<PAGE>
Exhibit (c)(1)(B)
SELF CONTAINED COMPLETE
REAL ESTATE APPRAISAL REPORT
140 Space - Lucerne Lakeside
Manufactured Home Community
3000 State Road 544
Winter Haven, Polk County, Florida 33881
PREPARED FOR
Mr. Steve Waite
Windsor Corporation
6430 South Quebec
Englewood, Colorado 80111
AS OF
May 1, 2000
PREPARED BY
WHITCOMB REAL ESTATE
<PAGE>
[LETTERHEAD OF WHITCOMB REAL ESTATE]
May 16, 2000
Mr. Steve Waite
Windsor Corporation
6430 South Quebec
Englewood, Colorado 80111
RE: 140 Space - Lucerne Lakeside
Manufactured Home Community
3000 State Road 544
Winter Haven, Polk County, Florida 33881
Dear Mr. Waite:
At your request, we have inspected and appraised the above captioned
property. We estimate the prospective market value of the property rights
outlined herein, as of May 1, 2000, based on an exposure period of six months,
to be:
- TWO MILLION SIX HUNDRED THOUSAND DOLLARS -
($2,600,000)
Our value estimate applies to the land as physically constituted, to the
improvements actually in existence and reflects prevailing trends in the local
real estate market. We have made a careful inspection, study, and analysis of
the property, and have considered all factors which, in our opinion, would tend
to influence the market value of the subject.
This conclusion is premised on the Assumptions and Limiting Conditions as
cited in our attached report, as well as the facts and circumstances as of the
valuation date. This appraisal has been prepared in accordance with the
"Uniform Standards of Professional Appraisal Practice" (USPAP) as published by
the Appraisal Standard Board of the Appraisal Foundation and those specific
conditions indicated in the engagement letter.
This appraisal assignment was not based on a requested minimum value,
specific value, or the approval of a loan. The intended user of this report is
Windsor Corporation.
Lucerne Lakeside is an age restricted manufactured home community located
on the south side of Lucerne Park Road, west of Old Lucerne Park Road in the
City of Winter Haven, Polk County, Florida. The property is located in the
north central portion of the county and was originally developed in 1964. We
observed the property to be in good overall condition. There
<PAGE>
Mr. Steve Waite
May 16, 2000
Page Two
were no major items of deferred maintenance noted during the physical inspection
of the premises.
Lucerne Lakeside consists of 140 manufactured home spaces, a clubhouse,
shuffleboard, laundry facilities, boat docks and a boat launch ramp. As of the
date of inspection, 137 of the manufactured home sites were occupied. The site
rent rates range from $235.00 to $270.00 per site per month, averaging $239.94.
These rents became effective March 1, 2000, when an increase of $10.00 per
manufactured home site took effect.
Our analysis has accounted for a management fee, adequate to ensure
professional management of the property. We have also forecast maintenance
expenditures to maintain the property in adequate repair in order to retain
residents and achieve rental increases. Our analysis and opinions are
contingent on adequate management and maintenance expenditures.
We appreciate this opportunity to be of service to you. If you have any
questions, please do not hesitate to contact us.
Very truly yours,
WHITCOMB REAL ESTATE
/s/ John H. Whitcomb JAG
John H. Whitcomb, MAI, CCIM
St. Cert. Gen. REA #0001234
/s/ William G. Trask JAG
William G. Trask
St. Cert. Gen. REA #0002347
<PAGE>
4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Title Page
<S> <C>
Transmittal
Table Of Contents....................................................... 4
Introduction
Photographs Of Subject.................................................. 6
Summary Of Facts And Conclusions........................................ 8
Extent of Confirming, Collecting And Reporting Data..................... 9
Purpose And Function Of The Report...................................... 9
Property Rights Appraised............................................... 10
Effective Date Of Value................................................. 10
Appraisal Definitions................................................... 10
Descriptive Section
Area Description........................................................ 12
Neighborhood Description................................................ 17
Manufactured Home Community Market Overview............................. 20
Land And Site Improvements.............................................. 33
Improvement Description................................................. 35
Ownership And Property History.......................................... 37
Occupancy............................................................... 37
Zoning And Other Land Use Controls...................................... 37
Assessment And Taxes.................................................... 38
Marketability And Exposure Period....................................... 40
Valuation Section
Highest And Best Use.................................................... 43
Valuation Process....................................................... 48
Income Capitalization Approach.......................................... 49
Sales Comparison Approach............................................... 65
Final Estimate Of Value................................................. 82
Certification........................................................... 83
Assumptions And Limiting Conditions..................................... 84
</TABLE>
Addenda
Legal Description
Profiles Of Appraisers
<PAGE>
INTRODUCTION
<PAGE>
6
PHOTOGRAPHS OF THE SUBJECT (Taken May 10, 2000)
[PICTURE APPEARS HERE]
Entrance to Lucerne Lakeside
[PICTURE APPEARS HERE]
Typical Street View
<PAGE>
7
PHOTOGRAPHS OF THE SUBJECT (Taken May 10, 2000)
[PICTURE APPEARS HERE]
Lucerne Park Road Facing East
[PICTURE APPEARS HERE]
Lucerne Park Road Facing West
<PAGE>
8
SUMMARY OF FACTS AND CONCLUSIONS
--------------------------------
Property Appraised: 140 Space - Lucerne Lakeside
------------------
Manufactured Home Community
3000 State Road 544
Winter Haven, Polk County, Florida
Property Rights Appraised: Fee Simple Interest, subject to tenant leases
-------------------------
Land Area: 13.7 acres, more or less
---------
Improvements: Existing 140 manufactured home spaces, a
------------
clubhouse, shuffleboard, laundry facilities,
boat docks and a boat launch ramp.
Owner: Windsor Park Properties, 7.
-----
Zoning: RM, Residential Mobile Homes, City of Winter
------ Haven
MSA/Census Tract: 3980 (Lakeland/Winter Haven MSA)/
---------------- 0136 (City of Winter Haven)
Highest and Best Use:
--------------------
As Vacant: Hold for future development as predicated by
market demand.
As Improved: The current use as a manufactured home
community.
Market Value: Income Approach $2,600,000
------------
Sales Comparison Approach $2,650,000
Final Estimate of Market Value: $2,600,000
------------------------------
Date of Appraisal: May 1, 2000
-----------------
Dates of Inspection: May 10, 2000
-------------------
<PAGE>
9
EXTENT OF CONFIRMING, COLLECTING AND REPORTING DATA
---------------------------------------------------
William G. Trask inspected the property on May 10, 2000. The property's
physical data is based on information provided by the owner, confirmed by
physical inspection of the premises and information obtained from the Polk
County Property Appraiser's office.
Information regarding the subject's land use plan designation and zoning
are based on discussions with representatives of Polk County, Florida. We have
analyzed the property with regard to its Highest and Best Use, as if the land
was vacant and available for development and as it has been currently improved.
We have employed only the Income Capitalization and Sales Comparison
Approaches in our estimate of the market value of the property. The Cost
Approach has not been used in this valuation, due to the subjectivity of
entrepreneurial profit estimates. Recent data for the Income Capitalization and
Sales Comparison Approaches has been generated from local real estate brokers,
investors (local and nationally), owners, managers, and from our inspection of
the supporting rental neighborhood. All of the market data has been confirmed
with buyers, sellers, or other real estate professionals involved with or
knowledgeable of the transaction.
PURPOSE AND FUNCTION OF THE APPRAISAL
-------------------------------------
The purpose of the appraisal is to express our opinion of the "As Is"
market value of the fee simple interest, subject to existing leases, of the real
estate as of May 1, 2000.
Rental rates and increases are governed by the community's prospectus,
filed with the Florida Department of Business and Professional Regulation, until
a unit is removed from the community. At that time, a new prospectus can be
supplied to the tenant. A copy of the prospectus has been included in the
Addenda of this report.
We have surveyed the local market rents, but emphasis has been
appropriately given to the prospectus, in the forecast of rental levels at the
subject.
The information, opinions, and conclusions contained in this report have
been prepared as a basis for portfolio valuation.
<PAGE>
10
PROPERTY RIGHTS APPRAISED
-------------------------
The real estate interest appraised is that of ownership in fee simple
interest, subject to existing tenant leases, and the property is appraised as if
free and clear of mortgages, liens, servitudes and encumbrances, except those
noted in the body of this appraisal.
EFFECTIVE DATE OF VALUE
-----------------------
The effective date of our value is May 1, 2000.
APPRAISAL DEFINITIONS
---------------------
Market Value is defined as: 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:
. Buyer and Seller are typically motivated;
. Both parties are well informed or well advised, and each acting in
what he considers his own best interest;
. 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./1/
Fee Simple Interest is defined as: The absolute ownership unencumbered by
any other interest or estate subject only to the four powers of government./2/
_______________________
/1/ The Office of the Comptroller of Currency, 12 CFR 564.2(f).
/2/ The Dictionary of Real Estate Appraisal, Third Edition, Appraisal
Institute, 1993.
<PAGE>
DESCRIPTIVE SECTION
<PAGE>
AREA DESCRIPTION 12
----------------
Introduction
------------
The economic vitality of the surrounding area and the immediate
neighborhood encompassing the subject property is an important consideration in
estimating demand and future cash flow potential of a particular property. The
area analysis usually focuses on the social, economic, governmental and
environmental forces that affect real estate.
The first step in estimating the highest and best use of the subject
property is an examination of the social, economic, governmental and
environmental forces affecting property values in the Polk County area. In the
following discussion, we have attempted to present sufficient data to inform
readers unfamiliar with the state of Florida, Polk County and the Winter Haven
metropolitan area and its environs.
The subject is located in the State of Florida, nicknamed the Sunshine
State. Florida has a strong economic base consisting of tourism, real estate,
construction, manufacturing, finance, defense contracting and insurance.
Florida
-------
The population of Florida has grown rapidly in recent decades. In 1950,
Florida was the twentieth largest state in the nation with a population
approaching 3 million. By 1990, Florida had become the fourth largest state in
the nation with a population of nearly 13 million. This growth saw dramatic
changes in the demographic composition of the population, brought about by a
higher population age, a lower minority population and increased per capita
wealth. As shown in the following table, the population growth was explosive
during the 1970's and 1980's, slowing in the early 1990's. This trend is
expected to continue in the future as shown by the 2004 and 2009 projections.
Florida Population Growth and Projections
<TABLE>
<CAPTION>
=============================================
Year Population Percent
Change
---------------------------------------------
<S> <C> <C>
1970 6,790,929 N/A
---------------------------------------------
1980 9,746,324 43.5%
---------------------------------------------
1990 12,937,926 32.7%
---------------------------------------------
1999* 15,167,025 17.2%
---------------------------------------------
2004* 16,416,782 8.2%
---------------------------------------------
2009* 17,648,165 7.5%
=============================================
</TABLE>
United States Census Bureau.
*Florida Trend 2000 Economic Yearbook, April 2000.
<PAGE>
Area Description 13
The slower rate of future population growth will be partially attributable
to more stringent growth management policies. Growth management legislation will
curtail the demand for developable properties, which will restrict the supply of
a given population. The result should be more modest returns on real estate
investments with investors having to develop feasible projects in areas where
sufficient demand exists.
The dynamic complexities in the demographic composition had a significant
impact on the Florida real estate market through increased demand for housing
and the corresponding commercial development that usually follows. Until the
recessionary period of the early nineties and the financial institution
collapse, Florida was one of the most heavily invested states in the nation for
speculative real estate development.
Geography
---------
The subject is located in the north central portion of Polk County within
the northern municipal limits of the City of Winter Haven. More specifically,
the subject property is located on the south side of Lucerne Park Road west of
Old Lucerne Park Road. This location places the subject approximately three
miles north-northwest of the downtown area of Winter Haven.
Polk County and the Lakeland/Winter Haven SMSA (Standard Metropolitan
Statistical Area) are synonymous. Polk County is located in the west/central
area of Florida, east of the Tampa SMSA and southwest of the Orlando SMSA both
within a 50 mile radius. These metropolitan areas are connected by Interstate 4,
which passes through Polk County and is the main corridor for central Florida.
Interstate 4 connects to Interstate 95 in Daytona Beach and Interstate 75 in
Tampa. The Gulf of Mexico is located approximately 50 miles to the west and the
Atlantic Ocean is less than 55 miles to the east. Polk County lies on the
southwest fringe of Central Florida's tourist center, centered in the Orlando-
Kissimmee area.
Population
----------
The 1990 U. S. Census estimated the population of Polk County to be
405,382, up 26.0% from the 1980 population estimate of 321,652. This indicates a
compounded annual growth rate of 2.3% over the 10-year period. These growth
rates were similar to the compounded growth rate of 2.87% and the increase in
growth of 32.7% experienced by the State of Florida during the same period. The
1998 estimate of 465,858 indicates a 1.9% average increase in growth since the
1990 census, and the year 2005 projection (512,727), indicates a slight decrease
in this rate. Just over 77% of the population growth in Polk County is the
result of in-migration.
<PAGE>
Area Description 14
Economic Base
-------------
The economic base for this general area consists of phosphate mining and
processing, citrus production and processing, and agriculture (cattle and
farming); however, light manufacturing, distribution, tourism, medical services,
and services are becoming more important in the diversification of Polk County's
economic base. This diversification resulted from the national recession that
occurred during the early 1980's and was compounded on the local level by a poor
performance of the phosphate industry and damage incurred by the citrus industry
as the result of several major freezes. Both industries have rebounded well, but
the economic difficulties brought attention to the importance of a diverse
economy, which would be better able to cope with economic downturns.
The tourism aspects of the local economy result from the area's close
proximity to Cypress Gardens in Winter Haven, Busch Gardens in Tampa, Disney
World/Epcot/Universal Studios Sea World near Orlando, and a substantial number
of winter season residents. Lakeland is the primary retail and service center
for the surrounding area and the home of Florida Southern College, the Lakeland
Regional Medical Center, the Watson Clinic, the main office and warehouse of
Publix Supermarkets, Inc., and the winter training facility for the Detroit
Tigers.
Local business expansions and a rejuvenated market for phosphate have
helped Polk County prosper over the last year. The county's average unemployment
rate, which has been hovered at near 10% in the early 1990's, has reached a near
twenty-year low at 5.5%. As development pressures are moving inland from the
coastal areas, Polk County's large land area and central location are two
factors that are expected to contribute to its future growth.
Transportation
--------------
The primary form of transportation in Polk County is the automobile.
Interstate 4 traverses the northern portion of the county as it extends from
Interstate 275 in Tampa, on the west coast of Florida, through Orlando to
Daytona Beach and Interstate 95, on the east coast. State Road 60 is the major
east-west roadway in the central portion of the county. North south travel is
accomplished via U.S. Highway 27 in the eastern portion of the county, and U. S.
Highway 17/98 in the west.
The Lakeland area is particularly well served by the Interstate and U. S.
Highway network, and Polk County alone has 195 motor freight and warehousing
firms. Commercial Carrier Corporation, one of Florida's largest motor freight
carriers, is based in the area.
Orlando and Tampa International Airports are within a convenient 50-mile
drive from Winter Haven. The second and third largest air carrier operations in
Florida, they have a combined average of over 1,000 daily flights. Winter Haven
enjoys daily Amtrak passenger service connecting north to Orlando and beyond and
south to Miami. CSX Transportation (formerly Seaboard Coast Line Railroad)
maintains its main line through the Winter Haven area,
<PAGE>
Area Description 15
assuring industry of continued convenient rail service. The Port of Tampa, less
than 50 miles away, is the 7th busiest port in the U.S. and Polk County
companies are responsible for over half of the tonnage through this deep-water
port.
Concurrency
-----------
The State of Florida's Local Government Comprehensive Planning Act of 1975
required all counties and municipalities in the state to develop, implement and
monitor local comprehensive/growth management plans. Pursuant to this law, each
county was required to publish Land Use Policy Guides, both in written and map
form, which designate desired types of land use and probable zoning for all
county lands not within their boundaries.
Under Florida's 1985 Growth Management Act, a concept called "Concurrency"
was set forth to require that adequate roads, sewers, schools and other
facilities be in place when local officials approve a new development. Fearing
restrictions on growth, developers, builders, and realtors have vehemently
lobbied the State Legislature to alter the requirement.
At present, concurrency requires developers to agree to provide necessary
infrastructure before new developments are approved. However, in some areas,
moratoriums on new development are being implemented to allow government staff
sufficient time to study the affects of further growth and to develop plans,
both on-site and off will likely result in a protracted approval process, and
ultimately entail more costs to the private sector.
Any proposed large development that will have impacts on traffic, noise,
air quality, etc., that go beyond the immediate vicinity, must go through
Development of Regional Impact (DRI) a Regional Planning Council. The Council
studies the proposed development and its potential impacts, then makes
recommendations to the appropriate local governmental entity regarding whether
the development should be approved and what, if any, constraints or mitigation
requirements should be imposed to minimize adverse regional impacts.
Summary
-------
In conclusion, Polk County enjoys a strategic location between the two
rapidly growing Tampa and Orlando Metropolitan areas. The County is also
centrally located to many of the area's major tourist attractions. Coupled with
its mild winter climate, points to long-term growth and prosperity. Short-term
economic distress has resulted from the current economic recessions, but Polk
County's economy should continue to diversify, which will make it less
vulnerable to economic downturns in any one particular sector. The prospects of
an increasing population base, together with economic improvement are expected
to contribute positively to the overall growth of the area.
<PAGE>
[MAP OF AREA APPEARS HERE]
<PAGE>
17
NEIGHBORHOOD DESCRIPTION
------------------------
A neighborhood is defined as a portion of a larger community, or an entire
community, containing a homogeneous group of inhabitants, buildings, or business
enterprises.
Location and Boundaries
-----------------------
The subject property is located on the south side of Lucerne Park Road,
west of Old Lucerne Park Road, within the northern municipal limits of the City
of Winter Haven. This location places the subject approximately three miles
north-northwest of the downtown area of Winter Haven. The neighborhood is
generally bounded by the U. S. Highway 17 corridor to the west, the U. S.
Highway 27 corridor to the east, Avenue T / Lake Buckeye Drive / Country Club
Road to the south and the U. S. Highway 17 / 92 corridor to the north. The
subject property lies in the southwestern portion of the neighborhood. Large
portions of the neighborhood are within unincorporated areas of Polk County.
Land uses generally consist of commercial development along the major
thoroughfares with residential backup. Development in the neighborhood has taken
the form of mixed use, strip development of commercial (retail) and light
industrial properties, located primarily along the Avenue T, U. S. Highway 17,
U. S. Highway 27 and U. S. Highway 17 / 92 frontages. Residential development is
intermixed throughout the immediate neighborhood. The neighborhood is estimated
to be approximately 40% developed. There are large tracts of vacant land in the
neighborhood for infill development and development is expected to occur at a
slower pace in the future, due to the present level of existing development.
This area of Winter Haven offers all amenities and shopping, schools,
churches and medical facilities. Additionally the Cleveland Indians winter
training facility is located on the south side of Winter Haven.
Access
------
Access to the subject property is via Lucerne Park Road (State Road 544).
Lucerne Park Road is a two lane roadway that bisects the neighborhood in an
east/west direction. The subject is located on the south side of Lucerne Park
Road west of Old Lucerne Park Road, which bisects part of the neighborhood in an
east/west direction. Access to Interstate 4 is available within ten miles north-
northwest of the subject property via State Road 557 and also to the northeast
via U. S. Highway 27. Overall, access to the subject property is considered
good.
Housing
-------
While the subject competes with all forms of housing to a certain degree,
the closest competition is other manufactured housing communities. Our surveys
of residents indicate that a sense of community is the primary reason that
people choose to reside in a manufactured housing
<PAGE>
Neighborhood Description 18
community. There is also a sense of security, as residents pay close attention
to comings and goings in the community. While the subject is not the least
expensive form of housing in the neighborhood, it is also not the most
expensive.
Summary and Conclusion
----------------------
The subject property's location in regard to the local amenities in the
form of shopping, recreational and activity centers is considered good. The
infrastructure is in-place in the neighborhood and concurrency is not an issue
in development. General real estate values have been rising over the last three
to four year period, although construction has been continuing at a moderate
pace, on properties purchased during that period.
Future infill development in the neighborhood is expected to be at a much
slower pace, due primarily to the lack of prime available land in the
neighborhood, and the advanced degree of existing development. The subject will
benefit from its good location and the expected future population growth and is
a competitive form of housing in the local market.
<PAGE>
[NEIGHBORHOOD MAP APPEARS HERE]
<PAGE>
20
MANUFACTURED HOME COMMUNITY MARKET OVERVIEW
-------------------------------------------
The manufactured home industry in the State of Florida has prospered and
matured, over the past twenty years, as a direct result of the advancements in
manufactured home construction techniques and the continued ability of producers
and dealers to make manufactured homes a relatively inexpensive housing
alternative. Over this period the industry has progressed from it's original
"trailer park" image, to the "mobile home park" and, finally, to its present
status as "a manufactured home community." This most recent status is only
appropriate, as most manufactured homes are typically moved only once during
their economic lifetime; from the manufacturer or dealer's lot to the home site.
According to the 1990 U. S. Census, 1,290,000 people occupied 762,855
manufactured homes in the State of Florida. These totals were the highest in the
United States with only Texas and California having manufactured home
populations that exceed one million. The measure of the significance of the
manufactured home in the state is evidenced by the fact that nearly 12.5% of all
housing units in the state were manufactured homes, as of 1990. The table below
lists the top five counties in the state, the number of manufactured homes and
the percentage of the state total of manufactured homes.
<TABLE>
<CAPTION>
=========================================================
Manufactured Housing Communities
Top Five Counties In Florida
---------------------------------------------------------
County No. Of Homes Pct. Total Housing
---------------------------------------------------------
<S> <C> <C>
Pinellas 52,207 6.84%
---------------------------------------------------------
Polk 51,768 6.36%
---------------------------------------------------------
Hillsborough 42,314 5.55%
---------------------------------------------------------
Pasco 40,391 5.29%
---------------------------------------------------------
Lake 26,935 3.53%
---------------------------------------------------------
Florida 762,855 100.00%
=========================================================
</TABLE>
Source: 1990 U.S. Census
As shown in the table on the following page, sales have decreased 39% since
1985, again due principally to restriction imposed by government regulations as
well as difficult economic times. The 1996 and 1997 statewide figures show a
varied trend, with significant increases over the 1991 sales.
<PAGE>
Manufactured Housing Community Market Overview 21
Single Family Housing
Site Built vs. New Manufactured Home Sales
Florida and Polk County 1983 to 1998
<TABLE>
<CAPTION>
=============================================================================================
Florida Polk
Year Housing Mfd. Mfd. County Mfd. Mfd.
Starts Home Homes % Housing Home Homes %
Sales of Total Starts Sales of Total
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1983 99,164 29,244 22.77% 2,062 2,320 52.94%
---------------------------------------------------------------------------------------------
1984 92,386 29,442 24.17% 1,858 2,720 59.41%
---------------------------------------------------------------------------------------------
1985 94,947 30,126 24.09% 2,012 2,673 57.05%
---------------------------------------------------------------------------------------------
1986 97,146 27,233 21.90% 1,708 2,710 61.34%
---------------------------------------------------------------------------------------------
1987 106,650 25,446 19.26% 2,322 2,757 54.28%
---------------------------------------------------------------------------------------------
1988 99,178 23,315 19.03% 2,326 2,592 52.70%
---------------------------------------------------------------------------------------------
1989 97,474 21,821 18.33% 2,428 2,672 52.39%
---------------------------------------------------------------------------------------------
1990 72,126 17,483 19.51% 1,525 2,031 57.11%
---------------------------------------------------------------------------------------------
1991 70,925 12,572 15.06% 1,988 1,284 39.24%
---------------------------------------------------------------------------------------------
1992 83,228 14,172 14.55% 2,253 1,506 40.06%
---------------------------------------------------------------------------------------------
1993 91,016 15,964 14.92% 2,588 1,699 39.63%
---------------------------------------------------------------------------------------------
1994 96,293 17,067 15.06% 2,573 2,047 44.31%
---------------------------------------------------------------------------------------------
1995 84,877 16,199 16.03% 2,187 1,705 43.81%
---------------------------------------------------------------------------------------------
1996 91,000 15,905 14.88% 2,504 1,542 38.11%
---------------------------------------------------------------------------------------------
1997 90,268 18,242 16.81% 2,648 1,459 35.52%
---------------------------------------------------------------------------------------------
1998 97,870 19,035 16.28% 2,852 1,374 32.51%
=============================================================================================
</TABLE>
Source: Florida Manufactured Housing Association, Statistical Package, 1998.
The Polk County new manufactured housing sales have generally followed the
state trends, peaking in 1986 and declining through 1991. Since that time, sales
have fluctuated. Significantly, Polk County manufactured homes sales have
represented a substantial portion of the county's development. This is supported
by the fact that Polk County has the second highest number and percentage of
manufactured housing to total housing in the state. Additionally, Polk County
was the top ranked county in sales from 1990 to 1994, falling to second
position, behind Marion County from 1995 through 1998. Although recent trends
indicate sales of manufactured homes to be far below the peak of the mid
eighties, demand within good quality manufactured
<PAGE>
Manufactured Home Community Market Overview 22
housing communities is still strong according to recent publications.
According to the Florida Manufactured Housing Association's 1998
Statistical Package, there are 471 manufactured home communities in Polk County.
Of this total, there are 102 communities (approximately 22% of the total), with
101 or more spaces. Additionally, 115 of the communities, or approximately 24%
of the total, are in the 26 to 100-space range. Approximately 54% of the
manufactured home communities in Polk County have 100 or fewer spaces. The large
percentage of small communities points to a fragmented marketplace, with a
variety of ownership forms. The subject, at 140 spaces, is one of the mid sized
communities in Polk County.
The rapid growth in Florida during the 1960's and 1970's outstripped the
ability of county and municipal governments to provide adequate infrastructure
improvements. This precipitated state legislation mandating that each county
submits an acceptable Comprehensive Plan. As previously discussed in the Area
Description section of this report, the concept of Concurrency required all
municipalities with zoning jurisdiction to adjust their zoning codes and reach
"substantial conformance" to county-wide land use plan. Many municipal planners
were forced to scale back the total developable inventory in their communities,
resulting in decreased projections of future municipal revenues from property
taxes. Manufactured housing communities were viewed as a poor developmental
alternative in many municipalities since they produce less property tax for the
municipality while creating about the same infrastructure burden. While many
counties have instituted a moratorium on the development of new manufactured
housing communities, others have imposed severe limitations on the development
of manufactured housing communities, typically found in the form of restrictive
impact fees (or transportation fees). It was noted that approved communities
have been allowed to develop to capacity.
Based on our conversations with Polk County and City of Winter Haven
officials, it is readily apparent that it has become increasingly more difficult
to rezone sites to manufactured home use, with governmental restrictions and
increasing impact fees, much of the developer's profit has been taken away. When
coupled with infrastructure costs dictated by concurrency, the cost of
development can increase to a point that makes the development of a manufactured
home community financially unfeasible. Hence, there is limited inventory and
future supply will be limited.
Additionally, our survey of the smaller municipalities has indicated that
additional fees are incurred for community development and are generally based
on the community's capacity. These fees vary among the individual
municipalities. The overall effect has been the decline in the development of
new manufactured housing communities in recent years. The difficult economic
times of the early 1990's and the lack of land for development have been
contributing factors to the inhibited growth in the state.
In the early 1980's, lot rental rates in most quality communities increased
100% or more,
<PAGE>
Manufactured Home Community Market Overview 23
while vacancies, at that time, were negligible. Spiraling rent increases and the
lack of a viable alternative for manufactured home owners had resulted in
problems in many communities in the form of rent strikes, picket lines, and a
high percentage of homes made available for resale.
An additional restriction, which has greatly impacted the operation of
manufactured housing communities, was the 1984 Florida Mobile Home Act. This Act
established the Bureau of Mobile Homes of the Department of Business and
Professional Regulation and further, set out a list of requirements for
community owners and residents under Chapter 723 of the Florida Statutes.
The law requires manufactured home community owners to file a prospectus
with the Bureau of Mobile Homes fully describing the community and its rental
agreements and further requires owners to distribute the prospectus to all
community residents. In addition, rental rates must pass the test of being
reasonable. The code states:/3/
1. For the purpose of this section, a lot rental amount that is in excess
of market rent shall be considered unreasonable.
2. Market rent means that rent which would result from market forces
absent an unequal bargaining position between mobile home park owners
and mobile home owners.
3. In determining market rent, the court may consider rents charged by
comparable mobile home parks in its competitive area. To be
comparable, a mobile home park must offer similar facilities,
services, amenities, and management.
4. In determining whether a rent increase or resulting lot rental amount
is unreasonable, the court may consider economic or other factors, but
not limited to, increases or decreases in the consumer price index,
published by the Bureau of Labor Statistics of the Department of
Labor, increases or decreases in operating costs or taxes and prior
disclosures.
5. An arbitrator or mediator under sections 723.037, 723.038 and 723.0381
shall employ the same standards as set forth in this section.
The statute established procedures that the community owner must follow in
order to affect rental rate increases and, perhaps most importantly, requires
that a community owner who wishes to sell his community must first offer it (at
the owner's price and terms) to the community's homeowners association.
Current HUD wind standards are more stringent for manufactured housing than
they are for conventional site built housing. These wind standards were created
in response to Hurricane
________________________
/3/ History: Section 1, Chapters 84-90 and Section 9, Chapters 90-198.
<PAGE>
Manufactured Home Community Market Overview 24
Andrew. Additionally, many insurance companies are hesitant to write business
interruption coverage for manufactured housing communities in coastal Florida.
However, business interruption insurance only covers losses sustained until all
debris is cleared away and the community is again fit for occupancy, the point
when the insurance coverage ends. Therefore, the insurance coverage is available
for a typically short period of time. These changes do not appear to have had a
major effect on the demand for manufactured homes, as market demand has actually
strengthened. It is apparent that the market reception for manufactured homes is
as a continued source of quality and affordable housing.
Rental Rates and Occupancy
--------------------------
There is a wide range of rates in the marketplace, based on the project and
the amenities offered. Generally speaking, a standard (non-corner/no view
amenity) pad ranges between $200.00 per month to $240.00 per month. Premiums are
also attached to pads with a corner or view amenity, and these can run as high
as $20 per month above the standard pad pricing, although these premiums are not
generally found in smaller communities. Services included in the rental rate
vary by community, with higher rental rates indicative of more services.
The subject averages $239.94 per lot (based on 140 lots), per month, with
the rent range from $235.00 to $270.00. The local market supports the subject
rents. No rent increase is planned at the current time.
Most importantly, regardless of the competitive rental rates shown by the
competitive properties, the subject community is governed exclusively by the
Prospectus, which specifically addresses annual rental increases and other
charges. A copy of the Prospectus has been included in the Addenda to this
report. Income forecasts were based upon current rent levels.
The subject is a 140-space, fully developed, age restricted manufactured
housing community. The communities that are most competitive with the subject
have been detailed on the following pages. These five communities are fully
developed and are currently between 98.9% and 100.0% occupied. The physical
occupancy at the subject is currently 97.9%. The manager occupies one space rent
free and 136 occupied sites produce rent resulting in an economic occupancy of
97.1%. This occupancy appears to be slightly below the sub-market occupancy of
approximately 99.8%.
<PAGE>
Manufactured Housing Community Market Overview 25
Summary
-------
The State of Florida experienced high levels of growth in the manufactured
housing industry during the 1980's. Sales climbed steadily through the late
seventies and early eighties, peaking in 1985. Since that time sales showed a
steady decline each year through 1991. Sales in 1992, 1993 and 1994 indicated a
reversal from this most recent declining trend.
Manufactured home community owners, who in recent years have benefited from
a "captive" market and little competitive new supply, now find their interests
sandwiched between those of county and municipal authorities on the one hand,
and those of state regulators on the other. The upshot is likely to be that
although occupancies in manufactured housing communities will remain high,
future rent increases will not likely be as great as they have been.
<PAGE>
RENT COMPARABLE NUMBER ONE 26
--------------------------
Cypress Shores East
3275 West U. S. Highway 92
Winter Haven, Polk County, Florida
[PHOTO APPEARS HERE]
Location: South side of U. S. Highway 92, east of Jersey
Road.
Number of Spaces: 123
Property Description: Age restricted manufactured housing community
built in 1959.
Monthly Rental Rates: $238.07
Occupancy: 100.0% (123 of 123)
Services Included in Rates: Water, sewer and trash collection.
Amenities: Clubhouse, shuffleboard, boat slips and docks.
Verification/Date: Community Manager on May 15, 2000.
Comments: This is a slightly smaller, age-restricted
community located approximately 3 miles west of
the subject.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
=========================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
-----------------------------------------------------------------------------------------
Similar Similar Similar Similar Similar Similar Similar
=========================================================================================
</TABLE>
<PAGE>
RENT COMPARABLE NUMBER TWO 27
--------------------------
Cypress Shores West
West U. S. Highway 92
Winter Haven, Polk County, Florida
[PHOTO APPEARS HERE]
Location: South side of U. S. Highway 92, east of Jersey
Road.
Number of Spaces: 82
Property Description: Age restricted manufactured housing community
built in 1959.
Monthly Rental Rates: $228.00 to $240.00
Occupancy: 100.0% (82 of 82)
Services Included in Rates: Water, sewer and trash collection.
Amenities: Clubhouse, shuffleboard, boat slips and docks.
Verification/Date: Community Manager on May 15, 2000.
Comments: This is a smaller, age-restricted community
located approximately 3 miles west of the subject.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
=========================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
-----------------------------------------------------------------------------------------
Similar Similar Similar Similar Similar Similar Similar
=========================================================================================
</TABLE>
<PAGE>
RENT COMPARABLE NUMBER THREE 28
----------------------------
Palm Shores
1 East Lane
Lake Alfred, Polk County, Florida
[PHOTO APPEARS HERE]
Location: South side of Mosley Road, east of U. S. Highway
17/92.
Number of Spaces: 94
Property Description: Age restricted manufactured housing community
built in 1962.
Monthly Rental Rates: $200.00 to $206.00
Occupancy: 98.9% (93 of 94)
Services Included in Rates: Water, sewer and trash collection.
Amenities: Clubhouse, shuffleboard, boat slips and docks.
Verification/Date: Sara, Community Manager on May 15, 2000.
Comments: This is a smaller, age-restricted community
located approximately 2 miles north of the
subject.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
=========================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
-----------------------------------------------------------------------------------------
Similar Similar Similar Similar Similar Similar Similar
=========================================================================================
</TABLE>
<PAGE>
RENT COMPARABLE NUMBER FOUR 29
---------------------------
Woodland Lakes
5401 U. S. Highway 17/92 West
Haines City, Polk County, Florida
[PHOTO APPEARS HERE]
Location: South side of U. S. Highway 17/92 West, west of
Century Drive.
Number of Spaces: 167
Property Description: Age-restricted manufactured housing community
built in 1980.
Monthly Rental Rates: $240.00 to $260.00
Occupancy: 100.0% (167 of 167)
Services Included in Rates: Water, sewer and trash collection.
Amenities: Clubhouse, shuffleboard, boat slips and docks.
Verification/Date: David, Community Manager on May 15, 2000.
Comments: This is a larger, age-restricted community located
approximately 2 1/2 miles north-northeast of the
subject.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
=========================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
-----------------------------------------------------------------------------------------
Similar Similar Similar Similar Similar Similar Similar
=========================================================================================
</TABLE>
<PAGE>
RENT COMPARABLE NUMBER FIVE 30
---------------------------
Shipp Reck Harbor
1600 Lake Shipp Drive
Winter Haven, Polk County, Florida
[PHOTO APPEARS HERE]
Location: Southwest side of South Lake Shipp Drive, south of
Winter-Lake Road.
Number of Spaces: 112
Property Description: Age-restricted manufactured housing community
built in 1971.
Monthly Rental Rates: $225.00 to $235.00
Occupancy: 100.0% (112 of 112)
Services Included in Rates: Basic cable television and trash collection.
Amenities: Clubhouse, pool and shuffleboard.
Verification/Date: Debbie, Community Manager on May 15, 2000.
Comments: This is a smaller, age-restricted community
located approximately 5 miles southwest of the
subject.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
=========================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
-----------------------------------------------------------------------------------------
Similar Similar Similar Similar Similar Similar Similar
=========================================================================================
</TABLE>
<PAGE>
Rent Comparable Summary
<TABLE>
<CAPTION>
================================================================================================================================
No. Name/Location Occ. Sites/Sites Monthly Services Included Amenities
% Occ. Rental Rates
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Cypress Shores East 123/123 $238.07 Water, sewer and trash Clubhouse, shuffleboard,
3275 West U.S. Highway 92 100.0% collection. boat slips and docks.
Winter Haven, Polk County, Florida
--------------------------------------------------------------------------------------------------------------------------------
2 Cypress Shores West 82/82 $228.00 Water, sewer and trash Clubhouse, shuffleboard,
West U.S. Highway 92 100.0% to collection. boat slips and docks.
Winter Haven, Polk County, Florida $240.00
--------------------------------------------------------------------------------------------------------------------------------
3 Palm Shores 93/94 $200.00 Water, sewer and trash Clubhouse, shuffleboard,
1 East Lane 98.9% to collection. boat slips and docks.
Lake Alfred, Polk County, Florida $206.00
--------------------------------------------------------------------------------------------------------------------------------
4 Woodland Lakes 167/167 $240.00 Water, sewer and trash Clubhouse, shuffleboard,
5401 U.S. Highway 17/92 West 100.0% to collection. boat slips and docks.
Haines City, Polk County, Florida $260.00
--------------------------------------------------------------------------------------------------------------------------------
5 Shipp Reck Harbor 112/112 $225.00 Trash collection and Clubhouse, pool and
1600 Lake Shipp Drive 100.0% to basic cable television shuffleboard.
Winter Haven, Polk County, Florida $235.00
--------------------------------------------------------------------------------------------------------------------------------
S Lucerne Lakeside 137/140 $235.00 Water, sewer and trash Clubhouse, laundry and
Lucerne Park Road 97.9% to collection. shuffleboard.
Winter Haven, Polk County, Florida $270.00
================================================================================================================================
</TABLE>
<PAGE>
[RENT COMPARABLES MAP APPEARS HERE]
<PAGE>
33
LAND AND SITE IMPROVEMENTS
--------------------------
The subject site is a generally rectangular shaped parcel of land
containing approximately 13.7 acres of gross area. The site is presently
developed with 140 manufactured housing spaces. The tract is generally level and
at street grade and drainage of the tract appears adequate. We observed no
obvious adverse soil or subsoil conditions during the physical inspection of the
site.
Utility services connected and in service on the date of valuation include
the following:
Sanitary Sewer: City of Winter Haven.
--------------
Storm Sewer: On site drainage system.
-----------
Water: City of Winter Haven.
-----
Telephone: General Telephone
---------
Electric: Tampa Electric Company
--------
Ingress to and egress from the subject community is via Lucerne Park Road,
west of Old Lucerne Park Road. The individual lots, in the community, are
accessed by roadways, which are laid-out in a grid pattern, maximizing the use
of the site, typical of manufactured housing communities. Roadway improvements
include:
Street-bed: Lucerne Park Road is an asphalt paved two-lane roadway.
----------
The streets in the community are asphalt-paved roadways
and are 20 to 25 foot wide right-of-ways.
Curb: Lucerne Park Road does not have concrete curbs. The
----
community streets do not have curbs.
Sidewalk: Lucerne Park Road does not have concrete sidewalks. The
--------
community streets do not have sidewalks.
Streetlights: Lucerne Park Road does not have pole-mounted lights.
------------
There are pole-mounted lights throughout the community.
Landscaping: Grass and planted areas found throughout the site.
-----------
<PAGE>
Land and Site Improvements 34
Arrangements between the subject ownership and municipal and/or public
utility authorities for the connection of telephone and electricity are presumed
to exist, although neither a plan specifically identifying the location of all
underground lines nor contracts providing for their installation were provided
to us.
Encumbrances
------------
Our review of the deed, county property records and survey did not reveal
any adverse or potentially adverse interests, which would affect the utility of
the subject property. Specifically, there are no recorded or otherwise known
liens, defects in title or adverse easements. Additionally, there are no rent
controls in effect in Polk County.
Easements
---------
Standard utility easements for electricity and telephone are assumed to
exist. No other easements were identified to us.
Encroachments
-------------
There were no obvious encroachments observed during the inspection of the
subject and neighboring properties.
Environmental
-------------
There were no obvious areas of contamination on or about the subject site.
We are not qualified in environmental hazards and, therefore recommend an audit
be performed.
Functional Utility
------------------
The site, which is rectangular in shape and contains approximately 13.7
acres, is large enough to accommodate building improvements and roadways as well
as recreational amenities and green areas. The site is considered functional
for various residential development scenarios. The existing development as a
140-space manufactured housing community with an overall density of
approximately 10.22 spaces per acre is slightly above modern standards. The
site is considered functional for use as a manufactured housing community.
<PAGE>
35
IMPROVEMENT DESCRIPTION
-----------------------
The subject is improved with 140 manufactured housing spaces. The lots in
the community are arranged along streets laid out in a grid pattern taking
advantage of the rectangular shape of the site. The streets have been
configured to maximize the available number of spaces. The individual
manufactured housing lots in the community vary slightly in size averaging
approximately 2,925 square feet. The density of the property is equal to 10.22
dwelling units per acre.
The common area amenities include a clubhouse, laundry, shuffleboard
courts, boat docks and a boat launch ramp. The clubhouse contains approximately
2,142 square feet of area and has been partitioned into the main
hall/multipurpose room, restrooms, kitchen and the park office. The interior
construction consists of painted or papered drywall walls and acoustical tile
ceilings. The flooring finish is vinyl tile. There are flush mounted
fluorescent light fixtures. Adjacent to the clubhouse are the shuffleboard
courts.
We have not estimated a separate value for these amenities, or equipment,
as they are standard items found at most manufactured housing communities.
These amenities are typical for a community of this type, age, size and
location, and are adequate and functional in use.
Age and Condition
-----------------
According to the owner, the community was developed in 1964. The subject
is approximately 36 years old. The common areas, streets, amenities and
individual mobile homes were observed to be in good overall condition. Overall,
the subject improvements are estimated to be effectively 15 years old and were
observed to be in good condition.
<PAGE>
Improvement Description 36
[MAP OF RECREATION AREA APPEARS HERE]
Site Layout-Lucerne Lakeside
<PAGE>
37
OWNERSHIP AND PROPERTY HISTORY
------------------------------
The ownership of the subject, as recorded in the Official Records of Polk
County, Florida, is in the name of Windsor Park Properties, 7. The property was
purchased by the current owners in June 1995 for $2,100,000 as is evidenced by
the Trustee's Deed recorded in Official Record Book 3546 on Page 0201. This
indicates a price per space of $15,000. There have been no other significant
transactions involving the subject property within the past five years.
OCCUPANCY
---------
The property is currently occupied by a 140-space manufactured housing
community, known as Lucerne Lakeside. There are three vacant manufactured
housing spaces of the 140 total spaces. The physical occupancy is 97.9%. All
of the spaces will accommodate multi-sectional homes. In addition to the
physical vacancy the manager occupies one space rent free resulting in an
economic occupancy of 136 spaces. The economic vacancy of the manufactured
housing spaces is 4 spaces or 2.9%.
The community is governed, as required by law, by a prospectus. Annual
increases in the rental rates are governed by the prospectus, contained in the
Addenda to this report. The current market rents at the subject range from
$235.00 to $270.00 per month. The rents were increased by $10.00 per site per
month, effective March 1, 2000.
Our analysis does not incorporate any value attributable to any community
owned models as these units are considered personal property, not a portion of
the real estate. Likewise, we have incorporated no income attributable to the
sale of homes in our analysis.
ZONING AND OTHER LAND USE CONTROLS
----------------------------------
The subject property is located within the municipal limits of Winter Haven
and is zoned RM, Residential Mobile Homes according to the City of Winter Haven
zoning ordinance. The land use classification RM (Medium Density Residential)
allows for a density of up to 10 dwelling units per acre.
The subject is a legal, non-conforming use of the site by density. This is
due to the community not meeting the density requirements of the Future Land Use
Plan.
Concurrency
-----------
Based on the present configuration of the subject, it is in conformance
with the approved comprehensive plan filed by the City of Winter Haven.
Therefore, concurrency is not an issue.
<PAGE>
Zoning And Other Land Use Controls 38
Flood Hazard
------------
The City of Winter Haven is a participant in the Federal Emergency
Management Agency (FEMA) system. According to Flood Map Community Number
120271, Panel 0005 B, dated September 30, 1981, the subject property is located
in FEMA designated "C" and "A2" zones. The "A2" zone covers the lake and canal
frontages of the community. An "A2" zone is defined as a "special flood hazard
area where base flood elevations are provided". A "C" zone is defined as "an
area of minimal flood hazard usually depicted on Flood Insurance Rate Maps as
being above the 500-year flood elevations".
ASSESSMENT AND TAXES
--------------------
The subject is identified in the Polk County records under Parcel Number
09-28-26-530000-000121. According to the records at the Polk County Property
Appraiser's Office, the current (1999) assessed value of the subject totals
$1,093,500. In comparison to our opinion of the market value the subject is
under assessed. Under assessment is common for manufactured home communities,
because much of the value can be attributed to the entrepreneurial skill in
acquiring the land and filling the community. In our discussions with the Polk
County Property Appraiser's Office, it has been noted that properties are not
re-assessed upon sale in Polk County. Rather, all properties are re-assessed
every three years and any sale will be factored in to the assessment of each
property type. The Prospectus allows for the pass through of additional ad
valorem taxes to the residents.
Assessed values, for purposes of property taxation are determined on
January 1, of each year. In the state of Florida, properties are assessed at
100% of the market value, as required by Florida Statute, Chapter 192.042.
Properties are reassessed annually and equitability of assessments is not a
basis for assessment in the state of Florida. Taxes are due and payable on the
first day of the year, although tax bills are issued in arrears. Discounts up
to 4% of the total bill are available for early payment and taxes become
delinquent after March 31. Discussions with owners of investment real estate
and manufactured home communities have revealed that "early" payment of real
estate taxes is a common practice. Additionally, prudent management would also
dictate the payment of real estate taxes to take advantage of any discounts
offered. All tax amounts are current.
Historically, the actual taxes have varied over the last three years. The
table on the following page illustrates the actual taxes and assessments over
the last three years.
<PAGE>
Assessment And Taxes 39
Historical Taxes
==============================================
Tax Year Assessment Taxes
----------------------------------------------
1999 $1,093,500 $26,666.09
----------------------------------------------
1998 $1,093,500 $26,949.31
----------------------------------------------
1997 $1,093,500 $27,092.56
==============================================
Based on the historical taxes we expect the real estate taxes to increase
slightly in the future. We have the estimated 2000 tax liability to be $26,933.
We have applied the available early payment discount for November 2000 and our
estimate of total taxes is $25,855.
<PAGE>
40
MARKETABILITY AND EXPOSURE PERIOD
---------------------------------
The subject as discussed in the Neighborhood Analysis, and Manufactured
Home Community Market Overview sections of this report is competitive and
marketable with other properties in the marketplace.
There are typically four classes of purchasers attracted to this type of
development. The first are the tenants/residents of the community, purchasing on
a cooperative or condominium basis to reduce rental rates. The second class of
purchaser would be the single owner/operator who purchases a community as an
income and investment vehicle. Third would be the "traditional" manufactured
home community owner/developer who views the community as a safe, long term
investment. Finally, there is the institutional investor or syndicate (REIT)
which owns several large manufactured housing communities on a
statewide/nationwide basis.
Due to the stability of manufactured home community investments, the REIT
investors have been a major player in the marketplace. REIT investors have bid
down capitalization rates for new, large communities. Resident groups have also
increased demand for manufactured home community investments. According to our
banking sources, resident groups are able to borrow money at debt coverage
ratios as low as 1.0 to 1. The banks view resident group loans as good quality
with minimum risk. Typical payback periods range between five and eight years.
Discussions with large institutional manufactured home community investor
representatives and local area realtors, indicated that "properly priced",
stable, well kept manufactured housing communities should "be under contract"
within a six to eight month period in today's market. However, our research has
also revealed that very few communities are "listed" for sale and that for the
most part brokers solicit owners for buyers.
Our discussions further indicated that institutional investors required a
minimum of 200 spaces, and pricing would reflect an 8.50% to 9.50% overall
capitalization rate requirement for senior communities. Family communities
typically reflect higher capitalization rates due to a less stable occupancy
base. Pricing is established by processing gross income, reduced by a 2% to 3%
vacancy and credit loss factor with expenses of 35% of effective gross income.
An additional capital charge of 3% to 5%, based on overall condition, is
deducted to arrive at a net operating income (NOI). This criteria is generally
the most restrictive pricing, as other investors will tend to accept lower
expense ratios (30%), no capital charges and a lower overall rate.
In late summer 1998, commercial mortgage backed securities (CMBS) lenders
restructured their pricing for long term fixed rate loans. These loans had
historically been priced based on an interest rate spread above Treasury
Securities. The secondary market for these loans became illiquid and lenders
were unable to sell the loans profitably. Consequently, although interest rates
on Treasuries have fallen, the interest rates on securitized loans have
increased. Prior to this increase, interest rate spreads were available lower
than 150 basis points over the 10-
<PAGE>
Marketability and Exposure Period 41
year Treasuries. Since the fall, spreads have increased to the low 200 basis
point range for manufactured housing communities.
Interest rates are low and financial institutions are again willing to lend
money for existing real estate projects with good occupancies. The presence of
life insurance companies and conduit programs has made the financing of
manufactured housing communities a very competitive business. The insurance
companies and conduit programs will lend on a non-recourse basis, with terms
ranging from 10 to 20 years.
On the basis of the preceding analysis, the subject would be attractive to
all but the institutional investor. In our opinion, the exposure period for the
subject would be within the range indicated by the industry participants, and we
estimate an exposure period of six months.
<PAGE>
VALUATION SECTION
<PAGE>
43
HIGHEST AND BEST USE
--------------------
Highest and Best Use may be defined as:
"The reasonably probable and legal use of vacant land
or an improved property, which is physically possible,
appropriately supported, financially feasible and which
results in the highest value. The four criteria the
highest and best use must meet are legal permissibility,
physical possibility, financial feasibility, and maximum
profitability."/4/
The highest and best use of a specific parcel of land does not depend on
subjective analysis; rather, the competitive forces in the market shape it. The
analysis and interpretation of highest and best use is an economic study of the
market forces on the subject.
Market forces also shape market value. The data collected and analyzed to
estimate property value is also used to formulate an opinion of the property's
highest and best use as of the effective date of the appraisal. In all
valuation assignments, value estimates are based on use. The highest and best
use of a property provides the foundation for an investigation of the
competitive positions of buyers and sellers in the marketplace, and can be
described as the foundation on which market value rests. Without interaction in
the marketplace, highest and best use would not exist and market value
estimations would be impossible.
When potential buyers contemplate purchasing real estate for personal use
or occupancy, their principal motivations are perceived benefits of enhanced
enjoyment, prestige, and privacy. Purchasers of investment property are
frequently motivated by the promise of net income or capital accumulation and
certain tax advantages. These investors are more directly concerned with
feasibility, an indication that a project has a reasonable likelihood of
satisfying their specific objectives.
Analysis of the highest and best use of: 1) the land as though vacant, and
2) the property as improved, is essential in the valuation process. Through
highest and best use analysis, we attempt to interpret the market forces that
influence the subject property and identify the use on which the final value
estimate will be based. This determination is based on the analysis and
interpretation of market conditions, the trends affecting the buyers and sellers
in the marketplace, and the existing use of the subject. The highest and best
use of the land, as though vacant and the property as improved, must meet four
criteria.
______________
/4/ The Appraisal Institute, The Dictionary of Real Estate Appraisal, 3d ed.
(Chicago, Illinois: The Appraisal Institute, 1993), Page 170.
<PAGE>
Highest and Best Use 44
Analyzing the highest and best use of the land as though vacant serves two
functions. First, it helps identify comparable properties, which should have
highest and best uses of the land as though vacant, similar to that of the
subject property. The second reason is to identify the use that would produce
maximum income to the land after property income is allocated to the
improvements. In the Cost Approach and some income capitalization techniques, a
separate value estimate of the land is required. Estimating the land's highest
and best use as though vacant becomes the necessary part of deriving a land
value estimate.
There are also reasons to analyze the highest and best use of the property
as improved. The first is to help identify comparable properties that should
have the same or similar highest and best uses as the improved subject property.
The second is to decide whether the improvements should be demolished, renovated
or retained in their present condition. They should be retained as long as they
have some marketable value and the return from the property exceeds the return
that would be realized by a new use, after deducting the costs of demolishing
the old building and constructing a new one. Identification of the existing
property's most profitable use is crucial to this determination.
The highest and best use of both the land as though vacant and the property
as improved must meet four criteria. The highest and best use must be:
1. Legally Permissible
2. Physically Possible
3. Financially Feasible
4. Maximally Productive
These criteria are usually considered sequentially; a use may be
financially feasible, but this is irrelevant if it is physically impossible or
legally prohibited. Only when there is a reasonable possibility that one of the
prior, unacceptable conditions can be changed is it appropriate to proceed with
the analysis. If, for example, current zoning does not permit a potential
highest and best use, but there is a possibility that the zoning can be changed,
the proposed use can be considered on that basis.
Legally Permissible
-------------------
Legal restrictions, as they apply to the subject property, are of two
types, i.e., private restrictions (deed restrictions, easements, etc.) and
public restrictions (zoning, building codes, environmental regulations and
historic district controls, etc.). These latter restrictions must be
investigated, to the best of our ability, because they may preclude many
potential highest and best uses.
No information regarding private restrictions affecting the subject was
uncovered in our research or provided by the client. It is assumed that only
common restrictions, such as utility easements, are in-place, which would not be
of any significant consequence to the development
<PAGE>
Highest and Best Use 45
of the site.
The subject is an approved Manufactured Housing Community by the City of
Winter Haven Planning and Zoning Department. As discussed in the Zoning and
Other Land Use Controls Section of this report, the property, as developed, is a
legal non-conforming use of the land and concurrency is not an issue.
Physically Possible
-------------------
The second constraint imposed on the possible use of the property is that
dictated by the physical aspects of the site itself. Size, shape and terrain of
the parcel of land affect the uses to which it can be developed. The utility of
the parcel may depend on its frontage and depth. Also considered are the
capacity and availability of public utilities. When a site's topography or
subsoil conditions make development restrictive or costly, its potential use is
adversely affected. Generally, the larger the site, the greater the potential
for achieving economies of scale or flexibility in development.
The highest and best use of a property as improved also depends on physical
considerations such as size, design and condition. The condition of the
property and its ability to continue in its current use are also relevant.
The subject site is generally rectangular in shape and contains a total
area of 13.7 acres. The site is generally level and has adequate access frontage
along the south side of Lucerne Park Road and lake frontage along the north
shore of Lake Smart. The size and shape of the site does not restrict maximum
flexibility and development, and the subject's development has made an adequate
use of the site as indicated by its density of approximately 10.22 spaces per
acre. The subject meets the physically possible criteria of this analysis.
Financially Feasible
--------------------
After determining which uses are physically possible and legally
permissible, we have eliminated many uses from consideration. Then the uses
that meet the first two criteria are analyzed further to determine which are
likely to produce an income, or return, equal to or greater than the amount
needed to satisfy operating expenses, financial obligations and capital
amortization. All uses that are expected to produce a positive return are
regarded as financially feasible.
To determine financial feasibility, we then estimate the future gross
income that can be expected from each logical use. Vacancy and collection
losses and operating expenses are then subtracted from each gross income to
obtain the likely net operating income (NOI) from each use. A rate of return on
the invested capital can then be calculated for each use. If the net revenue
capable of being generated is enough to satisfy the required rate of return on
investment and provide a return on the land, the use is financially feasible
within some price limit.
<PAGE>
Highest and Best Use 46
Maximally Productive
--------------------
Of the financially feasible uses, the use that produces the highest price,
or value, consistent with the rate of return warranted by the market for that
use is the highest and best use. To determine the highest and best use of land
as though vacant, the same rate of return is often used to capitalize income
streams from different uses into their respective values. This procedure is
appropriate if all competing uses have similar risk characteristics. If not,
differing rates of return would be required. The use that produces the highest
value is the highest and best use.
To test the highest and best use of land as though vacant or a property as
improved, an appraiser analyzes all logical, feasible alternatives. The market
usually limits the number of property uses to a few logical choices. Each
alternative use must first meet the tests of physical possibility and legal
permissibility. The uses that meet the first two tests are then analyzed to
ascertain how many financially feasible alternatives must be considered.
An appraiser must exercise caution in performing market analysis to support
an estimate of highest and best use. Although a given site may be particularly
well suited for a specific use, there may be a number of other sites that are
also well suited, and some may be better suited. Therefore, the appraiser must
test the highest and best conclusion to ensure that existing and potential
competition from other sites has been fully recognized.
Highest and Best Use - Vacant Land
----------------------------------
In determining the highest and best use of the site as vacant, the most
restrictive constraint is the legal use of the site. As stated above and in the
Zoning and Other Land Use Controls section of this report, the subject is a
legal, non-conforming use of the site.
We have also noted that less than 1/4 of the manufactured housing
communities have over 100 spaces in Polk County. Due to the non-availability of
space for immediate development, restrictive governmental impact fees and a lack
of financing for speculative projects, it is unlikely that there will be
speculative manufactured housing community development in the foreseeable
future.
Current trends in the manufactured housing sales would preclude the
development of a manufactured housing community until such time as the market
has improved. In our opinion, the highest and best use of the site, as if
vacant and available for development, would be to hold the property for future
sale as the market trends might predicate.
<PAGE>
Highest and Best Use 47
Highest and Best Use - As Improved
----------------------------------
The site is currently improved with a 140-space age restricted manufactured
housing community. The use of the site is a legally permissible use under the
current zoning. The subject property has been in existence as a manufactured
housing community since 1964.
The improvements are well situated on the site. The site has excellent
access from Lucerne Park Road. The amenities for this size and type of
improvement are within normal standards. The use of the site is physically
possible. Demand for manufactured housing in this area is evident. As
evidenced in the Income Capitalization Approach, the property is capable of
providing an acceptable return to an owner, demonstrating the financial
feasibility of the subject property.
The property, as currently improved, is physically possible, legally
permissible, financially feasible and maximally productive. Therefore, in our
opinion, the highest and best use of the property as improved is its current use
as a 140-space age restricted manufactured housing community.
<PAGE>
48
VALUATION PROCESS
-----------------
There are three recognized approaches to the valuation of real property:
Cost; Income; and, Direct Sales Comparison. The appropriateness of each
approach varies with the type and age of the property under examination, as well
as the quantity and quality of applicable market data as of the appraisal date.
In the analyses and appraisal of the subject property, we have considered the
positive and negative aspects of each approach for this specific assignment.
The Cost Approach provides a value indication based on the depreciated cost
of the improvements added to land value. The Income Approach produce an
estimate of value through an economic analysis of the net income derived from
the property and is converted to a capital sum at an appropriate rate. The
Sales Comparison Approach produces an estimate of value through a comparison of
similar properties, which have been transferred in the local market.
In the analysis of a stabilized manufactured housing community, investors
are primarily concerned with cash flow to service any debt and the equity
positions. While development costs are important for developing communities,
investors assume that these costs are adequately accounted for in rental levels.
In communities where developers have made money on the sale of homes by offering
low site rents, an investor would not be willing to compensate a seller for any
more than the income to be received. The Cost Approach was not utilized due to
the subjectivity of depreciation and entrepreneurial profit estimates.
A number of positive and negative factors were believed to affect the
overall value of the subject. On the positive side, the following were
considered.
1. The subject is well located in regard to the area amenities.
2. The subject is well kept and has a high-grade amenity package.
Partially offsetting the positive influences are negative factors among
which the following was considered the most pertinent:
1. The market is competitive, with shipments down from the 1980's levels.
With the above factors in mind, the Income Capitalization Comparison and
Sales Comparison Approaches will now be discussed in detail on the following
pages.
<PAGE>
49
INCOME CAPITALIZATION APPROACH
------------------------------
As an introduction to the analysis of the subject, it is helpful to
identify the goals and objectives of both buyers and sellers of properties such
as the subject.
From the standpoint of a seller, maximum price is of course an initial
goal. Tempered by capital gains considerations and the potential for recapture
of book depreciation accruals, a seller is often forced to consider a negotiated
price that may include such concessions as interim or permanent financing.
Dictated by market forces, the rate, term, and amount of financing may be
favorable, neutral, or unfavorable with respect to the ultimate selling price.
The purchasers of investment realty naturally prefer to pay a minimum price
subject to terms. Within the goal of price minimization purchasers seek:
1. Cash flow relative to capital investment measured either on a pre-
income tax or post-income tax basis.
2. Minimal capital investment to permit leverage.
3. Equity build-up through mortgage amortization.
4. Sheltered income through accumulation of book depreciation.
5. Capital accumulation through market appreciation.
The relative importance of the above factors to an investor's formula is
difficult to quantify. Institutional investors, speculators, developers,
financial institutions, and syndicators do not uniformly apply the same
investment strategies. The location, size, tenant mix, age, absence or presence
of long term leases, assignability of existing debt, condition of the
facilities, level of occupancy, quality of management, and other related factors
are among the criteria affecting the marketability of an income-producing
property.
The first step in the Income Approach to value involves the estimate of
future net operating income to be generated by the property. The estimate of net
operating income is derived through a process of estimating the total potential
gross income (PGI) from lot rentals, less a vacancy and credit loss factor,
added to an estimate of income from other sources. The result is an effective
gross income (EGI) estimate. All expenses associated with the operation of the
property are then deducted to yield a stabilized net operating income (NOI)
estimate.
In our estimate of the stabilized net operating income, we have considered
the subject's current rent, expense levels and historical trends. We have also
considered the current rent and expenses at manufactured home communities
similar to the subject, as limited by the existing Prospectus and rental
agreement.
<PAGE>
Income Capitalization Approach 50
The subject's historical income and expenses for 1997, 1998 and 1999 have
been presented, in the table, on the following page. Although the reported
expenses do not appear unreasonable, we have also relied on market comparables.
Current income and expense information for three comparable age-restricted
manufactured home communities has also been presented in this section.
The data on the tables has been arrayed to display the "percent of total
income" and "dollar per space" figures, consistent with industry reporting
practices. We have combined some of the owners expense categories for purposes
of comparison.
Our analysis of each component of income, vacancy and credit loss and
expenses follows these tables, and has been summarized in the Reconstructed
Operating Statement found on Page 60.
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================================
Lucerne Lakeside - Historical Income and expenses
Pct. of $ Per Pct. of $ Per Pct. of $ Per
1997 Income Space 1998 Income Space 1999 Income Space
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income:
Rents $340,094 99.68% $2,429.24 $357,096 99.84% $2,550.69 $372,664 99.86% $2,661.89
Miscellaneous/Other 1,094 0.32% 7.81 585 0.16% 4.18 515 0.14% 3.68
---------------------------------------------------------------------------------------------------
Total Income $341,188 100.00% $2,437.06 $357,681 100.00% $2,554.86 $373,179 100.00% $2,665.56
Expenses:
Insurance $ 5,130 1.50% $ 36.64 $ 2,092 0.58% $ 14.94 $ 2,574 0.69% $ 18.39
Office/Adminstrative 27,523 8.07% 196.59 23,542 6.58% 168.16 26,101 6.99% 186.44
Maintenance & Repairs 6,814 2.00% 48.67 10,727 3.00% 76.62 8,125 2.18% 58.04
Management Expense 16,933 4.96% 120.95 17,937 5.01% 128.12 18,659 5.00% 133.28
Wages & Benefits 39,060 11.45% 279.00 40,511 11.33% 289.36 46,839 12.55% 334.56
Property Taxes 26,988 7.91% 192.77 27,847 7.79% 198.91 27,757 7.44% 198.26
Utilities 22,357 6.55% 159.69 23,690 6.62% 169.21 25,260 6.77% 180.43
---------------------------------------------------------------------------------------------------
Total Expenses $144,805 42.44% $1,034.32 $146,346 40.92% $1,045.33 $155,315 41.62% $1,109.39
Net Operating Income $196,383 57.56% $1,402.74 $211,335 59.08% $1,509.54 $217,864 58.38% $1,556.17
==============================================================================================================================
</TABLE>
<PAGE>
Income Capitalization Approach 52
Income Analysis
---------------
The general practice in the local market is to charge a base lot rent on a
monthly basis. The base lot rate may, or may not include such services as water,
sewer, trash collection and lawn mowing. The higher base lot rents typically
include more services. The base lot rents typically generate between 90% and
99% of the total income in a manufactured home community. At the subject,
water, sewer and trash collection are included in the monthly lot rent. As
previously discussed, based on the market rent range, we are of the opinion that
the subject rent structure is within the market range for comparable properties.
Potential Gross Income
----------------------
As any potential purchaser would incorporate a one-year forecast of
potential gross income at the existing rent levels, our analysis must, and has,
also account for this. In our forecast of total rental income, we have
projected 12 months at the current rent levels, based on the current rent roll.
The total potential gross income from lot rentals is $403,099. The manufactured
home lot rent rate averages $239.94 per month.
Vacancy and Credit Loss
-----------------------
Vacancy and credit loss is typically a very small percentage in an
established community, due primarily to the high cost of relocating homes. The
community is 97.9% physically occupied. As of the date of inspection, there
were three vacant spaces and one occupied by the community manager. The
economic vacancy of the manufactured home sites at the subject is currently
2.9%. In addition to the vacancy, a small percentage for credit loss is
appropriate. We have estimated stabilized vacancy and credit loss for the
manufactured home spaces at 5.0% to account for both physical and economic
vacancy and credit loss. Total vacancy and credit loss has been estimated to be
$20,155. The effective gross income from rentals is estimated to be $382,944.
Miscellaneous Income
--------------------
Miscellaneous income, at the subject, is derived from late check charges
and similar fees. Historically this amount has ranged from $3.68 to $7.81 per
space, varying annually. Based on the historical financials we have estimated
this amount at $4.00 per space, equal to $560 annually.
<PAGE>
Income Capitalization Approach 53
Effective Gross Income
----------------------
Effective Gross Income is derived from income based upon the current
economic rent less a vacancy and credit loss allowance for present and
anticipated income losses due to any tenant changes, added to any additional
income from miscellaneous sources. Our estimate of the stabilized effective
gross income follows:
==============================================================
Lucerne Lakeside
Effective Gross Income
==============================================================
Income:
Monthly Number Monthly
Spaces Rent Months Total Annualized
--------------------------------------------------------------
140 $ 239.94 12 $ 33,592 $ 403,099
- -
--------------------------------------------------------------
Gross Potential Rental Income $ 403,099
Less:
Vacancy & Credit Loss 5.0% (20,155)
------------
Effective Gross Income From Rentals $ 382,944
Miscellaneous/Other Income (per space) $ 4.00 560
------------
Effective Gross Income $ 383,504
==============================================================
Operating Expense Analysis
--------------------------
The following discussion addresses each of the line item expenses for the
property. We have presented the 1997, 1998 and 1999 amounts, together with the
comparable expense data, followed by our stabilized estimate of the expense.
The comparable expense information has been obtained from a number of reliable
sources and we have presented it in a summary form, on the following page, to
maintain confidentiality.
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================================
Manufactured Housing Community Comparable Operations
Pct. of $ Per Pct. of $ Per Pct. of $ Per
126 Income Space 109 Income Space 144 Income Space
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income:
Rents $213,370 88.23% $1,693.41 $339,528 100.00% $3,114.94 $366,892 97.98% $2,547.86
Miscellaneous/Other 28,460 11.77% 225.87 0 0.00% 0.00 7,557 2.02% 52.48
---------------------------------------------------------------------------------------------------
Total Income $241,830 100.00% $1,919.29 $339,528 100.00% $3,114.94 $374,449 100.00% $2,600.34
Expenses:
Insurance $ 3,131 1.29% $ 24.85 $ 2,740 0.81% $ 25.14 $ 3,616 0.97% $ 25.11
Office/Adminstrative 2,155 0.89% 17.10 5,783 1.70% 53.06 2,310 0.62% 16.04
Maintenance & Repair 3,899 1.61% 30.94 4,100 1.21% 37.61 10,040 2.68% 69.72
Management Expense 6,000 2.48% 47.62 16,400 4.83% 150.46 8,400 2.24% 58.33
Wages & Benefits 13,200 5.46% 104.76 10,000 2.95% 91.74 17,040 4.55% 118.33
Property Taxes 17,179 7.10% 136.34 38,058 11.21% 349.16 36,397 9.72% 252.76
Utilities 25,633 10.60% 203.44 27,920 8.22% 256.15 57,479 15.35% 399.16
Miscellaneous 631 0.26% 5.01 0 0.00% 0.00 500 0.13% 3.47
---------------------------------------------------------------------------------------------------
Total Expenses $ 71,828 29.70% $ 570.06 $105,001 30.93% $ 963.31 $135,782 36.26% $ 942.93
Net Operating Income $170,002 70.30% $1,349.22 $234,527 69.07% $2,151.62 $238,667 63.74% $1,657.41
==============================================================================================================================
</TABLE>
<PAGE>
Income Capitalization Approach 55
Insurance charges are property specific based on the location of the
property and the amenity package. Insurance charges varied over the last three-
year period. Insurance costs have ranged from $14.94 per space in 1998 to
$36.64 per space in 1997. The 1999 insurance expense totaled $18.39 per space.
The comparable expense data indicated a range from $21.91 to $42.06 per space.
We have used $20.00 per space based on the historical amounts, which is $2,800
annually.
Insurance
<TABLE>
<CAPTION>
=================================================================================================
1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total $5,130 $2,092 $2,574 $5,014 $2,848 $8,707 $2,800
-------------------------------------------------------------------------------------------------
% EGI 1.50% 0.58% 0.69% 2.43% 0.83% 1.25% 0.73%
-------------------------------------------------------------------------------------------------
$/Space $36.64 $14.94 $18.39 $28.49 $21.91 $42.06 $20.00
=================================================================================================
</TABLE>
Office/Administrative expense is project specific due to varying
classifications of expense categories. At the subject, this expense includes
the costs associated with the operation of the office, such as telephone,
supplies, licenses, dues and subscriptions and advertising expenses. We have
attempted to include like items in this category for both the subject and the
expense comparables. The expense comparables indicated a range for this
category from $58.77 to $71.26 per space. The historical data has varied
annually over the last three years and was above the range of the comparable
expenses. We have placed greatest reliance on the historical data, estimating
administrative expense at $175.00 per space or $24,500 per year.
Office/Administration
<TABLE>
<CAPTION>
=================================================================================================
1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total $27,523 $23,542 $26,101 $10,343 $9,264 $13,029 $24,500
-------------------------------------------------------------------------------------------------
% EGI 8.07% 6.58% 6.99% 5.00% 2.70% 1.86% 6.39%
-------------------------------------------------------------------------------------------------
$/Space $196.59 $168.16 $186.44 $58.77 $71.26 $ 62.94 $175.00
=================================================================================================
</TABLE>
<PAGE>
Income Capitalization Approach 56
Maintenance and Repairs expense is project specific based on the age and
condition of the property. Many properties expense capital items rather than
capitalizing them. This can result in abnormal spikes in the expense amounts in
certain years.
Historically, maintenance and repair expenses have varied annually from
$48.67 per space in 1997 to $76.62 per space in 1998. Our inspection revealed
the property to be in good overall condition, with no items of deferred
maintenance noted.
The expense comparables indicate a higher and wider range of expense in
this category from $42.80 per space (Comparable Number 1), to $238.04 per space
(Comparable Number 3). Our stabilized estimate of this expense is $70.00 per
space or $9,800 annually, based on the historical data.
Maintenance and Repairs
<TABLE>
<CAPTION>
=================================================================================================
1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total $6,814 $10,727 $8,125 $7,533 $21,766 $49,275 $ 9,800
-------------------------------------------------------------------------------------------------
% EGI 2.00% 3.00% 2.18% 3.64% 6.33% 7.05% 2.56%
-------------------------------------------------------------------------------------------------
$/Space $48.67 $76.62 $58.04 $42.80 $167.43 $238.04 $ 70.00
=================================================================================================
</TABLE>
Management Fee has historically ranged from 4.96% to 5.01% of effective
gross income at the subject. Management expense was charged at one of the three
comparables and amounted to 2.31%, for Comparable Number Three. The overall
market range for management fees was found to range from approximately 3.0% to
5.0%.
We have estimated a fee of 5.0% of effective gross income, considered
adequate for the management of a property of this size, in this location.
Applying this percentage to the Effective Gross Income Estimate produces an
annual amount of $19,175 or $136.97 per space per year.
<PAGE>
Income Capitalization Approach 57
Wages and Benefits expense has increased annually ranging from $279.00 per
space in 1997 to $334.56 per space in 1999. The 1998 wages and benefits expense
amounted to $289.36 per space. The comparables have indicated a wider range
from $75.31 per space for Comparable Number One to $309.50 per space for
Comparable Number Two.
This category includes all of the costs associated with the staffing
including payroll and payroll taxes and any health and/or life insurance
benefits. The manager would typically receive a rent-free home and this is the
case at the subject property. Our estimate of this expense has been based on
the historical amounts weighed by the comparables. Our estimate of $42,000
annually is the equivalent of $300.00 per space or 10.95% of the Effective Gross
Income estimate.
Wages and Benefits
<TABLE>
<CAPTION>
========================================================================================================
1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total $39,060 $40,511 $46,839 $13,254 $40,235 $38,059 $42,000
--------------------------------------------------------------------------------------------------------
% EGI 11.45% 11.33% 12.55% 6.41% 11.71% 5.44% 10.95%
--------------------------------------------------------------------------------------------------------
$/Space $279.00 $289.36 $334.56 $ 75.31 $309.50 $183.86 $300.00
========================================================================================================
</TABLE>
Property Taxes represent the annual real estate tax liability of the
property. This category is project specific due to location and taxing
authority. We have not used the expense comparables for the estimate this
expense.
In our analysis, we have relied on the historical tax data as presented and
discussed in the Assessment and Taxes section of this report. Our stabilized
estimate of the owner's annual property tax liability is $25,855, corresponding
to the forecast November 2000 amount. This is equivalent to $184.68 per space
or 6.74% of the Effective Gross Income estimate.
<PAGE>
Income Capitalization Approach 58
Utilities expense is also project specific, due to the number and type of
services which may be included in the rent. In this case, this line item
includes water, sewer and trash collection for the residents and the cost of the
common area utilities. We have placed greatest reliance on the historical data,
as it is the best indicator for this expense at the subject. The expense
comparables include some utilities in the lot rents. Historically, this expense
has increased slightly each year. We have estimated utilities expense at
$175.00 per space or $24,500 annually. This is equivalent to 6.39% of the
Effective Gross Income estimate.
Utilities
<TABLE>
<CAPTION>
========================================================================================================
1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total $22,357 $23,690 $25,260 $31,009 $57,397 $56,120 $24,500
--------------------------------------------------------------------------------------------------------
% EGI 6.55% 6.62% 6.77% 15.00% 16.70% 8.03% 6.39%
--------------------------------------------------------------------------------------------------------
$/Space $159.69 $169.21 $180.43 $176.19 $441.52 $271.11 $175.00
========================================================================================================
</TABLE>
Reserves are not typically accounted for by property owners. This category
represents the inclusion of set-asides for major recurring or capital type
expenditures experienced periodically by any property. This item is typically
accounted for either on a dollar per space ($20.00 to $30.00) or a percentage
(0.5% to 1.0%) of effective gross income. We have used $25.00 per space per
year, which should be adequate to cover future capital costs. This equates to
$3,500 annually.
<PAGE>
Income Capitalization Approach 59
Expense Summary
---------------
To summarize, we have estimated the stabilized total operating expenses for
the subject to be $152,131. This estimate is equal to 39.67% of the Effective
Gross Income (EGI) estimate.
Expense Summary
<TABLE>
<CAPTION>
=====================================================================================================
1997 1998 1999 Comp Comp Comp Stabilized
1 2 3 Estimate
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total $ 144,805 $ 146,346 $ 155,315 $82,832 $ 341,763 $ 689,020 $ 152,131
-----------------------------------------------------------------------------------------------------
% EGI 42.44% 40.92% 41.62% 40.07% 44.96% 34.80% 39.67%
-----------------------------------------------------------------------------------------------------
$/Space $1,034.32 $1,045.33 $1,109.39 $470.64 $1,188.58 $1,175.32 $1,086.65
=====================================================================================================
</TABLE>
As shown on the preceding table, expenses have historically represented
between 40.92% (1998) and 42.44% (1997) of the Effective Gross Income, and have
varied each year. The expense comparables, as summarized above, indicated a
wider range between 34.80% (Comparable Number 3) and 44.96% (Comparable Number
2). Our estimate of total expenses is equal to 39.67% of the estimated EGI. It
should be noted that the historical expenses had no provision for a reserve for
capital expenditures, which we have included in our estimate.
Our estimate of net operating income is $231,374. We have presented our
stabilized estimate of income and expenses on the following page.
<PAGE>
Income Capitalization Approach 60
================================================================================
Lucerne Lakeside
Stabilized Operating Statement
% of $ per
Amount EGI Space
================================================================================
Total Effective Gross Income $ 383,504 100.00% $ 2,739.32
Expenses
Insurance $ 2,800 0.73% $ 20.00
Office 24,500 6.39% 175.00
Maintenance & Repairs 9,800 2.56% 70.00
Management Expense 19,175 5.00% 136.97
Wages & Benefits 42,000 10.95% 300.00
Property Taxes 25,855 6.74% 184.68
Utilities 24,500 6.39% 175.00
Reserves 3,500 0.91% 25.00
----------------------------------
Total Expenses $ 152,131 39.67% $ 1,086.65
Net Operating Income $ 231,374 60.33% $ 1,652.67
================================================================================
<PAGE>
Income Capitalization Approach 61
Capitalization Discussion
-------------------------
Two alternative methods of valuation are employed in the Income Approach.
Direct capitalization is a method of converting net operating income into market
value, employing a "capitalization" rate based upon market perimeters. This
approach is particularly applicable to properties with a stable income stream,
or in cases where income, and consequently value, can be projected to increase
at a constant or stable rate.
An alternative valuation method is yield capitalization, which employs a
year-by-year projection of income and expenses, recognizing rent changes and the
cost of improvements as they occur. Yield capitalization, also known as
Discounted Cash Flow Analysis, is considered most appropriate in the valuation
of properties with uneven income streams. Since investors are unwilling to pay
for any upside from vacant units, fully developed manufactured home communities
are typically valued by direct capitalization, based on existing income.
Direct Capitalization
---------------------
Direct capitalization of net operating income by an overall capitalization
rate extracted from the market provides an excellent indication of market value.
Purchasers of manufactured home communities most often utilize this method.
This method is the most easily understood, closely related to the market, and
convincing if the overall rates abstracted from recent sales are from comparable
sale properties and accurate income data are available. Income data was
available from all of the comparable sale properties included in this report.
Market Data
-----------
The comparable sale data shown in the Sales Comparison section of this
report indicated an overall capitalization rate between 7.98% and 9.48%. Our
analysis of this data indicated a narrow range in overall capitalization rates,
which tend to be influenced by the size of the community, its age and condition,
occupancy, amenity package and location.
Comparable Sales
========================================================
Sale Sale Date Overall
Number Capitalization Rate
--------------------------------------------------------
1 07/98 8.24%
--------------------------------------------------------
2 07/99 9.48%
--------------------------------------------------------
3 03/99 9.27%
--------------------------------------------------------
4 10/98 8.72%
--------------------------------------------------------
5 08/99 7.98%
========================================================
As discussed in the marketability section of this report, our sources
indicated that
<PAGE>
Income Capitalization Approach 62
institutional investors required 8.5% to 9.5% overall capitalization rates for
projects in the 200 space range and were the most restrictive in pricing due to
stringent criteria. We also found that REIT's were bidding rates down even
further. Our information revealed that manufactured home community cooperatives
and associations would more likely accept slightly lower overall rates, while
the small investor would require a slightly higher rate. We have also discussed
the fact that the manufactured home community market in Polk County is
unsophisticated and the subject at 140 spaces is one of the mid sized
communities in the county.
The comparable sale data represents recent sales of properties, similar in
respects to the subject. Sale Comparable Number One is a sale of a smaller,
newer property with similar amenities, located in a similar area. Sale
Comparable Number Two is a slightly smaller, newer property, with similar
amenities, located in a more urban area. This sale indicated an overall rate of
9.48%, and represented the top of the indicated range. Sale Comparable Number
Three is a larger slightly older property with similar amenities to the subject.
Sale Comparable Number Four is a sale of a smaller, newer property with similar
amenities. Sale Comparable Number Five is a sale of a larger, similar aged
property with similar amenities.
Based on the comparison of the sale data to the subject, the overall rate
for the subject would likely be in the 8.5% to 9.5% range, as the subject is
considered attractive to all investors and interest rates are still low. We have
concluded a rate of 9.00%, as the subject is a 140 space, well-occupied
community, located in a sophisticated market area. The subject would appeal to a
large number of investors.
Debt Coverage Ratio Method
--------------------------
As an alternative to market-derived overall capitalization rates, we have
developed an overall rate through the Debt Coverage Ratio analysis. The
parameters for this calculation are summarized below.
The Debt Coverage Ratio Method of income capitalization essentially
measures the risk involved in mortgage lending. Its usefulness to mortgage
underwriting takes the form of establishing a degree of safety with a given set
of loan terms.
Mortgage underwriting typically focuses on positive debt coverage, (net
operating income/annual mortgage debt service or NOI/ADS), rather than market
value, because a negative cash flow, after debt service, may indicate the
probability that a mortgage loan could be in jeopardy. Accordingly, if the
greatest portion of the property's value is debt capital, as established by the
loan-to-value ratio, annual debt coverage in underwriting is a major
consideration. The Debt Coverage Ratio method is therefore market based and
direct.
By multiplying this risk factor by the projected mortgage payment
requirement an estimate of the required overall rate to satisfy the lender's
minimum risk requirements can be derived. The formula for this procedure is: M x
f x DCR = R, where;
<PAGE>
Income Capitalization Approach 63
M = Loan to Value Ratio
f = Mortgage Constant
DCR = Debt Coverage Ratio
R = Overall Rate
In order to establish the criteria for the development of the Debt Coverage
Ratio Method, we have conducted a recent survey of local lenders. The results of
our survey have been summarized on the following table.
<TABLE>
<CAPTION>
=========================================================================
Contact Gene Fogarty Mike McCoy
-------------------------------------------------------------------------
<S> <C> <C>
Bank NationsBank Community Bank
-------------------------------------------------------------------------
Type Of Lender Conventional Conventional
-------------------------------------------------------------------------
Nominal Mortgage Interest Rate 7.25% to 7.50% 7.25% to 7.50%
-------------------------------------------------------------------------
Amortization Period 15 - 30 Years 15 - 30 Years
-------------------------------------------------------------------------
Loan Term 3 - 7 Years 5 - 10 Years
-------------------------------------------------------------------------
Debt Coverage Ratio 1.20 - 1.25 1.20 - 1.25
-------------------------------------------------------------------------
Loan To Value Ratio 75% 75%
=========================================================================
</TABLE>
Our survey of local lenders indicated an annual interest rate of 7.50%.
A mortgage loan would be available at 75% of the market value, based on a
15-year amortization schedule. Based on these criteria the indicated annual
interest rate constant is 9.6671%. Additionally, our survey indicated that a
minimum debt coverage ratio (DCR) of 1.25 to 1.00 would likely be required for a
property similar to the subject. An overall capitalization rate, based on these
assumptions, has been developed as shown below.
<TABLE>
<CAPTION>
=====================================================================================================
M F DCR OAR
X X =
Loan to Value Ratio Mortgage Constant Debt Coverage Ratio Overall Rate
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0.75 0.96671 1.25 0.090629
-----------------------------------------------------------------------------------------------------
Rounded 9.1%
====================================================================================================
</TABLE>
The Debt Coverage Ratio method indicated a capitalization rate based upon
financing by local banks. However, as the popularity of manufacturing housing
community investments has increased, alternate sources of financing have become
available through insurance companies and
<PAGE>
Income Capitalization Approach 64
conduit programs.
The presence of institutional investors in the market and few quality real
estate investments has bid down rates on manufactured home communities.
Investors have become more creative in their acquisition strategies in order to
compete. Therefore, actual transactions in the marketplace better demonstrate
investor perceptions of yields on manufactured home community investments.
The rate developed via the Debt Coverage Ratio method is slightly lower
than the rate extracted from the market data, and is considered supportive of
the market rate. We have estimated an overall capitalization rate of 9.00% for
the subject and capitalized the net income of $231,374. The value conclusion via
the income approach is summarized as follows:
$231,374 divided by .0900 = $2,570,822
Rounded to $2,600,000
<PAGE>
SALES COMPARISON APPROACH
-------------------------
The fundamental premise of the Sales Comparison Approach is the concept
that the analysis of sales of reasonably similar properties provides an
appraiser with empirical data from which observations and conclusions about the
property being appraised can be made. Proper application of the approach
requires that:
1. Only market transactions be weighed, and the data of each transaction
be confirmed to the greatest extent possible.
2. The degree of comparability of each sale to the subject be considered;
differences in physical, functional, and economic characteristics be
noted; and adjustments for the differences be made.
3. The value conclusion be consistent with the analysis of the sales
data.
For a conveyance to qualify as a "market transaction", four factors must be
present:
1. The conveyance must be "arm's length"; that is, it must be between two
non-related parties.
2. Neither the buyer nor the seller should have been under compulsion to
act.
3. The property should be available to the class of purchasers best able
to utilize the facility.
4. The price must be expressed in the equivalent of cash, adjusted for
any special financing, concessions, or terms.
For any class of real estate, the market area for comparative data must
reflect the area prospective purchasers would consider. Comparability is also a
function of the physical character of the asset to be appraised. Classes of real
estate in which physical specifications are standardized, or in which scale is
small, and/or in which the commodity has achieved uniform market recognition
require that the sales data considered closely resemble the subject. As
specifications become more complex, as scale increases, and as market
recognition declines, the physical similarity of the sales data and the subject
tends to decline.
To judge the degree of comparability that exists between the sales selected
for analysis and the subject, several guidelines were applied.
1. Each sale is in the same market as the subject. To the extent that a
market is a meeting place for buyers and sellers of real estate of a
given type, the boundaries of the market are set by the participants
in merchandising and absorbing competitive properties and are economic
not purely physical or geographic.
2. Physical characteristics of the subject and comparables are similar.
<PAGE>
Sales Comparison Approach 66
3. The functional adequacy of each sale property and the subject are
competitive in terms of the ability of each to support similar
functions.
To draw a conclusion from the analysis of the sales data, a unit of
comparison has been selected. The calculation of a unit of comparison provides a
common denominator by which the market sales can be related to each other and to
the subject property. The commonly accepted unit of comparison in the valuation
of a manufactured home community is the sale price per space. This unit of
comparison emphasizes the contribution of the improvements, and the contribution
of the land is merged into the unit sale price.
While a diverse array of transactions was initially considered, the sales
selected for direct comparison to the subject are those transactions that are
most similar to the subject. For features that are dissimilar, adjustments have
been made leading to an indication of the price at which the subject could be
expected to sell. In considering adjustments, relevant factors were considered
including:
1. Nature of surrounding development.
2. Relative size.
3. Availability of competing properties.
4. Effect of time on selling prices.
5. Age and condition of the improvements.
6. Amenities and occupancy.
In our search for comparable sales, we excluded age-restricted communities
since they tend to have a less transient occupancy base and typically trade at
lower capitalization rates than all age communities. Based on our investigation,
the following five sales are the most significant transactions for direct
comparison with the subject. All are recent transactions and are indicative of
the actions of the manufactured housing community market. Meanwhile, we expanded
our sales search geographically in an attempt to provide the most relevant
market data to the subject property.
The sales occurred between July 1998 and August 1999. The properties ranged
in size from 110 to 337 spaces. The sale prices, on a per space basis, ranged
from $18,846 to $25,519. The Effective Gross Income Multipliers (EGIM) ranged
from 5.56 to 7.89 and the indicated overall rates, as previously mentioned,
ranged from 7.98% to 9.48%. The following pages detail each of the sales,
following which we have presented a summary of the pertinent data.
<PAGE>
Sale Comparable Number One 67
Shipp Reck Harbor
1600 Lake Shipp Drive South
Winter Haven, Polk County, Florida
[PICTURE APPEARS HERE]
Sale Date: July 1998
Property Description
--------------------
Size/Type: 112-space age-restricted manufactured home community
Utilities: All Public
Land Description: Generally level, irregularly shaped, parcel of land
with adequate access. Improved with asphalt paved
streets and streetlights.
Improvements/Amenities: Clubhouse, pool and shuffleboard courts.
Year Built/Condition: Late 1970's/Good
<PAGE>
Sale Comparable Number One 68
<TABLE>
<CAPTION>
Income Data
-----------
<S> <C>
Annual Occupancy: 100.0% (112 of 112 spaces)
Average Lot Rent: $220.00
Effective Gross Income: $310,680
Expenses: $108,738 (35.0% of the effective gross income)
estimated
Net Income: $201,942 / $1,803 per space
Sale Data
---------
Sale Price: $2,450,000
Cash Equivalent Price: $2,450,000
Grantor: Orin M. Shell, et al
Grantee: Isaac Kelbie, Inc.
Financing Terms: Purchase Money Mortgage, No effect.
Sales History
(Past 3 Years): None noted
Market Exposure: Unknown
Verification Source: Confidential
Date: September 29, 1998
Comparison Data
---------------
Sale Price/Space: $21,875
Effective Gross Income
Multiplier (EGIM): 8.24
Overall Capitalization
Rate (OAR): 7.89
Comments The income and expenses were estimated from
percentages provided during verification.
</TABLE>
<TABLE>
<CAPTION>
========================================================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Similar Similar Similar Similar Superior Similar Similar
========================================================================================================================
</TABLE>
<PAGE>
Sale Comparable Number Two 69
Hidden Village
3035 66/th/ Avenue North
St. Petersburg, Pinellas County, Florida
[PICTURE APPEARS HERE]
<TABLE>
<S> <C>
Sale Date: July 1999
Property Description
--------------------
Size/Type: 130-space age restricted manufactured housing
community
Utilities: All Public
Land Description: Generally level, irregularly shaped, parcel of
land with adequate access. Improved with asphalt-
paved streets and streetlights.
Improvements/Amenities: Clubhouse, pool, shuffleboard courts and laundry
facilities.
Year Built/Condition: 1973/Good
</TABLE>
<PAGE>
Sale Comparable Number Two 70
<TABLE>
<CAPTION>
Income Data
-----------
<S> <C>
Annual Occupancy: 96.9% (126 of 130)
Average Lot Rent: $253.29
Effective Gross Income: $440,560
Expenses: $208,372 (47.3% of the effective gross income)
Net Income: $232,188 / $1,786 per space
Sale Data
---------
Sale Price: $2,450,000
Cash Equivalent Price: $2,450,000
Grantor: Wayne C. Rickert
Grantee: Home Mobile Home Park
Financing Terms: Cash to Seller.
Sales History
(Past 3 Years): None noted
Verification Source: Lorraine Leitheiser, Broker
Date: November 10, 1999
Comparison Data
---------------
Sale Price/Space: $18,846
Effective Gross Income
Multiplier (EGIM): 5.56
Overall Capitalization
Rate (OAR): 9.48%
Comments: This sale also included 15 apartments along the front
of the community. The financial information reflects
the buyer's pro-forma adjusted for a 5% management
fee and $25 per space in reserves.
</TABLE>
<TABLE>
<CAPTION>
========================================================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Similar Similar Similar Similar Superior Similar Similar
========================================================================================================================
</TABLE>
<PAGE>
Sale Comparable Number Three 71
Flamingo Shores and Heritage Estates
3275 West U. S. Highway 92
Winter Haven, Polk County, Florida
[PICTURE APPEARS HERE]
<TABLE>
<S> <C>
Sale Date: March 1999
Property Description
--------------------
Size/Type: 206-space age restricted manufactured housing community
Utilities: All Public
Land Description: Generally level, irregularly shaped, parcel of land with
adequate access and lake frontage. Improved with asphalt-
paved streets and streetlights.
Improvements/Amenities: Clubhouses, shuffleboard courts, boat slips and docks.
Year Built/Condition: 1959/Good
</TABLE>
<PAGE>
Sale Comparable Number Three 72
<TABLE>
<CAPTION>
Income Data
-----------
<S> <C>
Annual Occupancy: 98.1% (202 of 206 spaces)
Average Lot Rent: $217.00
Effective Gross Income: $510,603
Expenses: $139,924 (27.4% of the effective gross income)
Net Income: $370,679 / $1,799 per space
Sale Data
---------
Sale Price: $4,000,000
Cash Equivalent Price: $4,000,000
Grantor: Ullrich Enterprises, Inc.
Grantee: Corrigan Group Two, L.C.
Financing Terms: Cash to Seller.
Sales History
(Past 3 Years): None noted
Market Exposure: Unknown
Verification Source: Bill Corrigan, Buyer
Date: June 1999
Comparison Data
---------------
Sale Price/Space: $19,417
Effective Gross Income
Multiplier (EGIM): 7.83
Overall Capitalization
Rate (OAR): 9.27%
Comments This is a good quality community older than the subject.
</TABLE>
<TABLE>
<CAPTION><CAPTION>
========================================================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Similar Similar Similar Similar Similar Similar Similar
========================================================================================================================
</TABLE>
<PAGE>
Sale Comparable Number Four 73
Tyrone Village
13618 North Florida Avenue
Tampa, Hillsborough County, Florida
[PICTURE APPEARS HERE]
<TABLE>
<S> <C>
Sale Date: October 1998
Property Description
--------------------
Size/Type: 110-space age restricted manufactured housing community
Utilities: All Public
Land Description: Generally level, irregularly shaped 15.84-acre parcel of
land with adequate access. Improved with asphalt-paved
streets and streetlights.
Improvements/Amenities: Clubhouse, pool, laundry and shuffleboard courts.
Year Built/Condition: 1974/Good
</TABLE>
<PAGE>
Sale Comparable Number Four 74
<TABLE>
<CAPTION>
Income Data
-----------
<S> <C>
Annual Occupancy: 97.2% (106 of 110 spaces)
Average Lot Rent: $260.00
Effective Gross Income: $329,839
Expenses: $138,022 (41.85% of the effective gross income)
Net Income: $191,817 / $1,744 per space
Sale Data
---------
Sale Price: $2,200,000
Cash Equivalent Price: $2,200,000
Grantor: Daniel and Catherine Woods
Grantee: Tyrone Park, LLC
Financing Terms: Cash to Seller
Sales History
(Past 3 Years): None.
Market Exposure: Unknown
Verification Source: Michael Hay, Grantee
Date: October 1998
Comparison Data
---------------
Sale Price/Space: $20,000
Effective Gross Income
Multiplier (EGIM): 6.67
Overall Capitalization
Rate (OAR): 8.72%
Comments: This sale included five rental homes.
</TABLE>
<TABLE>
<CAPTION>
========================================================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Similar Similar Similar Similar Superior Similar Similar
========================================================================================================================
</TABLE>
<PAGE>
Sale Comparable Number Five 75
Gateway Mobile Home Park
10100 Gandy Boulevard
St. Petersburg, Pinellas County, Florida
[PHOTO APPEARS HERE]
Sale Date: August 1999
Property Description
--------------------
Size/Type: 337-site age restricted manufactured home community
Utilities: All Public
Land Description: Generally level, irregularly shaped 40.07-acre parcel
of land with adequate access. Improved with asphalt-
paved streets and streetlights.
Improvements/Amenities: Clubhouse, pool, laundry and shuffleboard courts.
Year Built/Condition: 1957-1964/Good
<PAGE>
Sale Comparable Number Five 76
Income Data
-----------
Annual Occupancy: 98.8% (333 of 337 sites)
Average Lot Rent: $290.00
Effective Gross Income: $1,094,711
Expenses: $408,412 (37.31% of the effective gross income)
Net Income: $686,299 / $2,036 per space
Sale Data
---------
Sale Price: $8,600,000
Cash Equivalent Price: $8,600,000
Grantor: D.A. Bennett Company.
Grantee: RAC Investments, Inc.
Financing Terms: Cash to Seller
Sales History
(Past 3 Years): None.
Market Exposure: Unknown
Verification Source: D.A. Bennett, Grantor
Date: August 1999
Comparison Data
---------------
Sale Price/Space: $25,519
Effective Gross Income
Multiplier (EGIM): 7.86
Overall Capitalization
Rate (OAR): 7.98%
Comments: This community was developed in phases, with the
newer phase (62 lots) being completed in 1964.
Expenses included a management fee and have been
adjusted to reflect $25.00 per site reserve.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
========================================================================================
Location Access Visibility Condition Amenities Home Quality Overall
----------------------------------------------------------------------------------------
Superior Similar Similar Similar Inferior Similar Similar
========================================================================================
</TABLE>
<PAGE>
Summary of Sale Comparables
<TABLE>
<CAPTION>
========================================================================================================================
No. Name/Location Sale Price/ Total Price/ Average EGIM/ O.A.R.
Sale Date Spaces/ Space Lot Rent %
Occupancy Expenses
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Shipp Reck Harbor $2,450,000 112/ $21,875 $220.00 7.89/ 8.24%
1600 Lake Shipp Drive South July 1998 100.0% 35.0%
Winter Haven, Polk County, Florida
------------------------------------------------------------------------------------------------------------------------
2 Hidden Village $2,450,000 130/ $18,846 $253.29 5.56/ 9.48%
3035 66/th/ Avenue North July 1999 96.9% 47.3%
St. Petersburg, Pinellas County, Florida
------------------------------------------------------------------------------------------------------------------------
3 Flamingo Shores & Heritage Estates $4,000,000 206/ $19,417 $217.00 7.83/ 9.27%
3275 West U.S. Highway 92 March 1999 98.1% 27.4%
Winter Haven, Polk County, Florida
------------------------------------------------------------------------------------------------------------------------
4 Tyrone Village $2,200,000 110/ $20,000 $260.00 6.67/ 8.72%
13618 North Florida Avenue October 1998 97.2% 41.85%
Tampa, Hillsborough County, Florida
------------------------------------------------------------------------------------------------------------------------
5 Gateway Mobile Home Park $8,600,000 337/ $25,519 $290.00 7.86/ 7.98%
10100 Gandy Boulevard August 1999 98.8% 37.3%
St. Petersburg, Pinellas County, Florida
========================================================================================================================
</TABLE>
<PAGE>
[COMPARABLE SALES MAP APPEARS HERE]
<PAGE>
Sales Comparison Approach 79
As previously stated, the Sales Comparison Approach involves investigating
recent transfers of properties similar to the subject. The properties, which
have been compared to the subject, have been discussed below:
Sale Comparable Number One is Ship Reck Harbor in Winter Haven, Polk
County, Florida. This 112 space rental park sold for $2,450,000 in July 1998.
This price equates to a sale price per space of $21,875. Based on an effective
gross income of $310,680, the EGIM was 7.89, and the overall rate was 8.24%.
This park was 100.0% occupied at the time of sale.
Sale Comparable Number Two is Hidden Village in St. Petersburg, Pinellas
County, Florida. The property has 130 home sites and recently sold for
$2,450,000, or $18,846 per space. Based on an effective gross income of
$440,560, the EGIM was 5.56. The expenses represented 47.3% of the effective
gross income and the indicated capitalization rate was 9.48%. This age
restricted community was 96.9% occupied at the time of sale.
Sale Comparable Number Three is the combined sale of Flamingo Shores and
Heritage Estates in Winter Haven, Polk County, Florida. This 206 space age
restricted community sold for $4,000,000 in March 1999. This price equates to a
sale price per space of $19,417. Based on an effective gross income of
$510,603, the EGIM was 7.83, and the overall rate was 9.27%. The parks were
98.1% occupied at the time of sale.
Sale Comparable Number Four is Tyrone Village Mobile Home Park in Tampa,
Hillsborough County, Florida. This 110 space age restricted community sold for
$2,200,000 in October 1998. This price equates to a sale price per space of
$20,000. Based on an effective gross income of $329,839, the EGIM was 6.67, and
the overall rate was 8.72%. This community was 97.2% occupied at the time of
sale.
Sale Comparable Number Five is Gateway Mobile Home Park located in St.
Petersburg, Pinellas County, Florida. This 337-site age restricted community
sold for $8,600,000 in August 1999. This price equates to a sale price per site
of $25,519. Based on an effective gross income of $1,094,711, the EGIM was
7.86, and the overall capitalization rate was 7.98%. This community was 98.8%
occupied at the time of sale.
All of the sales were fee simple transactions, with abnormal financing
reflected in the cash equivalent price. There were no abnormal sale conditions
known to have occurred and all of the sales represent transactions that have
taken place over an eighteen-month period, having traded under similar market
conditions.
Effective Gross Income Multiplier
---------------------------------
Other adjustments, typically considered, are location, amenities, age and
condition, occupancy, etc., and are reflected in the average lot rent. A tenant
is typically willing, absent other factors, to pay more lot rent for a better
located, newer community. This also holds true for
<PAGE>
Sales Comparison Approach 80
amenities, age and other factors. The average lot rent reflects, in most cases,
the market perception of a property's position in the marketplace. It is also
typical that lot rent increases contribute to increases in net operating income.
Alternatively, we have employed the effective gross income multiplier (EGIM), in
this analysis.
The Effective Gross Income Multiplier for the comparable sale properties
ranged between 5.56 and 7.89. As previously discussed, the EGIM is essentially
a function of the average lot rent. The average lot rent is a function of the
physical aspects of the property, such as age and condition, location and
amenities. EGIM's also reflect the market's perception of the potential for
future rent increases.
The subject is an established, age-restricted community, with a good
location and access. There is a history of good occupancy and the property and
improvements were observed to be in good overall condition. There is adequate
maintenance to maintain the current condition of the community. A rent increase
of $10.00 per space went into effect March 1, 2000 and our analysis has
incorporated this increase. The rent levels have been shown to be within the
indicated market range.
Based on these considerations, we have concluded an EGIM in the mid-portion
of the indicated range, processing the subject's Effective Gross Income of
$383,504 with an EGIM of 6.80.
$383,504 x 6.80 = $2,607,827
Rounded $2,600,000
On a per space basis, our estimate of value is the equivalent of $18,571.
Price Per Space Analysis
------------------------
Adjustments, typically considered, are location, age and condition,
occupancy, etc., and are reflected in the income generating capabilities of a
community. A tenant is typically willing, absent other factors, to pay more
rent for a better located, newer community with a greater amenity package.
Rather than making a subjective percentage adjustment to the per space sales
prices, the Net Operating Income/Space (NOI/Space) reflects, in most cases, the
market perception of a property's position in the marketplace. Since investors
are mainly concerned with cash flow to service debt, the net operating income
generating capability of a particular community can be used for comparison
purposes. Typically, the higher the NOI/Space for a community, the higher the
per space sales price. The subject has a NOI/Space of $1,652.67 in our
stabilized analysis. The NOI/Space and the per space sales prices for the
comparables are shown on the following table. We then compare the percentage
difference between each comparable's NOI/Space and the subject's NOI/Space. For
comparables with a higher NOI/Space, a downward adjustment to the per space
sales price is made. An upward adjustment
<PAGE>
Sales Comparison Approach 81
is made for a comparable with a lower NOI/Space.
NOI/Space and Per Space Sales Price
<TABLE>
<CAPTION>
=================================================================================
COMP 1 COMP 2 COMP 3 COMP 4 COMP 5 SUBJECT
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NOI/Space $ 1,803 $ 1,786 $ 1,799 $ 1,744 $ 2,036 $1,653
---------------------------------------------------------------------------------
Price/Space $21,875 $18,846 $19,417 $20,000 $25,519 N/A
---------------------------------------------------------------------------------
Percent
Adjustment -8.34% -7.47% -8.16% -5.23% -18.85% N/A
---------------------------------------------------------------------------------
Adjusted
Price/Space $20,050 $17,439 $17,834 $18,955 $20,710 N/A
=================================================================================
</TABLE>
After adjustments, the indicated range is from $17,439 to $20,710 per
space. We have concluded towards the middle of the range giving equal weight to
all of the comparables. We concluded $19,000 per space.
Thus, 140 Spaces x $19,000/Space is: $2,660,000
Rounded $2,700,000
This value is slightly above the indication from the EGIM method and
considered mutually supportive. We have concluded $2,650,000 via the sales
comparison approach.
<PAGE>
82
FINAL ESTIMATE OF VALUE
-----------------------
The two approaches to value applied in the subject analysis yielded these
conclusions:
Income Capitalization Approach $2,600,000
Sales Comparison Approach $2,650,000
Depending on the circumstances of an appraisal, the two approaches to value
apply to various degrees. The income capitalization approach indicates the
amount at which a prudent investor might be interested in acquiring the
property. The sales comparison approach reflects demand and reasonable selling
price expectancy as evidenced by sales of similar properties.
In the reconciliation, we reviewed each approach to value (a) to ascertain
the reliability of the data and (b) to weight the approach that best represented
the actions of typical users and investors in the marketplace.
The income capitalization approach depends on the principles of
substitution and anticipation. This approach postulates that the value of a
property derives from the net income the property will produce during its
economic life. Investors in the market predicate their decisions on economic
factors oriented to the market and concern themselves with net income and its
durability. The income capitalization approach synthesizes the capitalized
return to, and of, the improvements and to the land. In this case, the
availability of sufficient reliable and supportable historical data for the
subject, made the income capitalization approach a reliable gage of the market
value of the subject.
The sales comparison approach uses a number of value indicators, both
physical and economic, including investors' strategies and attitudes reflected
in documented market transactions. The principle of substitution is the basis
of this approach, which states that a prudent investor will pay no more to buy a
property than the cost to buy a comparable substitute property. In the
valuation of the subject property, the sales comparison approach was considered
reliable. Given the relative homogeneity of the locations, the availability of
market data, we have emphasized this approach in the valuation.
The two approaches reflect a narrow range of values. Our estimate of value
has been based on the Income Approach, as buyers are most concerned with cash
flow to service debt. Our opinion of the market value of the subject property,
based on a reasonable exposure period of six months, as of May 1, 2000 is:
- TWO MILLION SIX HUNDRED THOUSAND DOLLARS -
($2,600,000)
<PAGE>
83
CERTIFICATION
-------------
We certify that, to the best of our knowledge and belief:
. The statements of fact in this report are true and correct.
. The reported analyses, opinions, and conclusions are limited only by
the reported assumptions and limiting conditions and are our personal,
impartial and unbiased professional analyses, opinions, and
conclusions.
. We have no present or prospective interest in the property that is the
subject of this report, and no personal interest with respect to the
parties involved.
. We have no bias with respect to the property that is the subject of
this report or to the parties involved with this assignment.
. Our engagement in this assignment was not contingent upon developing
or reporting predetermined results.
. Our compensation for completing this assignment is not contingent upon
the development or reporting of a predetermined value or direction in
value that favors the cause of the client, the amount of the value
opinion, the attainment of a stipulated result, or the occurrence of a
subsequent event directly related to the intended use of this
appraisal.
. Our analysis, opinions, and conclusions were developed, and this
report has been prepared, in conformity with the Uniform Standards of
Professional Appraisal Practice.
. 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, John H. Whitcomb, MAI, CCIM has
completed the requirements under the continuing education program of
the Appraisal Institute.
. John H. Whitcomb, MAI, CCIM and William G. Trask have made a personal
inspection of the property that is the subject of this report.
. No one provided significant professional assistance to the persons
signing this report.
. We are in compliance with the competency provisions of the Uniform
Standards of professional Appraisal Practice of the Appraisal
Foundation.
. This appraisal assignment was not based on a requested minimum value,
specific value, or the approval of a loan.
/s/ John H. Whitcomb JAG /s/ William G. Trask JAG
------------------------------ -----------------------------
John H. Whitcomb, MAI, CCIM William G. Trask
St. Cert. Gen. REA #0001234 St. Cert. Gen. REA #0002347
<PAGE>
84
ASSUMPTIONS AND LIMITING CONDITIONS
-----------------------------------
The primary assumptions and limiting conditions pertaining to the
conclusion in this report are summarized below.
To the best of our knowledge and belief, the statements of facts contained in
the appraisal report, upon which the analysis and conclusion expressed are
based, are true and correct. Information, estimates and opinions furnished to
us and contained in the report or utilized in the formation of the value
conclusion were obtained from sources considered reliable and believed to be
true and correct. However, no representation, liability or warranty for the
accuracy of such items is assumed by or imposed on us, and is subject to
corrections, errors, omissions and withdrawal without notice.
The legal description of the appraised property, as exhibited in the report is
assumed correct.
The valuation may not be used in conjunction with any other appraisal or study.
The value conclusion stated in this appraisal is based on the program of
utilization described in the report, and may not be separated into parts. The
appraisal was prepared solely for the purpose and party so identified in the
Purpose and Function. The appraisal report may not be reproduced, in whole or
in part, and the findings of the report may not be utilized by a third party for
any purpose, without the written consent of Whitcomb Real Estate.
No change of any item in any of the appraisal report shall be made by anyone
other than Whitcomb Real Estate and we shall have no responsibility for any such
unauthorized change.
The property has been appraised as though free and clear of mortgages, liens,
leases, servitudes and encumbrances, except as may be described in the
appraisal.
We are not required to give testimony or be in attendance at any court or
administrative proceeding with reference to the property appraised unless
additional compensation is agreed to and prior arrangements have been made.
Unless specifically stated, the value conclusion contained in the appraisal
applies to the real estate only, and does not include personal property,
machinery and equipment, trade fixtures, business value, goodwill or other non-
realty items. Income tax considerations have not been included or valued unless
so specified in the appraisal. We make no representations as to the value
changes, which may be attributed to such considerations.
Neither all nor any part of the contents of the report shall be disseminated or
referred to the public through advertising, public relations, news or sales
media, or any other public means of communication or referenced in any
publication, including any private or public offerings including buy not limited
to those filed with Securities and Exchange Commission or other governmental
agency, without the prior written consent and approval of and review by Whitcomb
Real Estate.
<PAGE>
Assumptions and Limiting Conditions 85
In completing the appraisal, it is understood and agreed that the report are not
now intended, and will not be used in connection with a real estate syndication.
Good and marketable title to the interest being appraised is assumed. We are
not qualified to render an "opinion of title," and no responsibility is assumed
or accepted for matters of a legal nature affecting the property being
appraised. No formal investigation of legal title was made, and we render no
opinion as to ownership of the property or condition of its title.
Unless otherwise noted in the appraisal, it is assumed that there are no
encroachments, zoning, building, fire or safety code violations, or restrictions
of any type affecting the subject property. It is assumed that the property is
in full compliance with all applicable federal, state, local and private codes,
laws, consents, licenses and regulations, and that all licenses, permits,
certificates, approvals, franchises, etc. have been secured and can be freely
renewed and/or transferred to a purchaser.
It is assumed that the utilization of the land and any improvements are within
the boundaries or property lines of the property described, and that there are
no encroachments, easements, trespass, etc., unless noted within the report. We
have not made a survey of the property, and no responsibility is assumed in
connection with any matter that may be disclosed by a proper survey. If a
subsequent survey should reflect a differing land area and/or frontages, we
reserve the right to review our final value estimate.
All maps, plats, building diagrams, site plans, floor plans, photographs, etc.
incorporated into the appraisal are for illustrative purposes only, to assist
the reader in visualizing the property, but are not guaranteed to be exact.
Dimensions and descriptions are based on public records and/or information
furnished by others and are not meant to be used as a reference in legal matters
of survey.
Management is assumed to be competent, and the ownership to be in responsible
hands. The quality of property management can have a direct effect on a
property's economic viability and value. The financial projections contained in
the appraisal assumes both responsible ownership and competent management. Any
variance from this assumption could have a significant impact on the final value
estimate.
We assume that there are no hidden or unapparent conditions of the property's
soil, subsoil or structures, which would render them more or less valuable. No
responsibility is assumed for such conditions, or for engineering which might be
required to discover such factors. Detailed soil studies were not made available
to us, so statements regarding soil qualities, if made in the report, are not
conclusive but have been considered consistent with information available to us
and provided by others. In addition, unless stated otherwise in the appraisal,
the land and soil of the area under appraisement appears firm and solid, but the
appraisal does not warrant this condition.
The appraisal report covering the subject property is limited to surface rights
only, and does not include any inherent subsurface or mineral rights.
The appraisal is made for valuation purposes only. It is not intended nor to be
construed to be an engineering report. We are not qualified as structural or
environmental engineers, therefore we are not qualified to judge the structural
and environmental integrity of the improvements, if any. Consequently, no
warranty, representations or liability are assumed for the structural soundness,
quality, adequacy or capacities of said improvements and utility services,
including the construction materials, particularly the roof, foundations, and
equipment, including the HVAC systems, if applicable. Should there be any
<PAGE>
Assumptions and Limiting Conditions 86
question concerning same, it is strongly recommended that an
Engineering/Construction/Environmental inspection be obtained. The value
estimate stated in this appraisal, unless noted otherwise, is predicated on the
assumption that all improvements, equipment and building services, if any, are
structurally sound and suffer no concealed or latent defects or inadequacies
other than those noted in the appraisal.
Any proposed construction or rehabilitation referred to in the appraisal report
is assumed to be completed within a reasonable time and in a workmanlike manner
according to or exceeding currently accepted standards of design and methods of
construction.
Any areas or inaccessible portions of the property or improvements not inspected
are assumed to be as reported or similar to the areas, which are inspected.
Unless specifically stated in the report, we found no obvious evidence of insect
infestation or damage, dry or wet rot. Since a thorough inspection by a
competent inspector was not performed for us, the subject improvements, if any,
is assumed to be free of existing insect infestation, wet rot, dry rot, and any
structural damage which may have been caused by pre-existing infestation or rot
which was subsequently, treated.
In the appraisal assignment, the existence of potentially hazardous material
used in the construction, maintenance or servicing of the improvements, such as
the presence of urea-formaldehyde foam insulation, asbestos, lead paint, toxic
waste, underground tanks, radon and/or any other prohibited material or chemical
which may or may not be present on or in the subject property, was, unless
specifically indicated in the report, not observed by us, nor do we have any
knowledge of the existence of such materials on or in the property. We,
however, are not qualified to detect such substances. The existence of these
potentially hazardous materials may have a significant effect on the value of
the property. The client is urged to retain an expert in this field, if
desired. The value conclusion assumes the property is "clean" and free of any
of these adverse conditions unless notified to the contrary in writing.
No effort has been made to determine the possible effect, if any, on the subject
property of energy shortages or present or future federal, state or local
legislation, including any environmental or ecological matters or
interpretations thereof.
We take no responsibility for any events, conditions or circumstances affecting
the subject property or its value, that take place subsequent to either the
effective date of value cited in the appraisal or the date of our field
inspection, which ever occurs first.
The estimates of value stated in this appraisal apply only to the effective
dates of value stated in the report. Value is affected by many related and
unrelated economic conditions within a local, regional, national and/or
worldwide context, which might necessarily affect the prospective value of the
subject property. We assume no liability for an unforeseen change in the
economy, or at the subject property, if applicable.
We believe that the underlying assumptions and current conditions provide a
reasonable basis for the value estimate stated in this appraisal. However, some
assumptions or projections inevitably will not materialize and unanticipated
events and circumstances may occur during the forecast period. These could
include major changes in the economic environs; significant increases or
decreases in current
<PAGE>
Assumptions and Limiting Conditions 87
mortgage interest rates and/or terms or availability of financing altogether;
property assessment; and/or major revisions in current state and/or federal tax
or regulatory laws. Therefore, the actual results achieved during the projected
holding period and investor requirements relative to anticipated annual returns
and overall yields could vary from the projection. Thus, variations could be
material and have an impact on the individual value conclusion stated herein.
The Americans with Disabilities Act (ADA) became effective January 26, 1992.
The appraiser has not made a specific compliance survey and analysis of this
property to determine whether or not it is in conformity with the various
detailed requirements of the ADA. It is possible that a compliance survey of
the property together with a detailed analysis of the requirements of the ADA
could reveal that the property is not in compliance with one or more of the
requirements of the act. If so, this fact could have a negative effect upon the
value of the property. Since the appraiser has no direct evidence relating to
this issue, possible noncompliance with the requirements of ADA was not
considered in estimating the value of the property.
<PAGE>
ADDENDA
<PAGE>
LEGAL DESCRIPTION
<PAGE>
For Official Use Only
------------------------------
Documentary Tax Pd. $ 14,700.00
----------
Intangible Tax Pd. $ --
-----------
E.D. "Bud" Dixon, Clerk, Polk Co.
By: /s/ [ILLEGIBLE] Deputy Clerk ------------------------------
-----------------
TRUSTEE'S DEED
--------------
THIS INDENTURE is executed effective as of the 15/TH/ day of June, 1995,
between WAYNE P. REECE, as Trustee, under that certain unrecorded Land Trust
Agreement known as the Butler Land Trust, dated the 1st day of July 1974, with
full power and authority to sell, assign, convey, lease, pledge, otherwise
encumber and satisfy, modify and release any and all liens, as Grantor, and
WINDSOR PARK PROPERTIES 7, a California limited partnership, Grantee, whose
address is 120 West Grand Avenue, Escondido, California 92025.
W I T N E S S E T H:
--------------------
WHEREAS, WAYNE P. REECE is the duly qualified and acting Trustee of that
certain unrecorded Land Trust Agreement known as the Butler Land Trust, dated
the 1st day of July 1974;
The Grantor, herein for and in consideration for the sum of Ten Dollars
($10.00), and other good and valuable consideration to it in hand paid by
Grantee, the receipt whereof
This Instrument Prepared By
and Return to:
DAVID S. BERNSTEIN, ESQ.
Gaynor, Decker, Young, Malchon,
Dickson, Schumaker & Bernstein, P.A.
Post Office Box 14034
St. Petersburg, FL 33733
<PAGE>
For Official Use Only
------------------------------
------------------------------
is hereby acknowledged, hereby grants, bargains, sells, aliens, releases,
conveys and confirms to the Grantee, and to its heirs and assigns forever, that
certain real property situate, lying and being in Polk County, Florida, more
particularly described as follows:
SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF.
SUBJECT TO REAL ESTATE TAXES FOR THE YEAR 1995 AND SUBSEQUENT YEARS.
SUBJECT TO THOSE CERTAIN PERMITTED TITLE EXCEPTIONS SET FORTH IN
EXHIBIT "B" ATTACHED HERETO AND MADE A PART HEREOF.
TOGETHER, with all and singular the tenements, hereditaments and
appurtenances belonging or in anywise appertaining to that real property.
TO HAVE AND TO HOLD the same to the Grantee, its heirs and assigns, in
fee simple, forever.
IN WITNESS WHEREOF, the Grantor has set his/her hand and seal
effective as of the day and year first above written.
WITNESSES:
/s/ Dorothy C. Drake
-------------------------------
Print Name: DOROTHY C. DRAKE
-------------------
/s/ Wayne P. Reece
/s/ Heather L. Estes ------------------------------------
------------------------------- WAYNE P. REECE, as Trustee under
Print Name: HEATHER L. ESTES that certain unrecorded Land Trust
-------------------- Agreement known as the Butler Land
Trust, dated the 1st day of July
1974
Address:
Post Office BOX 352
------------------------------------
Orlando, FL 32802
------------------------------------
2
<PAGE>
For Official Use Only
---------------------------
---------------------------
STATE OF FLORIDA
COUNTY OF ORANGE
I hereby certify that on this 15th day of June, 1995, before me personally
appeared WAYNE P. REECE, as Trustee, under that certain unrecorded Land Trust
Agreement known as the Butler Land Trust, dated the 1st day of July 1974,
personally known to me, N/A , and severally acknowledged the
-----------------------
execution thereof to be his free act and deed for the uses and purposes therein
mentioned.
WITNESS my signature and official seal in the County of Orange and State of
Florida, the day and year last aforesaid.
My Commission Expires:
/s/ Dorothy C. Drake
================================== ------------------------------
DOROTHY C. DRAKE Print Name: Dorothy C. Drake
Notary Public-State of Florida ------------------
My Commission Expires NOTARY PUBLIC
July 4, 1995
CC 075594
==================================
3
<PAGE>
EXHIBIT A
---------
LEGAL DESCRIPTION
-----------------
Lot 12 of "FRED W. INMAN'S" SUBDIVISION as shown by the map or plat thereof as
recorded in the Office of the Clerk of the Circuit Court in and for Polk County,
Florida, in Plat Book 1, Page 37A, LESS the East 270 feet thereof and the North
5.00 feet thereof for road right-of-way.
Also known as a portion of Lot 12 of "FRED W. INMAN'S" SUBDIVISION as shown by
the map or plat thereof as recorded in the Office of the Clerk of the Circuit
Court in and for Polk County, Florida, in Plat Book 1, Page 37A, LESS the East
270 feet thereof and the North 5.00 feet thereof for road right-of-way, being
more particularly described as follows: Begin at a point where the West line of
Lot 12 intersects the present Southerly Right of Way line of State Road No. 544;
thence run S00 degrees 16' 19" E a distance of 1006 feet more or less to the
shore line of Lake Smart; thence in an Easterly direction and along said shore
line a distance of 660 feet more or less; thence N00 degrees 16' 19" W a
distance of 967 feet more or less to a point lying on said South right-of-way
line of State Road #544; thence S89 degrees 44' 47" W along said Right of Way
line a distance of 646.72 feet to a point of curvature of a curve concave to the
South; thence continue along said right-of-way line and said curve to the left
(curve having for its elements a radius of 1377.40 feet, a central angle of 00
degrees 08' 29") a distance of 3.40 feet to the Point of Beginning.
Containing 13.7 acres more or less.
<PAGE>
EXHIBIT "B"
PERMITTED EXCEPTIONS
Covenants and conditions as set forth in instrument recorded September 6, 1973,
in Official Records Book 1551, page 1018, of the public records of Polk County,
Florida.
<PAGE>
PROFILES OF APPRAISERS
<PAGE>
PROFILE OF APPRAISER
WILLIAM G. TRASK
St.Cert.Gen. REA #0002347
REAL ESTATE APPRAISAL EXPERIENCE
--------------------------------
Appraiser
Whitcomb Real Estate
Tampa, FL
Specializing in real estate valuations and consulting projects for lending
institutions, public and private corporations and individuals, for a
variety of uses. Property types appraised include manufactured housing
communities, recreational vehicle parks, manufacturing plants, office
buildings, apartment complexes, retail properties and other types of
commercial establishments. February 1998 to Present.
Appraiser
Atlas Real Estate Group, Inc.
Tampa, FL
Specialized in real estate condemnation valuations and related studies.
Property types appraised include agricultural, industrial, residential,
office buildings, retail properties and other types of commercial land and
establishments. August 1991 to January 1998.
PROFESSIONAL AFFILIATIONS
-------------------------
State Certified General Real Estate Appraiser
Florida # 0002347
Georgia # CG007464
PARTIAL LIST OF CLIENTS AND PROPERTIES
--------------------------------------
Manufactured Home Communities
-----------------------------
<TABLE>
<S> <C> <C> <C>
A Garden Walk Palm Beach Gardens, FL Honeymoon Park Dunedin, FL
Bear Creek Ormond Beach, FL La Buona Vita Port St. Lucie, FL
Bonfire Leesburg, FL Lincolnshire Largo, FL
Briarwood Lake Worth, FL Meadowbrook Lakeland, FL
Camelot East Sarasota, FL Mobiland By The Sea Melbourne, FL
Camelot Lakes Sarasota, FL Oak View Arcadia, FL
Carefree Village Tampa, FL Palmetto Hallandale, FL
Clover Leaf Brooksville, FL Plaza Bradenton, FL
Coquina Crossing St. Augustine, FL Ranchero Village Largo, FL
</TABLE>
<PAGE>
Profile of Appraiser 2
William G. Trask
<TABLE>
<CAPTION>
Manufactured Home Communities (Cont.)
-------------------------------------
<S> <C> <C> <C>
Country Club Estates Venice, FL River Bay Tampa, FL
Country Lakes Coconut Creek, FL Riverview Micco, FL
Country Life Leesburg, FL Serendipity Clearwater, FL
Crystal River Village Crystal River, FL Southern Acres St. Cloud, FL
Diamond Point Leesburg, FL Spanish Trails Zephyrhills, FL
Friendly Village Sellersburg, IN Sun Village Largo, FL
Hammock Lake Fort Meade, FL Sundance Zephyrhills, FL
Heron Cay Vero Beach, FL Sunshine Village Lake Worth, FL
Hibiscus Mount Dora, FL Tall Pines Fort Pierce, FL
Hidden Village St. Petersburg, FL Tanglewood Fort Pierce, FL
High Point Clearwater, FL Vero Palms Vero Beach, FL
Recreational Vehicle Parks
--------------------------
Lazy Lakes RV Sugarloaf Key, FL Ridgecrest RV Leesburg, FL
Lions Lair RV Marathon, FL Sunshine RV Vero Beach, FL
Pioneer Village North Fort Myers, FL Topics RV Spring Hill, FL
Other
-----
ABC Pizza House Tampa, FL Fabian Enterprises Tampa, FL
Blakie's Restaurant Tampa, FL Florida Power & Light St. Petersburg, FL
Breed Automotive Lakeland, FL Mobil Oil Lakeland, FL
Discount Auto Parts Lakeland, FL Pier 1 Imports Hoover, AL
Discount Auto Parts Sarasota, FL Pizza Hut Brandon, FL
Discount Auto Parts Land O' Lakes, FL Pizza Hut Lakeland, FL
Financial
---------
Belgravia Capital Heller Financial
Collateral Mortgage, Ltd. Lehman Brothers
Executive Commercial Funding NationsBank
First Federal Savings Bank, Leesburg, FL Republic Bank, Port Richey, FL
First National Bank, St. Lucie, FL Signature Financial Services, Inc.
First Union National Bank Union Capital Investments, LLC
GE Capital Corporation United Southern Bank, Eustis, FL
Greentree Financial
</TABLE>
<PAGE>
Profile of Appraiser 3
William G. Trask
Real Estate/Real Estate Investment
----------------------------------
Continental Communities National Home Communities
Martin Newby Management Pacific Life
Munao Partnership Windsor Corporation
EDUCATIONAL BACKGROUND
----------------------
Florida State University
University of South Florida
Edison Community College
Hillsborough Community College
Appraisal Institute
International Right of Way Association
<PAGE>
PROFILE OF APPRAISER
JOHN H. WHITCOMB, MAI, CCIM
St.Cert. Gen. REA #0001234
REAL ESTATE EXPERIENCE
----------------------
Owner
Whitcomb Real Estate
Tampa, FL
Specialize in complex real estate valuations and consulting projects.
Property types include manufactured home communities, recreational vehicle
parks, self-storage facilities, hotels, manufacturing plants, office
buildings, retail buildings and other types of commercial establishments as
well as special use facilities. Mr. Whitcomb is active in the ownership and
management of seven manufactured home communities throughout Florida.
January 1996 to present.
Partner
Chartwell Advisory Group, Ltd.
Tampa, FL
Supervised complex real estate valuations and property tax consulting
projects. Responsibilities included management of all technical staff
members throughout the country. Property types included manufactured home
communities, recreational vehicle parks, hotels, large manufacturing
plants, office buildings and retail buildings. April 1993 to January 1996.
Senior Appraiser
Marshall and Stevens, Inc.
Philadelphia, PA and Tampa, FL
Specialized in preparing appraisals for land and buildings in industrial,
commercial and residential uses. Performed appraisals for purposes of
sale/purchase, property tax appeals, syndication, financing and allocation
of purchase price. September 1985 to March 1990, and June 1992 to April
1993.
Vice President
Strategis Asset Valuation & Management, Inc.
Tampa, FL
Prepared appraisals and feasibility studies on complex commercial
properties. Performed appraisals for purposes of sale/purchase, property
tax appeals, financing and allocation of purchase price. March 1990 to May
1992.
<PAGE>
Profile of Appraiser 2
PROFESSIONAL AFFILIATIONS
-------------------------
MAI, Member Appraisal Institute
CCIM, Certified Commercial Investment Member Commercial Investment Real Estate
Institute
State Certified General Real Estate Appraiser
Florida #0001234
PARTIAL LIST OF CLIENTS AND PROPERTIES
--------------------------------------
<TABLE>
<CAPTION>
Manufactured Home Communities
-----------------------------
<S> <C> <C> <C>
Akers Away West Palm Beach, FL Lakeside Douglasville, GA
Alafia Riverfront Gibsonton, FL Lakewood Denton, TX
Alpine Village Sebring, FL Lantana Cascade Lantana, FL
Arbor Oaks Zephyrhills, FL Long Lake Village West Palm Beach, FL
Blue Heron Clearwater, FL Marlboro Court West Palm Beach, FL
Bradenton Trailer Park Bradenton, FL MH Country Club Oakland Park, FL
Carefree Village Tampa, FL Mission EL Paso, TX
Carolina Village Concord, NC Moultrie Oaks St. Augustine, FL
Casa del Monte West Palm Beach, FL Oak Point Titusville, FL
Chateau Forest Seffner, FL Orange Manor East Winter Haven, FL
Chateau Village Bradenton, FL Palm Breezes Club Lantana, FL
Cloverleaf Brooksville, FL Palm Ridge Leesburg, FL
Colonial Coach Greenacres City, FL Panama City Estates Panama City, FL
Coquina Crossing St. Augustine, FL Plantation Estates Seffner, FL
Coral Lake Coconut Creek, FL Portside Jacksonville, FL
Country Club Estates Venice, FL Ridgecrest Fort Pierce, FL
Dessau Austin, TX San Souci North Fort Myers, FL
Foxcroft Village Loch Sheldrake, NY Scenic View Lakeland, FL
Foxwood Estates Lakeland, FL Seminole St. Petersburg, FL
Franklin Estates Murfreesboro, TN Shangri La Largo, FL
Gardens of Manatee Parrish, FL Southwinds Lakeland, FL
A Garden Walk West Palm Beach, FL St. Lucie Village Okeechobee, FL
The Groves Orlando, FL Sunrise Village Cocoa Beach, FL
Gwinnett Estates Snellville, GA Sunshine Lake Worth, FL
Harmony Ranch Thonotosassa, FL Tall Pines Fort Pierce, FL
Holiday Ranch West Palm Beach, FL Tall Pines Jonesboro, CA
Holiday Plaza West Palm Beach, FL Twin Shores Longboat Key, FL
Holland Fort Lauderdale, FL Valley Pines EL Paso, TX
Kings and Queens Lakeland, FL Village Glen Melbourne, FL
</TABLE>
<PAGE>
Profile of Appraiser 3
Recreational Vehicle Parks
--------------------------
<TABLE>
<S> <C> <C> <C>
Avalon RV Park Clearwater, FL Pioneer Creek Bowling Green, FL
Camp Inn Frostproof, FL Rainbow Village Clearwater, FL
Forest Lake Village Zephyrhills, FL Space Coast RV Resort Rockledge, FL
Hide Away Ruskin, FL Sunshine RV Vero Beach, FL
Holiday RV Resort Leesburg, FL Topics Hudson, FL
Horizon RV Park Davenport, FL Twelve Oaks Sanford, FL
Key RV Park Marathon, FL Village Park Orange City, FL
Self-Storage Facilities
-----------------------
Affordable Self Storage Loganville, GA Orange Avenue Tallahassee, FL
Alpine Self Storage Rockford, IL Plantation Xtra Storage Plantation, FL
Baytree Self Storage Valdosta, GA St. Augustine Self Storage St. Augustine, FL
Budget Self Storage Sterling, VA Southern Self Storage Riviera Beach, FL
Delray Mini Storage Delray Beach, FL Storage Express Lauderhill, FL
Edison Lock Up Edison, NJ Valdosta Self Storage Valdosta, GA
Extra Space Lauderhill, FL Xtra Space Orlando, FL
Howell Self Storage Howell, NJ Your Extra Attic Duluth, GA
Hyde Park Storage Tampa, FL Your Extra Attic Norcross, GA
Jacksonville Storage Jacksonville, FL Your Extra Attic Stockbridge, GA
Okeechobee Storage Hialeah Gardens, FL Your Extra Attic Winters Chapel, GA
Hotel/Resorts
-------------
Canyon Ranch in the Berkshires Howard Johnson Maingate
Comfort Inn Kissimmee Hyatt On Union Square
Comfort Suites Asheville Hyatt Orlando
Embassy Suites Boca Raton Hyatt Wilshire
Hotel Nikko San Francisco Hyatt Regency Houston
Hilton Southwest Freeway Houston La Samanna
Hollywood Beach Hilton Ramada Resort Maingate
Holiday Inn Gainesville Westin Washington, D.C.
</TABLE>
<PAGE>
Profile of Appraiser 4
Financial
---------
Belgravia Capital Heller Financial
Bloomfield Acceptance Company Household Finance Corporation
Chase Manhattan Bank Irving Leasing Corporation
Chrysler Capital Corporation Mfd. Housing Community Bankers
Citicorp Real Estate Mellon Bank
Collateral Mortgage Morgan Stanley
CoreStates Financial Corporation NationsBank
Credit Suisse First Boston Nomura Securities
FINOVA Capital Pacificorp Financial Services
First Union Corporation PACTEL Finance
GE Capital Society National Bank
Goldman Sachs Sun America Insurance
Greentree Financial Union Capital
Real Estate/Real Estate Investment
----------------------------------
W.P. Carey & Company, Inc. LaSalle Partners
Chateau Communities Las Colinas Corporation
Continental Communities Metropolitan Life
Delaware North Companies MHC
Dillon Read Real Estate Inc. National Home Communities
Drexel Burnham Lambert Realty, Inc. Pitney Bowes Credit Corp.
First Boston Corporation Salomon Brothers, Inc.
EDUCATIONAL BACKGROUND
----------------------
University of Florida, B.A.
College of William and Mary, M.B.A.
American Institute of Real Estate Appraisers
The Appraisal Institute
Commercial Investment Real Estate Institute
PUBLICATIONS
------------
Mr. Whitcomb has authored an article on ad valorem taxes and cogeneration
facilities for Cogeneration and Resource Recovery magazine.
----------------------------------
TESTIMONY
---------
Mr. Whitcomb has presented expert testimony in United States Tax Court.
