.80 to $1.00 a square foot. In review of
historical maintenance costs, the maintenance expense is
estimated at $0.88 a square foot.
Marketing:
The marketing expense for yellow page listings, periodic
newspaper advertisements and listings in apartment rental
publications, and is estimated to be about $0.06 a square foot.
Reserves:
Reserves are used to annualize future costs of major maintenance
or replacement (short-lived) items. The managers and/or owners
of most rental properties in the Tampa Bay area generally set
aside little or no reserves for future capital expenditures. For
this reason, the reserves typically do not meet future capital
requirements. The calculation showing the estimated annual
reserves needed to repair or replace short-lived items is shown
as follows. The analysis assumes that increases in replacement
costs will be offset by interest earned on the reserve account.
<PAGE>
<TABLE>
<CAPTION>
Reserves Based Reserves Based
Structural Replacement / Remaining = on Remaining / Total = on Total
Component Cost Economic Life Economic Life Economic Life Economic Life
<S> <C> <C> <C> <C> <C>
Roofs $203,914 / 8 = $25,489 / 15 = $13,594
Appliances $360,000 / 8 = $45,000 / 15 = $24,000
HVAC $405,716 / 8 = $50,715 / 15 = $27,048
Flooring $243,430 / 3 = $81,143 / 5 = $48,686
$202,347 $113,328
Estimated Cost Per Unit (240 Units) = $843 $472
</TABLE>
<PAGE>
The estimated reserve expense of $843 a unit reflects the
reserves that are now required due to the lack of past
contributions to a reserve account. The estimated reserve
expense of $472 a unit reflects the contributions that would have
been necessary if the reserve account had originally been in
place.
For the purpose of this report, the reserve expense is for
illustration purposes only and will not be included in either the
direct capitalization estimate or the discounted cash flow
analysis. In order for reserves to be an expense item, the
expenses for the improved comparables would need to be adjusted
upward, thus causing a decrease in the indicated capitalization
rates. Both methods will result in the same value estimates.
According to the 1995 income and expense statement for the
subject, $46,635 was spent on capital replacements and repairs.
ANALYSIS OF OPERATING HISTORY:
The income summary for the subject indicates that revenues
increased by 2.5% in 1993, 0.6% in 1994, and 3.6% in 1995.
Expenses over the four year period fluctuated from 42.7% to 44.4%
of effective gross income.
The effective gross income for the subject property was reported
at $1,455,692, $1,492,586, $1,500,946, and $1,554,502
respectively for the years 1992 through 1995. Operating expenses
for the same time period were respectively reported at $635,575,
$643,075, $641,541, and $690,479. Net operating income was
respectively reported at $820,117, $849,511, $859,405 and
$864,023, which indicates an average annual compounded increase
of 1.3%. Although the individual expense categories show some
variations and inconsistencies over time, the overall income and
expense figures provided appear to be in line with the market.
On the following page is a summary of the reconstructed income
and operating statements for 1992 through 1995, and a projection
for upcoming year. The projected income and expense figures are
consistent with figures found in the direct capitalization and
discounted cash flow analysis.
<PAGE>
<TABLE>
Operating History
<CAPTION>
Units Sq.Ft.
1992 1993 1994 1995 Projected 240 202,004
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Potential Gross Income $1,506,797 $1,540,945 $1,581,531 $1,616,057 $1,665,360 $6,939 $8.24
Vacancy & Collection Loss 73,580 4.9% 73,174 4.7% 103,575 6.5% 107,617 6.7% 116,575 7.00% 7.00%
Rent Income $1,433,217 $1,467,771 $1,477,956 $1,508,440 $1,548,785 $6,453 $7.67
Other Income 22,475 1.6% 24,815 1.7% 22,990 1.6% 46,062 3.1% 30,976 2.00% 2.00%
Effective Gross Income $1,455,692 $1,492,586 $1,500,946 $1,554,502 $1,579,761 $6,582 $7.82
Percent Increase 2.5% 0.6% 3.6% 1.6%
Expenses:
Real Estate Taxes $168,375 $165,835 $173,657 $172,686 $177,764 $741 $0.88
Insurance 17,529 17,818 13,082 34,638 36,361 $152 $0.18
Management 71,661 4.9% 73,389 4.9% 75,047 5.0% 77,725 5.0 78,988 $329 5.00%
General & Administrative 75,782 80,053 78,305 81,803 84,842 $354 $0.42
Utilities 138,363 141,286 142,858 134,841 143,423 $598 $0.71
Maintenance & Repairs 146,997 150,527 147,301 176,824 177,764 $741 $0.88
Marketing 16,868 14,167 11,291 11,962 12,120 $51 $0.06
Total Expenses $635,575 $643,075 $641,541 $690,479 $711,262 $2,964 $3.52
Percent Increase 1.2% -0.2% 7.6% 3.0%
Percent of Income 43.7% 43.1% 42.7% 44.4% 45.0%
Net Operating Income $820,117 $849,511 $859,405 $864,023 $868,499 $3,619 $4.30
</TABLE>
<PAGE>
The rent roll, dated April 12, 1996 indicates rent income from
existing leases at $132,280 a month (excluding vacant units).
Based on a straight line projection, the effective gross income
is calculated as follows.
$132,280 X 12 Months = $1,587,360
Other Income (2.0%) 31,747
Annual Straight Line Projection $1,619,107
This straight line projection of $1,619,107 compares reasonably
well with the projected effective gross income of $1,579,761.
DIRECT CAPITALIZATION
The last item needed to complete the summary of the income
capitalization approach is deriving the capitalization rate
(O.A.R.). Direct Capitalization is the process of converting
income into value either by dividing the net income by an overall
rate or by multiplying the potential or effective gross income by
a multiplier.
When valuing property by direct capitalization, it is essential
that the market comparables reflect risk, income, expenses, and
physical characteristics similar to those of the property being
appraised. An overall capitalization rate is established by
dividing a comparable's estimated net operating income by its
selling price. The basic mathematical formula for deriving this
overall rate is as follows:
Net Operating Income
-------------------- = O.A.R.
Selling Price
Income and expense information was available for only one of the
four comparables used in the sales comparison approach. The one
sale was comparable 3 (Chesapeake Apartments), which reportedly
sold at a 9.3% capitalization rate, based on projected figures.
While income and expense information was not available for
comparable 1 (Lincoln Shores), it was reported that the
capitalization rate was well above 9% apparently due to necessary
capital improvements. Based on conversations with Paul Wikle,
CCIM, of Wikle Properties, and John D. Selby CCIM of CB
Commercial it was indicated that capitalization rates for 1990
vintage institutional grade apartment properties are in the 8.5%
to 9.0% range, 1980 vintage institutional grade apartment
properties are in the 9.0% to 9.5% range, and 1970 vintage
institutional grade apartment properties are in the 9.5% to 10.0%
range.
Considering that the subject complex has good occupancy and is
well maintained in average condition, it is believed that an
appropriate capitalization rate for the subject would fall at the
middle of the range for 1980 vintage institutional grade
apartment properties. Based on the above analysis, the overall
rate for the subject by market extraction is estimated at 9.30%.
BAND OF INVESTMENT
Another type of direct capitalization is the band of investment
technique. This technique builds a capitalization rate by
extracting information from the market. The information which is
extracted is the equity investors component (equity dividend
rate) and the mortgage component (mortgage constant).
Conversations with area lenders indicate that conventional
financing could be obtained for a property such as the subject at
an interest rate of about 8.5% fixed. The typical loan is
amortized over 25 years with a five year balloon. The typical
loan to value ratio for a property such as the subject is about
80% and the typical required debt coverage ratio is about 1.20.
Based on the current investment rates available in the market the
equity dividend rate for the subject is estimated at 8%.
Assumptions
Mortgage Constant: (8.50%, 25 years) 0.096627
Equity Dividend Rate: 0.08
Mortgage 0.80 X 0.096627 = 0.07730
Equity 0.20 X 0.080000 = 0.01600
--------
0.09330
Rounded 9.33%
DEBT COVERAGE RATIO
Another way of estimating an overall capitalization rate is by
using the typical debt service coverage ratio required by lenders
and multiplying this figure by the loan to value ratio and then
by the mortgage constant. Conversations with area lenders
indicated that they would typically require a debt coverage ratio
of 1.20 on a property such as the subject. Using the above data,
the overall rate by the debt coverage ratio formula is estimated
as follows:
DCR LV MC OAR
1.20 80% .0966 = .0927 or 9.27%
DCR = Debt Coverage Ratio
LV = Loan to Value Ratio
MC = Annualized Mortgage Constant
OAR = Overall Capitalization Rate
The three techniques indicate overall capitalization rates for
the subject at 9.30%, 9.33%, and 9.27%, respectively. Typically
newer properties in good condition command lower overall rates
while older properties in poor condition command higher overall
rates. Also, another major factor which influences overall rates
is risk. The riskier the project or property, the higher the
overall rate.
The overall rate of 9.30% by market extraction is given the most
weight. The overall rates by both the band of investment and the
debt coverage ratio lend good support to the overall rate by
market extraction. These two techniques, however are only given
secondary weight because the data used in these techniques can
change daily. Therefore, based on the above analysis the overall
rate for the subject is estimated at 9.30%.
Based on the cited data and above analysis, the market value of
the subject by direct capitalization is estimated as follows:
<PAGE>
SUMMARY OF THE DIRECT CAPITALIZATION APPROACH
Potential Gross Income
36 (1) 1/1 $470.00 $203,040
76 (2) 1/1 $515.00 $469,680
32 (3) 2/1 $620.00 238,080
96 (4) 2/2 $655.00 754,560
-------------
Total Potential Gross Income 1,665,360
Vacancy and Collection Loss 7.00% 116,575
-------------
Total Rent Income 1,548,785
Other Income 2.00% 30,976
-------------
Effective Gross Income 1,579,761
Expenses
Real Estate Taxes 177,764
Insurance 36,361
Management 78,988
General & Administrative 84,842
Utilities 143,423
Maintenance 177,764
Marketing 12,120
-------------
Total Expenses 45.02% 711,262
-------------
Net Operating Income $868,499
-------------
Capitalization Rate 9.30%
ESTIMATE OF VALUE BY THE INCOME APPROACH $9,338,699
Rounded to: $9,300,000
=============
<PAGE>
Discounted Cash Flow Analysis:
The discounted cash flow analysis is an additional income
capitalization approach method of valuing an income producing
apartment complex. This method involves projecting an income
stream for the property over a period of time and converting the
cash flow to a present value. In this case, we have projected
the cash flow over a 10 year holding period which is generally
the maximum time a project is held due to deterioration of tax
benefits.
Income and expenses for the first year of the cash flow analysis
are estimated as previously described in the direct
capitalization approach. The sales price at the end of the
period (reversion) is estimated based on the eleventh year net
operating income capitalized at 9.80%. From this is deducted a
sale expense estimated at 5%.
The major assumption in this approach is that growth in both
income and expenses are estimated at 3% a year. The stabilized
vacancy rate is estimated at 6% and is supported by the recent
market trends. The 3% income and expense increases are
consistent with the current trend in the consumer price index
(CPI). These estimates are based on current market experience
and may vary widely over time, thus pointing out the major
weakness of this approach.
Two separate techniques are used reflecting, 1) an unleveraged
deal and 2) a leveraged deal.
1) In the first technique, an unleveraged deal, the net operating
income and the net proceeds of sale are discounted to present
value. This discount rate is based on expected internal rates of
return by investors on various types of unleveraged properties.
We have chosen a discount rate of 12.0% based on the risk and an
analysis of similar real estate investments. A survey in the
December 1995 issue of Appraiser News, published by the Appraisal
Institute, indicates required internal rates of return for
apartment properties at about 10.0% to 13.0%.
2) The second technique, a leveraged deal, incorporates debt
service and loan payoff into the calculations. For the purposes
of this analysis a $7,490,115 loan (1.20 DCR) is assumed at 8.50%
for 25 years. The resulting cash flow and proceeds at sale are
discounted to present value, to arrive at a value of the equity
investment. This is then added to the original mortgage amount
to arrive at a value for the subject. Due to the higher risk
associated with the equity in a leveraged deal, a discount rate
of 20.00% is considered appropriate.
In order to check the internal rate of return relative to the
capitalization rate, a basic value change formula is used. As
can be determined from the following analysis, the 12.00% and
20.00% yield rates appear reasonable.
The Basic Value Change Formula
UNLEVERAGED DEAL
Yo = Ro + [delta] a
Ro = 9.30%
[delta] a = CR = Compounded Rate of Income Change = 2.70%
Yo = 9.30% + 2.70% = 12.00%
LEVERAGED DEAL
Ye = Re + [delta] a
Re = 5.00%
[delta] a = CR = Compounded Rate of Income Change = 12.64%
Ye = 9.30% + 10.96% = 20.26%
Based on this analysis, the 10 year projected pro forma and the
present value of the resulting cash flows, before and after, debt
service can be calculated, as follows:
<PAGE>
<TABLE>
MULTIFAMILY INCOME PROFORMA
<CAPTION>
Project: Pelican Sound Location 2545 NE Coachman Date: 04/15/96
Gross Income Estimate: Road
Unit Type No. Rent/Mo. Rent/Yr. Vacancy Rate: 7.00 Expenses
Other Income: 2.00%
<S> <C> <C> <C> <C> <C> <C> <C>
(1) 1/1 36 $470.00 $203,040 Income Growth: 3.00% R.E. Taxes $0.88 /Sq.Ft.
Expense Growth: 3.00% Insurance $0.18 /Sq.Ft.
(2) 1/1 76 $515.00 $469,680 Reversion: Management 5.00% /Sq.Ft.
Cap Rate: 9.80% Utilities $0.71 /Sq.Ft.
(3) 2/1 32 $620.00 $238,080 Sales Expenses: 5.00% Maintenance $0.88 /Sq.Ft.
Mortgage: Marketing $0.06 /Sq.Ft.
(4) 2/2 96 $655.00 $754,560 Amount: $7,490,115 Gen.& Admin. $0.42 /Sq.Ft.
Interest Rate: 8.50%
Amoritazation: 25
Potential Gross Income: $1,665,360 Debt Serv. $723,749 Total Sq. Ft. 202,004
Bal.year 10 $6,124,709
<CAPTION>
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross Income $1,665,360 $1,715,321 $1,766,780 $1,819,784 $1,874,377 $1,930,609 $1,988,527 $2,048,183 $2,109,628 $2,172,917
Vacancy
& Collection $116,575 $120,072 $123,675 $127,385 $131,206 $135,143 $139,197 $143,373 $147,674 $152,104
Rent Income $1,548,785 $1,595,249 $1,643,105 $1,692,399 $1,743,171 $1,795,466 $1,849,330 $1,904,810 $1,961,954 $2,020,813
Other Income $30,976 $31,905 $32,862 $33,848 $34,863 $35,909 $36,987 $38,096 $39,239 $40,416
Eff. Gross Income $1,579,761 $1,627,154 $1,675,967 $1,726,247 $1,778,034 $1,831,375 $1,886,317 $1,942,906 $2,001,193 $2,061,229
Expenses:
R.E. Taxes $177,764 $183,097 $188,590 $194,248 $200,075 $206,077 $212,260 $218,627 $225,186 $231,942
Insurance $36,361 $37,452 $38,575 $39,733 $40,925 $42,152 $43,417 $44,719 $46,061 $47,443
Management $78,988 $81,358 $83,798 $86,312 $88,902 $91,569 $94,316 $97,145 $100,060 $103,061
Gen. & Admin. $84,842 $147,726 $90,009 $92,709 $95,490 $98,355 $101,306 $104,345 $107,475 $110,700
Utilities $143,423 $183,097 $152,157 $156,722 $161,424 $166,267 $171,255 $176,392 $181,684 $187,134
Maintenance $177,764 $12,484 $188,590 $194,248 $200,075 $206,077 $212,260 $218,627 $225,186 $231,942
Marketing $12,120 $732,600 $12,858 $13,244 $13,641 $14,050 $14,472 $14,906 $15,353 $15,814
Total Expenses $711,262 $732,600 $754,578 $777,215 $800,532 $824,548 $849,284 $874,763 $901,005 $928,036
Net. Oper. Income $868,499 $894,554 $921,390 $949,032 $977,503 $1,006,827 $1,037,033 $1,068,143 1,100,188 $1,133,193
Debt Service $723,749 $723,749 $723,749 $723,749 $723,749 $723,749 $723,749 $723,749 $723,749 $723,749
Cash Flow $144,750 $170,805 $197,640 $225,282 $253,754 $283,078 $313,284 $344,394 $376,439 $409,444
</TABLE>
<PAGE>
DISCOUNTED CASH FLOW ANALYSIS
Cash Flow Summary:
N.O.I. Cash Flow
Year 1 $868,499 $144,750
Year 2 894,554 170,805
Year 3 921,390 197,640
Year 4 949,032 225,282
Year 5 977,503 253,754
Year 6 1,006,827 283,078
Year 7 1,037,033 313,284
Year 8 1,068,143 344,394
Year 9 1,100,188 376,439
Year 10 1,133,193 409,444
Reversion:
Est. Sales Price 11,910,094 11,910,094
Sales Expenses 595,505 595,505
Mortgage Payoff 6,124,709
----------- ----------
Net Proceeds $11,314,590 $5,189,881
=========== ==========
Discount Rate: 12.00% 20.00%
Present Value:
Equity 9,117,381 1,803,843
Mortgage 7,490,115
----------- -----------
Total Present Value $9,117,381 $9,293,958
Rounded to: $9,100,000 $9,300,000
=========== ===========
This analysis uses two different assumptions to arrive at an
estimate of value. The first is based on an unleveraged
investment in the property and does not use the mortgage in the
overall calculation. It is the present value of the Net
Operating Income cash flows and reversion proceeds. The second
method incorporates the mortgage into the calculations to arrive
at a present value of the equity investment, to which is added
the original mortgage amount.
Summary of the Income Capitalization Approach
Three methods have been used to derive a value by the income
capitalization approach: capitalized net operating income,
discounted cash flow (DCF) analysis - unleveraged and discounted
cash flow (DCF) analysis - leveraged. These methods have yielded
the following results:
Capitalized Net Income: $9,300,000
DCF-unleveraged: $9,100,000
DCF-leveraged: $9,300,000
As indicated earlier, the discounted cash flow analysis methods
are based on the necessary assumptions as to income and expense
growth over the holding period. While every effort has been made
to make an accurate projection, this estimate could be subject to
wide fluctuations over time. For this reason, these methods were
given slightly less weight in the final analyzes.
The capitalized net income method is more closely related to
actual market transactions, in that the capitalization rate is
market derived. It does not require an opinion of future
movement of income and expenses, but tends to reflect the markets
perceptions as to future trends.
Therefore, based on the foregoing analysis, the value indication
by the income capitalization approach is:
$9,300,000
<PAGE>
RECAPITULATION AND FINAL RECONCILIATION
The valuation of real property involves a systematic process in
which the problem is defined, the procedure necessary to solve
the problem is planned, and required data is acquired,
classified, analyzed and reconciled into an final value estimate.
"Reconciliation is the analysis of alternative conclusions to
arrive at a final value estimate." The analysis considers the
reliability and accuracy of the information used in the value
conclusions for the cost approach, the sales comparison approach,
and the income capitalization approach. The market value
estimates for each of the three approaches used are:
COST APPROACH $9,000,000
SALES COMPARISON APPROACH $8,900,000
INCOME CAPITALIZATION APPROACH $9,300,000
The cost approach is a method in which the value of a property is
derived from creating a substitute property with the same utility
as the subject. It is typically considered to be relatively
reliable for new or proposed construction. The degree of error
tends to increase in this approach commensurate with the degree
of accrued depreciation. This approach includes an estimate of
land value based on direct comparison of the subject site with
sites having similar utility which have recently sold; an
estimate of the replacement cost new of the improvements; and an
estimate of all forms of accrued depreciation which is deducted
from the replacement cost new estimate.
Three comparable land sales were used to estimate the value of
the subject site. The land comparables were the best known
available in the market and lend adequate support to the
estimated value of the subject site. The Marshall Valuation
Service was used to estimate the replacement cost of the
improvements and the depreciation estimate was based on an
observation of the surrounding neighborhood. The subject was
constructed in 1984 and has a large amount of accrued
depreciation due to physical deterioration. The cost approach is
considered the least reliable in the final value estimate.
The sales comparison approach involves comparing similar
properties that have recently sold, or similar properties that
are currently offered for sale, with the subject. The basic
principle of substitution underlies this approach.
Four improved apartment comparable sales were used to estimate
the market value of the subject. Like the subject, all of the
sales were 1980 vintage apartment complexes. Improved comparable
1 is located within 9 miles of the subject and the remaining 3
improved comparables are located within the same geographical
market area, within 3 miles of the subject.
Three units of comparison were used in the sales comparison
approach. The three units of comparison used include the
indicated price per unit, price per room and price per square
foot. After analysis, all three units of comparison indicated
similar values estimates. The sales comparison approach was
considered a reliable estimate of market value for the subject.
The income capitalization approach is also reliable when
estimating the value of an income property. This approach most
nearly reflects the value of the property as an investment. This
approach includes an analysis of the effective gross income which
the subject is capable of generating, based on rents achieved and
occupancy rates at competitive properties. A deduction for
normal operating expenses is made in order to derive net
operating income which is capitalized at an overall rate. The
resulting figure is the estimated value by the income
capitalization approach.
Financial information supplied included an April 12, 1996 rent
roll and a four year operating history. Comparable rent data was
readily available and the operating expenses, capitalization
rate, and discount rates were well supported by market evidence.
Two techniques were used in the income capitalization approach.
The first technique used was direct capitalization and the second
technique was a discounted cash flow analysis which considered
both a leveraged purchase and an unleveraged purchase. Both
techniques indicated value estimates which were reasonably
similar. The income capitalization approach was considered a
reliable estimate of market value for the subject.
In the final estimate of value, the income capitalization
approach
was given greatest weight and the sales comparison approach was
given secondary weight. The cost approach was given little
consideration. Therefore, based on the cited market data and the
foregoing analysis, the market value of fee simple interest in
the subject in "as is" condition and as of the effective date of
April 15, 1996 is estimated at:
NINE MILLION TWO HUNDRED THOUSAND DOLLARS
($9,200,000)
INCLUDING
DEPRECIATED VALUE OF APPLIANCES
TWO HUNDRED THOUSAND DOLLARS
($200,000)
<PAGE>
REAL PROPERTY
NINE MILLION DOLLARS
($9,000,000)
ESTIMATED MARKETING TIME:
We have reviewed the typical marketing time for apartment
complexes in the Tampa Bay area, as well as, discussed the
marketing time with knowledgeable commercial brokers. If
appropriately priced and marketed, the marketing time of the
subject property is estimated at 6 months.
<PAGE>
CERTIFICATE OF APPRAISAL
I certify that, to the best of my 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 my personal, unbiased professional analyses,
opinions, and conclusions.
- - I have no present or prospective interest in the property
that is the subject of this report, and I have no personal
interest or bias with respect to the parties involved.
- - My compensation is not contingent upon the reporting of a
predetermined value or direction in value that favors the
cause of the client, the amount of the value estimate, the
attainment of a stipulated result, or the occurrence of a
subsequent event.
- - My reported analyses, opinions, and conclusions were
developed, and this report has been prepared, in conformity
with the Uniform Standards of Professional Appraisal
Practice; and the requirements of the Code of Professional
Ethics and the Standards of Professional Practice of the
Appraisal Institute. Unless otherwise stated herein, the
departure provision does not apply.
- - I have made a personal inspection of the property that is
the subject of this report.
- - No one provided significant professional assistance to the
person signing this report.
- - The appraiser has performed within the context of the
competency provision of the Uniform Standards of
Professional Appraisal Practice.
- - This report was not based on a requested minimum valuation,
a specific valuation, or the approval of a loan.
- - The use of this report is subject to the requirements of the
Appraisal Institute relating to review by its duly
authorized representatives.
- - As of the date of this report, both Robert E. Riggins and
William W. Atkinson have completed the requirements of the
continuing education program of the Appraisal Institute.
- - This appraisal recognizes the following definition of value:
Market Value: as defined in Chapter 12, Code of Federal
Regulations, Part 34.42(f) is, "The most probable price
which a property should bring in a competitive and open
market under all conditions requisite to a fair sale, the
buyer and seller each acting prudently knowledgeably, and
assuming the price is not affected by undue stimulus.
Implicit in this definition is the consummation of a sale as
of a specified date and the passing of title from seller to
buyer under conditions whereby:
1. buyer and seller are typically motivated;
2. both parties are well informed or well advised, and
acting in what they consider their own best interests;
3. a reasonable time is allowed for exposure in the open
market;
4. payment is made in terms of cash in United States
dollars or in terms of financial arrangements
comparable thereto; and
5. the price represents the normal consideration for the
property sold unaffected by special or creative
financing or sales concessions granted by anyone
associated with the sale.
The market value of the property described herein, subject to the
assumptions and limiting conditions set forth herein, as of
April 15, 1996, in "as is" condition, is estimated to be:
NINE MILLION TWO HUNDRED THOUSAND DOLLARS
($9,200,000)
<PAGE>
INCLUDING
DEPRECIATED VALUE OF APPLIANCES
TWO HUNDRED THOUSAND DOLLARS
($200,000)
REAL PROPERTY
NINE MILLION DOLLARS
($9,000,000)
Respectfully submitted:
____________________________ ____________________________
Robert E. Riggins, MAI, SRA William W. Atkinson, MAI
President Vice President
State-certified general real State-certified general real
estate appraiser #0000605 estate appraiser #0001221
<PAGE>
ASSUMPTIONS AND LIMITING CONDITIONS
The Market Value estimate of the property or properties appraised
is subject to the following assumptions and limiting conditions:
1. The legal description furnished is assumed to be correct.
2. No responsibility is assumed for matters legal in character
nor is any opinion rendered herein as to title which is
assumed to be good and merchantable. It is assumed that the
property is free and clear of liens and encumbrances and
under responsible ownership and management on the appraised
date.
3. It is assumed that surveys and/or plats furnished to or
acquired by the appraiser and used in the making of this
report are correct. The appraiser has not made a land
survey or caused one to be made and therefore assumes no
responsibility for their accuracy.
4. Certain data used in compiling this report was given to the
appraiser from sources he considers reliable; however, he
does not guarantee the correctness of such data, although as
far as is reasonably possible the data has been checked and
is believed to be correct.
5. The soil and the area under appraisement appears to be firm
and solid, unless otherwise stated. Subsidence in the area
is unknown or uncommon but the appraiser does not warrant
against this condition or occurrence.
6. Subsurface rights (mineral and oil) were not considered in
making this report, unless otherwise stated.
7. Any riparian rights and/or littorial rights indicated by
survey, map or plat are assumed to go with the property
unless easements or deeds of record were found by the
appraiser to the contrary.
8. Possession of this report, or copy thereof, does not carry
with it, the right of publication or reproduction nor may it
be used by anyone but the applicant without prior written
consent of the applicant and the appraiser and in any event
only in its entirety. This limitation is not to exclude
applicant from copying the report in connection with the
normal course of a mortgage application of syndication of
the property.
9. The appraiser, by reason of this report, is not required to
give testimony in court with reference to the property
herein appraised nor is he obligated to appear before any
governmental body, board or agent unless arrangements have
been previously made thereof.
10. The distribution of the total valuation in this report
between land and improvements applies only under the
existing program of utilization. The separate valuations
for land and improvements must not be used in conjunction
with any other appraisal and are invalid if so used.
11. Neither all nor any part of the contents of this report
shall be conveyed to the public through advertising, public
relations, news, sales or other media without the written
consent and approval of the author, particularly as to the
valuation conclusions, the identity of the appraiser or firm
with which he is connected, or any reference to the American
Institute of Real Estate Appraisers, or the MAI designation.
12. We are not expert in determining the presence or absence of
hazardous substances, defined as all hazardous or toxic
materials, wastes, pollutants or contaminants (including,
but not limited to, asbestos, PCB, UFFI, or other raw
materials or chemical(s) used in construction, or otherwise
present on the property). We assume no responsibility for
the studies or analyses which would be required to determine
the presence or absence of such substances or for loss as a
result of the presence of such substances. The value
estimate is based on the assumption that the subject
property is not so affected.
<PAGE>
ADDENDUM
<PAGE>
SUPPLEMENTAL SUBJECT PHOTOGRAPHS
VIEW OF APARTMENT BUILDINGS
VIEW OF APARTMENT COMPLEX AND TENNIS COURTS
<PAGE>
VIEW OF SWIMMING POOL AND LEASING OFFICE
INTERIOR VIEW OF LEASING OFFICE
<PAGE>
INTERIOR VIEW OF LAUNDRY ROOM
INTERIOR VIEW OF APARTMENT UNIT
<PAGE>
INTERIOR VIEW OF APARTMENT UNIT
INTERIOR VIEW OF APARTMENT UNIT
<PAGE>
NE COACHMAN ROAD - FACING SOUTHWEST
NE COACHMAN ROAD - FACING NORTHEAST
<PAGE>
FLOOD PLAIN MAP
<PAGE>
EXHIBIT A
*** OFFICIAL RECORDS ***
BOOK 7207 PAGE 914
All that certain parcel(s) of property lying and being situated
in the county of Pinellas, State of Florida, and being more
particularly described as follows:
Parcel A
A parcel of land lying in the Northeast 1/4 of Section 7,
Township 29 South, Range 16 East, Pinellas County, Florida, being
more particularly described as follows:
Commencing at the East 1/4 corner of said Section 7; thence N 00
deg. 5438" E, for 413.55 feet, along the East line of said
Section 7, the same being the centerline of U.S. Highway No. 19,
to a point of intersection with the Northerly right-of-way line
of Seaboard Coast Line Railroad; thence N. 81 deg. 0702" W, for
1117,55 feet, along said Northerly right-of-way line to a point
of intersection with the Easterly right-of-way line of Florida
Power Corporation, as described in Official Record Book1466, Page
156 of the Public Records of Pinellas County, Florida; thence N
00 deg. 4241" E. for 289.94 feet, along said Easterly right-of-
way line to the POINT OF BEGINNING; thence continue N 00 deg.
4241" E. for 15.77 feet, along said Easterly right-of-way line;
thence N 00 deg. 4511" E, for 1030.35 feet, along said Easterly
right-of-way line, to a point of intersection with the Southerly
right-of-way line of County Road No. 2 (Northeast Coachman Road),
a 100 foot right-of-way; thence N 58 deg. 2140" E, for 367.38
feet, along Southerly right-of-way line to a point of
intersection with Westerly line of that certain parcel of land as
described in Official Record Book 4938, Page 322 of said Public
Records of Pinellas County, Florida; thence along said Westerly
and Southerly line of said parcel by the following six (6)
courses; (1) S 31 deg. 3820" E, for 148.89 feet; (2) thence S 00
deg. 5315" W, for 202.73 feet to a point of curvature of a curve
concave to the Northwest; (3) thence Southwesterly 60.99 feet
along the arc of a curve having a radius of 135.19 feet, and a
central angle of 25 deg. 5055"; (4) thence S 89 deg. 0645" E, for
43.53 feet; (5) thence S 00 deg. 5315" W, for 643.19 feet; (6)
thence S 89 deg. 0645" E, for 505.05 feet; thence S 00 deg. 3515"
W, for 133.49 feet; thence N 89 deg. 0645" W, for 418.00 feet;
thence S 22 deg. 0658" W, for 103.85 feet; thence S 30 deg. 0645"
E, for 36.78 feet; thence N 75 deg. 0225" W, for 58.50 feet;
thence 587 deg. 33'49" W, for 129.00 feet; thence N 77 deg.
2611W", for 43.00 feet; thence S 82 deg. 3349" W, for 200.00
feet; thence N 27 deg. 5611" W, for 72.00 feet; thence N 89 deg.
1111" W, for 25.96 feet to the POINT OF BEGINNING.
PARCEL B
A parcel of land lying in the Northeast 1/4 of Section 7,
Township 29 South, Range 15 East, Pinellas County, florida, being
more particularly described as follows:
Commence at the Northeast corner of said Section 7; thence S 00
deg. 3438" W, for 979.41 feet, along the East line of said
Section 7, the same being the centerline of U.S. Highway No. 19;
thence N 89 deg. 0645" W, for 335.76 feet to the POINT OF
BEGINNING; said point also being on the West line of those
certain parcels as described in Official Record Book 4059, Page
1669 and Official Record Book 4963, Page 927 of the Public
Records of Pinellas County, Florida; thence N 00 deg. 5333" E,
for 715.81 feet along said West line to the Southerly right-of-
way line of County Road No. 2 (Northeast Coachman Road); thence S
58 deg. 2140" W, for 485.63 feet, along said Southerly right-of-
way; thence leaving said Southerly right-of-way along the
Easterly and Northerly lines of that certain parcel as described
in Official Record Book 4938, Page 922 of the Public Records of
Pinellas County, Florida by the following six (6) courses: (1) S
31 deg. 3820" E, for 69.68 feet; (2) S 89 deg. 0645" E, for 21.94
feet, (3) S 00 deg. 5315" W, for 243.94 feet, (4) S 89 deg. 0645"
E, for 200.00 feet, (5) S 00 deg. 5315" W, for 135.00 feet, (6) S
89 deg. 0645" E, for 150.00 feet to the POINT OF BEGINNING.
together with an easement for ingress, egress and access as set
forth in Amended Dedication recorded in Official Record Book
4311, Page 1635, Public Records of Pinnellas County, Florida.
LEGAL DESCRIPTION CONTINUED
<PAGE>
<TABLE>
4/12/96 DECADE PROPERTIES, INC. 1:19 pm
User: AMAMI Rent Roll Page:
Property: Town Place Apartments
<CAPTION>
Unit Rent Per Lease Lease
Reference Monthly Square Square Starting Exp. Deposits
Number Name Rent Feet Foot Date Date Held
<S> <C> <C> <C> <C> <C> <C> <C>
39-1 Cox, Dianne 625.00 1036 7.24/yr 7/01/95 6/30/96 200.00
39-2 Bice, James 625.00 1036 7.24/yr 10/01/95 6/30/96 200.00
39-3 Troutker, Andrew & Bonnie 630.00 1036 7.36/yr 7/01/95 6/30/96 200.00
39-4 Zargaran, Theresa 655.00 1036 7.59/yr 4/10/96 3/31/97 100.00
39-5 Barr, Michael & Amy 630.00 1036 7.38/yr 9/08/95 8/31/96 300.00
39-6 Vacant 665.00 1036 7.70/yr 0.00
39-7 Matula, Leonard & Debra 730.00 1036 8.46/yr 8/26/95 7/31/96 200.00
39-8 Chappell, Brian & Dorothy 645.00 1036 7.47/yr 2/01/96 2/01/96 100.00
39-9 Pethachi,
Pickappah/Vallianni 1,170.00 836 16.79/yr 4/01/96 10/31/96 200.00
39-10 Podres, Johnny 1,125.00 836 16.15/yr 2/01/96 4/30/96 0.00
39-11 Williams, Keith 580.00 836 8.33/yr 3/01/96 2/28/97 300.00
39-12 Taylor, Patricia 580.00 836 8.33/yr 8/04/95 8/31/96 200.00
39-13 Crisco, Sandra 615.00 836 8.83/yr 11/01/95 5/31/96 200.00
39-14 Bercaw, Lee & Kelly 585.00 836 8.48/yr 1/01/96 7/31/96 300.00
39-15 Sylvia, Raymond & Anita 590.00 836 8.47/yr 11/01/95 6/30/96 375.00
39-16 U.S. Coast Guard 688.00 836 9.76/yr 8/18/95 7/31/96 0.00
39-17 U.S. Coast Guard 530.00 720 8.83/yr 8/08/95 8/31/96 0.00
39-18 Vivekakadan, Rachu akd 500.00 720 8.33/yr 11/01/95 5/31/96 100.00
39-19 Hayes, Catherine 530.00 720 8.83/yr 5/01/95 4/30/96 100.00
39-20 Abdo, Kael & Raida 510.00 720 8.58/yr 9/01/95 8/31/96 100.00
39-21 Zbakic, Edin akd 555.00 720 9.25/yr 10/20/95 9/30/96 200.00
39-22 Littles, Jeanette 500.00 720 8.33/yr 8/01/95 7/31/96 199.00
39-23 Gambert, Allen 525.00 720 8.75/yr 3/01/96 9/30/96 200.00
39-24 Bailey, James 520.00 720 8.67/yr 1/01/96 7/31/96 100.00
39-25 Sabado, Brian 520.00 720 8.67/yr 1/01/96 12/31/96 100.00
39-26 Zukauskas, Robert & Brenda 515.00 720 8.58/yr 12/01/95 8/31/96 250.00
39-27 Jencik, Kimberly 520.00 720 8.67/yr 1/02/96 8/31/96 100.00
39-28 O'Conner, Ann Marie 530.00 720 8.83/yr 2/28/96 2/28/97 350.00
39-29 Fortese, Ben & Holly 535.00 720 8.92/yr 4/01/96 3/31/97 100.00
39-30 Cunningham, Grey and 520.00 720 8.67/yr 11/01/95 10/31/96 200.00
39-31 Northrup, William 460.00 540 10.22/yr 3/01/96 2/28/97 200.00
39-32 Robinson, Matthew &
Jennifer 490.00 540 10.89/yr 2/02/96 8/31/96 200.00
39-33 Collazo Esparro, Francisco 460.00 540 10.22/yr 1/04/96 8/31/96 200.00
39-34 Preston, Robert 455.00 540 10.11/yr 11/18/95 5/31/96 200.00
39-35 Moser, Garnett/Carolyn 555.00 720 9.25/yr 1/01/96 1/01/96 200.00
39-36 Daniels, Ronald & Deborah 530.00 720 8.83/yr 4/01/96 12/31/96 0.00
39-37 Lee, Thomas & Laurie 485.00 720 8.08/yr 8/01/95 7/31/96 200.00
39-38 Guinther, Michelle and 510.00 720 8.50/yr 6/07/95 6/30/96 100.00
39-39 Miller, John 515.00 720 8.58/yr 8/01/95 4/30/96 100.00
39-40 El Makdissi, Elie & Joann 510.00 720 8.58/yr 4/22/95 4/30/96 200.00
39-41 Margraff, Thomas 445.00 540 9.89/yr 5/01/95 4/30/96 200.00
39-42 Hollenberg, Rich 460.00 540 10.22/yr 12/01/95 6/30/96 200.00
39-43 Vacant 475.00 540 0.00
39-44 Hughes, Glenda 460.00 540 10.56/yr 2/01/96 7/31/96 200.00
39-45 Dionne, Gerald 485.00 720 8.08/yr 5/27/95 5/31/96 100.00
39-46 Hollingsworth, Diane 485.00 720 8.08/yr 10/01/95 9/30/96 200.00
39-47 Iuliani, Vincent 500.00 720 8.33/yr 4/01/96 3/31/97 200.00
39-48 Brown, Kevin 500.00 720 8.33/yr 3/01/96 2/28/97 100.00
39-49 Hall, Mark & Christina 495.00 720 8.25/yr 4/01/96 10/31/96 300.00
39-50 Nunez, Jenny 500.00 720 8.33/yr 11/03/95 7/31/96 200.00
39-51 Mercier, Alberto and 465.00 540 10.33/yr 1/01/96 8/31/96 200.00
39-52 Vacant 465.00 540 10.33/yr 0.00
39-53 Hrinik, Dennis 460.00 540 10.22/yr 1/01/96 6/30/96 200.00
39-54 Bertke, Susan 460.00 540 10.22/yr 1/27/96 12/31/96 0.00
39-55 Klotz, Christopher 515.00 720 8.58/yr 4/01/96 10/31/96 200.00
39-56 Petterson, Mikael & Heidi 500.00 720 8.33/yr 8/01/95 8/01/95 200.00
39-57 Grossmann, Marc and 485.00 720 8.08/yr 8/26/95 7/31/96 200.00
39-58 Holzhauser, Gary Brooks 490.00 720 8.17/yr 1/01/96 12/31/96 200.00
39-59 Ward, Jeffrey 480.00 720 8.08/yr 8/01/95 7/31/96 200.00
39-60 West, Laura 470.00 720 7.83/yr 10/01/95 9/30/96 300.00
39-61 Miller, David 485.00 720 8.08/yr 12/01/95 11/30/96 200.00
39-62 Hussein, Ahmed 450.00 540 10.00/yr 2/01/96 1/31/97 100.00
39-63 Hoang, VY 455.00 540 10.11/yr 3/15/95 3/31/96 200.00
39-64 Puente, James and 460.00 540 10.22/yr 12/30/95 9/30/96 100.00
39-65 Skeme, Gail 510.00 540 11.33/yr 1/01/96 8/31/96 300.00
39-66 Mestor, Tammy 485.00 720 8.08/yr 3/01/96 2/28/97 0.00
39-67 Fischer, Lori 485.00 720 8.08/yr 5/01/95 4/30/96 300.00
39-68 Stanek, Scott & Katherine 500.00 720 8.33/yr 2/01/96 10/31/96 130.00
39-69 Thorne, Elizabeth 485.00 720 8.08/yr 7/01/95 6/30/96 100.00
39-70 Goodman, Garth 500.00 720 8.33/yr 10/08/95 5/31/96 200.00
39-71 McMatt, Bryan 470.00 540 10.44/yr 12/05/95 6/30/96 200.00
39-72 Kern, Kirsten 470.00 540 10.44/yr 3/02/96 9/30/96 200.00
39-73 Engelking, James 455.00 540 10.11/yr 7/18/95 6/30/96 100.00
39-74 Horn, Kristina and 460.00 540 10.22/yr 12/01/95 6/30/96 200.00
39-75 Furlong, Michael 485.00 720 8.08/yr 10/01/95 6/30/96 100.00
39-76 Mromyak, Thomas 545.00 720 9.08/yr 4/01/96 3/31/97 100.00
39-77 Garcia, Ramona 485.00 720 8.08/yr 8/06/95 7/31/96 100.00
39-78 Smith, Walter & Linda 485.00 720 8.08/yr 8/01/95 7/31/96 200.00
39-79 Hull, Christine 485.00 720 8.08/yr 3/01/96 2/28/97 200.00
39-80 Devine, Derek & Marie 515.00 720 8.58/yr 9/07/95 8/31/96 300.00
39-81 Nagel, Mellissa 465.00 540 10.33/yr 1/01/96 12/31/96 300.00
39-82 Ferlito, Jennifer 490.00 540 10.89/yr 12/16/95 6/30/96 200.00
39-83 Couch, Chuck 465.00 540 10.33/yr 4/01/96 10/31/96 200.00
39-84 Boudrie, Marc and 455.00 540 10.11/yr 4/30/95 4/30/96 100.00
39-85 Salkin, Ruth 500.00 720 8.33/yr 10/01/95 9/30/96 475.00
39-86 Beckman, Tracy 475.00 540 10.56/yr 4/01/96 10/31/96 300.00
39-87 Grier, Krysta 545.00 720 9.88/yr 3/01/96 3/01/96 200.00
39-88 Panczel, Erika 455.00 540 10.11/yr 10/01/95 4/30/96 99.00
39-89 Dara, Eugene & Rosetta 520.00 720 8.67/yr 4/05/96 10/31/96 300.00
39-90 Padgett, Kim 460.00 540 10.22/yr 4/01/96 3/31/97 200.00
39-91 Bunning, Michelle 560.00 720 9.33/yr 2/07/96 9/30/96 100.00
39-92 Harris, Rhee 460.00 540 10.22/yr 2/01/96 1/31/97 200.00
39-93 Albano, Toula and 600.00 836 8.61/yr 10/13/95 4/30/96 200.00
39-94 Duday, Marcia & Nancy 595.00 836 8.54/yr 2/01/96 8/31/96 300.00
39-95 Love, Katherine 605.00 836 8.68/yr 9/01/95 8/31/96 100.00
39-96 Colina, Arnie 590.00 836 8.47/yr 5/05/95 4/30/96 100.00
39-97 Shrewsberry, Mark & Lisa 580.00 836 8.33/yr 1/01/96 12/31/96 350.00
39-98 Vacant 590.00 836 8.47/yr 0.00
39-99 Chambers, Kathy 575.00 836 8.25/yr 9/01/95 5/31/96 100.00
39-100 Vacant 620.00 836 8.98/yr 0.00
39-101 Martyniak, Mike 645.00 1036 7.47/yr 11/16/95 10/31/96 200.00
39-102 Johnson, Minerya 630.00 1036 7.38/yr 2/01/96 11/30/96 200.00
39-103 McCall, Linda and 660.00 1036 7.64/yr 7/08/95 6/30/96 100.00
39-104 Jones, Judith 655.00 1036 7.59/yr 11/01/95 10/31/96 200.00
39-105 Ridderhoff, Pete & Earleen 625.00 1036 7.24/yr 6/01/95 5/31/96 300.00
39-106 Duncan, Mark and 655.00 1036 7.59/yr 7/01/95 3/31/96 100.00
39-107 Perez, Rosa 630.00 1036 7.30/yr 7/21/95 4/30/96 200.00
39-108 Quinby, Karin and 655.00 1036 7.59/yr 3/07/95 3/31/96 200.00
39-109 Barrett, Margarette 670.00 1036 7.76/yr 10/14/95 9/30/96 200.00
39-110 House, Deborah 700.00 1036 8.11/yr 3/01/96 9/30/96 300.00
39-111 Vacant 600.00 1036 7.88/yr 0.00
39-112 U.S. Coast Guard 730.00 1036 8.46/yr 7/21/95 6/30/96 0.00
39-113 U.S. Coast Guard 730.00 1036 8.46/yr 2/01/96 1/31/97 0.00
39-114 Brewer, Robyn 670.00 1036 7.76/yr 9/20/95 4/30/96 200.00
39-115 Hardin, John 640.00 1036 7.41/yr 5/01/95 4/30/96 300.00
39-116 Gillespie, Ricky & Pamela 635.00 1036 7.36/yr 6/01/95 7/31/96 99.00
39-117 Takeda, Tokurd & Kathleen 485.00 720 8.08/yr 5/01/95 4/30/96 300.00
39-118 Amrhein, Sigurd 500.00 720 8.33/yr 2/15/96 9/30/96 0.00
39-119 Graham, Linda 500.00 720 8.33/yr 1/01/96 12/31/96 100.00
39-120 Rallo, Ben 485.00 720 8.08/yr 8/01/95 7/31/96 100.00
39-121 Cucuz, Melissa 500.00 720 8.33/yr 9/01/95 8/31/96 0.00
39-122 Cloud, Tracy 500.00 720 8.33/yr 12/31/95 8/31/96 100.00
39-123 Lynch, Michael & James 490.00 540 10.89/yr 3/01/96 3/01/96 200.00
39-124 Clark, Tracy 485.00 540 10.78/yr 8/15/95 7/31/96 200.00
39-125 Lorenzo, Austin 450.00 540 10.00/yr 1/01/96 12/31/96 200.00
39-126 Kody, Mike 460.00 540 10.22/yr 4/01/96 4/01/96 200.00
39-127 Young, David & Shelba 495.00 720 8.25/yr 12/01/95 6/30/96 200.00
39-128 Dalton, Russell 515.00 720 8.58/yr 4/01/96 3/31/97 200.00
39-129 Nokks, Susan 515.00 720 8.58/yr 3/01/96 11/30/96 200.00
39-130 Wong, Seng and 500.00 720 8.33/yr 9/15/95 4/30/96 150.00
39-131 Weston, James 485.00 720 8.08/yr 5/01/95 4/30/96 200.00
39-132 Vacant 515.00 720 8.58/yr 0.00
39-133 Hatcher, Argie 470.00 540 10.44/yr 11/01/95 10/31/96 0.00
39-134 Korizzo, Joanne 460.00 540 10.22/yr 2/01/96 8/31/96 200.00
39-135 Getgen, Daniel 465.00 540 10.33/yr 1/01/96 12/31/96 200.00
39-136 Galle, Bruce 450.00 540 10.00/yr 11/01/95 10/31/96 100.00
39-137 Hill, Judith 640.00 1036 7.41/yr 10/01/95 9/30/96 250.00
39-138 Powell, Kimberly and 655.00 1036 7.59/yr 6/16/95 5/31/96 100.00
39-139 Dewitt, Monica 650.00 1036 7.53/yr 6/01/95 5/31/96 250.00
39-140 Sharp, William & Terri 655.00 1036 7.59/yr 7/02/95 6/30/96 100.00
39-141 Danahy, Rafael and 650.00 1036 7.53/yr 10/01/95 4/30/96 100.00
39-142 Vacant 655.00 1036 7.59/yr 0.00
39-143 U.S. Coast Guard 730.00 1036 8.46/yr 1/05/96 6/30/96 0.00
39-144 Holter, Michael and 645.00 1036 7.47/yr 9/01/95 8/31/96 200.00
39-145 Schoeck, Lane 650.00 1036 7.53/yr 7/01/95 6/30/96 100.00
39-146 Feeney, Kevin 655.00 1036 7.59/yr 4/07/95 4/30/96 200.00
39-147 Discioscia, Joann and 655.00 1036 7.59/yr 7/01/95 6/30/96 100.00
39-148 Traci, Louis 675.00 1036 7.82/yr 4/01/96 10/31/96 200.00
39-149 Unansky, Elaine 660.00 1036 7.64/yr 1/01/96 12/31/96 300.00
39-150 Mabee, Richard 670.00 1036 7.76/yr 4/01/96 3/31/97 200.00
39-151 Aqliano, Ruth and 625.00 1036 7.24/yr 7/01/95 6/30/96 175.00
39-152 Crawford, Lon 655.00 1036 7.59/yr 8/29/95 7/31/96 100.00
39-153 U.S. Coast Guard 730.00 1036 8.46/yr 6/30/95 6/30/96 0.00
39-154 Coyle, Tim and 670.00 1036 7.76/yr 4/01/96 4/01/96 200.00
39-155 U.S. Coast Guard 730.00 1036 8.46/yr 9/15/95 8/31/96 0.00
39-156 Miller, David 700.00 1036 8.11/yr 5/01/95 4/30/96 0.00
39-157 Vacant 655.00 1036 7.59/yr 0.00
39-158 Vacant 650.00 1036 7.53/yr 0.00
39-159 O'Connor, Tim & Angela 640.00 1036 7.41/yr 7/01/95 6/30/96 300.00
39-160 Vacant 685.00 1036 7.81/yr 0.00
39-161 Drayton, Dan 650.00 1036 7.53/yr 12/01/95 6/30/96 200.00
39-162 Setzer, Deborah and 655.00 1036 7.59/yr 9/01/95 8/31/96 100.00
39-163 Morrison, Scott and 675.00 1036 7.82/yr 4/01/96 10/31/96 300.00
39-164 Shill, Tom & Teresa 650.00 1036 7.53/yr 8/01/95 7/31/96 100.00
39-165 Stone, Rick & Shirley 655.00 1036 7.59/yr 6/23/95 5/31/96 100.00
39-166 Shaw, John & Joellen 670.00 1036 7.76/yr 11/09/95 5/31/96 350.00
39-167 Trevino, Sheila 650.00 1036 7.53/yr 11/01/95 10/31/96 350.00
39-168 Vacant 645.00 1036 7.47/yr 0.00
39-169 West, Thomas 620.00 836 8.98/yr 3/25/96 10/31/96 0.00
39-170 U.S. Coast Guard 710.00 836 10.19/yr 12/12/95 11/30/96 0.00
39-171 Dodge, Christine and 620.00 836 8.98/yr 7/01/95 6/30/96 100.00
39-172 Werner, Marianne 580.00 836 8.33/yr 5/01/95 4/30/96 250.00
39-173 Bryant, Ken 600.00 836 8.61/yr 11/01/95 8/31/96 99.00
39-174 Porras, Melba 640.00 836 9.19/yr 12/01/95 11/30/96 200.00
39-175 Lang, Judith 595.00 836 8.54/yr 9/01/95 5/31/96 200.00
39-176 Oaks, Renee 685.00 836 8.68/yr 12/01/95 12/01/95 200.00
39-177 Camillo, Albert 590.00 836 8.47/yr 4/10/95 4/30/96 200.00
39-178 Trapano, Vincent and 595.00 836 8.54/yr 11/01/95 10/31/96 100.00
39-179 Sharp, Hassan & Christina 585.00 836 8.40/yr 3/01/96 3/01/96 100.00
39-180 White, Lisa and 620.00 836 8.98/yr 8/25/95 7/31/96 200.00
39-181 Barker, Ross & Kristine 590.00 836 8.47/yr 6/01/95 5/31/96 200.00
39-182 Kozer, Blair 610.00 836 8.76/yr 11/24/95 7/31/96 300.00
39-183 Hess, Debra 590.00 836 8.47/yr 3/01/96 3/01/96 100.00
39-184 Bowman, Heidi 590.00 836 8.47/yr 9/18/95 8/31/96 200.00
39-185 Vacant 545.00 1036 6.31/yr 0.00
39-186 Falk, Jennifer and 660.00 1036 7.64/yr 9/01/95 3/31/96 200.00
39-187 Ekeberg, Kristin and 655.00 1036 7.59/yr 9/08/95 5/31/96 300.00
39-188 Colina, Ricardo & Lucy 700.00 1036 8.11/yr 1/06/96 7/31/96 200.00
39-189 Dubendorfer, Dorothea 670.00 1036 7.76/yr 2/01/96 1/31/97 200.00
39-190 Hobbs, Timothy 670.00 1036 7.76/yr 1/01/96 6/30/96 0.00
39-191 Vandervelde, Hendrick 660.00 1036 7.64/yr 12/01/95 11/30/96 200.00
39-192 Grosbeck, John and 655.00 1036 7.59/yr 4/01/96 4/01/96 200.00
39-193 U.S. Coast Guard 730.00 1036 8.46/yr 2/01/96 1/31/97 0.00
39-194 U.S. Coast Guard 730.00 1036 8.46/yr 3/01/96 2/28/97 300.00
39-195 Francis, Gerald & Laverda 650.00 1036 7.53/yr 10/01/95 9/30/96 300.00
39-196 Cribbs, William 735.00 1036 8.51/yr 4/01/96 4/01/96 200.00
39-197 Ridgeway, Ronnie & Cathy 785.00 1036 8.17/yr 3/01/96 3/01/96 200.00
39-198 Davis, Reynaldo & Sandra 655.00 1036 7.59/yr 10/01/95 9/30/96 200.00
39-199 Whitehurst, Calvin &
Elizabeth 650.00 1036 7.53/yr 8/01/95 7/31/96 200.00
39-200 Jardin, Fernando (63) 665.00 1036 7.78/yr 11/01/95 10/31/96 100.00
39-201 Whoolery, Kathy 535.00 720 8.92/yr 2/01/96 8/31/96 200.00
39-202 Dobbs, Meredith 535.00 720 8.92/yr 7/08/95 6/30/96 200.00
39-203 Palmer, Alice 528.00 720 8.67/yr 7/01/95 6/30/96 200.00
39-204 Rebokus, Elsie 545.00 720 9.18/yr 4/01/96 12/31/96 200.00
39-205 Kalteux, Carolyn and 540.00 720 9.00/yr 8/01/95 7/31/96 100.00
39-206 Dancey, David 540.00 720 9.00/yr 3/01/96 9/30/96 100.00
39-207 Dupras, Dinah 540.00 720 9.00/yr 4/05/96 11/30/96 200.00
39-208 Grant, Jim 535.00 720 8.92/yr 2/01/96 1/31/97 100.00
39-209 Harrington, David & Gwen 685.00 1036 7.93/yr 5/06/95 4/30/96 300.00
39-210 Fachtmann, Richard 730.00 1036 8.46/yr 11/13/95 5/31/96 200.00
39-211 Kline, David 685.00 1036 7.93/yr 3/01/96 10/31/96 100.00
39-212 Wendt, Ellen and 700.00 1036 8.11/yr 10/01/95 4/30/96 200.00
39-213 Murren, Thomas 685.00 1036 7.93/yr 2/01/96 1/31/97 100.00
39-214 Handy, Rodney & Carolyn 680.00 1036 7.88/yr 5/01/95 4/30/96 100.00
39-215 Kaits, Diana 720.00 1036 8.34/yr 3/25/95 3/31/96 200.00
39-216 Hamel, Vicki and 685.00 1036 7.93/yr 4/07/95 4/30/96 200.00
39-217 Sharp, Adam 725.00 1036 8.41/yr 7/01/95 7/1/95 200.00
39-218 Rosati, Guy 685.00 1036 7.93/yr 3/01/96 10/31/96 100.00
39-219 Plager, Alan & Sandy 685.00 1036 7.93/yr 8/01/95 7/31/96 100.00
39-220 Lovetere, Francis and 688.00 1036 7.88/yr 7/01/95 6/30/96 200.00
39-221 Tobin, Lana and 688.00 1036 7.88/yr 3/01/96 10/31/96 300.00
39-222 Steffy, Suzanne 685.00 1036 7.93/yr 8/15/95 7/31/96 200.00
39-223 Toro, William and 655.00 1036 7.59/yr 11/01/95 7/31/96 200.00
39-224 McEuew, Kim and 685.00 1036 7.93/yr 4/27/95 4/30/96 100.00
39-225 Uhrin, Michael and 535.00 720 8.92/yr 2/10/96 1/31/97 0.00
39-226 Schrier, Gladys 585.00 720 8.42/yr 4/01/96 3/31/97 300.00
39-227 Tripp, David 525.00 720 8.75/yr 12/05/95 7/31/96 200.00
39-228 Turner, Kathleen 525.00 720 8.75/yr 10/06/95 9/30/96 250.00
39-229 Gray, Frederick 525.00 720 8.75/yr 11/11/95 10/31/96 200.00
39-230 Larson, Brian and 535.00 720 8.92/yr 8/01/95 4/30/96 250.00
39-231 Stuhner, Susan 555.00 720 9.25/yr 5/20/95 5/31/96 100.00
39-232 Diamond, Jeff 525.00 720 8.75/yr 12/04/95 11/30/96 200.00
39-233 Wooldridge, Edward & Alice 655.00 1036 7.59/yr 4/01/96 3/31/97 100.00
39-234 Galloway, Dawn and 655.00 1036 7.59/yr 7/15/95 6/30/96 200.00
39-235 Warren, Chris & Kimothy 650.00 1036 7.53/yr 9/01/95 8/31/96 100.00
39-236 Crehey, Philip 645.00 1036 7.47/yr 11/01/95 10/31/96 250.00
39-237 Jacquette, Michael 650.00 1036 7.53/yr 8/01/95 4/30/96 150.00
39-238 Bellville, Denise 650.00 1036 7.53/yr 7/01/95 7/01/95 175.00
39-239 Walton, Scott & Laurie 680.00 1036 7.88/yr 4/01/96 3/31/97 300.00
39-240 Fournier, Joyce 645.00 1036 7.47/yr 7/01/95 6/30/96 300.00
</TABLE>
<PAGE>
PROPERTY TOTALS:
-Percentage of Occupied Units-
Total Occupied Rents 132,280.00 Total Occupied Units 227
Total Vacant Rents 7,765.00 Total Vacant Units 13
Total Gross Rents 140,045.00 Total Units 240
Total Square Footage 208,368.00 Percentage Occupied 95%
Average Rent/Sq. Ft. /Yr. 8.39 -Percentage of Occupied Sq. Feet-
Average Rent/Sq. Ft. /Mth 8.70 Total Occupied Sq. Feet188,688.00
Total Security Deposits 39,376.00 Total Vacant Sq. Feet 11,760.00
Total Square Footage 200,368.00
Percentage Occupied 94%
<PAGE>
OPERATING STATEMENTS - TOWN PLACE APARTMENTS
INCOME 1992 1993 1994
Gross Potential Rent 1,506,787 1,540,845 1,581,531
Less: Vacancy (73,580) (73,174) (103,575)
Net Rental Income 1,433,217 1,487,771 1,477,956
Late Charges 5,281 4,723 4,988
Laundry & Misc. Income 17,194 20,092 15,002
Total Service & Misc. Income 22,475 24,815 22,990
TOTAL INCOME 1,455,092 1,492,588 1,500,948
EXPENSES
On-Site Management 67,829 58,495 68,088
Maintenance 48,115 48,254 47,074
Cleaning 12,966 13,947 14,476
Grounds 15,269 17,873 14,642
Total Personnel 144,181 148,372 144,278
Telephone, Mileage & Postage 4,290 8,054 8,228
Miscellaneous 3,663 4,501 3,991
Total Office 7,853 10,555 10,219
Newspapers 2,353 2,427 585
Apartment Guides & Other 14,515 11,740 10,706
Total Adv. & Marketing 16,878 14,167 11,291
Painter 13,485 12,200 13,662
Carpet Shampooing 5,535 2,885 2,883
Cleaning 500 830
Total Outside Contractors 19,020 15,605 16,875
Pest Control 4,259 8,807 7,838
Rubbish 25,385 30,834 27,792
Total Building Services 29,644 38,741 35,525
Maintenance Supplies 9,797 12,387 12,466
Cleaning Supplies 1,211 1,480 1,081
Total Supplies 11,008 13,847 13,547
Gas 2,438 2,380 1,914
Electric 25,870 28,197 32,312
Sewer and Water 80,413 73,955 73,004
Total Utilities 108,719 104,545 107,230
Lawn Mowing Contract 29,400 28,400 34,468
Misc. Grounds 11,220 11,511 6,219
Total Grounds 40,620 40,911 40,687
Property Management Fee 71,661 73,389 78,047
Taxes 188,370 165,835 173,657
Insurance 17,529 17,818 18,082
Total Fixed Expenses 257,566 257,042 261,788
TOTAL EXPENSES 635,589 643,076 841,541
NET OPERATING INCOME 820,103 849,511 859,405
<PAGE>
GROSS POTENTAL RENT 6,616,857
LESS: VACANCY (187.617)
LATE CHARGES 4.181
LAUNDRY AND MISCELLANEOUS INCOME 41.881
TOTAL INCOME 1.554.502
EXPENSES
ON-SITE 68.414
MAINTENANCE MANAGEMENT/REPAIR 48.889
CLEANING & OTHER 13.270
GROUNDS/SHOW & OTHER 14.875
TOTAL PERSONNEL 144.569
TELEPHONE 3.781
POSTAGE 1.827
DUES, FEES LICENSES 1.338
OFFICE EQUIPMENT & OTHER 7.273
TOTAL OFFICE 13.389
APARTMENT GUIDES & OTHER 5.688
PUBLIC RELATIONS 6.268
LEASE RENEWAL INCENTIVES & OTHER 94
TOTAL ADV. & MARKETING 11.962
PLUMBING 1.352
PAINTER 15.459
CARPET SHAMPOOING/REPAIR 6.041
DRYWALL/CARPENTRY & OTHER 3.013
TOTAL OUTSIDE CONTRACTORS 25.865
PEST CONTROL 5,568
RUBBISH 26.934
FIRE EXTINGUISHERS 2.866
FURNITURE RENTAL & OTHER 2.149
TOTAL BUILDING SERVICES 36,709
PAINT 5.14
MAINTENANCE SUPPLIES 12.32
A/C AND APPLIANCE PARTS 4.74
CLEANING SUPPLIES & OTHER 1.86
TOTAL SUPPLIES 24.065
GAS 2.146
ELECTRIC 32.528
SEWER AND WATER 67.673
TOTAL UTILITIES 102.347
LAWN MOWING CONTRACT 32.888
FERTILIZER & MULCH 4.892
EQUIPMENT SERVICE & PARTS 1.872
POOL CHEMICALS, REPAIRS & OTHER 7.681
TOTAL GROUNDS 46.525
PROPERTY MANAGEMENT FEE 77.725
TAXES 177.686
INSURANCE 34.638
TOTAL FIXED EXPENSES 285.849
CAPITALIZED REPLACEMENTS/REPAIRS 46.635
TOTAL EXPENSES 737.115
NET OPERATING INCOME 817.387
<PAGE>
Sec. 135.076 CLEARWATER CODE
Division 12. Planned Development District (PD)
Sec. 135.076. General description.
This district is created to provide an alternate method of
land development not available within the framework of the other
zoning districts. Specifically, this zone classification may be
assigned to land which is to be developed utilizing innovative
design techniques not made possible through the structure of the
other zoning districts for the purpose of achieving one or more
of the following development objectives:
(1) To preserve or be otherwise sensitive to significant
environmental or topographical features which exist on
the site.
(2) To accommodate a mixture of uses on a single parcel of
land made internally and externally compatible through
use limitations, sign control, building orientation,
buffering, or other techniques which may be appropriate
to a particular development proposal.
(3) To accommodate a juxtapositioning of buildings with
exceptional setback or separation distances made
internally and externally compatible through strategic
landscape and spatial design.
(4) To accommodate a comprehensively planned and phased
redevelopment project involving multiple ownerships
which provides for interrelated uses, circulation
patterns (both vehicular and pedestrian), building
orientations, parking areas, architectural motifs,
signs, open spaces, vistas, amenity areas and like
features which positively contribute to the area being
redeveloped and the city.
All land assigned this zoning will require site plan approval by
the city commission in accord with the provisions contained in
chapter 137, "Administration and Enforcement," of this
development code, section 137.010. Such site plan shall be
reviewed by the city commission in conjunction with any
application for planned development district zoning or rezoning
and all development shall occur consistent with that site plan as
approved by the commission or subsequently amended consistent
with the provisions for amendment contained in chapter 137. (Ord.
No. 4035, Sec. 2, 8-29-85)
Sec. 135.077. Subdistricts.
The planned development district shall be comprised of the
following six (6) subdistricts, the preferred land use in each
implied by the subdistrict title:
(1) Residential Planned Development District (RPD).
(2) Office Planned Development District (OPD).
(3) Commercial Planned Development District (CPD).
(4) Industrial Planned Development District (IPD).
(5) Recreational Planned Development District (RecPD).
(6) Clearwater Beach Planned Development District (CBPD).
(Ord. No. 4035, Sec. 2, 8-29-85)
<PAGE>
LAND DEVELOPMENT CODE Sec. 135.080
Sec. 135.078. Establishment/contraction.
It is intended that four (4) acres or more be provided to
establish a new Residential, Office, Commercial, Industrial or
Clearwater Beach Planned Development District and that fifty (50)
acres or more be provided to establish a Recreational Planned
Development District, unless legislatively (by ordinance)
determined by the city commission to be in the public interest.
Furthermore, it is intended that no existing Residential, Office,
Commercial, Industrial or Clearwater Beach Planned Development
District be contracted to an area of less than four (4) acres,
and that no existing Recreational Planned Development District be
contracted to an area of less than fifty (50) acres, unless the
city commission legislatively (by ordinance) determines that a
reduced area is in the public interest. (Ord. No. 4035, Sec. 2,
8-29-85)
Sec. 135.079. Permitted uses.
Within each of the subdistricts of the Planned Development
District, only the following uses may be permitted and all
require city commission approval in conjunction with site plan
approval:
(1) Residential Planned Development District: Any single
or combination of residential uses identified as
permitted in the residential zoning districts contained
in this chapter.
(2) Office Planned Development District: Any single or
combination of uses identified as permitted in the
office or residential zoning districts contained in
this chapter.
(3) Commercial Planned Development District: Any single or
combination of uses identified as permitted in the
commercial, office or residential zoning districts
contained in this chapter.
(4) Industrial Planned Development District: Any single or
combination of uses identified as permitted in the
Limited Industrial District or any commercial zoning
district contained in this chapter.
(5) Recreational Planned Development District: Any single
or combination of uses identified as permitted in the
Open Space/Recreation District, plus, retail sales and
restaurants which are integral to and limited in size
and scope so as to complement the recreation use which
they directly serve.
(6) Clearwater Beach Planned Development District: Any
combination of tourist-oriented hotel, motel,
restaurant, retail, service, entertainment and/or
office uses.
Any use proposed for a particular subdistrict of the Planned
Development District must be clearly and specifically identified
on the accompanying site plan to be deemed permitted. (Ord. No.
4035, Sec. 2, 8-29-85)
Sec. 135.080. Conditional uses.
Within each of the subdistricts of the Planned Development
District, the following uses may be permitted as conditional
uses:
CLEARWATER CODE
(1) Residential Planned Development District: Any single
or combination of uses identified as conditional in the
residential zoning districts contained in this chapter.
(2) Office Planned Development District: Any single or
combination of uses identified as conditional in the
office or residential zoning districts contained in
this chapter.
(3) Commercial Planned Development District: Any single or
combination of uses identified as conditional in the
commercial, office or residential zoning districts
contained in this chapter.
(4) Industrial Planned Development District: Any single or
combination of uses identified as conditional in the
Limited Industrial District or any commercial district
contained in this chapter.
(5) Recreational Planned Development District: Only
alcoholic beverage sales (consumption on premises) may
be considered as a conditional use and only where such
use is integral to and limited in size and scope so as
to complement the recreation use which it directly
serves.
(6) Clearwater Beach Planned Development District: Any
single or combination of uses identified in the
commercial zoning districts contained in this chapter.
(Ord. No. 4035, Sec. 2, 8-29-85)
Sec. 135.081. Use limitations.
All uses, whether permitted, conditional or nonconforming,
shall be conducted in consonance with the use standards contained
in chapter 136, section 136.005. (Ord. No. 4035, Sec. 2, 8-29-
85)
Sect. 135.082. Dimensional and numerical development
requirements.
The following dimensional and numerical development
requirement shall apply to all development within Planned
Development Districts:
(1) Maximum density: Twenty-eight (28) dwelling units or
forty-two (42) hotel/motel units per net acre. (Ord.
No. 4035, Sec. 2, 8-29-85)
<PAGE>
Sec. 135.080 CLEARWATER CODE
Division 13. Limited Office District (OL)
Sec. 135.083. General description.
This district is created to provide a professional office
district compatible with neighborhood land uses through the
utilization of restrictive building heights, setbacks and lot
coverage. Actual site development is to have particular emphasis
on landscaping, buffering and architecture in order to preserve
neighborhood integrity and consistency. (Ord. No. 4035, Sec. 2,
8-29-85)
<PAGE>
LAND DEVELOPMENT CODE Sec. 135.087
Sec. 135.084. Establishment/contraction.
It is intended that two (2) acres or more be provided to
establish a new Limited Office District and that no existing
Limited Office District be contracted to an area of less than two
(2) acres, unless the city commission legislatively (by
ordinance) determines that a reduced area is in the public
interest. (Ord. No. 4035, Sec. 2, 8-29-85)
Sec. 135.085. Permitted uses.
Within Limited Office Districts, only the following uses
(and structures designed for such uses) shall be permitted:
(1) Business/professional offices.
(2) Funeral homes.
(3) Multiple-family dwellings.
(4) Townhouses.
(5) Three-family dwellings.
(6) Two-family dwellings.
(7) Detached single-family dwellings.
(8) Family care.
(9) Accessory uses. (Ord. No. 4035, Sec. 2, 8-29-85)
Sec. 135.086. Conditional uses.
Within Limited Office Districts, the following uses may be
permitted as conditional uses:
(1) Veterinary offices.
(2) Level I group care.
(3) Level II group care.
(4) Level III group care.
(5) Congregate care.
(6) Nursing homes.
(7) Child day care. (Ord. No. 4035, Sec. 2, 8-29-85)
Sec. 135.087. Use limitations.
(a) Multiple-family dwellings shall be governed by the
dimensional and numerical development requirements of
the Multiple-Family Residential "Sixteen" District
contained in section 135.051 of this chapter.
(b) Townhouses shall be governed by the dimensional and
numerical development requirements contained in chapter
136, section 136.012.
(c) Three-family dwellings shall be governed by the
dimensional and numerical development requirements of
the Multiple-Family Residential "Twelve" District
contained in section 135.044 of this chapter.
(d) Two-family dwellings shall be governed by the
dimensional and numerical development requirements of
the Multiple-Family Residential "Twelve" District
contained in section 135.043 of this chapter.
(e) Detached single-family dwellings shall be governed by
the dimensional and numerical development requirements
of the Single-Family Residential "Eight" District
contained in section 135.029 of this chapter.
(f) Family, group and congregate care facilities shall
comply with all terms contained in chapter 136, section
136.020.
(g) Nursing homes shall have a maximum density of sixteen
(16) units per net acre.
(h) Accessory uses shall comply with all terms contained in
chapter 136, section 136.008.
(i) All uses, whether permitted, conditional or
nonconforming, shall be conducted in consonance with
the use standards contained in chapter 136, section
136.005. (Ord. No. 4035, Sec. 2, 8-29-85)
<PAGE>
LAND DEVELOPMENT CODE Sec. 135.088
Sec. 134.088. Dimensional and numerical development
requirements.
The following dimensional and numerical requirements shall
apply to development within Limited Office Districts not
expressly regulated elsewhere:
(1) Minimum lot area: Six thousand (6,000) square feet.
(2) Minimum lot width at setback line: Sixty (60) feet.
(3) Minimum lot depth: Eighty-five (85) feet.
(4) Minimum setbacks: Structures shall be afforded
setbacks which measure not less than hereinafter
referenced nor less than any higher standard which may
be applicable to a particular property in accord with
the uniform development regulations contained in
chapter 136.
a. Principal and accessory structures:
1. From a street right-of-way: Twenty-five (25)
feet
2. From a side property line: Ten (10) feet.
3. From a rear property line: Fifteen (15)
feet.
b. Reserved.
(5) Maximum height: Twenty-five (25) feet; except that
such height limitation shall, where applicable, be
increased or reduced in accord with the height bonus
provisions, airport restrictions, and other regulations
contained in chapter 136, section 136.004.
(6) Minimum open space:
a. For the lot: Thirty (30) percent of the lot area.
b. For the front yard: Fifty-five (55) percent of
the front yard area.
(7) Maximum floor area ratio: Three-tenths (0.3).
(8) Minimum building separation distance within a
development: Each building within a development shall
be separated from each other building within the same
development by a distance equal to fifty (50) percent
of the sum of the heights of such two (2) adjacent
buildings, but in no case shall the separation distance
be less than twenty (20) feet.
(9) Maximum building coverage: Thirty (30) percent. (Ord.
No. 4035, Sec. 2, 8-29-85)
Division 14. General Office District (OG)
Sec. 135.089. General description.
This district is created to provide a general business
office district compatible with other highway-oriented land uses
in terms of building height, mass and setbacks. Site development
shall be particularly sensitive to limiting points of access to
the highway, coordinating on-site vehicular and pedestrian
circulation, and enhancing the view corridor along the highway
through the provision of landscaping and open space. (Ord. No.
4035, Sec. 2, 8-29-85)
<PAGE>
Sec. 135.076 LAND DEVELOOPMENT CODE Sec. 135.092
Sec. 135.090. Establishment/contraction.
It is intended that two (2) acres or more be provided to
establish a new General Office District and that no existing
General Office District be contracted to an area of less than two
(2) acres, unless the city commission legislatively (by
ordinance) determines that a reduced area is in the public
interest. (Ord. No. 4035, Sec. 2, 8-29-85)
Sec. 135.091. Permitted uses.
Within General Office Districts, only the following uses
(and structures designed for such uses) shall be permitted:
(1) Business/professional offices.
(2) Medical clinic or laboratory.
(3) Snack bar or luncheonette.
(4) Accessory uses. (Ord. No. 4035, Sec. 2, 8-29-85)
Sec. 135.092. Conditional uses.
Within General Office Districts, the following uses may be
permitted as conditional uses:
(1) Veterinary offices.
(2) Nursing homes. (Ord. No. 4035, Sec. 2, 8-29-85)
<PAGE>
APPRAISAL ENGAGEMENT LETTER
RIGGINS, ATKINSON, COMBS & ASSOCIATES, INC. APRIL 9, 1996
Appraiser's Name Date
18850 U.S. Highway 19 North, Suite 525 (818)-530-9793
Address Phone
Clearwater, Florida 34624 Ref. #_________
2545 COACHMAN ROAD N.E., CLEARWATER
Subject property address
TOWN PLACE APARTMENTS
Name or description of site
Republic Bank welcomes the opportunity for you to provide an MAI
Appraisal for our customer. Be advised that our contract for
services is specifically with you as an individual, NOT others in
your firm who may assist in the preparation of this report. As
such, you are required to sign this engagement letter and the
appraisal reports as the primary appraiser. Your signature on
this engagement letter returned to Republic Bank, a copy of which
is to be included within the addendum of the appraisal report,
specifically acknowledged that you have no financial or other
interest in the property to be appraised or relationships with
the potential borrower which might cause a conflict of interest
or otherwise influence your value estimate.
X The legal description of the subject property is attached.
X In order to access the property, contact:
Wayne Shaw --- Phone # (813)-595-9484
Please complete: Cost $4,500.00.
Completion date: April 24, 1996
Please confirm your engagement to appraise the above subject by
signing this engagement letter and transmit by facsimile to
(813) 823-6529 to the attention of Terry K. Rush
THE TERMS OF THE AGREEMENT AND THE
APPRAISAL STANDARDS WERE RECEIVED BY ME.
THESE ARE FOR SUBJECT REAL ESTATE.
Signature: Date:________
Name of Appraisal Firm: _______________________________________
<PAGE>
Robert E. Riggins, SRA, MAI
Education:
Memphis State University - Master of Science Degree (1980):
Major - Real Estate Finance; Minor - Economics.
Memphis State University - Bachelor of Business Administration
Degree (1970): Major - Economics; Minor - Accounting
Courses: American Institute of Real Estate Appraisers (AIREA):
I-A - Basic Appraisal Principles, Methods and Techniques
I-B - Capitalization Theory and Techniques
II - Urban Properties
VI - Real Estate Investment Analysis
IX - Appraisal Administration and Review
IV - Litigation Valuation
Courses: Appraisal Institute
Standards of Professional Practice, Parts A & B
Capitalization Theory, Part B
Uniform Residential Appraisal Report
Seminars:
Statistics in Real Estate (AIREA)
Multifamily Appraisal Seminar (SREA)
Investment Feasibility Analysis (SREA)
Market and Marketability Analysis (SREA)
Cash Flow and Risk Analysis (SREA)
Instructor - Single Family Underwriting Seminar (MBA)
FHLBB - R-41(c) Seminar (AIREA)
Standards of Professional Practice (SREA)
New URAR Appraisal Report (Appraisal Institute) 1993
USPAP "Core" Law
HUD Lender Selection Roster Appraiser Training (11/94)
Professional Affiliations:
Member of the Appraisal Institute, MAI Designation #6123.
Past President and Member of the Board of Directors, Memphis
Chapter #53 of the Society of Real Estate Appraisers.
Past Chairman of the Educational Committee and Candidates
Committee, Memphis Chapter #51 of the American Institute of Real
Estate Appraisers.
Board of Directors of the Tampa Bay Chapter of the Appraisal
Institute.
Beta Sigma Phi, National Honorary Scholastic Fraternity.
Member - FNMA Condominium Task Force.
Experience:
President, RIGGINS, ATKINSON, COMBS & ASSOCIATES, INC. (1994-
Present)
Senior Vice President and Regional Manager, Commercial Real
Estate Appraisals, AppraisalFirst, Inc. (1990-1994).
Vice President and Regional Manager, Commercial Real Estate
Appraisals, AppraisalFirst, Inc. (1987-1990).
Regional Manager, Commercial Real Estate Appraisals, AmeriFirst
Appraisal Company (1985-1987).
Senior Vice President, Construction and Commercial Lending,
Banksmiths Mortgage Corporation (1984-1985).
Senior Vice President, Chief Appraiser, Citizens Mortgage
Corporation (1983-1984)
Vice President, Commercial Lending and Commercial Appraisal
Departments, Leader Federal Savings and Loan Association (1972-
1983).
Licenses:
Licensed Real Estate Broker, State of Florida.
State Certified, General Appraiser # 0000605
The Appraisal Institute conducts a program of continuing
education for designated members. Designated members who meet
the minimum standards of this program are awarded periodic
educational certification. Robert E. Riggins is currently
certified under this program.
<PAGE>
William W. Atkinson, MAI
Education:
Florida State University 1986, Tallahassee, Florida, Bachelor of
Science Degree in Finance and Real Estate. Minor in Accounting.
Courses:
Florida State University:
Real Estate Feasibility Analysis
Real Estate Principles and Practices
Real Estate and its Legal Environment
Real Estate Appraisal
Real Estate Market Analysis
Real Estate Finance
Appraisal Institute
Standards of Professional Practice SPP, Part A (9/94)
Standards of Professional Practice SPP, Part B (9/94)
Real Estate Appraisal Principles 1A1 (10/89)
Basic Valuation Procedures 1A2 (3/90)
Capitalization Theory and Techniques, Part A 1BA (3/91)
Capitalization Theory and Techniques, Part A 1BB (6/91)
Case Studies in Real Estate Valuation (11/92)
Report Writing and Valuation Analysis (6/93)
Non-Residential Demonstration Report (10/94)
The Appraiser's Complete Review (2/95)
Comprehensive Exam (2/95)
Seminars:
Appraisal Institute
Demonstration Non-Residential Report Writing (3/94)
USPAP "Core" Law (6/94)
U.S. Department of Housing & Urban Development)
HUD Lender Selection Roster Appraiser Training (11/94)
Professional Affiliations:
Member of the Appraisal Institute, MAI Designation #10.975
Experience:
Vice President, RIGGINS, ATKINSON, COMBS & ASSOCIATES, INC.
(1994-Present)
Staff Appraiser, Residential and Commercial Division -
AppraisalFirst, Inc., Clearwater, Florida. (1987-1994)
Staff Appraiser, Residential Division - AmeriFirst Appraisal
Company, Clearwater, Florida. (1986-1987)
License:
Licensed Real Estate Broker - State of Florida.
State-certified general appraiser #0001221
<PAGE>
Annex D: Opinion of The Valuations Group
[The Valuations Group]
October 7, 1996
Decade Companies, General Partner
Decade Companies Income Properties
Brookfield Lakes Corporate Center
250 Patrick Blvd, Suite 140
Brookfield, WI 53045
Gentlemen:
You have requested our opinion as to the fairness to the holders
of limited partnership interests in the Decade Companies Income
Partnership (the "Partnership") of an Offer to Repurchase at a
price of $402 per Interest up to all of the currently outstanding
Interests in the Partnership, being made by the Partnership.
The Valuations Group primary business is to provide independent
opinions of value for interests in general and limited
partnerships. The firm and its principals have significant
experience and knowledge of the factors which effect the
valuation and pricing of partnership interests. Prior to being
engaged to provide this opinion of fairness, in the normal course
of its business The Valuations Group has prepared an independent
opinion of value for a client unrelated to this transaction. This
opinion indicated a fair market value of $440 per Interest and
was based on information available as of August 15th, 1995. The
Valuations Group' current valuation based on the same methodology
applied using information available as of August 15th, 1996 is
$389 per Interest. The principal causes of the valuation decline
are: i) limited partner distributions in excess of operational
cash flow over the 12 month period ended June 30, 1996; ii)
inclusion of a $200,000 partnership "liquidation fee" not
previously included in the determination of net asset value; iii)
loan fees incurred in connection with the 1996 refinancing of
Town Place Apartments, and; iv) inclusion of a $225,000 deferred
fee due to a third-party upon sale of one of the Partnership's
properties. The Valuations Group was previously unaware of the
Partnership's contractual obligation to make this payment.
Other than the services rendered in connection with this opinion,
The Valuations Group has not provided professional services to
any party to this transaction nor is the fee payable for this
opinion related to the proposed transaction's success or failure.
In the course of rendering its opinion, The Valuations Group has:
i) Reviewed a draft of the Offer to Purchase.
ii) Reviewed the original Partnership prospectus and limited
partnership agreement.
iii) Reviewed and analyzed financial statements and related
notes contained in the Partnership's 1994 and 1995 annual
reports and included in the Partnership's Form 10-Q's for
the quarters ended June 30, 1995 and June 30, 1996.
iv) Reviewed an independent appraisal of the Partnership's
three properties dated September 25, 1996.
v) Reviewed and analyzed published data on capitalization
rates for properties deemed to be similar to the
Properties owned by the Partnership.
vi) Reviewed Partnership correspondence regarding the possible
repurchase of partnership Interests.
vii) Reviewed published data regarding transactions of limited
partnership interests in the informal partnership
secondary market and recent tender offers for interests in
other limited partnerships.
viii) Discussed the repurchase proposal and the partnership's
history and future outlook with the Partnership's senior
management.
In the course of its review, The Valuations Group did not
physically inspect the Partnership's properties. The Valuations
Group has relied upon the accuracy and completeness of the
financial, appraisal, and other information which was provided to
it by the General Partner and other third parties. The Valuations
Group has not made an effort to independently verify the accuracy
and completeness of any such information. In connection with its
opinion, The Valuations Group assumes that there will be no
material change in property operations or the properties'
appraised values prior to the closing of the repurchase offer
transaction.
The Valuations Group has not been requested to, nor has it
specifically expressed or implied an opinion as to the i)
alternatives to the repurchase offer; ii) partnership's capacity
to enter into the proposed transaction; iii) income tax
considerations to any party involved with the transaction; nor
the iv) effect the proposed transaction may have, if any, on
limited partners electing not to tender their Interests.
Based upon, and subject to the foregoing, and other matters which
we deem to be relevant, it is our opinion that as of the date
hereof the offer of $402 per Interest is fair from a financial
point of view.
Respectfully Submitted,
/S/Bryson S. Randolph)
THE VALUATIONS GROUP, INC.
BY: Bryson S. Randolph, Chairman
LETTER OF ACCEPTANCE
To Tender Limited Partnership Interests
of
DECADE COMPANIES INCOME PROPERTIES--A LIMITED PARTNERSHIP
Pursuant to the Offer to Purchase
Dated October 24, 1996
THIS OFFER, THE PRORATION PERIOD, AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, MILWAUKEE TIME, ON NOVEMBER 22, 1996, UNLESS
EXTENDED.
To: Decade Companies Income Properties--A Limited Partnership
250 Patrick Boulevard
Suite 140
Brookfield, Wisconsin 53045-5864
(This Letter of Acceptance may be delivered to Decade Companies
Income Properties--A Limited Partnership, by mail or by hand
delivery at the above address, or by facsimile transmission to it
at (414) 792-0808. The Letter of Acceptance will be deemed to be
received at the time of actual receipt at the offices of Decade
Companies Income Properties--A Limited Partnership.)
Ladies and Gentlemen:
The undersigned
is the Limited Partner of record and the owner of limited
partnership interest (the "Interests") of Decade Companies Income
Properties--A Limited Partnership (the "Partnership"). The
undersigned hereby tenders to the Partnership (as set forth on
page 3 of this Letter of Acceptance) in accordance with the terms
and conditions of the Partnership's Offer to Purchase, dated
October 24, 1996, (including the annexes thereto and this letter
of acceptance) (collectively the "Offer"), receipt of which is
hereby acknowledged.
Subject to, and effective upon, acceptance for payment of the
Interests tendered herewith, the undersigned hereby sells,
assigns and transfers to the Partnership all right, title and
interest in and to all of the Interests that are tendered hereby,
and the Partnership may redeem and cancel said Interests. After
acceptance for payment of the Interests by the Partnership, the
undersigned will have no right, title or interest in or with
respect to the Interests tendered, other than the right to
receive in cash the purchase price provided in the Offer of $402
per Interest, with such amount to be prorated in respect of
fractional Limited Partnership Interests ("Fractional
Interests"). The undersigned understands and acknowledges that
the Partnership may prorate the amount of Interests accepted for
purchase, as set forth in the Offer to Purchase, dated October
16, 1996.
The undersigned hereby represents and warrants that the
undersigned has full power and authority to tender, sell, assign
and transfer the tendered Interests and that, when the same are
accepted for payment, the Partnership will acquire good,
marketable and unencumbered title thereto, free and clear of all
liens, restrictions, charges and encumbrances and the same will
not be subject to any adverse claim. The undersigned understands
that the Partnership will cancel said Interests. The undersigned
will, upon request, execute any additional documents deemed by
the Partnership to be necessary or desirable to complete the
sale, assignment and transfer of the tendered Interests.
All authority conferred or agreed to be conferred in this Letter
of Acceptance shall not be affected by, and shall survive, the
death or incapacity of the undersigned, and any obligation of the
undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators and legal
representatives of the undersigned. Except as stated in the
Offer, this tender is irrevocable.
Unless otherwise indicated herein under "Special Payment
Instructions," please issue the check for the purchase price in
the name(s) of the registered holder(s) and at the address stated
above. In the event that Special Payment Instructions are
completed, please issue the check for the purchase price in the
name of, and deliver said check to the person or persons at the
address so indicated.
If you are going to tender your Interests, please sign exactly as
your name(s) appear on page 1, above. See Instruction 4 before
signing. If you own any Fractional Interests and decide to
tender any Interests, such amount must be tendered so that the
Limited Partner is left owning no Fractional Interests and at
least three (3) Interests.
Owned Tendered
Decade Companies Income Properties--
A Limited Partnership ___________ _______________
The payment date or dates will be determined at the sole
discretion of the General Partner, but is expected to be 30 days
after the Expiration Date of the Offer.
__________________________ __________ ____________________
(Limited Partner) (Date) Social Security # or
Employer
Identification #
__________________________ __________ ____________________
(Limited Partner) (Date) Social Security # or
Employer
Identification #
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1 and 5)
To be completed only if payment
for Interests accepted for
purchase by the Partnership is to
be made to a person other than
the Limited Partner(s) and at the
address set forth at the
beginning of this Letter.
Name and/or address of payee
other than registered owner at
registered address:
____________________________________________________________
Name (please print)
____________________________________________________________
Address
____________________________________________________________
(Include Zip Code)
____________________________________________________________
(Tax ID or SS Number)
Signature guarantee, if required.
See Instruction 1.
____________________________________________________________
(Name of Institution)
____________________________________________________________
(Signature of Officer and Title)
____________________________________________________________
(Date)
<PAGE>
INSTRUCTIONS
The Following Instructions Are Part of the Terms
and Conditions of the Offer
1. Guarantee of Signature. No signature guarantee on this
Letter of Acceptance is required unless payment is requested
to be made to a person or persons or at an address different
from that shown on the Letter of Acceptance. If payment is
requested to be made to any other person or at any other
address, all signatures on this Letter of Acceptance must be
guaranteed by a federal or state chartered bank or savings
and loan institution or by a broker-dealer that is a member
of the New York Stock Exchange, Inc.
2. Delivery of Letter of Acceptance. This Letter of Acceptance
must be delivered to the Partnership at the address and by
any of the means specified in the Letter of Acceptance, and
must be received by the Partnership prior to the Expiration
Date as defined in the Offer. The method of delivery to the
Partnership is at the election and risk of the Limited
Partner. However, if delivery is by mail, the Partnership
recommends registered mail with return receipt requested.
3. Form of Tender. No alternative, conditional or contingent
tenders will be accepted. If a Limited Partner tenders less
than all of his Interests, only whole Interests may be
retained by such Limited Partner and a minimum of three (3)
Interests must be retained. Fractional Interests will be
purchased only to the extent that the tendering Limited
Partner tenders either all of his Interests or after such
redemption he or she owns a minimum of three (3) Interests
and no other Fractional Interests. All tendering Limited
Partners, by execution of this Letter of Acceptance (or a
facsimile thereof), waive any right to receive any notice of
the acceptance of their Interests as a condition thereto and
understand the Partnership may prorate its purchases.
4. Signatures on Letter of Acceptance. If this Letter of
Acceptance is signed by the registered holder of the
Interests tendered hereby, the signature must correspond
with the name as shown at the beginning of the Letter of
Acceptance. If any of the Interests tendered hereby are
owned of record by two or more joint owners, all such owners
must sign this Letter of Acceptance. At the General
Partner's sole discretion, the Partnership may accept the
signature of one joint owner, provided that by executing
this document such Limited Partner hereby agrees to
indemnify the Partnership from claims made by the other
joint owners concerning the Interests.
If any tendered Interests are registered in different names,
it will be necessary to complete, sign and submit as many
separate Letters of Acceptance as there are different
registrations. For example, two Letters of Acceptance would
be required for Interests owned individually by Mr. X, and
by Mr. and Mrs. X as joint tenants.
If this Letter of Acceptance is signed by trustees,
executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate
when signing, and proper evidence satisfactory to the
Partnership of their authority so to act must be submitted.
5. Special Payment Instructions. If a check is to be issued in
the name of or at an address different than that shown at
the beginning of the Letter of Acceptance, such instructions
must be noted on the Letter of Acceptance and the signature
of the tendering Limited Partner(s) must be guaranteed as
provided in Instruction 1, above.
6. Waiver of Conditions. The Partnership reserves the absolute
right to waive any of the specified conditions of the Offer
in the case of Interests tendered.
7. Form W-9 Obligation. To prevent back-up federal income tax
withholding equal to 31% of the payments made pursuant to
the Offer, each Limited Partner, who is not exempt (e.g. a
corporation), must provide a correct taxpayer identification
number. A substitute Form W-9 is attached and should be
completed by those Limited Partners who have not forwarded a
taxpayer identification number. If a Limited Partner has
already forwarded a Form W-9 (or substitute), you do not
need to send another Form W-9 to the Partnership.
8. Requests for Assistance. Questions and requests for
assistance should be directed to the Partnership Manager,
Mr. Michael G. Sweet, 250 Patrick Boulevard, Suite 140,
Brookfield, Wisconsin 53045-5864 (phone: 414-792-9200)
(facsimile 414-792-0808).
<PAGE>
Substitute Form W-9
REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER AND CERTIFICATION
Name (If joint names, list first and circle the name of the
person or entity whose number you enter in Part I below):
_____________________________________________
Business name
_____________________________________________
Please check appropriate box:
_____ Individual/Sole Proprietor _____ Corporation
_____ Partnership _____ Other ______________
Address (number, street, and apt. or suite no.)
_____________________________________________
City, State, and Zip Code
_____________________________________________
Requester's Name and Address:
Decade Companies Income Properties--A Limited Partnership
250 Patrick Blvd., Suite 140
Brookfield, WI 53045-5864
PART I - Taxpayer IDENTIFICATION NUMBER (TIN)
Enter your TIN in the appropriate box. For individuals, this is
your social security number (SSN):______-______-________. OR
For other entities, it is your employer identification number
(EIN):______-______-________.
PART II - For Payees Exempt From Backup Withholding
Individuals (including sole proprietors) are not exempt from
backup withholding. Corporations are exempt from backup
withholding for certain payments, such as interest and dividends.
For a complete list of exempt payees, see the separate IRS
Instructions for the Requester of Form W-9.
If you are exempt from backup withholding, you should still
complete this form to avoid possible erroneous backup
withholding. Enter your correct TIN in Part I, write "Exempt" in
Part II, and sign and date this form. If you are a nonresident
alien or a foreign entity not subject to backup withholding, give
the requester a completed Form W-8, Certificate of Foreign
Status.
PART III - Certification
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer
identification number (or I am waiting for a number to be
issued to me), and
2. I am not subject to backup withholding because: (a) I am
exempt from backup withholding, or (b) I have not been
notified by the Internal Revenue Service that I am subject
to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I
am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS - You must cross out item 2 above if
you have been notified by the IRS that you are currently subject
to backup withholding because of under reporting interest or
dividends on your tax return. For real estate transactions, item
2 does not apply. For mortgage interest paid, the acquisition or
abandonment of secured property, cancellation of debt,
contributions to an individual retirement arrangement (IRA), and
generally payments other than interest and dividends, you are not
required to sign the Certification, but you must provide your
correct TIN.
Sign Here
Signature:______________________________ Date:___________________
October 24, 1996
RE: Decade Companies Income Properties -- A Limited Partnership
Dear Investor:
Enclosed with this letter is an offer by the Partnership to
purchase your Limited Partnership Interests ("Interests") for
$402 in cash per Interest. The enclosed documents consist of an
Offer to Purchase, which you should read carefully, and a Letter
of Acceptance.
The General Partners believe that there are both Limited Partners
who desire to sell their Interests immediately for cash in order
to obtain liquidity and other Limited Partners who desire to
retain their Interests in order to benefit from any future profit
that may be realized from continued operation and eventual sale
of the Partnership's three apartment properties. The Offer is
being made to accommodate the competing interests of both groups
of Limited Partners.
Limited Partners who tender their shares pursuant to the Offer
are in effect exchanging the certainty and liquidity of a current
sale for the potentially higher return of continued ownership of
their Interests, but the continued ownership of Interests also
entails the risk of loss of all or a portion of the investment of
the remaining Limited Partners.
In order to accept the Offer you must complete the enclosed
Letter of Acceptance and return it on or before November 20, 1996
(unless the Offer is extended, in which case we will notify you
in writing). The Letter of Acceptance must be signed by the
person or persons in whose name the Interests are carried on the
Partnership's records in exactly the same manner in which such
name or names appear. For your convenience we have attached a
label to page one of each Letter of Acceptance that indicates the
name or names of the Limited Partner(s), the address of record,
and the number of Interests owned. The Partnership intends to
pay for Interests, which are tendered and accepted by the
Partnership, on or before December 13, 1996 in the name or names
that appear on the label and will be mailed to the address shown
on the label, unless different instructions are given per the
Letter of Acceptance. Please carefully review the enclosed Offer
to Purchase which contains important information.
Cash distributions have been suspended for the third quarter of
1996 to set aside cash reserves to pay for the repurchase of
Interests. The amount and frequency of future distributions will
be affected by several factors, including cash flow from
Partnership properties, cash reserves of the Partnership, number
of Interests tendered and purchased pursuant to this Offer, and
any financing required to fund this Offer.
Very truly yours,
Michael Sweet
Partnership Manager
MS/mt
Enclosures
